|
Maryland
State or other jurisdiction of incorporation or organization |
| |
6036
(Primary Standard Industrial Classification Code Number) |
| |
To be provided
(IRS Employer Identification No.) |
|
|
Gary R. Bronstein, Esq.
Stephen F. Donahoe, Esq. Kilpatrick Townsend & Stockton LLP 607 14th Street, NW, Suite 900 Washington, DC 20005 (202) 508-5800 |
| |
P. Ross Bevan, Esq.
Silver, Freedman, Taff & Tiernan LLP 3299 K Street, NW, Suite 100 Washington, DC 20007 (202) 295-4500 |
|
|
Large accelerated filer
☐
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Accelerated filer
☐
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|
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Non-accelerated filer
☐
|
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Smaller reporting company
☒
|
|
| | | |
Emerging growth company
☒
|
|
| | |
Minimum
|
| |
Midpoint
|
| |
Maximum
|
| |||||||||
Number of shares
|
| | | | 9,350,000 | | | | | | 11,000,000 | | | | | | 12,650,000 | | |
Gross offering proceeds
|
| | | $ | 93,500,000 | | | | | $ | 110,000,000 | | | | | $ | 126,500,000 | | |
Estimated offering expenses, excluding selling agent and underwriters’ commissions
|
| | | $ | 1,400,000 | | | | | $ | 1,400,000 | | | | | $ | 1,400,000 | | |
Selling agent and underwriters’ commissions(1)
|
| | | $ | 847,180 | | | | | $ | 998,980 | | | | | $ | 1,150,780 | | |
Estimated net proceeds
|
| | | $ | 91,252,820 | | | | | $ | 107,601,020 | | | | | $ | 123,949,220 | | |
Estimated net proceeds per share
|
| | | $ | 9.76 | | | | | $ | 9.78 | | | | | $ | 9.80 | | |
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Annexes: | | | | | | | |
| | | | A-1 | | | |
| | | | B-1 | | | |
| | | | C-1 | | |
Company Name and Ticker Symbol
|
| |
Exchange
|
| |
Headquarters
|
| |
Total Assets
|
| ||||||
| | | | | | | | | | | |
(in millions)
|
| |||
Prudential Bancorp, Inc. (PBIP)
|
| | | | Nasdaq | | | |
Philadelphia, Pennsylvania
|
| | | $ | 1,188 | | |
Elmira Savings Bank (ESBK)
|
| | | | Nasdaq | | | | Elmira, New York | | | | | 676 | | |
HMN Financial, Inc. (HMNF)
|
| | | | Nasdaq | | | | Rochester, Minnesota | | | | | 863 | | |
Home Federal Bancorp, Inc. of Louisiana
(HFBL) |
| | | | Nasdaq | | | | Shreveport, Louisiana | | | | | 518 | | |
HV Bancorp, Inc. (HVBC)
|
| | | | Nasdaq | | | | Doylestown, Pennsylvania | | | | | 425 | | |
IF Bancorp, Inc. (IROQ)
|
| | | | Nasdaq | | | | Watseka, Illinois | | | | | 736 | | |
Randolph Bancorp, Inc. (RNDB)
|
| | | | Nasdaq | | | | Stoughton, Massachusetts | | | | | 724 | | |
Severn Bancorp, Inc. (SVBI)
|
| | | | Nasdaq | | | | Annapolis, Maryland | | | | | 924 | | |
Standard AVB Financial Corp. (STND)
|
| | | | Nasdaq | | | | Monroeville, Pennsylvania | | | | | 1,061 | | |
WVS Financial Corp. (WVFC)
|
| | | | Nasdaq | | | | Pittsburgh, Pennsylvania | | | | | 357 | | |
| | |
Price to Core
Earnings Multiple(1) |
| |
Price to Book
Value Ratio |
| |
Price to Tangible
Book Value Ratio |
| |||||||||
William Penn Bancorporation (pro forma): | | | | | | | | | | | | | | | | | | | |
Minimum
|
| | | | 57.14x | | | | | | 62.34% | | | | | | 64.52% | | |
Midpoint
|
| | | | 75.00x | | | | | | 67.93% | | | | | | 70.13% | | |
Maximum
|
| | | | 97.54x | | | | | | 72.78% | | | | | | 74.96% | | |
Peer group companies as of September 2, 2020: | | | | | | | | | | | | | | | | | | | |
Average
|
| | | | 11.04x | | | | | | 69.28% | | | | | | 72.84% | | |
Median
|
| | | | 11.29x | | | | | | 69.65% | | | | | | 72.74% | | |
| | |
Shares to be Sold in the
Offering |
| |
Shares to be Exchanged
for Existing Shares of William Penn Bancorp |
| |
Total Shares
of Common Stock to be Outstanding |
| |
Exchange
Ratio |
| |
Equivalent
per Share Value(1) |
| |
Shares to be
Received for 100 Existing Shares(2) |
| ||||||||||||||||||||||||||||||
| | |
Amount
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| ||||||||||||||||||||||||||||||||||||
Minimum
|
| | | | 9,350,000 | | | | | | 83.2% | | | | | | 1,891,151 | | | | | | 16.8% | | | | | | 11,241,151 | | | | | | 2.4301 | | | | | $ | 24.30 | | | | | | 243 | | |
Midpoint
|
| | | | 11,000,000 | | | | | | 83.2 | | | | | | 2,224,884 | | | | | | 16.8 | | | | | | 13,224,884 | | | | | | 2.8589 | | | | | | 28.59 | | | | | | 285 | | |
Maximum
|
| | | | 12,650,000 | | | | | | 83.2 | | | | | | 2,558,616 | | | | | | 16.8 | | | | | | 15,208,616 | | | | | | 3.2877 | | | | | | 32.88 | | | | | | 328 | | |
| | |
9,350,000
Shares at $10.00 per Share |
| |
12,650,000
Shares at $10.00 per Share |
| ||||||
| | |
(In thousands)
|
| |||||||||
Offering proceeds
|
| | | $ | 93,500 | | | | | $ | 126,500 | | |
Less: offering expenses
|
| | | | 2,247 | | | | | | 2,551 | | |
Net offering proceeds
|
| | | | 91,253 | | | | | | 123,949 | | |
Less: | | | | | | | | | | | | | |
Proceeds contributed to William Penn Bank
|
| | | | 45,626 | | | | | | 61,975 | | |
Proceeds used for loan to employee stock ownership plan
|
| | | | 7,480 | | | | | | 10,120 | | |
Proceeds remaining for William Penn Bancorporation
|
| | | $ | 38,147 | | | | | $ | 51,854 | | |
| | |
Number of Shares to be Granted or Purchased
|
| |
Dilution Resulting
From the Issuance of Shares for Stock Benefit Plans |
| |
Total
Estimated Value At Maximum of Offering Range |
| |||||||||||||||
(Dollars in thousands)
|
| |
At Maximum of
Offering Range |
| |
As a Percentage of
Common Stock to be Issued in the Offering(3) |
| ||||||||||||||||||
Employee stock ownership plan(1)
|
| | | | 1,012,000 | | | | | | 8.0% | | | | | | 0.00% | | | | | $ | 10,120 | | |
Restricted stock awards(1)
|
| | | | 506,000 | | | | | | 4.0 | | | | | | 3.22 | | | | | | 5,060 | | |
Stock options(2)
|
| | | | 1,265,000 | | | | | | 10.0 | | | | | | 7.68 | | | | | | 3,782 | | |
Total
|
| | | | 2,783,000 | | | | | | 22.0% | | | | | | 10.43% | | | | | $ | 18,962 | | |
| | |
Eligible
Participants |
| |
Number of
Shares at Maximum of Offering Range |
| |
Estimated
Value of Shares |
| |
Percentage of
Shares Outstanding After the Conversion and Offering |
| ||||||||||||
| | |
(Dollars in thousands)
|
| |||||||||||||||||||||
Employee Stock Ownership Plan:
|
| | | | Employees | | | | | | | | | | | | | | | | | | | | |
Shares purchased in 2008 offering(1)
|
| | | | | | | | | | 287,292(2) | | | | | $ | 874 | | | | | | 1.89% | | |
Shares to be purchased in this offering
|
| | | | | | | | | | 1,012,000 | | | | | | 10,120 | | | | | | 6.65 | | |
Total
|
| | | | | | | | | | 1,299,292 | | | | | $ | 10,994 | | | | | | 8.54% | | |
| | |
At June 30,
|
| |||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Financial Condition Data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total assets
|
| | | $ | 736,452 | | | | | $ | 415,829 | | | | | $ | 301,109 | | | | | $ | 315,997 | | | | | $ | 314,074 | | |
Total cash and cash equivalents
|
| | | | 82,915 | | | | | | 26,168 | | | | | | 16,128 | | | | | | 13,252 | | | | | | 11,234 | | |
Interest-bearing time deposits
|
| | | | 2,300 | | | | | | 8,486 | | | | | | 32,422 | | | | | | 45,400 | | | | | | 45,645 | | |
Investment securities available-for-sale
|
| | | | 89,998 | | | | | | 20,660 | | | | | | 1,816 | | | | | | 2,910 | | | | | | 4,076 | | |
Investment securities held-to-maturity
|
| | | | — | | | | | | 1,906 | | | | | | 3,147 | | | | | | 4,226 | | | | | | 4,938 | | |
Loans receivable, net
|
| | | | 508,605 | | | | | | 326,017 | | | | | | 233,389 | | | | | | 234,865 | | | | | | 231,911 | | |
Deposits
|
| | | | 559,848 | | | | | | 281,206 | | | | | | 180,657 | | | | | | 182,199 | | | | | | 177,300 | | |
Federal Home Loan Bank advances
|
| | | | 64,892 | | | | | | 50,000 | | | | | | 51,500 | | | | | | 65,500 | | | | | | 70,500 | | |
Stockholders’ equity
|
| | | | 96,365 | | | | | | 76,630 | | | | | | 61,895 | | | | | | 61,604 | | | | | | 59,903 | | |
Operating Data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest and dividend income
|
| | | $ | 19,817 | | | | | $ | 17,821 | | | | | $ | 12,175 | | | | | $ | 11,950 | | | | | $ | 12,435 | | |
Interest expense
|
| | | | 5,018 | | | | | | 3,591 | | | | | | 3,182 | | | | | | 3,448 | | | | | | 3,524 | | |
Net interest income
|
| | | | 14,799 | | | | | | 14,230 | | | | | | 8,993 | | | | | | 8,502 | | | | | | 8,911 | | |
Provision (credit) for loan losses
|
| | | | 626 | | | | | | 88 | | | | | | (120) | | | | | | 15 | | | | | | 5 | | |
Net interest income after provision for loan losses
|
| | | | 14,173 | | | | | | 14,142 | | | | | | 9,113 | | | | | | 8,487 | | | | | | 8,906 | | |
Non-interest income
|
| | | | 2,160 | | | | | | 1,127 | | | | | | 641 | | | | | | 511 | | | | | | 493 | | |
Non-interest expense
|
| | | | 15,392 | | | | | | 10,453 | | | | | | 6,283 | | | | | | 5,109 | | | | | | 5,722 | | |
Income before income taxes
|
| | | | 941 | | | | | | 4,816 | | | | | | 3,471 | | | | | | 3,889 | | | | | | 3,677 | | |
Income tax (benefit) expense
|
| | | | (387) | | | | | | 1,060 | | | | | | 2,007 | | | | | | 1,325 | | | | | | 1,246 | | |
Net income
|
| | | $ | 1,328 | | | | | $ | 3,756 | | | | | $ | 1,464 | | | | | $ | 2,564 | | | | | $ | 2,431 | | |
|
| | |
At June 30,
|
| |||||||||||||||||||||||||||
(Dollars in thousands, except per share amounts)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Average common shares outstanding – basic
|
| | | | 4,065,019 | | | | | | 3,978,737 | | | | | | 3,464,257 | | | | | | 3,461,633 | | | | | | 3,482,653 | | |
Average common shares outstanding – diluted
|
| | | | 4,065,019 | | | | | | 3,978,737 | | | | | | 3,464,257 | | | | | | 3,461,633 | | | | | | 3,482,653 | | |
Earnings per share – basic
|
| | | $ | 0.33 | | | | | $ | 0.94 | | | | | $ | 0.42 | | | | | $ | 0.74 | | | | | $ | 0.70 | | |
Earnings per share – diluted
|
| | | $ | 0.33 | | | | | $ | 0.94 | | | | | $ | 0.42 | | | | | $ | 0.74 | | | | | $ | 0.70 | | |
Dividends per share
|
| | | $ | 0.50 | | | | | $ | 0.32 | | | | | $ | 0.31 | | | | | $ | 0.28 | | | | | $ | 0.27 | | |
| | |
At or For the Year Ended June 30,
|
| |||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Performance Ratios: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Return on average assets
|
| | | | 0.27% | | | | | | 0.92% | | | | | | 0.48% | | | | | | 0.81% | | | | | | 0.77% | | |
Return on average assets (excluding merger charges and gain
on bargain purchase)(1) |
| | | | 0.79 | | | | | | 1.11 | | | | | | 0.60 | | | | | | 0.81 | | | | | | 0.77 | | |
Return on average equity
|
| | | | 1.64 | | | | | | 5.01 | | | | | | 2.39 | | | | | | 4.22 | | | | | | 4.08 | | |
Return on average equity (excluding merger charges and gain on bargain purchase)(2)
|
| | | | 4.78 | | | | | | 6.08 | | | | | | 3.00 | | | | | | 4.22 | | | | | | 4.08 | | |
Interest rate spread(3)
|
| | | | 3.10 | | | | | | 3.57 | | | | | | 2.84 | | | | | | 2.62 | | | | | | 2.72 | | |
Net interest margin(4)
|
| | | | 3.30 | | | | | | 3.76 | | | | | | 3.08 | | | | | | 2.85 | | | | | | 2.95 | | |
Non-interest expense to average assets
|
| | | | 3.13 | | | | | | 2.55 | | | | | | 2.05 | | | | | | 1.62 | | | | | | 1.81 | | |
Efficiency ratio(5)
|
| | | | 90.76 | | | | | | 68.07 | | | | | | 65.22 | | | | | | 56.68 | | | | | | 60.85 | | |
Efficiency ratio (excluding merger charges and gain on bargain purchase)(6)
|
| | | | 74.62 | | | | | | 62.88 | | | | | | 61.32 | | | | | | 56.68 | | | | | | 60.85 | | |
Average interest-earning assets to average interest-bearing liabilities
|
| | | | 117.92 | | | | | | 120.23 | | | | | | 121.88 | | | | | | 120.36 | | | | | | 120.33 | | |
Average equity to average assets
|
| | | | 16.52 | | | | | | 18.31 | | | | | | 19.95 | | | | | | 19.28 | | | | | | 18.81 | | |
Capital Ratios(7): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total capital (to risk-weighted assets)
|
| | | | N/A | | | | | | 25.82% | | | | | | 33.69% | | | | | | 30.76% | | | | | | 30.70% | | |
Tier 1 capital (to risk-weighted assets)
|
| | | | N/A | | | | | | 24.68 | | | | | | 32.49 | | | | | | 29.50 | | | | | | 29.45 | | |
Common equity Tier 1 capital (to risk-weighted assets)
|
| | | | N/A | | | | | | 24.68 | | | | | | 32.49 | | | | | | 29.50 | | | | | | 29.45 | | |
Tier 1 leverage capital (to adjusted total assets)
|
| | | | 13.67 | | | | | | 16.94 | | | | | | 20.00 | | | | | | 18.72 | | | | | | 18.18 | | |
Asset Quality Ratios: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Allowance for loan losses as a percent of total loans
|
| | | | 0.68% | | | | | | 0.96% | | | | | | 1.29% | | | | | | 1.35% | | | | | | 1.33% | | |
Allowance for loan losses as a percent of non-performing loans
|
| | | | 107.88 | | | | | | 161.18 | | | | | | 75.76 | | | | | | 58.33 | | | | | | 81.61 | | |
Net charge-offs (recoveries) to average outstanding loans during the period
|
| | | | 0.09 | | | | | | 0.01 | | | | | | 0.02 | | | | | | (0.02) | | | | | | 0.15 | | |
Non-performing loans as a percent of total loans(8)
|
| | | | 0.64 | | | | | | 0.60 | | | | | | 1.75 | | | | | | 2.38 | | | | | | 1.69 | | |
Non-performing assets as a percent of total assets(8)
|
| | | | 0.46 | | | | | | 0.48 | | | | | | 1.42 | | | | | | 1.81 | | | | | | 1.51 | | |
Other Data: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Number of full-service branch offices
|
| | | | 12 | | | | | | 6 | | | | | | 3 | | | | | | 3 | | | | | | 3 | | |
| | |
For the Year Ended June 30,
|
| |||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Net income
|
| | | $ | 1,328 | | | | | $ | 3,756 | | | | | $ | 1,464 | | | | | $ | 2,564 | | | | | $ | 2,431 | | |
Less adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Merger charges
|
| | | | 3,294 | | | | | | 796 | | | | | | 375 | | | | | | — | | | | | | — | | |
Gain on bargain purchase
|
| | | | (746) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Adjusted net income
|
| | | $ | 3,876 | | | | | $ | 4,552 | | | | | $ | 1,839 | | | | | $ | 2,564 | | | | | $ | 2,431 | | |
Average assets
|
| | | $ | 490,981 | | | | | $ | 409,142 | | | | | $ | 307,132 | | | | | $ | 315,036 | | | | | $ | 316,681 | | |
Return on average assets (excluding merger charges and gain on bargain purchase)
|
| | | | 0.79% | | | | | | 1.11% | | | | | | 0.60% | | | | | | 0.81% | | | | | | 0.77% | | |
| | |
For the Year Ended June 30,
|
| |||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Net income
|
| | | $ | 1,328 | | | | | $ | 3,756 | | | | | $ | 1,464 | | | | | $ | 2,564 | | | | | $ | 2,431 | | |
Less adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Merger charges
|
| | | | 3,294 | | | | | | 796 | | | | | | 375 | | | | | | — | | | | | | — | | |
Gain on bargain purchase
|
| | | | (746) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Adjusted net income
|
| | | $ | 3,876 | | | | | $ | 4,552 | | | | | $ | 1,839 | | | | | $ | 2,564 | | | | | $ | 2,431 | | |
Average equity
|
| | | $ | 81,122 | | | | | $ | 74,912 | | | | | $ | 61,269 | | | | | $ | 60,754 | | | | | $ | 59,576 | | |
Return on average equity (excluding merger charges and gain on bargain purchase)
|
| | | | 4.78% | | | | | | 6.08% | | | | | | 3.00% | | | | | | 4.22% | | | | | | 4.08% | | |
| | |
For the Year Ended June 30,
|
| |||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Non-interest expense
|
| | | $ | 15,392 | | | | | $ | 10,453 | | | | | $ | 6,283 | | | | | $ | 5,109 | | | | | $ | 5,722 | | |
Less adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Merger charges
|
| | | | 3,294 | | | | | | 796 | | | | | | 375 | | | | | | — | | | | | | — | | |
Adjusted non-interest expense.
|
| | | $ | 12,098 | | | | | $ | 9,657 | | | | | $ | 5,908 | | | | | $ | 5,109 | | | | | $ | 5,722 | | |
Net interest income
|
| | | $ | 14,799 | | | | | $ | 14,230 | | | | | $ | 8,993 | | | | | $ | 8,502 | | | | | $ | 8,911 | | |
Non-interest income
|
| | | $ | 2,160 | | | | | $ | 1,127 | | | | | $ | 641 | | | | | $ | 511 | | | | | $ | 493 | | |
Less adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gain on bargain purchase
|
| | | | 746 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Adjusted non-interest income
|
| | | $ | 1,414 | | | | | $ | 1,127 | | | | | $ | 641 | | | | | $ | 511 | | | | | $ | 493 | | |
Efficiency ratio (excluding merger charges and gain on bargain purchase)
|
| | | | 74.62% | | | | | | 62.88% | | | | | | 61.32% | | | | | | 56.68% | | | | | | 60.85% | | |
| | |
Minimum of
Offering Range |
| |
Midpoint of
Offering Range |
| |
Maximum of
Offering Range |
| |||||||||||||||||||||||||||
| | |
9,350,000
Shares at $10.00 per Share |
| |
Percent of
Net Proceeds |
| |
11,000,000
Shares at $10.00 per Share |
| |
Percent of
Net Proceeds |
| |
12,650,000
Shares at $10.00 per Share |
| |
Percent of
Net Proceeds |
| ||||||||||||||||||
| | |
(Dollars in thousands)
|
| |||||||||||||||||||||||||||||||||
Offering proceeds
|
| | | $ | 93,500 | | | | | | | | | | | $ | 110,000 | | | | | | | | | | | $ | 126,500 | | | | | | | | |
Less: offering expenses
|
| | | | 2,247 | | | | | | | | | | | | 2,399 | | | | | | | | | | | | 2,551 | | | | | | | | |
Net offering proceeds
|
| | | | 91,253 | | | | | | 100.0% | | | | | | 107,601 | | | | | | 100.0% | | | | | | 123,949 | | | | | | 100.0% | | |
Less: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Proceeds contributed to William Penn Bank
|
| | | | 45,626 | | | | | | 50.0 | | | | | | 53,801 | | | | | | 50.0 | | | | | | 61,975 | | | | | | 50.0 | | |
Proceeds used for loan to employee stock ownership plan
|
| | | | 7,480 | | | | | | 8.2 | | | | | | 8,800 | | | | | | 8.2 | | | | | | 10,120 | | | | | | 8.2 | | |
Proceeds remaining for William Penn Bancorporation
|
| | | $ | 38,147 | | | | | | 41.8% | | | | | $ | 45,000 | | | | | | 41.8% | | | | | $ | 51,854 | | | | | | 41.8% | | |
| | |
At
June 30, 2020 |
| |
Minimum of
Offering Range 9,350,000 Shares at $10.00 per Share |
| |
Midpoint of
Offering Range 11,000,000 Shares at $10.00 per Share |
| |
Maximum of
Offering Range 12,650,000 Shares at $10.00 per Share |
| ||||||||||||
| | |
(Dollars in thousands)
|
| |||||||||||||||||||||
Deposits(1) | | | | $ | 559,848 | | | | | $ | 559,848 | | | | | $ | 559,848 | | | | | $ | 559,848 | | |
Borrowed funds
|
| | | | 64,892 | | | | | | 64,892 | | | | | | 64,892 | | | | | | 64,892 | | |
Total deposits and borrowed funds
|
| | | $ | 624,740 | | | | | $ | 624,740 | | | | | $ | 624,740 | | | | | $ | 624,740 | | |
Stockholders’ equity: | | | | | | | | | | | | | | | | | | | | | | | | | |
Preferred Stock: | | | | | | | | | | | | | | | | | | | | | | | | | |
50,000,000 shares, $0.01 par value per share authorized;
none issued or outstanding |
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Common stock: | | | | | | | | | | | | | | | | | | | | | | | | | |
150,000,000 shares, $0.01 par value per share, authorized; specified number of shares assumed to be issued and outstanding(2)
|
| | | | 467 | | | | | | 112 | | | | | | 132 | | | | | | 152 | | |
Additional paid-in capital
|
| | | | 42,932 | | | | | | 130,830 | | | | | | 147,158 | | | | | | 163,486 | | |
William Penn, MHC capital consolidation
|
| | | | — | | | | | | 3,903 | | | | | | 3,903 | | | | | | 3,903 | | |
Retained earnings(3)
|
| | | | 56,600 | | | | | | 56,600 | | | | | | 56,600 | | | | | | 56,600 | | |
Accumulated other comprehensive income
|
| | | | 76 | | | | | | 76 | | | | | | 76 | | | | | | 76 | | |
Less: | | | | | | | | | | | | | | | | | | | | | | | | | |
Treasury stock
|
| | | | (3,710) | | | | | | — | | | | | | — | | | | | | — | | |
Common stock to be acquired by employee stock ownership plan(4)
|
| | | | — | | | | | | (7,480) | | | | | | (8,800) | | | | | | (10,120) | | |
Common stock to be acquired by new equity incentive plan(5)
|
| | | | — | | | | | | (3,740) | | | | | | (4,400) | | | | | | (5,060) | | |
Total stockholders’ equity
|
| | | $ | 96,365 | | | | | $ | 180,301 | | | | | $ | 194,669 | | | | | $ | 209,037 | | |
Total stockholders’ equity as a percentage of total
assets |
| | | | 13.09% | | | | | | 21.98% | | | | | | 23.32% | | | | | | 24.62% | | |
Tangible equity as a percentage of tangible assets
|
| | | | 12.37% | | | | | | 21.40% | | | | | | 22.76% | | | | | | 24.08% | | |
| | |
William Penn Bank
Historical at June 30, 2020 |
| |
Pro Forma at June 30, 2020,
Based Upon the Sale in the Offering of |
| ||||||||||||||||||||||||||||||||||||||||||
| | |
9,350,000 Shares
|
| |
11,000,000 Shares
|
| |
12,650,000 Shares
|
| |||||||||||||||||||||||||||||||||||||||
| | |
Amount
|
| |
Percent of
Assets |
| |
Amount
|
| |
Percent of
Assets |
| |
Amount
|
| |
Percent of
Assets |
| |
Amount
|
| |
Percent of
Assets |
| ||||||||||||||||||||||||
| | |
(Dollars in thousands)
|
| |||||||||||||||||||||||||||||||||||||||||||||
Equity
|
| | | $ | 93,401 | | | | | | 12.68% | | | | | $ | 127,807 | | | | | | 16.34% | | | | | $ | 134,002 | | | | | | 16.95% | | | | | $ | 140,196 | | | | | | 17.55% | | |
Tier 1 leverage capital(1)(2)
|
| | | $ | 86,822 | | | | | | 13.67% | | | | | $ | 121,228 | | | | | | 17.81% | | | | | | 127,423 | | | | | | 18.50% | | | | | $ | 133,617 | | | | | | 19.17% | | |
Tier 1 leverage requirement
|
| | | | 31,746 | | | | | | 5.00 | | | | | | 34,027 | | | | | | 5.00 | | | | | | 34,436 | | | | | | 5.00 | | | | | | 34,845 | | | | | | 5.00 | | |
Excess
|
| | | $ | 55,076 | | | | | | 8.67% | | | | | $ | 87,201 | | | | | | 12.81% | | | | | $ | 92,987 | | | | | | 13.50% | | | | | $ | 98,772 | | | | | | 14.17% | | |
Tier 1 risk-based capital(1)(2)
|
| | | $ | 86,822 | | | | | | 19.19% | | | | | $ | 121,228 | | | | | | 26.26% | | | | | $ | 127,423 | | | | | | 27.51% | | | | | $ | 133,617 | | | | | | 28.74% | | |
Tier 1 risk-based requirement
|
| | | | 36,197 | | | | | | 8.00 | | | | | | 36,297 | | | | | | 8.00 | | | | | | 37,058 | | | | | | 8.00 | | | | | | 37,189 | | | | | | 8.00 | | |
Excess
|
| | | $ | 50,625 | | | | | | 11.19% | | | | | $ | 84,301 | | | | | | 18.26% | | | | | $ | 90,365 | | | | | | 19.51% | | | | | $ | 96,428 | | | | | | 20.74% | | |
Total risk-based capital(1)(2)
|
| | | $ | 90,341 | | | | | | 19.97% | | | | | $ | 124,747 | | | | | | 27.03% | | | | | $ | 130,942 | | | | | | 28.27% | | | | | $ | 137,136 | | | | | | 29.50% | | |
Total risk-based requirement
|
| | | | 45,247 | | | | | | 10.00 | | | | | | 46,159 | | | | | | 10.00 | | | | | | 46,323 | | | | | | 10.00 | | | | | | 46,486 | | | | | | 10.00 | | |
Excess
|
| | | $ | 45,094 | | | | | | 9.97% | | | | | $ | 78,588 | | | | | | 17.03% | | | | | $ | 84,619 | | | | | | 18.27% | | | | | $ | 90,650 | | | | | | 19.50% | | |
Common equity tier 1 risk-based capital(1)(2)
|
| | | $ | 86,822 | | | | | | 19.19% | | | | | $ | 121,228 | | | | | | 26.26% | | | | | $ | 127,423 | | | | | | 27.51% | | | | | $ | 133,617 | | | | | | 28.74% | | |
Common equity tier 1 risk-based requirement
|
| | | | 29,410 | | | | | | 6.50 | | | | | | 30,003 | | | | | | 6.50 | | | | | | 30,110 | | | | | | 6.50 | | | | | | 30,216 | | | | | | 6.50 | | |
Excess
|
| | | $ | 57,412 | | | | | | 12.69% | | | | | $ | 91,225 | | | | | | 19.76% | | | | | $ | 97,313 | | | | | | 21.01% | | | | | $ | 103,401 | | | | | | 22.24% | | |
Reconciliation of capital infused into William Penn Bank:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net proceeds
|
| | | | | | | | | | | | | | | $ | 45,626 | | | | | | | | | | | $ | 53,801 | | | | | | | | | | | $ | 61,975 | | | | | | | | |
Less: Common stock acquired by new equity incentive plan
|
| | | | | | | | | | | | | | | | (3,740) | | | | | | | | | | | | (4,400) | | | | | | | | | | | | (5,060) | | | | | | | | |
Less: Common stock acquired by employee stock ownership plan
|
| | | | | | | | | | | | | | | | (7,480) | | | | | | | | | | | | (8,800) | | | | | | | | | | | | (10,120) | | | | | | | | |
Pro forma increase
|
| | | | | | | | | | | | | | | $ | 34,406 | | | | | | | | | | | $ | 40,601 | | | | | | | | | | | $ | 46,795 | | | | | | | | |
|
| | |
At or for the Year Ended June 30, 2020
Based upon the Sale at $10.00 Per Share of |
| |||||||||||||||
| | |
9,350,000
Shares |
| |
11,000,000
Shares |
| |
12,650,000
Shares |
| |||||||||
| | |
(Dollars in thousands, except per share amounts)
|
| |||||||||||||||
Gross proceeds of offering
|
| | | $ | 93,500 | | | | | $ | 110,000 | | | | | $ | 126,500 | | |
Expenses
|
| | | | 2,247 | | | | | | 2,399 | | | | | | 2,551 | | |
Estimated net proceeds
|
| | | | 91,253 | | | | | | 107,601 | | | | | | 123,949 | | |
Common stock purchased by employee stock ownership plan
|
| | | | (7,480) | | | | | | (8,800) | | | | | | (10,120) | | |
Common stock purchased by stock-based benefit plans
|
| | | | (3,740) | | | | | | (4,400) | | | | | | (5,060) | | |
Estimated net proceeds, as adjusted
|
| | | $ | 80,033 | | | | | $ | 94,401 | | | | | $ | 108,769 | | |
For the Year Ended June 30, 2020 | | | | | | | | | | | | | | | | | | | |
Consolidated net earnings: | | | | | | | | | | | | | | | | | | | |
Historical
|
| | | $ | 1,328 | | | | | $ | 1,328 | | | | | $ | 1,328 | | |
Income on adjusted net proceeds
|
| | | | 180 | | | | | | 212 | | | | | | 245 | | |
Income on mutual holding company asset contribution
|
| | | | 9 | | | | | | 9 | | | | | | 9 | | |
Employee stock ownership plan(1)
|
| | | | (232) | | | | | | (273) | | | | | | (314) | | |
Stock awards(2)
|
| | | | (580) | | | | | | (682) | | | | | | (784) | | |
Stock options(3)
|
| | | | (528) | | | | | | (621) | | | | | | (714) | | |
Pro forma net income
|
| | | $ | 177 | | | | | $ | (26) | | | | | | (230) | | |
Earnings per share(4): | | | | | | | | | | | | | | | | | | | |
Historical
|
| | | $ | 0.13 | | | | | $ | 0.11 | | | | | $ | 0.09 | | |
Income on adjusted net proceeds
|
| | | | 0.02 | | | | | | 0.02 | | | | | | 0.02 | | |
Employee stock ownership plan(1)
|
| | | | (0.02) | | | | | | (0.02) | | | | | | (0.02) | | |
Stock awards(2)
|
| | | | (0.06) | | | | | | (0.06) | | | | | | (0.06) | | |
Stock options(3)
|
| | | | (0.05) | | | | | | (0.05) | | | | | | (0.05) | | |
Pro forma earnings per share(4)
|
| | | $ | 0.02 | | | | | $ | — | | | | | $ | (0.02) | | |
Offering price to pro forma net earnings per share
|
| | | | 500.00x | | | | | | NM | | | | | | NM | | |
Number of shares used in earnings per share calculations
|
| | | | 10,523,071 | | | | | | 12,380,084 | | | | | | 14,237,096 | | |
| | |
At or for the Year Ended June 30, 2020
Based upon the Sale at $10.00 Per Share of |
| |||||||||||||||
| | |
9,350,000
Shares |
| |
11,000,000
Shares |
| |
12,650,000
Shares |
| |||||||||
| | |
(Dollars in thousands, except per share amounts)
|
| |||||||||||||||
At June 30, 2020 | | | | | | | | | | | | | | | | | | | |
Stockholders’ equity: | | | | | | | | | | | | | | | | | | | |
Historical
|
| | | $ | 96,365 | | | | | $ | 96,365 | | | | | $ | 96,365 | | |
Estimated net proceeds
|
| | | | 91,253 | | | | | | 107,601 | | | | | | 123,949 | | |
Mutual holding company capital contribution
|
| | | | 3,903 | | | | | | 3,903 | | | | | | 3,903 | | |
Common stock acquired by employee stock ownership plan(1)
|
| | | | (7,480) | | | | | | (8,800) | | | | | | (10,120) | | |
Stock awards(2)
|
| | | | (3,740) | | | | | | (4,400) | | | | | | (5,060) | | |
Pro forma stockholders’ equity
|
| | | $ | 180,301 | | | | | $ | 194,669 | | | | | $ | 209,037 | | |
Intangible assets
|
| | | | (6,050) | | | | | | (6,050) | | | | | | (6,050) | | |
Pro forma tangible stockholders’ equity
|
| | | $ | 174,251 | | | | | $ | 188,619 | | | | | $ | 202,987 | | |
Stockholders’ equity per share: | | | | | | | | | | | | | | | | | | | |
Historical
|
| | | $ | 8.57 | | | | | $ | 7.28 | | | | | $ | 6.33 | | |
Estimated net proceeds
|
| | | | 8.12 | | | | | | 8.14 | | | | | | 8.15 | | |
Equity increase from the mutual holding company
|
| | | | 0.35 | | | | | | 0.30 | | | | | | 0.26 | | |
Common stock acquired by employee stock ownership plan(1)
|
| | | | (0.67) | | | | | | (0.67) | | | | | | (0.67) | | |
Common stock acquired by stock-based benefit plans(2)
|
| | | | (0.33) | | | | | | (0.33) | | | | | | (0.33) | | |
Pro forma stockholders’ equity per share(5)
|
| | | $ | 16.04 | | | | | $ | 14.72 | | | | | $ | 13.74 | | |
Intangible assets
|
| | | | (0.54) | | | | | | (0.46) | | | | | | (0.40) | | |
Pro forma tangible stockholders’ equity per share(5)
|
| | | $ | 15.50 | | | | | $ | 14.26 | | | | | $ | 13.34 | | |
Pro forma price to book value
|
| | | | 62.34% | | | | | | 67.93% | | | | | | 72.78% | | |
Pro forma price to tangible book value
|
| | | | 64.52% | | | | | | 70.13% | | | | | | 74.96% | | |
Number of shares outstanding for pro forma book value per share calculations
|
| | | | 11,241,151 | | | | | | 13,224,884 | | | | | | 15,208,616 | | |
| | |
At June 30,
|
| |||||||||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Amortized
Cost |
| |
Fair
Value |
| |
Amortized
Cost |
| |
Fair
Value |
| |
Amortized
Cost |
| |
Fair
Value |
| ||||||||||||||||||
Securities available-for-sale: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities
|
| | | $ | 51,570 | | | | | $ | 51,738 | | | | | $ | 3,609 | | | | | $ | 3,678 | | | | | $ | — | | | | | $ | — | | |
U.S. agency collateralized mortgage obligations
|
| | | | 3,215 | | | | | | 3,215 | | | | | | 5,634 | | | | | | 5,767 | | | | | | — | | | | | | — | | |
U.S. government agency securities
|
| | | | 6,226 | | | | | | 6,155 | | | | | | 10,865 | | | | | | 10,912 | | | | | | — | | | | | | — | | |
U.S. treasury securities
|
| | | | 1,000 | | | | | | 1,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Private label collateralized mortgage obligations
|
| | | | — | | | | | | — | | | | | | 264 | | | | | | 303 | | | | | | 1,539 | | | | | | 1,816 | | |
Municipal bonds
|
| | | | 10,485 | | | | | | 10,508 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Corporate bonds
|
| | | | 17,399 | | | | | | 17,382 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total securities available-for-sale
|
| | | | 89,895 | | | | | | 89,998 | | | | | | 20,372 | | | | | | 20,660 | | | | | | 1,539 | | | | | | 1,816 | | |
Securities held-to-maturity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities
|
| | | | — | | | | | | — | | | | | | 1,500 | | | | | | 1,522 | | | | | | 2,336 | | | | | | 2,305 | | |
U.S. agency collateralized mortgage obligations
|
| | | | — | | | | | | — | | | | | | 206 | | | | | | 214 | | | | | | 611 | | | | | | 634 | | |
Municipal bonds
|
| | | | — | | | | | | — | | | | | | 100 | | | | | | 100 | | | | | | 100 | | | | | | 100 | | |
Corporate bonds
|
| | | | — | | | | | | — | | | | | | 100 | | | | | | 101 | | | | | | 100 | | | | | | 102 | | |
Total securities held-to-maturity
|
| | | | — | | | | | | — | | | | | | 1,906 | | | | | | 1,937 | | | | | | 3,147 | | | | | | 3,141 | | |
Total investment securities
|
| | | $ | 89,895 | | | | | $ | 89,998 | | | | | $ | 22,278 | | | | | $ | 22,597 | | | | | $ | 4,686 | | | | | $ | 4,957 | | |
|
| | |
One
Year or Less |
| |
More than
One Year to Five Years |
| |
More than
Five Years to Ten Years |
| |
More than
Ten Years |
| |
Total
|
| |||||||||||||||||||||||||||||||||||||||||||||
June 30, 2020
(Dollars in thousands) |
| |
Carrying
Value |
| |
Weighted
Average Yield |
| |
Carrying
Value |
| |
Weighted
Average Yield |
| |
Carrying
Value |
| |
Weighted
Average Yield |
| |
Carrying
Value |
| |
Weighted
Average Yield |
| |
Carrying
Value |
| |
Weighted
Average Yield |
| ||||||||||||||||||||||||||||||
Securities available-for-sale: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities
|
| | | $ | — | | | | | | —% | | | | | $ | — | | | | | | —% | | | | | $ | — | | | | | | —% | | | | | $ | 51,738 | | | | | | 2.80% | | | | | $ | 51,738 | | | | | | 2.80% | | |
U.S. agency collateralized mortgage obligations
|
| | | | 5 | | | | | | 0.93 | | | | | | — | | | | | | — | | | | | | 1,124 | | | | | | 3.26 | | | | | | 2,086 | | | | | | 3.47 | | | | | | 3,215 | | | | | | 3.39 | | |
U.S. government agency securities
|
| | | | — | | | | | | — | | | | | | 132 | | | | | | 4.61 | | | | | | — | | | | | | — | | | | | | 6,023 | | | | | | 3.96 | | | | | | 6,155 | | | | | | 3.97 | | |
Municipal bonds
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 463 | | | | | | 5.56 | | | | | | 10,045 | | | | | | 3.01 | | | | | | 10,508 | | | | | | 3.12 | | |
Corporate bonds
|
| | | | 1,888 | | | | | | 1.79 | | | | | | 9,479 | | | | | | 5.35 | | | | | | 6,015 | | | | | | 5.04 | | | | | | — | | | | | | — | | | | | | 17,382 | | | | | | 4.86 | | |
U.S. treasuries securities
|
| | | | 1,000 | | | | | | 0.09 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,000 | | | | | | 0.09 | | |
Total investment securities
|
| | | $ | 2,893 | | | | | | 1.20% | | | | | $ | 9,611 | | | | | | 5.34% | | | | | $ | 7,602 | | | | | | 4.81% | | | | | $ | 69,892 | | | | | | 2.95% | | | | | $ | 89,998 | | | | | | 3.31% | | |
|
| | |
At June 30,
|
| | | |||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| | | | | | | ||||||||||||||||||
(Dollars in thousands)
|
| |
Amount
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| | | ||||||||||||||||
Residential real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
One- to four-family
|
| | | $ | 345,915 | | | | | | 66.85% | | | | | $ | 220,176 | | | | | | 65.98% | | | | | ||||
Home equity and HELOCs
|
| | | | 47,054 | | | | | | 9.10 | | | | | | 31,905 | | | | | | 9.56 | | | | | ||||
Residential construction
|
| | | | 15,799 | | | | | | 3.05 | | | | | | 9,739 | | | | | | 2.92 | | | | | ||||
Total residential real estate loans
|
| | | | 408,768 | | | | | | 79.00 | | | | | | 261,820 | | | | | | 78.46 | | | | | ||||
Commercial real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Multi-family
|
| | | | 14,964 | | | | | | 2.89 | | | | | | 11,028 | | | | | | 3.30 | | | | | ||||
Commercial non-residential
|
| | | | 76,707 | | | | | | 14.83 | | | | | | 53,557 | | | | | | 16.05 | | | | | ||||
Commercial construction and land
|
| | | | 6,690 | | | | | | 1.29 | | | | | | 4,438 | | | | | | 1.33 | | | | | ||||
Total commercial real estate loans
|
| | | | 98,361 | | | | | | 19.01 | | | | | | 69,023 | | | | | | 20.68 | | | | | ||||
Commercial loans
|
| | | | 6,438 | | | | | | 1.24 | | | | | | 2,099 | | | | | | 0.63 | | | | | ||||
Consumer loans
|
| | | | 3,900 | | | | | | 0.75 | | | | | | 741 | | | | | | 0.23 | | | | | ||||
Total loans
|
| | | | 517,467 | | | | | | 100.00% | | | | | | 333,683 | | | | | | 100.00% | | | | | ||||
Loans in process
|
| | | | (4,895) | | | | | | | | | | | | (3,669) | | | | | | | | | | | ||||
Unearned loan origination fees
|
| | | | (448) | | | | | | | | | | | | (788) | | | | | | | | | | | ||||
Allowance for loan losses
|
| | | | (3,519) | | | | | | | | | | | | (3,209) | | | | | | | | | | | ||||
Loans, net
|
| | | $ | 508,605 | | | | | | | | | | | $ | 326,017 | | | | | | | | | | | ||||
|
| | |
At June 30,
|
| |||||||||||||||||||||||||||||||||
| | |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Amount
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| ||||||||||||||||||
Residential real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
One- to four-family
|
| | | $ | 170,322 | | | | | | 70.00% | | | | | $ | 166,219 | | | | | | 67.82% | | | | | $ | 162,395 | | | | | | 66.26% | | |
Home equity and HELOCS
|
| | | | 21,158 | | | | | | 8.70 | | | | | | 22,938 | | | | | | 9.36 | | | | | | 24,799 | | | | | | 10.12 | | |
Residential construction
|
| | | | 11,831 | | | | | | 4.86 | | | | | | 8,836 | | | | | | 3.61 | | | | | | 12,050 | | | | | | 4.92 | | |
Total residential real estate loans
|
| | | | 203,311 | | | | | | 83.56 | | | | | | 197,993 | | | | | | 80.79 | | | | | | 199,244 | | | | | | 81.30 | | |
Commercial real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family
|
| | | | 12,061 | | | | | | 4.96 | | | | | | 12,076 | | | | | | 4.93 | | | | | | 12,539 | | | | | | 5.12 | | |
Commercial non-residential
|
| | | | 23,759 | | | | | | 9.76 | | | | | | 24,820 | | | | | | 10.13 | | | | | | 26,744 | | | | | | 10.91 | | |
Commercial construction and land
|
| | | | 3,131 | | | | | | 1.29 | | | | | | 9,120 | | | | | | 3.72 | | | | | | 5,319 | | | | | | 2.17 | | |
Total commercial real estate loans
|
| | | | 38,951 | | | | | | 16.01 | | | | | | 46,016 | | | | | | 18.78 | | | | | | 44,602 | | | | | | 18.20 | | |
Commercial loans
|
| | | | 196 | | | | | | 0.08 | | | | | | 129 | | | | | | 0.05 | | | | | | 51 | | | | | | 0.02 | | |
Consumer loans
|
| | | | 859 | | | | | | 0.35 | | | | | | 947 | | | | | | 0.38 | | | | | | 1,183 | | | | | | 0.48 | | |
Total loans
|
| | | | 243,317 | | | | | | 100.00% | | | | | | 245,085 | | | | | | 100.00% | | | | | | 245,080 | | | | | | 100.00% | | |
Loans in process
|
| | | | (5,716) | | | | | | | | | | | | (5,879) | | | | | | | | | | | | (8,896) | | | | | | | | |
Unearned loan origination fees
|
| | | | (1,074) | | | | | | | | | | | | (1,038) | | | | | | | | | | | | (1,025) | | | | | | | | |
Allowance for loan losses
|
| | | | (3,138) | | | | | | | | | | | | (3,303) | | | | | | | | | | | | (3,248) | | | | | | | | |
Loans, net
|
| | | $ | 233,389 | | | | | | | | | | | $ | 234,865 | | | | | | | | | | | $ | 231,911 | | | | | | | | |
|
June 30, 2020
(Dollars in thousands) |
| |
One- to
Four-Family |
| |
Home
Equity and HELOCs |
| |
Residential
Construction |
| |
Multi-
Family |
| |
Commercial
Non- Residential |
| |
Commercial
Construction and Land |
| |
Commercial
|
| |
Consumer
|
| |
Total
Loans |
| |||||||||||||||||||||||||||
Amounts due in: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
One year or less
|
| | | $ | 4,080 | | | | | $ | 1,137 | | | | | $ | 7,773 | | | | | $ | 1,817 | | | | | $ | 5,466 | | | | | $ | 747 | | | | | $ | 934 | | | | | $ | 786 | | | | | $ | 22,740 | | |
More than 1 – 5 years
|
| | | | 18,510 | | | | | | 5,314 | | | | | | 8,026 | | | | | | 1,734 | | | | | | 8,564 | | | | | | 5,943 | | | | | | 4,069 | | | | | | 1,169 | | | | | | 53,329 | | |
More than 5 – 10 years
|
| | | | 53,274 | | | | | | 10,063 | | | | | | — | | | | | | 2,755 | | | | | | 12,696 | | | | | | — | | | | | | 1,435 | | | | | | 333 | | | | | | 80,556 | | |
More than 10 years
|
| | | | 270,051 | | | | | | 30,540 | | | | | | — | | | | | | 8,658 | | | | | | 49,981 | | | | | | — | | | | | | — | | | | | | 1,612 | | | | | | 360,842 | | |
Total
|
| | | $ | 345,915 | | | | | $ | 47,054 | | | | | $ | 15,799 | | | | | $ | 14,964 | | | | | $ | 76,707 | | | | | $ | 6,690 | | | | | $ | 6,438 | | | | | $ | 3,900 | | | | | $ | 517,467 | | |
|
(Dollars in thousands)
|
| |
Fixed Rates
|
| |
Floating or
Adjustable Rates |
| |
Total
|
| |||||||||
Residential real estate loans: | | | | | | | | | | | | | | | | | | | |
One- to four-family
|
| | | $ | 223,615 | | | | | $ | 118,220 | | | | | $ | 341,835 | | |
Home equity and HELOCs
|
| | | | 18,513 | | | | | | 27,404 | | | | | | 45,917 | | |
Residential construction
|
| | | | 5,497 | | | | | | 2,529 | | | | | | 8,026 | | |
Commercial real estate loans: | | | | | | | | | | | | | | | | | | | |
Multi-family
|
| | | | 5,493 | | | | | | 7,654 | | | | | | 13,147 | | |
Commercial non-residential
|
| | | | 23,163 | | | | | | 48,078 | | | | | | 71,241 | | |
Commercial construction and land
|
| | | | 4,231 | | | | | | 1,712 | | | | | | 5,943 | | |
Commercial loans
|
| | | | 5,072 | | | | | | 432 | | | | | | 5,504 | | |
Consumer loans
|
| | | | 1,606 | | | | | | 1,508 | | | | | | 3,114 | | |
Total
|
| | | $ | 287,190 | | | | | $ | 207,537 | | | | | $ | 494,727 | | |
| | |
At June 30,
|
| |||||||||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Amount
|
| |
Percent of
Total Deposits |
| |
Amount
|
| |
Percent of
Total Deposits |
| |
Amount
|
| |
Percent of
Total Deposits |
| ||||||||||||||||||
Checking accounts
|
| | | $ | 142,223 | | | | | | 25.40% | | | | | $ | 67,547 | | | | | | 24.02% | | | | | $ | 28,278 | | | | | | 15.66% | | |
Money market accounts
|
| | | | 129,048 | | | | | | 23.05 | | | | | | 67,648 | | | | | | 24.06 | | | | | | 50,010 | | | | | | 27.68 | | |
Savings and club accounts
|
| | | | 94,097 | | | | | | 16.81 | | | | | | 33,172 | | | | | | 11.79 | | | | | | 18,542 | | | | | | 10.26 | | |
Certificates of deposit
|
| | | | 194,480 | | | | | | 34.74 | | | | | | 112,839 | | | | | | 40.13 | | | | | | 83,827 | | | | | | 46.40 | | |
Total
|
| | | $ | 559,848 | | | | | | 100.00% | | | | | $ | 281,206 | | | | | | 100.00% | | | | | $ | 180,657 | | | | | | 100.00% | | |
June 30, 2020
(Dollars in thousands) |
| |
Certificates
of Deposit |
| |||
Maturity Period: | | | | | | | |
Three months or less
|
| | | $ | 10,243 | | |
Over three through six months
|
| | | | 16,396 | | |
Over six through twelve months
|
| | | | 25,260 | | |
Over twelve months
|
| | | | 32,878 | | |
Total
|
| | | $ | 84,777 | | |
| | |
Year Ended June 30,
|
| |||||||||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Beginning balance
|
| | | $ | 281,206 | | | | | $ | 180,657 | | | | | $ | 182,199 | | |
Deposits acquired from Audubon Savings Bank
|
| | | | — | | | | | | 107,180 | | | | | | — | | |
Deposits acquired from Washington Savings Bank
|
| | | | 135,546 | | | | | | — | | | | | | — | | |
Deposits acquired from Fidelity Savings and Loan Association
of Bucks County |
| | | | 66,409 | | | | | | — | | | | | | — | | |
Increase (decrease) before interest credited
|
| | | | 72,924 | | | | | | (8,937) | | | | | | (3,028) | | |
Interest credited
|
| | | | 3,763 | | | | | | 2,306 | | | | | | 1,486 | | |
Net increase (decrease) in deposits
|
| | | | 278,642 | | | | | | 100,549 | | | | | | (1,542) | | |
Ending balance
|
| | | $ | 559,848 | | | | | $ | 281,206 | | | | | $ | 180,657 | | |
|
| | |
June 30,
|
| |||||||||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Less than 0.50%
|
| | | $ | 6,535 | | | | | $ | — | | | | | $ | — | | |
0.50% to 0.99%
|
| | | | 13,598 | | | | | | 9,453 | | | | | | 16,021 | | |
1.00% to 1.49%
|
| | | | 33,320 | | | | | | 26,761 | | | | | | 24,587 | | |
1.50% to 1.99%
|
| | | | 55,299 | | | | | | 19,673 | | | | | | 19,708 | | |
2.00% to 2.99%
|
| | | | 77,850 | | | | | | 54,777 | | | | | | 23,511 | | |
3.00% and greater
|
| | | | 7,878 | | | | | | 2,175 | | | | | | — | | |
Ending balance
|
| | | $ | 194,480 | | | | | $ | 112,839 | | | | | $ | 83,827 | | |
| | |
Period to Maturity
|
| | ||||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
One Year
or Less |
| |
More than
One Year to Two Years |
| |
More than
Two Years to Three Years |
| |
More than
Three Years to Four Years |
| |
More than
Four Years |
| |
Total
|
| |
Percent
of Total Certificate Accounts |
| |||||||||||||||||||||
Less than 0.50%
|
| | | $ | 6,418 | | | | | $ | 117 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 6,535 | | | | | | 3.36% | | |
0.50% to 0.99%
|
| | | | 11,374 | | | | | | 2,168 | | | | | | 56 | | | | | | — | | | | | | — | | | | | | 13,598 | | | | | | 6.99 | | |
1.00% to 1.49%
|
| | | | 24,513 | | | | | | 5,200 | | | | | | 2,524 | | | | | | 423 | | | | | | 660 | | | | | | 33,320 | | | | | | 17.13 | | |
1.50% to 1.99%
|
| | | | 27,882 | | | | | | 14,997 | | | | | | 4,321 | | | | | | 2,881 | | | | | | 5,218 | | | | | | 55,299 | | | | | | 28.43 | | |
2.00% to 2.99%
|
| | | | 42,465 | | | | | | 13,731 | | | | | | 10,118 | | | | | | 5,546 | | | | | | 5,990 | | | | | | 77,850 | | | | | | 40.03 | | |
3.00% and greater
|
| | | | 944 | | | | | | 860 | | | | | | 1,066 | | | | | | 4,576 | | | | | | 432 | | | | | | 7,878 | | | | | | 4.06 | | |
Total
|
| | | $ | 113,596 | | | | | $ | 37,073 | | | | | $ | 18,085 | | | | | $ | 13,426 | | | | | $ | 12,300 | | | | | $ | 194,480 | | | | | | 100.00% | | |
| | |
Year Ended June 30,
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||||||||||||||||||||||||||||||||||||||
| | |
Average
Balance |
| |
Percent
|
| |
Weighted
Average Cost |
| |
Average
Balance |
| |
Percent
|
| |
Weighted
Average Cost |
| |
Average
Balance |
| |
Percent
|
| |
Weighted
Average Cost |
| |||||||||||||||||||||||||||
Non-interest bearing checking
accounts |
| | | $ | 20,311 | | | | | | 5.93% | | | | | | —% | | | | | $ | 11,901 | | | | | | 4.29% | | | | | | —% | | | | | $ | — | | | | | | —% | | | | | | —% | | |
Interest-bearing checking accounts
|
| | | | 63,389 | | | | | | 18.52 | | | | | | 0.13 | | | | | | 56,605 | | | | | | 20.38 | | | | | | 0.09 | | | | | | 27,577 | | | | | | 15.14 | | | | | | 0.06 | | |
Money market deposit accounts
|
| | | | 88,965 | | | | | | 25.99 | | | | | | 1.28 | | | | | | 64,363 | | | | | | 23.18 | | | | | | 0.81 | | | | | | 48,002 | | | | | | 26.35 | | | | | | 0.44 | | |
Savings and club accounts
|
| | | | 42,044 | | | | | | 12.28 | | | | | | 0.16 | | | | | | 39,354 | | | | | | 14.17 | | | | | | 0.12 | | | | | | 21,443 | | | | | | 11.77 | | | | | | 0.15 | | |
Certificates of deposit
|
| | | | 127,553 | | | | | | 37.28 | | | | | | 1.82 | | | | | | 105,464 | | | | | | 37.98 | | | | | | 1.59 | | | | | | 85,137 | | | | | | 46.74 | | | | | | 1.44 | | |
Total
|
| | | $ | 342,262 | | | | | | 100.00% | | | | | | 1.05% | | | | | $ | 277,687 | | | | | | 100.00% | | | | | | 0.83% | | | | | $ | 182,159 | | | | | | 100.00% | | | | | | 0.82% | | |
|
| | |
At or For the Year Ended
June 30, |
| |||||||||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |||||||||
Maximum amount outstanding at any month-end during period: | | | | | | | | | | | | | | | | | | | |
Federal Home Loan Bank advances
|
| | | $ | 65,922 | | | | | $ | 51,500 | | | | | $ | 65,500 | | |
Average outstanding balance during period: | | | | | | | | | | | | | | | | | | | |
Federal Home Loan Bank advances
|
| | | $ | 58,401 | | | | | $ | 48,772 | | | | | $ | 57,503 | | |
Weighted average interest rate during period: | | | | | | | | | | | | | | | | | | | |
Federal Home Loan Bank advances
|
| | | | 2.42% | | | | | | 2.65% | | | | | | 2.95% | | |
Balance outstanding at end of period: | | | | | | | | | | | | | | | | | | | |
Federal Home Loan Bank advances
|
| | | $ | 64,892 | | | | | $ | 50,000 | | | | | $ | 51,500 | | |
Weighted average interest rate at end of period: | | | | | | | | | | | | | | | | | | | |
Federal Home Loan Bank advances
|
| | | | 2.53% | | | | | | 2.58% | | | | | | 2.71% | | |
| | |
Year Ended June 30,
|
| |||||||||||||||||||||
| | | | | | | | | | | | | | |
Change Fiscal 2020/2019
|
| |||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| |
$
|
| |
%
|
| ||||||||||||
Net interest income
|
| | | $ | 14,799 | | | | | $ | 14,230 | | | | | $ | 569 | | | | | | 4.00% | | |
Provision for loan losses
|
| | | | 626 | | | | | | 88 | | | | | | 538 | | | | | | 611.36 | | |
Non-interest income
|
| | | | 2,160 | | | | | | 1,127 | | | | | | 1,033 | | | | | | 91.66 | | |
Non-interest expenses
|
| | | | 15,392 | | | | | | 10,453 | | | | | | 4,939 | | | | | | 47.25 | | |
Income tax (benefit) expense
|
| | | | (387) | | | | | | 1,060 | | | | | | (1,447) | | | | | | (136.51) | | |
Net income
|
| | | $ | 1,328 | | | | | $ | 3,756 | | | | | $ | (2,428) | | | | | | (64.64)% | | |
Return on average assets
|
| | | | 0.27% | | | | | | 0.92% | | | | | | | | | | | | | | |
Return on average assets (excluding merger charges and gain on
bargain purchase)(1) |
| | | | 0.79 | | | | | | 1.11 | | | | | | | | | | | | | | |
Return on average equity
|
| | | | 1.64 | | | | | | 5.01 | | | | | | | | | | | | | | |
Return on average equity (excluding merger charges and gain on
bargain purchase)(1) |
| | | | 4.78 | | | | | | 6.08 | | | | | | | | | | | | | | |
| | |
Year Ended June 30,
|
| |||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| ||||||
Service fees
|
| | | $ | 569 | | | | | $ | 483 | | |
Realized losses on sale of real estate owned, net
|
| | | | — | | | | | | (30) | | |
Gain on sale of loans
|
| | | | — | | | | | | 12 | | |
Gain on sale of securities
|
| | | | 238 | | | | | | 140 | | |
Earnings on bank-owned life insurance
|
| | | | 347 | | | | | | 327 | | |
Gain on bargain purchase
|
| | | | 746 | | | | | | — | | |
Other
|
| | | | 260 | | | | | | 195 | | |
Total
|
| | | $ | 2,160 | | | | | $ | 1,127 | | |
| | |
Year Ended June 30,
|
| |||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| ||||||
Salaries and employee benefits
|
| | | $ | 6,855 | | | | | $ | 6,438 | | |
Occupancy and equipment
|
| | | | 1,784 | | | | | | 1,096 | | |
Data processing
|
| | | | 1,155 | | | | | | 692 | | |
Professional fees
|
| | | | 451 | | | | | | 277 | | |
Merger-related expenses
|
| | | | 3,294 | | | | | | 796 | | |
Amortization of intangible assets
|
| | | | 242 | | | | | | 260 | | |
Other
|
| | | | 1,611 | | | | | | 894 | | |
Total
|
| | | $ | 15,392 | | | | | $ | 10,453 | | |
| | |
Year Ended June 30,
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Average
Balance |
| |
Interest and
Dividends |
| |
Yield/
Cost |
| |
Average
Balance |
| |
Interest and
Dividends |
| |
Yield/
Cost |
| |
Average
Balance |
| |
Interest and
Dividends |
| |
Yield/
Cost |
| |||||||||||||||||||||||||||
Interest-earning assets: | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
Loans(1)
|
| | | $ | 366,372 | | | | | $ | 17,914 | | | | | | 4.89% | | | | | $ | 330,102 | | | | | $ | 16,595 | | | | | | 5.03% | | | | | $ | 237,950 | | | | | $ | 10,992 | | | | | | 4.62% | | |
Investment securities(2)
|
| | | | 56,755 | | | | | | 1,557 | | | | | | 2.74 | | | | | | 17,181 | | | | | | 415 | | | | | | 2.42 | | | | | | 8,569 | | | | | | 317 | | | | | | 3.70 | | |
Other interest-earning assets
|
| | | | 25,373 | | | | | | 346 | | | | | | 1.36 | | | | | | 30,899 | | | | | | 811 | | | | | | 2.62 | | | | | | 45,585 | | | | | | 866 | | | | | | 1.90 | | |
Total interest-earning
assets |
| | | | 448,500 | | | | | | 19,817 | | | | | | 4.42 | | | | | | 378,182 | | | | | | 17,821 | | | | | | 4.71 | | | | | | 292,104 | | | | | | 12,175 | | | | | | 4.17 | | |
Non-interest-earning assets
|
| | | | 42,481 | | | | | | | | | | | | | | | | | | 30,960 | | | | | | | | | | | | | | | | | | 15,028 | | | | | | | | | | | | | | |
Total assets
|
| | | $ | 490,981 | | | | | | | | | | | | | | | | | $ | 409,142 | | | | | | | | | | | | | | | | | $ | 307,132 | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
Interest-bearing accounts
|
| | | $ | 63,389 | | | | | | 82 | | | | | | 0.13% | | | | | $ | 56,605 | | | | | | 53 | | | | | | 0.09% | | | | | $ | 27,577 | | | | | | 16 | | | | | | 0.06% | | |
Money market deposit accounts
|
| | | | 88,965 | | | | | | 1,136 | | | | | | 1.28 | | | | | | 64,363 | | | | | | 524 | | | | | | 0.81 | | | | | | 48,002 | | | | | | 209 | | | | | | 0.44 | | |
Savings and club accounts
|
| | | | 42,044 | | | | | | 67 | | | | | | 0.16 | | | | | | 39,354 | | | | | | 48 | | | | | | 0.12 | | | | | | 21,443 | | | | | | 33 | | | | | | 0.15 | | |
Certificates of deposit
|
| | | | 127,553 | | | | | | 2,319 | | | | | | 1.82 | | | | | | 105,464 | | | | | | 1,672 | | | | | | 1.59 | | | | | | 85,137 | | | | | | 1,228 | | | | | | 1.44 | | |
Total interest-bearing deposits
|
| | | | 321,951 | | | | | | 3,604 | | | | | | 1.12 | | | | | | 265,786 | | | | | | 2,297 | | | | | | 0.86 | | | | | | 182,159 | | | | | | 1,486 | | | | | | 0.82 | | |
FHLB advances
|
| | | | 58,401 | | | | | | 1,414 | | | | | | 2.42 | | | | | | 48,772 | | | | | | 1,294 | | | | | | 2.65 | | | | | | 57,503 | | | | | | 1,696 | | | | | | 2.95 | | |
|
| | |
Year Ended June 30,
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2018
|
| |||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Average
Balance |
| |
Interest and
Dividends |
| |
Yield/
Cost |
| |
Average
Balance |
| |
Interest and
Dividends |
| |
Yield/
Cost |
| |
Average
Balance |
| |
Interest and
Dividends |
| |
Yield/
Cost |
| |||||||||||||||||||||||||||
Total interest-bearing liabilities
|
| | | | 380,352 | | | | | | 5,018 | | | | | | 1.32 | | | | | | 314,558 | | | | | | 3,591 | | | | | | 1.14 | | | | | | 239,662 | | | | | | 3,182 | | | | | | 1.33 | | |
Non-interest-bearing liabilities: | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
Non-interest-bearing
deposits |
| | | | 20,311 | | | | | | | | | | | | | | | | | | 11,901 | | | | | | | | | | | | | | | | | | — | | | | | | | | | | | | | | |
Other non-interest-bearing liabilities
|
| | | | 9,196 | | | | | | | | | | | | | | | | | | 7,771 | | | | | | | | | | | | | | | | | | 6,201 | | | | | | | | | | | | | | |
Total liabilities
|
| | | | 409,859 | | | | | | | | | | | | | | | | | | 334,230 | | | | | | | | | | | | | | | | | | 245,863 | | | | | | | | | | | | | | |
Total equity
|
| | | | 81,122 | | | | | | | | | | | | | | | | | | 74,912 | | | | | | | | | | | | | | | | | | 61,269 | | | | | | | | | | | | | | |
Total liabilities and
equity |
| | | $ | 490,981 | | | | | | | | | | | | | | | | | $ | 409,142 | | | | | | | | | | | | | | | | | $ | 307,132 | | | | | | | | | | | | | | |
Net interest income
|
| | | | | | | | | $ | 14,799 | | | | | | | | | | | | | | | | | $ | 14,230 | | | | | | | | | | | | | | | | | $ | 8,993 | | | | | | | | |
Interest rate spread(3)
|
| | | | | | | | | | 3.10% | | | | | | | | | | | | | | | | | | 3.57% | | | | | | | | | | | | | | | | | | 2.84% | | | | | | | | |
Net interest-earning assets(4)
|
| | | $ | 68,148 | | | | | | | | | | | | | | | | | $ | 63,624 | | | | | | | | | | | | | | | | | $ | 52,442 | | | | | | | | | | | | | | |
Net interest margin(5)
|
| | | | | | | | | | 3.30% | | | | | | | | | | | | | | | | | | 3.76% | | | | | | | | | | | | | | | | | | 3.08% | | | | | | | | |
Ratio of interest-earning assets to interest-bearing liabilities
|
| | | | 117.92% | | | | | | | | | | | | | | | | | | 120.23% | | | | | | | | | | | | | | | | | | 121.88% | | | | | | | | | | | | | | |
| | |
Year Ended 06/30/2020
Compared to Year Ended 06/30/2019 |
| |
Year Ended 06/30/2019
Compared to Year Ended 06/30/2018 |
| ||||||||||||||||||||||||||||||
| | |
Increase (Decrease)
Due to |
| |
Increase (Decrease)
Due to |
| ||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Volume
|
| |
Rate
|
| |
Total
|
| |
Volume
|
| |
Rate
|
| |
Total
|
| ||||||||||||||||||
Interest income: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans
|
| | | $ | 1,783 | | | | | $ | (464) | | | | | $ | 1,319 | | | | | $ | 4,744 | | | | | $ | 859 | | | | | $ | 5,603 | | |
Investment securities
|
| | | | 1,094 | | | | | | 48 | | | | | | 1,142 | | | | | | 236 | | | | | | (138) | | | | | | 98 | | |
Other interest-earning assets
|
| | | | (186) | | | | | | (279) | | | | | | (465) | | | | | | (328) | | | | | | 273 | | | | | | (55) | | |
Total interest-earning assets
|
| | | | 2,691 | | | | | | (695) | | | | | | 1,996 | | | | | | 4,652 | | | | | | 994 | | | | | | 5,646 | | |
Interest expense: | | | | | | | | ||||||||||||||||||||||||||||||
Interest-bearing accounts
|
| | | | 5 | | | | | | 24 | | | | | | 29 | | | | | | 41 | | | | | | (4) | | | | | | 37 | | |
Money market deposit accounts
|
| | | | (32) | | | | | | 644 | | | | | | 612 | | | | | | 31 | | | | | | 284 | | | | | | 315 | | |
Savings and club accounts
|
| | | | 3 | | | | | | 15 | | | | | | 18 | | | | | | 23 | | | | | | (8) | | | | | | 15 | | |
Certificates of deposits
|
| | | | 524 | | | | | | 124 | | | | | | 648 | | | | | | 343 | | | | | | 101 | | | | | | 444 | | |
Total interest-bearing deposits
|
| | | | 500 | | | | | | 807 | | | | | | 1,307 | | | | | | 438 | | | | | | 373 | | | | | | 811 | | |
FHLB advances
|
| | | | 240 | | | | | | (120) | | | | | | 120 | | | | | | (183) | | | | | | (219) | | | | | | (402) | | |
Total interest-bearing liabilities
|
| | | | 740 | | | | | | 687 | | | | | | 1,427 | | | | | | 255 | | | | | | 154 | | | | | | 409 | | |
Net change in net interest income
|
| | | $ | 1,951 | | | | | $ | (1,382) | | | | | $ | 569 | | | | | $ | 4,397 | | | | | $ | 840 | | | | | $ | 5,237 | | |
| | |
At June 30,
|
| |||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Non-accrual loans: | | | | | | | |||||||||||||||||||||||||
Residential real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
One- to four-family
|
| | | $ | 2,353 | | | | | $ | 1,270 | | | | | $ | 1,100 | | | | | $ | 2,559 | | | | | $ | 969 | | |
Home equity and HELOCs
|
| | | | 384 | | | | | | 385 | | | | | | 41 | | | | | | 103 | | | | | | 10 | | |
Residential construction
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total residential real estate loans
|
| | | | 2,737 | | | | | | 1,655 | | | | | | 1,141 | | | | | | 2,662 | | | | | | 979 | | |
Commercial real estate loans: | | | | | | | |||||||||||||||||||||||||
Multi-family
|
| | | | 185 | | | | | | 189 | | | | | | — | | | | | | — | | | | | | — | | |
Commercial non-residential
|
| | | | 135 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commercial construction and land
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total commercial real estate loans
|
| | | | 320 | | | | | | 189 | | | | | | — | | | | | | — | | | | | | — | | |
Commercial loans
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Consumer loans
|
| | | | 115 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total non-accrual loans
|
| | | | 3,172 | | | | | | 1,844 | | | | | | 1,141 | | | | | | 2,662 | | | | | | 979 | | |
Accruing loans past due 90 days or more: | | | | | | | |||||||||||||||||||||||||
Residential real estate loans: | | | | | | | |||||||||||||||||||||||||
One- to four-family
|
| | | | — | | | | | | 7 | | | | | | — | | | | | | — | | | | | | — | | |
Home equity and HELOCs
|
| | | | 90 | | | | | | 140 | | | | | | — | | | | | | — | | | | | | — | | |
Residential construction
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total residential real estate loans
|
| | | | 90 | | | | | | 147 | | | | | | — | | | | | | — | | | | | | — | | |
Commercial real estate loans: | | | | | | | |||||||||||||||||||||||||
Multi-family
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commercial non-residential
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | |
At June 30,
|
| |||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Commercial construction and land
|
| | | | — | | | | | | — | | | | | | 3,001 | | | | | | 3,001 | | | | | | 3,001 | | |
Total commercial real estate loans
|
| | | | — | | | | | | — | | | | | | 3,001 | | | | | | 3,001 | | | | | | 3,001 | | |
Commercial loans
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Consumer loans
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total accruing loans past due 90 days or more
|
| | | | 90 | | | | | | 147 | | | | | | 3,001 | | | | | | 3,001 | | | | | | 3,001 | | |
Total non-performing loans
|
| | | | 3,262 | | | | | | 1,991 | | | | | | 4,142 | | | | | | 5,663 | | | | | | 3,980 | | |
Real estate owned
|
| | | | 100 | | | | | | — | | | | | | 135 | | | | | | 69 | | | | | | 755 | | |
Total non-performing assets
|
| | | $ | 3,362 | | | | | $ | 1,991 | | | | | $ | 4,277 | | | | | $ | 5,732 | | | | | $ | 4,735 | | |
Total non-performing loans to total loans
|
| | | | 0.64% | | | | | | 0.60% | | | | | | 1.75% | | | | | | 2.38% | | | | | | 1.69% | | |
Total non-performing assets to total assets
|
| | | | 0.46 | | | | | | 0.48 | | | | | | 1.42 | | | | | | 1.81 | | | | | | 1.51 | | |
|
| | |
At June 30,
|
| |||||||||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| ||||||||||||||||||||||||||||||
| | |
Days Past Due
|
| |
Days Past Due
|
| ||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
30-59
|
| |
60-89
|
| |
90 or more
|
| |
30-59
|
| |
60-89
|
| |
90 or more
|
| ||||||||||||||||||
Residential real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
One- to four-family
|
| | | $ | 235 | | | | | $ | 1,020 | | | | | $ | 1,477 | | | | | $ | — | | | | | $ | 807 | | | | | $ | 1,038 | | |
Home equity and HELOCs
|
| | | | 126 | | | | | | 101 | | | | | | 181 | | | | | | 246 | | | | | | 59 | | | | | | 315 | | |
Residential construction
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commercial real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family
|
| | | | — | | | | | | 465 | | | | | | 185 | | | | | | — | | | | | | 394 | | | | | | 189 | | |
Commercial non-residential
|
| | | | 100 | | | | | | 507 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commercial construction and land
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commercial loans.
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Consumer loans
|
| | | | 3 | | | | | | 21 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total
|
| | | $ | 464 | | | | | $ | 2,114 | | | | | $ | 1,843 | | | | | $ | 246 | | | | | $ | 1,260 | | | | | $ | 1,542 | | |
|
| | |
At June 30,
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||||||||||||||||||||||||||||||||
| | |
Days Past Due
|
| |
Days Past Due
|
| |
Days Past Due
|
| |||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
30-59
|
| |
60-89
|
| |
90 or more
|
| |
30-59
|
| |
60-89
|
| |
90 or more
|
| |
30-59
|
| |
60-89
|
| |
90 or more
|
| |||||||||||||||||||||||||||
Residential real estate loans: | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
One- to four-family
|
| | | $ | 647 | | | | | $ | 21 | | | | | $ | 1,100 | | | | | $ | 945 | | | | | $ | 368 | | | | | $ | 2,559 | | | | | $ | 2,073 | | | | | $ | 912 | | | | | $ | 969 | | |
Home equity and second Mortgages
|
| | | | 87 | | | | | | 89 | | | | | | 41 | | | | | | 89 | | | | | | — | | | | | | 103 | | | | | | 79 | | | | | | 89 | | | | | | 10 | | |
Residential construction
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commercial real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commercial non-residential
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commercial construction and land
|
| | | | — | | | | | | — | | | | | | 3,001 | | | | | | — | | | | | | — | | | | | | 3,001 | | | | | | — | | | | | | — | | | | | | 3,001 | | |
Commercial loans..
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Consumer loans
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total
|
| | | $ | 734 | | | | | $ | 110 | | | | | $ | 4,142 | | | | | $ | 1,034 | | | | | $ | 368 | | | | | $ | 5,663 | | | | | $ | 2,152 | | | | | $ | 1,001 | | | | | $ | 3,980 | | |
|
| | |
At June 30,
|
| |||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Classified loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Substandard
|
| | | $ | 3,354 | | | | | $ | 2,653 | | | | | $ | 7,467 | | | | | $ | 9,578 | | | | | $ | 8,008 | | |
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total classified loans
|
| | | | 3,354 | | | | | | 2,653 | | | | | | 7,467 | | | | | | 9,578 | | | | | | 8,008 | | |
Special mention
|
| | | | 1,310 | | | | | | 1,138 | | | | | | 413 | | | | | | 438 | | | | | | 459 | | |
Total criticized loans(1)
|
| | | $ | 4,664 | | | | | $ | 3,791 | | | | | $ | 7,880 | | | | | $ | 10,016 | | | | | $ | 8,467 | | |
| | |
At June 30,
|
| |||||||||||||||||||||||||||||||||
| | |
2020
|
| |
2019
|
| ||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Amount
|
| |
% of
Allowance Amount to Total Allowance |
| |
% of
Allowance to Loans in Category |
| |
Amount
|
| |
% of
Allowance Amount to Total Allowance |
| |
% of
Allowance to Loans in Category |
| ||||||||||||||||||
Residential real estate loans: | | | | | | | | ||||||||||||||||||||||||||||||
One- to four-family
|
| | | $ | 1,483 | | | | | | 42.14% | | | | | | 0.43% | | | | | $ | 1,501 | | | | | | 46.78% | | | | | | 0.68% | | |
Home equity and HELOCs
|
| | | | 166 | | | | | | 4.72 | | | | | | 0.35 | | | | | | 122 | | | | | | 3.80 | | | | | | 0.38 | | |
Residential construction
|
| | | | 526 | | | | | | 14.95 | | | | | | 3.33 | | | | | | 321 | | | | | | 10.00 | | | | | | 3.30 | | |
Commercial real estate loans: | | | | | | | | ||||||||||||||||||||||||||||||
Multi-family
|
| | | | 123 | | | | | | 3.50 | | | | | | 0.82 | | | | | | 71 | | | | | | 2.21 | | | | | | 0.64 | | |
Commercial non-residential
|
| | | | 727 | | | | | | 20.66 | | | | | | 0.95 | | | | | | 708 | | | | | | 22.07 | | | | | | 1.32 | | |
Commercial construction and land
|
| | | | 396 | | | | | | 11.25 | | | | | | 5.92 | | | | | | 121 | | | | | | 3.77 | | | | | | 2.73 | | |
Commercial loans
|
| | | | 83 | | | | | | 2.36 | | | | | | 1.29 | | | | | | 95 | | | | | | 2.96 | | | | | | 4.53 | | |
Consumer loans
|
| | | | 15 | | | | | | 0.42 | | | | | | 0.38 | | | | | | 3 | | | | | | .09 | | | | | | 0.40 | | |
Total general and allocated
allowance |
| | | | 3,519 | | | | | | 100.00 | | | | | | 0.68 | | | | | | 2,942 | | | | | | 91.68 | | | | | | 0.88 | | |
Unallocated
|
| | | | — | | | | | | — | | | | | | — | | | | | | 267 | | | | | | 8.32 | | | | | | — | | |
Total allowance for loan losses
|
| | | $ | 3,519 | | | | | | 100.00% | | | | | | 0.68% | | | | | $ | 3,209 | | | | | | 100.00% | | | | | | 0.96% | | |
|
| | |
At June 30,
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
| | |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Amount
|
| |
% of
Allowance Amount to Total Allowance |
| |
% of
Allowance to Loans in Category |
| |
Amount
|
| |
% of
Allowance Amount to Total Allowance |
| |
% of
Allowance to Loans in Category |
| |
Amount
|
| |
% of
Allowance Amount to Total Allowance |
| |
% of
Allowance to Loans in Category |
| |||||||||||||||||||||||||||
Residential real estate loans: | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
One- to four-family
|
| | | $ | 1,478 | | | | | | 47.10% | | | | | | 0.87% | | | | | $ | 1,857 | | | | | | 56.22% | | | | | | 1.12% | | | | | $ | 1,658 | | | | | | 51.06% | | | | | | 1.02% | | |
Home equity and HELOCs
|
| | | | 58 | | | | | | 1.84 | | | | | | 0.27 | | | | | | 66 | | | | | | 2.00 | | | | | | 0.29 | | | | | | 88 | | | | | | 2.71 | | | | | | 0.35 | | |
Residential construction
|
| | | | 191 | | | | | | 6.09 | | | | | | 1.61 | | | | | | 93 | | | | | | 2.82 | | | | | | 1.05 | | | | | | 133 | | | | | | 4.09 | | | | | | 1.10 | | |
Commercial real estate loans: | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||||||
Multi-family
|
| | | | 116 | | | | | | 3.70 | | | | | | 0.96 | | | | | | 8 | | | | | | 0.24 | | | | | | 0.07 | | | | | | 111 | | | | | | 3.42 | | | | | | 0.89 | | |
Commercial non-residential
|
| | | | 388 | | | | | | 12.36 | | | | | | 1.63 | | | | | | 439 | | | | | | 13.29 | | | | | | 1.77 | | | | | | 577 | | | | | | 17.76 | | | | | | 2.16 | | |
Commercial construction and land(1)
|
| | | | 903 | | | | | | 28.78 | | | | | | 28.84 | | | | | | 837 | | | | | | 25.34 | | | | | | 9.18 | | | | | | 679 | | | | | | 20.90 | | | | | | 12.77 | | |
Commercial loans
|
| | | | 4 | | | | | | 0.13 | | | | | | 2.04 | | | | | | 3 | | | | | | 0.09 | | | | | | 2.33 | | | | | | 2 | | | | | | 0.06 | | | | | | 3.92 | | |
Consumer loans
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total general and allocated
allowance |
| | | | 3,138 | | | | | | 100.00 | | | | | | 1.29 | | | | | | 3,303 | | | | | | 100.00 | | | | | | 1.35 | | | | | | 3,248 | | | | | | 100.00 | | | | | | 1.33 | | |
Unallocated
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total allowance for loan losses
|
| | | $ | 3,138 | | | | | | 100.00% | | | | | | 1.29% | | | | | $ | 3,303 | | | | | | 100.00% | | | | | | 1.35% | | | | | $ | 3,248 | | | | | | 100.00% | | | | | | 1.33% | | |
|
| | |
At or For the Year Ended June 30,
|
| |||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |||||||||||||||
Allowance at beginning of period
|
| | | $ | 3,209 | | | | | $ | 3,138 | | | | | $ | 3,303 | | | | | $ | 3,248 | | | | | $ | 3,606 | | |
Provision (recovery) for loan losses
|
| | | | 626 | | | | | | 88 | | | | | | (120) | | | | | | 15 | | | | | | 5 | | |
Charge-offs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential real estate loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
One- to four-family
|
| | | | (260) | | | | | | (21) | | | | | | (82) | | | | | | (56) | | | | | | (384) | | |
Home equity and HELOCs
|
| | | | (6) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Residential construction
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total residential real estate loans
|
| | | | (266) | | | | | | (21) | | | | | | (82) | | | | | | (56) | | | | | | (384) | | |
Commercial real estate loans: | | | | | | | |||||||||||||||||||||||||
Multi-family
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commercial non-residential
|
| | | | (35) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commercial construction and land
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total commercial real estate loans.
|
| | | | (35) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commercial loans
|
| | | | (3) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Consumer loans
|
| | | | (12) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total charge-offs
|
| | | | (316) | | | | | | (21) | | | | | | (82) | | | | | | (56) | | | | | | (384) | | |
Recoveries: | | | | | | | |||||||||||||||||||||||||
Residential real estate loans: | | | | | | | |||||||||||||||||||||||||
One- to four-family
|
| | | | — | | | | | | 4 | | | | | | 31 | | | | | | 36 | | | | | | 14 | | |
Home equity and HELOCs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Residential construction
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total residential real estate loans
|
| | | | — | | | | | | 4 | | | | | | 31 | | | | | | 36 | | | | | | 14 | | |
Commercial real estate loans: | | | | | | | |||||||||||||||||||||||||
Multi-family
|
| | | | — | | | | | | — | | | | | | 6 | | | | | | — | | | | | | 7 | | |
Commercial non-residential
|
| | | | — | | | | | | — | | | | | | — | | | | | | 60 | | | | | | — | | |
Commercial construction and land
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total commercial real estate loans.
|
| | | | — | | | | | | — | | | | | | 6 | | | | | | 60 | | | | | | 7 | | |
Commercial loans
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Consumer loans
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total recoveries
|
| | | | — | | | | | | 4 | | | | | | 37 | | | | | | 96 | | | | | | 21 | | |
Net (charge-offs) recoveries
|
| | | | (316) | | | | | | (17) | | | | | | (45) | | | | | | 40 | | | | | | (363) | | |
Allowance at end of period
|
| | | $ | 3,519 | | | | | $ | 3,209 | | | | | $ | 3,138 | | | | | $ | 3,303 | | | | | $ | 3,248 | | |
Total loans(1)
|
| | | $ | 512,124 | | | | | $ | 329,226 | | | | | $ | 236,527 | | | | | $ | 238,168 | | | | | $ | 235,159 | | |
Average loans outstanding
|
| | | | 366,961 | | | | | | 330,102 | | | | | | 237,950 | | | | | | 237,060 | | | | | | 243,116 | | |
Ratio of allowance to non- performing loans
|
| | | | 107.88% | | | | | | 161.18% | | | | | | 75.76% | | | | | | 58.33% | | | | | | 81.61% | | |
Ratio of allowance to total loans
|
| | | | 0.68% | | | | | | 0.96% | | | | | | 1.29% | | | | | | 1.35% | | | | | | 1.33% | | |
Ratio of net charge-offs (recoveries) to average loans
|
| | | | 0.09% | | | | | | 0.01% | | | | | | 0.02% | | | | | | (0.02)% | | | | | | 0.15% | | |
| | |
Twelve Month
Net Interest Income |
| |
Net Portfolio Value
|
| | | | ||||||||||||
Change in Interest Rates (Basis Points)
|
| |
Percent
of Change |
| |
Estimated NPV
|
| |
Percent
of Change |
| | |||||||||||
+200
|
| | | | (1.38)% | | | | | $ | 125,172 | | | | | | (4.16)% | | | | ||
+100
|
| | | | (0.61) | | | | | | 127,658 | | | | | | (2.25) | | | | ||
0
|
| | | | — | | | | | | 130,600 | | | | | | — | | | | ||
-50
|
| | | | 1.05 | | | | | | 120,470 | | | | | | (7.76) | | | |
| | | | | | | | |
Payments due
by period |
| | | | | | | | | | | | | |||||||||||||||||||||
(Dollars in thousands)
|
| |
Total
|
| |
Less than
One Year |
| |
One to
Three Years |
| |
Three to
Five Years |
| |
More Than
Five Years |
| | | | | |||||||||||||||||||||||
Borrowed funds
|
| | | $ | 64,892 | | | | | $ | 15,086 | | | | | $ | 23,165 | | | | | $ | 25,050 | | | | | $ | 1,591 | | | | | | | ||||||||
Commitments to fund loans
|
| | | | 18,602 | | | | | | 18,602 | | | | | | — | | | | | | — | | | | | | — | | | | | | | ||||||||
Unused lines of credit
|
| | | | 52,432 | | | | | | 8,662 | | | | | | 7,293 | | | | | | 1,909 | | | | | | 34,568 | | | | | | | ||||||||
Operating lease obligations
|
| | | | 1,881 | | | | | | 247 | | | | | | 510 | | | | | | 511 | | | | | | 613 | | | | | | | ||||||||
Total
|
| | | $ | 137,807 | | | | | $ | 42,597 | | | | | $ | 30,968 | | | | | $ | 27,470 | | | | | $ | 36,772 | | | | | | |
Name
|
| |
Position
|
|
Kenneth J. Stephon | | | President and Chief Executive Officer of William Penn Bancorporation, William Penn Bancorp, William Penn, MHC and William Penn Bank | |
Jill M. Ross | | | Executive Vice President and Chief Retail and Commercial Officer of William Penn Bancorporation, William Penn Bancorp, William Penn, MHC and William Penn Bank | |
Gregory S. Garcia | | | Executive Vice President and Chief Operating Officer of William Penn Bancorporation, William Penn Bancorp, William Penn, MHC and William Penn Bank | |
Jonathan T. Logan | | | Senior Vice President and Chief Financial Officer of William Penn Bancorporation, William Penn Bancorp, William Penn, MHC and William Penn Bank | |
Director
|
| |
Audit
Committee |
| |
Compensation
Committee |
| |
Nominating and
Corporate Governance Committee |
| |
Risk
Committee |
|
Craig Burton
|
| |
X
|
| | | | |
X
|
| | | |
D. Michael Carmody, Jr.
|
| |
X
|
| | | | |
X
|
| | | |
Charles Corcoran
|
| | | | | | | | | | |
X
|
|
Glenn Davis
|
| | | | |
X
|
| |
X
|
| | | |
William J. Feeney
|
| | | | |
X
|
| |
X
|
| | | |
Christopher M. Molden
|
| | | | |
X
|
| |
X
|
| | | |
William C. Niemczura
|
| | | | | | | |
X
|
| |
X
|
|
William B.K. Parry, Jr.
|
| | | | | | | | | | |
X
|
|
Terry L. Sager
|
| | | | | | | | | | |
X
|
|
Vincent P. Sarubbi.
|
| |
X
|
| | | | | | | | | |
Kenneth J. Stephon.
|
| | | | | | | | | | | | |
Number of Meetings in Fiscal 2020
|
| |
4
|
| |
1
|
| |
1
|
| |
N/A
|
|
Name
|
| |
Fees Earned
or Paid in Cash |
| |
Total
|
| ||||||
Craig Burton
|
| | | $ | 43,620 | | | | | $ | 43,620 | | |
D. Michael Carmody, Jr.
|
| | | | 43,620 | | | | | | 43,620 | | |
Charles Corcoran
|
| | | | 43,620 | | | | | | 43,620 | | |
Glenn Davis
|
| | | | 43,620 | | | | | | 43,620 | | |
William J. Feeney
|
| | | | 48,120 | | | | | | 48,120 | | |
Christopher M. Molden(1)
|
| | | | 5,470 | | | | | | 5,470 | | |
William C. Niemczura(1)
|
| | | | 5,470 | | | | | | 5,470 | | |
William B.K. Parry, Jr.
|
| | | | 43,620 | | | | | | 43,620 | | |
Terry L. Sager
|
| | | | 41,220 | | | | | | 41,220 | | |
Vincent P. Sarubbi.
|
| | | | 43,620 | | | | | | 43,620 | | |
Name and Principal Position
|
| |
Year
|
| |
Salary
|
| |
Bonus(1)
|
| |
Non-Equity
Incentive Plan Compensation(2) |
| |
All Other
Compensation(3) |
| |
Total
($) |
| ||||||||||||||||||
Kenneth J. Stephon
President and Chief Executive Officer |
| | | | 2020 | | | | | $ | 368,319 | | | | | $ | 1,250 | | | | | $ | 123,187 | | | | | $ | 55,343 | | | | | $ | 548,099 | | |
Jill M. Ross
Executive Vice President and Chief Retail and Commercial Officer |
| | | | 2020 | | | | | | 182,560 | | | | | | 36,250 | | | | | | 65,312 | | | | | | 34,229 | | | | | | 318,351 | | |
Gregory S. Garcia
Executive Vice President and Chief Operating Officer |
| | | | 2020 | | | | | | 189,735 | | | | | | 1,250 | | | | | | 53,437 | | | | | | 32,566 | | | | | | 276,988 | | |
| | |
Mr. Stephon
|
| |
Ms. Ross
|
| |
Mr. Garcia
|
| |||||||||
Health insurance premiums
|
| | | $ | 19,909 | | | | | $ | 19,909 | | | | | $ | 19,909 | | |
Employer contributions to 401(k) Plan
|
| | | | 17,329 | | | | | | 14,320 | | | | | | 12,647 | | |
Employee stock ownership plan
|
| | | | 18,105 | | | | | | — | | | | | | — | | |
| | |
Date of
Corporate Approval |
| |
Estimated Possible Payouts
Under Non-Equity Incentive Plan Awards(1) |
| | |||||||||||||||||
Name
|
| |
Threshold
|
| |
Target
|
| |
Maximum
|
| |||||||||||||||
Kenneth J. Stephon
|
| | | | June 19,2019 | | | | | $ | 54,750 | | | | | $ | 109,500 | | | | | $ | 164,250 | | |
Jill M. Ross
|
| | | | June 19,2019 | | | | | | 23,750 | | | | | | 47,500 | | | | | | 71,250 | | |
Gregory S. Garcia
|
| | | | June 19,2019 | | | | | | 23,750 | | | | | | 47,500 | | | | | | 71,250 | | |
Name and Address
|
| |
Number of Shares
Beneficially Owned |
| |
Percent of Common
Stock Outstanding(1) |
| ||||||
William Penn, MHC
|
| | | | 3,711,114 | | | | | | 82.7% | | |
10 Canal Street, Suite 104
Bristol, Pennsylvania 19007 |
| | | ||||||||||
Tyndall Capital Partners LP
|
| | | | 342,817 | | | | | | 7.6% | | |
Jeffrey Halis
150 East 58th Street, 14th Floor New York, New York 10155 |
| | |
Name
|
| |
Number of Shares
Beneficially Owned |
| |
Percent of
Common Stock Outstanding(1) |
| |||
Directors: | | | | | | | | | | |
Craig Burton
|
| | | | 4,800(2) | | | | | |
D. Michael Carmody, Jr.
|
| | | | 100 | | | | | |
Charles Corcoran
|
| | | | 15,043 | | | | | |
Glenn Davis
|
| | | | 5,000 | | | | | |
William J. Feeney
|
| | | | 14,000 | | | | | |
Christopher M. Molden
|
| | | | 200 | | | | | |
William C. Niemczura
|
| | | | 350 | | | | | |
William B.K. Parry, Jr.
|
| | | | 13,500(3) | | | | | |
Terry L. Sager
|
| | | | 13,057 | | | | | |
Vincent P. Sarubbi
|
| | | | 100 | | | | | |
Kenneth J. Stephon
|
| | | | 964 | | | | | |
Executive Officers Who Are Not Directors: | | | | | | | | | | |
Jill M. Ross
|
| | | | — | | | | | |
Gregory S. Garcia
|
| | | | — | | | | | |
Jonathan T. Logan
|
| | | | — | | | | | |
All Directors and Executive Officers as a Group (14 persons)
|
| | | | 67,114 | | | | | |
| | |
Number of
Shares Received in Exchange for Shares of William Penn Bancorp(1) |
| |
Proposed Purchases of
Stock in the Offering |
| |
Total Common Stock
to be Held |
| |||||||||||||||
Name of Beneficial Owner
|
| |
Number
of Shares |
| |
Dollar
Amount |
| |
Number
of Shares(1) |
| |
Percentage of
Total Outstanding(2) |
| ||||||||||||
Directors: | | | | | | | | | | | | | | | | | | | | | | | | | |
Craig Burton
|
| | | | | | | 5,000 | | | | | $ | 50,000 | | | | | | | | | | | |
D. Michael Carmody, Jr.
|
| | | | | | | 12,500 | | | | | | 125,000 | | | | | | | | | | | |
Charles Corcoran
|
| | | | | | | — | | | | | | — | | | | | | | | | | | |
Glenn Davis
|
| | | | | | | 10,000 | | | | | | 100,000 | | | | | | | | | | | |
William J. Feeney
|
| | | | | | | 10,000 | | | | | | 100,000 | | | | | | | | | | | |
Christopher M. Molden
|
| | | | | | | 10,000 | | | | | | 100,000 | | | | | | | | | | | |
William C. Niemczura
|
| | | | | | | 10,000 | | | | | | 100,000 | | | | | | | | | | | |
William B.K. Parry, Jr.
|
| | | | | | | 2,500 | | | | | | 25,000 | | | | | | | | | | | |
Terry L. Sager
|
| | | | | | | 10,000 | | | | | | 100,000 | | | | | | | | | | | |
Vincent P. Sarubbi
|
| | | | | | | 15,000 | | | | | | 150,000 | | | | | | | | | | | |
Kenneth J. Stephon
|
| | | | | | | 30,000 | | | | | | 300,000 | | | | | | | | | | | |
Executive Officers Who are Not Also Directors:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Jill M. Ross
|
| | | | | | | 10,000 | | | | | | 100,000 | | | | | | | | | | | |
Gregory S. Garcia
|
| | | | | | | 5,000 | | | | | | 50,000 | | | | | | | | | | | |
Jonathan T. Logan
|
| | | | | | | 200 | | | | | | 2,000 | | | | | | | | | | | |
All Directors and Executive Officers as a Group (14 persons)
|
| | | | | | | | | | | | | | | | | | | | | | % | | |
| | |
Shares to be Sold in
This Offering |
| |
Shares of
William Penn Bancorporation to be Issued for Shares of William Penn Bancorp |
| |
Total Shares
of Common Stock to be Issued in Exchange and Offering |
| |
Exchange
Ratio |
| |
Equivalent
Value of Shares Based Upon Offering Price(1) |
| |
Shares to
be Received for 100 Existing Shares(2) |
| ||||||||||||||||||||||||||||||
| | |
Amount
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| ||||||||||||||||||||||||||||||||||||
Minimum
|
| | | | 9,350,000 | | | | | | 83.2% | | | | | | 1,891,151 | | | | | | 16.8% | | | | | | 11,241,151 | | | | | | 2.4301 | | | | | $ | 24.30 | | | | | | 243 | | |
Midpoint
|
| | | | 11,000,000 | | | | | | 83.2 | | | | | | 2,224,884 | | | | | | 16.8 | | | | | | 13,224,884 | | | | | | 2.8589 | | | | | | 28.59 | | | | | | 285 | | |
Maximum
|
| | | | 12,650,000 | | | | | | 83.2 | | | | | | 2,558,616 | | | | | | 16.8 | | | | | | 15,208,616 | | | | | | 3.2877 | | | | | | 32.88 | | | | | | 328 | | |
Company Name and Ticker Symbol
|
| |
Exchange
|
| |
Headquarters
|
| |
Total Assets
|
| |||
| | | | | | | | |
(in millions)
|
| |||
Prudential Bancorp, Inc. (PBIP)
|
| |
Nasdaq
|
| |
Philadelphia, Pennsylvania
|
| | | $ | 1,188 | | |
Elmira Savings Bank (ESBK)
|
| |
Nasdaq
|
| | Elmira, New York | | | | | 676 | | |
HMN Financial, Inc. (HMNF)
|
| |
Nasdaq
|
| | Rochester, Minnesota | | | | | 863 | | |
Home Federal Bancorp, Inc. of Louisiana (HFBL)
|
| |
Nasdaq
|
| | Shreveport, Louisiana | | | | | 518 | | |
HV Bancorp, Inc. (HVBC)
|
| |
Nasdaq
|
| |
Doylestown, Pennsylvania
|
| | | | 425 | | |
IF Bancorp, Inc. (IROQ)
|
| |
Nasdaq
|
| | Watseka, Illinois | | | | | 736 | | |
Randolph Bancorp, Inc. (RNDB)
|
| |
Nasdaq
|
| |
Stoughton, Massachusetts
|
| | | | 724 | | |
Severn Bancorp, Inc. (SVBI)
|
| |
Nasdaq
|
| | Annapolis, Maryland | | | | | 924 | | |
Standard AVB Financial Corp. (STND)
|
| |
Nasdaq
|
| |
Monroeville, Pennsylvania
|
| | | | 1,061 | | |
WVS Financial Corp. (WVFC)
|
| |
Nasdaq
|
| | Pittsburgh, Pennsylvania | | | | | 357 | | |
| | |
Price to Core
Earnings Multiple(1) |
| |
Price to Book
Value Ratio |
| |
Price to Tangible
Book Value Ratio |
| |||||||||
William Penn Bancorporation (pro forma): | | | | | | | | | | | | | | | | | | | |
Minimum
|
| | | | 57.14x | | | | | | 62.34% | | | | | | 64.52% | | |
Midpoint
|
| | | | 75.00x | | | | | | 67.93% | | | | | | 70.13% | | |
Maximum
|
| | | | 97.54x | | | | | | 72.78% | | | | | | 74.96% | | |
Peer group companies as of September 2, 2020:
|
| | | | | | | | | | | | | | | | | | |
Average
|
| | | | 11.04x | | | | | | 69.28% | | | | | | 72.84% | | |
Median
|
| | | | 11.29x | | | | | | 69.65% | | | | | | 72.74% | | |
| | |
Page
|
| |||
| | | | F-1 | | | |
| | | | F-2 | | | |
| | | | F-3 | | | |
| | | | F-4 | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-7 | | |
| | |
June 30,
2020 |
| |
June 30,
2019 |
| ||||||
ASSETS | | | | ||||||||||
Cash and due from banks
|
| | | $ | 21,385 | | | | | $ | 8,260 | | |
Interest bearing deposits with other banks
|
| | | | 56,755 | | | | | | 17,908 | | |
Federal funds sold
|
| | | | 4,775 | | | | | | — | | |
Total cash and cash equivalents
|
| | | | 82,915 | | | | | | 26,168 | | |
Interest-bearing time deposits
|
| | | | 2,300 | | | | | | 8,486 | | |
Securities available for sale
|
| | | | 89,998 | | | | | | 20,660 | | |
Securities held to maturity, fair value of $0 and $1,937, respectively
|
| | | | — | | | | | | 1,906 | | |
Loans receivable, net of allowance for loan losses of $3,519 and $3,209, respectively
|
| | | | 508,605 | | | | | | 326,017 | | |
Premises and equipment, net
|
| | | | 16,733 | | | | | | 8,406 | | |
Regulatory stock, at cost
|
| | | | 4,200 | | | | | | 2,785 | | |
Deferred income taxes
|
| | | | 4,817 | | | | | | 2,111 | | |
Bank-owned life insurance
|
| | | | 14,758 | | | | | | 11,203 | | |
Goodwill
|
| | | | 4,858 | | | | | | 4,858 | | |
Intangible assets
|
| | | | 1,192 | | | | | | 1,172 | | |
Accrued interest receivable and other assets
|
| | | | 6,076 | | | | | | 2,057 | | |
TOTAL ASSETS
|
| | | $ | 736,452 | | | | | $ | 415,829 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | ||||||||||
LIABILITIES | | | | ||||||||||
Deposits
|
| | | $ | 559,848 | | | | | $ | 281,206 | | |
Advances from Federal Home Loan Bank
|
| | | | 64,892 | | | | | | 50,000 | | |
Advances from borrowers for taxes and insurance
|
| | | | 4,536 | | | | | | 3,814 | | |
Accrued interest payable and other liabilities
|
| | | | 10,811 | | | | | | 4,179 | | |
TOTAL LIABILITIES
|
| | | | 640,087 | | | | | | 339,199 | | |
Commitments and contingencies
|
| | | | — | | | | | | — | | |
STOCKHOLDERS’ EQUITY | | | | ||||||||||
Preferred stock, no par value, 1,000,000 shares authorized; no shares issued
|
| | | | — | | | | | | — | | |
Common Stock, $.10 par value, 49,000,000 shares authorized; 4,667,304 and
4,158,113 shares issued and 4,489,345 and 3,980,154 shares outstanding at June 30, 2020 and 2019, respectively. |
| | | | 467 | | | | | | 416 | | |
Additional paid-in capital
|
| | | | 42,932 | | | | | | 22,441 | | |
Treasury Stock, 177,959 shares at cost at June 30, 2020 and 2019
|
| | | | (3,710) | | | | | | (3,710) | | |
Retained earnings
|
| | | | 56,600 | | | | | | 57,255 | | |
Accumulated other comprehensive income
|
| | | | 76 | | | | | | 228 | | |
TOTAL WILLIAM PENN BANCORP, INC. STOCKHOLDERS’ EQUITY
|
| | | | 96,365 | | | | | | 76,630 | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| | | $ | 736,452 | | | | | $ | 415,829 | | |
| | |
Year ended June 30,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
INTEREST INCOME | | | | ||||||||||
Loans receivable, including fees
|
| | | $ | 17,914 | | | | | $ | 16,595 | | |
Securities
|
| | | | 1,557 | | | | | | 415 | | |
Other
|
| | | | 346 | | | | | | 811 | | |
Total Interest Income
|
| | | | 19,817 | | | | | | 17,821 | | |
INTEREST EXPENSE | | | | ||||||||||
Deposits
|
| | | | 3,604 | | | | | | 2,297 | | |
Borrowings
|
| | | | 1,414 | | | | | | 1,294 | | |
Total Interest Expense
|
| | | | 5,018 | | | | | | 3,591 | | |
Net Interest Income
|
| | | | 14,799 | | | | | | 14,230 | | |
Provision For Loan Losses
|
| | | | 626 | | | | | | 88 | | |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
|
| | | | 14,173 | | | | | | 14,142 | | |
OTHER INCOME | | | | | | | | | | | | | |
Service fees
|
| | | | 569 | | | | | | 483 | | |
Realized losses on sale of REO, net
|
| | | | — | | | | | | (30) | | |
Gain on sale of loans
|
| | | | — | | | | | | 12 | | |
Gain on sale of securities
|
| | | | 238 | | | | | | 140 | | |
Earnings on bank-owned life insurance
|
| | | | 347 | | | | | | 327 | | |
Gain on bargain purchase
|
| | | | 746 | | | | | | — | | |
Other
|
| | | | 260 | | | | | | 195 | | |
Total Other Income
|
| | | | 2,160 | | | | | | 1,127 | | |
OTHER EXPENSES | | | | | | | | | | | | | |
Salaries and employee benefits
|
| | | | 6,855 | | | | | | 6,438 | | |
Occupancy and equipment
|
| | | | 1,784 | | | | | | 1,096 | | |
Data processing
|
| | | | 1,155 | | | | | | 692 | | |
Professional fees
|
| | | | 451 | | | | | | 277 | | |
Merger related expenses
|
| | | | 3,294 | | | | | | 796 | | |
Amortization on intangible assets
|
| | | | 242 | | | | | | 260 | | |
Other
|
| | | | 1,611 | | | | | | 894 | | |
Total Other Expense
|
| | | | 15,392 | | | | | | 10,453 | | |
Income Before Income Taxes
|
| | | | 941 | | | | | | 4,816 | | |
Income Tax (Benefit) Expense
|
| | | | (387) | | | | | | 1,060 | | |
NET INCOME
|
| | | $ | 1,328 | | | | | $ | 3,756 | | |
Basic and diluted earnings per share
|
| | | $ | 0.33 | | | | | $ | 0.94 | | |
| | |
Year Ended June,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net income
|
| | | $ | 1,328 | | | | | $ | 3,756 | | |
Other comprehensive income (loss): | | | | | | | | | | | | | |
Changes in net unrealized gain (loss) on securities available for sale
|
| | | | 46 | | | | | | 151 | | |
Tax effect
|
| | | | (10) | | | | | | (31) | | |
Reclassification adjustment for gain recognizd in net income
|
| | | | (238) | | | | | | (140) | | |
Tax effect
|
| | | | 50 | | | | | | 29 | | |
Other comprehensive income (loss), net of tax
|
| | | | (152) | | | | | | 9 | | |
Comprehensive income
|
| | | $ | 1,176 | | | | | $ | 3,765 | | |
| | |
Number
of Shares |
| |
Common
Stock |
| |
Additional
Paid-in capital |
| |
Treasury
Stock |
| |
Retained
Earnings |
| |
Accumulated
Other Comprehensive Income |
| |
Total
Stockholders’ Equity |
| |||||||||||||||||||||
Balance, June 30, 2018
|
| | | | 3,463,059 | | | | | $ | 364 | | | | | $ | 10,243 | | | | | $ | (3,710) | | | | | $ | 54,779 | | | | | $ | 219 | | | | | $ | 61,895 | | |
Net income
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,756 | | | | | | | | | | | | 3,756 | | |
Other comprehensive income
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9 | | | | | | 9 | | |
Dividend paid ($0.32 per share)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,280) | | | | | | | | | | | | (1,280) | | |
Merger with Audubon Savings Bank
|
| | | | 517,095 | | | | | | 52 | | | | | | 12,198 | | | | | | | | | | | | | | | | | | | | | | | | 12,250 | | |
Balance, June 30, 2019
|
| | | | 3,980,154 | | | | | $ | 416 | | | | | $ | 22,441 | | | | | $ | (3,710) | | | | | $ | 57,255 | | | | | $ | 228 | | | | | $ | 76,630 | | |
Net income
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,328 | | | | | | | | | | | | 1,328 | | |
Other comprehensive loss
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (152) | | | | | | (152) | | |
Dividend paid ($0.50 per share)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,983) | | | | | | | | | | | | (1,983) | | |
Merger with Fidelity Savings and Loan Association
|
| | | | 255,325 | | | | | | 26 | | | | | | 11,351 | | | | | | | | | | | | | | | | | | | | | | | | 11,377 | | |
Merger with Washington Savings Bank
|
| | | | 253,866 | | | | | | 25 | | | | | | 9,140 | | | | | | | | | | | | | | | | | | | | | | | | 9,165 | | |
Balance, June 30, 2020
|
| | | | 4,489,345 | | | | | $ | 467 | | | | | $ | 42,932 | | | | | $ | (3,710) | | | | | $ | 56,600 | | | | | $ | 76 | | | | | $ | 96,365 | | |
|
| | |
Year ended June 30,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Cash Flows from Operating Activities | | | | | | | | | | | | | |
Net income
|
| | | $ | 1,328 | | | | | $ | 3,756 | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | |
Provision for loan losses
|
| | | | 626 | | | | | | 88 | | |
Depreciation expense
|
| | | | 582 | | | | | | 408 | | |
Other accretion, net
|
| | | | (545) | | | | | | (265) | | |
Deferred income taxes
|
| | | | 51 | | | | | | (544) | | |
Impact of tax law change
|
| | | | (408) | | | | | | — | | |
Proceeds from gain on sale of loans
|
| | | | — | | | | | | 604 | | |
Origination of loans sold
|
| | | | — | | | | | | (592) | | |
Gain on sale of loans
|
| | | | — | | | | | | (12) | | |
Gain on bargain purchase
|
| | | | (746) | | | | | | — | | |
Loss on sale of other real estate owned
|
| | | | — | | | | | | 30 | | |
Amortization of core deposit intangibles
|
| | | | 242 | | | | | | 260 | | |
Gain on sale of securities
|
| | | | (238) | | | | | | (140) | | |
Earnings on bank-owned life insurance
|
| | | | (347) | | | | | | (327) | | |
Other, net
|
| | | | (395) | | | | | | (511) | | |
Net Cash Provided by Operating Activities
|
| | | | 150 | | | | | | 2,755 | | |
Cash Flows from Investing Activities | | | | | | | | | | | | | |
Securities available for sale:
|
| | | | | | | | | | | | |
Purchases
|
| | | | (98,928) | | | | | | (20,907) | | |
Maturities, calls and principal paydowns
|
| | | | 19,439 | | | | | | 1,198 | | |
Proceeds from sale of securities
|
| | | | 13,575 | | | | | | 40,383 | | |
Securities held to maturity:
|
| | | | | | | | | | | | |
Maturities, calls and principal paydowns
|
| | | | 268 | | | | | | 1,252 | | |
Net increase in loans receivable
|
| | | | (4,960) | | | | | | (5,834) | | |
Interest bearing time deposits:
|
| | | | | | | | | | | | |
Purchases
|
| | | | (1,500) | | | | | | (1,499) | | |
Maturities & principal paydowns
|
| | | | 7,986 | | | | | | 25,435 | | |
Regulatory stock
|
| | | | | | | | | | | | |
Purchases
|
| | | | — | | | | | | (983) | | |
Redemptions
|
| | | | 133 | | | | | | 2,535 | | |
Proceeds from sale of other real estate owned
|
| | | | — | | | | | | 250 | | |
Purchases of premises and equipment, net
|
| | | | (1,814) | | | | | | (247) | | |
Proceeds from the sale of premises and equipment
|
| | | | 8 | | | | | | — | | |
Acquisition(s), net of cash acquired
|
| | | | 48,848 | | | | | | 6,693 | | |
Net Cash (Used) Provided by Investing Activities
|
| | | | (16,945) | | | | | | 48,276 | | |
Cash Flows from Financing Activities | | | | | | | | | | | | | |
Net increase (decrease) in deposits
|
| | | | 77,117 | | | | | | (6,631) | | |
Proceeds from Federal Home Loan Bank advances
|
| | | | 12,000 | | | | | | 19,000 | | |
Repayment of Federal Home Loan Bank advances
|
| | | | (14,031) | | | | | | (52,880) | | |
Increase in advances from borrowers for taxes and insurance
|
| | | | 439 | | | | | | 800 | | |
Cash dividends
|
| | | | (1,983) | | | | | | (1,280) | | |
Net Cash Provided (Used) for Financing Activities
|
| | | | 73,542 | | | | | | (40,991) | | |
Net Increase in Cash and Cash Equivalents
|
| | | | 56,747 | | | | | | 10,040 | | |
Cash and Cash Equivalents-Beginning
|
| | | | 26,168 | | | | | | 16,128 | | |
Cash and Cash Equivalents-Ending
|
| | | $ | 82,915 | | | | | $ | 26,168 | | |
Supplementary Cash Flows Information
|
| | | | | | | | | | | | |
Interest paid
|
| | | $ | 5,157 | | | | | $ | 3,610 | | |
Income taxes paid
|
| | | | 12 | | | | | | 12 | | |
Transfers from loans to other real estate owned
|
| | | | — | | | | | | 178 | | |
Transfers of securities from held to maturity to available for sale
|
| | | | 1,637 | | | | | | — | | |
Operating lease right-of-use asset recorded
|
| | | | 1,789 | | | | | | — | | |
Operating lease liabilities recorded
|
| | | | 1,771 | | | | | | — | | |
Acquisition of noncash assets and liabilities
|
| | | | | | | | | | | | |
Assets acquired
|
| | | | 244,854 | | | | | | 149,149 | | |
Liabilities assumed
|
| | | | 223,566 | | | | | | 141,757 | | |
| | |
Years
|
|
Office buildings and improvements
|
| |
5 – 33
|
|
Furniture, fixtures, and equipment
|
| |
5 – 10
|
|
Automobiles
|
| |
4
|
|
| | |
Year ended June 30,
|
| |||||||||
(Dollars in thousands, except share and per share amounts)
|
| |
2020
|
| |
2019
|
| ||||||
Weighted-average common shares outstanding
|
| | | | 4,242,978 | | | | | | 4,156,696 | | |
Average treasury stock shares
|
| | | | (177,959) | | | | | | (177,959) | | |
Average unearned ESOP shares
|
| | | | — | | | | | | — | | |
Weighted-average common shares and common stock equivalents used
to calculate basic and diluted earnings per share |
| | | | 4,065,019 | | | | | | 3,978,737 | | |
Net Income
|
| | | $ | 1,328 | | | | | $ | 3,756 | | |
Basic and diluted earnings per share
|
| | | $ | 0.33 | | | | | $ | 0.94 | | |
(Dollars in thousands)
|
| | | | | | |
Contractually required principal and interest at acquisition
|
| | | $ | 619 | | |
Contractual cash flows not expected to be collected (nonaccretable difference)
|
| | | | 431 | | |
Expected cash flows at acquisition
|
| | | | 188 | | |
Interest component of expected cash flows (accretable discount)
|
| | | | 27 | | |
Fair value of acquired loans accounted for under FASB ASC 310-30
|
| | | $ | 161 | | |
|
(Dollars in thousands)
|
| |
Fidelity May 1, 2020 to
June 30, 2020 |
| |||
Net interest income
|
| | | $ | 313 | | |
Non-interest income
|
| | | | 17 | | |
Non-interest expense
|
| | | | (331) | | |
Pre-tax income
|
| | | $ | (1) | | |
Income tax expense
|
| | | | — | | |
Net income
|
| | | $ | (1) | | |
| | |
Pro Forma for the Year Ended
|
| |||||||||
(Dollars in thousands)
|
| |
June 30, 2020
|
| |
June 30, 2019
|
| ||||||
Net interest income
|
| | | $ | 17,352 | | | | | $ | 17,478 | | |
Provision for loan losses
|
| | | | (695) | | | | | | (105) | | |
Non-interest income
|
| | | | 1,672 | | | | | | 1,915 | | |
Non-interest expense
|
| | | | (16,005) | | | | | | (14,819) | | |
Pre-tax income
|
| | | $ | 2,324 | | | | | $ | 4,469 | | |
Income tax expense
|
| | | | 488 | | | | | | 938 | | |
Net income
|
| | | $ | 1,836 | | | | | $ | 3,531 | | |
Earnings per share basic and diluted
|
| | | $ | 0.41 | | | | | $ | 0.79 | | |
(Dollars in thousands)
|
| | | | | | |
Contractually required principal and interest at acquisition
|
| | | $ | 420 | | |
Contractual cash flows not expected to be collected (nonaccretable difference)
|
| | | | 230 | | |
Expected cash flows at acquisition
|
| | | | 190 | | |
Interest component of expected cash flows (accretable discount)
|
| | | | 27 | | |
Fair value of acquired loans accounted for under FASB ASC 310-30
|
| | | $ | 163 | | |
(Dollars in thousands)
|
| | | | | | |
Contractually required principal at acquisition
|
| | | $ | 125,491 | | |
Contractual cash flows not expected to be collected (credit mark)
|
| | | | 2,440 | | |
Expected cash flows at acquisition
|
| | | | 123,051 | | |
Interest rate discount mark
|
| | | | 1,694 | | |
Fair value of acquired loans not accounted for under FASB ASC 310-30
|
| | | $ | 121,357 | | |
(Dollars in thousands)
|
| |
Washington May 1, 2020
to June 30, 2020 |
| |||
Net interest income
|
| | | $ | 591 | | |
Non-interest income
|
| | | | 67 | | |
Non-interest expense
|
| | | | (628) | | |
Pre-tax income
|
| | | $ | 30 | | |
Income tax expense
|
| | | | (6) | | |
Net income
|
| | | $ | 24 | | |
| | |
Pro Forma for the Year Ended
|
| |||||||||
(Dollars in thousands)
|
| |
June 30, 2020
|
| |
June 30, 2019
|
| ||||||
Net interest income
|
| | | $ | 19,112 | | | | | $ | 20,149 | | |
Provision for loan losses
|
| | | | (752) | | | | | | (196) | | |
Non-interest income
|
| | | | 2,409 | | | | | | 1,715 | | |
Non-interest expense
|
| | | | (17,392) | | | | | | (18,223) | | |
Pre-tax income
|
| | | $ | 3,377 | | | | | $ | 3,445 | | |
Income tax expense
|
| | | | 709 | | | | | | 723 | | |
Net income
|
| | | $ | 2,668 | | | | | $ | 2,722 | | |
Earnings per share basic and diluted
|
| | | $ | 0.59 | | | | | $ | 0.61 | | |
| | |
Core deposit
intangible |
| |||
2020
|
| | | $ | 234 | | |
2021
|
| | | | 208 | | |
2022
|
| | | | 182 | | |
2023
|
| | | | 156 | | |
2024
|
| | | | 130 | | |
Thereafter
|
| | | | 262 | | |
| | | | $ | 1,172 | | |
|
Consideration paid
|
| | | | | | | | | $ | 12,250 | | |
| Assets acquired: | | | | | | | | | | | | | |
|
Cash and due from financial institutions
|
| | | $ | 6,693 | | | | | | | | |
|
Securities available for sale
|
| | | | 39,113 | | | | | | | | |
|
Loans receivable, net
|
| | | | 86,840 | | | | | | | | |
|
Premises and equipment
|
| | | | 6,056 | | | | | | | | |
|
Regulatory stock
|
| | | | 1,610 | | | | | | | | |
|
Deferred income taxes
|
| | | | 1,256 | | | | | | | | |
|
Bank-owned life insurance
|
| | | | 4,944 | | | | | | | | |
|
Core deposit intangible
|
| | | | 1,432 | | | | | | | | |
|
Accrued interest receivable
|
| | | | 522 | | | | | | | | |
|
Other assets
|
| | | | 683 | | | | | | | | |
|
Total assets
|
| | | | 149,149 | | | | | | | | |
| Liabilities assumed: | | | | | | | | | | | | | |
|
Deposits
|
| | | $ | (107,180) | | | | | | | | |
|
Advances from Federal Home Loan Bank
|
| | | | (32,380) | | | | | | | | |
|
Accrued interest payable
|
| | | | (81) | | | | | | | | |
|
Other liabilities
|
| | | | (2,116) | | | | | | | | |
|
Total liabilities
|
| | | | (141,757) | | | | | | | | |
|
Net assets acquired
|
| | | | | | | | | | 7,392 | | |
|
Goodwill resulting from ASB merger
|
| | | | | | | | | $ | 4,858 | | |
| | |
Year ended June 30,
|
| |||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| ||||||
Due in one year or less
|
| | | $ | 1,050 | | | | | $ | 7,986 | | |
Due after one year through five years
|
| | | | 1,250 | | | | | | 500 | | |
| | | | $ | 2,300 | | | | | $ | 8,486 | | |
| | |
June 30, 2020
|
| |||||||||||||||||||||
(Dollars in thousands)
|
| |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Fair
Value |
| ||||||||||||
Available For Sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities
|
| | | $ | 51,570 | | | | | $ | 272 | | | | | $ | (104) | | | | | $ | 51,738 | | |
U.S. agency collateralized mortgage obligations
|
| | | | 3,215 | | | | | | 33 | | | | | | (33) | | | | | | 3,215 | | |
U.S. government agency securities
|
| | | | 6,226 | | | | | | 2 | | | | | | (73) | | | | | | 6,155 | | |
U.S. treasury securitites
|
| | | | 1,000 | | | | | | — | | | | | | — | | | | | | 1,000 | | |
Municipal bonds
|
| | | | 10,485 | | | | | | 33 | | | | | | (10) | | | | | | 10,508 | | |
Corporate bonds
|
| | | | 17,399 | | | | | | 60 | | | | | | (77) | | | | | | 17,382 | | |
Total Available For Sale
|
| | | $ | 89,895 | | | | | $ | 400 | | | | | $ | (297) | | | | | $ | 89,998 | | |
|
| | |
June 30, 2019
|
| |||||||||||||||||||||
(Dollars in thousands)
|
| |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Fair
Value |
| ||||||||||||
Available For Sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities
|
| | | $ | 3,609 | | | | | $ | 69 | | | | | $ | — | | | | | $ | 3,678 | | |
U.S. agency collateralized mortgage obligations
|
| | | | 5,634 | | | | | | 138 | | | | | | (5) | | | | | | 5,767 | | |
U.S. government agency securities
|
| | | | 10,865 | | | | | | 68 | | | | | | (21) | | | | | | 10,912 | | |
Private label collateralized mortgage obligations
|
| | | | 264 | | | | | | 39 | | | | | | — | | | | | | 303 | | |
Total Available For Sale
|
| | | $ | 20,372 | | | | | $ | 314 | | | | | $ | (26) | | | | | $ | 20,660 | | |
Held to Maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities
|
| | | $ | 1,500 | | | | | $ | 37 | | | | | $ | (15) | | | | | $ | 1,522 | | |
U.S. agency collateralized mortgage obligations
|
| | | | 206 | | | | | | 8 | | | | | | — | | | | | | 214 | | |
Municipal bonds
|
| | | | 100 | | | | | | — | | | | | | — | | | | | | 100 | | |
Corporate bonds
|
| | | | 100 | | | | | | 1 | | | | | | — | | | | | | 101 | | |
Total Held to Maturity
|
| | | $ | 1,906 | | | | | $ | 46 | | | | | $ | — | | | | | $ | 1,937 | | |
| | |
June 30, 2020
|
| |||||||||
| | |
Available for Sale
|
| |||||||||
(Dollars in thousands)
|
| |
Amortized
Cost |
| |
Fair
Value |
| ||||||
Due in one year or less
|
| | | $ | 2,904 | | | | | $ | 2,893 | | |
Due after one year through five years
|
| | | | 9,632 | | | | | | 9,611 | | |
Due after five years through ten years
|
| | | | 7,606 | | | | | | 7,602 | | |
Due after ten years
|
| | | | 69,753 | | | | | | 69,892 | | |
| | | | $ | 89,895 | | | | | $ | 89,998 | | |
| | |
June 30, 2020
|
| |||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Less than 12 Months
|
| |
12 Months or More
|
| |
Total
Fair Value |
| |
Total
Unrealized Losses |
| ||||||||||||||||||||||||
|
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| ||||||||||||||||||||||||||
Available For Sale: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities
|
| | | $ | 22,082 | | | | | $ | 104 | | | | | $ | — | | | | | $ | — | | | | | $ | 22,082 | | | | | $ | 104 | | |
U.S. agency collateralized mortgage obligations
|
| | | | 1,513 | | | | | | 14 | | | | | | 1,129 | | | | | | 19 | | | | | | 2,642 | | | | | | 33 | | |
U.S. government agency securities
|
| | | | 4,922 | | | | | | 49 | | | | | | 914 | | | | | | 24 | | | | | | 5,836 | | | | | | 73 | | |
Municipal bonds
|
| | | | 3,694 | | | | | | 10 | | | | | | — | | | | | | — | | | | | | 3,694 | | | | | | 10 | | |
Corporate bonds
|
| | | | 5,222 | | | | | | 77 | | | | | | — | | | | | | — | | | | | | 5,222 | | | | | | 77 | | |
Total Temporarily Impaired Securities
|
| | |
$
|
37,433
|
| | | |
$
|
254
|
| | | |
$
|
2,043
|
| | | |
$
|
43
|
| | | |
$
|
39,476
|
| | | |
$
|
297
|
| |
|
| | |
June 30, 2019
|
| |||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Less than 12 Months
|
| |
12 Months or More
|
| |
Total
Fair Value |
| |
Total
Unrealized Losses |
| ||||||||||||||||||||||||
|
Fair
Value |
| |
Unrealized
Losses |
| |
Fair
Value |
| |
Unrealized
Losses |
| ||||||||||||||||||||||||||
Available For Sale: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. agency collateralized mortgage
obligations |
| | | $ | 1,237 | | | | | $ | 5 | | | | | $ | — | | | | | $ | — | | | | | $ | 1,237 | | | | | $ | 5 | | |
U.S. government agency securities
|
| | | | 2,524 | | | | | | 21 | | | | | | — | | | | | | — | | | | | | 2,524 | | | | | | 21 | | |
| | | | | 3,761 | | | | | | 26 | | | | | | — | | | | | | — | | | | | | 3,761 | | | | | | 26 | | |
Held to Maturity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities
|
| | | | — | | | | | | — | | | | | | 716 | | | | | | 15 | | | | | | 716 | | | | | | 15 | | |
| | | | | — | | | | | | — | | | | | | 716 | | | | | | 15 | | | | | | 716 | | | | | | 15 | | |
Total Temporarily Impaired Securities
|
| | |
$
|
3,761
|
| | | |
$
|
26
|
| | | |
$
|
716
|
| | | |
$
|
15
|
| | | |
$
|
4,477
|
| | | |
$
|
41
|
| |
| | |
June 30, 2020
|
| |
June 30, 2019
|
| ||||||||||||||||||
(Dollars in thousands)
|
| |
Amount
|
| |
Percent
|
| |
Amount
|
| |
Percent
|
| ||||||||||||
Residential real estate: | | | | | | | | | | | | | | | | | | | | | | | | | |
1 – 4 family
|
| | | $ | 345,915 | | | | | | 66.85% | | | | | $ | 220,176 | | | | | | 65.98% | | |
Home equity and HELOCs
|
| | | | 47,054 | | | | | | 9.10 | | | | | | 31,905 | | | | | | 9.56 | | |
Construction-residential
|
| | | | 15,799 | | | | | | 3.05 | | | | | | 9,739 | | | | | | 2.92 | | |
Commercial real estate:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family (five or more)
|
| | | | 14,964 | | | | | | 2.89 | | | | | | 11,028 | | | | | | 3.30 | | |
Commercial non-residential
|
| | | | 76,707 | | | | | | 14.83 | | | | | | 53,557 | | | | | | 16.05 | | |
Construction and land
|
| | | | 6,690 | | | | | | 1.29 | | | | | | 4,438 | | | | | | 1.33 | | |
Commercial
|
| | | | 6,438 | | | | | | 1.24 | | | | | | 2,099 | | | | | | 0.63 | | |
Consumer Loans
|
| | | | 3,900 | | | | | | 0.75 | | | | | | 741 | | | | | | 0.22 | | |
Total Loans
|
| | | | 517,467 | | | | | | 100.00% | | | | | | 333,683 | | | | | | 100.00% | | |
Loans in process
|
| | | | (4,895) | | | | | | | | | | | | (3,669) | | | | | | | | |
Unearned loan origination fees
|
| | | | (448) | | | | | | | | | | | | (788) | | | | | | | | |
Allowance for loan losses
|
| | | | (3,519) | | | | | | | | | | | | (3,209) | | | | | | | | |
Net Loans
|
| | | $ | 508,605 | | | | | | | | | | | $ | 326,017 | | | | | | | | |
June 30, 2020
|
| |
Residential real estate:
|
| |
Commercial real estate:
|
| | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
(Dollar amounts in
thousands) |
| |
1 – 4 family
|
| |
Home Equity
and HELOCs |
| |
Construction-
residential |
| |
Multi-family
(five or more) |
| |
Commercial
non-residential |
| |
Construction
and Land |
| |
Commercial
|
| |
Consumer
|
| |
Unallocated
|
| |
Total
|
| ||||||||||||||||||||||||||||||
Allowance for credit losses:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance
|
| | | $ | 1,501 | | | | | $ | 122 | | | | | $ | 321 | | | | | $ | 71 | | | | | $ | 708 | | | | | $ | 121 | | | | | $ | 95 | | | | | $ | 3 | | | | | $ | 267 | | | | | $ | 3,209 | | |
Charge-offs
|
| | | | (260) | | | | | | (6) | | | | | | — | | | | | | — | | | | | | (35) | | | | | | — | | | | | | (3) | | | | | | (12) | | | | | | — | | | | | | (316) | | |
Recoveries
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Provision
|
| | | | 242 | | | | | | 50 | | | | | | 205 | | | | | | 52 | | | | | | 54 | | | | | | 275 | | | | | | (9) | | | | | | 24 | | | | | | (267) | | | | | | 626 | | |
Ending Balance
|
| | | $ | 1,483 | | | | | $ | 166 | | | | | $ | 526 | | | | | $ | 123 | | | | | $ | 727 | | | | | $ | 396 | | | | | $ | 83 | | | | | $ | 15 | | | | | $ | — | | | | | $ | 3,519 | | |
Allowance ending balance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Collectively evaluated for impairment
|
| | | | 1,483 | | | | | | 166 | | | | | | 526 | | | | | | 123 | | | | | | 727 | | | | | | 396 | | | | | | 83 | | | | | | 15 | | | | | | — | | | | | | 3,519 | | |
Total allowance
|
| | | $ | 1,483 | | | | | $ | 166 | | | | | $ | 526 | | | | | $ | 123 | | | | | $ | 727 | | | | | $ | 396 | | | | | $ | 83 | | | | | $ | 15 | | | | | $ | — | | | | | $ | 3,519 | | |
Loans receivable ending balance:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment
|
| | | $ | 973 | | | | | $ | 628 | | | | | $ | — | | | | | $ | 185 | | | | | $ | 585 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 2,371 | | |
Collectively evaluated for impairment
|
| | | | 189,055 | | | | | | 15,677 | | | | | | 9,218 | | | | | | 9,267 | | | | | | 45,214 | | | | | | 6,690 | | | | | | 4,150 | | | | | | 713 | | | | | | — | | | | | | 279,984 | | |
Acquired non-credit impaired loans(1)
|
| | | | 155,588 | | | | | | 30,727 | | | | | | 6,581 | | | | | | 5,512 | | | | | | 30,908 | | | | | | — | | | | | | 2,288 | | | | | | 3,187 | | | | | | — | | | | | | 234,791 | | |
Acquired credit impaired loans(2)
|
| | | | 299 | | | | | | 22 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 321 | | |
Total portfolio
|
| | | $ | 345,915 | | | | | $ | 47,054 | | | | | $ | 15,799 | | | | | $ | 14,964 | | | | | $ | 76,707 | | | | | $ | 6,690 | | | | | $ | 6,438 | | | | | $ | 3,900 | | | | | $ | — | | | | | $ | 517,467 | | |
|
June 30, 2019
|
| |
Residential real estate:
|
| |
Commercial real estate:
|
| | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||
(Dollar amounts in
thousands) |
| |
1 – 4 family
|
| |
Home Equity
and HELOCs |
| |
Construction-
residential |
| |
Multi-family
(five or more) |
| |
Commercial
non-residential |
| |
Construction
and Land |
| |
Commercial
|
| |
Consumer
|
| |
Unallocated
|
| |
Total
|
| ||||||||||||||||||||||||||||||
Allowance for credit losses:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Beginning balance
|
| | | $ | 1,478 | | | | | $ | 58 | | | | | $ | 191 | | | | | $ | 116 | | | | | $ | 388 | | | | | $ | 903 | | | | | $ | 4 | | | | | $ | — | | | | | $ | — | | | | | $ | 3,138 | | |
Charge-offs
|
| | | | (21) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (21) | | |
Recoveries
|
| | | | 4 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4 | | |
Provision
|
| | | | 40 | | | | | | 64 | | | | | | 130 | | | | | | (45) | | | | | | 320 | | | | | | (782) | | | | | | 91 | | | | | | 3 | | | | | | 267 | | | | | | 88 | | |
Ending Balance
|
| | | $ | 1,501 | | | | | $ | 122 | | | | | $ | 321 | | | | | $ | 71 | | | | | $ | 708 | | | | | $ | 121 | | | | | $ | 95 | | | | | $ | 3 | | | | | $ | 267 | | | | | $ | 3,209 | | |
Allowance ending balance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment
|
| | | $ | 58 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 58 | | |
Collectively evaluated for impairment
|
| | | | 1,443 | | | | | | 122 | | | | | | 321 | | | | | | 71 | | | | | | 708 | | | | | | 121 | | | | | | 95 | | | | | | 3 | | | | | | 267 | | | | | | 3,151 | | |
Total allowance
|
| | | $ | 1,501 | | | | | $ | 122 | | | | | $ | 321 | | | | | $ | 71 | | | | | $ | 708 | | | | | $ | 121 | | | | | $ | 95 | | | | | $ | 3 | | | | | $ | 267 | | | | | $ | 3,209 | | |
Loans receivable ending balance:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment
|
| | | $ | 2,557 | | | | | $ | 1,185 | | | | | $ | — | | | | | $ | — | | | | | $ | 662 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 4,404 | | |
Collectively evaluated for impairment
|
| | | | 180,310 | | | | | | 20,858 | | | | | | 9,739 | | | | | | 10,533 | | | | | | 28,572 | | | | | | 2,888 | | | | | | 1,728 | | | | | | 735 | | | | | | — | | | | | | 255,363 | | |
Acquired non-credit impaired loans(1)
|
| | | | 37,309 | | | | | | 9,862 | | | | | | — | | | | | | 495 | | | | | | 24,323 | | | | | | 1,550 | | | | | | 371 | | | | | | 6 | | | | | | — | | | | | | 73,916 | | |
Total portfolio
|
| | | $ | 220,176 | | | | | $ | 31,905 | | | | | $ | 9,739 | | | | | $ | 11,028 | | | | | $ | 53,557 | | | | | $ | 4,438 | | | | | $ | 2,099 | | | | | $ | 741 | | | | | $ | — | | | | | $ | 333,683 | | |
|
June 30, 2020
|
| ||||||||||||||||||||||||||||||
| | |
Commercial Real Estate
|
| | | | | | | | | | | | | |||||||||||||||
| | |
Multi-family
|
| |
Non-residential
|
| |
Construction
and land |
| |
Commercial
|
| |
Total
|
| |||||||||||||||
Pass
|
| | | $ | 13,976 | | | | | $ | 75,973 | | | | | $ | 6,690 | | | | | $ | 6,438 | | | | | $ | 103,077 | | |
Special Mention
|
| | | | 803 | | | | | | 507 | | | | | | — | | | | | | — | | | | | | 1,310 | | |
Substandard
|
| | | | 185 | | | | | | 227 | | | | | | — | | | | | | — | | | | | | 412 | | |
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Ending Balance
|
| | | $ | 14,964 | | | | | $ | 76,707 | | | | | $ | 6,690 | | | | | $ | 6,438 | | | | | $ | 104,799 | | |
|
June 30, 2019
|
| ||||||||||||||||||||||||||||||
| | |
Commercial Real Estate
|
| | | | | | | | | | | | | |||||||||||||||
| | |
Multi-family
|
| |
Non-residential
|
| |
Construction
and land |
| |
Commercial
|
| |
Total
|
| |||||||||||||||
Pass
|
| | | $ | 10,445 | | | | | $ | 52,151 | | | | | $ | 4,438 | | | | | $ | 2,099 | | | | | $ | 69,133 | | |
Special Mention
|
| | | | 394 | | | | | | 744 | | | | | | — | | | | | | — | | | | | | 1,138 | | |
Substandard
|
| | | | 189 | | | | | | 662 | | | | | | — | | | | | | — | | | | | | 851 | | |
Doubtful
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Ending Balance
|
| | | $ | 11,028 | | | | | $ | 53,557 | | | | | $ | 4,438 | | | | | $ | 2,099 | | | | | $ | 71,122 | | |
June 30, 2020
|
| ||||||||||||||||||||||||||||||
| | |
Residential Real Estate
|
| | | | | | | | | | | | | |||||||||||||||
| | |
1 – 4 family
|
| |
Home equity &
HELOCs |
| |
Construction
|
| |
Consumer
|
| |
Total
|
| |||||||||||||||
Performing
|
| | | $ | 343,562 | | | | | $ | 46,580 | | | | | $ | 15,799 | | | | | $ | 3,785 | | | | | $ | 409,726 | | |
Non-performing
|
| | | | 2,353 | | | | | | 474 | | | | | | — | | | | | | 115 | | | | | | 2,942 | | |
| | | | $ | 345,915 | | | | | $ | 47,054 | | | | | $ | 15,799 | | | | | $ | 3,900 | | | | | $ | 412,668 | | |
|
June 30, 2019
|
| ||||||||||||||||||||||||||||||
| | |
Residential Real Estate
|
| | | | | | | | | | | | | |||||||||||||||
| | |
1 – 4 family
|
| |
Home equity &
HELOCs |
| |
Construction
|
| |
Consumer
|
| |
Total
|
| |||||||||||||||
Performing
|
| | | $ | 218,899 | | | | | $ | 31,380 | | | | | $ | 9,739 | | | | | $ | 741 | | | | | $ | 260,759 | | |
Non-performing
|
| | | | 1,277 | | | | | | 525 | | | | | | — | | | | | | — | | | | | | 1,802 | | |
| | | | $ | 220,176 | | | | | $ | 31,905 | | | | | $ | 9,739 | | | | | $ | 741 | | | | | $ | 262,561 | | |
(Dollars in thousands)
|
| |
June 30, 2020
|
| |||
Outstanding principal balance
|
| | | $ | 773 | | |
Carrying amount
|
| | | | 321 | | |
(Dollars in thousands)
|
| |
Accretable Discount
|
| |||
Balance, May 1, 2020
|
| | | $ | 57 | | |
Accretion
|
| | | | (4) | | |
Balance, June 30, 2020
|
| | | $ | 53 | | |
| | |
Aged Analysis of Past Due and Non-accrual Loans
As of June 30, 2020 |
| |
Recorded
Investment > 90 Days and Accruing |
| |
Recorded
Investment Loans on Non-Accrual |
| |||||||||||||||||||||||||||||||||||||||||||||
(Dollar amounts in thousands)
|
| |
30 – 59 Days
Past Due |
| |
60 – 89 Days
Past Due |
| |
90 Days
Or Greater |
| |
Total Past
Due |
| |
Acquired
Credit Impaired |
| |
Current
|
| |
Total Loans
Receivable |
| |||||||||||||||||||||||||||||||||
Residential real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 – 4 family
|
| | | $ | 235 | | | | | $ | 1,020 | | | | | $ | 1,477 | | | | | $ | 2,732 | | | | | $ | 299 | | | | | $ | 342,884 | | | | | $ | 345,915 | | | | | $ | — | | | | | $ | 2,353 | | |
Home equity and HELOCs
|
| | | | 126 | | | | | | 101 | | | | | | 181 | | | | | | 408 | | | | | | 22 | | | | | | 46,624 | | | | | | 47,054 | | | | | | 90 | | | | | | 384 | | |
Construction – residential
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 15,799 | | | | | | 15,799 | | | | | | — | | | | | | — | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family
|
| | | | — | | | | | | 465 | | | | | | 185 | | | | | | 650 | | | | | | — | | | | | | 14,314 | | | | | | 14,964 | | | | | | — | | | | | | 185 | | |
Commercial non-residential
|
| | | | 100 | | | | | | 507 | | | | | | — | | | | | | 607 | | | | | | — | | | | | | 76,100 | | | | | | 76,707 | | | | | | — | | | | | | 135 | | |
Construction and land
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,690 | | | | | | 6,690 | | | | | | — | | | | | | — | | |
Commercial
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,438 | | | | | | 6,438 | | | | | | — | | | | | | — | | |
Consumer
|
| | | | 3 | | | | | | 21 | | | | | | — | | | | | | 24 | | | | | | — | | | | | | 3,876 | | | | | | 3,900 | | | | | | — | | | | | | 115 | | |
Total
|
| | | $ | 464 | | | | | $ | 2,114 | | | | | $ | 1,843 | | | | | $ | 4,421 | | | | | $ | 321 | | | | | $ | 512,724 | | | | | $ | 517,467 | | | | | $ | 90 | | | | | $ | 3,172 | | |
|
| | |
Aged Analysis of Past Due and Non-accrual Loans
As of June 30, 2019 |
| |
Recorded
Investment > 90 Days and Accruing |
| |
Recorded
Investment Loans on Non-Accrual |
| |||||||||||||||||||||||||||||||||||||||||||||
(Dollar amounts in thousands)
|
| |
30 – 59 Days
Past Due |
| |
60 – 89 Days
Past Due |
| |
90 Days
Or Greater |
| |
Total Past
Due |
| |
Acquired
Credit Impaired |
| |
Current
|
| |
Total Loans
Receivable |
| |||||||||||||||||||||||||||||||||
Residential real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 – 4 family
|
| | | $ | — | | | | | $ | 807 | | | | | $ | 1,038 | | | | | $ | 1,845 | | | | | $ | — | | | | | $ | 218,331 | | | | | $ | 220,176 | | | | | $ | 7 | | | | | $ | 1,270 | | |
Home equity and HELOCs
|
| | | | 246 | | | | | | 59 | | | | | | 315 | | | | | | 620 | | | | | | — | | | | | | 31,285 | | | | | | 31,905 | | | | | | 140 | | | | | | 385 | | |
Construction – residential
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,739 | | | | | | 9,739 | | | | | | — | | | | | | — | | |
Commercial real estate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Multi-family
|
| | | | — | | | | | | 394 | | | | | | 189 | | | | | | 583 | | | | | | — | | | | | | 10,445 | | | | | | 11,028 | | | | | | — | | | | | | 189 | | |
Commercial non-residential
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 53,557 | | | | | | 53,557 | | | | | | — | | | | | | | | |
Construction and land
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,438 | | | | | | 4,438 | | | | | | — | | | | | | — | | |
Commercial
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,099 | | | | | | 2,099 | | | | | | — | | | | | | — | | |
Consumer
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 741 | | | | | | 741 | | | | | | — | | | | | | — | | |
Total
|
| | | $ | 246 | | | | | $ | 1,260 | | | | | $ | 1,542 | | | | | $ | 3,048 | | | | | $ | — | | | | | $ | 330,635 | | | | | $ | 333,683 | | | | | $ | 147 | | | | | $ | 1,844 | | |
|
June 30, 2020
|
| ||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Recorded
Investment |
| |
Unpaid
Principal Balance |
| |
Related
Allowance |
| |
Average
Recorded Investment |
| |
Interest
Income Recognized |
| |||||||||||||||
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 – 4 Family residential real Estate
|
| | | $ | 973 | | | | | $ | 973 | | | | | $ | — | | | | | $ | 1,451 | | | | | $ | 45 | | |
Home equity and HELOCs
|
| | | | 628 | | | | | | 634 | | | | | | — | | | | | | 906 | | | | | | 37 | | |
Construction Residential
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Multi-family
|
| | | | 185 | | | | | | 185 | | | | | | — | | | | | | 139 | | | | | | — | | |
Commercial non-residential
|
| | | | 585 | | | | | | 620 | | | | | | — | | | | | | 624 | | | | | | 38 | | |
Construction and land
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commecial
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Consumer
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
June 30, 2020
|
| ||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Recorded
Investment |
| |
Unpaid
Principal Balance |
| |
Related
Allowance |
| |
Average
Recorded Investment |
| |
Interest
Income Recognized |
| |||||||||||||||
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 – 4 Family
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 67 | | | | | $ | 4 | | |
Home equity and HELOCs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Construction Residential
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Multi-family
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commercial non-residential
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Construction and land
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commecial
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Consumer
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 – 4 Family
|
| | | $ | 973 | | | | | $ | 973 | | | | | $ | — | | | | | $ | 1,518 | | | | | $ | 49 | | |
Home equity and HELOCs
|
| | | | 628 | | | | | | 634 | | | | | | — | | | | | | 906 | | | | | | 37 | | |
Construction Residential
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Multi-family
|
| | | | 185 | | | | | | 185 | | | | | | — | | | | | | 139 | | | | | | — | | |
Commercial non-residential
|
| | | | 585 | | | | | | 620 | | | | | | — | | | | | | 624 | | | | | | 38 | | |
Construction and land
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commecial
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Consumer
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
June 30, 2019
|
| ||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Recorded
Investment |
| |
Unpaid
Principal Balance |
| |
Related
Allowance |
| |
Average
Recorded Investment |
| |
Interest
Income Recognized |
| |||||||||||||||
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 – 4 Family residential real Estate
|
| | | $ | 2,396 | | | | | $ | 2,396 | | | | | $ | — | | | | | $ | 1,927 | | | | | $ | 73 | | |
Home equity and HELOCs
|
| | | | 1,185 | | | | | | 1,185 | | | | | | — | | | | | | 859 | | | | | | 47 | | |
Construction Residential
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Multi-family
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commercial non-residential
|
| | | | 662 | | | | | | 662 | | | | | | — | | | | | | 682 | | | | | | 42 | | |
Construction and land
|
| | | | — | | | | | | — | | | | | | — | | | | | | 2,251 | | | | | | 169 | | |
Commecial
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Consumer
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 – 4 Family
|
| | | $ | 161 | | | | | $ | 161 | | | | | $ | 58 | | | | | $ | 165 | | | | | $ | 11 | | |
Home equity and HELOCs
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Construction Residential
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Multi-family
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
June 30, 2019
|
| ||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Recorded
Investment |
| |
Unpaid
Principal Balance |
| |
Related
Allowance |
| |
Average
Recorded Investment |
| |
Interest
Income Recognized |
| |||||||||||||||
Commercial non-residential
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Construction and land
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commecial
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Consumer
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1 – 4 Family
|
| | | $ | 2,557 | | | | | $ | 2,557 | | | | | $ | 58 | | | | | $ | 2,092 | | | | | $ | 84 | | |
Home equity and HELOCs
|
| | | | 1,185 | | | | | | 1,185 | | | | | | — | | | | | | 859 | | | | | | 47 | | |
Construction Residential
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Multi-family
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Commercial non-residential
|
| | | | 662 | | | | | | 662 | | | | | | — | | | | | | 682 | | | | | | 42 | | |
Construction and land
|
| | | | — | | | | | | — | | | | | | — | | | | | | 2,251 | | | | | | 169 | | |
Commecial
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Consumer
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | |
For the year ended
June 30, 2019 |
| |||||||||||||||
(Dollars in thousands)
|
| |
Number of
Contracts |
| |
Pre-Modification
Outstanding Recorded Investment |
| |
Post-Modification
Outstanding Recorded Investment |
| |||||||||
Commercial non-residential
|
| | | | 2 | | | | | $ | 232 | | | | | $ | 232 | | |
Total
|
| | | | 2 | | | | | $ | 232 | | | | | $ | 232 | | |
| | |
June 30, 2020
|
| |
June 30, 2019
|
| ||||||||||||||||||
(Dollars in thousands)
|
| |
Amount
|
| |
% of Total
|
| |
Amount
|
| |
% of Total
|
| ||||||||||||
Interest-bearing deposits
|
| | | $ | 4 | | | | | | 0.2% | | | | | $ | 20 | | | | | | 1.5% | | |
Investment securities
|
| | | | 352 | | | | | | 13.8% | | | | | | 101 | | | | | | 7.8% | | |
Loans
|
| | | | 2,184 | | | | | | 86.0% | | | | | | 1,181 | | | | | | 90.7% | | |
Total accrued interest receivable
|
| | | $ | 2,540 | | | | | | 100.0% | | | | | $ | 1,302 | | | | | | 100.0% | | |
| | |
June 30,
|
| |||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| ||||||
Land
|
| | | $ | 4,144 | | | | | $ | 2,471 | | |
Office buildings and improvements
|
| | | | 14,493 | | | | | | 8,198 | | |
Furniture, fixtures and equipment
|
| | | | 1,918 | | | | | | 978 | | |
Automobiles
|
| | | | 50 | | | | | | 57 | | |
| | | | | 20,605 | | | | | | 11,704 | | |
Accumulated depreciation
|
| | | | (3,872) | | | | | | (3,298) | | |
| | | | $ | 16,733 | | | | | $ | 8,406 | | |
(Dollars in thousands)
|
| |
Goodwill
|
| |
Core Deposit
Intangibles |
| ||||||
Balance, July 1, 2018
|
| | | $ | — | | | | | $ | — | | |
Adjustments: | | | | | | | | | | | | | |
Additions
|
| | | | 4,858 | | | | | | 1,432 | | |
Amortization
|
| | | | — | | | | | | (260) | | |
Balance, June 30, 2019
|
| | | $ | 4,858 | | | | | $ | 1,172 | | |
|
(Dollars in thousands)
|
| |
Goodwill
|
| |
Core Deposit
Intangibles |
| ||||||
Balance, July 1, 2019
|
| | | $ | 4,858 | | | | | $ | 1,172 | | |
Adjustments: | | | | | | | | | | | | | |
Additions
|
| | | | — | | | | | | 262 | | |
Amortization
|
| | | | — | | | | | | (242) | | |
Balance, June 30, 2020
|
| | | $ | 4,858 | | | | | $ | 1,192 | | |
| | |
June 30, 2020
|
| |
June 30, 2019
|
| ||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Gross
|
| |
Accumulated
Amortization |
| |
Net
|
| |
Gross
|
| |
Accumulated
Amortization |
| |
Net
|
| ||||||||||||||||||
Core deposit intangibles
|
| | | $ | 1,694 | | | | | $ | (502) | | | | | $ | 1,192 | | | | | $ | 1,432 | | | | | $ | (260) | | | | | $ | 1,172 | | |
| | |
June 30, 2020
|
| |
June 30, 2019
|
| ||||||||||||||||||
(Dollars in thousands)
|
| |
Amount
|
| |
Weighted
Average Rate |
| |
Amount
|
| |
Weighted
Average Rate |
| ||||||||||||
Checking accounts
|
| | | $ | 142,223 | | | | | | 0.13% | | | | | $ | 67,547 | | | | | | 0.09% | | |
Money market accounts
|
| | | | 129,048 | | | | | | 0.94 | | | | | | 67,648 | | | | | | 1.68 | | |
Savings and club accounts
|
| | | | 94,097 | | | | | | 0.19 | | | | | | 33,172 | | | | | | 0.16 | | |
Certificates of deposit
|
| | | | 194,480 | | | | | | 1.86 | | | | | | 112,839 | | | | | | 1.90 | | |
| | | | $ | 559,848 | | | | | | 0.93% | | | | | $ | 281,206 | | | | | | 1.21% | | |
(Dollars in thousands)
|
| |
June 30, 2020
|
| |
June 30, 2019
|
| ||||||
FHLB advances: | | | | | | | | | | | | | |
Convertible
|
| | | $ | 20,000 | | | | | $ | 20,000 | | |
Fixed
|
| | | | 21,767 | | | | | | 11,000 | | |
Mid-term
|
| | | | 23,125 | | | | | | 19,000 | | |
Total FHLB advances
|
| | | $ | 64,892 | | | | | $ | 50,000 | | |
(Dollars in thousands)
|
| |
June 30, 2020
|
| |||||||||
Fiscal year ending June 30:
|
| |
Amount
|
| |
Weighted
Average Rate |
| ||||||
2021
|
| | | $ | 15,086 | | | | | | 2.40% | | |
2022
|
| | | | 9,092 | | | | | | 2.17% | | |
2023
|
| | | | 14,073 | | | | | | 2.75% | | |
2024
|
| | | | 9,158 | | | | | | 2.13% | | |
2025
|
| | | | 15,892 | | | | | | 2.85% | | |
Thereafter
|
| | | | 1,591 | | | | | | 2.83% | | |
| | | | $ | 64,892 | | | | | | 2.53% | | |
| | |
Year ended June 30,
|
| |||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| ||||||
Federal: | | | | | | | | | | | | | |
Current
|
| | | $ | (448) | | | | | $ | 1,594 | | |
Deferred
|
| | | | 51 | | | | | | (544) | | |
| | | | | (397) | | | | | | 1,050 | | |
State, current
|
| | | | 10 | | | | | | 10 | | |
| | | | $ | (387) | | | | | $ | 1,060 | | |
|
| | |
Year ended June 30,
|
| |||||||||||||||||||||
| | |
2020
|
| |
2019
|
| ||||||||||||||||||
(Dollars in thousands)
|
| |
Amount
|
| |
% of
Pretax Income |
| |
Amount
|
| |
% of
Pretax Income |
| ||||||||||||
Federal income tax at statutory rate
|
| | | $ | 198 | | | | | | 21.0% | | | | | $ | 1,011 | | | | | | 21.0% | | |
State tax, net of federal benefit
|
| | | | 7 | | | | | | 0.7 | | | | | | 8 | | | | | | 0.2 | | |
Bank owned-life insurance
|
| | | | (74) | | | | | | (7.9) | | | | | | (69) | | | | | | (1.4) | | |
Gain on bargain purchase
|
| | | | (157) | | | | | | (16.7) | | | | | | — | | | | | | — | | |
Non-deductible merger expenses
|
| | | | 71 | | | | | | 7.5 | | | | | | — | | | | | | — | | |
Impact of tax law change
|
| | | | (408) | | | | | | (43.3) | | | | | | — | | | | | | — | | |
Other
|
| | | | (24) | | | | | | (2.4) | | | | | | 110 | | | | | | 2.2 | | |
| | | | $ | (387) | | | | | | (41.1)% | | | | | $ | 1,060 | | | | | | 22.0% | | |
| | |
June 30,
|
| |||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Loan origination fees
|
| | | $ | 100 | | | | | $ | 186 | | |
Allowance for loan losses
|
| | | | 788 | | | | | | 757 | | |
Deferred director’s fees
|
| | | | 289 | | | | | | 303 | | |
Deferred compensation
|
| | | | 525 | | | | | | 475 | | |
Deferred pension
|
| | | | 613 | | | | | | — | | |
Purchase accounting adjustments
|
| | | | 1,552 | | | | | | — | | |
NOL carry forward
|
| | | | 1,090 | | | | | | 453 | | |
Other
|
| | | | — | | | | | | 60 | | |
Total Deferred Tax Assets
|
| | | | 4,957 | | | | | | 2,234 | | |
Deferred tax liabilities: | | | | | | | | | | | | | |
Net unrealized gain on securities
|
| | | | (21) | | | | | | (60) | | |
Premises and equipment
|
| | | | (114) | | | | | | (63) | | |
Other
|
| | | | (5) | | | | | | — | | |
Total Deferred Tax Liabilities
|
| | | | (140) | | | | | | (123) | | |
Net Deferred Tax Asset
|
| | | $ | 4,817 | | | | | $ | 2,111 | | |
| | |
June 30,
|
| |||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| ||||||
Commitments to extend credit
|
| | | $ | 18,602 | | | | | $ | 10,952 | | |
Unfunded commitments under lines of credit
|
| | | | 52,432 | | | | | | 27,981 | | |
| | |
Actual
|
| |
For Capital Adequacy
Purposes |
| |
To be Well Capitalized
under Prompt Corrective Action Provisions |
| |||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| ||||||||||||||||||
As of June 30, 2019: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total risk-based capital
|
| | | $ | 71,558 | | | | | | 25.8% | | | | | $ | >22,172 | | | | | | >8.0% | | | | | $ | >27,715 | | | | | | >10.0% | | |
Common Equity Tier 1 Capital
|
| | | | 68,437 | | | | | | 24.7 | | | | | | >12,477 | | | | | | >4.5 | | | | | | >18,022 | | | | | | >6.5 | | |
Core capital (to risk-weighted assets)
|
| | | | 68,437 | | | | | | 24.7 | | | | | | >16,636 | | | | | | >6.0 | | | | | | >22,181 | | | | | | >8.0 | | |
Core capital (to adjusted total assets)
|
| | | | 68,437 | | | | | | 16.9 | | | | | | >16,162 | | | | | | >4.0 | | | | | | >20,203 | | | | | | >5.0 | | |
| | |
June 30, 2020
|
| |||||||||||||||||||||
(Dollars in thousands)
|
| |
Level I
|
| |
Level II
|
| |
Level III
|
| |
Total
|
| ||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Investments available-for-sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities
|
| | | $ | — | | | | | $ | 51,738 | | | | | $ | — | | | | | $ | 51,738 | | |
U.S. agency collateralized mortgage obligations
|
| | | | — | | | | | | 3,215 | | | | | | — | | | | | | 3,215 | | |
U.S. government agency securities
|
| | | | — | | | | | | 6,155 | | | | | | — | | | | | | 6,155 | | |
U.S. treasury securities
|
| | | | — | | | | | | 1,000 | | | | | | — | | | | | | 1,000 | | |
Municipal bonds
|
| | | | — | | | | | | 10,508 | | | | | | — | | | | | | 10,508 | | |
Corporate bonds
|
| | | | — | | | | | | 17,382 | | | | | | — | | | | | | 17,382 | | |
Total Assets
|
| | | $ | — | | | | | $ | 89,998 | | | | | $ | — | | | | | $ | 89,998 | | |
|
| | |
June 30, 2019
|
| |||||||||||||||||||||
(Dollars in thousands)
|
| |
Level I
|
| |
Level II
|
| |
Level III
|
| |
Total
|
| ||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Investments available-for-sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities
|
| | | $ | — | | | | | $ | 3,678 | | | | | $ | — | | | | | $ | 3,678 | | |
U.S. agency collateralized mortgage obligations
|
| | | | — | | | | | | 5,767 | | | | | | — | | | | | | 5,767 | | |
U.S. government agency securities
|
| | | | — | | | | | | 10,912 | | | | | | — | | | | | | 10,912 | | |
Private label collateralized mortgage obligations
|
| | | | — | | | | | | 303 | | | | | | — | | | | | | 303 | | |
Total Assets
|
| | | $ | — | | | | | $ | 20,660 | | | | | $ | — | | | | | $ | 20,660 | | |
| | |
June 30, 2020
|
| |||||||||||||||||||||
(Dollars in thousands)
|
| |
Level I
|
| |
Level II
|
| |
Level III
|
| |
Total
|
| ||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired loans
|
| | | $ | — | | | | | $ | — | | | | | $ | 190 | | | | | $ | 190 | | |
Other real estate owned
|
| | | | — | | | | | | — | | | | | | 100 | | | | | | 100 | | |
| | | | $ | — | | | | | $ | — | | | | | $ | 290 | | | | | $ | 290 | | |
|
| | |
June 30, 2019
|
| |||||||||||||||||||||
(Dollars in thousands)
|
| |
Level I
|
| |
Level II
|
| |
Level III
|
| |
Total
|
| ||||||||||||
Assets: | | | | | | | | | | | | | | | | | | | | | | | | | |
Impaired loans
|
| | | $ | — | | | | | $ | — | | | | | $ | 4,346 | | | | | $ | 4,346 | | |
Other real estate owned
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | $ | — | | | | | $ | — | | | | | $ | 4,346 | | | | | $ | 4,346 | | |
|
| | |
Quantative Information about Level 3 Fair Value Measurements
|
| ||||||||||||
(Dollars in thousands)
|
| |
Fair Value
Estimate |
| |
Valuation
Techniques |
| |
Unobservable
Input |
| |
Range
|
| |||
June 30, 2020 | | | | | | | | | | | | | | | | |
Impaired loans
|
| | | $ | 190 | | | |
Appraisal of collateral(1)
|
| |
Appraisal adjustments(2)
|
| |
0 – 28%
|
|
Foreclosed real estate owned
|
| | | $ | 100 | | | |
Appraisal of collateral(1)(3)
|
| |
Liquidation expenses(2)
|
| |
0%
|
|
| | |
Quantative Information about Level 3 Fair Value Measurements
|
| ||||||||||||
(Dollars in thousands)
|
| |
Fair Value
Estimate |
| |
Valuation
Techniques |
| |
Unobservable
Input |
| |
Range
|
| |||
June 30, 2019 | | | | | | | | | | | | | | | | |
Impaired loans
|
| | | $ | 4,346 | | | |
Appraisal of collateral(1)
|
| |
Appraisal adjustments(2)
|
| |
0 – 25%
|
|
Foreclosed real estate owned
|
| | | $ | — | | | |
Appraisal of collateral(1)(3)
|
| |
Liquidation expenses(2)
|
| |
0%
|
|
| | |
Fair Value Measurements at June 30, 2020
|
| |||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Carrying
Amount |
| |
Fair
Value |
| |
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
| |
Significant
Other Observable Inputs (Level 2) |
| |
Significant
Unobservable Inputs (Level 3) |
| |||||||||||||||
Financial assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks
|
| | | $ | 82,915 | | | | | $ | 82,915 | | | | | $ | 82,915 | | | | | $ | — | | | | | $ | — | | |
Interest bearing time deposits
|
| | | | 2,300 | | | | | | 2,300 | | | | | | 2,300 | | | | | | — | | | | | | — | | |
Loans receivable, net
|
| | | | 508,605 | | | | | | 541,779 | | | | | | — | | | | | | — | | | | | | 541,779 | | |
Regulatory stock
|
| | | | 4,200 | | | | | | 4,200 | | | | | | 4,200 | | | | | | — | | | | | | — | | |
Bank-owned life insurance
|
| | | | 14,758 | | | | | | 14,758 | | | | | | 14,758 | | | | | | — | | | | | | — | | |
Accrued interest receivable
|
| | | | 2,540 | | | | | | 2,540 | | | | | | 2,540 | | | | | | — | | | | | | — | | |
| | |
Fair Value Measurements at June 30, 2020
|
| |||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Carrying
Amount |
| |
Fair
Value |
| |
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
| |
Significant
Other Observable Inputs (Level 2) |
| |
Significant
Unobservable Inputs (Level 3) |
| |||||||||||||||
Financial liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Checking accounts
|
| | | | 142,223 | | | | | | 142,223 | | | | | | 142,223 | | | | | | — | | | | | | — | | |
Money market accounts
|
| | | | 129,048 | | | | | | 129,048 | | | | | | 129,048 | | | | | | — | | | | | | — | | |
Savings and club accounts
|
| | | | 94,097 | | | | | | 94,097 | | | | | | 94,097 | | | | | | — | | | | | | — | | |
Certificates of deposit
|
| | | | 194,480 | | | | | | 198,268 | | | | | | — | | | | | | — | | | | | | 198,268 | | |
Advances from Federal Home Loan
Bank |
| | | | 64,892 | | | | | | 67,520 | | | | | | — | | | | | | — | | | | | | 67,520 | | |
Advances from borrowers for taxes
and insurance |
| | | | 4,536 | | | | | | 4,536 | | | | | | 4,536 | | | | | | — | | | | | | — | | |
Accrued interest payable
|
| | | | 246 | | | | | | 246 | | | | | | 246 | | | | | | — | | | | | | — | | |
Off-balance sheet financial instruments
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | |
Fair Value Measurements at June 30, 2019
|
| |||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
Carrying
Amount |
| |
Fair
Value |
| |
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
| |
Significant
Other Observable Inputs (Level 2) |
| |
Significant
Unobservable Inputs (Level 3) |
| |||||||||||||||
Financial assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and due from banks
|
| | | $ | 26,168 | | | | | $ | 26,168 | | | | | $ | 26,168 | | | | | $ | — | | | | | $ | — | | |
Interest bearing time deposits
|
| | | | 8,486 | | | | | | 8,486 | | | | | | 8,486 | | | | | | — | | | | | | — | | |
Securities held to maturity
|
| | | | 1,906 | | | | | | 1,937 | | | | | | — | | | | | | 1,937 | | | | | | — | | |
Loans receivable, net
|
| | | | 326,017 | | | | | | 330,060 | | | | | | — | | | | | | — | | | | | | 330,060 | | |
Regulatory stock
|
| | | | 2,785 | | | | | | 2,785 | | | | | | 2,785 | | | | | | — | | | | | | — | | |
Bank-owned life insurance
|
| | | | 11,203 | | | | | | 11,203 | | | | | | 11,203 | | | | | | — | | | | | | — | | |
Accrued interest receivable
|
| | | | 1,340 | | | | | | 1,340 | | | | | | 1,340 | | | | | | — | | | | | | — | | |
Financial liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Checking accounts
|
| | | | 67,547 | | | | | | 67,547 | | | | | | 67,547 | | | | | | — | | | | | | — | | |
Money market accounts
|
| | | | 67,648 | | | | | | 67,648 | | | | | | 67,648 | | | | | | — | | | | | | — | | |
Savings and club accounts
|
| | | | 33,172 | | | | | | 33,172 | | | | | | 33,172 | | | | | | — | | | | | | — | | |
Certificates of deposit
|
| | | | 112,839 | | | | | | 112,245 | | | | | | — | | | | | | — | | | | | | 112,245 | | |
Advances from Federal Home
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loan Bank
|
| | | | 50,000 | | | | | | 50,651 | | | | | | — | | | | | | — | | | | | | 50,651 | | |
Advances from borrowers
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
for taxes and insurance
|
| | | | 3,814 | | | | | | 3,814 | | | | | | 3,814 | | | | | | — | | | | | | — | | |
Accrued interest payable
|
| | | | 171 | | | | | | 171 | | | | | | 171 | | | | | | — | | | | | | — | | |
Off-balance sheet financial instruments
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
(in thousands)
|
| | | | |
June 30, 2020
|
| |||
Lease Right-of-Use Assets | | | Classification | | | | | | | |
Operating lease right-of-use assets
|
| |
Other assets
|
| | | $ | 1,663 | | |
Total Right-of-Use Assets
|
| | | | | | $ | 1,663 | | |
|
(in thousands)
|
| | | | |
June 30, 2020
|
| |||
Lease Liabilities | | | Classification | | | | | | | |
Operating lease liabilities
|
| |
Other liabilities
|
| | | $ | 1,638 | | |
Total Lease Liabilities
|
| | | | | | $ | 1,638 | | |
| | |
June 30, 2020
|
|
Weighted average remaining lease term | | | | |
Operating leases
|
| |
11.9 years
|
|
Weighted average discount rate | | | | |
Operating leases
|
| |
2.19%
|
|
(in thousands)
|
| |
Operating Leases
|
| |||
Twelve months ended: | | | | | | | |
June 30, 2021
|
| | | $ | 247 | | |
June 30, 2022
|
| | | | 252 | | |
June 30, 2023
|
| | | | 258 | | |
June 30, 2024
|
| | | | 265 | | |
June 30, 2025
|
| | | | 246 | | |
Thereafter
|
| | | | 613 | | |
Total future minimum lease payments
|
| | | $ | 1,881 | | |
Amounts representing interest
|
| | | | (243) | | |
Present value of net future minimum lease payments
|
| | | $ | 1,638 | | |
| | |
June 30,
|
| |||||||||
(Dollars in thousands)
|
| |
2020
|
| |
2019
|
| ||||||
Beginning Balance
|
| | | $ | 147 | | | | | $ | 117 | | |
New loans
|
| | | | 505 | | | | | | — | | |
Loans to newly appointed directors
|
| | | | 103 | | | | | | 104 | | |
Repayments
|
| | | | (168) | | | | | | (74) | | |
Ending balance
|
| | | $ | 587 | | | | | $ | 147 | | |
| | |
June 30,
2020 |
| |
June 30,
2019 |
| ||||||
ASSETS | | | | | | | | | | | | | |
Cash on deposit at the Bank
|
| | | $ | 2,861 | | | | | $ | 1,440 | | |
Investment in the Bank
|
| | | | 93,401 | | | | | | 75,142 | | |
Other assets
|
| | | | 103 | | | | | | 48 | | |
TOTAL ASSETS
|
| | | $ | 96,365 | | | | | $ | 76,630 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | |
LIABILITIES | | | | | | | | | | | | | |
Accrued and other liabilities
|
| | | $ | — | | | | | $ | — | | |
TOTAL LIABILITIES
|
| | | | — | | | | | | — | | |
Commitments and contingencies
|
| | | | — | | | | | | — | | |
STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | |
Preferred stock, no par value, 1,000,000 shares authorized; no shares issued
|
| | | | — | | | | | | — | | |
Common Stock, $.10 par value, 49,000,000 shares authorized; 4,667,304 and 4,158,113
shares issued and 4,489,345 and 3,980,154 shares outstanding at June 30, 2020 and 2019, respectively. |
| | | | 467 | | | | | | 416 | | |
Additional paid-in capital
|
| | | | 42,932 | | | | | | 22,441 | | |
Treasury Stock, 177,959 shares at cost at June 30, 2020 and 2019
|
| | | | (3,710) | | | | | | (3,710) | | |
Retained earnings
|
| | | | 56,600 | | | | | | 57,255 | | |
Accumulated other comprehensive income
|
| | | | 76 | | | | | | 228 | | |
TOTAL STOCKHOLDERS’ EQUITY
|
| | | | 96,365 | | | | | | 76,630 | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| | | $ | 96,365 | | | | | $ | 76,630 | | |
|
| | |
Year ended June 30,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
INCOME | | | | | | | | | | | | | |
Interest on interest-bearing deposits with the Bank
|
| | | $ | 8 | | | | | $ | 14 | | |
Total Income
|
| | | | 8 | | | | | | 14 | | |
EXPENSES | | | | | | | | | | | | | |
Professional fees
|
| | | | 50 | | | | | | — | | |
Merger relates expenses
|
| | | | 532 | | | | | | — | | |
Other expenses
|
| | | | 12 | | | | | | 82 | | |
Total Expenses
|
| | | | 594 | | | | | | 82 | | |
Income before income tax benefit and equity in undistributed net income of affiliates
|
| | | | (586) | | | | | | (68) | | |
Income Tax Benefit
|
| | | | (51) | | | | | | (14) | | |
Equity in undistributed net income of the Bank
|
| | | | 1,863 | | | | | | 3,810 | | |
NET INCOME
|
| | | $ | 1,328 | | | | | $ | 3,756 | | |
Comprehensive income
|
| | | $ | 1,176 | | | | | $ | 3,765 | | |
| | |
Year ended June 30,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Cash Flows from Operating Activities | | | | | | | | | | | | | |
Net income
|
| | | $ | 1,328 | | | | | $ | 3,756 | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | |
Equity in undistributed net earnings of subsidiaries
|
| | | | (1,863) | | | | | | (3,810) | | |
Dividend from the Bank
|
| | | | 4,000 | | | | | | 2,000 | | |
Change in other assets
|
| | | | (61) | | | | | | (8) | | |
Net Cash Provided by (Used for) Operating Activities
|
| | | | 3,404 | | | | | | 1,938 | | |
Cash Flows from Financing Activities | | | | | | | | | | | | | |
Cash dividends
|
| | | | (1,983) | | | | | | (1,280) | | |
Net Cash (Used) for Financing Activities
|
| | | | (1,983) | | | | | | (1,280) | | |
Net Increase in Cash and Cash Equivalents
|
| | | | 1,421 | | | | | | 658 | | |
Cash and Cash Equivalents-Beginning
|
| | | | 1,440 | | | | | | 782 | | |
Cash and Cash Equivalents-Ending
|
| | | $ | 2,861 | | | | | $ | 1,440 | | |
Supplementary Cash Flows Information
|
| | | | | | | | | | | | |
Income taxes paid
|
| | | $ | — | | | | | $ | — | | |
|
Consolidated Financial Statements for the Nine Months Ended March 31, 2020 and 2019 (Unaudited)
|
| | | | | | |
| | | | | A-1 | | | |
| | | | | A-2 | | | |
| | | | | A-3 | | | |
| | | | | A-4 | | | |
| | | | | A-5 | | | |
| | | | | A-6 – A-31 | | |
| | |
March 31, 2020
|
| |
June 30, 2019
|
| ||||||
| | |
(unaudited)
|
| |||||||||
Assets | | | | | | | | | | | | | |
Cash and due from banks
|
| | |
$
|
1,084,862
|
| | | | $ | 980,252 | | |
Interest bearing demand deposits
|
| | |
|
4,681,286
|
| | | | | 2,842,634 | | |
Federal funds sold
|
| | |
|
19,296,000
|
| | | | | 18,590,000 | | |
Cash and cash equivalents
|
| | |
|
25,062,148
|
| | | | | 22,412,886 | | |
Interest bearing time deposits
|
| | |
|
676,743
|
| | | | | 665,924 | | |
Investment securities available-for-sale, at fair value
|
| | |
|
470,757
|
| | | | | 577,904 | | |
Investment securities held-to-maturity (fair value March 31, 2020 $3,043; June 30, 2019 $8,782)
|
| | |
|
2,894
|
| | | | | 8,512 | | |
Loans receivable, net of allowance for loan losses of $431,534 at March 31, 2020 and $469,381 at June 30, 2019
|
| | |
|
57,492,060
|
| | | | | 62,041,187 | | |
Accrued interest receivable
|
| | |
|
178,288
|
| | | | | 205,469 | | |
Foreclosed real estate
|
| | |
|
100,100
|
| | | | | 191,100 | | |
Restricted stock, at cost
|
| | |
|
334,600
|
| | | | | 300,200 | | |
Premises and equipment, net
|
| | |
|
175,356
|
| | | | | 191,419 | | |
Prepaid expenses and other assets
|
| | |
|
211,262
|
| | | | | 199,775 | | |
Deferred income taxes, net
|
| | |
|
344,852
|
| | | | | 354,115 | | |
Total Assets
|
| | |
$
|
85,049,060
|
| | | | $ | 87,148,491 | | |
Liabilities and Equity | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | |
Deposits
|
| | |
$
|
64,937,797
|
| | | | $ | 68,060,437 | | |
Advances from Federal Home Loan Bank of Pittsburgh
|
| | |
|
5,270,593
|
| | | | | 4,408,422 | | |
Advances from borrowers for taxes and insurance
|
| | |
|
411,146
|
| | | | | 404,175 | | |
Accrued interest payable
|
| | |
|
22,888
|
| | | | | 18,887 | | |
Other liabilities
|
| | |
|
1,512,895
|
| | | | | 1,557,399 | | |
Total Liabilities
|
| | |
|
72,155,319
|
| | | | | 74,449,320 | | |
Equity | | | | | | | | | | | | | |
Surplus
|
| | |
|
951,782
|
| | | | | 951,782 | | |
Retained earnings
|
| | |
|
12,955,589
|
| | | | | 12,586,445 | | |
Accumulated other comprehensive loss
|
| | |
|
(1,013,630)
|
| | | | | (839,056) | | |
Total Equity
|
| | |
|
12,893,741
|
| | | | | 12,699,171 | | |
Total Liabilities and Equity
|
| | |
$
|
85,049,060
|
| | | | $ | 87,148,491 | | |
9 Months Ended March 31,
|
| |
2020
|
| |
2019
|
| ||||||
| | |
(unaudited)
|
| |||||||||
Interest Income | | | | | | | | | | | | | |
Loans receivable, including fees:
|
| | | | | | | | | | | | |
First mortgage loans
|
| | |
$
|
1,700,192
|
| | | | $ | 1,686,200 | | |
Consumer and other loans
|
| | |
|
517,525
|
| | | | | 517,782 | | |
Mortgage-backed securities
|
| | |
|
14,126
|
| | | | | 18,971 | | |
Other
|
| | |
|
303,309
|
| | | | | 392,252 | | |
Total Interest Income
|
| | |
|
2,535,152
|
| | | | | 2,615,205 | | |
Interest Expense | | | | | | | | | | | | | |
Deposits
|
| | |
|
458,491
|
| | | | | 433,893 | | |
Federal Home Loan Bank advances
|
| | |
|
106,934
|
| | | | | 73,400 | | |
Total Interest Expense
|
| | |
|
565,425
|
| | | | | 507,293 | | |
Net interest income
|
| | |
|
1,969,727
|
| | | | | 2,107,912 | | |
Provision (Credit) for Loan Losses
|
| | |
|
(49,308)
|
| | | | | 2,686 | | |
Net interest income after provision (credit) for loan losses
|
| | |
|
2,019,035
|
| | | | | 2,105,226 | | |
Non-Interest Income | | | | | | | | | | | | | |
Service charges and fees
|
| | |
|
115,189
|
| | | | | 122,242 | | |
Net loss on sale of foreclosed real estate
|
| | |
|
(2,701)
|
| | | | | (11,470) | | |
Other
|
| | |
|
203
|
| | | | | 916 | | |
Total Non-Interest Income
|
| | |
|
112,691
|
| | | | | 111,688 | | |
Non-Interest Expenses | | | | | | | | | | | | | |
Compensation and employee benefits
|
| | |
|
784,881
|
| | | | | 1,152,696 | | |
Occupancy and equipment
|
| | |
|
136,426
|
| | | | | 150,944 | | |
Foreclosed real estate expenses
|
| | |
|
14,903
|
| | | | | 4,209 | | |
Federal deposit insurance premiums
|
| | |
|
(30)
|
| | | | | 18,116 | | |
Data processing
|
| | |
|
123,221
|
| | | | | 122,882 | | |
Other
|
| | |
|
547,265
|
| | | | | 437,193 | | |
Total Non-Interest Expenses
|
| | |
|
1,606,666
|
| | | | | 1,886,040 | | |
Income before income taxes
|
| | |
|
525,060
|
| | | | | 330,874 | | |
Income Tax Expense
|
| | |
|
155,916
|
| | | | | 122,952 | | |
Net Income
|
| | |
$
|
369,144
|
| | | | $ | 207,922 | | |
9 Months Ended March 31,
|
| |
2020
|
| |
2019
|
| ||||||
| | |
(unaudited)
|
| |||||||||
Comprehensive Income | | | | | | | | | | | | | |
Net income
|
| | |
$
|
369,144
|
| | | | $ | 207,922 | | |
Other Comprehensive Loss | | | | | | | | | | | | | |
Unrealized gain (loss) on securities available-for-sale, net of taxes of $518 and $(384), respectively
|
| | |
|
1,947
|
| | | | | (1,443) | | |
Unfunded post-retirement obligations:
|
| | | | | | | | | | | | |
Increase in minimum pension liability, net of taxes of $(55,146) and $(33,076), respectively
|
| | |
|
(207,454)
|
| | | | | (124,427) | | |
Reclassification adjustment for amortized prior service cost and actuarial losses for unfunded pension liability, net of taxes of $8,223 and $7,448, respectively(1)
|
| | |
|
30,933
|
| | | | | 28,017 | | |
Other comprehensive loss on unfunded post-retirement obligations
|
| | |
|
(176,521)
|
| | | | | (96,410) | | |
Total Other Comprehensive Loss
|
| | |
|
(174,574)
|
| | | | | (97,853) | | |
Comprehensive Income
|
| | |
$
|
194,570
|
| | | | $ | 110,069 | | |
| | |
Surplus
|
| |
Retained
Earnings |
| |
Accumulated
Other Comprehensive Loss |
| |
Total
|
| ||||||||||||
Balance, July 1, 2018
|
| | | $ | 951,782 | | | | | $ | 12,282,043 | | | | | $ | (709,717) | | | | | $ | 12,524,108 | | |
Net income
|
| | | | — | | | | | | 207,922 | | | | | | — | | | | | | 207,922 | | |
Other comprehensive loss
|
| | | | — | | | | | | — | | | | | | (97,853) | | | | | | (97,853) | | |
Balance, March 31, 2019 (unaudited)
|
| | | $ | 951,782 | | | | | $ | 12,489,965 | | | | | $ | (807,570) | | | | | $ | 12,634,177 | | |
|
| | |
Surplus
|
| |
Retained
Earnings |
| |
Accumulated
Other Comprehensive Loss |
| |
Total
|
| ||||||||||||
Balance, July 1, 2019
|
| | | $ | 951,782 | | | | | $ | 12,586,445 | | | | | $ | (839,056) | | | | | $ | 12,699,171 | | |
Net income
|
| | | | — | | | | | | 369,144 | | | | | | — | | | | | | 369,144 | | |
Other comprehensive loss
|
| | | | — | | | | | | — | | | | | | (174,574) | | | | | | (174,574) | | |
Balance, March 31, 2020 (unaudited)
|
| | | $ | 951,782 | | | | | $ | 12,955,589 | | | | | $ | (1,013,630) | | | | | $ | 12,893,741 | | |
9 Months Ended March 31,
|
| |
2020
|
| |
2019
|
| ||||||
| | |
(unaudited)
|
| |||||||||
Cash Flows from Operating Activities | | | | | | | | | | | | | |
Net income
|
| | |
$
|
369,144
|
| | | | $ | 207,922 | | |
Adjustments to reconcile change in net income to net cash provided by operating activities:
|
| | | | | | | | | | | | |
Provision for depreciation
|
| | |
|
29,734
|
| | | | | 33,552 | | |
(Credit) provision for loan losses
|
| | |
|
(49,308)
|
| | | | | 2,686 | | |
Net amortization of securities premiums and discounts
|
| | |
|
544
|
| | | | | 802 | | |
Deferred income taxes
|
| | |
|
55,668
|
| | | | | (9,098) | | |
Net loss on sale of foreclosed real estate
|
| | |
|
2,701
|
| | | | | 11,470 | | |
Decrease (increase) in assets:
|
| | | | | | | | | | | | |
Accrued interest receivable
|
| | |
|
27,181
|
| | | | | (9,077) | | |
Prepaid expenses and other assets
|
| | |
|
(11,487)
|
| | | | | 3,655 | | |
Increase (decrease) in liabilities:
|
| | | | | | | | | | | | |
Accrued interest payable
|
| | |
|
4,001
|
| | | | | 7,104 | | |
Pension liability
|
| | |
|
(279,719)
|
| | | | | 125,783 | | |
Other liabilities
|
| | |
|
11,771
|
| | | | | (72,638) | | |
Net Cash Provided by Operating Activities
|
| | |
|
160,230
|
| | | | | 302,162 | | |
Cash Flows from Investing Activities | | | | | | | | | | | | | |
Net purchases of interest-bearing time deposits
|
| | |
|
(10,819)
|
| | | | | (1,592) | | |
Net decrease (increase) in loans receivable
|
| | |
|
4,598,435
|
| | | | | (1,577,027) | | |
Investment securities available-for-sale:
|
| | | | | | | | | | | | |
Proceeds from maturities, calls and principal repayments
|
| | |
|
190,073
|
| | | | | 156,538 | | |
Investment securities held-to-maturity:
|
| | | | | | | | | | | | |
Proceeds from maturities, calls and principal repayments
|
| | |
|
5,613
|
| | | | | 16,736 | | |
Proceeds from sale of premises and equipment
|
| | |
|
—
|
| | | | | 850 | | |
Purchase of premises and equipment
|
| | |
|
(13,671)
|
| | | | | (18,993) | | |
Proceeds from sale of foreclosed real estate
|
| | |
|
88,299
|
| | | | | 31,909 | | |
Net increase in restricted stock
|
| | |
|
(34,400)
|
| | | | | (66,000) | | |
Net Cash Provided by (Used in) Investing Activities
|
| | |
|
4,742,530
|
| | | | | (1,457,579) | | |
Cash Flows from Financing Activities | | | | | | | | | | | | | |
Net decrease in deposits
|
| | |
|
(3,122,640)
|
| | | | | (827,155) | | |
Proceeds from long-term debt
|
| | |
|
1,000,000
|
| | | | | 1,770,000 | | |
Repayment of long-term debt
|
| | |
|
(137,829)
|
| | | | | (121,086) | | |
Net increase in advances from borrowers for taxes and insurance
|
| | |
|
6,971
|
| | | | | 5,613 | | |
Net Cash Provided by (Used in) Financing Activities
|
| | |
|
(2,253,498)
|
| | | | | 827,372 | | |
Net increase (decrease) in cash and cash equivalents
|
| | |
|
2,649,262
|
| | | | | (328,045) | | |
Cash and Cash Equivalents, Beginning
|
| | |
|
22,412,886
|
| | | | | 23,932,579 | | |
Cash and Cash Equivalents, Ending
|
| | |
$
|
25,062,148
|
| | | | $ | 23,604,534 | | |
Supplementary Cash Flows Information | | | | | | | | | | | | | |
Interest paid
|
| | |
$
|
561,424
|
| | | | $ | 500,189 | | |
Income taxes paid
|
| | |
$
|
52,000
|
| | | | $ | 115,000 | | |
March 31, 2020
|
| |
Amortized
Cost |
| |
Unrealized
Gains |
| |
Unrealized
Losses |
| |
Fair
Value |
| ||||||||||||
Securities available-for-sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage-backed securities, U.S. government sponsored enterprises (GSEs)
|
| | |
$
|
452,176
|
| | | |
$
|
18,581
|
| | | |
$
|
—
|
| | | |
$
|
470,757
|
| |
| | | | $ | 452,176 | | | | | $ | 18,581 | | | | | $ | — | | | | | $ | 470,757 | | |
Securities held-to-maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities, GSEs
|
| | | $ | 2,894 | | | | | $ | 149 | | | | | $ | — | | | | | $ | 3,043 | | |
| | | | $ | 2,894 | | | | | $ | 149 | | | | | $ | — | | | | | $ | 3,043 | | |
|
June 30, 2019
|
| |
Amortized
Cost |
| |
Unrealized
Gains |
| |
Unrealized
Losses |
| |
Fair
Value |
| ||||||||||||
Securities available-for-sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage-backed securities, U.S. government sponsored enterprises (GSEs)
|
| | | $ | 561,788 | | | | | $ | 16,116 | | | | | $ | — | | | | | $ | 577,904 | | |
| | | | $ | 561,788 | | | | | $ | 16,116 | | | | | $ | — | | | | | $ | 577,904 | | |
Securities held-to-maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities, GSEs
|
| | | $ | 8,512 | | | | | $ | 270 | | | | | $ | — | | | | | $ | 8,782 | | |
| | | | $ | 8,512 | | | | | $ | 270 | | | | | $ | — | | | | | $ | 8,782 | | |
March 31, 2020
|
| |
Available-for-Sale
|
| |
Held-to-Maturity
|
| ||||||||||||||||||
| | |
Amortized Cost
|
| |
Fair
Value |
| |
Amortized Cost
|
| |
Fair
Value |
| ||||||||||||
Investment securities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Due in one year or less
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Due after one year through five years
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
Due after five years through ten years
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
Due after ten years through fifteen years
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
Mortgage-backed securities
|
| | |
|
452,176
|
| | | |
|
470,757
|
| | | |
|
2,894
|
| | | |
|
3,043
|
| |
| | | | $ | 452,176 | | | | | $ | 470,757 | | | | | $ | 2,894 | | | | | $ | 3,043 | | |
|
June 30, 2019
|
| |
Available-for-Sale
|
| |
Held-to-Maturity
|
| ||||||||||||||||||
| | |
Amortized Cost
|
| |
Fair
Value |
| |
Amortized Cost
|
| |
Fair
Value |
| ||||||||||||
Investment securities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Due in one year or less
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Due after one year through five years
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Due after five years through ten years
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Due after ten years through fifteen years
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Mortgage-backed securities
|
| | | | 561,788 | | | | | | 577,904 | | | | | | 8,512 | | | | | | 8,782 | | |
| | | | $ | 561,788 | | | | | $ | 577,904 | | | | | $ | 8,512 | | | | | $ | 8,782 | | |
| | |
2020
|
| |
2019
|
| ||||||
First mortgage loans: | | | | | | | | | | | | | |
One-to-four family residences – owner occupied
|
| | |
$
|
23,232,841
|
| | | | $ | 22,754,109 | | |
One-to-four family residences – non-owner occupied
|
| | |
|
15,447,295
|
| | | | | 18,621,665 | | |
Secured by other properties
|
| | |
|
3,244,175
|
| | | | | 3,611,107 | | |
| | | |
|
41,924,311
|
| | | | | 44,986,881 | | |
Consumer and other loans: | | | | | | | | | | | | | |
Home equity and second mortgage
|
| | |
|
16,004,808
|
| | | | | 17,519,066 | | |
Savings account loans and other
|
| | |
|
142,948
|
| | | | | 179,626 | | |
| | | |
|
16,147,756
|
| | | | | 17,698,692 | | |
Total Loans Receivable
|
| | |
|
58,072,067
|
| | | | | 62,685,573 | | |
Unearned loan origination fees, net
|
| | |
|
(148,473)
|
| | | | | (175,005) | | |
Allowance for loan losses
|
| | |
|
(431,534)
|
| | | | | (469,381) | | |
Loans Receivable, Net
|
| | |
$
|
57,492,060
|
| | | | $ | 62,041,187 | | |
|
March 31, 2020
|
| |
Allowance for Loan Losses
|
| |||||||||||||||||||||||||||||||||||||||
|
Beginning
Balance |
| |
Charge-offs
|
| |
Recoveries
|
| |
Provisions
(Credits) |
| |
Ending
Balance |
| |
Ending
Balance: Individually Evaluated for Impairment |
| |
Ending
Balance: Collectively Evaluated for Impairment |
| |||||||||||||||||||||||
Secured by one-to-four family
residences: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 88,324 | | | | | $ | — | | | | | $ | — | | | | | $ | 1,167 | | | | | $ | 89,491 | | | | | $ | — | | | | | $ | 89,491 | | |
Non-owner occupied
|
| | |
|
223,609
|
| | | |
|
—
|
| | | |
|
12,957
|
| | | |
|
(40,198)
|
| | | |
|
196,368
|
| | | |
|
55,843
|
| | | |
|
140,525
|
| |
Secured by other properties
|
| | |
|
84,138
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
(3,466)
|
| | | |
|
80,672
|
| | | |
|
49,919
|
| | | |
|
30,753
|
| |
Home equity and second mortgage
|
| | |
|
67,696
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
(8,200)
|
| | | |
|
59,496
|
| | | |
|
—
|
| | | |
|
59,496
|
| |
Savings account loans and other
|
| | |
|
5,614
|
| | | |
|
(1,937)
|
| | | |
|
441
|
| | | |
|
1,389
|
| | | |
|
5,507
|
| | | |
|
—
|
| | | |
|
5,507
|
| |
| | | | $ | 469,381 | | | | | $ | (1,937) | | | | | $ | 13,398 | | | | | $ | (49,308) | | | | | $ | 431,534 | | | | | $ | 105,762 | | | | | $ | 325,772 | | |
March 31, 2019
|
| |
Allowance for Loan Losses
|
| |||||||||||||||||||||||||||||||||||||||
|
Beginning
Balance |
| |
Charge-offs
|
| |
Recoveries
|
| |
Provisions
(Credits) |
| |
Ending
Balance |
| |
Ending
Balance: Individually Evaluated for Impairment |
| |
Ending
Balance: Collectively Evaluated for Impairment |
| |||||||||||||||||||||||
Secured by one-to-four family
residences: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 108,190 | | | | | $ | — | | | | | $ | — | | | | | $ | (2,362) | | | | | $ | 105,828 | | | | | $ | — | | | | | $ | 105,828 | | |
Non-owner occupied
|
| | | | 200,983 | | | | | | — | | | | | | — | | | | | | 14,325 | | | | | | 215,308 | | | | | | 44,382 | | | | | | 170,926 | | |
Secured by other properties
|
| | | | 90,936 | | | | | | — | | | | | | — | | | | | | (8,575) | | | | | | 82,361 | | | | | | 49,919 | | | | | | 32,442 | | |
Home equity and second mortgage
|
| | | | 78,499 | | | | | | — | | | | | | — | | | | | | (953) | | | | | | 77,546 | | | | | | — | | | | | | 77,546 | | |
Savings account loans and other
|
| | | | 8,573 | | | | | | (1,477) | | | | | | 342 | | | | | | 251 | | | | | | 7,689 | | | | | | — | | | | | | 7,689 | | |
| | | | $ | 487,181 | | | | | $ | (1,477) | | | | | $ | 342 | | | | | $ | 2,686 | | | | | $ | 488,732 | | | | | $ | 94,301 | | | | | $ | 394,431 | | |
|
March 31, 2020
|
| |
Loans Receivable
|
| |||||||||||||||
|
Ending
Balance |
| |
Ending
Balance: Individually Evaluated for Impairment |
| |
Ending
Balance: Collectively Evaluated for Impairment |
| |||||||||||
Secured by one-to-four family residences: | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 23,232,841 | | | | |
$
|
273,158
|
| | | |
$
|
22,959,683
|
| |
Non-owner occupied
|
| | |
|
15,447,295
|
| | | |
|
513,746
|
| | | |
|
14,933,549
|
| |
Secured by other properties
|
| | |
|
3,244,175
|
| | | |
|
308,400
|
| | | |
|
2,935,775
|
| |
Home equity and second mortgage
|
| | |
|
16,004,808
|
| | | |
|
57,650
|
| | | |
|
15,947,158
|
| |
Savings account loans and other
|
| | |
|
142,948
|
| | | |
|
—
|
| | | |
|
142,948
|
| |
| | | | $ | 58,072,067 | | | | |
$
|
1,152,954
|
| | | |
$
|
56,919,113
|
| |
|
June 30, 2019
|
| |
Loans Receivable
|
| |||||||||||||||
|
Ending
Balance |
| |
Ending
Balance: Individually Evaluated for Impairment |
| |
Ending
Balance: Collectively Evaluated for Impairment |
| |||||||||||
Secured by one-to-four family residences: | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 22,754,109 | | | | | $ | 281,984 | | | | | $ | 22,472,125 | | |
Non-owner occupied
|
| | | | 18,621,665 | | | | | | 545,734 | | | | | | 18,075,931 | | |
Secured by other properties
|
| | | | 3,611,107 | | | | | | 326,059 | | | | | | 3,285,048 | | |
Home equity and second mortgage
|
| | | | 17,519,066 | | | | | | 71,879 | | | | | | 17,447,187 | | |
Savings account loans and other
|
| | | | 179,626 | | | | | | — | | | | | | 179,626 | | |
| | | | $ | 62,685,573 | | | | | $ | 1,225,656 | | | | | $ | 61,459,917 | | |
|
March 31, 2020
|
| |
Recorded
Investment |
| |
Unpaid
Principal Balance |
| |
Related
Allowance |
| |
Average
Recorded Investment |
| |
Interest
Income Recognized |
| |||||||||||||||
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 273,158 | | | | | $ | 273,158 | | | | | $ | — | | | | | $ | 277,571 | | | | | $ | 6 | | |
Non-owner occupied
|
| | |
|
87,756
|
| | | |
|
87,756
|
| | | |
|
—
|
| | | |
|
103,750
|
| | | |
|
3,220
|
| |
Secured by other properties
|
| | |
|
134,820
|
| | | |
|
134,820
|
| | | |
|
—
|
| | | |
|
142,219
|
| | | |
|
12,079
|
| |
Home equity and second mortgage
|
| | |
|
57,650
|
| | | |
|
57,650
|
| | | |
|
—
|
| | | |
|
64,764
|
| | | |
|
569
|
| |
Savings account loans and other
|
| | |
|
—
|
| | | |
|
12,575
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Non-owner occupied
|
| | |
|
425,990
|
| | | |
|
425,990
|
| | | |
|
55,843
|
| | | |
|
425,990
|
| | | |
|
—
|
| |
Secured by other properties
|
| | |
|
173,580
|
| | | |
|
173,580
|
| | | |
|
49,919
|
| | | |
|
175,011
|
| | | |
|
7,495
|
| |
Home equity and second mortgage
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
Savings account loans and other
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 273,158 | | | | | $ | 273,158 | | | | | $ | — | | | | | $ | 277,571 | | | | | $ | 6 | | |
Non-owner occupied
|
| | |
|
513,746
|
| | | |
|
513,746
|
| | | |
|
55,843
|
| | | |
|
529,740
|
| | | |
|
3,220
|
| |
Secured by other properties
|
| | |
|
308,400
|
| | | |
|
308,400
|
| | | |
|
49,919
|
| | | |
|
317,230
|
| | | |
|
19,574
|
| |
Home equity and second mortgage
|
| | |
|
57,650
|
| | | |
|
57,650
|
| | | |
|
—
|
| | | |
|
64,764
|
| | | |
|
569
|
| |
Savings account loans and other
|
| | |
|
—
|
| | | |
|
12,575
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
June 30, 2019
|
| |
Recorded
Investment |
| |
Unpaid
Principal Balance |
| |
Related
Allowance |
| |
Average
Recorded Investment |
| |
Interest
Income Recognized |
| |||||||||||||||
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 281,984 | | | | | $ | 281,984 | | | | | $ | — | | | | | $ | 287,132 | | | | | $ | 5 | | |
Non-owner occupied
|
| | | | 119,744 | | | | | | 151,701 | | | | | | — | | | | | | 121,019 | | | | | | 4,755 | | |
Secured by other properties
|
| | | | 149,618 | | | | | | 149,618 | | | | | | — | | | | | | 156,436 | | | | | | 13,180 | | |
Home equity and second mortgage
|
| | | | 71,879 | | | | | | 71,879 | | | | | | — | | | | | | 108,384 | | | | | | 2,917 | | |
Savings account loans and other
|
| | | | — | | | | | | 12,575 | | | | | | — | | | | | | — | | | | | | — | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Non-owner occupied
|
| | | | 425,990 | | | | | | 425,990 | | | | | | 55,843 | | | | | | 427,181 | | | | | | 3,061 | | |
Secured by other properties
|
| | | | 176,441 | | | | | | 176,441 | | | | | | 49,919 | | | | | | 178,378 | | | | | | 9,753 | | |
Home equity and second mortgage
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Savings account loans and other
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 281,984 | | | | | $ | 281,984 | | | | | $ | — | | | | | $ | 287,132 | | | | | $ | 5 | | |
Non-owner occupied
|
| | | | 545,734 | | | | | | 577,691 | | | | | | 55,843 | | | | | | 548,200 | | | | | | 7,816 | | |
Secured by other properties
|
| | | | 326,059 | | | | | | 326,059 | | | | | | 49,919 | | | | | | 334,814 | | | | | | 22,933 | | |
Home equity and second mortgage
|
| | | | 71,879 | | | | | | 71,879 | | | | | | — | | | | | | 108,384 | | | | | | 2,917 | | |
Savings account loans and other
|
| | | | — | | | | | | 12,575 | | | | | | — | | | | | | — | | | | | | — | | |
March 31, 2020
|
| |
Pass
|
| |
Special
Mention |
| |
Substandard
|
| |
Doubtful
|
| |
Loss
|
| |
Total
|
| ||||||||||||||||||
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | |
$
|
22,959,683
|
| | | |
$
|
—
|
| | | |
$
|
273,158
|
| | | |
$
|
—
|
| | | |
$
|
—
|
| | | |
$
|
23,232,841
|
| |
Non-owner occupied
|
| | |
|
13,713,466
|
| | | |
|
1,220,083
|
| | | |
|
513,746
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
15,447,295
|
| |
Secured by other properties
|
| | |
|
2,671,514
|
| | | |
|
437,841
|
| | | |
|
134,820
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
3,244,175
|
| |
Home equity and second mortgage
|
| | |
|
15,947,158
|
| | | |
|
—
|
| | | |
|
57,650
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
16,004,808
|
| |
Savings account loans and other
|
| | |
|
139,246
|
| | | |
|
—
|
| | | |
|
3,702
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
142,948
|
| |
| | | | $ | 55,431,067 | | | | | $ | 1,657,924 | | | | | $ | 983,076 | | | | | $ | — | | | | | $ | — | | | | | $ | 58,072,067 | | |
June 30, 2019
|
| |
Pass
|
| |
Special
Mention |
| |
Substandard
|
| |
Doubtful
|
| |
Loss
|
| |
Total
|
| ||||||||||||||||||
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 22,472,125 | | | | | $ | — | | | | | $ | 281,984 | | | | | $ | — | | | | | $ | — | | | | | $ | 22,754,109 | | |
Non-owner occupied
|
| | | | 16,706,762 | | | | | | 1,401,017 | | | | | | 513,886 | | | | | | — | | | | | | — | | | | | | 18,621,665 | | |
Secured by other properties
|
| | | | 3,003,645 | | | | | | 457,844 | | | | | | 149,618 | | | | | | — | | | | | | — | | | | | | 3,611,107 | | |
Home equity and second mortgage
|
| | | | 17,447,187 | | | | | | — | | | | | | 71,879 | | | | | | — | | | | | | — | | | | | | 17,519,066 | | |
Savings account loans and other
|
| | | | 174,814 | | | | | | — | | | | | | 4,812 | | | | | | — | | | | | | — | | | | | | 179,626 | | |
| | | | $ | 59,804,533 | | | | | $ | 1,858,861 | | | | | $ | 1,022,179 | | | | | $ | — | | | | | $ | — | | | | | $ | 62,685,573 | | |
March 31, 2020
|
| |
30 – 59 Days
Past Due |
| |
60 – 89 Days
Past Due |
| |
Greater
Than 90 Days |
| |
Total Past
Due |
| |
Current
|
| |
Total
Loans Receivables |
| |
Loans
Receivable >90 Days and Accruing |
| |||||||||||||||||||||
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 98,841 | | | | | $ | — | | | | | $ | — | | | | | $ | 98,841 | | | | | $ | 23,134,000 | | | | | $ | 23,232,841 | | | | | $ | — | | |
Non-owner occupied
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
513,746
|
| | | |
|
513,746
|
| | | |
|
14,933,549
|
| | | |
|
15,447,295
|
| | | |
|
—
|
| |
Secured by other properties
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
3,244,175
|
| | | |
|
3,244,175
|
| | | |
|
—
|
| |
Home equity and second mortgage
|
| | |
|
75,239
|
| | | |
|
87
|
| | | |
|
—
|
| | | |
|
75,326
|
| | | |
|
15,929,482
|
| | | |
|
16,004,808
|
| | | |
|
—
|
| |
Savings account loans and other
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
142,948
|
| | | |
|
142,948
|
| | | |
|
—
|
| |
| | | | $ | 174,080 | | | | | $ | 168,780 | | | | | $ | 513,746 | | | | | $ | 687,913 | | | | | $ | 57,384,154 | | | | | $ | 58,072,067 | | | | | $ | — | | |
|
June 30, 2019
|
| |
30 – 59 Days
Past Due |
| |
60 – 89 Days
Past Due |
| |
Greater
Than 90 Days |
| |
Total Past
Due |
| |
Current
|
| |
Total
Loans Receivables |
| |
Loans
Receivable >90 Days and Accruing |
| |||||||||||||||||||||
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 212,347 | | | | | $ | — | | | | | $ | — | | | | | $ | 212,347 | | | | | $ | 22,541,762 | | | | | $ | 22,754,109 | | | | | $ | — | | |
Non-owner occupied
|
| | | | 134,350 | | | | | | — | | | | | | 513,886 | | | | | | 648,236 | | | | | | 17,973,429 | | | | | | 18,621,665 | | | | | | — | | |
Secured by other properties
|
| | | | — | | | | | | 149,618 | | | | | | — | | | | | | 149,618 | | | | | | 3,461,489 | | | | | | 3,611,107 | | | | | | — | | |
Home equity and second mortgage
|
| | | | 22,462 | | | | | | 19,162 | | | | | | — | | | | | | 41,624 | | | | | | 17,477,442 | | | | | | 17,519,066 | | | | | | — | | |
Savings account loans and other
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 179,626 | | | | | | 179,626 | | | | | | — | | |
| | | | $ | 369,159 | | | | | $ | 168,780 | | | | | $ | 513,886 | | | | | $ | 1,051,825 | | | | | $ | 61,633,748 | | | | | $ | 62,685,573 | | | | | $ | — | | |
|
| | |
2020
|
| |
2019
|
| ||||||
Secured by one-to-four family residences: | | | | | | | | | | | | | |
Owner occupied
|
| | |
$
|
273,158
|
| | | | $ | 281,984 | | |
Non-owner occupied
|
| | |
|
513,746
|
| | | | | 513,886 | | |
Secured by other properties
|
| | |
|
134,820
|
| | | | | 149,618 | | |
Home equity and second mortgage
|
| | |
|
57,650
|
| | | | | 71,879 | | |
Savings account loans and other
|
| | |
|
—
|
| | | | | — | | |
| | | |
$
|
979,374
|
| | | | $ | 1,017,367 | | |
| | |
Estimated
Useful Lives |
| |
2020
|
| |
2019
|
| ||||||
Buildings and improvements
|
| |
3 to 35 years
|
| | |
$
|
968,615
|
| | | | $ | 968,615 | | |
Furniture, fixtures and equipment
|
| |
1 to 15 years
|
| | |
|
776,523
|
| | | | | 771,383 | | |
| | | | | | |
|
1,745,138
|
| | | | | 1,739,998 | | |
Accumulated depreciation
|
| | | | | |
|
(1,602,432)
|
| | | | | (1,581,229) | | |
| | | | | | |
|
142,706
|
| | | | | 158,769 | | |
Land
|
| | | | | |
|
32,650
|
| | | | | 32,650 | | |
| | | | | | |
$
|
175,356
|
| | | | $ | 191,419 | | |
| | |
2020
|
| |
2019
|
| ||||||||||||||||||||||||||||||
| | |
Weighted
Average Rate at March 31, 2020 |
| |
Amount
|
| |
Percent
|
| |
Weighted
Average Rate at June 30, 2019 |
| |
Amount
|
| |
Percent
|
| ||||||||||||||||||
Core deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Business checking
|
| | | | | | | | |
$
|
378,482
|
| | | |
|
0.58%
|
| | | | | | | | | | $ | 437,231 | | | | | | 0.64% | | |
Non-interest checking
|
| | | | | | | | |
|
3,041,670
|
| | | |
|
4.68
|
| | | | | | | | | | | 3,486,425 | | | | | | 5.12 | | |
NOW
|
| | | | | | | | |
|
14,791,328
|
| | | |
|
22.78
|
| | | | | | | | | | | 16,810,886 | | | | | | 24.70 | | |
Money market
|
| | | | | | | | |
|
3,140,120
|
| | | |
|
4.84
|
| | | | | | | | | | | 3,526,512 | | | | | | 5.18 | | |
Savings
|
| | | | | | | | |
|
17,372,403
|
| | | |
|
26.75
|
| | | | | | | | | | | 17,749,181 | | | | | | 26.08 | | |
| | | |
|
0.40%
|
| | | |
|
38,724,003
|
| | | |
|
59.63
|
| | | | | 0.41% | | | | | | 42,010,235 | | | | | | 61.72 | | |
Time deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Certificates of deposit
|
| | |
|
1.69%
|
| | | |
|
26,213,794
|
| | | |
|
40.37
|
| | | | | 1.63% | | | | | | 26,050,202 | | | | | | 38.28 | | |
| | | |
|
0.92%
|
| | | |
$
|
64,937,797
|
| | | |
|
100.00%
|
| | | | | 0.88% | | | | |
$
|
68,060,437
|
| | | | | 100.00% | | |
Years ending June 30,
|
| | | | | | |
2020
|
| | | $ | 2,207,456 | | |
2021
|
| | | | 9,253,409 | | |
2022
|
| | | | 7,745,799 | | |
2023
|
| | | | 2,961,297 | | |
2024
|
| | | | 2,551,586 | | |
2025
|
| | | | 1,179,402 | | |
Thereafter
|
| | | | 314,845 | | |
| | | | $ | 26,213,794 | | |
| | |
2020
|
| |
2019
|
| ||||||
Money market accounts
|
| | |
$
|
18,052
|
| | | | $ | 20,213 | | |
NOW accounts
|
| | |
|
68,808
|
| | | | | 78,539 | | |
Savings accounts
|
| | |
|
39,085
|
| | | | | 40,272 | | |
Certificates of deposit
|
| | |
|
332,546
|
| | | | | 294,869 | | |
| | | |
$
|
458,491
|
| | | | $ | 433,893 | | |
| | |
2020
|
| |
2019
|
| ||||||
Correspondent Bank charges
|
| | |
$
|
13,583
|
| | | | $ | 13,565 | | |
Professional fees
|
| | |
|
236,572
|
| | | | | 121,277 | | |
Advertising
|
| | |
|
37,115
|
| | | | | 38,793 | | |
Insurance/surety bond premiums
|
| | |
|
18,195
|
| | | | | 18,137 | | |
Supplies
|
| | |
|
20,507
|
| | | | | 20,570 | | |
Supervisory Exams
|
| | |
|
9,877
|
| | | | | 12,633 | | |
ATM costs
|
| | |
|
55,747
|
| | | | | 51,539 | | |
VISA debit cards
|
| | |
|
23,060
|
| | | | | 24,007 | | |
Telephone, data line, and internet charges
|
| | |
|
75,828
|
| | | | | 64,889 | | |
Postage
|
| | |
|
12,654
|
| | | | | 12,295 | | |
Dues and subscriptions
|
| | |
|
12,574
|
| | | | | 11,114 | | |
DDA/NOW account costs
|
| | |
|
5,547
|
| | | | | 9,394 | | |
Loan processing costs
|
| | |
|
6,557
|
| | | | | 7,532 | | |
Telephone banking
|
| | |
|
7,041
|
| | | | | 7,377 | | |
Courier services
|
| | |
|
8,386
|
| | | | | 7,938 | | |
Meals and entertainment
|
| | |
|
3,665
|
| | | | | 9,206 | | |
Provision for other credit losses
|
| | |
|
(7,934)
|
| | | | | (2,448) | | |
Other
|
| | |
|
8,291
|
| | | | | 9,375 | | |
| | | |
$
|
547,265
|
| | | | $ | 437,193 | | |
|
| | |
2020
|
| |
2019
|
| ||||||
Current, federal
|
| | |
$
|
56,591
|
| | | | $ | 96,181 | | |
Deferred, federal
|
| | |
|
55,668
|
| | | | | (9,098) | | |
Total federal income tax expense
|
| | |
|
112,259
|
| | | | | 87,083 | | |
Current, state
|
| | |
|
43,657
|
| | | | | 35,869 | | |
Deferred, state
|
| | |
|
—
|
| | | | | — | | |
Total state income tax expense
|
| | |
|
43,657
|
| | | | | 35,869 | | |
Total Income Tax Expense
|
| | |
$
|
155,916
|
| | | | $ | 122,952 | | |
| | |
2020
|
| |
2019
|
| ||||||
Assets | | | | | | | | | | | | | |
Impairment of securities available-for-sale
|
| | |
$
|
24,731
|
| | | | $ | 24,731 | | |
Allowance for loan losses
|
| | |
|
90,622
|
| | | | | 98,570 | | |
Other comprehensive loss, pension
|
| | |
|
273,348
|
| | | | | 226,425 | | |
Executive retirement plan
|
| | |
|
2,284
|
| | | | | 2,520 | | |
Other
|
| | |
|
41,241
|
| | | | | 30,147 | | |
| | | |
|
432,226
|
| | | | | 382,393 | | |
Valuation allowance
|
| | |
|
(24,731)
|
| | | | | (24,731) | | |
Total assets, net
|
| | |
|
407,495
|
| | | | | 357,662 | | |
Liabilities | | | | | | | | | | | | | |
Basis of premises and equipment
|
| | |
|
—
|
| | | | | (163) | | |
Unrealized gains on securities available-for-sale
|
| | |
|
(3,902)
|
| | | | | (3,384) | | |
Other
|
| | |
|
(58,741)
|
| | | | | — | | |
Total liabilities
|
| | |
|
(62,643)
|
| | | | | (3,547) | | |
Net Deferred Tax Assets
|
| | |
$
|
344,852
|
| | | | $ | 354,115 | | |
| | |
2020
|
| |
2019
|
| ||||||
Changes in benefit obligation: | | | | | | | | | | | | | |
Beginning of year
|
| | |
$
|
2,623,485
|
| | | | $ | 2,493,426 | | |
Service cost
|
| | |
|
111,274
|
| | | | | 106,724 | | |
Interest cost
|
| | |
|
67,946
|
| | | | | 104,606 | | |
Assumption changes
|
| | |
|
216,456
|
| | | | | 243,899 | | |
Actual loss
|
| | |
|
26,445
|
| | | | | 42,336 | | |
Curtailments/Settlements
|
| | |
|
(353,416)
|
| | | | | (300,539) | | |
Benefits paid
|
| | |
|
(55,441)
|
| | | | | (66,967) | | |
End of year
|
| | |
|
2,636,749
|
| | | | | 2,623,485 | | |
Changes in fair value of plan assets: | | | | | | | | | | | | | |
Beginning of year
|
| | |
|
1,379,626
|
| | | | | 1,613,931 | | |
Actual return on plan assets
|
| | |
|
24,980
|
| | | | | 33,201 | | |
Employer contributions
|
| | |
|
100,000
|
| | | | | 100,000 | | |
Settlements
|
| | |
|
—
|
| | | | | (300,539) | | |
Benefits paid
|
| | |
|
(55,441)
|
| | | | | (66,967) | | |
End of year
|
| | |
|
1,449,165
|
| | | | | 1,379,626 | | |
Unfunded Status at End of Year
|
| | |
$
|
(1,187,584)
|
| | | | $ | (1,243,859) | | |
Amounts recognized in the statements of financial condition consist of: | | | | | | | | | | | | | |
Other liabilities
|
| | |
$
|
(1,187,584)
|
| | | | $ | (1,243,859) | | |
Accumulated other comprehensive loss (pre-tax basis)
|
| | |
|
1,301,657
|
| | | | | 1,078,213 | | |
Net Amount Recognized
|
| | |
$
|
114,073
|
| | | | $ | (165,646) | | |
Amounts recognized in accumulated other comprehensive loss consists of: | | | | | | | | | | | | | |
Unrecognized actuarial loss
|
| | |
$
|
1,301,657
|
| | | | $ | 1,078,213 | | |
| | | |
$
|
1,301,657
|
| | | | $ | 1,078,213 | | |
| | |
2020
|
| |
2019
|
| ||||||
Service cost, benefit earned during the period
|
| | |
$
|
111,274
|
| | | | $ | 80,043 | | |
Interest cost on projected benefit obligation
|
| | |
|
67,946
|
| | | | | 78,455 | | |
Expected return on plan assets
|
| | |
|
(44,679)
|
| | | | | (52,152) | | |
Recognized prior service credit
|
| | |
|
—
|
| | | | | — | | |
Recognized net actuarial loss
|
| | |
|
39,156
|
| | | | | 35,465 | | |
CurtaiIment/Settlement (gain)/loss
|
| | |
|
(353,416)
|
| | | | | 83,972 | | |
Net Pension Costs
|
| | |
$
|
(179,719)
|
| | | | $ | 225,783 | | |
March 31, 2020
|
| |
Fair Value
|
| |
Quoted
Prices in Active Markets for Identical Assets (Level 1) |
| |
Significant
Other Observable Inputs (Level 2) |
| |
Significant
Unobservable Inputs (Level 3) |
| ||||||||||||
Certificates of deposit
|
| | |
$
|
1,449,165
|
| | | |
$
|
|
| | | |
$
|
1,449,165
|
| | | |
$
|
|
| |
| | | | $ | 1,449,165 | | | | | $ | | | | | $ | 1,449,165 | | | | | $ | | | ||
|
June 30, 2019
|
| |
Fair Value
|
| |
Quoted
Prices in Active Markets for Identical Assets (Level 1) |
| |
Significant
Other Observable Inputs (Level 2) |
| |
Significant
Unobservable Inputs (Level 3) |
| ||||||||||||
Certificates of deposit
|
| | | $ | 1,379,626 | | | | | $ | — | | | | | $ | 1,379,626 | | | | | $ | — | | |
| | | | $ | 1,379,626 | | | | | $ | — | | | | | $ | 1,379,626 | | | | | $ | — | | |
Years ending June 30,
|
| | | | | | |
2020
|
| | | $ | 171,384 | | |
2021
|
| | | | 2,473,000 | | |
Thereafter
|
| | | | — | | |
| | | | $ | 2,644,384 | | |
Due
|
| |
Initial
Conversion Date |
| |
Strike
Rate |
| |
Current
Interest Rate |
| |
2020
|
| |
2019
|
| |||||||||||||||
April 2023
|
| | | | N/A | | | | | | N/A | | | | | | 2.93103 | | | | |
$
|
1,000,000
|
| | | | $ | 1,000,000 | | |
January 2024
|
| | | | N/A | | | | | | N/A | | | | | | 2.76062 | | | | |
|
1,000,000
|
| | | | | 1,000,000 | | |
July 2024
|
| | | | N/A | | | | | | N/A | | | | | | 2.00071 | | | | |
|
1,000,000
|
| | | | | — | | |
January 2025
|
| | | | N/A | | | | | | N/A | | | | | | 2.73683 | | | | |
|
778,628
|
| | | | | 815,873 | | |
October 2025
|
| | | | N/A | | | | | | N/A | | | | | | 3.34297 | | | | |
|
712,628
|
| | | | | 743,339 | | |
October 2027
|
| | | | N/A | | | | | | N/A | | | | | | 2.34936 | | | | |
|
779,406
|
| | | | | 849,210 | | |
| | | | | | | | | | | | | | | | | | | | | |
$
|
5,270,593
|
| | | | $ | 4,408,422 | | |
March 31, 2020
|
| |
Actual
|
| |
For Capital Adequacy Purposes*
|
| |
To be Well Capitalized under
Prompt Corrective Action Provisions |
| |||||||||||||||||||||||||||
| | |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| ||||||||||||||||||
Total risk-based capital
(to risk-weighted assets) |
| | |
$
|
14,338,905
|
| | | |
|
33.9%
|
| | | |
$
|
4,438,643≥
|
| | | |
|
≥10.500%
|
| | | |
$
|
4,227,279≥
|
| | | |
|
≥10.0%
|
| |
Tier 1 capital (to risk-weighted assets)
|
| | |
|
13,907,371
|
| | | |
|
32.9%
|
| | | |
|
3,583,187≥
|
| | | |
|
≥8.500%
|
| | | |
|
3,381,823≥
|
| | | |
|
≥8.0%
|
| |
Common Equity tier 1 capital (to risk-weighted assets)
|
| | |
|
13,907,371
|
| | | |
|
32.9%
|
| | | |
|
2,959,095≥
|
| | | |
|
≥7.000%
|
| | | |
|
2,747,731≥
|
| | | |
|
≥6.5%
|
| |
Tier 1 Leverage Ratio capital
(to average tangible assets) |
| | |
|
13,907,371
|
| | | |
|
15.8%
|
| | | |
|
3,518,978≥
|
| | | |
|
≥4.000%
|
| | | |
|
4,398,722≥
|
| | | |
|
≥5.0%
|
| |
|
June 30, 2019
|
| |
Actual
|
| |
For Capital Adequacy Purposes*
|
| |
To be Well Capitalized under
Prompt Corrective Action Provisions |
| |||||||||||||||||||||||||||
| | |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| ||||||||||||||||||
Total risk-based capital
(to risk-weighted assets) |
| | | $ | 14,007,609 | | | | | | 30.4% | | | | | $ | 4,837,352≥ | | | | | | ≥10.500% | | | | | $ | 4,607,001≥ | | | | | | ≥10.0% | | |
Tier 1 capital (to risk-weighted assets)
|
| | | | 13,538,227 | | | | | | 29.4% | | | | | | 3,915,951≥ | | | | | | ≥8.500% | | | | | | 3,685,601≥ | | | | | | ≥8.0% | | |
Common Equity tier 1 capital (to risk-weighted assets)
|
| | | | 13,538,227 | | | | | | 29.4% | | | | | | 3,224,901≥ | | | | | | ≥7.000% | | | | | | 2,994,551≥ | | | | | | ≥6.5% | | |
Tier 1 Leverage Ratio capital
(to average tangible assets) |
| | | | 13,538,227 | | | | | | 15.39% | | | | | | 3,539,672≥ | | | | | | ≥4.000% | | | | | | 4,424,590≥ | | | | | | ≥5.0% | | |
|
| | |
Fixed Rate
|
| |
Variable Rate
|
| ||||||||||||||||||
| | |
2020
|
| |
2019
|
| |
2020
|
| |
2019
|
| ||||||||||||
First or second mortgage loans
|
| | |
$
|
806,000
|
| | | | $ | 494,400 | | | | |
$
|
—
|
| | | | $ | 110,000 | | |
Unused lines of credit
|
| | |
|
558,571
|
| | | | | 899,813 | | | | |
|
1,781,087
|
| | | | | 1,753,230 | | |
Undisbursed amounts on construction loans
|
| | |
|
1,227,979
|
| | | | | 3,135,942 | | | | |
|
—
|
| | | | | — | | |
| | | |
$
|
2,592,550
|
| | | | $ | 4,530,155 | | | | |
$
|
1,781,087
|
| | | | $ | 1,863,230 | | |
March 31, 2020
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Securities available-for-sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage-backed securities, U.S. government sponsored enterprises (GSEs)
|
| | |
$
|
—
|
| | | |
$
|
470,757
|
| | | |
$
|
—
|
| | | |
$
|
470,757
|
| |
| | | | $ | — | | | | | $ | 470,757 | | | | | $ | — | | | | | $ | 470,757 | | |
|
June 30, 2019
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Securities available-for-sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage-backed securities, U.S. government sponsored enterprises (GSEs)
|
| | | $ | — | | | | | $ | 577,904 | | | | | $ | — | | | | | $ | 577,904 | | |
| | | | $ | — | | | | | $ | 577,904 | | | | | $ | — | | | | | $ | 577,904 | | |
March 31, 2020
|
| |
Total
|
| |
Quoted
Prices in Active Markets for Identical Assets (Level 1) |
| |
Significant
Other Observable Inputs (Level 2) |
| |
Significant
Unobservable Inputs (Level 3) |
| ||||||||||||
Impaired loans
|
| | |
$
|
493,808
|
| | | |
$
|
—
|
| | | |
$
|
—
|
| | | |
$
|
493,808
|
| |
Foreclosed real estate
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
| | | | $ | 493,808 | | | | | $ | — | | | | | $ | — | | | | | $ | 493,808 | | |
June 30, 2019
|
| |
Total
|
| |
Quoted
Prices in Active Markets for Identical Assets (Level 1) |
| |
Significant
Other Observable Inputs (Level 2) |
| |
Significant
Unobservable Inputs (Level 3) |
| ||||||||||||
Impaired loans
|
| | | $ | 496,669 | | | | | $ | — | | | | | $ | — | | | | | $ | 496,669 | | |
Foreclosed real estate
|
| | | | 100,100 | | | | | | — | | | | | | — | | | | | | 100,100 | | |
| | | | $ | 596,769 | | | | | $ | — | | | | | $ | — | | | | | $ | 596,769 | | |
March 31, 2020
|
| |
Quantitative Information about Level 3 Fair Value Measurements
|
| ||||||||||||
| | |
Fair Value
Estimate |
| |
Valuation
Techniques |
| |
Unobservable Inputs
|
| |
Estimated
Range (Weighted Average) |
| |||
Impaired loans
|
| | |
$
|
493,808
|
| | |
Appraisal of collateral
|
| |
Costs to sell
|
| |
9.0%
(9.0)% |
|
Foreclosed real estate
|
| | |
$
|
—
|
| | |
Appraisal of collateral
|
| |
Costs to sell
|
| |
9.0%
(9.0)% |
|
|
June 30, 2019
|
| |
Quantitative Information about Level 3 Fair Value Measurements
|
| ||||||||||||
| | |
Fair Value
Estimate |
| |
Valuation
Techniques |
| |
Unobservable Inputs
|
| |
Estimated
Range (Weighted Average) |
| |||
Impaired loans
|
| | | $ | 496,669 | | | |
Appraisal of collateral
|
| |
Costs to sell
|
| |
9.0%
(9.0)% |
|
Foreclosed real estate
|
| | | $ | 100,100 | | | |
Appraisal of collateral
|
| |
Costs to sell
|
| |
9.0%
(9.0)% |
|
| | |
Unrealized
Gains (Losses) on Available-For-Sale Securities |
| |
Unfunded
Post Retirement Obligations |
| |
Total
|
| |||||||||
Balance, July 1, 2018
|
| | | $ | 13,048 | | | | | | (722,765) | | | | | | (709,717) | | |
Unrealized losses on available for sale securities
|
| | | | (1,443) | | | | | | — | | | | | | (1,443) | | |
Increase in minimum pension liability
|
| | | | — | | | | | | (124,427) | | | | | | (124,427) | | |
Amounts reclassified from accumulated other comprehensive loss to net income
|
| | | | — | | | | | | 28,017 | | | | | | 28,017 | | |
Net current-period other comprehensive loss
|
| | | | (1,443) | | | | | | (96,410) | | | | | | (97,853) | | |
Balance, March 31, 2019
|
| | | $ | 11,605 | | | | | $ | (819,175) | | | | | $ | (807,570) | | |
|
| | |
Unrealized
Gains (Losses) on Available-For-Sale Securities |
| |
Unfunded
Post Retirement Obligations |
| |
Total
|
| |||||||||
Balance, July 1, 2019
|
| | | $ | 12,732 | | | | | $ | (851,788) | | | | | $ | (839,056) | | |
Unrealized gains on available for sale securities
|
| | | | 1,947 | | | | | | — | | | | | | 1,947 | | |
Increase in minimum pension liability
|
| | | | — | | | | | | (207,454) | | | | | | (207,454) | | |
Amounts reclassified from accumulated other comprehensive
loss to net income |
| | | | — | | | | | | 30,933 | | | | | | 30,933 | | |
Net current-period other comprehensive income (loss)
|
| | | | 1,947 | | | | | | (176,521) | | | | | | (174,574) | | |
Balance, March 31, 2020
|
| | | $ | 14,679 | | | | | $ | (1,028,309) | | | | | $ | (1,013,630) | | |
|
|
| |
Tel: 215-564-1900
Fax: 215-564-3940 www.bdo.com |
| |
Ten Penn Center
1801 Market Street, Suite 1700 Philadelphia, PA 19103 |
|
June 30,
|
| |
2019
|
| |
2018
|
| ||||||
Assets | | | | | | | | | | | | | |
Cash and due from banks
|
| | |
$
|
980,252
|
| | | | $ | 627,334 | | |
Interest bearing demand deposits
|
| | |
|
2,842,634
|
| | | | | 2,495,245 | | |
Federal funds sold
|
| | |
|
18,590,000
|
| | | | | 20,810,000 | | |
Cash and cash equivalents
|
| | |
|
22,412,886
|
| | | | | 23,932,579 | | |
Interest bearing time deposits
|
| | |
|
665,924
|
| | | | | 943,368 | | |
Investment securities available-for-sale, at fair value
|
| | |
|
577,904
|
| | | | | 774,131 | | |
Investment securities held-to-maturity (fair value 2019 $8,782; 2018
$29,696) |
| | |
|
8,512
|
| | | | | 29,283 | | |
Loans receivable, net of allowance for loan losses of $469,381 at June 30, 2019
and $487,181 at June 30, 2018 |
| | |
|
62,041,187
|
| | | | | 60,549,606 | | |
Accrued interest receivable
|
| | |
|
205,469
|
| | | | | 198,741 | | |
Foreclosed real estate
|
| | |
|
191,100
|
| | | | | 264,509 | | |
Restricted stock, at cost
|
| | |
|
300,200
|
| | | | | 238,200 | | |
Premises and equipment, net
|
| | |
|
191,419
|
| | | | | 217,259 | | |
Prepaid expenses and other assets
|
| | |
|
199,775
|
| | | | | 249,106 | | |
Deferred income taxes, net
|
| | |
|
354,115
|
| | | | | 304,052 | | |
Total Assets
|
| | |
$
|
87,148,491
|
| | | | $ | 87,700,834 | | |
Liabilities and Equity | | | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | | |
Deposits
|
| | |
$
|
68,060,437
|
| | | | $ | 70,720,933 | | |
Advances from Federal Home Loan Bank of Pittsburgh
|
| | |
|
4,408,422
|
| | | | | 2,804,840 | | |
Advances from borrowers for taxes and insurance
|
| | |
|
404,175
|
| | | | | 392,878 | | |
Accrued interest payable
|
| | |
|
18,887
|
| | | | | 12,835 | | |
Other liabilities
|
| | |
|
1,557,399
|
| | | | | 1,245,240 | | |
Total Liabilities
|
| | |
|
74,449,320
|
| | | | | 75,176,726 | | |
Equity | | | | | | | | | | | | | |
Surplus
|
| | |
|
951,782
|
| | | | | 951,782 | | |
Retained earnings
|
| | |
|
12,586,445
|
| | | | | 12,282,043 | | |
Accumulated other comprehensive loss
|
| | |
|
(839,056)
|
| | | | | (709,717) | | |
Total Equity
|
| | |
|
12,699,171
|
| | | | | 12,524,108 | | |
Total Liabilities and Equity
|
| | |
$
|
87,148,491
|
| | | | $ | 87,700,834 | | |
Years Ended June 30,
|
| |
2019
|
| |
2018
|
| ||||||
Interest Income | | | | | | | | | | | | | |
Loans receivable, including fees:
|
| | | | | | | | | | | | |
First mortgage loans
|
| | |
$
|
2,258,344
|
| | | | $ | 2,338,288 | | |
Consumer and other loans
|
| | |
|
694,750
|
| | | | | 678,872 | | |
Investment securities
|
| | |
|
—
|
| | | | | 35,153 | | |
Mortgage-backed securities
|
| | |
|
24,733
|
| | | | | 33,122 | | |
Other
|
| | |
|
535,113
|
| | | | | 296,889 | | |
Total Interest Income
|
| | |
|
3,512,940
|
| | | | | 3,382,324 | | |
Interest Expense | | | | | | | | | | | | | |
Deposits
|
| | |
|
584,220
|
| | | | | 560,021 | | |
Federal Home Loan Bank advances
|
| | |
|
104,716
|
| | | | | 31,839 | | |
Total Interest Expense
|
| | |
|
688,936
|
| | | | | 591,860 | | |
Net interest income
|
| | |
|
2,824,004
|
| | | | | 2,790,464 | | |
Provision (Credit) for Loan Losses
|
| | |
|
(16,665)
|
| | | | | (13,875) | | |
Net interest income after provision (credit) for loan losses
|
| | |
|
2,840,669
|
| | | | | 2,804,339 | | |
Non-Interest Income | | | | | | | | | | | | | |
Service charges and fees
|
| | |
|
164,279
|
| | | | | 177,492 | | |
Net loss on sale of investment securities
|
| | |
|
—
|
| | | | | (117,767) | | |
Net gain (loss) on sale of foreclosed real estate
|
| | |
|
9,555
|
| | | | | (36,351) | | |
Other
|
| | |
|
953
|
| | | | | 2,718 | | |
Total Non-Interest Income
|
| | |
|
174,787
|
| | | | | 26,092 | | |
Non-Interest Expenses | | | | | | | | | | | | | |
Compensation and employee benefits
|
| | |
|
1,542,738
|
| | | | | 1,373,090 | | |
Occupancy and equipment
|
| | |
|
200,104
|
| | | | | 193,718 | | |
Foreclosed real estate expenses
|
| | |
|
58,886
|
| | | | | 52,286 | | |
Federal deposit insurance premiums
|
| | |
|
23,918
|
| | | | | 26,184 | | |
Data processing
|
| | |
|
163,728
|
| | | | | 164,262 | | |
Other
|
| | |
|
593,668
|
| | | | | 574,553 | | |
Total Non-Interest Expenses
|
| | |
|
2,583,042
|
| | | | | 2,384,093 | | |
Income before income taxes
|
| | |
|
432,414
|
| | | | | 446,338 | | |
Income Tax Expense
|
| | |
|
128,012
|
| | | | | 398,247 | | |
Net Income
|
| | |
$
|
304,402
|
| | | | $ | 48,091 | | |
Years Ended June 30,
|
| |
2019
|
| |
2018
|
| ||||||
Comprehensive Income | | | | | | | | | | | | | |
Net income
|
| | |
$
|
304,402
|
| | | | $ | 48,091 | | |
Other Comprehensive Income | | | | | | | | | | | | | |
Unrealized loss on securities available-for-sale, net of taxes of $(84) and $(18,887), respectively
|
| | |
|
(316)
|
| | | | | (49,323) | | |
Reclassification adjustment for loss on sale of available- for-sale securities, net of
taxes of $0 and $24,731, respectively |
| | |
|
—
|
| | | | | 93,036 | | |
Net unrealized (losses) gains on securities available-for- sale
|
| | |
|
(316)
|
| | | | | 43,713 | | |
Unfunded post-retirement obligations:
|
| | | | | | | | | | | | |
Decrease (Increase) in minimum pension liability, net of taxes of $(44,227) and
$15,333, respectively |
| | |
|
(166,379)
|
| | | | | 35,694 | | |
Reclassification adjustment for amortized prior service cost and actuarial losses for unfunded pension liability, net of taxes of $9,930 and $14,906, respectively(1)
|
| | |
|
37,356
|
| | | | | 39,296 | | |
Other comprehensive income on unfunded post- retirement obligations
|
| | |
|
(129,023)
|
| | | | | 74,990 | | |
Total Other Comprehensive (Loss) Income
|
| | |
|
(129,339)
|
| | | | | 118,703 | | |
Comprehensive Income
|
| | | $ | 175,063 | | | | |
$
|
166,794
|
| |
| | |
Surplus
|
| |
Retained
Earnings |
| |
Accumulated
Other Comprehensive Loss |
| |
Total
|
| ||||||||||||
Balance, July 1, 2017
|
| | | $ | 951,782 | | | | | $ | 12,100,619 | | | | | $ | (695,087) | | | | | $ | 12,357,314 | | |
Net income
|
| | | | — | | | | | | 48,091 | | | | | | — | | | | | | 48,091 | | |
Other comprehensive income
|
| | | | — | | | | | | — | | | | | | 118,703 | | | | | | 118,703 | | |
Reclassification of other comprehensive income to retained earnings of ‘stranded tax effects’ in accordance with ASU 2018-02
|
| | | | — | | | | | | 133,333 | | | | | | (133,333) | | | | | | — | | |
Balance, June 30, 2018
|
| | | | 951,782 | | | | | | 12,282,043 | | | | | | (709,717) | | | | | | 12,524,108 | | |
Net income
|
| | | | — | | | | | | 304,402 | | | | | | — | | | | | | 304,402 | | |
Other comprehensive loss
|
| | | | — | | | | | | — | | | | | | (129,339) | | | | | | (129,339) | | |
Balance, June 30, 2019
|
| | | $ | 951,782 | | | | | $ | 12,586,445 | | | | | $ | (839,056) | | | | | $ | 12,699,171 | | |
Years Ended June 30,
|
| |
2019
|
| |
2018
|
| ||||||
Cash Flows from Operating Activities | | | | | | | | | | | | | |
Net income
|
| | |
$
|
304,402
|
| | | | $ | 48,091 | | |
Adjustments to reconcile change in net income to net cash provided by operating activities:
|
| | | | | | | | | | | | |
Provision for depreciation
|
| | |
|
44,209
|
| | | | | 48,337 | | |
(Credit) Provision for loan losses
|
| | |
|
(16,665)
|
| | | | | (13,875) | | |
Write-down of foreclosed real estate
|
| | |
|
51,055
|
| | | | | — | | |
Net amortization of securities premiums and discounts
|
| | |
|
(997)
|
| | | | | (635) | | |
Deferred income taxes
|
| | |
|
(15,681)
|
| | | | | 259,811 | | |
Net (gain) loss on sale of foreclosed real estate
|
| | |
|
(9,555)
|
| | | | | 36,351 | | |
Net loss on sale of investment securities
|
| | |
|
—
|
| | | | | 117,767 | | |
Decrease in assets:
|
| | | | | | | | | | | | |
Accrued interest receivable
|
| | |
|
(6,728)
|
| | | | | 623 | | |
Prepaid expenses and other assets
|
| | |
|
49,331
|
| | | | | 53,818 | | |
Net loss on disposal of premises and equipment
|
| | |
|
88
|
| | | | | 49 | | |
Increase (decrease) in liabilities:
|
| | | | | | | | | | | | |
Accrued interest payable
|
| | |
|
6,052
|
| | | | | 4,336 | | |
Other liabilities
|
| | |
|
148,838
|
| | | | | 88,840 | | |
Net Cash Provided by Operating Activities
|
| | |
|
554,349
|
| | | | | 643,513 | | |
Cash Flows from Investing Activities | | | | | | | | | | | | | |
Net redemptions/(purchases) of interest-bearing time deposits
|
| | |
|
277,444
|
| | | | | (2,995) | | |
Investment securities available-for-sale:
|
| | | | | | | | | | | | |
Proceeds from maturities, calls and principal repayments
|
| | |
|
196,743
|
| | | | | 2,369,645 | | |
Proceeds from sales
|
| | |
|
—
|
| | | | | 1,882,233 | | |
Investment securities held-to-maturity:
|
| | | | | | | | | | | | |
Proceeds from maturities, calls and principal repayments
|
| | |
|
20,852
|
| | | | | 1,036,608 | | |
Net decrease (increase) in loans receivable
|
| | |
|
(1,474,916)
|
| | | | | 751,400 | | |
Purchase of premises and equipment
|
| | |
|
(18,457)
|
| | | | | (18,417) | | |
Proceeds from sale of foreclosed real estate
|
| | |
|
31,909
|
| | | | | 155,694 | | |
Net increase in restricted stock
|
| | |
|
(62,000)
|
| | | | | (114,500) | | |
Net Cash (Used In) Provided by Investing Activities
|
| | |
|
(1,028,425)
|
| | | | | 6,059,668 | | |
Cash Flows from Financing Activities | | | | | | | | | | | | | |
Net decrease in deposits
|
| | |
|
(2,660,496)
|
| | | | | (5,687,378) | | |
Proceeds from long-term debt
|
| | |
|
1,770,000
|
| | | | | 2,884,300 | | |
Repayment of long-term debt
|
| | |
|
(166,418)
|
| | | | | (79,460) | | |
Net increase (decrease) in advances from borrowers for taxes and insurance
|
| | |
|
11,297
|
| | | | | (1,826) | | |
Net Cash Used in Financing Activities
|
| | |
|
(1,045,617)
|
| | | | | (2,884,364) | | |
Net increase (decrease) in cash and cash equivalents
|
| | |
|
(1,519,693)
|
| | | | | 3,818,817 | | |
Cash and Cash Equivalents, Beginning
|
| | |
|
23,932,579
|
| | | | | 20,113,762 | | |
Cash and Cash Equivalents, Ending
|
| | |
$
|
22,412,886
|
| | | | $ | 23,932,579 | | |
Supplementary Cash Flows Information | | | | | | | | | | | | | |
Interest paid
|
| | |
$
|
682,884
|
| | | | $ | 587,524 | | |
Income taxes paid
|
| | |
$
|
135,000
|
| | | | $ | 156,500 | | |
Supplementary Schedule of Non-Cash Investing and Financing Activities | | | | | | | | | | | | | |
Foreclosed real estate acquired in settlement of loans receivable
|
| | |
$
|
—
|
| | | | $ | 305,399 | | |
June 30, 2019
|
| |
Amortized Cost
|
| |
Unrealized
Gains |
| |
Unrealized
Losses |
| |
Fair
Value |
| ||||||||||||
Securities available-for-sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage-backed securities, U.S. government sponsored enterprises (GSEs)
|
| | |
$
|
561,788
|
| | | |
$
|
16,116
|
| | | |
$
|
—
|
| | | |
$
|
577,904
|
| |
| | | | $ | 561,788 | | | | | $ | 16,116 | | | | | $ | — | | | | | $ | 577,904 | | |
Securities held-to-maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities, GSEs
|
| | | $ | 8,512 | | | | | $ | 270 | | | | | $ | — | | | | | $ | 8,782 | | |
| | | | $ | 8,512 | | | | | $ | 270 | | | | | $ | — | | | | | $ | 8,782 | | |
|
June 30, 2018
|
| |
Amortized Cost
|
| |
Unrealized
Gains |
| |
Unrealized
Losses |
| |
Fair
Value |
| ||||||||||||
Securities available-for-sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage-backed securities, U.S. government sponsored enterprises (GSEs)
|
| | | $ | 757,615 | | | | | $ | 16,517 | | | | | $ | (1) | | | | | $ | 774,131 | | |
| | | | $ | 757,615 | | | | | $ | 16,517 | | | | | $ | (1) | | | | | $ | 774,131 | | |
Securities held-to-maturity: | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities, GSEs
|
| | | $ | 29,283 | | | | | $ | 413 | | | | | $ | — | | | | | $ | 29,696 | | |
| | | | $ | 29,283 | | | | | $ | 413 | | | | | $ | — | | | | | $ | 29,696 | | |
June 30, 2019
|
| |
Less than 12 Months
|
| |
12 Months or More
|
| |
Total
|
| |||||||||||||||||||||||||||
| | |
Fair Value
|
| |
Unrealized
Losses |
| |
Fair Value
|
| |
Unrealized
Losses |
| |
Fair Value
|
| |
Unrealized
Losses |
| ||||||||||||||||||
Securities available-for-sale: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities
|
| | |
$
|
—
|
| | | |
$
|
—
|
| | | |
$
|
—
|
| | | |
$
|
—
|
| | | |
$
|
—
|
| | | |
$
|
—
|
| |
Securities held-to- maturity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
|
June 30, 2018
|
| |
Less than 12 Months
|
| |
12 Months or More
|
| |
Total
|
| |||||||||||||||||||||||||||
| | |
Fair Value
|
| |
Unrealized
Losses |
| |
Fair Value
|
| |
Unrealized
Losses |
| |
Fair Value
|
| |
Unrealized
Losses |
| ||||||||||||||||||
Securities available-for-sale: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities
|
| | | $ | 1,086 | | | | | $ | (1) | | | | | $ | — | | | | | $ | — | | | | | $ | 1,086 | | | | | $ | (1) | | |
Securities held-to-maturity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mortgage-backed securities
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total
|
| | | $ | 1,086 | | | | | $ | (1) | | | | | $ | — | | | | | $ | — | | | | | $ | 1,086 | | | | | $ | (1) | | |
June 30, 2019
|
| |
Available-for-Sale
|
| |
Held-to-Maturity
|
| ||||||||||||||||||
| | |
Amortized Cost
|
| |
Fair
Value |
| |
Amortized Cost
|
| |
Fair
Value |
| ||||||||||||
Investment securities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Due in one year or less
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Due after one year through five years
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
Due after five years through ten years
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
Due after ten years through fifteen years
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
Mortgage-backed securities
|
| | |
|
561,788
|
| | | |
|
577,904
|
| | | |
|
8,512
|
| | | |
|
8,782
|
| |
| | | | $ | 561,788 | | | | | $ | 577,904 | | | | | $ | 8,512 | | | | | $ | 8,782 | | |
|
June 30, 2018
|
| |
Available-for-Sale
|
| |
Held-to-Maturity
|
| ||||||||||||||||||
| | |
Amortized Cost
|
| |
Fair
Value |
| |
Amortized Cost
|
| |
Fair
Value |
| ||||||||||||
Investment securities: | | | | | | | | | | | | | | | | | | | | | | | | | |
Due in one year or less
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Due after one year through five years
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Due after five years through ten years
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Due after ten years through fifteen years
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Mortgage-backed securities
|
| | | | 757,615 | | | | | | 774,131 | | | | | | 29,283 | | | | | | 29,696 | | |
| | | | $ | 757,615 | | | | | $ | 774,131 | | | | | $ | 29,283 | | | | | $ | 29,696 | | |
| | |
2019
|
| |
2018
|
| ||||||
First mortgage loans: | | | | | | | | | | | | | |
One-to-four family residences – owner occupied
|
| | |
$
|
22,754,109
|
| | | | $ | 21,205,105 | | |
One-to-four family residences – non-owner occupied
|
| | |
|
18,621,665
|
| | | | | 18,485,241 | | |
Secured by other properties
|
| | |
|
3,611,107
|
| | | | | 4,798,757 | | |
| | | |
|
44,986,881
|
| | | | | 44,489,103 | | |
Consumer and other loans: | | | | | | | | | | | | | |
Home equity and second mortgage
|
| | |
|
17,519,066
|
| | | | | 16,553,808 | | |
Savings account loans and other
|
| | |
|
179,626
|
| | | | | 134,938 | | |
| | | |
|
17,698,692
|
| | | | | 16,688,746 | | |
Total Loans Receivable
|
| | |
|
62,685,573
|
| | | | | 61,177,849 | | |
Unearned loan origination fees, net
|
| | |
|
(175,005)
|
| | | | | (141,062) | | |
Allowance for loan losses
|
| | |
|
(469,381)
|
| | | | | (487,181) | | |
Loans Receivable, Net
|
| | |
$
|
62,041,187
|
| | | | $ | 60,549,606 | | |
|
June 30, 2019
|
| |
Allowance for Loan Losses
|
| |||||||||||||||||||||||||||||||||||||||
| | |
Beginning
Balance |
| |
Charge-offs
|
| |
Recoveries
|
| |
Provisions
(Credits) |
| |
Ending
Balance |
| |
Ending
Balance: Individually Evaluated for Impairment |
| |
Ending
Balance: Collectively Evaluated for Impairment |
| |||||||||||||||||||||
Secured by one-to-four family
residences: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 108,190 | | | | | $ | — | | | | | $ | — | | | | | $ | (19,866) | | | | | $ | 88,324 | | | | | $ | — | | | | | $ | 88,324 | | |
Non-owner occupied
|
| | |
|
200,983
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
22,626
|
| | | |
|
223,609
|
| | | |
|
55,843
|
| | | |
|
167,766
|
| |
Secured by other
properties |
| | |
|
90,936
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
(6,798)
|
| | | |
|
84,138
|
| | | |
|
49,919
|
| | | |
|
34,219
|
| |
Home equity and second mortgage
|
| | |
|
78,499
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
(10,803)
|
| | | |
|
67,696
|
| | | |
|
—
|
| | | |
|
67,696
|
| |
Savings account loans and other
|
| | |
|
8,573
|
| | | |
|
(1,477)
|
| | | |
|
342
|
| | | |
|
(1,824)
|
| | | |
|
5,614
|
| | | |
|
—
|
| | | |
|
5,614
|
| |
| | | | $ | 487,181 | | | | | $ | (1,477) | | | | | $ | 342 | | | | | $ | (16,665) | | | | | $ | 469,381 | | | | | $ | 105,762 | | | | | $ | 363,619 | | |
|
June 30, 2018
|
| |
Allowance for Loan Losses
|
| |||||||||||||||||||||||||||||||||||||||
| | |
Beginning
Balance |
| |
Charge-offs
|
| |
Recoveries
|
| |
Provisions
(Credits) |
| |
Ending
Balance |
| |
Ending
Balance: Individually Evaluated for Impairment |
| |
Ending
Balance: Collectively Evaluated for Impairment |
| |||||||||||||||||||||
Secured by one-to- four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 93,365 | | | | | $ | — | | | | | $ | — | | | | | $ | 14,825 | | | | | $ | 108,190 | | | | | $ | — | | | | | $ | 108,190 | | |
Non-owner occupied
|
| | | | 271,216 | | | | | | (59,833) | | | | | | — | | | | | | (10,400) | | | | | | 200,983 | | | | | | 42,911 | | | | | | 158,072 | | |
Secured by other
properties |
| | | | 109,285 | | | | | | — | | | | | | — | | | | | | (18,349) | | | | | | 90,936 | | | | | | 49,919 | | | | | | 41,017 | | |
Home equity and second mortgage
|
| | | | 83,581 | | | | | | — | | | | | | — | | | | | | (5,082) | | | | | | 78,499 | | | | | | — | | | | | | 78,499 | | |
Savings account loans and other
|
| | | | 7,927 | | | | | | (4,625) | | | | | | 140 | | | | | | 5,131 | | | | | | 8,573 | | | | | | — | | | | | | 8,573 | | |
| | | | $ | 565,374 | | | | | $ | (64,458) | | | | | $ | 140 | | | | | $ | (13,875) | | | | | $ | 487,181 | | | | | $ | 92,830 | | | | | $ | 394,351 | | |
|
June 30, 2019
|
| |
Loans Receivable
|
| |||||||||||||||
| | |
Ending
Balance |
| |
Ending
Balance: Individually Evaluated for Impairment |
| |
Ending
Balance: Collectively Evaluated for Impairment |
| |||||||||
Secured by one-to-four family residences: | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | |
$
|
22,754,109
|
| | | |
$
|
281,984
|
| | | |
$
|
22,472,125
|
| |
Non-owner occupied
|
| | |
|
18,621,665
|
| | | |
|
545,734
|
| | | |
|
18,075,931
|
| |
Secured by other properties
|
| | |
|
3,611,107
|
| | | |
|
326,059
|
| | | |
|
3,285,048
|
| |
Home equity and second mortgage
|
| | |
|
17,519,066
|
| | | |
|
71,879
|
| | | |
|
17,447,187
|
| |
Savings account loans and other
|
| | |
|
179,626
|
| | | |
|
—
|
| | | |
|
179,626
|
| |
| | | | $ | 62,685,573 | | | | | $ | 1,225,656 | | | | | $ | 61,459,917 | | |
|
June 30, 2018
|
| |
Loans Receivable
|
| |||||||||||||||
| | |
Ending
Balance |
| |
Ending
Balance: Individually Evaluated for Impairment |
| |
Ending
Balance: Collectively Evaluated for Impairment |
| |||||||||
Secured by one-to-four family residences: | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 21,205,105 | | | | | $ | 150,387 | | | | | $ | 21,054,718 | | |
Non-owner occupied
|
| | | | 18,485,241 | | | | | | 550,668 | | | | | | 17,934,573 | | |
Secured by other properties
|
| | | | 4,798,757 | | | | | | 343,569 | | | | | | 4,455,188 | | |
Home equity and second mortgage
|
| | | | 16,553,808 | | | | | | 55,931 | | | | | | 16,497,877 | | |
Savings account loans and other
|
| | | | 134,938 | | | | | | — | | | | | | 134,938 | | |
| | | | $ | 61,177,849 | | | | | $ | 1,100,555 | | | | | $ | 60,077,294 | | |
June 30, 2019
|
| |
Recorded
Investment |
| |
Unpaid
Principal Balance |
| |
Related
Allowance |
| |
Average
Recorded Investment |
| |
Interest
Income Recognized |
| |||||||||||||||
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | |
$
|
281,984
|
| | | |
$
|
281,984
|
| | | |
$
|
—
|
| | | |
$
|
287,132
|
| | | |
$
|
5
|
| |
Non-owner occupied
|
| | |
|
119,744
|
| | | |
|
151,701
|
| | | |
|
—
|
| | | |
|
121,019
|
| | | |
|
4,755
|
| |
Secured by other properties
|
| | |
|
149,618
|
| | | |
|
149,618
|
| | | |
|
—
|
| | | |
|
156,436
|
| | | |
|
13,180
|
| |
Home equity and second mortgage
|
| | |
|
71,879
|
| | | |
|
71,879
|
| | | |
|
—
|
| | | |
|
108,384
|
| | | |
|
2,917
|
| |
Savings account loans and other
|
| | |
|
—
|
| | | |
|
12,575
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
June 30, 2019
|
| |
Recorded
Investment |
| |
Unpaid
Principal Balance |
| |
Related
Allowance |
| |
Average
Recorded Investment |
| |
Interest
Income Recognized |
| |||||||||||||||
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Non-owner occupied
|
| | |
|
425,990
|
| | | |
|
425,990
|
| | | |
|
55,843
|
| | | |
|
427,181
|
| | | |
|
3,061
|
| |
Secured by other properties
|
| | |
|
176,441
|
| | | |
|
176,441
|
| | | |
|
49,919
|
| | | |
|
178,378
|
| | | |
|
9,753
|
| |
Home equity and second mortgage
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
Savings account loans and other
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 281,984 | | | | | $ | 281,984 | | | | | $ | — | | | | | $ | 287,132 | | | | | $ | 5 | | |
Non-owner occupied
|
| | |
|
545,734
|
| | | |
|
577,691
|
| | | |
|
55,843
|
| | | |
|
548,200
|
| | | |
|
7,816
|
| |
Secured by other properties
|
| | |
|
326,059
|
| | | |
|
326,059
|
| | | |
|
49,919
|
| | | |
|
334,814
|
| | | |
|
22,933
|
| |
Home equity and second mortgage
|
| | |
|
71,879
|
| | | |
|
71,879
|
| | | |
|
—
|
| | | |
|
108,384
|
| | | |
|
2,917
|
| |
Savings account loans and other
|
| | |
|
—
|
| | | |
|
12,575
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| |
June 30, 2018
|
| |
Recorded
Investment |
| |
Unpaid
Principal Balance |
| |
Related
Allowance |
| |
Average
Recorded Investment |
| |
Interest
Income Recognized |
| |||||||||||||||
With no related allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 150,387 | | | | | $ | 150,387 | | | | | $ | — | | | | | $ | 303,342 | | | | | $ | 3,526 | | |
Non-owner occupied
|
| | | | 235,408 | | | | | | 267,365 | | | | | | — | | | | | | 343,512 | | | | | | 12,602 | | |
Secured by other properties
|
| | | | 163,254 | | | | | | 163,254 | | | | | | — | | | | | | 168,569 | | | | | | 11,764 | | |
Home equity and second mortgage
|
| | | | 55,931 | | | | | | 55,931 | | | | | | — | | | | | | 127,257 | | | | | | 5,191 | | |
Savings account loans and other
|
| | | | — | | | | | | 16,765 | | | | | | — | | | | | | 2,230 | | | | | | 186 | | |
With an allowance recorded: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Non-owner occupied
|
| | | | 315,260 | | | | | | 315,260 | | | | | | 42,911 | | | | | | 318,908 | | | | | | 14,371 | | |
Secured by other properties
|
| | | | 180,315 | | | | | | 180,315 | | | | | | 49,919 | | | | | | 182,158 | | | | | | 9,931 | | |
Home equity and second mortgage
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Savings account loans and other
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Total: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 150,387 | | | | | $ | 150,387 | | | | | $ | — | | | | | $ | 303,342 | | | | | $ | 3,526 | | |
Non-owner occupied
|
| | | | 550,668 | | | | | | 582,625 | | | | | | 42,911 | | | | | | 662,420 | | | | | | 26,973 | | |
Secured by other properties
|
| | | | 343,569 | | | | | | 343,569 | | | | | | 49,919 | | | | | | 350,727 | | | | | | 21,695 | | |
Home equity and second mortgage
|
| | | | 55,931 | | | | | | 55,931 | | | | | | — | | | | | | 127,257 | | | | | | 5,191 | | |
Savings account loans and other
|
| | | | — | | | | | | 16,765 | | | | | | — | | | | | | 2,230 | | | | | | 186 | | |
June 30, 2019
|
| |
Pass
|
| |
Special
Mention |
| |
Substandard
|
| |
Doubtful
|
| |
Loss
|
| |
Total
|
| ||||||||||||||||||
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 22,472,125 | | | | | $ | — | | | | | $ | 281,984 | | | | | $ | — | | | | | $ | — | | | | | $ | 22,754,109 | | |
Non-owner occupied
|
| | |
|
16,706,762
|
| | | |
|
1,401,017
|
| | | |
|
513,886
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
18,621,665
|
| |
Secured by other properties
|
| | |
|
3,003,645
|
| | | |
|
457,844
|
| | | |
|
149,618
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
3,611,107
|
| |
Home equity and second mortgage
|
| | |
|
17,447,187
|
| | | |
|
—
|
| | | |
|
71,879
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
17,519,066
|
| |
Savings account loans and other
|
| | |
|
174,814
|
| | | |
|
—
|
| | | |
|
4,812
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
179,626
|
| |
| | | | $ | 59,804,533 | | | | | $ | 1,858,861 | | | | | $ | 1,022,179 | | | | | $ | — | | | | | $ | — | | | | | $ | 62,685,573 | | |
|
June 30, 2018
|
| |
Pass
|
| |
Special
Mention |
| |
Substandard
|
| |
Doubtful
|
| |
Loss
|
| |
Total
|
| ||||||||||||||||||
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 21,054,718 | | | | | $ | — | | | | | $ | 150,387 | | | | | $ | — | | | | | $ | — | | | | | $ | 21,205,105 | | |
Non-owner occupied
|
| | | | 18,485,241 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 18,485,241 | | |
Secured by other properties
|
| | | | 4,635,503 | | | | | | — | | | | | | 163,254 | | | | | | — | | | | | | — | | | | | | 4,798,757 | | |
Home equity and second mortgage
|
| | | | 16,497,877 | | | | | | — | | | | | | 55,931 | | | | | | — | | | | | | — | | | | | | 16,553,808 | | |
Savings account loans and other
|
| | | | 134,938 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 134,938 | | |
| | | | $ | 60,808,277 | | | | | $ | — | | | | | $ | 369,572 | | | | | $ | — | | | | | $ | — | | | | | $ | 61,177,849 | | |
June 30, 2019
|
| |
30 – 59 Days
Past Due |
| |
60 – 89 Days
Past Due |
| |
Greater
Than 90 Days |
| |
Total Past
Due |
| |
Current
|
| |
Total
Loans Receivables |
| |
Loans
Receivable >90 Days and Accruing |
| |||||||||||||||||||||
Secured by one-to- four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 212,347 | | | | | $ | — | | | | | $ | — | | | | | $ | 212,347 | | | | | $ | 22,541,762 | | | | | $ | 22,754,109 | | | | | $ | — | | |
Non-owner occupied
|
| | |
|
134,350
|
| | | |
|
—
|
| | | |
|
513,886
|
| | | |
|
648,236
|
| | | |
|
17,973,429
|
| | | |
|
18,621,665
|
| | | |
|
—
|
| |
Secured by other properties
|
| | |
|
—
|
| | | |
|
149,618
|
| | | |
|
—
|
| | | |
|
149,618
|
| | | |
|
3,461,489
|
| | | |
|
3,611,107
|
| | | |
|
—
|
| |
Home equity and second mortgage
|
| | |
|
22,462
|
| | | |
|
19,162
|
| | | |
|
—
|
| | | |
|
41,624
|
| | | |
|
17,477,442
|
| | | |
|
17,519,066
|
| | | |
|
—
|
| |
Savings account loans and other
|
| | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
179,626
|
| | | |
|
179,626
|
| | | |
|
—
|
| |
| | | | $ | 369,159 | | | | | $ | 168,780 | | | | | $ | 513,886 | | | | | $ | 1,051,825 | | | | | $ | 61,633,748 | | | | | $ | 62,685,573 | | | | | $ | — | | |
|
June 30, 2018
|
| |
30 – 59 Days
Past Due |
| |
60 – 89 Days
Past Due |
| |
Greater
Than 90 Days |
| |
Total Past
Due |
| |
Current
|
| |
Total
Loans Receivables |
| |
Loans
Receivable >90 Days and Accruing |
| |||||||||||||||||||||
Secured by one-to-four family residences:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Owner occupied
|
| | | $ | 145,939 | | | | | $ | 68,862 | | | | | $ | 150,387 | | | | | $ | 365,188 | | | | | $ | 20,839,917 | | | | | $ | 21,205,105 | | | | | $ | — | | |
Non-owner occupied
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 18,485,241 | | | | | | 18,485,241 | | | | | | — | | |
Secured by other properties
|
| | | | — | | | | | | 163,254 | | | | | | — | | | | | | 163,254 | | | | | | 4,635,503 | | | | | | 4,798,757 | | | | | | — | | |
Home equity and second mortgage
|
| | | | — | | | | | | 67,860 | | | | | | 55,931 | | | | | | 123,791 | | | | | | 16,430,017 | | | | | | 16,553,808 | | | | | | — | | |
Savings account loans and other
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 134,938 | | | | | | 134,938 | | | | | | — | | |
| | | | $ | 145,939 | | | | | $ | 299,976 | | | | | $ | 206,318 | | | | | $ | 652,233 | | | | | $ | 60,525,616 | | | | | $ | 61,177,849 | | | | | $ | — | | |
|
| | |
2019
|
| |
2018
|
| ||||||
Secured by one-to-four family residences: | | | | | | | | | | | | | |
Owner occupied
|
| | |
$
|
281,984
|
| | | | $ | 150,387 | | |
Non-owner occupied
|
| | |
|
513,886
|
| | | | | — | | |
Secured by other properties
|
| | |
|
149,618
|
| | | | | 163,254 | | |
Home equity and second mortgage
|
| | |
|
71,879
|
| | | | | 55,931 | | |
Savings account loans and other
|
| | |
|
—
|
| | | | | — | | |
| | | |
$
|
1,017,367
|
| | | | $ | 369,572 | | |
| | |
Estimated
Useful Lives |
| |
2019
|
| |
2018
|
| ||||||
Buildings and improvements
|
| |
3 to 35 years
|
| | |
$
|
968,615
|
| | | | $ | 968,615 | | |
Furniture, fixtures and equipment
|
| |
1 to 15 years
|
| | |
|
771,383
|
| | | | | 769,310 | | |
| | | | | | |
|
1,739,998
|
| | | | | 1,737,925 | | |
Accumulated depreciation
|
| | | | | |
|
(1,581,229)
|
| | | | | (1,553,316) | | |
| | | | | | |
|
158,769
|
| | | | | 184,609 | | |
Land
|
| | | | | |
|
32,650
|
| | | | | 32,650 | | |
| | | | | | |
$
|
191,419
|
| | | | $ | 217,259 | | |
| | |
2019
|
| |
2018
|
| ||||||||||||||||||||||||||||||
| | |
Weighted
Average Rate at June 30, 2019 |
| |
Amount
|
| |
Percent
|
| |
Weighted
Average Rate at June 30, 2017 |
| |
Amount
|
| |
Percent
|
| ||||||||||||||||||
Core deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Business checking
|
| | | | | | | | |
$
|
437,231
|
| | | |
|
0.64%
|
| | | | | | | | | | $ | 322,715 | | | | | | 0.46% | | |
Non-interest checking
|
| | | | | | | | |
|
3,486,425
|
| | | |
|
5.12
|
| | | | | | | | | | | 2,738,631 | | | | | | 3.87 | | |
NOW
|
| | | | | | | | |
|
16,810,886
|
| | | |
|
24.70
|
| | | | | | | | | | | 18,753,514 | | | | | | 26.52 | | |
Money market
|
| | | | | | | | |
|
3,526,512
|
| | | |
|
5.18
|
| | | | | | | | | | | 4,092,473 | | | | | | 5.79 | | |
Savings
|
| | | | | | | | |
|
17,749,181
|
| | | |
|
26.08
|
| | | | | | | | | | | 18,118,590 | | | | | | 25.62 | | |
| | | |
|
0.41%
|
| | | |
|
42,010,235
|
| | | |
|
61.72
|
| | | | | 0.43% | | | | | | 44,025,923 | | | | | | 62.26 | | |
Time deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Certificates of deposit
|
| | |
|
1.63%
|
| | | |
|
26,050,202
|
| | | |
|
38.28
|
| | | | | 1.27% | | | | | | 26,695,010 | | | | | | 37.74 | | |
| | | |
|
0.88%
|
| | | |
$
|
68,060,437
|
| | | |
|
100.00%
|
| | | | | 0.75% | | | | | $ | 70,720,933 | | | | | | 100.00% | | |
Years ending June 30,
|
| | | | | | |
2020
|
| | | $ | 9,549,030 | | |
2021
|
| | | | 3,505,427 | | |
2022
|
| | | | 6,225,297 | | |
2023
|
| | | | 2,959,540 | | |
2024
|
| | | | 2,602,855 | | |
Thereafter
|
| | | | 1,208,053 | | |
| | | | $ | 26,050,202 | | |
| | |
2019
|
| |
2018
|
| ||||||
Money market accounts
|
| | |
$
|
26,160
|
| | | | $ | 26,411 | | |
NOW accounts
|
| | |
|
103,195
|
| | | | | 122,866 | | |
Savings accounts
|
| | |
|
53,711
|
| | | | | 53,314 | | |
Certificates of deposit
|
| | |
|
401,154
|
| | | | | 357,430 | | |
| | | |
$
|
584,220
|
| | | | $ | 560,021 | | |
| | |
2019
|
| |
2018
|
| ||||||
Correspondent Bank charges
|
| | |
$
|
18,239
|
| | | | $ | 25,571 | | |
Professional fees
|
| | |
|
160,974
|
| | | | | 161,499 | | |
Advertising
|
| | |
|
53,178
|
| | | | | 49,085 | | |
Insurance/surety bond premiums
|
| | |
|
24,144
|
| | | | | 24,318 | | |
Supplies
|
| | |
|
16,212
|
| | | | | 27,798 | | |
Supervisory Exams
|
| | |
|
27,350
|
| | | | | 17,548 | | |
ATM costs
|
| | |
|
69,847
|
| | | | | 67,045 | | |
VISA debit cards
|
| | |
|
30,839
|
| | | | | 30,215 | | |
Telephone, data line, and internet charges
|
| | |
|
84,891
|
| | | | | 81,399 | | |
Postage
|
| | |
|
16,993
|
| | | | | 19,869 | | |
Dues and subscriptions
|
| | |
|
15,426
|
| | | | | 13,917 | | |
DDA/NOW account costs
|
| | |
|
12,230
|
| | | | | 12,211 | | |
Loan processing costs
|
| | |
|
11,230
|
| | | | | 6,778 | | |
Telephone banking
|
| | |
|
9,716
|
| | | | | 9,991 | | |
Courier services
|
| | |
|
10,618
|
| | | | | 10,090 | | |
Meals and entertainment
|
| | |
|
10,496
|
| | | | | 6,104 | | |
Provision for other credit losses
|
| | |
|
8,048
|
| | | | | (2,566) | | |
Other
|
| | |
|
13,237
|
| | | | | 13,681 | | |
| | | |
$
|
593,668
|
| | | | $ | 574,553 | | |
|
| | |
2019
|
| |
2018
|
| ||||||
Current, federal
|
| | |
$
|
106,386
|
| | | | $ | 123,144 | | |
Deferred, federal
|
| | |
|
(15,681)
|
| | | | | 240,386 | | |
Total federal income tax expense
|
| | |
|
90,705
|
| | | | | 363,530 | | |
Current, state
|
| | |
|
37,307
|
| | | | | 15,292 | | |
Deferred, state
|
| | |
|
—
|
| | | | | 19,425 | | |
Total state income tax expense
|
| | |
|
37,307
|
| | | | | 34,717 | | |
Total Income Tax Expense
|
| | |
$
|
128,012
|
| | | | $ | 398,247 | | |
| | |
2019
|
| |
2018
|
| ||||||
Assets | | | | | | | | | | | | | |
Impairment of securities available-for-sale
|
| | |
$
|
24,731
|
| | | | $ | 24,731 | | |
Allowance for loan losses
|
| | |
|
98,570
|
| | | | | 102,308 | | |
Other comprehensive loss, pension
|
| | |
|
226,425
|
| | | | | 192,128 | | |
Executive retirement plan
|
| | |
|
2,520
|
| | | | | 2,835 | | |
Other
|
| | |
|
30,147
|
| | | | | 10,646 | | |
| | | |
|
382,393
|
| | | | | 332,648 | | |
Valuation allowance
|
| | |
|
(24,731)
|
| | | | | (24,731) | | |
Total assets, net
|
| | |
|
357,662
|
| | | | | 307,917 | | |
|
| | |
2019
|
| |
2018
|
| ||||||
Liabilities | | | | | | | | | | | | | |
Basis of premises and equipment
|
| | |
|
(163)
|
| | | | | (396) | | |
Unrealized gains on securities available-for-sale
|
| | |
|
(3,384)
|
| | | | | (3,469) | | |
Total liabilities
|
| | |
|
(3,547)
|
| | | | | (3,865) | | |
Net Deferred Tax Assets
|
| | |
$
|
354,115
|
| | | | $ | 304,052 | | |
|
| | |
2019
|
| |
2018
|
| ||||||
Changes in benefit obligation: | | | | | | | | | | | | | |
Beginning of year
|
| | |
$
|
2,493,426
|
| | | | $ | 2,448,837 | | |
Service cost
|
| | |
|
106,724
|
| | | | | 101,462 | | |
Interest cost
|
| | |
|
104,606
|
| | | | | 95,069 | | |
Assumption changes
|
| | |
|
243,899
|
| | | | | (113,561) | | |
Actual loss
|
| | |
|
42,336
|
| | | | | 28,586 | | |
Benefits paid
|
| | |
|
(367,506)
|
| | | | | (66,967) | | |
End of year
|
| | |
|
2,623,485
|
| | | | | 2,493,426 | | |
Changes in fair value of plan assets: | | | | | | | | | | | | | |
Beginning of year
|
| | |
|
1,613,931
|
| | | | | 1,449,918 | | |
Actual return on plan assets
|
| | |
|
33,201
|
| | | | | 30,980 | | |
Employer contributions
|
| | |
|
100,000
|
| | | | | 200,000 | | |
Benefits paid
|
| | |
|
(367,506)
|
| | | | | (66,967) | | |
End of year
|
| | |
|
1,379,626
|
| | | | | 1,613,931 | | |
Unfunded Status at End of Year
|
| | |
$
|
(1,243,859)
|
| | | | $ | (879,495) | | |
|
| | |
2019
|
| |
2018
|
| ||||||
Amounts recognized in the statements of financial condition consist of: | | | | | | | | | | | | | |
Other liabilities
|
| | |
$
|
(1,243,859)
|
| | | | $ | (879,495) | | |
Accumulated other comprehensive loss (pre-tax basis)
|
| | |
|
1,078,213
|
| | | | | 914,893 | | |
Net Amount Recognized
|
| | |
$
|
(165,646)
|
| | | | $ | 35,398 | | |
Amounts recognized in accumulated other comprehensive loss consists of: | | | | | | | | | | | | | |
Unrecognized actuarial loss
|
| | |
$
|
1,078,213
|
| | | | $ | 914,893 | | |
| | | |
$
|
1,078,213
|
| | | | $ | 914,893 | | |
|
| | |
2019
|
| |
2018
|
| ||||||
Service cost, benefit earned during the period
|
| | |
$
|
106,724
|
| | | | $ | 101,462 | | |
Interest cost on projected benefit obligation
|
| | |
|
104,606
|
| | | | | 95,069 | | |
Expected return on plan assets
|
| | |
|
(69,534)
|
| | | | | (64,928) | | |
Recognized prior service credit
|
| | |
|
—
|
| | | | | (1,946) | | |
Recognized net actuarial loss
|
| | |
|
47,286
|
| | | | | 56,148 | | |
Settlement loss
|
| | |
|
111,962
|
| | | | | — | | |
Net Pension Costs
|
| | |
$
|
301,044
|
| | | | $ | 185,805 | | |
June 30, 2017
|
| |
Fair Value
|
| |
Quoted
Prices in Active Markets for Identical Assets (Level 1) |
| |
Significant
Other Observable Inputs (Level 2) |
| |
Significant
Unobservable Inputs (Level 3) |
| ||||||||||||
Certificates of deposit
|
| | |
$
|
1,379,626
|
| | | |
$
|
—
|
| | | |
$
|
1,379,626
|
| | | |
$
|
—
|
| |
| | | | $ | 1,379,626 | | | | | $ | — | | | | | $ | 1,379,626 | | | | | $ | — | | |
|
June 30, 2018
|
| |
Fair Value
|
| |
Quoted
Prices in Active Markets for Identical Assets (Level 1) |
| |
Significant
Other Observable Inputs (Level 2) |
| |
Significant
Unobservable Inputs (Level 3) |
| ||||||||||||
Certificates of deposit
|
| | | $ | 1,613,931 | | | | | $ | — | | | | | $ | 1,613,931 | | | | | $ | — | | |
| | | | $ | 1,613,931 | | | | | $ | — | | | | | $ | 1,613,931 | | | | | $ | — | | |
Due
|
| |
Initial
Conversion Date |
| |
Strike Rate
|
| |
Current
Interest Rate |
| |
2019
|
| |
2018
|
| |||||||||||||||
April 2023
|
| | | | N/A | | | | | | N/A | | | | | | 2.93103 | | | | |
$
|
1,000,000
|
| | | | $ | 1,000,000 | | |
January 2024
|
| | | | N/A | | | | | | N/A | | | | | | 2.76062 | | | | |
|
1,000,000
|
| | | | | — | | |
January 2025
|
| | | | N/A | | | | | | N/A | | | | | | 2.73683 | | | | |
|
815,873
|
| | | | | 864,449 | | |
October 2025
|
| | | | N/A | | | | | | N/A | | | | | | 3.34297 | | | | |
|
743,339
|
| | | | | — | | |
October 2027
|
| | | | N/A | | | | | | N/A | | | | | | 2.34936 | | | | |
|
849,210
|
| | | | | 940,391 | | |
| | | | | | | | | | | | | | | | | | | | | |
$
|
4,408,422
|
| | | | $ | 2,804,840 | | |
|
Years ending June 30,
|
| | | | | | |
2020
|
| | | $ | 184,390 | | |
2021
|
| | | | 189,386 | | |
2022
|
| | | | 194,520 | | |
2023
|
| | | | 1,199,797 | | |
2024
|
| | | | 1,205,221 | | |
Thereafter
|
| | | | 1,435,108 | | |
| | | | $ | 4,408,422 | | |
June 30, 2019
|
| |
Actual
|
| |
For Capital Adequacy Purposes*
|
| |
To be Well Capitalized under
Prompt Corrective Action Provisions |
| |||||||||||||||||||||||||||
| | |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| ||||||||||||||||||
Total risk-based capital (to risk-weighted assets)
|
| | |
$
|
14,007,609
|
| | | |
|
30.4%
|
| | | |
$
|
4,837,352≥
|
| | | | | ≥10.500% | | | | |
$
|
4,607,001≥
|
| | | | | ≥10.0% | | |
Tier 1 capital (to risk-weighted
assets) |
| | |
|
13,538,227
|
| | | |
|
29.4%
|
| | | | | 3,915,951≥ | | | | | | ≥8.500% | | | | | | 3,685,601≥ | | | | | | ≥8.0% | | |
Common Equity tier 1 capital (to risk-weighted assets)
|
| | |
|
13,538,227
|
| | | |
|
29.4%
|
| | | | | 3,224,901≥ | | | | | | ≥7.000% | | | | | | 2,994,551≥ | | | | | | ≥6.5% | | |
Tier 1 Leverage Ratio capital (to average tangible
assets) |
| | |
|
13,538,227
|
| | | |
|
15.3%
|
| | | | | 3,539,672≥ | | | | | | ≥4.000% | | | | | | 4,424,590≥ | | | | | | ≥5.0% | | |
June 30, 2018
|
| |
Actual
|
| |
For Capital Adequacy Purposes*
|
| |
To be Well Capitalized under
Prompt Corrective Action Provisions |
| |||||||||||||||||||||||||||
| | |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| ||||||||||||||||||
Total risk-based capital (to risk-weighted assets)
|
| | | $ | 13,721,006 | | | | | | 31.1% | | | | | $ | 4,354,194≥ | | | | | | ≥9.875% | | | | | $ | 4,409,310≥ | | | | | | ≥10.0% | | |
Tier 1 capital (to risk-weighted
assets) |
| | | | 13,233,825 | | | | | | 30.0% | | | | | | 3,472,332≥ | | | | | | ≥7.875% | | | | | | 3,527,448≥ | | | | | | ≥8.0% | | |
Common Equity tier 1 capital (to risk-weighted assets)
|
| | | | 13,233,825 | | | | | | 30.0% | | | | | | 2,810,935≥ | | | | | | ≥6.375% | | | | | | 2,866,052≥ | | | | | | ≥6.5% | | |
Tier 1 Leverage Ratio capital (to average tangible
assets) |
| | | | 13,233,825 | | | | | | 14.9% | | | | | | 3,553,932≥ | | | | | | ≥4.000% | | | | | | 4,442,416≥ | | | | | | ≥5.0% | | |
| | |
Fixed Rate
|
| |
Variable Rate
|
| ||||||||||||||||||
| | |
2019
|
| |
2018
|
| |
2019
|
| |
2018
|
| ||||||||||||
First or second mortgage loans
|
| | |
$
|
494,400
|
| | | | $ | 195,000 | | | | |
$
|
110,000
|
| | | | $ | — | | |
Unused lines of credit
|
| | |
|
899,813
|
| | | | | 1,208,739 | | | | |
|
1,753,230
|
| | | | | 1,684,883 | | |
Undisbursed amounts on construction loans
|
| | |
|
3,135,942
|
| | | | | 1,839,679 | | | | |
|
—
|
| | | | | 10,500 | | |
| | | |
$
|
4,530,155
|
| | | | $ | 3,243,418 | | | | |
$
|
1,863,230
|
| | | | $ | 1,695,383 | | |
June 30, 2019
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Securities available-for-sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage-backed securities, U.S. government sponsored enterprises (GSEs)
|
| | |
$
|
—
|
| | | |
$
|
577,904
|
| | | |
$
|
—
|
| | | |
$
|
577,904
|
| |
| | | | $ | — | | | | | $ | 577,904 | | | | | $ | — | | | | | $ | 577,904 | | |
|
June 30, 2018
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
| ||||||||||||
Securities available-for-sale: | | | | | | | | | | | | | | | | | | | | | | | | | |
Residential mortgage-backed securities, U.S. government sponsored enterprises (GSEs)
|
| | | $ | — | | | | | $ | 774,131 | | | | | $ | — | | | | | $ | 774,131 | | |
| | | | $ | — | | | | | $ | 774,131 | | | | | $ | — | | | | | $ | 774,131 | | |
June 30, 2019
|
| |
Total
|
| |
Quoted
Prices in Active Markets for Identical Assets (Level 1) |
| |
Significant
Other Observable Inputs (Level 2) |
| |
Significant
Unobservable Inputs (Level 3) |
| ||||||||||||
Impaired loans
|
| | |
$
|
496,669
|
| | | |
$
|
—
|
| | | |
$
|
—
|
| | | |
$
|
496,669
|
| |
Foreclosed real estate
|
| | |
|
100,100
|
| | | |
|
—
|
| | | |
|
—
|
| | | |
|
100,100
|
| |
| | | | $ | 596,769 | | | | | $ | — | | | | | $ | — | | | | | $ | 596,769 | | |
|
June 30, 2018
|
| |
Total
|
| |
Quoted
Prices in Active Markets for Identical Assets (Level 1) |
| |
Significant
Other Observable Inputs (Level 2) |
| |
Significant
Unobservable Inputs (Level 3) |
| ||||||||||||
Impaired loans
|
| | | $ | 402,745 | | | | | $ | — | | | | | $ | — | | | | | $ | 402,745 | | |
Foreclosed real estate
|
| | | | 113,354 | | | | | | — | | | | | | — | | | | | | 113,354 | | |
| | | | $ | 516,099 | | | | | $ | — | | | | | $ | — | | | | | $ | 516,099 | | |
June 30, 2019
|
| |
Quantitative Information about Level 3 Fair Value Measurements
|
| |||||||||||||||
| | |
Fair Value
Estimate |
| |
Valuation
Techniques |
| |
Unobservable Inputs
|
| |
Estimated
Range (Weighted Average) |
| ||||||
Impaired loans
|
| | |
$
|
496,669
|
| | |
Appraisal of collateral
|
| |
Costs to sell
|
| | |
|
9.0%
(9.0)% |
| |
Foreclosed real estate
|
| | | $ | 100,100 | | | |
Appraisal of collateral
|
| |
Costs to sell
|
| | |
|
9.0%
(9.0)% |
| |
June 30, 2018
|
| |
Quantitative Information about Level 3 Fair Value Measurements
|
| |||||||||||||||
| | |
Fair Value
Estimate |
| |
Valuation
Techniques |
| |
Unobservable Inputs
|
| |
Estimated
Range (Weighted Average) |
| ||||||
Impaired loans
|
| | | $ | 402,745 | | | |
Appraisal of collateral
|
| |
Costs to sell
|
| | |
|
9.0%
(9.0)% |
| |
Foreclosed real estate
|
| | | $ | 113,354 | | | |
Appraisal of collateral
|
| |
Costs to sell
|
| | |
|
9.0%
(9.0)% |
| |
| | |
Unrealized
Gains (Losses) on Available- For-Sale Securities |
| |
Unfunded
Post Retirement Obligations |
| |
Total
|
| |||||||||
Balance, July 1, 2017
|
| | | $ | (21,806) | | | | | $ | (673,281) | | | | | $ | (695,087) | | |
Unrealized losses on available for sale securities
|
| | | | (49,323) | | | | | | — | | | | | | (49,323) | | |
Decrease in minimum pension liability
|
| | | | — | | | | | | 35,694 | | | | | | 35,694 | | |
Amounts reclassified from accumulated other comprehensive loss to net income
|
| | | | 93,036 | | | | | | 39,296 | | | | | | 132,332 | | |
Net current-period other comprehensive income
|
| | | | 43,713 | | | | | | 74,990 | | | | | | 118,703 | | |
Amounts reclassified from accumulated other comprehensive loss to retained earnings
|
| | | | (8,859) | | | | | | (124,474) | | | | | | (133,333) | | |
Balance, June 30, 2018
|
| | | | 13,048 | | | | | | (722,765) | | | | | | (709,717) | | |
Unrealized losses on available for sale securities
|
| | | | (316) | | | | | | — | | | | | | (316) | | |
Decrease in minimum pension liability
|
| | | | — | | | | | | (166,379) | | | | | | (166,379) | | |
Amounts reclassified from accumulated other comprehensive loss to net income
|
| | | | — | | | | | | 37,356 | | | | | | 37,356 | | |
Net current-period other comprehensive (loss)
|
| | | | (316) | | | | | | (129,023) | | | | | | (129,339) | | |
Balance, June 30, 2019
|
| | | $ | 12,732 | | | | | $ | (851,788) | | | | | $ | (839,056) | | |
| | |
Page
Number |
| |||
| | | | B-1 | | | |
Financial Statements | | | | | | | |
| | | | B-2 | | | |
| | | | B-3 | | | |
| | | | B-4 | | | |
| | | | B-5 | | | |
| | | | B-6 | | | |
| | | | B-7 – B-26 | | |
| | |
March 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
ASSETS | | | | ||||||||||
Cash and amounts due from other institutions
|
| | | $ | 3,056,532 | | | | | $ | 2,048,669 | | |
Interest-bearing deposits with other institutions
|
| | | | 15,234,031 | | | | | | 6,576,740 | | |
Cash and cash equivalents
|
| | | | 18,290,563 | | | | | | 8,625,409 | | |
Certificates of deposit
|
| | | | 100,000 | | | | | | 100,000 | | |
Equity securities
|
| | | | 30,425 | | | | | | 57,187 | | |
Investment securities held to maturity (fair value of $2,494,946)
|
| | | | — | | | | | | 2,500,000 | | |
Investment securities available for sale
|
| | | | 1,992,916 | | | | | | 1,000,773 | | |
Mortgage-backed securities held to maturity (fair value of $491,635 and $661,492)
|
| | | | 478,678 | | | | | | 650,156 | | |
Loans (net of allowance for loan losses of $740,397 and $678,410)
|
| | | | 127,439,835 | | | | | | 139,826,664 | | |
Accrued interest receivable
|
| | | | 446,848 | | | | | | 640,401 | | |
Regulatory stock
|
| | | | 1,225,000 | | | | | | 1,597,600 | | |
Premises and equipment, net
|
| | | | 4,694,700 | | | | | | 4,957,676 | | |
Bank-owned life insurance
|
| | | | 3,201,865 | | | | | | 3,122,918 | | |
Other assets
|
| | | | 961,540 | | | | | | 910,126 | | |
TOTAL ASSETS
|
| | | $ | 158,862,370 | | | | | $ | 163,988,910 | | |
LIABILITIES | | | | | | | | | | | | | |
Deposits
|
| | | $ | 133,606,269 | | | | | $ | 130,486,497 | | |
Short-term advances from Federal Home Loan Bank
|
| | | | — | | | | | | 11,000,000 | | |
Long-term advances from Federal Home Loan Bank
|
| | | | 11,000,000 | | | | | | 8,000,000 | | |
Accrued interest payable
|
| | | | 45,456 | | | | | | 71,142 | | |
Advance payments by borrowers for taxes and insurance
|
| | | | 266,009 | | | | | | 255,434 | | |
Other liabilities
|
| | | | 628,278 | | | | | | 732,486 | | |
TOTAL LIABILITIES
|
| | | | 145,546,012 | | | | | | 150,545,559 | | |
NET WORTH | | | | | | | | | | | | | |
Retained earnings
|
| | | | 13,310,534 | | | | | | 13,415,778 | | |
Accumulated other comprehensive income
|
| | | | 5,824 | | | | | | 27,573 | | |
TOTAL NET WORTH
|
| | | | 13,316,358 | | | | | | 13,443,351 | | |
TOTAL LIABILITIES AND NET WORTH
|
| | | $ | 158,862,370 | | | | | $ | 163,988,910 | | |
| | |
Year Ended March 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
INTEREST AND DIVIDEND INCOME | | | | ||||||||||
Interest and fees on loans
|
| | | $ | 5,618,902 | | | | | $ | 5,836,044 | | |
Interest on mortgage-backed securities
|
| | | | 19,929 | | | | | | 20,622 | | |
Interest and dividends on investments
|
| | | | 198,461 | | | | | | 195,654 | | |
Interest-bearing deposits with other institutions
|
| | | | 209,882 | | | | | | 110,432 | | |
Total interest and dividend income
|
| | | | 6,047,174 | | | | | | 6,162,752 | | |
INTEREST EXPENSE | | | | | | | | | | | | | |
Deposits
|
| | | | 1,357,495 | | | | | | 1,243,938 | | |
Short-term advances from Federal Home Loan Bank
|
| | | | 134,751 | | | | | | 214,210 | | |
Long-term advances from Federal Home Loan Bank
|
| | | | 312,192 | | | | | | 179,626 | | |
Total interest expense
|
| | | | 1,804,438 | | | | | | 1,637,774 | | |
NET INTEREST INCOME BEFORE PROVISION FOR LOAN
LOSSES |
| | | | 4,242,736 | | | | | | 4,524,978 | | |
Provision for loan losses
|
| | | | 126,000 | | | | | | 108,000 | | |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
|
| | | | 4,116,736 | | | | | | 4,416,978 | | |
NONINTEREST INCOME | | | | ||||||||||
Service charges on deposit accounts
|
| | | | 75,588 | | | | | | 80,076 | | |
(Loss) gain on sale of loans, net
|
| | | | (2,648) | | | | | | 1,887 | | |
Earnings on bank-owned life insurance
|
| | | | 78,947 | | | | | | 79,342 | | |
Rental income
|
| | | | 172,670 | | | | | | 167,589 | | |
Other income
|
| | | | 124,608 | | | | | | 126,149 | | |
Total noninterest income
|
| | | | 449,165 | | | | | | 455,043 | | |
NONINTEREST EXPENSE | | | | | | | | | | | | | |
Salaries and employee benefits expenses
|
| | | | 1,982,421 | | | | | | 2,632,301 | | |
Occupancy expenses
|
| | | | 699,924 | | | | | | 761,981 | | |
Furniture and equipment expenses
|
| | | | 184,082 | | | | | | 197,828 | | |
Insurance and bond premiums
|
| | | | 83,236 | | | | | | 105,498 | | |
Data processing expenses
|
| | | | 473,942 | | | | | | 473,230 | | |
Professional fees
|
| | | | 189,817 | | | | | | 179,003 | | |
Federal deposit insurance
|
| | | | 72,384 | | | | | | 98,670 | | |
Correspondent service charges
|
| | | | 128,973 | | | | | | 118,972 | | |
Gain on sale of other real estate owned
|
| | | | — | | | | | | (51,115) | | |
Other expenses
|
| | | | 875,499 | | | | | | 1,082,817 | | |
Total noninterest expense
|
| | | | 4,690,278 | | | | | | 5,599,185 | | |
LOSS BEFORE INCOME TAX BENEFIT
|
| | | | (124,377) | | | | | | (727,164) | | |
Income tax benefit
|
| | | | (19,133) | | | | | | (22,958) | | |
NET LOSS
|
| | | $ | (105,244) | | | | | $ | (704,206) | | |
| | |
Year Ended March 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
Net loss
|
| | | $ | (105,244) | | | | | $ | (704,206) | | |
Other comprehensive (loss) income : | | | | | | | | | | | | | |
Unrealized holding (losses) gains on securities
|
| | | | (27,535) | | | | | | 20,402 | | |
Tax effect
|
| | | | 5,786 | | | | | | (1,639) | | |
Other comprehensive (loss) income, net of tax
|
| | | | (21,749) | | | | | | 18,763 | | |
Comprehensive loss
|
| | | $ | (126,993) | | | | | $ | (685,443) | | |
| | |
Retained
Earnings |
| |
Accumulated
Other Comprehensive Income |
| |
Total
Net Worth |
| |||||||||
Balance, March 31, 2018
|
| | | $ | 14,119,984 | | | | | $ | 8,810 | | | | | $ | 14,128,794 | | |
Net loss
|
| | | | (704,206) | | | | | | — | | | | | | (704,206) | | |
Other comprehensive income
|
| | | | — | | | | | | 18,763 | | | | | | 18,763 | | |
Balance, March 31, 2019
|
| | | | 13,415,778 | | | | | | 27,573 | | | | | | 13,443,351 | | |
Net loss
|
| | | | (105,244) | | | | | | — | | | | | | (105,244) | | |
Other comprehensive loss
|
| | | | — | | | | | | (21,749) | | | | | | (21,749) | | |
Balance, March 31, 2020
|
| | | $ | 13,310,534 | | | | | $ | 5,824 | | | | | $ | 13,316,358 | | |
| | |
Year Ended March 31,
|
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
OPERATING ACTIVITIES | | | | | | | | | | | | | |
Net loss
|
| | | $ | (105,244) | | | | | $ | (704,206) | | |
Adjustments to reconcile net loss to net cash provided by operating activities:
|
| | | | | | | | | | | | |
Depreciation
|
| | | | 462,518 | | | | | | 489,137 | | |
Provision for loan losses
|
| | | | 126,000 | | | | | | 108,000 | | |
Net accretion of securities premiums and discounts and loan fees
|
| | | | (8,390) | | | | | | (1,286) | | |
Earnings on bank-owned life insurance
|
| | | | (78,947) | | | | | | (79,342) | | |
Gain on sale of other real estate owned
|
| | | | — | | | | | | (51,115) | | |
Loss (gain) on sale of loans, net
|
| | | | 2,648 | | | | | | (1,887) | | |
Mortgage loans originated for sale
|
| | | | (462,370) | | | | | | (308,789) | | |
Proceeds from the sale of mortgage loans originated for sale
|
| | | | 459,722 | | | | | | 310,676 | | |
Decrease in accrued interest receivable
|
| | | | 193,553 | | | | | | 23,727 | | |
(Decrease) increase in accrued interest payable
|
| | | | (25,686) | | | | | | 37,095 | | |
Deferred income taxes
|
| | | | (1,092) | | | | | | (39,397) | | |
Increase in supplemental retirement plan
|
| | | | 22,868 | | | | | | 226,278 | | |
Other, net
|
| | | | (171,612) | | | | | | 125,368 | | |
Net cash provided by operating activities
|
| | | | 413,968 | | | | | | 134,259 | | |
INVESTING ACTIVITIES | | | | | | | | | | | | | |
Purchase of:
|
| | | | | | | | | | | | |
Investment securities held to maturity
|
| | | | (500,000) | | | | | | — | | |
Investment securities available for sale
|
| | | | (1,985,143) | | | | | | (1,000,000) | | |
Proceeds from:
|
| | | | | | | | | | | | |
Calls and maturities of investment securities held to maturity
|
| | | | 3,000,000 | | | | | | — | | |
Calls and maturities of investment securities available for sale
|
| | | | 1,000,000 | | | | | | 2,000,000 | | |
Principal collected on:
|
| | | | | | | | | | | | |
Mortgage-backed securities held to maturity
|
| | | | 171,625 | | | | | | 188,009 | | |
Net decrease (increase) in loans
|
| | | | 12,261,299 | | | | | | (7,030,286) | | |
Purchases of premises and equipment
|
| | | | (199,542) | | | | | | (101,773) | | |
Purchase of regulatory stock
|
| | | | (37,600) | | | | | | (1,120,800) | | |
Redemption of regulatory stock
|
| | | | 410,200 | | | | | | 845,800 | | |
Proceeds from sale of real estate owned
|
| | | | — | | | | | | 176,226 | | |
Net cash provided by (used for) investing activities
|
| | | | 14,120,839 | | | | | | (6,042,824) | | |
FINANCING ACTIVITIES | | | | | | | | | | | | | |
Net increase in passbook, NOW, MMDA, and club accounts
|
| | | | 5,460,558 | | | | | | 959,511 | | |
Net decrease in certificates of deposit
|
| | | | (2,340,786) | | | | | | (4,455,591) | | |
Increase in advances from borrowers for taxes and insurance
|
| | | | 10,575 | | | | | | 29,728 | | |
Net (decrease) increase in short-term Federal Home Loan Bank advances
|
| | | | (11,000,000) | | | | | | 4,000,000 | | |
Repayment of long-term Federal Home Loan Bank advances
|
| | | | (1,000,000) | | | | | | (2,000,000) | | |
Proceeds from long-term Federal Home Loan Bank advances
|
| | | | 4,000,000 | | | | | | 6,000,000 | | |
Net cash (used for) provided by financing activities
|
| | | | (4,869,653) | | | | | | 4,533,648 | | |
Net increase (decrease) in cash and cash equivalents
|
| | | | 9,665,154 | | | | | | (1,374,917) | | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
|
| | | | 8,625,409 | | | | | | 10,000,326 | | |
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
| | | $ | 18,290,563 | | | | | $ | 8,625,409 | | |
SUPPLEMENTAL DISCLOSURES | | | | | | | | | | | | | |
Cash paid during the year for:
|
| | | | | | | | | | | | |
Interest
|
| | | $ | 1,830,124 | | | | | $ | 1,600,679 | | |
Income taxes
|
| | | | — | | | | | | 156,500 | | |
| | |
March 31, 2020
|
| |||||||||||||||||||||
| | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Fair
Value |
| ||||||||||||
Available for Sale | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government agencies maturing: | | | | | | | | | | | | | | | | | | | | | | | | | |
Less than 1 year
|
| | | $ | 1,992,916 | | | | | $ | — | | | | | $ | — | | | | | $ | 1,992,916 | | |
Total
|
| | | $ | 1,992,916 | | | | | $ | — | | | | | $ | — | | | | | $ | 1,992,916 | | |
|
| | |
March 31, 2019
|
| |||||||||||||||||||||
| | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Fair
Value |
| ||||||||||||
Held to Maturity | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government agencies maturing: | | | | | | | | | | | | | | | | | | | | | | | | | |
1 year to 5 years
|
| | | $ | 2,500,000 | | | | | $ | — | | | | | $ | (5,054) | | | | | $ | 2,494,946 | | |
Total
|
| | | $ | 2,500,000 | | | | | $ | — | | | | | $ | (5,054) | | | | | $ | 2,494,946 | | |
Available for Sale | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government agencies maturing: | | | | | | | | | | | | | | | | | | | | | | | | | |
1 year to 5 years
|
| | | $ | 1,000,000 | | | | | $ | 773 | | | | | $ | — | | | | | $ | 1,000,773 | | |
Total
|
| | | $ | 1,000,000 | | | | | $ | 773 | | | | | $ | — | | | | | $ | 1,000,773 | | |
| | |
March 31, 2020
|
| |||||||||||||||||||||
| | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Fair
Value |
| ||||||||||||
Held to Maturity | | | | | | | | | | | | | | | | | | | | | | | | | |
Government National Mortgage Association pass-through certificates
|
| | | $ | 449,323 | | | | | $ | 12,938 | | | | | $ | — | | | | | $ | 462,261 | | |
Freddie Mac pass-through certificates
|
| | | | 29,355 | | | | | | 136 | | | | | | (117) | | | | | | 29,374 | | |
Total
|
| | | $ | 478,678 | | | | | $ | 13,074 | | | | | $ | (117) | | | | | $ | 491,635 | | |
|
| | |
March 31, 2019
|
| |||||||||||||||||||||
| | |
Amortized
Cost |
| |
Gross
Unrealized Gains |
| |
Gross
Unrealized Losses |
| |
Fair
Value |
| ||||||||||||
Held to Maturity | | | | | | | | | | | | | | | | | | | | | | | | | |
Government National Mortgage Association pass-through certificates
|
| | | $ | 603,907 | | | | | $ | 11,674 | | | | | $ | — | | | | | $ | 615,581 | | |
Fannie Mae pass-through certificates
|
| | | | 134 | | | | | | — | | | | | | — | | | | | | 134 | | |
Freddie Mac pass-through certificates
|
| | | | 46,115 | | | | | | 139 | | | | | | (477) | | | | | | 45,777 | | |
Total
|
| | | $ | 650,156 | | | | | $ | 11,813 | | | | | $ | (477) | | | | | $ | 661,492 | | |
| | |
Held to Maturity
|
| |||||||||
| | |
Amortized
Cost |
| |
Fair
Value |
| ||||||
Due in 1 year or less
|
| | | $ | 216 | | | | | $ | 218 | | |
Due in 1 years to 5 years
|
| | | | 24,661 | | | | | | 25,111 | | |
Due in 5 years to 10 years
|
| | | | 54,167 | | | | | | 55,732 | | |
Due after 10 years
|
| | | | 399,634 | | | | | | 410,574 | | |
Total
|
| | | $ | 478,678 | | | | | $ | 491,635 | | |
| | |
2020
|
| |||||||||||||||||||||||||||||||||
| | |
Less Than Twelve Months
|
| |
Twelve Months or Greater
|
| |
Total
|
| |||||||||||||||||||||||||||
| | |
Fair
Value |
| |
Gross
Unrealized Losses |
| |
Fair
Value |
| |
Gross
Unrealized Losses |
| |
Fair
Value |
| |
Gross
Unrealized Losses |
| ||||||||||||||||||
Held to Maturity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Freddie Mac pass-through certificates
|
| | | $ | — | | | | | $ | — | | | | | $ | 24,625 | | | | | $ | (117) | | | | | $ | 24,625 | | | | | $ | (117) | | |
Total
|
| | | $ | — | | | | | $ | — | | | | | $ | 24,625 | | | | | $ | (117) | | | | | $ | 24,625 | | | | | $ | (117) | | |
|
| | |
2019
|
| |||||||||||||||||||||||||||||||||
| | |
Less Than Twelve Months
|
| |
Twelve Months or Greater
|
| |
Total
|
| |||||||||||||||||||||||||||
| | |
Fair
Value |
| |
Gross
Unrealized Losses |
| |
Fair
Value |
| |
Gross
Unrealized Losses |
| |
Fair
Value |
| |
Gross
Unrealized Losses |
| ||||||||||||||||||
Held to Maturity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government agencies
|
| | | $ | — | | | | | $ | — | | | | | $ | 2,494,946 | | | | | $ | (5,054) | | | | | $ | 2,494,946 | | | | | $ | (5,054) | | |
Freddie Mac pass-through certificates
|
| | | | — | | | | | | — | | | | | | 37,425 | | | | | | (477) | | | | | | 37,425 | | | | | | (477) | | |
Total
|
| | | $ | — | | | | | $ | — | | | | | $ | 2,532,371 | | | | | $ | (5,531) | | | | | $ | 2,532,371 | | | | | $ | (5,531) | | |
| | |
2020
|
| |
2019
|
| ||||||
Mortgage loans (one-to-four family residential)
|
| | | $ | 108,078,400 | | | | | $ | 118,964,944 | | |
Commercial loans
|
| | | | 14,222,968 | | | | | | 14,740,664 | | |
Automobile loans
|
| | | | 1,284,670 | | | | | | 1,429,456 | | |
Unsecured loans
|
| | | | 2,348,794 | | | | | | 2,697,476 | | |
Deposit loans
|
| | | | 18,093 | | | | | | 20,343 | | |
Other
|
| | | | 2,078,837 | | | | | | 2,465,813 | | |
Total
|
| | | | 128,031,762 | | | | | | 140,318,696 | | |
Less: | | | | | | | | | | | | | |
Allowance for loan losses
|
| | | | 740,397 | | | | | | 678,410 | | |
Deferred loan fees, net
|
| | | | (148,470) | | | | | | (186,378) | | |
Total
|
| | | $ | 127,439,835 | | | | | $ | 139,826,664 | | |
| | |
Beginning
Balance |
| |
Additions
|
| |
Amount
Collected |
| |
Ending
Balance |
| ||||||||||||
2020
|
| | | $ | 546,017 | | | | | $ | — | | | | | $ | (105,285) | | | | | $ | 440,732 | | |
2019
|
| | | $ | 963,878 | | | | | $ | 5,949 | | | | | $ | (423,810) | | | | | $ | 546,017 | | |
| | |
Mortgage
Loans |
| |
Commercial
Loans |
| |
Automobile
Loans |
| |
Unsecured
Loans |
| |
Deposit
Loans |
| |
Other
Loans |
| |
Unallocated
|
| |
Total
|
| ||||||||||||||||||||||||
Balance, March 31, 2018
|
| | | $ | 468,344 | | | | | $ | 118,416 | | | | | $ | 5,426 | | | | | $ | 30,730 | | | | | $ | — | | | | | $ | — | | | | | $ | 23,472 | | | | | $ | 646,388 | | |
Add provisions charged to operations
|
| | | | (34,649) | | | | | | 10,534 | | | | | | 3,151 | | | | | | (15,504) | | | | | | — | | | | | | 150,798 | | | | | | (6,330) | | | | | | 108,000 | | |
Add recoveries
|
| | | | 809 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 809 | | |
Less loans charged off
|
| | | | (8,783) | | | | | | — | | | | | | — | | | | | | (11,387) | | | | | | — | | | | | | (56,617) | | | | | | — | | | | | | (76,787) | | |
Balance, March 31, 2019
|
| | | $ | 425,721 | | | | | $ | 128,950 | | | | | $ | 8,577 | | | | | $ | 3,839 | | | | | $ | — | | | | | $ | 94,181 | | | | | $ | 17,142 | | | | | $ | 678,410 | | |
Add provisions charged to operations
|
| | | | (39,030) | | | | | | 18,205 | | | | | | (1,044) | | | | | | 2,371 | | | | | | — | | | | | | 85,220 | | | | | | 60,278 | | | | | | 126,000 | | |
Add recoveries
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Less loans charged off
|
| | | | (45,954) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (18,059) | | | | | | — | | | | | | (64,013) | | |
Balance, March 31, 2020
|
| | | $ | 340,737 | | | | | $ | 147,155 | | | | | $ | 7,533 | | | | | $ | 6,210 | | | | | $ | — | | | | | $ | 161,342 | | | | | $ | 77,420 | | | | | $ | 740,397 | | |
| | |
March 31, 2020
|
| |||||||||||||||||||||||||||||||||||||||||||||
| | |
Mortgage
Loans |
| |
Commercial
Loans |
| |
Automobile
Loans |
| |
Unsecured
Loans |
| |
Deposit
Loans |
| |
Other
Loans |
| |
Unallocated
|
| |
Total
|
| ||||||||||||||||||||||||
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Collectively evaluated for impairment
|
| | | | 340,737 | | | | | | 147,155 | | | | | | 7,533 | | | | | | 6,210 | | | | | | — | | | | | | 161,342 | | | | | | 77,420 | | | | | | 740,397 | | |
Total
|
| | | $ | 340,737 | | | | | $ | 147,155 | | | | | $ | 7,533 | | | | | $ | 6,210 | | | | | $ | — | | | | | $ | 161,342 | | | | | $ | 77,420 | | | | | $ | 740,397 | | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | | | | | | | $ | — | | |
Collectively evaluated for impairment
|
| | | | 108,078,400 | | | | | | 14,222,968 | | | | | | 1,284,670 | | | | | | 2,348,794 | | | | | | 18,093 | | | | | | 2,078,837 | | | | | | | | | | | | 128,031,762 | | |
Total
|
| | | $ | 108,078,400 | | | | | $ | 14,222,968 | | | | | $ | 1,284,670 | | | | | $ | 2,348,794 | | | | | $ | 18,093 | | | | | $ | 2,078,837 | | | | | | | | | | | $ | 128,031,762 | | |
|
| | |
March 31, 2019
|
| |||||||||||||||||||||||||||||||||||||||||||||
| | |
Mortgage
Loans |
| |
Commercial
Loans |
| |
Automobile
Loans |
| |
Unsecured
Loans |
| |
Deposit
Loans |
| |
Other
Loans |
| |
Unallocated
|
| |
Total
|
| ||||||||||||||||||||||||
Allowance for loan losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Collectively evaluated for impairment
|
| | | | 425,721 | | | | | | 128,950 | | | | | | 8,577 | | | | | | 3,839 | | | | | | — | | | | | | 94,181 | | | | | | 17,142 | | | | | | 678,410 | | |
Total
|
| | | $ | 425,721 | | | | | $ | 128,950 | | | | | $ | 8,577 | | | | | $ | 3,839 | | | | | $ | — | | | | | $ | 94,181 | | | | | $ | 17,142 | | | | | $ | 678,410 | | |
Loans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Individually evaluated for impairment
|
| | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | | | | | | | $ | — | | |
Collectively evaluated for impairment
|
| | | | 118,964,944 | | | | | | 14,740,664 | | | | | | 1,429,456 | | | | | | 2,697,476 | | | | | | 20,343 | | | | | | 2,465,813 | | | | | | | | | | | | 140,318,696 | | |
Total
|
| | | $ | 118,964,944 | | | | | $ | 14,740,664 | | | | | $ | 1,429,456 | | | | | $ | 2,697,476 | | | | | $ | 20,343 | | | | | $ | 2,465,813 | | | | | | | | | | | $ | 140,318,696 | | |
|
| | |
March 31, 2020
|
| |||||||||||||||
| | |
Performing
|
| |
Nonperforming
|
| |
Total
|
| |||||||||
Mortgage loans
|
| | | $ | 107,565,754 | | | | | $ | 512,646 | | | | | $ | 108,078,400 | | |
Commercial loans
|
| | | | 14,222,968 | | | | | | — | | | | | | 14,222,968 | | |
Automobile loans
|
| | | | 1,284,670 | | | | | | — | | | | | | 1,284,670 | | |
Unsecured loans
|
| | | | 2,348,794 | | | | | | — | | | | | | 2,348,794 | | |
Deposit loans
|
| | | | 18,093 | | | | | | — | | | | | | 18,093 | | |
Other loans
|
| | | | 1,995,790 | | | | | | 83,047 | | | | | | 2,078,837 | | |
Total
|
| | | $ | 127,436,069 | | | | | $ | 595,693 | | | | | $ | 128,031,762 | | |
|
| | |
March 31, 2019
|
| |||||||||||||||
| | |
Performing
|
| |
Nonperforming
|
| |
Total
|
| |||||||||
Mortgage loans
|
| | | $ | 118,848,998 | | | | | $ | 115,946 | | | | | $ | 118,964,944 | | |
Commercial loans
|
| | | | 14,740,664 | | | | | | — | | | | | | 14,740,664 | | |
Automobile loans
|
| | | | 1,429,456 | | | | | | — | | | | | | 1,429,456 | | |
Unsecured loans
|
| | | | 2,697,476 | | | | | | — | | | | | | 2,697,476 | | |
Deposit loans
|
| | | | 20,343 | | | | | | — | | | | | | 20,343 | | |
Other loans
|
| | | | 2,454,344 | | | | | | 11,469 | | | | | | 2,465,813 | | |
Total
|
| | | $ | 140,191,281 | | | | | $ | 127,415 | | | | | $ | 140,318,696 | | |
| | |
March 31, 2020
|
| |||||||||||||||||||||||||||||||||||||||
| | |
Current
|
| |
31-60 Days
Past Due |
| |
61 – 90 Days
Past Due |
| |
Greater Than
90 Days Past Due |
| |
Greater Than
90 Days Past Due and Still Accruing |
| |
Total Past Due
|
| |
Total Loans
|
| |||||||||||||||||||||
Mortgage loans
|
| | | $ | 107,198,317 | | | | | $ | 37,448 | | | | | $ | 329,989 | | | | | $ | 512,646 | | | | | $ | — | | | | | $ | 880,083 | | | | | $ | 108,078,400 | | |
Commercial loans
|
| | | | 14,222,968 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,222,968 | | |
Automobile loans
|
| | | | 1,270,744 | | | | | | 13,926 | | | | | | — | | | | | | — | | | | | | — | | | | | | 13,926 | | | | | | 1,284,670 | | |
Unsecured loans
|
| | | | 2,348,794 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,348,794 | | |
Deposit loans
|
| | | | 18,093 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 18,093 | | |
Other loans
|
| | | | 1,950,623 | | | | | | 26,932 | | | | | | 32,180 | | | | | | 69,102 | | | | | | — | | | | | | 128,214 | | | | | | 2,078,837 | | |
Total
|
| | | $ | 127,009,539 | | | | | $ | 78,306 | | | | | $ | 362,169 | | | | | $ | 581,748 | | | | | $ | — | | | | | $ | 1,022,223 | | | | | $ | 128,031,762 | | |
|
| | |
March 31, 2019
|
| |||||||||||||||||||||||||||||||||||||||
| | |
Current
|
| |
31-60 Days
Past Due |
| |
61-90 Days
Past Due |
| |
Greater Than 90
Days Past Due |
| |
Greater Than
90 Days Past Due and Still Accruing |
| |
Total Past Due
|
| |
Total Loans
|
| |||||||||||||||||||||
Mortgage loans
|
| | | $ | 118,631,673 | | | | | $ | — | | | | | $ | 217,325 | | | | | $ | 115,946 | | | | | $ | — | | | | | $ | 333,271 | | | | | $ | 118,964,944 | | |
Commercial loans
|
| | | | 14,740,664 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,740,664 | | |
Automobile loans
|
| | | | 1,429,456 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,429,456 | | |
| | |
March 31, 2019
|
| |||||||||||||||||||||||||||||||||||||||
| | |
Current
|
| |
31-60 Days
Past Due |
| |
61-90 Days
Past Due |
| |
Greater Than 90
Days Past Due |
| |
Greater Than
90 Days Past Due and Still Accruing |
| |
Total Past Due
|
| |
Total Loans
|
| |||||||||||||||||||||
Unsecured loans
|
| | | | 2,697,476 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,697,476 | | |
Deposit loans
|
| | | | 20,343 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 20,343 | | |
Other loans
|
| | | | 2,454,344 | | | | | | — | | | | | | — | | | | | | 11,469 | | | | | | — | | | | | | 11,469 | | | | | | 2,465,813 | | |
Total
|
| | | $ | 139,973,956 | | | | | $ | — | | | | | $ | 217,325 | | | | | $ | 127,415 | | | | | $ | — | | | | | $ | 344,740 | | | | | $ | 140,318,696 | | |
|
| | |
2020
|
| |
2019
|
| ||||||
Mortgage loans
|
| | | $ | 512,646 | | | | | $ | 115,946 | | |
Commercial loans
|
| | | | — | | | | | | — | | |
Automobile loans
|
| | | | — | | | | | | — | | |
Unsecured loans
|
| | | | — | | | | | | — | | |
Deposit loans
|
| | | | — | | | | | | — | | |
Other loans
|
| | | | 83,047 | | | | | | 11,469 | | |
Total
|
| | | $ | 595,693 | | | | | $ | 127,415 | | |
| | |
2020
|
| |
2019
|
| ||||||
Investments and interest-bearing deposits
|
| | | $ | 24,242 | | | | | $ | 36,410 | | |
Mortgage-backed securities
|
| | | | 617 | | | | | | 893 | | |
Loans receivable
|
| | | | 421,989 | | | | | | 603,098 | | |
Total
|
| | | $ | 446,848 | | | | | $ | 640,401 | | |
| | |
2020
|
| |
2019
|
| ||||||
Land
|
| | | $ | 827,914 | | | | | $ | 827,914 | | |
Buildings
|
| | | | 10,646,249 | | | | | | 10,575,694 | | |
Furniture and equipment
|
| | | | 1,956,037 | | | | | | 1,827,050 | | |
| | | | | 13,430,200 | | | | | | 13,230,658 | | |
Less accumulated depreciation
|
| | | | 8,735,500 | | | | | | 8,272,982 | | |
Total
|
| | | $ | 4,694,700 | | | | | $ | 4,957,676 | | |
| | |
2020
|
| |||||||||||||||
| | |
Weighted-
Average Rate |
| |
Amount
|
| |
Percent
|
| |||||||||
Passbook
|
| | | | 0.15% | | | | | $ | 25,573,031 | | | | | | 19.1% | | |
NOW and MMDA
|
| | | | 0.39 | | | | | | 49,860,088 | | | | | | 37.3 | | |
Club
|
| | | | 0.15 | | | | | | 65,939 | | | | | | 0.1 | | |
Certificates
|
| | | | 2.12 | | | | | | 58,107,211 | | | | | | 43.5 | | |
Total
|
| | | | 1.10% | | | | | $ | 133,606,269 | | | | | | 100.0% | | |
|
| | |
2019
|
| |||||||||||||||
| | |
Weighted-
Average Rate |
| |
Amount
|
| |
Percent
|
| |||||||||
Passbook
|
| | | | 0.15% | | | | | $ | 26,961,705 | | | | | | 20.7% | | |
NOW and MMDA
|
| | | | 0.15 | | | | | | 43,012,987 | | | | | | 33.0 | | |
Club
|
| | | | 0.15 | | | | | | 63,808 | | | | | | 0.1 | | |
Certificates
|
| | | | 2.07 | | | | | | 60,447,997 | | | | | | 46.2 | | |
Total
|
| | | | 1.04% | | | | | $ | 130,486,497 | | | | | | 100.0% | | |
| | |
2020
|
| |||
Within one year
|
| | | $ | 24,853,753 | | |
Beyond one year but within two years
|
| | | | 12,696,109 | | |
Beyond two years but within three years
|
| | | | 10,437,896 | | |
Beyond three years but within four years
|
| | | | 6,360,505 | | |
Beyond four years but within five years
|
| | | | 3,758,948 | | |
Total
|
| | | $ | 58,107,211 | | |
| | |
2020
|
| |
2019
|
| ||||||
Passbook, NOW and MMDA
|
| | | $ | 102,621 | | | | | $ | 102,525 | | |
Certificates
|
| | | | 1,254,874 | | | | | | 1,141,413 | | |
Total
|
| | | $ | 1,357,495 | | | | | $ | 1,243,938 | | |
| | |
2020
|
| |
2019
|
| ||||||
Short-term FHLB advances: | | | | | | | | | | | | | |
Average balance outstanding
|
| | | $ | 4,778,082 | | | | | $ | 8,139,726 | | |
Maximum amount outstanding at any month-end during the period
|
| | | | 9,000,000 | | | | | | 11,000,000 | | |
Balance outstanding at end of period
|
| | | | — | | | | | | 11,000,000 | | |
Average interest rate during the period
|
| | | | 2.82% | | | | | | 2.63% | | |
Weighted-average interest rate at end of period
|
| | | | —% | | | | | | 2.74% | | |
| | |
Maturity Range
|
| |
Weighted-Average
|
| |
Interest Rate Range
|
| | | | | | | | | | | | | |||||||||||||||
Description
|
| |
From
|
| |
To
|
| |
Rate
|
| |
From
|
| |
To
|
| |
2020
|
| |
2019
|
| |||||||||||||||
Mid Term Repo Fixed Rate
|
| |
May 21, 2020
|
| |
May 23, 2022
|
| | | | 2.59% | | | | | | 2.34% | | | | | | 2.87% | | | | | $ | 9,000,000 | | | | | $ | 7,000,000 | | |
Fixed Rate
|
| |
June 13, 2022
|
| |
May 21, 2024
|
| | | | 2.55% | | | | | | 2.38% | | | | | | 3.02% | | | | | | 2,000,000 | | | | | | 1,000,000 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 11,000,000 | | | | | $ | 8,000,000 | | |
Years Ending
March 31, |
| |
Amount
|
| |||
2021
|
| | | $ | 5,000,000 | | |
2022
|
| | | | 3,000,000 | | |
2023
|
| | | | 2,000,000 | | |
2024
|
| | | | 1,000,000 | | |
Total
|
| | | $ | 11,000,000 | | |
| | |
2020
|
| |
2019
|
| ||||||
Current
|
| | | $ | (18,041) | | | | | $ | 16,439 | | |
Deferred
|
| | | | (1,092) | | | | | | (39,397) | | |
Total
|
| | | $ | (19,133) | | | | | $ | (22,958) | | |
|
| | |
2020
|
| |
2019
|
| ||||||
Deferred tax assets: | | | | ||||||||||
Accrued retirement
|
| | | $ | 78,613 | | | | | $ | 72,287 | | |
Allowance for loan losses
|
| | | | 155,483 | | | | | | 142,466 | | |
Premises and equipment
|
| | | | 255,903 | | | | | | 250,682 | | |
Federal net operating loss carryforward
|
| | | | 98,596 | | | | | | 127,328 | | |
Other
|
| | | | 21,310 | | | | | | 44,948 | | |
Total gross deferred tax assets before valuation allowance
|
| | | | 609,905 | | | | | | 637,711 | | |
Valuation allowance
|
| | | | (98,596) | | | | | | (127,328) | | |
Total gross deferred tax assets
|
| | | | 511,309 | | | | | | 510,383 | | |
Deferred tax liabilities: | | | | | | | | | | | | | |
Deferred loan fees
|
| | | | (1,257) | | | | | | (1,423) | | |
Unrealized gain on available-for-sale debt securities and equity securities
|
| | | | — | | | | | | (7,096) | | |
Total gross deferred tax liabilities
|
| | | | (1,257) | | | | | | (8,519) | | |
Net deferred tax asset
|
| | | $ | 510,052 | | | | | $ | 501,864 | | |
| | |
2020
|
| |
2019
|
| ||||||||||||||||||
| | |
Amount
|
| |
% of
Pretax Income |
| |
Amount
|
| |
% of
Pretax Income |
| ||||||||||||
Provision of statutory rate
|
| | | $ | (26,119) | | | | | | (21.0)% | | | | | $ | (152,705) | | | | | | (21.0)% | | |
State income tax, net of federal tax benefit
|
| | | | 2,336 | | | | | | 1.9 | | | | | | 38,800 | | | | | | 4.2 | | |
Earnings on bank-owned life insurance
|
| | | | (16,579) | | | | | | (13.3) | | | | | | (16,662) | | | | | | (2.3) | | |
Merger expenses
|
| | | | 43,255 | | | | | | 34.8 | | | | | | — | | | | | | — | | |
Adjustment in valuation allowance
|
| | | | (28,991) | | | | | | (23.3) | | | | | | 127,328 | | | | | | 17.5 | | |
Other, net
|
| | | | 6,965 | | | | | | 5.6 | | | | | | (19,719) | | | | | | (2.7) | | |
Actual tax expense and effective rate
|
| | | $ | (19,133) | | | | | | (15.3)% | | | | | $ | (22,958) | | | | | | (4.3)% | | |
|
2021
|
| | | $ | 27,723 | | |
|
2022
|
| | | | 27,696 | | |
|
2023
|
| | | | 27,668 | | |
|
2024
|
| | | | 27,640 | | |
|
2025
|
| | | | — | | |
|
2026 and thereafter
|
| | | | — | | |
|
Total
|
| | | $ | 110,727 | | |
| | |
2020
|
| |
2019
|
| ||||||
Total net worth
|
| | | $ | 13,316,358 | | | | | $ | 13,443,351 | | |
Deduction due to insufficient amounts of additional Tier 1 and Tier 2 capital to cover deductions
|
| | | | — | | | | | | — | | |
Disallowed deferred tax assets
|
| | | | (510,052) | | | | | | (482,962) | | |
Accumulated other comprehensive income
|
| | | | (5,824) | | | | | | (27,573) | | |
Tier 1, core, and common equity Tier 1 capital
|
| | | | 12,800,482 | | | | | | 12,932,816 | | |
Allowance for loan losses and off-balance-sheet commitments
|
| | | | 770,504 | | | | | | 708,517 | | |
Unrealized gain on equity securities
|
| | | | 6,256 | | | | | | 33,791 | | |
Total risk-based capital
|
| | | $ | 13,577,242 | | | | | $ | 13,675,124 | | |
| | |
2020
|
| |
2019
|
| ||||||||||||||||||
| | |
Amount
|
| |
Ratio
|
| |
Amount
|
| |
Ratio
|
| ||||||||||||
Total capital | | | | | | | | | | | | | | | | | | | | | | | | | |
(to risk-weighted assets)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Actual
|
| | | $ | 13,577,242 | | | | | | 12.6% | | | | | $ | 13,675,124 | | | | | | 12.4% | | |
For capital adequacy purposes
|
| | | | 8,592,560 | | | | | | 8.0 | | | | | | 8,836,000 | | | | | | 8.0 | | |
To be well capitalized
|
| | | | 10,740,700 | | | | | | 10.0 | | | | | | 11,045,000 | | | | | | 10.0 | | |
Tier 1 capital | | | | | | | | | | | | | | | | | | | | | | | | | |
(to risk-weighted assets)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Actual
|
| | | $ | 12,800,482 | | | | | | 11.9% | | | | | $ | 12,932,816 | | | | | | 11.7% | | |
For capital adequacy purposes
|
| | | | 6,444,420 | | | | | | 6.0 | | | | | | 6,627,000 | | | | | | 6.0 | | |
To be well capitalized
|
| | | | 8,592,560 | | | | | | 8.0 | | | | | | 8,836,000 | | | | | | 8.0 | | |
Core capital | | | | | | | | | | | | | | | | | | | | | | | | | |
(to adjusted assets)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Actual
|
| | | $ | 12,800,482 | | | | | | 7.9% | | | | | $ | 12,932,816 | | | | | | 8.2% | | |
For capital adequacy purposes
|
| | | | 6,448,158 | | | | | | 4.0 | | | | | | 6,343,717 | | | | | | 4.0 | | |
To be well capitalized
|
| | | | 8,060,197 | | | | | | 5.0 | | | | | | 7,929,647 | | | | | | 5.0 | | |
Common equity Tier 1 capital | | | | | | | | | | | | | | | | | | | | | | | | | |
(to average assets)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Actual
|
| | | $ | 12,800,482 | | | | | | 11.9% | | | | | $ | 12,932,816 | | | | | | 11.7% | | |
For capital adequacy purposes
|
| | | | 4,833,315 | | | | | | 4.5 | | | | | | 4,970,250 | | | | | | 4.5 | | |
To be well capitalized
|
| | | | 6,981,455 | | | | | | 6.5 | | | | | | 7,179,250 | | | | | | 6.5 | | |
| | |
March 31, 2020
|
| |||||||||||||||||||||
| | |
Level I
|
| |
Level II
|
| |
Level III
|
| |
Total
|
| ||||||||||||
Assets measured at fair value on a recurring basis: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government agencies
|
| | | $ | — | | | | | $ | 1,992,916 | | | | | $ | — | | | | | $ | 1,992,916 | | |
Freddie Mac common stock
|
| | | | 15,684 | | | | | | — | | | | | | — | | | | | | 15,684 | | |
Other stock
|
| | | | 14,741 | | | | | | — | | | | | | — | | | | | | 14,741 | | |
| | |
March 31, 2019
|
| |||||||||||||||||||||
| | |
Level I
|
| |
Level II
|
| |
Level III
|
| |
Total
|
| ||||||||||||
Assets measured at fair value on a recurring basis: | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. government agencies
|
| | | $ | — | | | | | $ | 1,000,773 | | | | | $ | — | | | | | $ | 1,000,773 | | |
Freddie Mac common stock
|
| | | | 30,184 | | | | | | — | | | | | | — | | | | | | 30,184 | | |
Other stock
|
| | | | 27,003 | | | | | | — | | | | | | — | | | | | | 27,003 | | |
Accumulated Other Comprehensive Income(1)
|
| |
Unrealized
Gains (Losses) on Securities Available for Sale |
| |||
Balance at March 31, 2018
|
| | | $ | 8,810 | | |
Other comprehensive income before reclassifications
|
| | | | 18,763 | | |
Amounts reclassified from accumulated other comprehensive income
|
| | | | — | | |
Period change
|
| | | | 18,763 | | |
|
Accumulated Other Comprehensive Income(1)
|
| |
Unrealized
Gains (Losses) on Securities Available for Sale |
| |||
Balance at March 31, 2019
|
| | | $ | 27,573 | | |
Other comprehensive loss before reclassifications
|
| | | | (21,749) | | |
Amounts reclassified from accumulated other comprehensive income
|
| | | | — | | |
Period change
|
| | | | (21,749) | | |
Balance at March 31, 2020
|
| | | $ | 5,824 | | |
|
| | |
Year Ended June 30, 2020
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Pro Forma
Combined Year Ended June 30, 2020 |
| | |||||||||||||||||||||||
| | |
As reported
|
| |
Pro Forma Adjustments
|
| | | | | | | | | | | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
| |
William Penn
|
| |
Fidelity(1)
|
| |
Washington(2)
|
| |
Fidelity
|
| | | | | | | |
Washington
|
| | | | | | | |
William Penn
|
| | | | | | | | | | | | | ||||||||||||||||||||||||
INTEREST INCOME | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Loans receivable, including fees
|
| | | $ | 17,914 | | | | | $ | 2,436 | | | | | $ | 5,639 | | | | | $ | 156 | | | | | | (a) | | | | | $ | 559 | | | | | | (b) | | | | | $ | — | | | | | | | | | | | $ | 26,704 | | | | | | | | |
Securities
|
| | | | 1,557 | | | | | | 15 | | | | | | 198 | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | 1,770 | | | | | | | | |
Other
|
| | | | 346 | | | | | | 305 | | | | | | 210 | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | 861 | | | | | | | | |
Total Interest Income
|
| | | | 19,817 | | | | | | 2,756 | | | | | | 6,047 | | | | | | 156 | | | | | | | | | | | | 559 | | | | | | | | | | | | — | | | | | | | | | | | | 29,335 | | | | | | | | |
INTEREST EXPENSE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deposits
|
| | | | 3,604 | | | | | | 508 | | | | | | 1,357 | | | | | | (157) | | | | | | (c) | | | | | | (468) | | | | | | (c) | | | | | | — | | | | | | | | | | | | 4,844 | | | | | | | | |
Borrowings
|
| | | | 1,414 | | | | | | 119 | | | | | | 447 | | | | | | (84) | | | | | | (d) | | | | | | (130) | | | | | | (d) | | | | | | — | | | | | | | | | | | | 1,766 | | | | | | | | |
Total Interest Expense
|
| | | | 5,018 | | | | | | 627 | | | | | | 1,804 | | | | | | (241) | | | | | | | | | | | | (598) | | | | | | | | | | | | — | | | | | | | | | | | | 6,610 | | | | | | | | |
Net Interest Income
|
| | | | 14,799 | | | | | | 2,129 | | | | | | 4,243 | | | | | | 397 | | | | | | | | | | | | 1,157 | | | | | | | | | | | | — | | | | | | | | | | | | 22,725 | | | | | | | | |
Provision (Benefit) For Loan Losses
|
| | | | 626 | | | | | | (49) | | | | | | 126 | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | 703 | | | | | | | | |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
|
| | | | 14,173 | | | | | | 2,178 | | | | | | 4,117 | | | | | | 397 | | | | | | | | | | | | 1,157 | | | | | | | | | | | | — | | | | | | | | | | | | 22,022 | | | | | | | | |
OTHER INCOME | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Service fees
|
| | | | 569 | | | | | | 127 | | | | | | 73 | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | 769 | | | | | | | | |
Gain on sale of securities
|
| | | | 238 | | | | | | 1 | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | 239 | | | | | | | | |
Earnings on bank-owned life insurance
|
| | | | 347 | | | | | | — | | | | | | 79 | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | 426 | | | | | | | | |
Gain on bargain purchase
|
| | | | 746 | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | (746) | | | | | | (e) | | | | | | — | | | | | | | | |
Other
|
| | | | 260 | | | | | | (2) | | | | | | 297 | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | 555 | | | | | | | | |
Total Other Income
|
| | | | 2,160 | | | | | | 126 | | | | | | 449 | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | (746) | | | | | | | | | | | | 1,989 | | | | | | | | |
OTHER EXPENSES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Salaries and employee benefits
|
| | | | 6,855 | | | | | | 882 | | | | | | 1,982 | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | 9,719 | | | | | | | | |
Occupancy and equipment
|
| | | | 1,784 | | | | | | 192 | | | | | | 884 | | | | | | 9 | | | | | | (f) | | | | | | 22 | | | | | | (f) | | | | | | — | | | | | | | | | | | | 2,891 | | | | | | | | |
Data processing
|
| | | | 1,155 | | | | | | 137 | | | | | | 474 | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | 1,766 | | | | | | | | |
Professional fees
|
| | | | 451 | | | | | | 167 | | | | | | 190 | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | 7808 | | | | | | | | |
Merger related expenses
|
| | | | 3,294 | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | (3,294) | | | | | | (e) | | | | | | — | | | | | | | | |
Amortization on intangible assets
|
| | | | 242 | | | | | | — | | | | | | — | | | | | | 10 | | | | | | (g) | | | | | | 27 | | | | | | (g) | | | | | | — | | | | | | | | | | | | 279 | | | | | | | | |
Other
|
| | | | 1,611 | | | | | | 540 | | | | | | 1,160 | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | — | | | | | | | | | | | | 3,311 | | | | | | | | |
Total Other Expense
|
| | | | 15,392 | | | | | | 1,918 | | | | | | 4,690 | | | | | | 19 | | | | | | | | | | | | 49 | | | | | | | | | | | | (3,294) | | | | | | | | | | | | 18,774 | | | | | | | | |
Income (Loss) Before Income Taxes
|
| | | | 941 | | | | | | 386 | | | | | | (124) | | | | | | 378 | | | | | | | | | | | | 1,108 | | | | | | | | | | | | 2,548 | | | | | | | | | | | | 5,237 | | | | | | | | |
Income Tax Expense (Benefit)
|
| | | | (387) | | | | | | 116 | | | | | | (19) | | | | | | 85 | | | | | | (h) | | | | | | 249 | | | | | | (h) | | | | | | 741 | | | | | | (h) | | | | | | 786 | | | | | | | | |
NET INCOME (LOSS)
|
| | | $ | 1,328 | | | | | $ | 270 | | | | | $ | (105) | | | | | $ | 293 | | | | | | | | | | | $ | 859 | | | | | | | | | | | $ | 1,807 | | | | | | | | | | | $ | 4,452 | | | | | | | | |
Pro Forma Combined Per Share Data (Common Stock)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted earnings per share
|
| | | $ | 0.30 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 0.99 | | | | | | (i) | | |
Dividends declared per share
|
| | | | 0.50 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.50 | | | | | | | | |
Book value
|
| | | | 21.47 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 22.16 | | | | | | (j) | | |
Tangible book value
|
| | | | 20.10 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 20.80 | | | | | | (j) | | |
Weighted average shares outstanding (basic and diluted)
|
| | | | 4,489,345 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,489,345 | | | | | | (i) | | |
| | |
William Penn
|
| |
Pro Forma with
Fidelity and Washington |
| ||||||
(Dollars in thousands, except per share data)
|
| |
(audited)
|
| |
(unaudited)
|
| ||||||
Tangible common equity | | | | | | | | | | | | | |
Total common stockholders’ equity
|
| | | $ | 96,365 | | | | | $ | 99,489 | | |
Adjustments: | | | | | | | | | | | | | |
Accumulated other comprehensive income
|
| | | | (76) | | | | | | (76) | | |
Goodwill
|
| | | | (4,858) | | | | | | (4,858) | | |
Other intangible assets
|
| | | | (1,192) | | | | | | (1,155) | | |
Tangible common equity
|
| | | $ | 90,239 | | | | | $ | 93,400 | | |
Common shares outstanding
|
| | | | 4,489,345 | | | | | | 4,489,345 | | |
Book value per common share
|
| | | $ | 21.47 | | | | | $ | 22.16 | | |
Tangible book value per common share
|
| | | | 20.10 | | | | | | 20.80 | | |
| | |
William Penn
Bancorp Historical |
| |
Pro Forma
|
| |
Exchange
Ratio |
| |
Per Equivalent
William Penn Bancorporation Share |
| ||||||||||||
Book value per share at June 30, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | |
Sale of 9,350,000 shares
|
| | | $ | 21.47 | | | | | $ | 16.04 | | | | | | 2.4301x | | | | | $ | 38.98 | | |
Sale of 11,000,000 shares
|
| | | | 21.47 | | | | | | 16.04 | | | | | | 2.8589 | | | | | | 42.08 | | |
Sale of 12,650,000 shares
|
| | | | 21.47 | | | | | | 16.04 | | | | | | 3.2877 | | | | | | 45.17 | | |
Earnings per share for the year ended June 30, 2020:
|
| | | | | | | | | | | | | | | | | | | | | | | | |
Sale of 9,350,000 shares
|
| | | $ | 0.33 | | | | | $ | 0.02 | | | | | | 2.4301 | | | | | $ | 0.05 | | |
Sale of 11,000,000 shares
|
| | | | 0.33 | | | | | | 0.00 | | | | | | 2.8589 | | | | | | 0.00 | | |
Sale of 12,650,000 shares
|
| | | | 0.33 | | | | | | (0.02) | | | | | | 3.2877 | | | | | | (0.05) | | |
Price per share(1): | | | | | | | | | | | | | | | | | | | | | | | | | |
Sale of 9,350,000 shares
|
| | | $ | 32.25 | | | | | $ | 10.00 | | | | | | 2.4301 | | | | | $ | 24.30 | | |
Sale of 11,000,000 shares
|
| | | | 32.25 | | | | | | 10.00 | | | | | | 2.8589 | | | | | | 28.59 | | |
Sale of 12,650,000 shares
|
| | | | 32.25 | | | | | | 10.00 | | | | | | 3.2877 | | | | | | 32.88 | | |
|
SEC filing fee(1)
|
| | | $ | 16,593 | | |
|
FINRA filing fee(1)
|
| | | | 23,312 | | |
|
Nasdaq fees and expenses
|
| | | | 50,000 | | |
|
EDGAR, printing, postage and mailing
|
| | | | 250,000 | | |
|
Legal fees and expenses
|
| | | | 625,000 | | |
|
Accounting fees and expenses
|
| | | | 100,000 | | |
|
Appraiser’s fees and expenses
|
| | | | 115,000 | | |
|
Marketing firm expenses (including legal fees)(2)
|
| | | | 140,000 | | |
|
Business plan fees and expenses
|
| | | | 45,000 | | |
|
Transfer agent and registrar fees and expenses
|
| | | | 15,000 | | |
|
Proxy solicitor fees and expenses
|
| | | | 10,000 | | |
|
Miscellaneous
|
| | | | 10,095 | | |
|
TOTAL
|
| | | $ | 1,400,000 | | |
|
Exhibit
|
| |
Description
|
| |
Location
|
| |||
| | | 23.5 | | | | Consent of RP Financial, LC. | | | Filed herewith | |
| | | 24.0 | | | | Power of Attorney | | | | |
| | | 99.1 | | | | Appraisal RP Financial, LC. | | | Filed herewith | |
| | | 99.2 | | | | Draft of Marketing Materials | | | To be filed by amendment | |
| | | 99.3 | | | | Draft of Subscription Order Form and Instructions | | | To be filed by amendment | |
| | | 99.4 | | | | Form of Proxy for William Penn Bancorp, Inc. Special Meeting of Shareholders | | | To be filed by amendment | |
|
Name
|
| |
Title
|
| |
Date
|
|
|
/s/ Kenneth J. Stephon
Kenneth J. Stephon
|
| | President and Chief Executive Officer and Director (principal executive officer) | | |
October 15, 2020
|
|
|
/s/ Jonathan T. Logan
Jonathan T. Logan
|
| | Senior Vice President and Chief Financial Officer (principal financial and accounting officer) | | |
October 15, 2020
|
|
|
/s/ William J. Feeney
William J. Feeney
|
| | Chairman of the Board of Directors | | |
October 15, 2020
|
|
|
/s/ Craig Burton
Craig Burton
|
| | Director | | |
October 15, 2020
|
|
|
/s/ D. Michael Carmody, Jr.
D. Michael Carmody, Jr.
|
| | Director | | |
October 15, 2020
|
|
|
/s/ Charles Corcoran
Charles Corcoran
|
| | Director | | |
October 15, 2020
|
|
|
/s/ Glenn Davis
Glenn Davis
|
| | Director | | |
October 15, 2020
|
|
|
Name
|
| |
Title
|
| |
Date
|
|
|
/s/ Christopher M. Molden
Christopher M. Molden
|
| | Director | | |
October 15, 2020
|
|
|
/s/ William C. Niemczura
William C. Niemczura
|
| | Director | | |
October 15, 2020
|
|
|
/s/ William B.K. Parry, Jr.
William B.K. Parry, Jr.
|
| | Director | | |
October 15, 2020
|
|
|
/s/ Terry L. Sager
Terry L Sager
|
| | Director | | |
October 15, 2020
|
|
|
/s/ Vincent P. Sarubbi
Vincent P. Sarubbi
|
| | Director | | |
October 15, 2020
|
|
Exhibit 1.1
1251 AVENUE OF THE AMERICAS, 6TH FLOOR |
NEW YORK, NY 10020 |
P 212 466-7800 | TF 800 635-6851 |
Piper Sandler & Co. |
Since 1895. Member SIPC and NYSE. |
August 14, 2020
Attention: Mr. Kenneth J. Stephon
Chief Executive Officer and President
Boards of Directors
William Penn, MHC
William Penn Bancorp, Inc. (MHC)
William Penn Bank, (MHC)
10 Canal Street, Suite 104
Bristol, PA 19007
Ladies and Gentlemen:
We understand that the Boards of Directors of William Penn, MHC (the "MHC") and its subsidiaries, William Penn Bancorp, Inc. (MHC) ("Holding Company") and William Penn Bank, (MHC) (the "Bank"), are considering the adoption of a [Plan of Conversion] (the "Plan") pursuant to which the MHC will be converted from mutual holding company to stock holding company form, and all of the shares of the Holding Company currently outstanding will be exchanged for shares of common stock of a successor stock holding company to be formed in connection with the conversion (the "NewCo"). Concurrently with the conversion, NewCo also intends to offer and sell certain shares of its common stock (the "Shares") in a public offering. The MHC, the Holding Company, the NewCo and the Bank are sometimes collectively referred to herein as the "Company" and their respective Boards of Directors are collectively referred to herein as the "Board". Piper Sandler & Co. ("Piper Sandler") is pleased to assist the Company with the Offering (defined below) and this letter is to confirm the terms and conditions of Piper Sandler's engagement.
Under the terms of the Plan and applicable regulations, the Shares will be offered first to eligible depositors of the Bank, the Company's tax-qualified employee stock benefit plans and the Company's directors, officers and employees in a subscription offering (the "Subscription Offering"). Subject to the prior rights of subscribers in the Subscription Offering, the Shares may be offered in a community offering, with a preference given in the community offering to residents of the communities served by the Bank (the "Community Offering," and together with the Subscription Offering, the "Subscription and Community Offering"). Shares not subscribed for in the Subscription and Community Offering, if any, may be offered to the general public by Piper Sandler on a best efforts basis ("Syndicated Offering") and/or in a firm commitment public offering ("Firm Commitment Offering," and together with the Subscription and Community Offering and any Syndicated Offering, the "Offering").
Marketing Agent Services
In connection with its engagement as marketing agent, Piper Sandler anticipates that its services will include the following:
1. | Consulting as to the securities marketing implications of the Plan; |
2. | Reviewing with the Board the financial impact of the Offering on the Company, based upon the independent appraiser's appraisal of the common stock of the Holding Company; |
3. | Reviewing all offering documents, including the Prospectus, stock order forms and related offering materials (it being understood that preparation and filing of such documents will be the responsibility of the Company and its counsel); |
4. | Assisting in the design and implementation of a marketing strategy for the Offering; |
5. | Assisting management in scheduling and preparing for discussions or meetings with potential investors or other broker-dealers in connection with the Offering; and |
6. | Providing such other general advice and assistance as may be reasonably necessary to promote the successful completion of the Offering. |
Piper Sandler will act as exclusive marketing agent for the Company in the Subscription and Community Offering and will serve as sole manager of any Syndicated Offering or Firm Commitment Offering. Piper Sandler may also seek to form a syndicate of registered broker-dealers to assist in any Syndicated Offering or Firm Commitment Offering (all such registered broker-dealers participating in the Syndicated Offering or Firm Commitment Offering, including Piper Sandler, the "Syndicate Member Firms"). Piper Sandler will consult with the Company in selecting the Syndicate Member Firms and the extent of their participation in the Offering. Pursuant to the terms of the Plan, Piper Sandler will endeavor to distribute the Shares among dealers in a fashion that best meets the distribution objectives of the Company and the requirements of the Plan, which may result in limiting the allocation of stock to certain Syndicate Member Firms. It is understood that in no event shall any Syndicate Member Firm be obligated to take or purchase any Shares in the Offering other than as may be expressly agreed to in an underwriting agreement for a Firm Commitment Offering entered into between the Company and such firms.
Marketing Agent Fees
If the Offering is consummated, the Company agrees to pay Piper Sandler for its marketing agent services a fee of 1.00% of the aggregate Actual Purchase Price of all Shares sold in the Subscription Offering, excluding Shares purchased by or on behalf of (i) any employee benefit plan or trust of the Company established for the benefit of its directors, officers and employees, (ii) any charitable foundation established by the Company (or any shares contributed to such a charitable foundation), and (iii) any director, officer or employee of the Company or members of their immediate families (whether directly or through a personal trust).
With respect to any Shares sold in the Community Offering, the Company agrees to pay Piper Sandler a fee of 3.00% of the aggregate Actual Purchase Price of all Shares sold in the Community Offering.
With respect to any Shares sold in any Syndicated Offering or Firm Commitment Offering, the Company agrees to pay an aggregate fee of 5.50% of the aggregate Actual Purchase Price of all Shares sold in such offerings.
For purposes of this letter, the term "Actual Purchase Price" shall mean the price at which the Shares are sold in the Offering. All marketing agent fees payable hereunder shall be payable in immediately available funds by wire transfer at the time of the closing of the Offering or, in the case of a Firm Commitment Offering, shall be applied as an underwriting discount to the Shares purchased by the underwriters in such Firm Commitment Offering.
Records Agent Services
Piper Sandler also agrees to serve as records management agent for the Company in connection with the Offering. In this role, Piper Sandler anticipates that its services will include the services outlined below, each as may be necessary and as the Company may reasonably request:
1. | Consolidation of Deposit Accounts for Voting and Subscription Rights; | |
2. | Organization and Supervision of the Stock Information Center; | |
3. | Coordination of Proxy Solicitation of Members and Special Meeting Services (it being understood that the Company will engage an independent tabulator to tabulate proxies and, as necessary, a proxy solicitation firm to solicit depositor votes); and | |
4. | Subscription Processing Services. |
Each of these services is further described in Appendix A to this agreement.
The Company will furnish Piper Sandler with such information as Piper Sandler reasonably believes appropriate to its assignment (all such information so furnished being the "Records"). The Company recognizes and confirms that Piper Sandler (a) will use and rely primarily on the Records without having independently verified the same, and (b) does not assume responsibility for the accuracy or completeness of the Records.
Limitations
Piper Sandler, as records management agent hereunder, (a) shall have no duties or obligations other than those specifically set forth herein; (b) will be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value or genuineness of any order form or any stock certificates or the shares represented thereby, and will not be required to and will make no representations as to the validity, value or genuineness of the offer; (c) shall not be liable to any person, firm or corporation including the Company by reason of any error of judgment or for any act done by it in good faith, or for any mistake of law or fact in connection with this agreement and the performance hereof unless caused by or arising out of its own willful misconduct, bad faith or gross negligence, as determined in a final judgment by a court of competent jurisdiction; (d) will not be obliged to take any legal action hereunder which might in its judgment involve any expense or liability, unless it shall have been furnished with reasonable indemnity satisfactory to it; and (e) may rely on and shall be protected in acting in reliance upon any certificate, instrument, opinion, notice, letter, telex, telegram, or other document or security delivered to it and in good faith believed by it to be genuine and to have been signed by the proper party or parties.
Records Agent Fees
For its records management services hereunder, the Company agrees to pay Piper Sandler a fee of $60,000. This fee is based upon the requirements of current regulations and the Plan as currently contemplated. Any unusual or additional items or duplication of service required as a result of a material change in the regulations or the Plan or a material delay or other similar events may result in extra charges that will be covered in a separate agreement if and when they occur. The Company will inform Piper Sandler within a reasonable period of time of any changes in the Plan that require changes in Piper Sandler's services. In recognition that these services are administrative in nature and a substantial portion of the services will be performed prior to the commencement of the Offering, the Company agrees that (a) $30,000 of the fee shall be payable upon execution of this agreement by the Company, which shall be non-refundable; and (b) the balance shall be due upon the closing of the Offering.
Expenses
In addition to any fees that may be payable to Piper Sandler hereunder and the expenses to be borne by the Company pursuant to the following paragraph, the Company agrees to reimburse Piper Sandler, upon request made from time to time, for its reasonable out-of-pocket expenses incurred in connection with its engagement hereunder, regardless of whether the Offering is consummated, including, without limitation, legal fees and expenses, travel and syndication expenses; provided, however, that such expenses shall not exceed $140,000 without the Company's prior approval, not to be unreasonably withheld. The provisions of this paragraph are not intended to apply to or in any way impair the indemnification or contribution provisions of this letter.
As is customary, the Company will bear all other expenses incurred in connection with the Offering and the Stock Information Center, including, without limitation, (a) the cost of obtaining all securities and bank regulatory approvals, including any required FINRA filing fees; (b) the cost of printing and distributing the offering materials; (c) the costs of blue sky qualification (including fees and expenses of blue sky counsel) of the Shares in the various states; (d) listing fees; (e) all fees and disbursements of the Company's counsel, accountants, transfer agent and other advisors; and (f) the establishment and operational expenses for the Stock Information Center (e.g., postage, telephones, supplies, temporary employees, etc.). In the event Piper Sandler incurs any such fees and expenses on behalf of the Company, the Company will reimburse Piper Sandler for such fees and expenses whether or not the Offering is consummated.
Due Diligence Review
Piper Sandler's obligation to perform the services contemplated by this letter shall be subject to the satisfactory completion of such investigation and inquiries relating to the Company and its directors, officers, agents and employees as Piper Sandler and its counsel in their sole discretion may deem appropriate under the circumstances. In this regard, the Company agrees that, at its expense, it will make available to Piper Sandler all information that Piper Sandler requests, and will allow Piper Sandler the opportunity to discuss with the Company's management the financial condition, business and operations of the Company. The Company acknowledges that Piper Sandler will rely upon the accuracy and completeness of all information received from the Company and its directors, officers, employees, agents, independent accountants and counsel.
Blue Sky Matters
Piper Sandler and the Company agree that the Company's counsel shall serve as counsel with respect to blue sky matters in connection with the Offering. The Company shall cause such counsel to prepare a Blue Sky Memorandum related to the Offering, including Piper Sandler's participation therein, and shall furnish Piper Sandler a copy thereof addressed to Piper Sandler or upon which such counsel shall state Piper Sandler may rely.
Confidentiality
Except as contemplated in connection with the performance of its services under this agreement, as authorized by the Company or as required by law, regulation or legal process or by order of any court or governmental or regulatory authority, Piper Sandler agrees that it will treat as confidential all material, non-public information relating to the Company obtained in connection with its engagement hereunder (the "Confidential Information"); provided, however, that Piper Sandler may disclose such information to its partners, affiliates, employees, agents, consultants and advisors who are assisting or advising Piper Sandler in performing its services hereunder, provided they have been directed to comply with the terms and conditions of this paragraph. As used in this paragraph, the term "Confidential Information" shall not include information which (a) is or becomes generally available to the public other than as a result of a disclosure by Piper Sandler in breach of the confidentiality provisions contained herein, (b) was available to Piper Sandler on a non-confidential basis prior to its disclosure to Piper Sandler by the Company, or (c) becomes available to Piper Sandler on a non-confidential basis from a person other than the Company who is not otherwise known to Piper Sandler to be bound not to disclose such information pursuant to a contractual, legal or fiduciary obligation.
The Company hereby acknowledges and agrees that the financial models and presentations used by Piper Sandler in performing its services hereunder have been developed by and are proprietary to Piper Sandler and are protected under applicable copyright laws. The Company agrees that it will not reproduce or distribute all or any portion of such models or presentations without the prior written consent of Piper Sandler.
Indemnification; Contribution
Each of the MHC, the Holding Company and the Bank, jointly and severally, agrees to, and shall cause the NewCo to, indemnify and hold Piper Sandler and its affiliates and their respective partners, directors, officers, employees, agents and controlling persons within the meaning of Section 15 of the Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934 (Piper Sandler and each such person being an "Indemnified Party") harmless from and against any and all losses, claims, damages and liabilities, joint or several, to which such Indemnified Party may become subject under applicable federal or state law, or otherwise, (i) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the offering documents, including documents described or incorporated by reference therein, or in any other written or oral communication provided by or on behalf of any Company to any actual or prospective purchaser of the Shares or arising out of or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, (ii) arising out of or based in whole or in part on any inaccuracy in the representations or warranties of any Company contained in any underwriting agreement or agency agreement, or any failure of any Company to perform its obligations thereunder, or (iii) related to or arising out of the Offering or the engagement of Piper Sandler pursuant to, or the performance by Piper Sandler of the services contemplated by, this letter, and will reimburse any Indemnified Party for all expenses (including reasonable legal fees and expenses) as they are incurred, including expenses incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party; provided, however, that the Company shall only be obligated to pay for one separate counsel (in addition to any required local counsel) in any one action or proceeding or group of related actions or proceedings for all Indemnified Parties collectively, and provided, further, that the Company will not be liable (a) to Piper Sandler, in its capacity as marketing agent, to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon any untrue statement of a material fact or the omission of a material fact required to be stated therein or necessary to make not misleading any statements contained in any final prospectus, or any amendment or supplement thereto, made in reliance on and in conformity with written information furnished to the Company by Piper Sandler expressly for use therein, or (b) to Piper Sandler, in its capacity as records management agent and marketing agent, under clause (iii) of this paragraph to the extent that it is finally judicially determined that any such loss, claim, damage, liability or expense is primarily attributable to the gross negligence, willful misconduct or bad faith of Piper Sandler. If the foregoing indemnification is unavailable for any reason other than for the reasons stated in subparagraph (a) or (b) above, the Company agrees to contribute to such losses, claims, damages, liabilities and expenses in the proportion that its financial interest in the Offering bears to that of Piper Sandler. The MHC, the Holding Company and the Bank further agree, and shall cause the NewCo to agree, that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the MHC, the Holding Company, the Bank or NewCo or any person asserting claims on behalf of or in right of the MHC, the Holding Company, the Bank or NewCo for any losses, claims, damages, liabilities or expenses arising out of or relating to this agreement or the services to be rendered by Piper Sandler hereunder, unless it is finally judicially determined that such losses, claims, damages, liabilities or expenses resulted directly from the gross negligence willful misconduct or bad faith of Piper Sandler.
Each of the MHC, the Holding Company and the Bank agrees to, and shall cause the NewCo to, notify Piper Sandler promptly of the assertion against it or any other person of any claim or the commencement of any action or proceeding relating to any transaction contemplated by this agreement. Each of the MHC, Holding Companay and the Bank will not, and shall cause the NewCo not to, without Piper Sandler's prior written consent, settle, compromise, consent to the entry of any judgment in or otherwise seek to terminate any claim, action or proceeding in respect of which indemnity may be sought hereunder, whether or not any Indemnified Party is an actual or potential party thereto, unless such settlement, compromise, consent or termination (i) includes an explicit and unconditional release of each Indemnified Party from any liabilities arising out of such claim, action or proceeding and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party. If the MHC, the Holding Company, the Bank or the NewCo enters into any agreement or arrangement with respect to, or effects, any proposed sale, exchange, dividend or other distribution or liquidation of all or substantially all of its assets in one or a series of transactions, the MHC, the Holding Company or the Bank, as the case may be, shall provide, and shall cause the NewCo to provide, for the assumption of its obligations under this section by the purchaser or transferee of such assets or another party reasonably satisfactory to Piper Sandler.
Definitive Agreement
Piper Sandler and the Company agree that (a) except as set forth in clause (b) below, the foregoing represents the general intention of the Company and Piper Sandler with respect to the services to be provided by Piper Sandler in connection with the Offering, which will serve as a basis for Piper Sandler commencing activities, and (b) the only legal and binding obligations of the Company and Piper Sandler with respect to the Offering (such obligations to survive any termination of this agreement) shall be (i) the obligations set forth under the captions "Records Agent Fees," "Expenses," and "Indemnification; Contribution," and (ii) as set forth in a duly negotiated and executed definitive Agency Agreement to be entered into prior to the commencement of the Subscription and Community Offering and/or Syndicated Offering, and, if applicable, a duly negotiated and executed Underwriting Agreement to be entered into prior to the commencement of a Firm Commitment Offering. Such Agency Agreement and, as applicable, Underwriting Agreement, shall be in form and content satisfactory to Piper Sandler and the Company and their respective counsel and shall contain standard indemnification and contribution provisions consistent herewith.
Piper Sandler's execution of such Agency Agreement and/or Underwriting Agreement shall also be subject to (a) Piper Sandler's satisfaction with its investigation of the Company's business, financial condition and results of operations, (b) preparation of offering materials that are satisfactory to Piper Sandler, (c) compliance with all relevant legal and regulatory requirements to the reasonable satisfaction of Piper Sandler, (d) agreement that the price established by the independent appraiser for the Offering is reasonable, and (e) market conditions at the time of the proposed Offering.
Representations
Each of the MHC, the Holding Company and the Bank represents and warrants that it has all requisite power and authority to enter into and carry out the terms and provisions of this agreement, the execution, delivery and performance of this agreement does not breach or conflict with any agreement, document or instrument to which it is a party or bound and this agreement has been duly authorized, executed and delivered by it.
Miscellaneous
This agreement constitutes the entire agreement between the parties with respect to the subject matter hereof. This agreement can only be altered by written consent signed by the parties. This agreement shall be construed and enforced in accordance with the laws of the State of New York, without regard to the conflicts of laws principles thereof.
It is understood that the provisions contained under the captions "Limitations" and "Representations" will also survive any termination of this agreement.
Please confirm that the foregoing correctly sets forth our agreement by signing and returning to Piper Sandler the duplicate copy of this letter enclosed herewith.
Very truly yours, | |||
PIPER SANDLER & CO. | |||
By: | /s/ Derek Szot | ||
Derek Szot | |||
Managing Director |
Accepted and agreed to as of | |||
the date first written above: | |||
WILLIAM PENN, MHC | |||
WILLIAM PENN BANCORP, INC. (MHC) | |||
WILLIAM PENN BANK, (MHC) | |||
By: | /s/ Kenneth J. Stephon | ||
Kenneth J. Stephon | |||
Chief Executive Officer and President |
APPENDIX A
RECORDS AGENT SERVICES
I. | Consolidation of Deposit Accounts for Voting and Subscription Rights |
1. | Consolidate files in accordance with regulatory guidelines and create central file. | |
2. | Our EDP format will be provided to your data processing people. | |
3. | Vote calculation and preparation of depositor data for proxy forms. | |
4. | Preparation of depositor data for stock order forms. |
II. | Organization and Supervision of the Stock Information Center |
1. | Advising on physical organization of the Center, including materials requirements. | |
2. | Assist in the training of all Bank personnel and temporary employees who will be staffing the Center. | |
3. | Establish reporting procedures. | |
4. | On-site supervision of Center during subscription offering period. |
III. | Coordination of Proxy Solicitation of Members and Special Meeting Services |
1. | Coordinate proxy solicitation with Company and proxy solicitor (including assisting in designing and executing the vote campaign). | |
2. | Interface with proxy tabulator during solicitation period. | |
3. | Delete closed accounts for special meeting (if necessary). | |
4. | Act as or support inspector of election, it being understood that Piper Sandler will not act as inspector of election in the case of a contested election. |
IV. | Subscription Processing Services |
1. | Produce list of depositors by state (Blue Sky report). | |
2. | Production of subscription rights and research books. | |
3. | Assist in the design and preparation of a stock order form and offering marketing materials. | |
4. | Stock order form processing. | |
5. | Acknowledgment letter to confirm receipt of stock order. | |
6. | Daily reports and analysis. | |
7. | Proration calculation and share allocation in the event of an oversubscription. | |
8. | Produce charter shareholder list. | |
9. | Interface with transfer agent for ownership statement/welcome stockholder letter. | |
10. | Refund and interest calculations. | |
11. | Notification of full/partial rejection of orders. | |
12. | Production of 1099 Debit tape. |
Exhibit 2.0
PLAN OF CONVERSION AND REORGANIZATION
of
WILLIAM PENN, MHC,
WILLIAM PENN BANCORP, INC.
and
WILLIAM PENN BANK
As Adopted on September 16, 2020
and
Amended and Restated on October 6, 2020
TABLE OF CONTENTS
PAGE | ||||
1. | Introduction | 1 | ||
2. | Definitions | 2 | ||
3. | General Procedure for the Conversion and Reorganization | 8 | ||
4. | Total Number of Shares and Purchase Price of Conversion Stock | 11 | ||
5. | Subscription Rights of Eligible Account Holders (First Priority) | 11 | ||
6. | Subscription Rights of Tax-Qualified Employee Stock Benefit Plans (Second Priority) | 12 | ||
7. | Subscription Rights of Supplemental Eligible Account Holders (Third Priority) | 13 | ||
8. | Subscription Rights of Other Members (Fourth Priority) | 13 | ||
9. | Community Offering, Syndicated Community Offering, Public Offering and Other Offerings | 14 | ||
10. | Limitations on Subscriptions and Purchases of Common Stock | 15 | ||
11. | Timing of Subscription Offering; Manner of Exercising Subscription Rights and Order Forms | 17 | ||
12. | Payment for Common Stock | 18 | ||
13. | Account Holders in Nonqualified States or Foreign Countries | 19 | ||
14. | Voting Rights of Stockholders | 19 | ||
15. | Liquidation Account | 20 | ||
16. | Transfer of Deposit Accounts | 22 | ||
17. | Requirements Following the Stock Issuance for Registration, Market Making and Stock Exchange Listing | 22 | ||
18. | Completion of the Stock Offering | 22 | ||
19. | Requirements for Stock Purchases by Directors and Officers Following the Conversion and Reorganization | 23 | ||
20. | Restrictions on Transfer of Stock | 23 | ||
21. | Tax Rulings or Opinions | 23 | ||
22. | Stock Compensation Plans; Employment and Severance Agreements | 24 | ||
23. | Dividend and Repurchase Restrictions on Stock | 24 | ||
24. | Amendment or Termination of the Plan | 24 | ||
25. | Interpretation of the Plan | 25 |
Annex A | MHC Agreement and Plan of Merger | |
Annex B | Mid-Tier Agreement and Plan of Merger | |
Annex C | Amended and Restated Articles of Incorporation of | |
Annex D | Bylaws |
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1. | INTRODUCTION. |
For purposes of this section, all capitalized terms have the meanings ascribed to them in Section 2.
On April 15, 2008, William Penn Bank, reorganized into the mutual holding company form of organization whereby the Bank converted to a Pennsylvania-chartered stock savings bank (the “Bank”) and became the wholly-owned subsidiary of William Penn Bancorp, Inc., a federally-chartered subsidiary stock holding company (the “Mid-Tier Holding Company”), and the Mid-Tier Holding Company became the wholly-owned subsidiary of William Penn, MHC, a federally-chartered mutual holding company (the “MHC”). In connection therewith, on April 15, 2008, the Mid-Tier Holding Company issued (i) 1,025,283 shares of Mid-Tier Holding Company Common Stock to the Bank’s eligible depositors and borrowers, the William Penn Bank Employee Stock Ownership Plan and to other persons, (ii) issued 2,548,713 shares of Mid-Tier Holding Company Common Stock to the MHC and (iii) contributed 67,022 shares to The William Penn Bank Community Foundation.
On July 1, 2018, the Bank completed its acquisition of Audubon Savings Bank, a New Jersey-chartered mutual savings association, and the Mid-Tier Holding Company issued 517,095 additional shares of Mid-Tier Holding Company Common Stock to the MHC in connection with the consummation of the acquisition.
On May 1, 2020, the Bank completed its acquisition of both Fidelity Savings and Loan Association of Bucks County and Washington Savings Bank, each a Pennsylvania-chartered mutual savings bank, and the Mid-Tier Holding Company issued an aggregate of 509,191 additional shares of Mid-Tier Holding Company Common Stock to the MHC in connection with the consummation of the acquisitions. In connection with these acquisitions, on May 1, 2020, the Mid-Tier Holding Company and the MHC each converted from federally-chartered savings and loan holding companies to Pennsylvania-chartered bank holding companies.
As of the date hereof, the MHC beneficially and of record owns 3,711,114 shares of Mid-Tier Holding Company Common Stock, representing approximately 82.7% of the outstanding Mid-Tier Holding Company Common Stock, with the remaining shares of Mid-Tier Holding Company Common Stock being owned by Minority Stockholders.
The Boards of Directors of the MHC, the Mid-Tier Holding Company and the Bank believe that a conversion of the Bank to the stock holding company form pursuant to this Plan of Conversion and Reorganization is in the best interests of the MHC, the Mid-Tier Holding Company and the Bank, as well as the best interests of Members and Stockholders. The Boards of Directors determined that this Plan equitably provides for the interests of Members through the granting of subscription rights and the establishment of a liquidation account. The Conversion and Reorganization will result in the raising of additional capital for the Bank and the Holding Company and is expected to result in a more active and liquid market for the Holding Company Common Stock than currently exists for Mid-Tier Holding Company Common Stock. In addition, the Conversion and Reorganization have been structured as a tax-free reorganization. Finally, the Conversion and Reorganization is expected to enable the Bank and the Holding Company to more effectively compete in the financial services marketplace.
The Bank is committed to growth and diversification. The additional funds received in the Conversion and Reorganization will facilitate the Bank’s ability to continue to grow in accordance with its business plan, through both internal growth and potential acquisitions of other banking institutions or
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financial services companies. The Bank believes that the Conversion and Reorganization will support its ability to more fully serve the borrowing and other financial needs of the communities it serves. In light of the foregoing, the Boards of Directors of the MHC, the Mid-Tier Holding Company and the Bank believe that it is in the best interests of such companies and Members and Stockholders to raise additional capital at this time, and that the most feasible way to do so is through the Conversion and Reorganization.
As described in more detail in Section 3, the Bank will convert from the mutual holding company form of organization to the stock holding company form of organization through a series of substantially simultaneous mergers pursuant to which (i) the MHC will cease to exist and a liquidation account will be established by the Bank for the benefit of Members as of specified dates and (ii) the Bank will become a wholly owned subsidiary of the Holding Company. In connection therewith, each share of Mid-Tier Holding Company Common Stock outstanding immediately prior to the effective time thereof shall be automatically converted, without further action by the holder thereof, into and become the right to receive shares of Holding Company Common Stock based on the Exchange Ratio, plus cash in lieu of any fractional share interest.
In connection with the Conversion and Reorganization, the Holding Company will offer shares of Conversion Stock in the Offerings as provided herein. Shares of Conversion Stock will be offered in a Subscription Offering in descending order of priority to Eligible Account Holders, Tax-Qualified Employee Stock Benefit Plans, Supplemental Eligible Account Holders and Other Members. The Subscription Rights granted in connection with the Subscription Offering are non-transferable. Any shares of Conversion Stock remaining unsold after the Subscription Offering may be offered for sale to the public through a Community Offering and Syndicated Community Offering or Public Offering, as determined by the Board of Directors of the Holding Company in its sole discretion.
After careful study and consideration, the Boards of Directors of the Mid-Tier Holding Company, the MHC and the Bank adopted this Plan. The Plan must be approved by: (1) the affirmative vote of a majority of the total number of votes eligible to be cast by Members; (2) by the holders of at least two-thirds of the outstanding shares of Mid-Tier Holding Company Common Stock eligible to vote (including the MHC); and (3) by the holders of a majority of the outstanding shares of Mid-Tier Holding Company Common Stock owned by Minority Stockholders. After the Conversion and Reorganization, the Bank will continue to be regulated by the Department and by the FDIC. The Holding Company will be regulated by the FRB. In addition, the Bank will continue to be a member of the Federal Home Loan Bank System and all insured savings deposits will continue to be insured by the FDIC up to the maximum provided by law.
2. | DEFINITIONS. |
As used in this Plan, the terms set forth below have the following meaning:
ACTING IN CONCERT means (i) knowing participation in a joint activity or interdependent conscious parallel action towards a common goal whether or not pursuant to an express agreement or understanding; or (ii) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise. A Person which acts in concert with another Person (“other party”) shall also be deemed to be acting in concert with any Person who is also acting in concert with that other party, except that any Tax-Qualified Employee Stock Benefit Plan will not be deemed to be acting in concert with its trustee or a person who serves in a similar capacity solely for the purpose of determining whether stock held by the trustee and stock held by the plan will be aggregated and participants or beneficiaries of any such Tax-Qualified Employee Stock Benefit Plan will not be deemed to be acting in concert solely as
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a result of their common interests as participants or beneficiaries. When Persons act together for such purpose, their group is deemed to have acquired their stock. The determination of whether a group is Acting in Concert shall be made solely by the Board of Directors of the Holding Company or Officers delegated by such Board and may be based on any evidence upon which the Board or such delegatee chooses to rely, including, without limitation, joint account relationships or the fact that such Persons share a common address (whether or not related by blood or marriage) or have filed joint Schedules 13D or Schedules 13G with the SEC with respect to other companies. Directors of the Holding Company, the Bank and the MHC shall not be deemed to be Acting in Concert solely as a result of their membership on any such board or boards.
AFFILIATE means a Person who, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the Person specified.
ASSOCIATE of a Person means (i) a corporation or organization (other than the MHC, the Mid-Tier Holding Company, the Bank or a majority-owned subsidiary of the MHC, the Mid-Tier Holding Company or the Bank), if the Person is a senior officer or partner or beneficially owns, directly or indirectly, 10% or more of any class of equity securities of the corporation or organization, (ii) a trust or other estate, if the Person has a substantial beneficial interest in the trust or estate or is a trustee or fiduciary of the trust or estate, provided, however, that such term shall not include any Tax-Qualified Employee Stock Benefit Plan of the MHC, the Mid-Tier Holding Company or the Bank in which such Person has a substantial beneficial interest or serves as a trustee or in a similar fiduciary capacity, and (iii) any person who is related by blood or marriage to such Person and who lives in the same home as the Person or who is a director or senior officer of the MHC, the Mid-Tier Holding Company or the Bank or any of their subsidiaries.
BANK means William Penn Bank.
BANK BENEFIT PLAN(S) includes, but is not limited to, Tax Qualified Employee Stock Benefit Plans and Non-Tax Qualified Employee Stock Benefit Plans.
BANK LIQUIDATION ACCOUNT means the Liquidation Account established in the Bank as part of the Conversion and Reorganization.
CODE means the Internal Revenue Code of 1986, as amended.
COMMUNITY MEMBERS means, for purposes of any Community Offering, natural persons and trusts of natural persons residing in Bucks and Philadelphia Counties in Pennsylvania and Burlington, Camden, Gloucester and Mercer Counties in New Jersey.
COMMUNITY OFFERING means the offering for sale by the Holding Company of any shares of Conversion Stock not subscribed for in the Subscription Offering to such Persons as may be selected by the Holding Company in its sole discretion and to whom a copy of the Prospectus is delivered by or on behalf of the Holding Company.
CONTROL (including the terms “controlling,” “controlled by,” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
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CONVERSION AND REORGANIZATION means the series of transactions provided for in this Plan, including but not limited to (i) the merger of the MHC with and into the Mid-Tier Holding Company pursuant to which the MHC will cease to exist, (ii) the merger of the Mid-Tier Holding Company with the Holding Company, pursuant to which the Mid-Tier Holding Company will cease to exist and, in connection therewith, each share of Mid-Tier Holding Company Common Stock outstanding immediately prior to the effective time thereof shall automatically be converted into and become the right to receive shares of Holding Company Common Stock based on the Exchange Ratio, plus cash in lieu of any fractional share interest, and (iii) the issuance of Conversion Stock by the Holding Company in the Offerings as provided herein. All such transactions shall occur substantially simultaneously.
CONVERSION STOCK means the Holding Company Common Stock to be issued and sold in the Offerings pursuant to the Plan. For the avoidance of doubt, Conversion Stock does not include the Exchange Shares.
DEPARTMENT means the Pennsylvania Department of Banking and Securities or any successor thereto.
DEPOSIT ACCOUNT means any withdrawable account as defined in 12 C.F.R. § 239.2(r) and 12 CFR § 239.52(j); provided, however, that the term “Deposit Account” shall not include any escrow accounts maintained at the Bank.
DEPOSITOR means the holder of a Deposit Account.
ELIGIBLE ACCOUNT HOLDER means any Person holding a Qualifying Deposit on the Eligibility Record Date for purposes of determining Subscription Rights.
ELIGIBILITY RECORD DATE means the date for determining Qualifying Deposits of Eligible Account Holders and is the close of business on June 30, 2019.
ESOP means the William Penn Bank Employee Stock Ownership Plan or such other Tax Qualified Employee Stock Benefit Plan adopted by the Holding Company or the Bank in connection with the Conversion and Reorganization, the purpose of which shall be to hold Holding Company Common Stock.
ESTIMATED PRICE RANGE means the range of the estimated aggregate pro forma market value of the total number of shares of Conversion Stock to be issued in the Offerings, as determined by the Independent Appraiser in accordance with Section 4 hereof.
EXCHANGE RATIO means the rate at which shares of Holding Company Common Stock will be issued in exchange for shares of Mid-Tier Holding Company Common Stock held by the Minority Stockholders in connection with the Mid-Tier Holding Company Merger. The exact rate (which shall be rounded to four decimal places) shall be determined by the MHC, the Mid-Tier Holding Company and the Bank in order to ensure that upon consummation of the Conversion and Reorganization, the Minority Stockholders will own in the aggregate approximately the same percentage of the Holding Company Common Stock to be outstanding upon completion of the Conversion and Reorganization as the percentage of Mid-Tier Holding Company Common Stock owned by them in the aggregate immediately prior to consummation of the Conversion and Reorganization, subject to adjustment to reflect the assets of the MHC other than Mid-Tier Holding Company Common Stock and before giving effect to (a) cash paid in lieu of any fractional interests of Holding Company Common Stock and (b) any shares of Conversion Stock purchased by the Minority Stockholders in the Offerings.
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EXCHANGE SHARES mean the shares of Holding Company Common Stock to be issued to the Minority Stockholders in connection with the Mid-Tier Holding Company Merger.
FDIC means the Federal Deposit Insurance Corporation or any successor thereto.
FRB means the Board of Governors of the Federal Reserve System or any successor thereto.
HOLDING COMPANY means William Penn Bancorporation, a stock corporation organized under the laws of the State of Maryland.
HOLDING COMPANY COMMON STOCK means the shares of common stock, par value $0.01 per share, of the Holding Company. The Holding Company Common Stock is not insured by the FDIC.
INDEPENDENT APPRAISER means the independent investment banking or financial consulting firm retained by the MHC, the Mid-Tier Holding Company and the Bank to prepare an appraisal of the estimated pro forma market value of the Conversion Stock.
LIQUIDATION ACCOUNT means the account representing the liquidation interests received by Eligible Account Holders and Supplemental Eligible Account Holders in exchange for their interest in the MHC in connection with the Conversion and Reorganization, as in accordance with Section 15 hereof.
MANAGEMENT PERSON means any Officer or director of the Bank or the Mid-Tier Holding Company or any Affiliate of the Bank or the Mid-Tier Holding Company and any person Acting in Concert with such Officer or director.
MEETING OF STOCKHOLDERS means the meeting of the Stockholders of the Mid-Tier Holding Company, which may be an annual meeting or a special meeting, at which this Plan is submitted to the Stockholders for their approval, including any adjournments of such meeting.
MEMBER means any Person qualifying as a member of the MHC in accordance with its articles of incorporation and bylaws and the laws of the United States and the Commonwealth of Pennsylvania.
MHC means William Penn, MHC.
MHC MERGER means the merger of the MHC with and into the Mid-Tier Holding Company pursuant to the Plan of Merger included as Annex A hereto.
MID-TIER HOLDING COMPANY means William Penn Bancorp, Inc., an existing Pennsylvania corporation.
MID-TIER HOLDING COMPANY COMMON STOCK means the shares of common stock, par value $0.01 per share, of the Mid-Tier Holding Company. The Mid-Tier Holding Company Common Stock is not insured by the FDIC.
MID-TIER HOLDING COMPANY MERGER means the merger of the Mid-Tier Holding Company with and into the Holding Company pursuant to the Plan of Merger included as Annex B hereto.
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MINORITY STOCKHOLDER means any owner of the Mid-Tier Holding Company Common Stock other than the MHC.
OFFERINGS mean the offering of Conversion Stock to Persons other than the MHC in the Subscription Offering, the Community Offering and the Syndicated Community or Public Offering.
OFFICER means the president, chief executive officer, vice-president, secretary, treasurer or principal financial officer, comptroller or principal accounting officer and any other person performing similar functions with respect to any organization whether incorporated or unincorporated.
ORDER FORM means the form or forms to be provided by the Holding Company, containing all such terms and provisions as set forth in Section 11 hereof, to a Participant or other Person by which Conversion Stock may be ordered in the Subscription Offering and in the Community Offering.
OTHER MEMBER means a Voting Member who is not an Eligible Account Holder or a Supplemental Eligible Account Holder.
PARTICIPANT means any Eligible Account Holder, Tax-Qualified Employee Stock Benefit Plan, Supplemental Eligible Account Holder or Other Member, but does not include the MHC.
PERSON means an individual, a corporation, a partnership, an association, a joint-stock company, a limited liability company, a trust, an unincorporated organization or a government or political subdivision of a government.
PLAN and PLAN OF CONVERSION AND REORGANIZATION mean this Plan of Conversion and Reorganization as adopted by the Boards of Directors of the MHC, the Mid-Tier Holding Company and the Bank and any amendment hereto approved as provided herein. The Board of Directors of the Holding Company shall adopt this Plan as soon as practicable following its organization.
PRIMARY PARTIES mean the MHC, the Mid-Tier Holding Company, the Bank and the Holding Company.
PROSPECTUS means the one or more documents to be used in offering the Conversion Stock in the Offerings.
PUBLIC OFFERING means an underwritten firm commitment offering to the public through one or more underwriters.
PURCHASE PRICE means the price per share at which the Conversion Stock is sold by the Holding Company in the Offerings in accordance with the terms hereof.
QUALIFYING DEPOSIT means the aggregate balance of all Deposit Accounts in the Bank of (i) an Eligible Account Holder at the close of business on the Eligibility Record Date, provided such aggregate balance is not less than $50.00, and (ii) a Supplemental Eligible Account Holder at the close of business on the Supplemental Eligibility Record Date, provided such aggregate balance is not less than $50.00.
SEC means the United States Securities and Exchange Commission.
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SPECIAL MEETING OF MEMBERS means the Special Meeting of Members called for the purpose of submitting this Plan to the Voting Members for their approval, including any adjournments of such meeting.
STOCKHOLDERS mean those Persons who own shares of Mid-Tier Holding Company Common Stock.
STOCKHOLDER VOTING RECORD DATE means the date for determining the eligibility of Stockholders to vote at the Meeting of Stockholders, as determined by the Board of Directors of the Mid-Tier Holding Company.
SUBSCRIPTION OFFERING means the offering of the Conversion Stock to Participants.
SUBSCRIPTION RIGHTS mean nontransferable rights to subscribe for Conversion Stock granted to Participants pursuant to the terms of this Plan.
SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER means any Person, except directors and Officers of the Bank and their Associates, the Mid-Tier Holding Company or the MHC (unless the FRB grants a waiver to permit a director or Officer or an Associate thereof to be included) and their Associates, holding a Qualifying Deposit at the close of business on the Supplemental Eligibility Record Date.
SUPPLEMENTAL ELIGIBILITY RECORD DATE, if applicable, means the date for determining Supplemental Eligible Account Holders and shall be required if the Eligibility Record Date is more than 15 months prior to the date of the approval of the Plan by the FRB. If applicable, the Supplemental Eligibility Record Date shall be the last day of the calendar quarter preceding approval by the FRB of the Plan.
SYNDICATED COMMUNITY OFFERING means the offering for sale by a syndicate of broker-dealers to the general public of shares of Conversion Stock not purchased in the Subscription Offering and the Community Offering.
TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLAN means any defined benefit plan or defined contribution plan, such as an employee stock ownership plan, stock bonus plan, profit-sharing plan or other plan, which is established for the benefit of the employees of the Holding Company and/or the Bank and any Affiliate thereof and which, with its related trust, meets the requirements to be “qualified” under Section 401 of the Code as from time to time in effect. A “Non-Tax-Qualified Employee Stock Benefit Plan” is any defined benefit plan or defined contribution stock benefit plan that is not so qualified.
VOTING MEMBER means a Person who, at the close of business on the Voting Record Date, is entitled to vote as a Member of the MHC in accordance with its articles of incorporation and bylaws.
VOTING RECORD DATE means the date for determining the eligibility of Members to vote at the Special Meeting of Members.
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3. | GENERAL PROCEDURE FOR THE CONVERSION AND REORGANIZATION. |
A. Steps for Conversion and Reorganization
The Conversion and Reorganization may be effected in the manner set forth herein or in any manner approved by the FRB and the Department that is consistent with the purposes of this Plan and applicable law and regulations. This Plan is subject to the approval of the FRB and must be adopted by (1) at least a majority of the total number of votes eligible to be cast by Voting Members at the Special Meeting of Members, (2) the holders of at least two-thirds of the outstanding shares of Mid-Tier Holding Company Common Stock eligible to vote (including the MHC); and (3) the holders of a majority of the outstanding shares of Mid-Tier Holding Company Common Stock owned by Minority Stockholders. It is currently anticipated that the Conversion and Reorganization will be effected in accordance with the procedures specified below. At the effective date of the Conversion and Reorganization, the following transactions will occur:
(i) The Holding Company shall be organized as a subsidiary of the Mid-Tier Holding Company. The Amended and Restated Articles of Incorporation and Bylaws of the Holding Company shall read in the form of Annex C and Annex D, respectively. The MHC shall merge with and into the Mid-Tier Holding Company in the MHC Merger with the Mid-Tier Holding Company being the surviving institution. Immediately thereafter, the Mid-Tier Holding Company shall merge with and into the Holding Company in the Mid-Tier Holding Company Merger, with the Holding Company being the surviving institution. As a result of the MHC Merger and the Mid-Tier Holding Company Merger, (x) the shares of Mid-Tier Holding Company Common Stock held by the MHC shall be extinguished and (y) the liquidation interests in the Mid-Tier Holding Company constructively received by certain Members immediately before the Conversion and Reorganization will automatically, without further action on the part of the holders thereof, be exchanged for an interest in the Liquidation Account. As a result of the Mid-Tier Holding Company Merger, (x) the shares of Mid-Tier Holding Company Common Stock held by the Minority Stockholders shall be converted into the right to receive shares of Holding Company Common Stock based upon the Exchange Ratio, plus cash in lieu of any fractional share interest based upon the Purchase Price; and (y) the shares of Bank common stock held by the Mid-Tier Holding Company shall be owned by the Holding Company, with the result that the Bank shall become a wholly owned subsidiary of the Holding Company. In exchange for common stock of the Bank and the Bank Liquidation Account, the Holding Company shall contribute to the Bank an amount of the net proceeds received by the Holding Company for the sale of the Conversion Stock as shall be determined by the Boards of Directors of the Holding Company and the Bank and as shall be approved by the FRB, but not less than fifty percent (50%) of the net proceeds received by the Holding Company for the sale of the Conversion Stock, unless otherwise approved by the FRB. In addition, as a result of the Mid-Tier Holding Company Merger, options to purchase shares of Mid-Tier Holding Company Common Stock which are outstanding immediately prior to consummation of the Conversion and Reorganization shall be converted into options to purchase shares of Holding Company Common Stock, with the number of shares subject to the option and the exercise price per share to be adjusted based upon the Exchange Ratio so that the aggregate exercise price remains unchanged, and with the duration of the option remaining unchanged.
(ii) The Holding Company shall sell the Conversion Stock in the Offerings, as provided herein.
The effective date of the Conversion and Reorganization shall be the date upon which the last of the following actions occurs: (i) the filing of Articles of Merger with the Maryland State Department of Assessments and Taxation with respect to the Mid-Tier Holding Company Merger, (ii) the filing of
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Articles of Merger with the Secretary of State of the Commonwealth of Pennsylvania with respect to the MHC Merger and (iii) the closing of the issuance of the shares of Conversion Stock in the Offerings. The filing of Articles of Combination and the Articles of Merger relating to the MHC Merger and the Mid-Tier Holding Company Merger and the closing of the issuance of shares of Conversion Stock in the Offerings shall not occur until all requisite regulatory, Member and Stockholder approvals have been obtained, all applicable waiting periods have expired and sufficient subscriptions and orders for the Conversion Stock have been received. It is intended that the closing of the MHC Merger and the Mid-Tier Holding Company Merger and the sale of shares of Conversion Stock in the Offerings shall occur consecutively and substantially simultaneously.
B. Regulatory Filings
(i) To the extent required by applicable laws and regulations, or as the FRB may otherwise require, the MHC, the Mid-Tier Holding Company and the Bank shall provide public notice of the adoption of the Plan. Such notice shall be made by means of the placing of an advertisement in a newspaper of general circulation in each community where the Bank maintains an office. In addition, the Bank shall cause copies of the Plan to be made available at each of its offices for inspection by Members.
(ii) An application for the Conversion and Reorganization, including the Plan and all other requisite material (the “Application for Conversion”), shall be submitted to the FRB for approval. The MHC, the Mid-Tier Holding Company and the Bank will again cause to be published, in accordance with the requirements of applicable regulations of the FRB, a notice of the filing with the FRB of an application to convert the MHC and will post the notice of the filing for the Application for Conversion in each of the Bank’s offices.
(iii) The Primary Parties shall submit or cause to be submitted to the FRB and the Department all holding company, merger, and other applications or notices necessary for the Conversion and Reorganization. All notices required to be published in connection with such applications shall be published at the times required.
(iv) The Holding Company shall file one or more Registration Statements with the SEC to register the Holding Company Common Stock to be issued in the Conversion and Reorganization under the Securities Act of 1933, as amended, and, where required, shall register such Holding Company Common Stock under any applicable state securities laws. Upon registration and after the receipt of all required regulatory approvals, the Conversion Stock shall be first offered for sale in a Subscription Offering to Eligible Account Holders, the Tax-Qualified Employee Stock Benefit Plan, Supplemental Eligible Account Holders, if any, and Other Members. It is anticipated that any shares of Conversion Stock remaining unsold after the Subscription Offering will be sold through a Community Offering and a Syndicated Community Offering or a Public Offering. The purchase price per share for the Conversion Stock shall be a uniform price determined in accordance with Section 4 hereof and shall be set forth in the Prospectus.
C. Approval of Plan By Voting Members; The Special Meeting of Members
(i) The MHC shall file preliminary proxy materials with the FRB, as required. Promptly following receipt of requisite approval of the FRB, this Plan will be submitted to the Voting Members for their consideration and approval at the Special Meeting of Members. The Plan must be approved by a majority of the total number of votes eligible to be cast by Voting Members at the Special Meeting of Members. The MHC will mail to all Members as of the Voting Record Date, at their last known address appearing on the records of the Bank as of the Voting Record Date, a notice of special
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meeting and a proxy statement describing the Plan. Written notice given no less than 15 nor more than 45 days prior to the date of the Special Meeting of Members.
(ii) At the Special Meeting of Members, each Voting Member shall be entitled to cast one vote in person or by proxy for every $100.00 of Deposit Accounts, or fraction thereof, such Voting Member had at the Bank as of the Voting Record Date. Each Voting Member who is a borrower of the Bank and whose loan was outstanding at the Bank on June 1, 2005, which loan continues to be outstanding as of the Voting Record Date, will be entitled to one vote in addition to any other vote the Voting Member may otherwise have. No Voting Member may cast more than 1,000 votes at the Special Meeting of Members. Deposits held in trust or other fiduciary capacity may be voted by the trustee or other fiduciary to whom voting rights are provided under the trust instrument or other governing document or applicable law. Deposits held in an Individual Retirement Account or Keogh Account may be voted by the MHC if no other instructions are received in the same proportion as the votes cast by all other Voting Members.
D. Approval of Plan By Stockholders; The Meeting of Stockholders
(i) The Holding Company shall file a Registration Statement with the SEC to register the Exchange Shares. A prospectus contained in such Registration Statement shall also constitute proxy materials of the Mid-Tier Holding Company with respect to the Meeting of Stockholders. Promptly following the effectiveness of such Registration Statement and the receipt of any other requisite approval of the FRB, this Plan will be submitted to the Stockholders for their consideration and approval at the Meeting of Stockholders. The Plan must be approved by (1) the holders of at least two-thirds of the outstanding shares of Mid-Tier Holding Company Common Stock eligible to vote (including the MHC) and (2) the holders of a majority of the outstanding shares of Mid-Tier Holding Company Common Stock owned by Minority Stockholders. The Mid-Tier Holding Company will mail to all Stockholders as of the Stockholder Voting Record Date, at their last known address appearing on the records of the Mid-Tier Holding Company, a notice of meeting and definitive prospectus/proxy statement describing the Plan.
(ii) The Meeting of Stockholders shall be held upon written notice given no less than 20 nor more than 50 days prior to the date of the Meeting of Stockholders. At the Meeting of Stockholders, each Stockholder eligible to vote shall be entitled to cast one vote in person or by proxy for each share of Mid-Tier Holding Company Common Stock owned by such Stockholder as of the Stockholder Voting Record Date.
E. Expenses
The Primary Parties may retain and pay for the services of financial and other advisors and investment bankers to assist in connection with any or all aspects of the Conversion and Reorganization, including the payment of fees to brokers for assisting Persons in completing and/or submitting Order Forms. The Primary Parties shall use their best efforts to ensure that all fees, expenses, retainers and similar items shall be reasonable.
F. Articles of Incorporation and Bylaws
By voting to adopt this Plan, Voting Members and Stockholders will be voting to adopt the Amended and Restated Articles of Incorporation and Bylaws for the Holding Company attached as Annex C and Annex D, respectively, to this Plan.
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G. | Depositors of Fidelity Savings and Loan Association of Bucks County and Washington Savings Bank |
For purposes of this Plan, each holder of a deposit account in Fidelity Savings and Loan Association of Bucks County and Washington Savings Bank (each of which was merged with and into the Bank effective as of May 1, 2020) shall have the same rights and privileges as a Depositor under this Plan as if such holder’s deposit account had been established at the Bank on the date established at Fidelity Savings and Loan Association of Bucks County or Washington Savings Bank.
4. | TOTAL NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION STOCK. |
(a) The aggregate amount of shares of Conversion Stock to be offered in the Offerings shall be stated in terms of a range (the Estimated Price Range), which shall be based on a pro forma valuation of the aggregate market value of the to-be-outstanding Holding Company Common Stock multiplied by the percentage equal to the MHC’s percentage ownership interest in all outstanding shares of Mid-Tier Holding Company Common Stock, as adjusted to reflect the assets of the MHC other than Mid-Tier Holding Company Common Stock. The valuation, which shall be prepared by the Independent Appraiser, shall be based on financial information relating to the MHC, the Mid-Tier Holding Company and the Bank; market, financial and economic conditions; a comparison of the Mid-Tier Holding Company and the Bank with selected publicly-held financial institutions and holding companies and with comparable financial institutions and holding companies; and such other factors as the Independent Appraiser may deem to be important, including, but not limited to, the projected operating results and financial condition of the Holding Company and Bank. The valuation shall be stated in terms of an Estimated Price Range, the maximum of which shall be no more than 15% above the average of the minimum and maximum of such price range and the minimum of which shall be no more than 15% below such average. The valuation shall be updated during the Conversion and Reorganization as market and financial conditions warrant and as may be required by the FRB.
(b) Based upon the independent valuation, the Board of Directors of the Holding Company shall fix the Purchase Price and the number of shares of Conversion Stock to be offered in the Offerings. The Purchase Price for the Conversion Stock shall be a uniform price determined in accordance with applicable laws and regulations. The total number of shares of Conversion Stock to be issued in the Offerings shall be determined by the Board of Directors of the Holding Company upon conclusion of the Offerings in consultation with the Independent Appraiser and any financial advisor or investment banker retained by the Primary Parties in connection with the Offerings.
(c) Subject to the approval of the FRB, the Estimated Price Range may be increased or decreased to reflect market, financial and economic conditions prior to completion of the Conversion and Reorganization, and under such circumstances the Holding Company may increase or decrease the total number of shares of Conversion Stock to be issued in the Conversion and Reorganization to reflect any such change. Notwithstanding anything to the contrary contained in this Plan, no resolicitation of subscribers shall be required and subscribers shall not be permitted to modify or cancel their subscriptions unless the gross proceeds from the sale of the Conversion Stock in the Offerings are less than the minimum or more than 15% above the maximum of the Estimated Price Range set forth in the Prospectus.
5. | SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS (FIRST PRIORITY). |
(a) Each Eligible Account Holder shall receive, as first priority and without payment, Subscription Rights to purchase up to the greater of (i) $750,000 of Conversion Stock (or such maximum
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purchase limitation as may be established for the Community Offering and/or Syndicated Community Offering), (ii) one-tenth of 1% of the total offering of shares in the Subscription Offering, or (iii) 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of Conversion Stock offered in the Subscription Offering by a fraction, of which the numerator is the amount of the Qualifying Deposit of the Eligible Account Holder and the denominator is the total amount of all Qualifying Deposits of all Eligible Account Holders, in each case subject to Section 10 hereof.
(b) In the event of an oversubscription for shares of Conversion Stock pursuant to Section 5(a), available shares shall be allocated among subscribing Eligible Account Holders so as to permit each such Eligible Account Holder, to the extent possible, to purchase a number of shares which will make his or her total allocation equal to the lesser of the number of shares subscribed for or 100 shares. Any available shares remaining after each subscribing Eligible Account Holder has been allocated the lesser of the number of shares subscribed for or 100 shares shall be allocated among the subscribing Eligible Account Holders whose subscriptions remain unsatisfied in the proportion that the Qualifying Deposit of each such subscribing Eligible Account Holder bears to the total Qualifying Deposits of all such subscribing Eligible Account Holders whose orders are unfilled, provided that no fractional shares shall be issued.
(c) Subscription Rights of Eligible Account Holders who are also directors or Officers of the Mid-Tier Holding Company or the Bank and their Associates shall be subordinated to those of other Eligible Account Holders to the extent that they are attributable to increased deposits during the one-year period preceding the Eligibility Record Date.
6. | SUBSCRIPTION RIGHTS OF TAX-QUALIFIED EMPLOYEE STOCK BENEFIT PLANS (SECOND PRIORITY). |
Tax-Qualified Employee Stock Benefit Plans (excluding the Bank’s 401(k) Plan) shall receive, without payment, Subscription Rights to purchase in the aggregate up to 10% of the Conversion Stock. The subscription rights granted to Tax-Qualified Employee Stock Benefit Plans shall be subject to the availability of shares of Conversion Stock after taking into account the shares of Conversion Stock purchased by Eligible Account Holders; provided, however, that if the total number of shares of Common Stock is increased to any amount greater than the number of shares representing the maximum of the Estimated Price Range as set forth in the Prospectus (“Maximum Shares”), the ESOP shall have a first priority right to purchase any such shares exceeding the Maximum Shares. Shares of Conversion Stock purchased by any individual participant (“Plan Participant”) in a Tax-Qualified Employee Stock Benefit Plan using funds therein pursuant to the exercise of subscription rights granted to such Participant in his individual capacity as an Eligible Account Holder, Supplemental Eligible Account Holder and/or Other Member and/or purchases by such Plan Participant in the Community Offering shall not be deemed to be purchases by a Tax-Qualified Employee Stock Benefit Plan for purposes of calculating the maximum amount of Conversion Stock that Tax-Qualified Employee Stock Benefit Plans may purchase pursuant to the first sentence of this Section 6 if the individual Plan Participant controls or directs the investment authority with respect to such account or subaccount. Consistent with applicable laws and regulations and policies and practices of the FRB, the Tax-Qualified Employee Stock Benefit Plans may use funds contributed by the Holding Company or the Bank and/or borrowed from an independent financial institution to exercise such Subscription Rights, and the Holding Company and the Bank may make scheduled discretionary contributions thereto, provided that such contributions do not cause the Bank or the Holding Company to fail to meet any applicable regulatory capital requirement. The Tax-Qualified Employee Stock Benefit Plans may, in whole or in part, fill their orders through open market purchases subsequent to the closing of the Offerings, subject to approval of the FRB.
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The Tax-Qualified Employee Stock Benefit Plans shall not be deemed to be an Associate or Affiliate of or Person Acting in Concert with any Management Person.
7. | SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS (THIRD PRIORITY). |
(a) In the event that the Eligibility Record Date is more than 15 months prior to the date of approval of the Plan by the FRB, then, and only in that event, a Supplemental Eligibility Record Date shall be set and each Supplemental Eligible Account Holder shall receive, without payment, Subscription Rights to purchase up to the greater of (i) $750,000 of Conversion Stock (or such maximum purchase limitation as may be established for the Community Offering and/or Syndicated Community Offering), (ii) one-tenth of 1% of the total offering of shares in the Subscription Offering and (iii) 15 times the product (rounded down to the next whole number) obtained by multiplying the total number of shares of Conversion Stock offered in the Subscription Offering by a fraction, of which the numerator is the amount of the Qualifying Deposits of the Supplemental Eligible Account Holder and the denominator is the total amount of all Qualifying Deposits of all Supplemental Eligible Account Holders, in each case subject to Section 10 hereof and the availability of shares of Conversion Stock for purchase after taking into account the shares of Conversion Stock purchased by Eligible Account Holders and Tax-Qualified Employee Stock Benefit Plans through the exercise of Subscription Rights under Sections 5 and 6 hereof.
(b) In the event of an oversubscription for shares of Conversion Stock pursuant to Section 7(a), available shares shall be allocated among subscribing Supplemental Eligible Account Holders so as to permit each such Supplemental Eligible Account Holder, to the extent possible, to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of the number of shares subscribed for or 100 shares. Any remaining available shares shall be allocated among subscribing Supplemental Eligible Account Holders whose subscriptions remain unsatisfied in the proportion that the amount of their respective Qualifying Deposit bears to the total amount of the Qualifying Deposits of all such subscribing Supplemental Eligible Account Holders whose orders are unfilled, provided that no fractional shares shall be issued.
8. | SUBSCRIPTION RIGHTS OF OTHER MEMBERS (FOURTH PRIORITY). |
(a) Each Other Member shall receive, without payment, Subscription Rights to purchase up to the greater of (i) $750,000 of Conversion Stock (or such maximum purchase limitation as may be established for the Community Offering and/or Syndicated Community Offering) and (ii) one-tenth of 1% of the total offering of shares in the Subscription Offering, subject to Section 10 hereof and the availability of shares of Conversion Stock for purchase after taking into account the shares of Conversion Stock purchased by Eligible Account Holders, Tax-Qualified Employee Stock Benefit Plans and Supplemental Eligible Account Holders, if any, through the exercise of Subscription Rights under Sections 5, 6 and 7 hereof.
(b) If, pursuant to this Section 8, Other Members subscribe for a number of shares of Conversion Stock in excess of the total number of shares of Conversion Stock remaining, available shares shall be allocated among subscribing Other Members so as to permit each such Other Member, to the extent possible, to purchase a number of shares which will make his or her total allocation equal to the lesser of the number of shares subscribed for or 100 shares. Any remaining available shares shall be allocated among subscribing Other Members whose subscriptions remain unsatisfied on a pro rata basis in the same proportion as each such Other Member’s subscription bears to the total subscriptions of all such subscribing Other Members, provided that no fractional shares shall be issued.
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9. | COMMUNITY OFFERING, SYNDICATED COMMUNITY OFFERING, PUBLIC OFFERING AND OTHER OFFERINGS. |
(a) If less than the total number of shares of Conversion Stock offered by the Holding Company are sold in the Subscription Offering, it is anticipated that all remaining shares of Conversion Stock shall, if practicable, be sold in a Community Offering. Subject to the requirements set forth herein, the manner in which the Conversion Stock is sold in the Community Offering shall have as the objective the achievement of the widest possible distribution of such stock. The Holding Company may commence the Community Offering concurrently with, at any time during, or as soon as practicable after the end of, the Subscription Offering, and the Community Offering must be completed within 45 days after the completion of the Subscription Offering, unless extended by the Holding Company with any required regulatory approval.
(b) In the event of a Community Offering, shares of Conversion Stock that are not subscribed for in the Subscription Offering shall be offered for sale by means of a direct community marketing program, which may provide for the use of brokers, dealers or investment banking firms experienced in the sale of securities of financial institutions. Shares not subscribed for in the Subscription Offering will be available for purchase by members of the general public to whom a Prospectus is delivered by the Holding Company or on its behalf, with preference given first to Community Members.
(c) A Prospectus and Order Form shall be furnished to such Persons as the Holding Company may select in connection with the Community Offering, and each order for Conversion Stock in the Community Offering shall be subject to the absolute right of the Primary Parties to accept or reject any such order in whole or in part either at the time of receipt of an order or as soon as practicable following completion of the Community Offering. In the event of an oversubscription for shares in the Community Offering, available shares will be allocated first to each Community Member whose order is accepted in an amount equal to the lesser of 100 shares or the number of shares subscribed for by each such Community Member, if possible. Thereafter, unallocated shares shall be allocated among the Community Members whose accepted orders remain unsatisfied on an equal number of shares basis per order until all available shares have been allocated, provided that no fractional shares shall be issued. If there are any shares remaining after all accepted orders by Community Members have been satisfied, such remaining shares shall be allocated next to other members of the general public who purchase in the Community Offering, applying the same allocation described above for Community Members.
(d) No Person may purchase more than $750,000 of Conversion Stock in the Community Offering; provided, however, that this amount may be increased to up to 5% of the shares sold in the Offerings or decreased to less than $750,000 upon resolution of the Boards of Directors of the Primary Parties, subject to any required regulatory approval but without the further approval of Members or Minority Stockholders or the resolicitation of subscribers.
(e) Subject to such terms, conditions and procedures as may be determined by the Primary Parties, shares of Conversion Stock not subscribed for in the Subscription Offering or ordered in the Community Offering may be sold by a syndicate of broker-dealers to the general public in a Syndicated Community Offering. Each order for Conversion Stock in the Syndicated Community Offering shall be subject to the absolute right of the Primary Parties to accept or reject any such order in whole or in part either at the time of receipt of an order or as soon as practicable after completion of the Syndicated Community Offering. The amount of Conversion Stock that any Person may purchase in the Syndicated Community Offering shall not exceed $750,000 of Conversion Stock, provided, however, that this amount may be increased to up to 5% of the total offering of shares of Conversion Stock or decreased to less than $750,000 upon resolution of the Boards of Directors of the Primary Parties, subject to any
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required regulatory approval but without the further approval of Members or Minority Stockholders or the resolicitation of subscribers; and provided further that, to the extent applicable, and subject to the limitations on purchases of Conversion Stock set forth in this Section 9(e) and Section 10 of this Plan, in the event of an oversubscription for shares in the Syndicated Community Offering, orders for Conversion Stock in the Syndicated Community Offering, unless the FRB permits otherwise, shall first be filled to a maximum of 2% of the total number of shares of Conversion Stock sold in the Offerings. The Holding Company may commence the Syndicated Community Offering concurrently with, at any time during, or as soon as practicable after the end of, the Subscription Offering, and the Syndicated Community Offering must be completed within 45 days after the completion of the Subscription Offering, unless extended by the Holding Company with any required regulatory approval.
(f) The Holding Company may sell any shares of Conversion Stock remaining following the Subscription Offering and Community Offering in a Public Offering instead of a Syndicated Community Offering. The provisions of Section 10 hereof shall not be applicable to the sales to underwriters for purposes of the Public Offering but shall be applicable to sales by the underwriters to the public. The price to be paid by the underwriters in such an offering shall be equal to the Purchase Price less an underwriting discount to be negotiated among such underwriters and the Holding Company, subject to any required regulatory approval or consent.
(g) If for any reason a Syndicated Community Offering or Public Offering of shares of Conversion Stock not sold in the Subscription Offering and the Community Offering cannot be effected, or if any insignificant residue of shares of Conversion Stock is not sold in the Offerings, the Holding Company shall use its best efforts to obtain other purchasers for such shares in such manner and upon such conditions as may be satisfactory to the FRB.
10. | LIMITATIONS ON SUBSCRIPTIONS AND PURCHASES OF CONVERSION STOCK. |
The following limitations shall apply to all purchases of Conversion Stock in the Offerings:
(a) Except in the case of Tax-Qualified Employee Stock Benefit Plans in the aggregate, as set forth in Section 10(e) hereof, and in addition to the other restrictions and limitations set forth herein, no Person (or group of Persons exercising Subscription Rights through a single Deposit Account) may, directly or indirectly, subscribe for or purchase more than $750,000 of Conversion Stock in the Offerings. and no Person together with any Associates or Persons otherwise Acting in Concert may, directly or indirectly, subscribe for or purchase more than $1,500,000 of Conversion Stock in the Offerings.
(b) No Person may purchase fewer than 25 shares of Conversion Stock in the Offerings, to the extent such shares are available; provided, however, that if the Purchase Price is greater than $20.00 per share, such minimum number of shares shall be adjusted so that the aggregate Purchase Price for such minimum shares will not exceed $500.00.
(c) Except in the case of Tax-Qualified Employee Stock Benefit Plans in the aggregate, as set forth in Section 10(e) hereof, and in addition to the other restrictions and limitations set forth herein, the maximum aggregate amount of Conversion Stock which any Person together with any Associate or Persons Acting in Concert may, directly or indirectly, subscribe for or purchase in the Offerings, when combined with any Exchange Shares received by such Person(s), shall not exceed 4.9% of the total number of shares of Holding Company Common Stock to be outstanding upon consummation of the Conversion and Reorganization; provided, however, that nothing herein shall require any Minority Stockholder to divest any Exchange Shares or otherwise limit the amount of Exchange Shares to be issued to a Minority Stockholder.
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(d) The number of shares of Conversion Stock that directors and Officers and their Associates may purchase in the aggregate in the Offerings shall not exceed 25% of the total number of shares of Conversion Stock sold in the Offerings, including any shares which may be issued in the event of an increase in the maximum of the Estimated Price Range to reflect changes in market, financial and economic conditions after commencement of the Subscription Offering and prior to completion of the Offerings.
(e) The maximum number of shares of Conversion Stock that may be purchased in the Offerings by the ESOP shall not exceed 8.0% and all Tax-Qualified Employee Stock Benefit Plans shall not exceed 10% of the total number of shares of Conversion Stock sold in the Offerings; provided, however, that purchases of Conversion Stock which are made by Plan Participants pursuant to the exercise of subscription rights granted to such Plan Participant in his or her individual capacity as a Participant or purchases by a Plan Participant in the Community Offering using the funds thereof held in Tax-Qualified Employee Stock Benefit Plans shall not be deemed to be purchases by a Tax-Qualified Employee Stock Benefit Plan for purposes of this Section 10(e).
(f) For purposes of the foregoing limitations and the determination of Subscription Rights, (i) directors, Officers and employees of the MHC, the Mid-Tier Holding Company, the Bank or their subsidiaries shall not be deemed to be Associates or a group Acting in Concert solely as a result of their capacities as such, (ii) shares purchased by Tax-Qualified Employee Stock Benefit Plans shall not be attributable to the individual trustees or beneficiaries of any such plan for purposes of determining compliance with the limitations set forth in Section 10(a) or Section 10(d) hereof, and (iii) shares purchased by a Tax-Qualified Employee Stock Benefit Plan pursuant to instructions of an individual with an account in such plan which provides that the individual has the right to direct the investment therein, including any plan of the Bank qualified under Section 401(k) of the Code, shall be aggregated and included in that individual’s purchases and not attributed to the Tax-Qualified Employee Stock Benefit Plan.
(g) Subject to any required regulatory approval and the requirements of applicable laws and regulations, but without the further approval of Members or Minority Stockholders or the resolicitation of subscribers, the Primary Parties may increase or decrease any of the individual or aggregate purchase limitations set forth herein to a percentage which does not exceed 5% of the shares sold in the Offerings whether prior to, during or after the Subscription Offering, Community Offering and/or Syndicated Community Offering. If an individual purchase limitation is increased after commencement of the Subscription Offering or any other offering, the Primary Parties shall permit any Participant who subscribed for the maximum number of shares of Conversion Stock to subscribe for an additional number of shares, so that such Participant shall be permitted to subscribe for the then maximum number of shares permitted to be subscribed for by such Participant. If any of the individual or aggregate purchase limitations are decreased after commencement of the Subscription Offering or any other offering, the orders of any Participant who subscribed for more than the new purchase limitation shall be decreased by the minimum amount necessary so that such Participant shall be in compliance with the then maximum number of shares permitted to be subscribed for by such Participant. If the maximum purchase limitation is increased to 5% of the shares sold in the Offerings, such limitation may be further increased to 9.99%, provided that orders for Conversion Stock exceeding 5% of the shares of Conversion Stock sold in the Offerings shall not exceed in the aggregate 10% of the total shares of Conversion Stock sold in the Offerings.
(h) The Primary Parties shall have the right to take all such action as they may, in their sole discretion, deem necessary, appropriate or advisable to monitor and enforce the terms, conditions, limitations and restrictions contained in this Section 10 and elsewhere in this Plan and the terms,
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conditions and representations contained in the Order Form, including, but not limited to, the absolute right (subject only to any necessary regulatory approvals or concurrences) to reject, limit or revoke acceptance of any subscription or order and to delay, terminate or refuse to consummate any sale of Conversion Stock that they believe might violate, or is designed to, or is any part of a plan to, evade or circumvent such terms, conditions, limitations, restrictions and representations. Any such action shall be final, conclusive and binding on all persons, and the Primary Parties and their respective Boards shall be free from any liability to any Person on account of any such action.
11. | TIMING OF SUBSCRIPTION OFFERING; MANNER OF EXERCISING SUBSCRIPTION RIGHTS AND ORDER FORMS. |
(a) The Subscription Offering may be commenced concurrently with or at any time after the mailing to Stockholders of the proxy materials to be used in connection with the Meeting of Stockholders and the mailing to Voting Members of the proxy materials to be used in connection with the Special Meeting of Members. The Subscription Offering may be closed before the Special Meeting of Members and the Meeting of Stockholders, provided that the offer and sale of the Conversion Stock shall be conditioned upon the approval of the Plan by the Voting Members at the Special Meeting of Members and by the Stockholders at the Meeting of Stockholders.
(b) The exact timing of the commencement of the Subscription Offering shall be determined by the Primary Parties in consultation with the Independent Appraiser and any financial advisory or investment banking firm retained by them in connection with the Conversion and Reorganization. The Primary Parties may consider a number of factors, including, but not limited to, the Bank’s current and projected future earnings, local and national economic conditions, and the prevailing market for stocks in general and stocks of financial institutions in particular. The Primary Parties shall have the right to withdraw, terminate, suspend, delay, revoke or modify any such Subscription Offering, at any time and from time to time, as they in their sole discretion may determine, without liability to any Person, subject to compliance with applicable securities laws and any necessary regulatory approval or concurrence.
(c) Promptly after the SEC has declared the Registration Statement, which includes the Prospectus, effective and all required regulatory approvals have been obtained, the Holding Company shall, distribute or make available the Prospectus, together with Order Forms for the purchase of Conversion Stock, to all Participants for the purpose of enabling them to exercise their respective Subscription Rights, subject to Section 13 hereof.
(d) A single Order Form for all Deposit Accounts maintained with the Bank by any Eligible Account Holder, Supplemental Eligible Account Holder or Other Member may be furnished, irrespective of the number of Deposit Accounts maintained with the Bank on the Eligibility Record Date, the Supplemental Eligibility Record Date or the date for determining Other Members, respectively. No person holding a Subscription Right may exceed any otherwise applicable purchase limitation by submitting multiple orders for Conversion Stock. Multiple orders are subject to adjustment, as appropriate and deposit balances will be divided on a pro rata basis among such orders in allocating shares in the event of an oversubscription.
(e) The recipient of an Order Form shall have no less than 20 days and no more than 45 days from the date of mailing of the Order Form (with the exact termination date to be set forth on the Order Form) to properly complete and execute the Order Form and deliver it to the Holding Company. The Holding Company may extend such period by such amount of time as it determines is appropriate. Failure of any Participant to deliver a properly executed Order Form to the Holding Company, along with full payment (or authorization for full payment by withdrawal from a Deposit Account) for the shares of
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Conversion Stock subscribed for, within the time limits prescribed, shall be deemed a waiver and release by such person of any rights to subscribe for shares of Conversion Stock. Each Participant shall be required to confirm to the Holding Company by executing an Order Form that such Person has fully complied with all of the terms, conditions, limitations and restrictions in the Plan.
(f) The Primary Parties shall have the absolute right, in their sole discretion and without liability to any Participant or other Person, to reject any Order Form that, among other things, is (i) improperly completed or executed; (ii) not timely received; (iii) not accompanied by the proper and full payment (or authorization of withdrawal for full payment) or, if provided for by the Holding Company, in the case of institutional investors in the Community Offering, not accompanied by an irrevocable order together with a legally binding commitment to pay the full amount of the purchase price prior to 48 hours before the completion of the Offerings; or (iv) submitted by a Person whose representations the Primary Parties believe to be false or who they otherwise believe, either alone, or Acting in Concert with others, is violating, evading or circumventing, or intends to violate, evade or circumvent, the terms and conditions of the Plan. Furthermore, in the event Order Forms (i) are not delivered by the United States Postal Service or (ii) are not mailed pursuant to a “no mail” order placed in effect by the account holder, the Subscription Rights of the Person to which such rights have been granted will lapse as though such Person failed to return the contemplated Order Form within the time period specified thereon. The Primary Parties may, but will not be required to, waive any irregularity on any Order Form or may require the submission of corrected Order Forms or the remittance of full payment for shares of Conversion Stock by such date as it may specify. The interpretation of the Primary Parties of the terms and conditions of the Order Forms shall be final and conclusive.
12. | PAYMENT FOR CONVERSION STOCK. |
(a) Payment for shares of Conversion Stock subscribed for by Participants in the Subscription Offering and payment for shares of Conversion Stock ordered by Persons in the Community Offering shall be equal to the Purchase Price multiplied by the number of shares that are being subscribed for or ordered, respectively. Such payment may be made by personal check, bank draft or money order at the time the Order Form is delivered to the Holding Company, provided that checks will only be accepted subject to collection. The Holding Company, in its sole and absolute discretion, may also elect to receive payment for shares of Conversion Stock by wire transfer. In addition, the Holding Company may elect to provide Participants and/or other Persons who have a Deposit Account with the Bank the opportunity to pay for shares of Conversion Stock by authorizing the Bank to withdraw from the types of Deposit Accounts provided for on the Order Form in the amount equal to the aggregate Purchase Price of such shares. Payment may also be made by a Participant or other Person using funds held for such Participant’s benefit by a Bank Benefit Plan to the extent that such plan allows participants or any related trust established for the benefit of such participants to direct that some or all of their individual accounts or sub-accounts be invested in Conversion Stock.
(b) Notwithstanding the above, if the Tax-Qualified Employee Stock Benefit Plans subscribe for shares during the Subscription Offering, such plans will not be required to pay for the shares at the time they subscribe but rather may pay for such shares of Conversion Stock subscribed for by such plans upon consummation of the Offerings, provided that, in the case of the ESOP, there is in force from the time of its subscription until the consummation of the Offerings, a loan commitment to lend to the ESOP, at such time, the aggregate price of the shares of Conversion Stock for which it subscribed.
(c) If a Participant or other Person authorizes the Bank to withdraw the amount of the aggregate Purchase Price from his or her Deposit Account, the Bank shall have the right to make such withdrawal or to freeze funds equal to the aggregate Purchase Price upon receipt of the Order Form.
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Notwithstanding any regulatory provisions regarding penalties for early withdrawals from certificate accounts, the Bank may allow payment by means of withdrawal from certificate accounts without the assessment of such penalties. In the case of an early withdrawal of only a portion of such account, the certificate evidencing such account shall be canceled if any applicable minimum balance requirement ceases to be met. In such case, the remaining balance will earn interest at the regular statement savings rate. However, where any applicable minimum balance is maintained in such certificate account, the rate of return on the balance of the certificate account shall remain the same as prior to such early withdrawal. This waiver of the early withdrawal penalty applies only to withdrawals made in connection with the purchase of Conversion Stock.
(d) The subscription funds will be held by the Bank or, in the Bank’s discretion, in an escrow account at an unaffiliated insured financial institution. The Holding Company shall pay interest, at not less than the Bank’s statement savings rate, for all amounts paid by check, bank draft or money order to purchase shares of Conversion Stock in the Subscription Offering and the Community Offering from the date payment is received until the date the Offerings are completed or terminated.
(e) The Holding Company will not knowingly offer or sell any of the Conversion Stock proposed to be issued to any Person whose purchase would be financed by funds loaned, directly or indirectly, to the Person by the Bank.
(f) Each share of Conversion Stock shall be non-assessable upon payment in full of the Purchase Price.
13. | ACCOUNT HOLDERS IN NONQUALIFIED STATES OR FOREIGN COUNTRIES. |
The Holding Company shall make reasonable efforts to comply with the securities laws of all jurisdictions in the United States in which Participants reside. However, the Holding Company may elect that no Participant will be offered or receive any Conversion Stock under the Plan if such Participant resides in a foreign country. Further, subject to the written approval or non-objection of the FRB, the Holding Company may elect that no Participant will be offered or receive any Conversion Stock under the Plan if such Participant resides in a jurisdiction of the United States with respect to which any of the following apply: (a) there are few Participants otherwise eligible to subscribe for shares under this Plan who reside in such jurisdiction; (b) the granting of Subscription Rights or the offer or sale of shares of Conversion Stock to such Participants would require any of the Holding Company or the Bank or their respective directors and Officers, under the laws of such jurisdiction, to register as a broker-dealer, salesman or selling agent or to register or otherwise qualify the Conversion Stock for sale in such jurisdiction, or any of the Holding Company or the Bank would be required to qualify as a foreign corporation or file a consent to service of process in such jurisdiction; or (c) such registration, qualification or filing in the judgment of the Primary Parties would be impracticable or unduly burdensome for reasons of cost or otherwise.
14. | VOTING RIGHTS OF STOCKHOLDERS. |
Following consummation of the Conversion and Reorganization, voting rights with respect to the Bank shall be held and exercised exclusively by the Holding Company as holder of all of the Bank’s outstanding voting capital stock, and voting rights with respect to the Holding Company shall be held and exercised exclusively by the holders of the Holding Company’s voting capital stock.
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15. | LIQUIDATION ACCOUNT. |
(a) At the time of the MHC Merger, the Holding Company shall establish the Liquidation Account in an amount equal to the percentage of the outstanding shares of the Mid-Tier Holding Company Common Stock owned by the MHC before the MHC Merger, multiplied by the Mid-Tier Holding Company’s total stockholders’ equity as reflected in its latest statement of financial condition contained in the final Prospectus utilized in the Conversion and Reorganization, plus the value of the net assets of the MHC as reflected in the latest statement of financial condition of the MHC prior to the effective date of the Conversion and Reorganization (excluding its ownership of Mid-Tier Holding Company Common Stock). The function of the Liquidation Account will be to preserve the rights of certain holders of Deposit Accounts in the Bank who maintain such accounts in the Bank following the Conversion and Reorganization to a priority to distributions in the unlikely event of a liquidation of the Bank subsequent to the Conversion and Reorganization.
(b) The Liquidation Account shall be maintained for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders, if any, who maintain their Deposit Accounts in the Bank after the Conversion and Reorganization. Each such account holder will, with respect to each Deposit Account held, have a related inchoate interest in a portion of the Liquidation Account balance, which interest will be referred to in this Section 15 as the “subaccount balance.” All Deposit Accounts having the same social security number will be aggregated for purposes of determining the initial subaccount balance with respect to such Deposit Accounts, except as provided in Section 15(d) hereof. As a part of the Conversion and Reorganization, the Holding Company shall cause the Bank to establish and maintain a liquidation account for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders, if any, who maintain their Deposit Accounts in the Bank after the Conversion and Reorganization.
(c) (i) In the event of a complete liquidation of (x) the Bank or (y) the Bank and the Holding Company subsequent to the Conversion and Reorganization (and only in such event) following all liquidation payments to creditors of the Bank (including those to Account Holders to the extent of their Deposit Accounts), each Eligible Account Holder and Supplemental Eligible Account Holder, if any, shall be entitled to receive a liquidation distribution from the Liquidation Account in the amount of the then current subaccount balances for Deposit Accounts then held (adjusted as described below) before any liquidation distribution may be made with respect to the capital stock of the Holding Company. No merger, consolidation, sale of bulk assets or similar combination transaction with another FDIC-insured institution in which the Bank or the Holding Company is not the surviving entity shall be considered a complete liquidation for this purpose. In any such transaction, the Liquidation Account or Bank Liquidation Account, as applicable, shall be assumed by the surviving entity.
(ii) In the unlikely event of a complete liquidation of (x) the Bank or (y) the Bank and the Holding Company subsequent to the Conversion and Reorganization (and only in such event) following all liquidation payments to creditors of the Bank (including those to Eligible Account Holders and Supplemental Eligible Account Holders to the extent of their Deposit Accounts), at a time when the Bank has a positive net worth, and the Holding Company does not have sufficient assets (other than the stock of the Bank) at the time of the liquidation to fund the distribution due with respect to the Liquidation Account, the Bank with respect to the Bank Liquidation Account shall immediately pay directly to Eligible Account Holders and Supplemental Eligible Account Holders an amount necessary to fund the Holding Company’s remaining obligations under the Liquidation Account, before any liquidation distribution may be made to any holders of the Bank’s capital stock and without making such amount subject to the Holding Company’s creditors. Each Eligible Account Holder and Supplemental
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Eligible Account Holder shall be entitled to receive a distribution from the Liquidation Account with respect to the Holding Company, in the amount of the then adjusted subaccount balance then held, before any distribution may be made to any holders of the Holding Company’s capital stock. No merger, consolidation, sale of bulk assets or similar combination transaction with another FDIC-insured institution, in which the Bank or the Holding Company is not the surviving entity shall be considered a complete liquidation for this purpose. In any such transaction, the Liquidation Account or Bank Liquidation Account, as applicable, shall be assumed by the surviving entity.
(iii) In the event of the complete liquidation of the Holding Company where the Bank is not also completely liquidating, or in the event of a sale or other disposition of the Holding Company apart from the Bank, each Eligible Account Holder and Supplemental Eligible Account Holder shall be treated as surrendering the rights to his or her Liquidation Account and receiving from the Holding Company an equivalent interest in the Bank Liquidation Account. Each such holder’s interest in the Bank Liquidation Account shall be subject to the same rights and terms as if the Bank Liquidation Account was the Liquidation Account (except that the Holding Company shall cease to exist).
(d) The initial subaccount balance for a Deposit Account held by an Eligible Account Holder and Supplemental Eligible Account Holder, if any, shall be determined by multiplying the opening balance in the Liquidation Account by a fraction, of which the numerator is the amount of the Qualifying Deposits of such account holder and the denominator is the total amount of Qualifying Deposits of all Eligible Account Holders and Supplemental Eligible Account Holders, if any. For Deposit Accounts in existence at both the Eligibility Record Date and the Supplemental Eligibility Record Date, if any, separate initial subaccount balances shall be determined on the basis of the Qualifying Deposits in such Deposit Accounts on each such record date. Initial subaccount balances shall not be increased, and shall be subject to downward adjustment as provided below.
(e) If the aggregate deposit balance in the Deposit Account(s) of any Eligible Account Holder or Supplemental Eligible Account Holder, if any, at the close of business on any annual closing date, commencing on or after the effective date of the Conversion and Reorganization, is less than the lesser of (a) the aggregate deposit balance in such Deposit Account(s) at the close of business on any other annual closing date subsequent to such record dates or (b) the aggregate deposit balance in such Deposit Account(s) as of the Eligibility Record Date or the Supplemental Eligibility Record Date, if any, the subaccount balance for such Deposit Account(s) shall be adjusted by reducing such subaccount balance in an amount proportionate to the reduction in such deposit balance. In the event of such a downward adjustment, the subaccount balance shall not be subsequently increased, notwithstanding any subsequent increase in the deposit balance of the related Deposit Account(s). The subaccount balance of an Eligible Account Holder or Supplemental Eligible Account Holder, if any, will be reduced to zero if the account holder ceases to maintain a Deposit Account at the Bank that has the same social security number as appeared on his Deposit Account(s) at the Eligibility Record Date or, if applicable, the Supplemental Eligibility Record Date.
(f) Subsequent to the Conversion and Reorganization, neither the Holding Company nor the Bank may pay cash dividends generally on deposit accounts and/or capital stock of the Holding Company or the Bank, or repurchase any of the capital stock of the Holding Company or the Bank, if such dividend or repurchase would reduce the Holding Company’s and/or Bank’s capital below: (i) the amount required for the Liquidation Account or Bank Liquidation Account, as applicable; or (ii) the regulatory capital requirements of the Holding Company (to the extent applicable) or the Bank; otherwise, the existence of the Liquidation Account and the Bank Liquidation Account shall not operate to restrict the use or application of any of the net worth accounts of the Bank.
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(g) The amount of the Bank Liquidation Account shall equal at all times the amount of the Liquidation Account. In no event will any Eligible Account Holder or Supplemental Eligible Account Holder be entitled to a distribution exceeding such holder’s subaccount balance in the Liquidation Account.
(h) For the two-year period following the completion of the Conversion and Reorganization, the Holding Company will not, except with the prior written approval of the FRB, (i) liquidate or sell the Holding Company, or (ii) cause the Bank to be liquidated or sold. Thereafter, upon the written approval of the FRB, the Holding Company shall eliminate or transfer the Liquidation Account to the Bank and the Liquidation Account shall be assumed by the Bank, at which time the interests of Eligible Account Holders and Supplemental Eligible Account Holders will be solely, exclusively and directly in the Liquidation Account established in the Bank. If such transfer occurs, the Holding Company shall be deemed to have transferred the Liquidation Account to the Bank and such Liquidation Account shall become the liquidation account of the Bank and shall not be subject in any manner or amount to the claims of the Holding’s Company’s creditors. Approval of the Plan of Conversion shall constitute approval of the transactions described herein by the Members of the MHC and any other person or entity required to approve the Plan.
(i) For purposes of this Section 15, a Deposit Account includes a predecessor or successor account which is held by an account holder with the same social security number.
16. | TRANSFER OF DEPOSIT ACCOUNTS. |
Each Person holding a Deposit Account at the Bank at the time of the Conversion and Reorganization shall retain an identical Deposit Account at the Bank following the Conversion and Reorganization in the same amount (as adjusted to give effect to any withdrawal made for the purchase of Conversion Stock) and subject to the same terms and conditions (except as to voting and liquidation rights).
17. | REQUIREMENTS FOLLOWING THE CONVERSION AND REORGANIZATION FOR REGISTRATION, MARKET MAKING AND STOCK EXCHANGE LISTING. |
In connection with the Conversion and Reorganization, the Holding Company shall register the Holding Company Common Stock pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, and shall undertake not to deregister the Holding Company Common Stock for a period of three years following the Conversion and Reorganization without the prior written approval of the FRB. The Holding Company also shall use its best efforts to (i) encourage and assist a market maker to establish and maintain a market for the Holding Company Common Stock, and (ii) list the Holding Company Common Stock on a national or regional securities exchange or to have quotations for such stock disseminated on the OTC Bulletin Board or other interdealer quotation service.
18. | COMPLETION OF THE STOCK OFFERING. |
The Offerings will be terminated if not completed within 45 days after the last day of the Subscription Offering, unless an extension is approved by the FRB.
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19. | REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND OFFICERS FOLLOWING THE CONVERSION AND REORGANIZATION. |
For a period of three years following the Conversion and Reorganization, the directors and Officers of the Holding Company and the Bank and their Associates may not purchase Holding Company Common Stock without the prior written approval of the FRB except from a broker-dealer registered with the SEC. This prohibition shall not apply, however, to (i) a negotiated transaction involving more than 1% of the outstanding Holding Company Common Stock, and (ii) purchases of stock made by and held by any Tax-Qualified Employee Stock Benefit Plan (and purchases of stock made by and held by any Non-Tax-Qualified Employee Stock Benefit Plan following the receipt of stockholder approval of such plan) even if such Holding Company Common Stock may be attributable to individual Officers or directors and their Associates. The foregoing restriction on purchases of Holding Company Common Stock shall be in addition to any restrictions that may be imposed by federal and state securities laws.
20. | RESTRICTIONS ON TRANSFER OF STOCK. |
All shares of Conversion Stock that are purchased by Persons other than directors and Officers of the Holding Company or the Bank shall be transferable without restriction. Shares of Conversion Stock purchased by directors and Officers of the Holding Company or the Bank on original issue from the Holding Company (by subscription or otherwise) shall be subject to the restriction that such shares shall not be sold or otherwise disposed of for value for a period of one year following the date of purchase, except for any disposition of such shares following the death of the original purchaser. The shares of Conversion Stock issued by the Holding Company to such directors and Officers shall bear the following legend giving appropriate notice of such one-year restriction:
“The shares of stock evidenced by this Certificate are restricted as to transfer for a period of one year from the date of this Certificate. These shares may not be sold during such one-year period without a legal opinion of counsel for the Company that said transfer is permissible under the provisions of applicable law and regulation. This restrictive legend shall be deemed null and void after one year from the date of this Certificate.”
In addition, the Holding Company shall give appropriate instructions to the transfer agent for the Holding Company with respect to the applicable restrictions relating to the transfer of restricted stock. Any shares issued at a later date as a stock dividend, stock split or otherwise with respect to any such restricted stock shall be subject to the same holding period restrictions as may then be applicable to such restricted stock. The foregoing restriction on transfer shall be in addition to any restrictions on transfer that may be imposed by federal and state securities laws.
21. | TAX RULINGS OR OPINIONS. |
Consummation of the Conversion and Reorganization is conditioned upon prior receipt by the Primary Parties of either a ruling or an opinion of counsel with respect to federal tax laws to the effect that consummation of the transactions contemplated hereby will not result in a taxable reorganization under the provisions of the applicable codes or otherwise result in any adverse tax consequences to the Primary Parties or to account holders receiving Subscription Rights before or after the Conversion and Reorganization, except in each case to the extent, if any, that Subscription Rights are deemed to have fair market value on the date such rights are issued.
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22. | STOCK COMPENSATION PLANS; EMPLOYMENT AND SEVERANCE AGREEMENTS. |
(a) The Holding Company and the Bank are authorized to adopt Tax-Qualified Employee Stock Benefit Plans in connection with the Conversion and Reorganization, including without limitation an employee stock ownership plan.
(b) Subsequent to the Conversion and Reorganization, the Holding Company and the Bank are authorized to adopt Non-Tax Qualified Employee Stock Benefit Plans, including without limitation, stock option plans and restricted stock plans, provided however that any such plan implemented during the one-year period subsequent to the date of consummation of the Conversion and Reorganization: (i) shall be disclosed in the Prospectus; (ii) in the case of stock option plans and employee recognition or grant plans, shall be submitted for approval by the holders of the Common Stock no earlier than six months following consummation of the Conversion and Reorganization; and (iii) shall comply with all other applicable requirements of the FRB.
(c) Existing, as well as any newly-created, Tax-Qualified Employee Stock Benefit Plans may purchase shares of Conversion Stock in the Offerings, to the extent permitted by the terms of such benefit plans and this Plan.
(d) The Holding Company and the Bank are authorized to enter into employment or severance agreements with their executive officers.
23. | DIVIDEND AND REPURCHASE RESTRICTIONS ON STOCK. |
(a) Following consummation of the Conversion and Reorganization, any repurchases of shares of capital stock by the Holding Company will be made in accordance with then applicable laws and regulations.
(b) The Bank may not declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect thereof would cause the regulatory capital of the Bank to be reduced below the amount required for the liquidation account. Any dividend declared or paid on, or repurchase of, the Bank’s capital stock also shall be in compliance with then applicable laws and regulations.
24. | AMENDMENT OR TERMINATION OF THE PLAN. |
If deemed necessary or desirable by the Boards of Directors of the Primary Parties, this Plan may be substantively amended, as a result of comments from regulatory authorities or otherwise, at any time before the solicitation of proxies from the Members and the Stockholders to vote on the Plan and at any time thereafter with the concurrence of the FRB. Any amendment to this Plan made after approval by the Members and the Stockholders shall not necessitate further approval by the Members and the Stockholders unless otherwise required by the FRB. This Plan shall terminate if the sale of all shares of Conversion Stock is not completed within 24 months from date of the Special Meeting of Members. Before the earlier of the Meeting of Stockholders and the Special Meeting of Members, this Plan may be terminated by the Boards of Directors of the Primary Parties without approval of the FRB. After the earlier of the Meeting of Stockholders and the Special Meeting of Members, the Primary Parties may terminate this Plan only with the concurrence of the FRB.
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25. | INTERPRETATION OF THE PLAN. |
All interpretations of this Plan and application of its provisions to particular circumstances by a majority of the Boards of Directors of the Primary Parties shall be final, subject to the authority of the FRB.
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ANNEX A
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of ________________, is made by and between William Penn, MHC, a Pennsylvania chartered mutual holding company (the “MHC”), and William Penn Bancorp, Inc., a Pennsylvania chartered mid-tier holding company (the “Mid-Tier Holding Company” or the “Surviving Corporation”) (collectively, the “Constituent Corporations”).
WITNESSETH:
WHEREAS, the MHC, the Mid-Tier Holding Company and William Penn Bank, a Pennsylvania chartered savings bank (the “Bank”) have adopted a Plan of Conversion and Reorganization pursuant to which: (i) the MHC will merge with and into the Mid-Tier Holding Company, with the Mid-Tier Holding Company as the surviving entity (the “MHC Merger”); (ii) the Mid-Tier Holding Company will merge with and into a newly formed stock corporation (the “Holding Company”), with the Holding Company as the surviving entity (the “Mid-Tier Holding Company Merger”); and (iii) the Holding Company will offer shares of its common stock in the manner set forth in the Plan of Conversion and Reorganization (collectively, the “Conversion and Reorganization”); and
WHEREAS, the Constituent Corporations desire to provide for the terms and conditions of the MHC Merger.
NOW, THEREFORE, the Constituent Corporations hereby agree as follows:
1. EFFECTIVE TIME. The MHC Merger shall not be effective unless and until the MHC Merger receives any and all necessary approvals from the Board of Governors of the Federal Reserve System or such other later time specified on the articles of merger filed with the Secretary of State of the Commonwealth Pennsylvania (the “Effective Time”).
2. THE MHC MERGER AND EFFECT THEREOF. Subject to the terms and conditions set forth herein and in the Plan of Conversion and Reorganization and the expiration of all applicable waiting periods, the MHC shall merge with and into the Mid-Tier Holding Company, which shall be the Surviving Corporation. Upon consummation of the MHC Merger, the Surviving Corporation shall be considered the same business and corporate entity as each of the Constituent Corporations and the Surviving Corporation shall be subject to and be deemed to have assumed all of the property, rights, privileges, powers, franchises, debts, liabilities, obligations, duties and relationships of each of the Constituent Corporations and shall have succeeded to all of each of their relationships, fiduciary or otherwise, as fully and to the same extent as if such property, rights, privileges, powers, franchises, debts, obligations, duties and relationships had been originally acquired, incurred or entered into by the Surviving Corporation. In addition, any reference to either of the Constituent Corporations in any contract or document, whether executed or taking effect before or after the Effective Time, shall be considered a reference to the Surviving Corporation if not inconsistent with the other provisions of the contract or document; and any pending action or other judicial proceeding to which either of the Constituent Corporations is a party shall not be deemed to have abated or to have been discontinued by reason of the MHC Merger, but may be prosecuted to final judgment, order or decree in the same manner as if the MHC Merger had not occurred or the Surviving Corporation may be substituted as a party to such action or proceeding, and any judgment, order or decree may be rendered for or against it that might have been rendered for or against either of the Constituent Corporations if the MHC Merger had not occurred.
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3. TREATMENT OF MID-TIER HOLDING COMPANY COMMON STOCK AND MEMBER INTERESTS; LIQUIDATION ACCOUNT.
At the Effective Time:
(a) each share of common stock, $0.01 par value per share, of the Mid-Tier Holding Company (the “Mid-Tier Holding Company Common Stock”) issued and outstanding immediately before the Effective Time and held by the MHC shall, by virtue of the MHC Merger and without any action on the part of the holder thereof, be canceled; and
(b) the Mid-Tier Holding Company shall establish a liquidation account on behalf of certain depositors of the Bank as provided for in the Plan of Conversion and Reorganization.
4. NAME OF SURVIVING CORPORATION. The name of the Surviving Corporation shall be “William Penn Bancorp, Inc.”
5. DIRECTORS OF THE SURVIVING CORPORATION. Upon and after the Effective Time, until changed in accordance with the Articles of Incorporation and Bylaws of the Surviving Corporation and applicable law, the number of directors of the Surviving Corporation shall be eleven. The names of those persons who, upon and after the Effective Time, shall be directors of the Surviving Corporation are set forth below. Each such director shall serve for the term which expires at the annual meeting of stockholders of the Surviving Corporation in the year set forth after his or her respective name, and until a successor is elected and qualified.
Name | Residence Address |
Year Term Expires |
Craig Burton | 2023 | |
D. Michael Carmody, Jr. | 2022 | |
Charles Corcoran | 2021 | |
Glenn Davis | 2023 | |
William J. Feeney | 2022 | |
Christopher Molden | 2021 | |
William C. Niemczura | 2023 | |
William B.K. Parry, Jr. | 2021 | |
Terry L. Sager | 2022 | |
Vincent P. Sarubbi | 2021 | |
Kenneth J. Stephon | 2023 | |
6. OFFICERS OF THE SURVIVING CORPORATION. Upon and after the Effective Time, until changed in accordance with the Articles of Incorporation and Bylaws of the Surviving Corporation and applicable law, the officers of the Mid-Tier Holding Company immediately before the Effective Time shall be the officers of the Surviving Corporation.
7. OFFICES. Upon the Effective Time, all offices of the Mid-Tier Holding Company shall be offices of the Surviving Corporation. As of the Effective Time, the home office of the Surviving Corporation shall remain at 10 Canal Street, Suite 104, Bristol, Pennsylvania 19007.
8. ARTICLES OF INCORPORATION AND BYLAWS. On and after the Effective Time, the Articles of Incorporation of the Mid-Tier Holding Company as in effect immediately before the Effective Time shall be the Articles of Incorporation of the Surviving Corporation until amended in
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accordance with the terms thereof and applicable law. On and after the Effective Time, the Bylaws of the Mid-Tier Holding Company as in effect immediately before the Effective Time shall be the Bylaws of the Surviving Corporation until amended in accordance with the terms thereof and applicable law.
9. STOCKHOLDER AND MEMBER APPROVALS. The affirmative votes of the holders of Mid-Tier Holding Company Common Stock and of the members of the MHC as set forth in the Plan of Conversion and Reorganization shall be required to approve the Plan of Conversion and Reorganization, of which this Agreement and Plan of Merger is a part, on behalf of the Mid-Tier Holding Company and the MHC, respectively.
10. DIRECTOR APPROVAL. At least two-thirds of the members of the Board of Directors of each of the Constituent Corporations have approved this Agreement and Plan of Merger.
11. ABANDONMENT OF PLAN. This Agreement and Plan of Merger may be abandoned by either the MHC or the Mid-Tier Holding Company at any time before the Effective Time in the manner set forth in the Plan of Conversion and Reorganization.
12. AMENDMENTS. This Agreement and Plan of Merger may be amended by a subsequent writing signed by the parties hereto.
13. SUCCESSORS. This Agreement shall be binding on the successors of the Constituent Corporations.
14. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania.
[Signatures on following page]
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IN WITNESS WHEREOF, the Constituent Corporations have caused this Agreement and Plan of Merger to be executed by their duly authorized officers as of the day and year first above written.
Attest: | WILLIAM PENN, MHC | ||
By: | |||
Jonathan Logan | Kenneth J. Stephon | ||
Corporate Secretary | President and Chief Executive Officer |
Attest: | WILLIAM PENN BANCORP, INC. | ||
By: | |||
Jonathan Logan | Kenneth J. Stephon | ||
Corporate Secretary | President and Chief Executive Officer |
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ANNEX B
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of ______________, is made by and between William Penn Bancorp, Inc., a Pennsylvania corporation (the “Mid-Tier Holding Company”), and William Penn Bancorporation, a Maryland corporation (the “Holding Company” or the “Surviving Corporation”) (collectively, the “Constituent Corporations”).
WITNESSETH:
WHEREAS, William Penn, MHC, a Pennsylvania chartered mutual holding company (the “MHC”), the Mid-Tier Holding Company, and William Penn Bank, a Pennsylvania chartered savings bank (the “Bank”), have adopted a Plan of Conversion and Reorganization pursuant to which: (i) the MHC will merge with and into the Mid-Tier Holding Company, with the Mid-Tier Holding Company as the surviving entity; (ii) the Mid-Tier Holding Company will merge with and into the Holding Company, with the Holding Company as the surviving entity (the “Mid-Tier Holding Company Merger”); and (iii) the Holding Company will offer shares of its common stock in the manner set forth in the Plan of Conversion and Reorganization (collectively, the “Conversion and Reorganization”); and
WHEREAS, the Constituent Corporations desire to provide for the terms and conditions of the Holding Company Merger.
NOW, THEREFORE, the Constituent Corporations hereby agree as follows:
1. EFFECTIVE TIME. The Mid-Tier Holding Company Merger shall not be effective unless and until the Mid-Tier Holding Company Merger receives any and all necessary approvals from the Board of Governors of the Federal Reserve System or such other later time specified on the Articles of Merger filed with the Secretary of State of the Commonwealth of Pennsylvania and the Maryland State Department of Assessments and Taxation (the “Effective Time”).
2. THE MID-TIER HOLDING COMPANY MERGER AND EFFECT THEREOF. Subject to the terms and conditions set forth herein and in the Plan of Conversion and Reorganization and the expiration of all applicable waiting periods, the Mid-Tier Holding Company shall merge with and into the Holding Company, which shall be the Surviving Corporation. Upon consummation of the Mid-Tier Holding Company Merger, the Surviving Corporation shall be considered the same business and corporate entity as each of the Constituent Corporations and the Surviving Corporation shall be subject to and be deemed to have assumed all of the property, rights, privileges, powers, franchises, debts, liabilities, obligations, duties and relationships of each of the Constituent Corporations and shall have succeeded to all of each of their relationships, fiduciary or otherwise, as fully and to the same extent as if such property, rights, privileges, powers, franchises, debts, obligations, duties and relationships had been originally acquired, incurred or entered into by the Surviving Corporation. In addition, any reference to either of the Constituent Corporations in any contract or document, whether executed or taking effect before or after the Effective Time, shall be considered a reference to the Surviving Corporation if not inconsistent with the other provisions of the contract or document; and any pending action or other judicial proceeding to which either of the Constituent Corporations is a party shall not be deemed to have abated or to have been discontinued by reason of the Mid-Tier Holding Company Merger, but may be prosecuted to final judgment, order or decree in the same manner as if the Mid-Tier Holding Company Merger had not occurred or the Surviving Corporation may be substituted as a party to such action or proceeding, and any judgment, order or decree may be rendered for or against it that might have been
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rendered for or against either of the Constituent Corporations if the Mid-Tier Holding Company Merger had not occurred.
3. CONVERSION OF STOCK.
(a) At the Effective Time:
(i) each share of common stock, $0.01 par value per share, of the Mid-Tier Holding Company (the “Mid-Tier Holding Company Common Stock”) issued and outstanding immediately before the Effective Time shall, by virtue of the Mid-Tier Holding Company Merger and without any action on the part of the holder thereof, be converted into the right to receive shares of common stock, $0.01 par value per share, of the Holding Company (the “Holding Company Common Stock”) based on the Exchange Ratio, as defined in the Plan of Conversion and Reorganization, plus the right to receive cash in lieu of any fractional share interest, as determined in accordance with Section 3(b) hereof;
(ii) each share of Holding Company Common Stock issued and outstanding immediately before the Effective Time shall, by virtue of the Mid-Tier Holding Company Merger and without any action on the part of the holder thereof, be canceled and no consideration shall be exchanged therefor; and
(iii) the Holding Company shall establish a liquidation account on behalf of certain depositors of the Bank as provided for in the Plan of Conversion and Reorganization.
(b) Notwithstanding any other provision hereof, no fractional shares of Holding Company Common Stock shall be issued to holders of Mid-Tier Holding Company Common Stock. In lieu thereof, the holder of shares of Mid-Tier Holding Company Common Stock entitled to a fraction of a share of Holding Company Common Stock shall, at the time of surrender of the certificate or certificates representing such holder shares, receive an amount of cash equal to the product arrived at by multiplying such fraction of a share of Holding Company Common Stock by the Purchase Price, as defined in the Plan of Conversion and Reorganization. No such holder shall be entitled to dividends, voting rights or any other rights in respect of any fractional share.
4. EXCHANGE OF SHARES.
(a) At or after the Effective Time, each holder, other than the MHC, of a certificate or certificates theretofore evidencing issued and outstanding shares of Mid-Tier Holding Company Common Stock, upon surrender of the same to an agent, duly appointed by the Holding Company (the “Exchange Agent”), shall be entitled to receive in exchange therefor certificate(s) representing the number of full shares of Holding Company Common Stock for which the shares of Mid-Tier Holding Company Common Stock theretofore represented by the certificate or certificates so surrendered shall have been converted as provided in Section 3(a) hereof. The Exchange Agent shall mail to each holder of record of an outstanding certificate that immediately before the Effective Time evidenced shares of Mid-Tier Holding Company Common Stock, and that is to be exchanged for Holding Company Common Stock as provided in Section 3(a) hereof, a letter of transmittal that shall specify that delivery shall be effected, and risk of loss and title to such certificate shall pass, only upon delivery of such certificate to the Exchange Agent advising such holder of the terms of the exchange effected by the Mid-Tier Holding Company Merger and of the procedure for surrendering to the Exchange Agent such a certificate in exchange for a statement or statements evidencing Holding Company Common Stock.
(b) No holder of a certificate theretofore representing shares of Mid-Tier Holding Company Common Stock shall be entitled to receive any dividends in respect of the Holding Company Common
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Stock into which such shares shall have been converted by virtue of the Mid-Tier Holding Company Merger until the certificate representing such shares of Mid-Tier Holding Company Common Stock is surrendered in exchange for statements representing shares of Holding Company Common Stock. If dividends are declared and paid by the Holding Company in respect of Holding Company Common Stock after the Effective Time but before surrender of certificates representing shares of Mid-Tier Holding Company Common Stock, dividends payable in respect of shares of Holding Company Common Stock not then issued shall accrue (without interest). Any such dividends shall be paid (without interest) upon surrender of the certificates representing such shares of Mid-Tier Holding Company Common Stock. The Holding Company shall be entitled, after the Effective Time, to treat certificates representing shares of Mid-Tier Holding Company Common Stock as evidencing ownership of the number of full shares of Holding Company Common Stock into which the shares of Mid-Tier Holding Company Common Stock represented by such certificates shall have been converted, notwithstanding the failure on the part of the holder thereof to surrender such certificates.
(c) The Holding Company shall not be obligated to deliver a certificate or certificates representing shares of Holding Company Common Stock to which a holder of Mid-Tier Holding Company Common Stock would otherwise be entitled as a result of the Mid-Tier Holding Company Merger until such holder surrenders the certificate or certificates representing the shares of Mid-Tier Holding Company Common Stock for exchange as provided in this Section 4, or, in default thereof, an appropriate affidavit of loss and indemnification agreement and/or an indemnity bond as may be required in each case by the Holding Company. If any certificate evidencing shares of Holding Company Common Stock is to be issued in a name other than that in which the certificate evidencing Mid-Tier Holding Company Common Stock surrendered in exchange therefor is registered, it shall be a condition of the issuance thereof that the certificate so surrendered shall be properly endorsed and otherwise in proper form for transfer and that the person requesting such exchange pay to the Exchange Agent any transfer or other tax required by reason of the issuance of a certificate for shares of Holding Company Common Stock in any name other than that of the registered holder of the certificate surrendered or otherwise establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable.
5. NAME OF SURVIVING CORPORATION. The name of the Surviving Corporation shall be “William Penn Bancorporation”
6. DIRECTORS OF THE SURVIVING CORPORATION. Upon and after the Effective Time, until changed in accordance with the Articles of Incorporation and Bylaws of the Surviving Corporation and applicable law, the number of directors of the Surviving Corporation shall be eleven. The names of those persons who, upon and after the Effective Time, shall be directors of the Surviving Corporation are set forth below. Each such director shall serve for the term which expires at the annual meeting of stockholders of the Surviving Corporation in the year set forth after his or her respective name, and until a successor is elected and qualified.
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Name | Residence Address | Year Term Expires |
Craig Burton | 2023 | |
D. Michael Carmody, Jr. | 2022 | |
Charles Corcoran | 2021 | |
Glenn Davis | 2023 | |
William J. Feeney | 2022 | |
Christopher Molden | 2021 | |
William C. Niemczura | 2023 | |
William B.K. Parry, Jr. | 2021 | |
Terry L. Sager | 2022 | |
Vincent P. Sarubbi | 2021 | |
Kenneth J. Stephon | 2023 |
7. OFFICERS OF THE SURVIVING CORPORATION. Upon and after the Effective Time, until changed in accordance with the Articles of Incorporation and Bylaws of the Surviving Corporation and applicable law, the officers of the Holding Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation.
8. OFFICES. Upon the Effective Time, all offices of the Holding Company shall be offices of the Surviving Corporation. As of the Effective Time, the home office of the Surviving Corporation shall remain at 10 Canal Street, Suite 104, Bristol, Pennsylvania 19007.
9. ARTICLES OF INCORPORATION AND BYLAWS. On and after the Effective Time, the Articles of Incorporation of the Holding Company as in effect immediately before the Effective Time shall be the Articles of Incorporation of the Surviving Corporation until amended in accordance with the terms thereof and applicable law. On and after the Effective Time, the Bylaws of the Holding Company as in effect immediately before the Effective Time shall be the Bylaws of the Surviving Corporation until amended in accordance with the terms thereof and applicable law.
10. STOCKHOLDER APPROVALS. The affirmative votes of the holders of Mid-Tier Holding Company Common Stock and the holders of the Holding Company’s common stock as set forth in the Plan of Conversion and Reorganization shall be required to approve the Plan of Conversion and Reorganization, of which this Agreement and Plan of Merger is a part, on behalf of the Mid-Tier Holding Company and the Holding Company, respectively.
11. DIRECTOR APPROVAL. At least two-thirds of the members of the Board of Directors of each of the Constituent Corporations have approved this Agreement and Plan of Merger.
12. REGISTRATION; OTHER APPROVALS. In addition to the approvals set forth in Sections 1, 10 and 11 hereof and in the Plan of Conversion and Reorganization, the obligations of the parties hereto to consummate the Mid-Tier Holding Company Merger shall be subject to the Holding Company Common Stock to be issued hereunder in exchange for Mid-Tier Holding Company Common Stock being registered under the Securities Act of 1933, as amended, and registered or qualified under applicable state securities laws, as well as the receipt of all other approvals, consents or waivers as the parties may deem necessary or advisable.
13 ABANDONMENT OF PLAN. This Agreement and Plan of Merger may be abandoned by either the Mid-Tier Holding Company or the Holding Company at any time before the Effective Time in the manner set forth in the Plan of Conversion and Reorganization.
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14. AMENDMENTS. This Agreement and Plan of Merger may be amended by a subsequent writing signed by the parties hereto.
15. SUCCESSORS. This Agreement shall be binding on the successors of the Constituent Corporations.
16. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland.
[Signatures on following page]
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IN WITNESS WHEREOF, the Constituent Corporations have caused this Agreement and Plan of Merger to be executed by their duly authorized officers as of the day and year first above written.
Attest: | WILLIAM PENN BANCORP, INC. | ||
By: | |||
Jonathan Logan | Kenneth J. Stephon | ||
Corporate Secretary | President and Chief Executive Officer |
Attest: | WILLIAM PENN BANCORPORATION | ||
By: | |||
Jonathan Logan | Kenneth J. Stephon | ||
Corporate Secretary | President and Chief Executive Officer |
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ANNEX C
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
WILLIAM PENN BANCORPORATION
FIRST: The undersigned, Kenneth J. Stephon, whose address is 10 Canal Street, Suite 104, Bristol, Pennsylvania 19007, being at least eighteen (18) years of age, acting as incorporator, has formed the corporation under the general laws of the State of Maryland.
SECOND: The name of the corporation (hereinafter the “Corporation”) is:
WILLIAM PENN BANCORPORATION
THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the general laws of the State of Maryland.
FOURTH: The present address of the principal office of the Corporation in the State of Maryland is 7 St. Paul Street, Suite 820, Baltimore, Maryland 21202.
FIFTH: The name and address of the resident agent of the Corporation is CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 820, Baltimore, Maryland 21202. Said resident agent is a Maryland corporation.
SIXTH:
A. The total number of shares of stock of all classes of stock which the Corporation has authority to issue is two hundred million (200,000,000) shares, having an aggregate par value of two million dollars ($2,000,000), of which one hundred and fifty million (150,000,000) are to be shares of common stock with a par value of one cent ($0.01) per share, and fifty million (50,000,000) are to be shares of preferred stock with a par value of one cent ($0.01) per share.
B. A description of each class of stock of the Corporation, including any voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations and restrictions thereof, is as follows:
1. Common Stock. Subject to all of the rights of the preferred stock as expressly provided in these Articles of Amendment and Restatement, by law or by the Board of Directors in a resolution(s) pursuant to this Article SIXTH, the common stock of the Corporation shall possess all such rights and privileges as are afforded to capital stock by Maryland law in the absence of any express grant of rights or privileges in the Corporation’s Articles of Amendment and Restatement, including but not limited to, the following:
a. | Holders of the common stock shall be entitled to one (1) vote per share on each matter submitted to a vote at a meeting of stockholders; provided, however, that there shall not be any cumulative voting of the common stock. |
b. | Dividends may be declared and paid or set aside for payment upon the common stock out of any assets or funds of the Corporation legally available therefor. |
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c. | Upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, its net assets shall be distributed ratably to holders of the common stock. |
2. Preferred Stock. The Board of Directors is expressly authorized to classify and reclassify any unissued shares of preferred stock, and to divide and classify shares of any class into one or more series of such class, by determining, fixing or altering from time to time before issuance any one or more of the following:
a. | The distinctive designation of such class or series and the number of shares to constitute such class or series; provided however, that unless otherwise prohibited by the terms of such or any other class or series, the number of shares of any class or series may be decreased by the Board of Directors in connection with any classification or reclassification of unissued shares and the number of shares of such class or series may be increased by the Board of Directors in connection with any such classification or reclassification, and any shares of any class or series which have been redeemed, purchased, otherwise acquired, or converted into shares of common stock or any other class or series shall remain part of the authorized preferred stock and be subject to classification and reclassification as provided in this Paragraph B.2. |
b. | Whether or not and, if so, the rates, amounts and times at which, and the conditions under which, dividends shall be payable on shares of such class or series, whether any such dividends shall rank senior or junior to or on a parity with the dividends payable on any other class or series of stock, and the status of any such dividends as cumulative, cumulative to a limited extent or non-cumulative, and as participating or non-participating. |
c. | Whether or not shares of such class or series shall have voting rights, in addition to any voting rights provided by law and, if so, the terms of such voting rights. |
d. | Whether or not shares of such class or series shall have conversion or exchange privileges and, if so, the terms and conditions thereof, including provision for adjustment of the conversion or exchange rate in such events or at such times as the Board of Directors shall determine. |
e. | Whether or not shares of such class or series shall be subject to redemption and, if so, the terms and conditions of such redemption, including the date(s) upon or after which they shall be redeemable and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; and whether or not there shall be any sinking fund or purchase account in respect thereof, and if so, the terms thereof. |
f. | The rights of the holders of shares of such class or series upon the liquidation, dissolution, or winding up of the affairs of, or upon any distribution of the assets of, the Corporation, which rights may vary depending upon whether such liquidation, dissolution, or winding up is voluntary or involuntary and, if voluntary, may vary at different dates, and whether such rights shall rank senior or junior to or on a parity with such rights of any other class or series of stock. |
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g. | Whether or not there shall be any limitations applicable, while shares of such class or series are outstanding, upon the payment of dividends or making of distributions on, or the acquisition of, or the use of monies for the purchase or redemption of, any capital stock of the Corporation, or upon any other action of the Corporation, including action under this Paragraph B.2, and, if so, the terms and conditions thereof. |
h. | Any other preferences, rights, restrictions, including restrictions on transferability, and qualifications of shares of such class or series, not inconsistent with law and the Articles of Amendment and Restatement of the Corporation. |
C. 1. Notwithstanding any other provision of these Articles of Amendment and Restatement, in no event shall any record owner of any outstanding common stock that is beneficially owned, directly or indirectly, by a person who, as of any record date for the determination of stockholders entitled to vote on any matter, beneficially owns shares of common stock in excess of the Limit (as hereinafter defined), be entitled or permitted to any vote in respect of the shares held in excess of the Limit. The number of votes that may be cast by any record owner by virtue of the provisions hereof in respect of common stock beneficially owned by such person beneficially owning shares in excess of the Limit shall be a number equal to the total number of votes that a single record owner of all common stock beneficially owned by such person would be entitled to cast (subject to the provisions of this Article SIXTH), multiplied by a fraction, the numerator of which is the number of shares of such class or series that are both beneficially owned by such person and owned of record by such record owner and the denominator of which is the total number of shares of common stock beneficially owned by such person owning shares in excess of the Limit. The provisions of this Section C of Article SIXTH shall not be applicable to any record owner of any outstanding common stock that is beneficially owned, directly or indirectly, by a person who, as of any record date for the determination of stockholders entitled to vote on any matter, beneficially owns shares of common stock in excess of the Limit if, before the beneficial owner of such shares acquired beneficial ownership of shares in excess of the Limit, the beneficial owner’s ownership of shares in excess of the Limit shall have been approved by a majority of the Unaffiliated Directors (as defined below), in which case, any record owner owning such shares beneficially owned by the beneficial owner in excess of the Limit shall have full voting rights with respect to all such shares owned of record.
2. | The following definitions shall apply to this Section C of Article SIXTH: |
a. | “Affiliate” shall have the meaning ascribed to it in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, as in effect on the date of filing of these Articles of Amendment and Restatement. |
b. | “Beneficial ownership” shall be determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (or any successor rule or statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall be no successor rule or provision thereto, pursuant to said Rule 13d-3 as in effect on the date of filing of these Articles of Amendment and Restatement; provided, however, that a person shall, in any event, also be deemed the “beneficial owner” of any common stock: |
(1) | that such person or any of its Affiliates beneficially owns, directly or indirectly; or |
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(2) | that such person or any of its Affiliates has: (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options or otherwise, or (b) sole or shared voting or investment power with respect thereto pursuant to any agreement, arrangement, understanding, relationship or otherwise (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of a revocable proxy granted for a particular meeting of stockholders, pursuant to a public solicitation of proxies for such meeting, with respect to shares of which neither such person nor any such Affiliate is otherwise deemed the beneficial owner); or |
(3) | that are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates acts as a partnership, limited partnership, syndicate or other group pursuant to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation; and provided further, however, that: (a) no director or officer of the Corporation (or any Affiliate of any such director or officer) shall, solely by reason of any or all of such directors or officers acting in their capacities as such, be deemed, for any purposes hereof, to beneficially own any common stock beneficially owned by any other such director or officer (or any Affiliate thereof); and (b) neither any employee stock ownership plan or similar plan of the Corporation or any subsidiary of the Corporation, nor any trustee with respect thereto or any Affiliate of such trustee (solely by reason of such capacity of such trustee), shall be deemed, for any purposes hereof, to beneficially own any common stock held under any such plan. For purposes only of computing the percentage of beneficial ownership of common stock of a person, the outstanding common stock shall include shares deemed owned by such person through application of this Subparagraph C.2.b but shall not include any other shares of common stock that may be issuable by the Corporation pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise. For all other purposes, the outstanding common stock shall include only shares of common stock then outstanding and shall not include any shares of common stock that may be issuable by the Corporation pursuant to any agreement, or upon the exercise of conversion rights, warrants or options, or otherwise. |
c. | The “Limit” shall mean ten percent (10%) of the then-outstanding shares of common stock. |
d. | A “person” shall include an individual, a firm, a group acting in concert, a corporation, a partnership, an association, a joint venture, a pool, a joint stock company, a trust, an unincorporated organization or similar company, a limited liability company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of securities or any other entity. |
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e. | “Unaffiliated Director” means any member of the Board of Directors who is unaffiliated with the person beneficially owning shares in excess of the Limit (the “10% Beneficial Owner”) and was a member of the Board of Directors before the 10% Beneficial Owner became a 10% Beneficial Owner, and any director who is thereafter chosen to fill any vacancy of the Board of Directors or who is elected and who, in either event, is unaffiliated with the 10% Beneficial Owner and in connection with his or her initial assumption of office is recommended for appointment or election by a majority of the Unaffiliated Directors then on the Board of Directors. |
3. The Board of Directors shall have the power to construe and apply the provisions of this Section C and to make all determinations necessary or desirable to implement such provisions, including but not limited to matters with respect to: (a) the number of shares of common stock beneficially owned by any person; (b) whether a person is an Affiliate of another; (c) whether a person has an agreement, arrangement or understanding with another as to the matters referred to in the definition of beneficial ownership; (d) the application of any other definition or operative provision of this Section C to the given facts; or (e) any other matter relating to the applicability or effect of this Section C.
4. The Board of Directors shall have the right to demand that any person who is reasonably believed to beneficially own shares of common stock in excess of the Limit (or holds of record common stock beneficially owned by any person in excess of the Limit) supply the Corporation with complete information as to: (a) the record owner(s) of all shares beneficially owned by such person who is reasonably believed to own shares in excess of the Limit; and (b) any other factual matter relating to the applicability or effect of this Section C as may reasonably be requested of such person.
5. Except as otherwise provided by law or expressly provided in this Section C, the presence, in person or by proxy, of the holders of record of shares of capital stock of the Corporation entitling the holders thereof to cast a majority of the votes (after giving effect, if required, to the provisions of this Section C) entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote shall constitute a quorum at all meetings of the stockholders, and every reference in these Articles of Amendment and Restatement to a majority or other proportion of capital stock (or the holders thereof) for purposes of determining any quorum requirement or any requirement for stockholder consent or approval shall be deemed to refer to such majority or other proportion of the votes (or the holders thereof) then entitled to be cast in respect of such capital stock.
6. Any constructions, applications or determinations made by the Board of Directors pursuant to this Section C in good faith and on the basis of such information and assistance as was then reasonably available for such purpose shall be conclusive and binding upon the Corporation and its stockholders.
7. In the event any provision (or portion thereof) of this Section C shall be found to be invalid, prohibited or unenforceable for any reason, the remaining provisions (or portions thereof) of this Section C shall remain in full force and effect, and shall be construed as if such invalid, prohibited or unenforceable provision had been stricken herefrom or otherwise rendered inapplicable, it being the intent of the Corporation and its stockholders that each such remaining provision (or portion thereof) of this Section C remain, to the fullest extent permitted by law, applicable and enforceable as to all stockholders, including stockholders owning an amount of stock over the Limit, notwithstanding any such finding.
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SEVENTH:
A. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors, except as these Articles of Amendment and Restatement or Maryland law otherwise provides; provided, however that any limitations on the Board of Directors’ management or direction of the affairs of the Corporation shall reserve the Directors’ full power to discharge their fiduciary duties.
B. The Directors shall be divided into three classes, as nearly equal in number as reasonably possible, with the term of office of the first class to expire at the first annual meeting of stockholders, the term of office of the second class to expire at the annual meeting of stockholders one year thereafter and the term of office of the third class to expire at the annual meeting of stockholders two years thereafter with each Director to hold office for the term of office of his or her respective class and until his or her successor shall have been elected and qualified. At each annual meeting of stockholders following such initial classification and election, Directors elected to succeed those Directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election with each Director to hold office for the term of office of his or her respective class and until his or her successor shall have been duly elected and qualified.
C. The names of the initial directors who will serve until their successors are duly elected and qualified are as follows:
First Class - Term Expiring 2021
Charles Corcoran
Christopher Molden
William B.K. Parry, Jr.
Vincent P. Sarubbi
Second Class – Term Expiring 2022
D. Michael Carmody, Jr.
William J. Feeney
Terry L. Sager
Third Class - Term Expiring 2023
Craig Burton
Glenn Davis
William C. Niemczura
Kenneth J. Stephon
EIGHTH:
The following provisions are hereby adopted for the purpose of defining, limiting and regulating the powers of the Corporation, the directors and the stockholders:
A. The Board of Directors is hereby empowered to authorize the issuance from time to time of shares of its stock of any class and securities convertible into shares of its stock of any class for such consideration as determined by the Board of Directors in accordance with the Maryland General Corporation Law (the “MGCL”), and without any action by the stockholders.
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B. The Corporation, if authorized by the Board of Directors, may acquire shares of the Corporation’s capital stock.
C. No holder of any stock or any other securities of the Corporation, whether now or hereafter authorized, shall have any preemptive right to subscribe for or purchase any stock or any other securities of the Corporation other than such, if any, as the Board of Directors, in its sole discretion, may determine and at such price(s) and upon such other terms as the Board of Directors, in its sole discretion, may fix; and any stock or other securities that the Board of Directors may determine to offer for subscription may, as the Board of Directors in its sole discretion shall determine, be offered to the holders of any class, series or type of stock or other securities at the time outstanding to the exclusion of the holders of any or all other classes, series or types of stock or other securities at the time outstanding.
D. The Board of Directors shall have the power to create and to issue, whether or not in connection with the issuance and sale of any shares of stock or other securities of the Corporation, rights or options entitling the holders thereof to purchase from the Corporation any shares of its capital stock of any class(es), on such terms and conditions and in such form as the Board of Directors shall set forth in a resolution.
E. The Board of Directors shall have the power, subject to any limitations or restrictions imposed by law, to classify or reclassify any unissued shares of stock whether now or hereafter authorized, by fixing or altering in any one or more respects before issuance of such shares the voting powers, designations, preferences and relative, participating, optional or other special rights of such shares and the qualifications, limitations or restrictions of such preferences and/or rights.
F. The Board of Directors of the Corporation is expressly authorized to adopt, repeal, alter, amend and rescind the Bylaws of the Corporation by the affirmative vote of a majority of the directors then in office without the further approval of the stockholders. Notwithstanding any other provision of these Articles of Amendment and Restatement or the Bylaws of the Corporation (and notwithstanding that some lesser percentage may be specified by law), the Bylaws shall not be adopted, repealed, altered, amended or rescinded by the stockholders of the Corporation except by the affirmative vote of the holders of at least seventy five percent (75%) of the Voting Stock (after giving effect to the provisions of Article SIXTH), voting together as a single class.
G. The Board of Directors shall have the power to declare and authorize the payment of stock dividends payable in stock of one class of the Corporation’s capital stock to holders of stock of another class(es) of the Corporation’s capital stock.
H. The Board of Directors shall have authority to exercise without a vote of stockholders all powers of the Corporation, whether conferred by law or by these Articles of Amendment and Restatement, to purchase, lease or otherwise acquire the business assets or franchises in whole or in part of other corporations or unincorporated business entities.
I. The Board of Directors shall have the power to borrow or raise money, from time to time and without limit, and upon any terms, for any corporate purposes, and, subject to the MGCL, to authorize the creation, issuance, assumption or guaranty of bonds, notes or other evidences of indebtedness for monies so borrowed, to include therein such provisions as to redeemability, convertibility or otherwise as the Board of Directors, in its sole discretion, may determine and to secure the payment of principal, interest or sinking fund in respect thereof by mortgage upon, or the pledge of, or the conveyance or assignment in trust of, the whole or any part of the properties, assets and goodwill of the Corporation then owed or thereafter acquired.
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J. An officer or director of the Corporation, as such, shall not be liable to the Corporation or its stockholders for money damages, except (A) to the extent that it is proved that the person actually received an improper benefit or profit in money, property or services, for the amount of the benefit or profit in money, property or services actually received; or (B) to the extent that a judgment or other final adjudication adverse to the person is entered in a proceeding based on a finding in the proceeding that the person’s action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding; or (C) to the extent otherwise provided by the MGCL. If the MGCL is amended to further eliminate or limit the personal liability of officers and directors, then the liability of officers and directors of the Corporation shall be eliminated or limited to the fullest extent permitted by the MGCL, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such repeal or modification.
K. The Board of Directors may, in connection with the exercise of its business judgment involving any actual or proposed transaction that would or may involve a change in control of the Corporation (whether by purchases of shares of stock or any other securities of the Corporation in the open market or otherwise, tender offer, merger, consolidation, dissolution, liquidation, sale of all or substantially all of the assets of the Corporation, or proxy solicitation (other than on behalf of the Board of Directors or otherwise)), in determining what is in the best interests of the Corporation and its stockholders and in making any recommendation to its stockholders, give due consideration to all relevant factors, including, but not limited to the following: (1) the economic effect, both immediate and long-term, upon the Corporation’s stockholders, including stockholders, if any, choosing not to participate in the transaction; (2) effects, including any social and economic effects, on the employees, suppliers, creditors, depositors and customers of, and others dealing with, the Corporation and its subsidiaries and on the communities in which the Corporation and its subsidiaries operate or are located; (3) whether the proposal is acceptable based on the historical and current operating results or financial condition of the Corporation; (4) whether a more favorable price could be obtained for the Corporation’s stock or other securities in the future; (5) the reputation and business practices of the offeror and its management and affiliates as they would affect the employees; (6) the future value of the stock or any other securities of the Corporation; and (7) any anti-trust or other legal and regulatory issues that are raised by the proposal. If the Board of Directors determines that any actual or proposed transaction that would or may involve a change in control of the Corporation should be rejected, it may take any lawful action to accomplish its purpose, including, but not limited to, any and all of the following: advising stockholders not to accept the proposal; instituting litigation against the party making the proposal; filing complaints with governmental and regulatory authorities; acquiring the stock or any of the securities of the Corporation; selling or otherwise issuing authorized but unissued stock, other securities or treasury stock or granting options with respect thereto; selling any of the assets of the Corporation; acquiring a company to create an anti-trust or other regulatory problem for the party making the proposal; and obtaining a more favorable offer from another individual or entity.
L. Notwithstanding any provision of the MGCL requiring stockholder authorization of an action by a greater proportion than a majority of the total number of shares of all classes of capital stock or of the total number of shares of any class of capital stock, such action shall be valid and effective if authorized by the affirmative vote of the holders of a majority of the total number of shares of all classes outstanding and entitled to vote thereon, except as otherwise provided in these Articles.
M. Holders of shares of stock shall not be entitled to exercise any rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL or any successor statute unless the Board of Directors, pursuant to a resolution approved by a majority of the directors then in office, shall
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determine that such rights apply with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which holders of such shares would otherwise be entitled to exercise such rights.
NINTH: The Corporation shall indemnify (A) its directors and officers, whether serving the Corporation or at its request any other entity, to the fullest extent required or permitted by the general laws of the State of Maryland now or hereafter in force, including the advance of expenses under the procedures required, and (B) other employees and agents to such extent as shall be authorized by the Board of Directors or the Corporation’s Bylaws and be permitted by law. The foregoing rights of indemnification shall not be exclusive of any rights to which those seeking indemnification may be entitled. The Board of Directors may take such action as is necessary to carry out these indemnification provisions and is expressly empowered to adopt, approve and amend from time to time such Bylaws, resolutions or contracts implementing such provisions or such further indemnification arrangements as may be permitted by law. No amendment of the Articles of Amendment and Restatement of the Corporation shall limit or eliminate the right to indemnification provided hereunder with respect to acts or omissions occurring prior to such amendment or repeal. Any indemnification payments made pursuant to this Article NINTH are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. 1828(k)) and the regulations promulgated thereunder by the Federal Deposit Insurance Corporation (12 C.F.R. Part 359).
TENTH: The Corporation reserves the right to amend or repeal any provision contained in these Articles in the manner prescribed by the MGCL, including any amendment altering the terms or contract rights, as expressly set forth in these Articles, of any of the Corporation’s outstanding stock by classification, reclassification or otherwise, and no stockholder approval shall be required if the approval of stockholders is not required for the proposed amendment or repeal by the MGCL, and all rights conferred upon stockholders are granted subject to this reservation. The Board of Directors, pursuant to a resolution approved by a majority of the directors then in office, and without action by the stockholders, may amend these Articles to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue. Notwithstanding any other provision of these Articles or any provision of law that might otherwise permit a lesser vote or no vote, any amendment of Section C of Article SIXTH, Section B of Article SEVENTH, Sections F and J of Article EIGHTH and this Article TENTH of the Corporation’s Articles of Amendment and Restatement shall require the affirmative vote of seventy five percent (75%) of the issued and outstanding shares of capital stock entitled to vote.
ELEVENTH: Under regulations of the Board of Governors of the Federal Reserve System, the Corporation must establish and maintain a liquidation account (the “Liquidation Account”) for the benefit of certain Eligible Account Holders and Supplemental Eligible Account Holders as defined in the Plan of Conversion and Reorganization (the “Plan of Conversion”). In the event of a complete liquidation involving (i) the Corporation or (ii) William Penn Bank, the Corporation must comply with the regulations of the Board of Governors of the Federal Reserve System and the provisions of the Plan of Conversion with respect to the amount and priorities of each Eligible Account Holder’s and Supplemental Eligible Account Holder’s interests in the Liquidation Account. The interest of an Eligible Account Holder or Supplemental Eligible Account Holder in the Liquidation Account does not entitle such account holders to voting rights.
[Signature pages follow]
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The undersigned acknowledges that this is an act of the above-named corporation, and verifies, under the penalties for perjury, that the matters and facts stated herein, which require such verification, are true and accurate, to the best of his knowledge, information, and belief.
SIGNATURE OF SOLE INCORPORATOR, | ||||
CEO AND DIRECTOR: | ||||
Attest: | ||||
Name: | Jonathan T. Logan | Name: | Kenneth J. Stephon | |
Title: | Chief Financial Officer | Title: | Sole Incorporator, CEO and Director |
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CONSENT OF RESIDENT AGENT
The undersigned hereby agrees to its designation as resident agent in the State of Maryland for this corporation.
CSC-LAWYERS INCORPORATING | ||
SERVICE COMPANY | ||
Name: | ||
Title: |
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ANNEX D
BYLAWS
OF
WILLIAM PENN BANCORPORATION
ARTICLE I - STOCKHOLDERS
Section 1. ANNUAL MEETING
The annual meeting of the stockholders of William Penn Bancorporation (the “Corporation”) shall be held each year at such date and time as the Board of Directors shall, in their discretion, fix. The business to be transacted at the annual meeting shall include the election of directors and any other business properly brought before the meeting in accordance with these Bylaws.
Section 2. SPECIAL MEETINGS
A special meeting of the stockholders may be called at any time for any purpose(s) by the Chairman of the Board, the President, or by two-thirds of the total number of Directors which the Corporation would have if there were no vacancies on the Board of Directors. By virtue of the Corporation’s election made hereby to be governed by Section 3-805 of the Maryland General Corporation Law, a special meeting of the stockholders shall be called by the Secretary of the Corporation upon the written request of the holders of at least a majority of all shares outstanding and entitled to vote on the business to be transacted at such meeting. Notwithstanding the previous sentence, the Secretary of the Corporation shall not be obligated to call a special meeting of the stockholders requested by stockholders to take any action that is non-binding or advisory in nature. Business transacted at any special meeting shall be confined to the purpose(s) stated in the notice of such meeting.
Section 3. PLACE OF MEETING
The Board of Directors may designate any place, either within or without the State of Maryland, as the place of meeting for any annual or special meeting of stockholders.
Section 4. NOTICE OF MEETING; WAIVER OF NOTICE
Not less than ten (10) days nor more than ninety (90) days before the date of every stockholders meeting, the Secretary shall give to each stockholder entitled to vote at or to notice of such meeting, written notice stating the place, date and time of the meeting and, in the case of a special meeting, the purpose(s) for which the meeting is called, either by mail to his or her address as it appears on the records of the Corporation or by presenting it to him or her personally or by leaving it at his or her residence or usual place of business. Notwithstanding the foregoing provisions, a written waiver of notice, signed by the person entitled to notice, whether before or after the time stated therein, shall be equivalent to notice. Attendance of a person entitled to notice at a meeting, in person or by proxy, shall constitute a waiver of notice of such meeting, except when such person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
When a meeting is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the
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adjournment is taken; provided however, that if the date of the adjourned meeting is more than one hundred twenty (120) days after the record date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, written notice of the place, date and time of the adjourned meeting shall be given in conformity herewith.
Section 5. QUORUM
At any meeting of stockholders, the presence of a quorum for all purposes shall be determined as provided in the Articles of Incorporation unless or except to the extent that the presence of a larger number may be required by law.
If a quorum fails to attend any meeting, the Chairman of the meeting or the holders of a majority of the shares of stock entitled to vote who are represented in person or by proxy may adjourn the meeting to any place, date and time without further notice to a date not more than one hundred twenty (120) days after the original record date. At such adjourned meeting at which a quorum shall be present, any business may be transacted that might have been transacted at the meeting originally called. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of stockholders to leave less than a quorum.
Section 6. CONDUCT OF BUSINESS
(a) The chairman of any meeting of stockholders shall determine the order of business and the procedures at the meeting, including such regulation of the manner of voting and the conduct of discussion. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting.
(b) At any annual meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who is entitled to vote with respect thereto and who complies with the notice procedures set forth in this Section 6(b). For business to be properly brought before an annual meeting by a stockholder, the business must relate to a proper subject matter for stockholder action and the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice must be delivered or mailed to and received at the principal executive office of the Corporation not less than ninety (90) days before the date of the annual meeting; provided, however, that if less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A stockholder’s notice to the Secretary shall set forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Corporation’s books, of the stockholder proposing such business, (iii) the class and number of shares of the Corporation’s capital stock that are beneficially owned by such stockholder, (iv) a statement disclosing (A) whether such stockholder is acting with or on behalf of any other person and (B) if applicable, the identity of such person, and (v) any material interest of such stockholder in such business. Notwithstanding anything in these Bylaws to the contrary, no business shall be brought before or conducted at an annual meeting except in accordance with the provisions of this Section 6(b). The Chairman of the Board or other person presiding over the annual meeting shall, if the facts so warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 6(b) and, if he or she should so determine, he or she shall
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so declare to the meeting and any such business so determined to be not properly brought before the meeting shall not be transacted.
At any special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting in accordance with Article I, Section 2.
(c) Only persons who are nominated in accordance with the procedures set forth in these Bylaws shall be eligible for election as Directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders at which directors are to be elected only (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation entitled to vote for the election of Directors at the meeting who complies with the notice procedures set forth in this Section 6(c). Such nominations, other than those made by or at the direction of the Board of Directors, shall be made by timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice shall be delivered or mailed to and received at the principal executive office of the Corporation not less than ninety (90) days before the date of the meeting; provided, however, that if less than one hundred (100) days’ notice or prior disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Such stockholder’s notice shall set forth (i) as to each person whom such stockholder proposes to nominate for election or re-election as a Director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a Director if elected); and (ii) as to the stockholder giving the notice (A) the name and address, as they appear on the Corporation’s books, of such stockholder, (B) the class and number of shares of the Corporation’s capital stock that are beneficially owned by such stockholder, and (C) a statement disclosing (1) whether such stockholder or any nominee thereof is acting with or on behalf of any other person and (2) if applicable, the identity of such person.
(d) The requirements set forth in subsections (b) and (c) of this Section 6 shall apply to all shareholder proposals and nominations, without regard to whether such proposals or nominations are required to be included in the Corporation’s proxy statement or form of proxy.
Section 7. VOTING
All elections shall be determined by a plurality of the votes cast, and, except as otherwise required by law or the Articles of Incorporation, all other matters shall be determined by a majority of the votes cast.
Section 8. PROXIES
At all meetings of stockholders, a stockholder may vote the shares owned of record by him or her either in person or by proxy executed in writing by the stockholder or by his or her duly authorized attorney-in-fact. Any facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to this paragraph may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.
Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise
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provided in the proxy. A proxy is revocable by a stockholder at any time without condition or qualification unless the proxy states that it is irrevocable and the proxy is coupled with an interest. A proxy may be made irrevocable for as long as it is coupled with an interest. The interest with which a proxy may be coupled includes an interest in the stock to be voted under the proxy or another general interest in the Corporation or its assets or liabilities.
Section 9. CONTROL SHARE ACQUISITION ACT
Notwithstanding any other provision of the Articles of Incorporation or these Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law (or any successor statute) shall not apply to any acquisition by any person of shares of stock of the Corporation. This Section 9 may be repealed at any time, in whole or in part, by a majority vote of the Corporation’s Board of Directors, whether before or after an acquisition of Control Shares (as such term is defined in Section 3-701(d) of the Maryland General Corporation Law, or any successor provision) and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent Control Share Acquisition (as such term is defined in Section 3-701(e) of the Maryland General Corporation Law, or any successor provision).
ARTICLE II - DIRECTORS
Section 1. GENERAL POWERS
The business and affairs of the Corporation shall be managed by its Board of Directors. The Board of Directors may exercise all the powers of the Corporation, except those conferred on or reserved to the stockholders by statute or by the Articles of Incorporation or the Bylaws. The Board may adopt such rules and regulations for the conduct of their meetings and the management of the Corporation as they may deem proper, and that are not inconsistent with these Bylaws and with the Maryland General Corporation Law.
The Board of Directors shall annually elect a Chairman of the Board from among its members. The Chairman of the Board shall serve in a general oversight capacity and shall preside at all meetings of the Corporation’s Board of Directors. The Chairman of the Board shall perform all duties and have all powers that are commonly included in the office of the Chairman of the Board or which are delegated to him by the Board of Directors.
Section 2. NUMBER
The number of directors of the Corporation shall, by virtue of the Corporation’s election made hereby to be governed by Section 3-804(b) of the Maryland General Corporation Law, be fixed from time to time exclusively by vote of the Board of Directors; provided, however, that such number of directors shall never be less than the minimum number of directors required by the Maryland General Corporation Law.
Section 3. VACANCIES AND NEWLY CREATED DIRECTORSHIPS
By virtue of the Corporation’s election made hereby to be governed by Section 3-804(c) of the Maryland General Corporation Law, any vacancies in the Board of Directors resulting from an increase in the size of the Board of Directors or the death, resignation or removal of a director may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred and until a successor is elected and
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qualifies. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
Section 4. REGULAR MEETINGS
Regular meetings of the Board of Directors shall be held at such dates, such times and such places, either within or without the State of Maryland, as shall have been designated by the Board of Directors and publicized among all Directors.
Section 5. SPECIAL MEETINGS
Special meetings of the Board of Directors may be called by the Chairman of the Board, by the Chief Executive Officer, or by two-thirds of the members of the Board of Directors in writing. The person(s) authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Maryland, as the place for holding the special meeting of the Board of Directors called by them.
Section 6. NOTICE
A notice of a regular meeting shall not be required. The Secretary shall give notice to each director of the date, time and place of each special meeting of the Board of Directors. Notice is given to a director when it is delivered personally to him or her, left at his or her residence or usual place of business, or sent by electronic transmission, telephone, telegraph, or similar means of transmission at least twenty four (24) hours before the time of the meeting, or in the alternative, when it is mailed to his or her address as it appears on the records of the Corporation, at least seventy two (72) hours before the time of the meeting. Any director may waive notice of any meeting either before or after the holding thereof by written waiver filed with the records of the meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.
Section 7. TELEPHONIC MEETINGS
Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board or committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 7 shall constitute presence in person at such meeting.
Section 8. QUORUM
At any meeting of the Board of Directors, a majority of the total number of directors shall constitute a quorum for the transaction of business, but if less than such quorum is present at a meeting, a majority of the directors present may adjourn the meeting without further notice or waiver thereof.
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Section 9. MANNER OF ACTING
The vote of the majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors unless the concurrence of a greater proportion is required for such action by the Articles of Incorporation.
Section 10. REMOVAL OF DIRECTORS
Any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least a majority of the shares of stock entitled to vote in the election of directors.
Section 11. RESIGNATION
A director may resign at any time by giving written notice to the Board, the President or the Secretary of the Corporation. Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the Board or such officer, and the acceptance of the resignation shall not be necessary to make it effective.
Section 12. COMPENSATION
By resolution of the Board of Directors, a fixed sum and expenses, if any, for attendance at each regular or special meeting of the Board of Directors or of committees thereof, and other compensation for their services as such or on such committees, may be paid to directors, as compensation for such attendance at meetings and other services as a director may render to the Corporation.
Section 13. COMMITTEES
The Board of Directors, by a vote of a majority of the Board of Directors, may from time to time designate committees of the Board, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board and shall, for these committees and any others provided for herein, elect a director(s) to serve as the member(s), designating, if it desires, other directors as alternate members who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; provided, however, that any such committee shall have no power or authority with reference to (i) declaring dividends or distributions on stock, (ii) issuing stock other than as authorized by the Board of Directors, (iii) recommending to the stockholders any action that requires stockholder approval, (iv) amending the Bylaws and (v) approving a merger or share exchange which does not require stockholder approval. In the absence or disqualification of any member of any committee and any alternate member in his or her place, the member(s) of the committee present at the meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member.
Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings. The quorum requirements for each such committee shall be a majority of the members of such committee. Action may be taken by any committee without a meeting if all members thereof consent thereto in writing, and the writing(s) are filed with the minutes of the proceedings of such committee.
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Section 14. ADVISORY DIRECTORS
The Board of Directors may by resolution appoint advisory directors to the Board, who may also serve as directors emeriti, and shall have such authority and receive such compensation and reimbursement as the Board of Directors shall provide. Advisory directors or directors emeriti shall not have the authority to vote on the transaction of business.
Section 15. INTEGRITY OF DIRECTORS
A person is not qualified to serve as director if he or she: (1) is under indictment for, or has ever been convicted of, a criminal offense involving dishonesty or breach of trust and the penalty for such offense could be imprisonment for more than one year, or (2) is a person against who a banking agency has, within the past ten years, issued a cease and desist order for conduct involving dishonesty or breach of trust and that order is final and not subject to appeal, or (3) has been found either by a regulatory agency whose decision is final and not subject to appeal or by a court to have (i) breached a fiduciary duty involving personal profit or (ii) committed a willful violation of any law, rule or regulation governing banking, securities, commodities or insurance, or any final cease and desist order issued by a banking, securities, commodities or insurance regulatory agency.
Section 16. AGE LIMITATION
Notwithstanding anything herein to the contrary, the provisions of this section shall be applicable to all individuals, except for those individuals serving as directors or advisory directors of William Penn Savings and Loan Association as of July 1, 1986. No individual may be appointed to serve as a director if such individual shall be age 75 or more as of the date of such appointment. No individual may stand for election or re-election to serve as a director and be included on the meeting ballot if such individual shall be age 75 or more as of the date of the meeting of stockholders first called to vote on such matter.
ARTICLE III - OFFICERS
Section 1. EXECUTIVE AND OTHER OFFICERS
The officers of the Corporation shall be a President, a Secretary and a Treasurer. The Board of Directors may designate who shall serve as Chief Executive Officer, having general supervision of the business and affairs of the Corporation. In the absence of a designation, the President shall serve as Chief Executive Officer. The Board of Directors may appoint such other officers as it may deem proper. A person may hold more than one office in the Corporation but may not serve concurrently as both President and Vice President of the Corporation.
Section 2. PRESIDENT AND CHIEF EXECUTIVE OFFICER
The President and Chief Executive Officer shall be the principal executive officer of the Corporation. Subject to the provisions of these Bylaws and to the direction of the Board of Directors, he or she shall have the responsibility for the general management and control of the business and affairs of the Corporation and shall perform all duties and have all powers that are commonly incident to the office of the President or that are delegated to him or her by the Board of Directors. He or she shall have the power to sign all contracts, agreements, and other instruments of the Corporation that are authorized and shall have general supervision and direction of all of the other officers, employees and agents of the Corporation.
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Section 3. VICE PRESIDENT(S)
The Vice President(s) shall perform the duties of the President in his or her absence or during his or her inability to act. In addition, the Vice President(s) shall perform the duties and exercise the powers usually incident to their respective offices and/or such other duties and powers as may be properly assigned to them by the Board of Directors or the President. A Vice President(s) may be designated as Executive Vice President or Senior Vice President.
Section 4. SECRETARY
The Secretary shall keep the minutes of the meetings of the stockholders, of the Board of Directors and of any committees, in books provided for the purpose; he or she shall see that all notices are duly given in accordance with the provisions of the Bylaws or as required by law; he or she shall be custodian of the records of the Corporation; he or she shall witness all documents on behalf of the Corporation, the execution of which is duly authorized, see that the corporate seal is affixed where such document is required to be under its seal, and, when so affixed, may attest the same; and, in general, he or she shall perform all duties incident to the office of a secretary of a corporation, and such other duties as may from time to time be assigned to him or her by the Board of Directors or the President.
Section 5. TREASURER
The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all monies or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board of Directors. In general, he or she shall perform all the duties incident to the office of a treasurer of a corporation, and such other duties as may from time to time be assigned to him or her by the Board of Directors or the President.
Section 6. SUBORDINATE OFFICERS
The Corporation may have such subordinate officers as the Board of Directors may from time to time deem desirable. Each such officer shall hold office for such period and perform such duties as the Board of Directors, the President or the committee or officer designated pursuant to these Bylaws may prescribe.
Section 7. COMPENSATION
The Board of Directors shall have power to fix the salaries and other compensation and remuneration, of whatever kind, of all officers of the Corporation. It may authorize any committee or officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the salaries, compensation and remuneration of such subordinate officers.
Section 8. ELECTION, TENURE AND REMOVAL OF OFFICERS
The Board of Directors shall elect the officers. The Board of Directors may from time to time authorize any committee or officer to appoint subordinate officers. An officer serves for one year or until his or her successor is elected and qualified. If the Board of Directors in its judgment finds that the best interests of the Corporation will be served, it may remove any officer or agent of the Corporation. The removal of an officer or agent does not prejudice any of his or her contract rights. The Board of Directors (or any committee or officer authorized by the Board of Directors) may fill a vacancy that occurs in any office for the unexpired portion of the term of that office.
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ARTICLE IV – STOCK
Section 1. CERTIFICATES FOR STOCK
Each stockholder shall be entitled to certificates that represent and certify the shares of stock he or she holds in the Corporation. Each stock certificate shall include on its face the name of the Corporation, the name of the stockholder and the class of stock and number of shares represented by the certificate and be in such form, not inconsistent with law or with the Articles of Incorporation, as shall be approved by the Board of Directors or any officer(s) designated for such purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the President or the Chairman of the Board, and countersigned by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer. Each certificate shall be sealed with the actual corporate seal or a facsimile of it or in any other form and the signatures on each certificate may be either manual or facsimile signatures. A certificate is valid and may be issued whether or not an officer who signed it is still an officer of the Corporation when it is issued.
Notwithstanding anything to the contrary herein, the Board of Directors may provide by resolution that some or all of the shares of any or all classes or series of the Corporation’s capital stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation.
Section 2. TRANSFERS
The Board of Directors shall have power and authority to make such rules and regulations as it may deem expedient concerning the issuance, transfer and registration of certificates of stock or uncertificated shares of stock, and may appoint transfer agents and registrars thereof. The duties of transfer agent and registrar may be combined.
Section 3. RECORD DATE AND CLOSING OF TRANSFER BOOKS
In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than ninety (90) nor less than ten (10) days before the date of such meeting, nor more than ninety (90) days before any other action. The transfer books may not be closed for a period longer than twenty (20) days. In the case of a meeting of stockholders, the closing of the transfer books shall be at least ten (10) days before the date of the meeting.
Section 4. STOCK LEDGER
The Corporation shall maintain a stock ledger that contains the name and address of each stockholder and the number of shares of stock of each class registered in the name of each stockholder. The stock ledger may be in written form or in any other form that can be converted within a reasonable time into written form for visual inspection. The original or a duplicate of the stock ledger shall be kept at the offices of a transfer agent for the particular class of stock, within or without the State of Maryland, or, if none, at the principal office or the principal executive offices of the Corporation in the State of Maryland.
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Section 5. CERTIFICATION OF BENEFICIAL OWNERS
The Board of Directors may adopt, by resolution, a procedure by which a stockholder of the Corporation may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder.
Section 6. LOST, STOLEN OR DESTROYED STOCK CERTIFICATES
The Board of Directors of the Corporation may determine the conditions for issuing a new stock certificate or uncertificated shares in place of a stock certificate that is purportedly alleged to have been lost, stolen or destroyed, or the Board of Directors may delegate such power to any officer(s) of the Corporation. In its discretion, the Board of Directors or such officer(s) may refuse to issue such new certificate or uncertificated shares except upon the order of a court having jurisdiction in the premises.
ARTICLE V - FINANCE
Section 1. CHECKS, DRAFTS, ETC.
All checks, drafts and orders for the payment of money, notes and other evidences of indebtedness, issued in the name of the Corporation, shall, unless otherwise provided by resolution of the Board of Directors, be signed by the President or a Vice President and countersigned by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.
Section 2. FISCAL YEAR
The fiscal year of the Corporation shall commence on the first day of July and end on the last day of June in each year.
ARTICLE VI – MISCELLANEOUS PROVISIONS
Section 1. CORPORATE SEAL
The Board of Directors shall provide a suitable seal, bearing the name of the Corporation, which shall be in the charge of the Secretary. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.
Section 2. VOTING UPON SHARES IN OTHER CORPORATIONS
Stock of other corporations or associations, registered in the name of the Corporation, may be voted by the Chief Executive Officer, the President, a Vice President or a proxy appointed by any of them. The Board of Directors, however, may by resolution appoint some other person to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution.
Section 3. MAIL
Any notice or other document which is required by these Bylaws to be mailed shall be deposited in the United States mail, postage prepaid.
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Section 4. EXCLUSIVE FORUM FOR CERTAIN DISPUTES
Unless the Corporation consents in writing to the selection of an alternative forum, the United States District Court for the District of Maryland or, if such court lacks jurisdiction, any Maryland state court that has jurisdiction, shall, to the fullest extent permitted by law, be the sole and exclusive forum for (1) any derivative action or proceeding brought on behalf of the Corporation, (2) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (3) any action asserting a claim arising pursuant to any provision of the Maryland General Corporation Law, and (4) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 4.
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Exhibit 3.1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
WILLIAM PENN BANCORPORATION
FIRST: The undersigned, Kenneth J. Stephon, whose address is 10 Canal Street, Suite 104, Bristol, Pennsylvania 19007, being at least eighteen (18) years of age, acting as incorporator, has formed the corporation under the general laws of the State of Maryland.
SECOND: The name of the corporation (hereinafter the “Corporation”) is:
WILLIAM PENN BANCORPORATION
THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the general laws of the State of Maryland.
FOURTH: The present address of the principal office of the Corporation in the State of Maryland is 7 St. Paul Street, Suite 820, Baltimore, Maryland 21202.
FIFTH: The name and address of the resident agent of the Corporation is CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 820, Baltimore, Maryland 21202. Said resident agent is a Maryland corporation.
SIXTH:
A. The total number of shares of stock of all classes of stock which the Corporation has authority to issue is two hundred million (200,000,000) shares, having an aggregate par value of two million dollars ($2,000,000), of which one hundred and fifty million (150,000,000) are to be shares of common stock with a par value of one cent ($0.01) per share, and fifty million (50,000,000) are to be shares of preferred stock with a par value of one cent ($0.01) per share.
B. A description of each class of stock of the Corporation, including any voting powers, designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations and restrictions thereof, is as follows:
1. Common Stock. Subject to all of the rights of the preferred stock as expressly provided in these Articles of Amendment and Restatement, by law or by the Board of Directors in a resolution(s) pursuant to this Article SIXTH, the common stock of the Corporation shall possess all such rights and privileges as are afforded to capital stock by Maryland law in the absence of any express grant of rights or privileges in the Corporation’s Articles of Amendment and Restatement, including but not limited to, the following:
a. | Holders of the common stock shall be entitled to one (1) vote per share on each matter submitted to a vote at a meeting of stockholders; provided, however, that there shall not be any cumulative voting of the common stock. |
b. | Dividends may be declared and paid or set aside for payment upon the common stock out of any assets or funds of the Corporation legally available therefor. |
c. | Upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, its net assets shall be distributed ratably to holders of the common stock. |
2. Preferred Stock. The Board of Directors is expressly authorized to classify and reclassify any unissued shares of preferred stock, and to divide and classify shares of any class into one or more series of such class, by determining, fixing or altering from time to time before issuance any one or more of the following:
a. | The distinctive designation of such class or series and the number of shares to constitute such class or series; provided however, that unless otherwise prohibited by the terms of such or any other class or series, the number of shares of any class or series may be decreased by the Board of Directors in connection with any classification or reclassification of unissued shares and the number of shares of such class or series may be increased by the Board of Directors in connection with any such classification or reclassification, and any shares of any class or series which have been redeemed, purchased, otherwise acquired, or converted into shares of common stock or any other class or series shall remain part of the authorized preferred stock and be subject to classification and reclassification as provided in this Paragraph B.2. |
b. | Whether or not and, if so, the rates, amounts and times at which, and the conditions under which, dividends shall be payable on shares of such class or series, whether any such dividends shall rank senior or junior to or on a parity with the dividends payable on any other class or series of stock, and the status of any such dividends as cumulative, cumulative to a limited extent or non-cumulative, and as participating or non-participating. |
c. | Whether or not shares of such class or series shall have voting rights, in addition to any voting rights provided by law and, if so, the terms of such voting rights. |
d. | Whether or not shares of such class or series shall have conversion or exchange privileges and, if so, the terms and conditions thereof, including provision for adjustment of the conversion or exchange rate in such events or at such times as the Board of Directors shall determine. |
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e. | Whether or not shares of such class or series shall be subject to redemption and, if so, the terms and conditions of such redemption, including the date(s) upon or after which they shall be redeemable and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; and whether or not there shall be any sinking fund or purchase account in respect thereof, and if so, the terms thereof. |
f. | The rights of the holders of shares of such class or series upon the liquidation, dissolution, or winding up of the affairs of, or upon any distribution of the assets of, the Corporation, which rights may vary depending upon whether such liquidation, dissolution, or winding up is voluntary or involuntary and, if voluntary, may vary at different dates, and whether such rights shall rank senior or junior to or on a parity with such rights of any other class or series of stock. |
g. | Whether or not there shall be any limitations applicable, while shares of such class or series are outstanding, upon the payment of dividends or making of distributions on, or the acquisition of, or the use of monies for the purchase or redemption of, any capital stock of the Corporation, or upon any other action of the Corporation, including action under this Paragraph B.2, and, if so, the terms and conditions thereof. |
h. | Any other preferences, rights, restrictions, including restrictions on transferability, and qualifications of shares of such class or series, not inconsistent with law and the Articles of Amendment and Restatement of the Corporation. |
C. 1. Notwithstanding any other provision of these Articles of Amendment and Restatement, in no event shall any record owner of any outstanding common stock that is beneficially owned, directly or indirectly, by a person who, as of any record date for the determination of stockholders entitled to vote on any matter, beneficially owns shares of common stock in excess of the Limit (as hereinafter defined), be entitled or permitted to any vote in respect of the shares held in excess of the Limit. The number of votes that may be cast by any record owner by virtue of the provisions hereof in respect of common stock beneficially owned by such person beneficially owning shares in excess of the Limit shall be a number equal to the total number of votes that a single record owner of all common stock beneficially owned by such person would be entitled to cast (subject to the provisions of this Article SIXTH), multiplied by a fraction, the numerator of which is the number of shares of such class or series that are both beneficially owned by such person and owned of record by such record owner and the denominator of which is the total number of shares of common stock beneficially owned by such person owning shares in excess of the Limit. The provisions of this Section C of Article SIXTH shall not be applicable to any record owner of any outstanding common stock that is beneficially owned, directly or indirectly, by a person who, as of any record date for the determination of stockholders entitled to vote on any matter, beneficially owns shares of common stock in excess of the Limit if, before the beneficial owner of such shares acquired beneficial ownership of shares in excess of the Limit, the beneficial owner’s ownership of shares in excess of the Limit shall have been approved by a majority of the Unaffiliated Directors (as defined below), in which case, any record owner owning such shares beneficially owned by the beneficial owner in excess of the Limit shall have full voting rights with respect to all such shares owned of record.
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2. | The following definitions shall apply to this Section C of Article SIXTH: |
a. | “Affiliate” shall have the meaning ascribed to it in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, as in effect on the date of filing of these Articles of Amendment and Restatement. |
b. | “Beneficial ownership” shall be determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (or any successor rule or statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall be no successor rule or provision thereto, pursuant to said Rule 13d-3 as in effect on the date of filing of these Articles of Amendment and Restatement; provided, however, that a person shall, in any event, also be deemed the “beneficial owner” of any common stock: |
(1) | that such person or any of its Affiliates beneficially owns, directly or indirectly; or |
(2) | that such person or any of its Affiliates has: (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options or otherwise, or (b) sole or shared voting or investment power with respect thereto pursuant to any agreement, arrangement, understanding, relationship or otherwise (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of a revocable proxy granted for a particular meeting of stockholders, pursuant to a public solicitation of proxies for such meeting, with respect to shares of which neither such person nor any such Affiliate is otherwise deemed the beneficial owner); or | |
(3) | that are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates acts as a partnership, limited partnership, syndicate or other group pursuant to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital stock of the Corporation; and provided further, however, that: (a) no director or officer of the Corporation (or any Affiliate of any such director or officer) shall, solely by reason of any or all of such directors or officers acting in their capacities as such, be deemed, for any purposes hereof, to beneficially own any common stock beneficially owned by any other such director or officer (or any Affiliate thereof); and (b) neither any employee stock ownership plan or similar plan of the Corporation or any subsidiary of the Corporation, nor any trustee with respect thereto or any Affiliate of such trustee (solely by reason of such capacity of such trustee), shall be deemed, for any purposes hereof, to beneficially own any common stock held under any such plan. For purposes only of computing the percentage of beneficial ownership of common stock of a person, the outstanding common stock shall include shares deemed owned by such person through application of this Subparagraph C.2.b but shall not include any other shares of common stock that may be issuable by the Corporation pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise. For all other purposes, the outstanding common stock shall include only shares of common stock then outstanding and shall not include any shares of common stock that may be issuable by the Corporation pursuant to any agreement, or upon the exercise of conversion rights, warrants or options, or otherwise. |
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c. | The “Limit” shall mean ten percent (10%) of the then-outstanding shares of common stock. |
d. | A “person” shall include an individual, a firm, a group acting in concert, a corporation, a partnership, an association, a joint venture, a pool, a joint stock company, a trust, an unincorporated organization or similar company, a limited liability company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of securities or any other entity. |
e. | “Unaffiliated Director” means any member of the Board of Directors who is unaffiliated with the person beneficially owning shares in excess of the Limit (the “10% Beneficial Owner”) and was a member of the Board of Directors before the 10% Beneficial Owner became a 10% Beneficial Owner, and any director who is thereafter chosen to fill any vacancy of the Board of Directors or who is elected and who, in either event, is unaffiliated with the 10% Beneficial Owner and in connection with his or her initial assumption of office is recommended for appointment or election by a majority of the Unaffiliated Directors then on the Board of Directors. |
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3. The Board of Directors shall have the power to construe and apply the provisions of this Section C and to make all determinations necessary or desirable to implement such provisions, including but not limited to matters with respect to: (a) the number of shares of common stock beneficially owned by any person; (b) whether a person is an Affiliate of another; (c) whether a person has an agreement, arrangement or understanding with another as to the matters referred to in the definition of beneficial ownership; (d) the application of any other definition or operative provision of this Section C to the given facts; or (e) any other matter relating to the applicability or effect of this Section C.
4. The Board of Directors shall have the right to demand that any person who is reasonably believed to beneficially own shares of common stock in excess of the Limit (or holds of record common stock beneficially owned by any person in excess of the Limit) supply the Corporation with complete information as to: (a) the record owner(s) of all shares beneficially owned by such person who is reasonably believed to own shares in excess of the Limit; and (b) any other factual matter relating to the applicability or effect of this Section C as may reasonably be requested of such person.
5. Except as otherwise provided by law or expressly provided in this Section C, the presence, in person or by proxy, of the holders of record of shares of capital stock of the Corporation entitling the holders thereof to cast a majority of the votes (after giving effect, if required, to the provisions of this Section C) entitled to be cast by the holders of shares of capital stock of the Corporation entitled to vote shall constitute a quorum at all meetings of the stockholders, and every reference in these Articles of Amendment and Restatement to a majority or other proportion of capital stock (or the holders thereof) for purposes of determining any quorum requirement or any requirement for stockholder consent or approval shall be deemed to refer to such majority or other proportion of the votes (or the holders thereof) then entitled to be cast in respect of such capital stock.
6. Any constructions, applications or determinations made by the Board of Directors pursuant to this Section C in good faith and on the basis of such information and assistance as was then reasonably available for such purpose shall be conclusive and binding upon the Corporation and its stockholders.
7. In the event any provision (or portion thereof) of this Section C shall be found to be invalid, prohibited or unenforceable for any reason, the remaining provisions (or portions thereof) of this Section C shall remain in full force and effect, and shall be construed as if such invalid, prohibited or unenforceable provision had been stricken herefrom or otherwise rendered inapplicable, it being the intent of the Corporation and its stockholders that each such remaining provision (or portion thereof) of this Section C remain, to the fullest extent permitted by law, applicable and enforceable as to all stockholders, including stockholders owning an amount of stock over the Limit, notwithstanding any such finding.
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SEVENTH:
A. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors, except as these Articles of Amendment and Restatement or Maryland law otherwise provides; provided, however that any limitations on the Board of Directors’ management or direction of the affairs of the Corporation shall reserve the Directors’ full power to discharge their fiduciary duties.
B. The Directors shall be divided into three classes, as nearly equal in number as reasonably possible, with the term of office of the first class to expire at the first annual meeting of stockholders, the term of office of the second class to expire at the annual meeting of stockholders one year thereafter and the term of office of the third class to expire at the annual meeting of stockholders two years thereafter with each Director to hold office for the term of office of his or her respective class and until his or her successor shall have been elected and qualified. At each annual meeting of stockholders following such initial classification and election, Directors elected to succeed those Directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election with each Director to hold office for the term of office of his or her respective class and until his or her successor shall have been duly elected and qualified.
C. The names of the initial directors who will serve until their successors are duly elected and qualified are as follows:
First Class - Term Expiring 2021 | ||
Charles Corcoran | ||
Christopher Molden | ||
William B.K. Parry, Jr. | ||
Vincent P. Sarubbi | ||
Second Class – Term Expiring 2022 | ||
D. Michael Carmody, Jr. | ||
William J. Feeney | ||
Terry L. Sager | ||
Third Class - Term Expiring 2023 | ||
Craig Burton | ||
Glenn Davis | ||
William C. Niemczura | ||
Kenneth J. Stephon |
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EIGHTH:
The following provisions are hereby adopted for the purpose of defining, limiting and regulating the powers of the Corporation, the directors and the stockholders:
A. The Board of Directors is hereby empowered to authorize the issuance from time to time of shares of its stock of any class and securities convertible into shares of its stock of any class for such consideration as determined by the Board of Directors in accordance with the Maryland General Corporation Law (the “MGCL”), and without any action by the stockholders.
B. The Corporation, if authorized by the Board of Directors, may acquire shares of the Corporation’s capital stock.
C. No holder of any stock or any other securities of the Corporation, whether now or hereafter authorized, shall have any preemptive right to subscribe for or purchase any stock or any other securities of the Corporation other than such, if any, as the Board of Directors, in its sole discretion, may determine and at such price(s) and upon such other terms as the Board of Directors, in its sole discretion, may fix; and any stock or other securities that the Board of Directors may determine to offer for subscription may, as the Board of Directors in its sole discretion shall determine, be offered to the holders of any class, series or type of stock or other securities at the time outstanding to the exclusion of the holders of any or all other classes, series or types of stock or other securities at the time outstanding.
D. The Board of Directors shall have the power to create and to issue, whether or not in connection with the issuance and sale of any shares of stock or other securities of the Corporation, rights or options entitling the holders thereof to purchase from the Corporation any shares of its capital stock of any class(es), on such terms and conditions and in such form as the Board of Directors shall set forth in a resolution.
E. The Board of Directors shall have the power, subject to any limitations or restrictions imposed by law, to classify or reclassify any unissued shares of stock whether now or hereafter authorized, by fixing or altering in any one or more respects before issuance of such shares the voting powers, designations, preferences and relative, participating, optional or other special rights of such shares and the qualifications, limitations or restrictions of such preferences and/or rights.
F. The Board of Directors of the Corporation is expressly authorized to adopt, repeal, alter, amend and rescind the Bylaws of the Corporation by the affirmative vote of a majority of the directors then in office without the further approval of the stockholders. Notwithstanding any other provision of these Articles of Amendment and Restatement or the Bylaws of the Corporation (and notwithstanding that some lesser percentage may be specified by law), the Bylaws shall not be adopted, repealed, altered, amended or rescinded by the stockholders of the Corporation except by the affirmative vote of the holders of at least seventy five percent (75%) of the Voting Stock (after giving effect to the provisions of Article SIXTH), voting together as a single class.
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G. The Board of Directors shall have the power to declare and authorize the payment of stock dividends payable in stock of one class of the Corporation’s capital stock to holders of stock of another class(es) of the Corporation’s capital stock.
H. The Board of Directors shall have authority to exercise without a vote of stockholders all powers of the Corporation, whether conferred by law or by these Articles of Amendment and Restatement, to purchase, lease or otherwise acquire the business assets or franchises in whole or in part of other corporations or unincorporated business entities.
I. The Board of Directors shall have the power to borrow or raise money, from time to time and without limit, and upon any terms, for any corporate purposes, and, subject to the MGCL, to authorize the creation, issuance, assumption or guaranty of bonds, notes or other evidences of indebtedness for monies so borrowed, to include therein such provisions as to redeemability, convertibility or otherwise as the Board of Directors, in its sole discretion, may determine and to secure the payment of principal, interest or sinking fund in respect thereof by mortgage upon, or the pledge of, or the conveyance or assignment in trust of, the whole or any part of the properties, assets and goodwill of the Corporation then owed or thereafter acquired.
J. An officer or director of the Corporation, as such, shall not be liable to the Corporation or its stockholders for money damages, except (A) to the extent that it is proved that the person actually received an improper benefit or profit in money, property or services, for the amount of the benefit or profit in money, property or services actually received; or (B) to the extent that a judgment or other final adjudication adverse to the person is entered in a proceeding based on a finding in the proceeding that the person’s action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding; or (C) to the extent otherwise provided by the MGCL. If the MGCL is amended to further eliminate or limit the personal liability of officers and directors, then the liability of officers and directors of the Corporation shall be eliminated or limited to the fullest extent permitted by the MGCL, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such repeal or modification.
K. The Board of Directors may, in connection with the exercise of its business judgment involving any actual or proposed transaction that would or may involve a change in control of the Corporation (whether by purchases of shares of stock or any other securities of the Corporation in the open market or otherwise, tender offer, merger, consolidation, dissolution, liquidation, sale of all or substantially all of the assets of the Corporation, or proxy solicitation (other than on behalf of the Board of Directors or otherwise)), in determining what is in the best interests of the Corporation and its stockholders and in making any recommendation to its stockholders, give due consideration to all relevant factors, including, but not limited to the
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following: (1) the economic effect, both immediate and long-term, upon the Corporation’s stockholders, including stockholders, if any, choosing not to participate in the transaction; (2) effects, including any social and economic effects, on the employees, suppliers, creditors, depositors and customers of, and others dealing with, the Corporation and its subsidiaries and on the communities in which the Corporation and its subsidiaries operate or are located; (3) whether the proposal is acceptable based on the historical and current operating results or financial condition of the Corporation; (4) whether a more favorable price could be obtained for the Corporation’s stock or other securities in the future; (5) the reputation and business practices of the offeror and its management and affiliates as they would affect the employees; (6) the future value of the stock or any other securities of the Corporation; and (7) any anti-trust or other legal and regulatory issues that are raised by the proposal. If the Board of Directors determines that any actual or proposed transaction that would or may involve a change in control of the Corporation should be rejected, it may take any lawful action to accomplish its purpose, including, but not limited to, any and all of the following: advising stockholders not to accept the proposal; instituting litigation against the party making the proposal; filing complaints with governmental and regulatory authorities; acquiring the stock or any of the securities of the Corporation; selling or otherwise issuing authorized but unissued stock, other securities or treasury stock or granting options with respect thereto; selling any of the assets of the Corporation; acquiring a company to create an anti-trust or other regulatory problem for the party making the proposal; and obtaining a more favorable offer from another individual or entity.
L. Notwithstanding any provision of the MGCL requiring stockholder authorization of an action by a greater proportion than a majority of the total number of shares of all classes of capital stock or of the total number of shares of any class of capital stock, such action shall be valid and effective if authorized by the affirmative vote of the holders of a majority of the total number of shares of all classes outstanding and entitled to vote thereon, except as otherwise provided in these Articles.
M. Holders of shares of stock shall not be entitled to exercise any rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL or any successor statute unless the Board of Directors, pursuant to a resolution approved by a majority of the directors then in office, shall determine that such rights apply with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which holders of such shares would otherwise be entitled to exercise such rights.
NINTH: The Corporation shall indemnify (A) its directors and officers, whether serving the Corporation or at its request any other entity, to the fullest extent required or permitted by the general laws of the State of Maryland now or hereafter in force, including the advance of expenses under the procedures required, and (B) other employees and agents to such extent as shall be authorized by the Board of Directors or the Corporation’s Bylaws and be permitted by law. The foregoing rights of indemnification shall not be exclusive of any rights to which those seeking indemnification may be entitled. The Board of Directors may take such action as is necessary to carry out these indemnification provisions and is expressly empowered to adopt, approve and amend from time to time such Bylaws, resolutions or contracts implementing such provisions or such further indemnification arrangements as may be permitted by law. No amendment of the Articles of Amendment and Restatement of the Corporation shall limit or eliminate the right to indemnification provided hereunder with respect to acts or omissions occurring prior to such amendment or repeal. Any indemnification payments made pursuant to this Article NINTH are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. 1828(k)) and the regulations promulgated thereunder by the Federal Deposit Insurance Corporation (12 C.F.R. Part 359).
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TENTH: The Corporation reserves the right to amend or repeal any provision contained in these Articles in the manner prescribed by the MGCL, including any amendment altering the terms or contract rights, as expressly set forth in these Articles, of any of the Corporation’s outstanding stock by classification, reclassification or otherwise, and no stockholder approval shall be required if the approval of stockholders is not required for the proposed amendment or repeal by the MGCL, and all rights conferred upon stockholders are granted subject to this reservation. The Board of Directors, pursuant to a resolution approved by a majority of the directors then in office, and without action by the stockholders, may amend these Articles to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue. Notwithstanding any other provision of these Articles or any provision of law that might otherwise permit a lesser vote or no vote, any amendment of Section C of Article SIXTH, Section B of Article SEVENTH, Sections F and J of Article EIGHTH and this Article TENTH of the Corporation’s Articles of Amendment and Restatement shall require the affirmative vote of seventy five percent (75%) of the issued and outstanding shares of capital stock entitled to vote.
ELEVENTH: Under regulations of the Board of Governors of the Federal Reserve System, the Corporation must establish and maintain a liquidation account (the “Liquidation Account”) for the benefit of certain Eligible Account Holders and Supplemental Eligible Account Holders as defined in the Plan of Conversion and Reorganization (the “Plan of Conversion”). In the event of a complete liquidation involving (i) the Corporation or (ii) William Penn Bank, the Corporation must comply with the regulations of the Board of Governors of the Federal Reserve System and the provisions of the Plan of Conversion with respect to the amount and priorities of each Eligible Account Holder’s and Supplemental Eligible Account Holder’s interests in the Liquidation Account. The interest of an Eligible Account Holder or Supplemental Eligible Account Holder in the Liquidation Account does not entitle such account holders to voting rights.
[Signature pages follow]
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The undersigned acknowledges that this is an act of the above-named corporation, and verifies, under the penalties for perjury, that the matters and facts stated herein, which require such verification, are true and accurate, to the best of his knowledge, information, and belief.
SIGNATURE OF SOLE INCORPORATOR, CEO AND DIRECTOR: | ||
Attest: | ||
/s/ Jonathan T. Logan | /s/ Kenneth J. Stephon | |
Name: Jonathan T. Logan | Name: Kenneth J. Stephon | |
Title: Chief Financial Officer | Title: Sole Incorporator, CEO and Director | |
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CONSENT OF RESIDENT AGENT
The undersigned hereby agrees to its designation as resident agent in the State of Maryland for this corporation.
CSC-LAWYERS INCORPORATING SERVICE COMPANY | ||
/s/ Jennifer Strickland | ||
Name: Jennifer Strickland | ||
Title: Authorized Representative |
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Exhibit 3.2
BYLAWS
OF
WILLIAM PENN BANCORPORATION
ARTICLE I - STOCKHOLDERS
Section 1. ANNUAL MEETING
The annual meeting of the stockholders of William Penn Bancorporation (the “Corporation”) shall be held each year at such date and time as the Board of Directors shall, in their discretion, fix. The business to be transacted at the annual meeting shall include the election of directors and any other business properly brought before the meeting in accordance with these Bylaws.
Section 2. SPECIAL MEETINGS
A special meeting of the stockholders may be called at any time for any purpose(s) by the Chairman of the Board, the President, or by two-thirds of the total number of Directors which the Corporation would have if there were no vacancies on the Board of Directors. By virtue of the Corporation’s election made hereby to be governed by Section 3-805 of the Maryland General Corporation Law, a special meeting of the stockholders shall be called by the Secretary of the Corporation upon the written request of the holders of at least a majority of all shares outstanding and entitled to vote on the business to be transacted at such meeting. Notwithstanding the previous sentence, the Secretary of the Corporation shall not be obligated to call a special meeting of the stockholders requested by stockholders to take any action that is non-binding or advisory in nature. Business transacted at any special meeting shall be confined to the purpose(s) stated in the notice of such meeting.
Section 3. PLACE OF MEETING
The Board of Directors may designate any place, either within or without the State of Maryland, as the place of meeting for any annual or special meeting of stockholders.
Section 4. NOTICE OF MEETING; WAIVER OF NOTICE
Not less than ten (10) days nor more than ninety (90) days before the date of every stockholders meeting, the Secretary shall give to each stockholder entitled to vote at or to notice of such meeting, written notice stating the place, date and time of the meeting and, in the case of a special meeting, the purpose(s) for which the meeting is called, either by mail to his or her address as it appears on the records of the Corporation or by presenting it to him or her personally or by leaving it at his or her residence or usual place of business. Notwithstanding the foregoing provisions, a written waiver of notice, signed by the person entitled to notice, whether before or after the time stated therein, shall be equivalent to notice. Attendance of a person entitled to notice at a meeting, in person or by proxy, shall constitute a waiver of notice of such meeting, except when such person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.
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When a meeting is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided however, that if the date of the adjourned meeting is more than one hundred twenty (120) days after the record date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, written notice of the place, date and time of the adjourned meeting shall be given in conformity herewith.
Section 5. QUORUM
At any meeting of stockholders, the presence of a quorum for all purposes shall be determined as provided in the Articles of Incorporation unless or except to the extent that the presence of a larger number may be required by law.
If a quorum fails to attend any meeting, the Chairman of the meeting or the holders of a majority of the shares of stock entitled to vote who are represented in person or by proxy may adjourn the meeting to any place, date and time without further notice to a date not more than one hundred twenty (120) days after the original record date. At such adjourned meeting at which a quorum shall be present, any business may be transacted that might have been transacted at the meeting originally called. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of stockholders to leave less than a quorum.
Section 6. CONDUCT OF BUSINESS
(a) The chairman of any meeting of stockholders shall determine the order of business and the procedures at the meeting, including such regulation of the manner of voting and the conduct of discussion. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting.
(b) At any annual meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who is entitled to vote with respect thereto and who complies with the notice procedures set forth in this Section 6(b). For business to be properly brought before an annual meeting by a stockholder, the business must relate to a proper subject matter for stockholder action and the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice must be delivered or mailed to and received at the principal executive office of the Corporation not less than ninety (90) days before the date of the annual meeting; provided, however, that if less than one hundred (100) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A stockholder’s notice to the Secretary shall set forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Corporation’s books, of the stockholder proposing such business, (iii) the class and number of shares of the Corporation’s capital stock that are beneficially owned by such stockholder, (iv) a statement disclosing (A) whether such stockholder is acting with or on behalf of any other person and (B) if applicable, the identity of such person, and (v) any material interest of such stockholder in such business. Notwithstanding anything in these Bylaws to the contrary, no business shall be brought before or conducted at an annual meeting except in accordance with the provisions of this Section 6(b). The Chairman of the Board or other person presiding over the annual meeting shall, if the facts so warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 6(b) and, if he or she should so determine, he or she shall so declare to the meeting and any such business so determined to be not properly brought before the meeting shall not be transacted.
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At any special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting in accordance with Article I, Section 2.
(c) Only persons who are nominated in accordance with the procedures set forth in these Bylaws shall be eligible for election as Directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of stockholders at which directors are to be elected only (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation entitled to vote for the election of Directors at the meeting who complies with the notice procedures set forth in this Section 6(c). Such nominations, other than those made by or at the direction of the Board of Directors, shall be made by timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice shall be delivered or mailed to and received at the principal executive office of the Corporation not less than ninety (90) days before the date of the meeting; provided, however, that if less than one hundred (100) days’ notice or prior disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Such stockholder’s notice shall set forth (i) as to each person whom such stockholder proposes to nominate for election or re-election as a Director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a Director if elected); and (ii) as to the stockholder giving the notice (A) the name and address, as they appear on the Corporation’s books, of such stockholder, (B) the class and number of shares of the Corporation’s capital stock that are beneficially owned by such stockholder, and (C) a statement disclosing (1) whether such stockholder or any nominee thereof is acting with or on behalf of any other person and (2) if applicable, the identity of such person.
(d) The requirements set forth in subsections (b) and (c) of this Section 6 shall apply to all shareholder proposals and nominations, without regard to whether such proposals or nominations are required to be included in the Corporation’s proxy statement or form of proxy.
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Section 7. VOTING
All elections shall be determined by a plurality of the votes cast, and, except as otherwise required by law or the Articles of Incorporation, all other matters shall be determined by a majority of the votes cast.
Section 8. PROXIES
At all meetings of stockholders, a stockholder may vote the shares owned of record by him or her either in person or by proxy executed in writing by the stockholder or by his or her duly authorized attorney-in-fact. Any facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to this paragraph may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.
Such proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy. A proxy is revocable by a stockholder at any time without condition or qualification unless the proxy states that it is irrevocable and the proxy is coupled with an interest. A proxy may be made irrevocable for as long as it is coupled with an interest. The interest with which a proxy may be coupled includes an interest in the stock to be voted under the proxy or another general interest in the Corporation or its assets or liabilities.
Section 9. CONTROL SHARE ACQUISITION ACT
Notwithstanding any other provision of the Articles of Incorporation or these Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law (or any successor statute) shall not apply to any acquisition by any person of shares of stock of the Corporation. This Section 9 may be repealed at any time, in whole or in part, by a majority vote of the Corporation’s Board of Directors, whether before or after an acquisition of Control Shares (as such term is defined in Section 3-701(d) of the Maryland General Corporation Law, or any successor provision) and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent Control Share Acquisition (as such term is defined in Section 3-701(e) of the Maryland General Corporation Law, or any successor provision).
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ARTICLE II - DIRECTORS
Section 1. GENERAL POWERS
The business and affairs of the Corporation shall be managed by its Board of Directors. The Board of Directors may exercise all the powers of the Corporation, except those conferred on or reserved to the stockholders by statute or by the Articles of Incorporation or the Bylaws. The Board may adopt such rules and regulations for the conduct of their meetings and the management of the Corporation as they may deem proper, and that are not inconsistent with these Bylaws and with the Maryland General Corporation Law.
The Board of Directors shall annually elect a Chairman of the Board from among its members. The Chairman of the Board shall serve in a general oversight capacity and shall preside at all meetings of the Corporation’s Board of Directors. The Chairman of the Board shall perform all duties and have all powers that are commonly included in the office of the Chairman of the Board or which are delegated to him by the Board of Directors.
Section 2. NUMBER
The number of directors of the Corporation shall, by virtue of the Corporation’s election made hereby to be governed by Section 3-804(b) of the Maryland General Corporation Law, be fixed from time to time exclusively by vote of the Board of Directors; provided, however, that such number of directors shall never be less than the minimum number of directors required by the Maryland General Corporation Law.
Section 3. VACANCIES AND NEWLY CREATED DIRECTORSHIPS
By virtue of the Corporation’s election made hereby to be governed by Section 3-804(c) of the Maryland General Corporation Law, any vacancies in the Board of Directors resulting from an increase in the size of the Board of Directors or the death, resignation or removal of a director may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred and until a successor is elected and qualifies. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
Section 4. REGULAR MEETINGS
Regular meetings of the Board of Directors shall be held at such dates, such times and such places, either within or without the State of Maryland, as shall have been designated by the Board of Directors and publicized among all Directors.
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Section 5. SPECIAL MEETINGS
Special meetings of the Board of Directors may be called by the Chairman of the Board, by the Chief Executive Officer, or by two-thirds of the members of the Board of Directors in writing. The person(s) authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Maryland, as the place for holding the special meeting of the Board of Directors called by them.
Section 6. NOTICE
A notice of a regular meeting shall not be required. The Secretary shall give notice to each director of the date, time and place of each special meeting of the Board of Directors. Notice is given to a director when it is delivered personally to him or her, left at his or her residence or usual place of business, or sent by electronic transmission, telephone, telegraph, or similar means of transmission at least twenty four (24) hours before the time of the meeting, or in the alternative, when it is mailed to his or her address as it appears on the records of the Corporation, at least seventy two (72) hours before the time of the meeting. Any director may waive notice of any meeting either before or after the holding thereof by written waiver filed with the records of the meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.
Section 7. TELEPHONIC MEETINGS
Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board or committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 7 shall constitute presence in person at such meeting.
Section 8. QUORUM
At any meeting of the Board of Directors, a majority of the total number of directors shall constitute a quorum for the transaction of business, but if less than such quorum is present at a meeting, a majority of the directors present may adjourn the meeting without further notice or waiver thereof.
Section 9. MANNER OF ACTING
The vote of the majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors unless the concurrence of a greater proportion is required for such action by the Articles of Incorporation.
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Section 10. REMOVAL OF DIRECTORS
Any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least a majority of the shares of stock entitled to vote in the election of directors.
Section 11. RESIGNATION
A director may resign at any time by giving written notice to the Board, the President or the Secretary of the Corporation. Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the Board or such officer, and the acceptance of the resignation shall not be necessary to make it effective.
Section 12. COMPENSATION
By resolution of the Board of Directors, a fixed sum and expenses, if any, for attendance at each regular or special meeting of the Board of Directors or of committees thereof, and other compensation for their services as such or on such committees, may be paid to directors, as compensation for such attendance at meetings and other services as a director may render to the Corporation.
Section 13. COMMITTEES
The Board of Directors, by a vote of a majority of the Board of Directors, may from time to time designate committees of the Board, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board and shall, for these committees and any others provided for herein, elect a director(s) to serve as the member(s), designating, if it desires, other directors as alternate members who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; provided, however, that any such committee shall have no power or authority with reference to (i) declaring dividends or distributions on stock, (ii) issuing stock other than as authorized by the Board of Directors, (iii) recommending to the stockholders any action that requires stockholder approval, (iv) amending the Bylaws and (v) approving a merger or share exchange which does not require stockholder approval. In the absence or disqualification of any member of any committee and any alternate member in his or her place, the member(s) of the committee present at the meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member.
Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings. The quorum requirements for each such committee shall be a majority of the members of such committee.
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Action may be taken by any committee without a meeting if all members thereof consent thereto in writing, and the writing(s) are filed with the minutes of the proceedings of such committee.
Section 14. ADVISORY DIRECTORS
The Board of Directors may by resolution appoint advisory directors to the Board, who may also serve as directors emeriti, and shall have such authority and receive such compensation and reimbursement as the Board of Directors shall provide. Advisory directors or directors emeriti shall not have the authority to vote on the transaction of business.
Section 15. INTEGRITY OF DIRECTORS
A person is not qualified to serve as director if he or she: (1) is under indictment for, or has ever been convicted of, a criminal offense involving dishonesty or breach of trust and the penalty for such offense could be imprisonment for more than one year, or (2) is a person against who a banking agency has, within the past ten years, issued a cease and desist order for conduct involving dishonesty or breach of trust and that order is final and not subject to appeal, or (3) has been found either by a regulatory agency whose decision is final and not subject to appeal or by a court to have (i) breached a fiduciary duty involving personal profit or (ii) committed a willful violation of any law, rule or regulation governing banking, securities, commodities or insurance, or any final cease and desist order issued by a banking, securities, commodities or insurance regulatory agency.
Section 16. AGE LIMITATION
Notwithstanding anything herein to the contrary, the provisions of this section shall be applicable to all individuals, except for those individuals serving as directors or advisory directors of William Penn Savings and Loan Association as of July 1, 1986. No individual may be appointed to serve as a director if such individual shall be age 75 or more as of the date of such appointment. No individual may stand for election or re-election to serve as a director and be included on the meeting ballot if such individual shall be age 75 or more as of the date of the meeting of stockholders first called to vote on such matter.
ARTICLE III - OFFICERS
Section 1. EXECUTIVE AND OTHER OFFICERS
The officers of the Corporation shall be a President, a Secretary and a Treasurer. The Board of Directors may designate who shall serve as Chief Executive Officer, having general supervision of the business and affairs of the Corporation. In the absence of a designation, the President shall serve as Chief Executive Officer. The Board of Directors may appoint such other officers as it may deem proper. A person may hold more than one office in the Corporation but may not serve concurrently as both President and Vice President of the Corporation.
Section 2. PRESIDENT AND CHIEF EXECUTIVE OFFICER
The President and Chief Executive Officer shall be the principal executive officer of the Corporation. Subject to the provisions of these Bylaws and to the direction of the Board of Directors, he or she shall have the responsibility for the general management and control of the business and affairs of the Corporation and shall perform all duties and have all powers that are commonly incident to the office of the President or that are delegated to him or her by the Board of Directors. He or she shall have the power to sign all contracts, agreements, and other instruments of the Corporation that are authorized and shall have general supervision and direction of all of the other officers, employees and agents of the Corporation.
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Section 3. VICE PRESIDENT(S)
The Vice President(s) shall perform the duties of the President in his or her absence or during his or her inability to act. In addition, the Vice President(s) shall perform the duties and exercise the powers usually incident to their respective offices and/or such other duties and powers as may be properly assigned to them by the Board of Directors or the President. A Vice President(s) may be designated as Executive Vice President or Senior Vice President.
Section 4. SECRETARY
The Secretary shall keep the minutes of the meetings of the stockholders, of the Board of Directors and of any committees, in books provided for the purpose; he or she shall see that all notices are duly given in accordance with the provisions of the Bylaws or as required by law; he or she shall be custodian of the records of the Corporation; he or she shall witness all documents on behalf of the Corporation, the execution of which is duly authorized, see that the corporate seal is affixed where such document is required to be under its seal, and, when so affixed, may attest the same; and, in general, he or she shall perform all duties incident to the office of a secretary of a corporation, and such other duties as may from time to time be assigned to him or her by the Board of Directors or the President.
Section 5. TREASURER
The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation, and shall deposit, or cause to be deposited, in the name of the Corporation, all monies or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by the Board of Directors. In general, he or she shall perform all the duties incident to the office of a treasurer of a corporation, and such other duties as may from time to time be assigned to him or her by the Board of Directors or the President.
Section 6. SUBORDINATE OFFICERS
The Corporation may have such subordinate officers as the Board of Directors may from time to time deem desirable. Each such officer shall hold office for such period and perform such duties as the Board of Directors, the President or the committee or officer designated pursuant to these Bylaws may prescribe.
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Section 7. COMPENSATION
The Board of Directors shall have power to fix the salaries and other compensation and remuneration, of whatever kind, of all officers of the Corporation. It may authorize any committee or officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the salaries, compensation and remuneration of such subordinate officers.
Section 8. ELECTION, TENURE AND REMOVAL OF OFFICERS
The Board of Directors shall elect the officers. The Board of Directors may from time to time authorize any committee or officer to appoint subordinate officers. An officer serves for one year or until his or her successor is elected and qualified. If the Board of Directors in its judgment finds that the best interests of the Corporation will be served, it may remove any officer or agent of the Corporation. The removal of an officer or agent does not prejudice any of his or her contract rights. The Board of Directors (or any committee or officer authorized by the Board of Directors) may fill a vacancy that occurs in any office for the unexpired portion of the term of that office.
ARTICLE IV – STOCK
Section 1. CERTIFICATES FOR STOCK
Each stockholder shall be entitled to certificates that represent and certify the shares of stock he or she holds in the Corporation. Each stock certificate shall include on its face the name of the Corporation, the name of the stockholder and the class of stock and number of shares represented by the certificate and be in such form, not inconsistent with law or with the Articles of Incorporation, as shall be approved by the Board of Directors or any officer(s) designated for such purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the President or the Chairman of the Board, and countersigned by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer. Each certificate shall be sealed with the actual corporate seal or a facsimile of it or in any other form and the signatures on each certificate may be either manual or facsimile signatures. A certificate is valid and may be issued whether or not an officer who signed it is still an officer of the Corporation when it is issued.
Notwithstanding anything to the contrary herein, the Board of Directors may provide by resolution that some or all of the shares of any or all classes or series of the Corporation’s capital stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation.
Section 2. TRANSFERS
The Board of Directors shall have power and authority to make such rules and regulations as it may deem expedient concerning the issuance, transfer and registration of certificates of stock or uncertificated shares of stock, and may appoint transfer agents and registrars thereof. The duties of transfer agent and registrar may be combined.
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Section 3. RECORD DATE AND CLOSING OF TRANSFER BOOKS
In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than ninety (90) nor less than ten (10) days before the date of such meeting, nor more than ninety (90) days before any other action. The transfer books may not be closed for a period longer than twenty (20) days. In the case of a meeting of stockholders, the closing of the transfer books shall be at least ten (10) days before the date of the meeting.
Section 4. STOCK LEDGER
The Corporation shall maintain a stock ledger that contains the name and address of each stockholder and the number of shares of stock of each class registered in the name of each stockholder. The stock ledger may be in written form or in any other form that can be converted within a reasonable time into written form for visual inspection. The original or a duplicate of the stock ledger shall be kept at the offices of a transfer agent for the particular class of stock, within or without the State of Maryland, or, if none, at the principal office or the principal executive offices of the Corporation in the State of Maryland.
Section 5. CERTIFICATION OF BENEFICIAL OWNERS
The Board of Directors may adopt, by resolution, a procedure by which a stockholder of the Corporation may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder.
Section 6. LOST, STOLEN OR DESTROYED STOCK CERTIFICATES
The Board of Directors of the Corporation may determine the conditions for issuing a new stock certificate or uncertificated shares in place of a stock certificate that is purportedly alleged to have been lost, stolen or destroyed, or the Board of Directors may delegate such power to any officer(s) of the Corporation. In its discretion, the Board of Directors or such officer(s) may refuse to issue such new certificate or uncertificated shares except upon the order of a court having jurisdiction in the premises.
ARTICLE V - FINANCE
Section 1. CHECKS, DRAFTS, ETC.
All checks, drafts and orders for the payment of money, notes and other evidences of indebtedness, issued in the name of the Corporation, shall, unless otherwise provided by resolution of the Board of Directors, be signed by the President or a Vice President and countersigned by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary.
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Section 2. FISCAL YEAR
The fiscal year of the Corporation shall commence on the first day of July and end on the last day of June in each year.
ARTICLE VI – MISCELLANEOUS PROVISIONS
Section 1. CORPORATE SEAL
The Board of Directors shall provide a suitable seal, bearing the name of the Corporation, which shall be in the charge of the Secretary. The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof.
Section 2. VOTING UPON SHARES IN OTHER CORPORATIONS
Stock of other corporations or associations, registered in the name of the Corporation, may be voted by the Chief Executive Officer, the President, a Vice President or a proxy appointed by any of them. The Board of Directors, however, may by resolution appoint some other person to vote such shares, in which case such person shall be entitled to vote such shares upon the production of a certified copy of such resolution.
Section 3. MAIL
Any notice or other document which is required by these Bylaws to be mailed shall be deposited in the United States mail, postage prepaid.
Section 4. EXCLUSIVE FORUM FOR CERTAIN DISPUTES
Unless the Corporation consents in writing to the selection of an alternative forum, the United States District Court for the District of Maryland or, if such court lacks jurisdiction, any Maryland state court that has jurisdiction, shall, to the fullest extent permitted by law, be the sole and exclusive forum for (1) any derivative action or proceeding brought on behalf of the Corporation, (2) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (3) any action asserting a claim arising pursuant to any provision of the Maryland General Corporation Law, and (4) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 4.
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Exhibit 4.0
COMMON STOCK | COMMON STOCK |
CERTIFICATE NO. __ | SEE REVERSE FOR CERTAIN DEFINITIONS |
CUSIP ____________ |
WILLIAM PENN BANCORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
THIS CERTIFIES THAT | [SPECIMEN] |
is the owner of: |
FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK,
$0.01 PAR VALUE PER SHARE, OF WILLIAM PENN BANCORPORATION
The shares represented by this certificate are transferable only on the stock transfer books of William Penn Bancorporation (the “Company”) by the holder of record hereof, or by his duly authorized attorney or legal representative, upon the surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be held subject to all the provisions of the Articles of Incorporation of the Company and any amendments thereto (copies of which are on file with the Corporate Secretary of the Company), to all of which provisions the holder by acceptance hereof, assents. This certificate is not valid until countersigned and registered by the Company’s Transfer Agent and Registrar.
The shares evidenced by this certificate are not of an insurable type and are not insured by the Federal Deposit Insurance Corporation.
IN WITNESS WHEREOF, WILLIAM PENN BANCORPORATION has caused this certificate to be executed by the facsimile signatures of its duly authorized officers and has caused a facsimile of its corporate seal to be hereunto affixed.
Dated: __________________ | [SEAL] | ||
President and Chief Executive Officer | Corporate Secretary |
The shares represented by this certificate are subject to a limitation contained in the Articles of Incorporation to the effect that in no event shall any record owner of any outstanding common stock which is beneficially owned, directly or indirectly, by a person who beneficially owns in excess of 10% of the outstanding shares of common stock (the “Limit”) be entitled or permitted to any vote in respect of shares held in excess of the Limit.
The Board of Directors of the Company is authorized by resolution(s), from time to time adopted, to provide for the issuance of serial preferred stock in series and to fix and state the voting powers, designations, preferences and relative, participating, optional, or other special rights of the shares of each such series and the qualifications, limitations and restrictions thereof. The Company will furnish to any shareholder upon request and without charge a full description of each class of stock and any series thereof.
The shares represented by this Certificate may not be cumulatively voted on any matter.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM | - | as tenants in common | UNIF GIFTS MIN ACT | - | custodian | |||
(Cust) | (Minor) |
TEN ENT | - | as tenants by the entireties | under Uniform Gifts to Minors Act | |||||
(State) | ||||||||
JT TEN | - |
as joint tenants with right
of survivorship and not as tenants in common |
Additional abbreviations may also be used though not in the above list.
For value received __________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFICATION NUMBER OF ASSIGNEE
Please print or typewrite name and address including postal zip code of assignee.
__________________________________________________ shares of the common stock represented by this certificate and do hereby irrevocably constitute and appoint ______________________________________________________________________________, attorney, to transfer the said stock on the books of the within-named corporation with full power of substitution in the premises.
DATED ______________________ | |
NOTICE: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular without alteration or enlargement or any change whatever. |
SIGNATURE GUARANTEED: | ||
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION, (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15 |
Exhibit 5.0
Suite 900, 607 14th Street, NW Washington, DC 20005-2018 t 202 508 5800 f 202 508 5858 |
October 15, 2020 |
direct dial 202 508 5893 direct fax 202 204 5616 gbronstein@kilpatricktownsend.com |
Board of Directors
William Penn Bancorporation
10 Canal Street, Suite 104
Bristol, Pennsylvania 19007
Ladies and Gentlemen:
We have acted as counsel to William Penn Bancorporation, a Maryland corporation (the “Company”), in connection with the registration under the Securities Act of 1933, as amended (the “Act”), of up to 15,208,616 shares of common stock, $0.01 par value per share, of the Company (the “Shares”) pursuant to the Registration Statement on Form S-1 (the “Registration Statement”) filed with the Securities and Exchange Commission on October 15, 2020. The Registration Statement relates to (i) up to 12,650,000 shares (the “Offering Shares”) that may be issued in a subscription offering, community offering and/or syndicated community offering or firm commitment offering and (ii) up to 2,558,616 shares (the “Exchange Shares”) that may be issued in exchange for outstanding shares of common stock, par value $0.10 per share, of William Penn Bancorp, Inc., a Pennsylvania corporation.
We have reviewed the Registration Statement, the Plan of Conversion and Reorganization filed as Exhibit 2.0 to the Registration Statement, and the corporate proceedings of the Company with respect to the authorization of the issuance of the Shares. We have also examined originals or copies of such documents, corporate records, certificates of public officials and other instruments, and have conducted such other investigations of law and fact as we have deemed necessary or advisable for purposes of our opinion. In our examination, we have assumed, without verification, the genuineness of all signatures, the authenticity of all documents and instruments submitted to us as originals, and the conformity to the originals of all documents and instruments submitted to us as certified or conformed copies.
This opinion is limited solely to the Maryland General Corporation Law, including applicable provisions of the Constitution of Maryland and the reported judicial decisions interpreting such law.
Board of Directors
William Penn Bancorporation
October 15, 2020
Page 2
For purposes of this opinion, we have assumed that, prior to the issuance of any Shares, the Registration Statement, as finally amended, will have become effective under the Act and that the mergers contemplated by the Plan of Conversion and Reorganization will have become effective.
Based upon and subject to the foregoing, it is our opinion that:
(i) the Offering Shares, when issued and sold in the manner described in the Registration Statement, will be validly issued, fully paid and nonassessable; and
(ii) when the Company issues and delivers the Exchange Shares in accordance with the terms of the Plan of Conversion and Reorganization, the Exchange Shares will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and as an exhibit to the Application on Form MM-AC of William Penn, MHC filed with the Board of Governors of the Federal Reserve System (the “Federal Reserve Board Application”), and to the reference to our firm under the heading “Legal and Tax Opinions” in the prospectus which is part of each of the Registration Statement and the Federal Reserve Board Application, as such may be amended or supplemented, or incorporated by reference in any Registration Statement covering additional shares of Common Stock to be issued or sold under the Plan of Conversion and Reorganization that is filed pursuant to Rule 462(b) of the Act, and to the reference to our firm in the Federal Reserve Board Application. In giving such consent, we do not hereby admit that we are experts or are otherwise within the category of persons whose consent is required under Section 7 of the Act or the rules or regulations of the Securities and Exchange Commission thereunder.
Very truly yours, | |
KILPATRICK TOWNSEND & STOCKTON LLP | |
/s/ Gary R. Bronstein | |
Gary R. Bronstein, a Partner |
Exhibit 8.1 |
Suite 900, 607 14th Street, NW
Washington, DC 20005-2018
t 202 508 5800 f 202 508 5858
__________, 2020
Boards of Directors
William Penn, MHC
William Penn Bancorp, Inc.
William Penn Bancorporation
William Penn Bank
10 Canal Street, Suite 104
Bristol, Pennsylvania 19007
Ladies and Gentlemen:
We have been requested as special counsel to William Penn, MHC, a Pennsylvania-chartered mutual holding company (the “Mutual Holding Company”), William Penn Bancorp, Inc., a Pennsylvania chartered bank holding company (the “Mid-Tier Holding Company”), William Penn Bank, a Pennsylvania chartered stock savings bank (the “Bank”), and William Penn Bancorporation, a newly formed Maryland corporation (“the “Holding Company”), to express our opinion concerning material federal income tax consequences relating to the reorganization of the Mutual Holding Company into the capital stock form of organization (all of the steps of the reorganization are collectively referred to herein as the “Conversion”) pursuant to that certain Plan of Conversion and Reorganization of William Penn, MHC, William Penn Bancorp, Inc., and William Penn Bank adopted on September 16, 2020 and amended and restated on October 6, 2020 (the “Plan”). Unless otherwise defined, all terms used herein have the meanings given to such terms in the Plan.
In connection with our opinion, we have relied upon the accuracy of the factual matters set forth in the Plan (see below) and the Registration Statement filed by the Holding Company with the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended, and the Application for Conversion on Form MM-AC filed by the Mutual Holding Company with the Board of Governors of the Federal Reserve System.
We are also relying on certain representations as to factual matters provided to us by the Mutual Holding Company, the Bank, the Mid-Tier Holding Company and the Holding Company, as set forth in the certificates signed by authorized officers of each of the aforementioned entities and incorporated herein by reference. If any of the facts are incorrect or incomplete, our discussion and conclusion may be different from those set forth below. We are under no obligation and we expressly disavow any obligations to advise the Mutual Holding Company, the Bank, the Mid-Tier Holding Company and the Holding Company if we learn that the facts are not as they have been represented to us. We have made such investigations as we
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have deemed relevant or necessary for the purpose of this opinion. In our examination, we have assumed the authenticity of original documents, the accuracy of copies and the genuineness of signatures. In connection therewith, we have examined the Plan and certain other documents of or relating to the Conversion, some of which are described or referred to in the Plan and which we deemed necessary to examine in order to issue the opinions described herein.
The opinions set forth herein are based upon the existing provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations thereunder (the “Federal Income Tax Regulations”), and upon current Internal Revenue Service (the “IRS”) published rulings and existing court decisions, any of which could be changed at any time. Any such changes may be retroactive and could significantly modify the statements and opinions expressed herein. Similarly, any change in the facts and assumptions stated below, upon which this opinion is based, could modify the conclusions. This opinion is as of the date hereof, and we disclaim any obligation to advise you of any change in any matter considered herein after the date hereof.
We opine only as to the matters we expressly set forth, and no opinions should be inferred as to any other matters or as to the tax treatment of the transactions that we do not specifically address. We express no opinion as to other federal laws and regulations, or as to laws and regulations of other jurisdictions, or as to factual or legal matters other than as set forth herein.
Current Structure
At the present time, the Mutual Holding Company owns approximately 82.7% of the outstanding common stock of the Mid-Tier Holding Company, the remaining common stock is owned by the Minority Stockholders. The Mid-Tier Holding Company owns all of the outstanding common stock of the Bank. The only outstanding equity securities of the Mid-Tier Holding Company and the Bank are shares of common stock. The Mutual Holding Company is a mutual form of organization without authority to issue capital stock, with its depositors and certain borrowers being entitled to voting rights and with its depositors entitled to liquidation proceeds, after payment of the creditors, upon the complete liquidation of the Mutual Holding Company.
Description of Proposed Transactions
The Boards of Directors of the Mutual Holding Company, the Holding Company, the Mid-Tier Holding Company and the Bank have adopted the Plan to provide for the conversion of the Mutual Holding Company from a Pennsylvania-chartered mutual holding company to the capital stock form of organization. A new Maryland stock corporation, the Holding Company, was incorporated on July 31, 2020 as part of the Conversion and will succeed to all the rights and obligations of the Mutual Holding Company and the Mid-Tier Holding Company and will issue Holding Company Common Stock in the Conversion.
It is proposed, through a two-step merger process, referred to herein as the “MHC Merger” and the “Mid-Tier Merger”, and Offering that the Holding Company will become the
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owner of 100% of the outstanding common stock of the Bank and that the Holding Company will be owned by the persons acquiring Holding Company Stock in the Offering and the existing Minority Stockholders, with Eligible Account Holders and Supplemental Eligible Account Holders possessing rights in the Liquidation Account of the Holding Company, including indirect rights in the Bank Liquidation Account.
Steps in the Proposed Transaction
(1) The Mid-Tier Holding Company will establish the Holding Company as a first-tier Maryland-chartered stock holding company subsidiary.
(2) The Mutual Holding Company will merge with and into the Mid-Tier Holding Company (the “MHC Merger”) pursuant to the Agreement and Plan of Merger attached to the Plan as Annex A. In the MHC Merger, and pursuant to the Agreement and Plan of Merger, the depositor members of the Bank will automatically, without any further action on the part of the holders thereof, constructively receive liquidation interests in the Mid-Tier Holding Company in exchange for their ownership rights/liquidation interests in the Bank and all outstanding capital stock of the Mid-Tier Holding Company held by the Mutual Holding Company will be cancelled.
(3) Immediately after the MHC Merger, the Mid-Tier Holding Company will merge with and into the Holding Company (the “Mid-Tier Merger”) with the Holding Company as the resulting entity pursuant to the Agreement and Plan of Merger attached to the Plan as Annex B. As part of the Mid-Tier Merger, the liquidation interests in the Mid-Tier Holding Company constructively received by the depositors of the Bank immediately prior to Conversion will automatically, without further action on the part of the holders thereof, be exchanged for an interest in the Liquidation Account (and indirectly for an interest in the Bank Liquidation Account), the shares of Mid-Tier Holding Company Common Stock held by Minority Stockholders will be converted into and become the right to receive Holding Company Common Stock based on the Exchange Ratio and cash in lieu of any fractional shares of stock issued in the exchange and all of the outstanding capital stock of the Holding Company will be cancelled.
(4) Immediately after the Mid-Tier Merger, the Holding Company will offer for sale and sell a number of shares of Holding Company Common Stock in the Offering that will represent ownership by the purchasers thereof of approximately 82.7% of its Common Stock after completion of the Offering, with the remainder of the shares of Holding Company Common Stock being owned by the Minority Stockholders.
(5) The Holding Company will contribute at least 50% of the net proceeds of the Offering to the Bank in exchange for common stock of the Bank.
Consequences of the Proposed Transaction
Following the Conversion, the Holding Company will be owned 100% by the purchasers of the shares in the Offering and the Minority Shareholders and Eligible Account Holders and
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Supplemental Eligible Account Holders will possess interest in the Liquidation Account and indirectly in the Bank Liquidation Account.
The Liquidation Account will be maintained by the Holding Company for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain their deposit accounts with the Bank. Pursuant to the Plan, the initial balance of the Liquidation Account will be equal to the product of (a) the percentage of the outstanding shares of the common stock of the Mid-Tier Holding Company owned by the Mutual Holding Company multiplied by (b) the Mid-Tier Holding Company’s total stockholders’ equity as reflected in the latest statement of financial condition contained in the final offering Prospectus utilized in the Conversion. All outstanding equity securities of the Holding Company will at all times be subject to the superior rights in the Liquidation Account of Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain their deposits at the Bank.
The Holding Company will own all of the Common Stock of the Bank subject to the superior liquidation right in the Bank Liquidation Account of the Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain their deposit accounts with the Bank. The terms of the Liquidation Account and Bank Liquidation Account, which supports the payment of the Liquidation Account in the event the Holding Company lacks sufficient net assets, are described in the Plan.
Opinions
Based on the foregoing, and subject to the qualifications and limitations set forth in this letter, we are of the opinion that:
1. | The MHC Merger of the Mutual Holding Company with and into the Mid-Tier Holding Company will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Code. |
2. | The constructive exchange of Eligible Account Holders’ and Supplemental Eligible Account Holders’ liquidation interests in the Mutual Holding Company for liquidation interests in the Mid-Tier Holding Company in the MHC Merger will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Federal Income Tax Regulations (See Rev. Rul. 69-3, 1969-1 C.B. 103, and Rev. Rul. 69-646, 1969-2 C.B. 54). |
3. | None of the Mutual Holding Company, the Mid-Tier Holding Company, Eligible Account Holders nor Supplemental Eligible Account Holders will recognize any gain or loss on the transfer of the assets of the Mutual Holding Company to the Mid-Tier Holding Company and the assumption by the Mid-Tier Holding Company of the Mutual Holding Company’s liabilities, if any, in constructive exchange for liquidation interests in the Mid-Tier Holding Company (Sections 361(a), 361(c), 357(a), 1032(a) and 354(a) of the Code). |
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4. | The basis of the assets of the Mutual Holding Company and the holding period of such assets to be received by the Mid-Tier Holding Company will be the same as the basis and holding period of such assets in the Mutual Holding Company immediately before the exchange (Sections 362(b) and 1223(2) of the Code). |
5. | The Mid-Tier Merger of the Mid-Tier Holding Company with and into the Holding Company will constitute a mere change in identity, form or place of organization within the meaning of Section 368(a)(1)(F) of the Code and, therefore, will qualify as a tax-free reorganization within the meaning of Section 368(a)(1)(F) of the Code. The Mid-Tier Holding Company will not recognize any gain or loss on the transfer of its assets to the Holding Company and the Holding Company’s assumption of liabilities in the Mid-Tier Merger pursuant to which Eligible Account Holders and Supplemental Eligible Account Holders will receive interests in the Liquidation Account of the Holding Company in exchange for their liquidation interests in the Mid-Tier Holding Company (Sections 361(a), 361(c) and 357(a) of the Code). No gain or loss will be recognized by the Holding Company upon receipt of the assets of the Mid-Tier Holding Company in the Mid-Tier Merger (Section 1032(a) of the Code).. |
6. | The basis of the assets of the Mid-Tier Holding Company and the holding period of such assets to be received by the Holding Company will be the same as the basis and holding period of such assets in the Mid-Tier Holding Company immediately before the exchange (Sections 362(b) and 1223(2) of the Code). |
7. | Eligible Account Holders and Supplemental Eligible Account Holders will not recognize any gain or loss upon the constructive exchange of their liquidation interests in the Mid-Tier Holding Company for interests in the liquidation account in the Holding Company (Section 354 of the Code). |
8. | The exchange by the Eligible Account Holders and Supplemental Eligible Account Holders of the liquidation interests that they constructively received in the Mid-Tier Holding Company for interests in the liquidation account established in the Holding Company will satisfy the continuity of interest requirement of Section 1.368-1(b) of the Federal Income Tax Regulations (See Rev. Rul. 69-3, 1969-1 C.B. 103, and Rev. Rul. 69-646, 1969-2 C.B. 54). |
9. | Each stockholder’s aggregate basis in shares of the Holding Company’s common stock (including fractional share interests) received in the exchange will be the same as the aggregate basis of the Mid-Tier Holding Company common stock surrendered in the exchange. (Section 358(a)(1) of the Code). |
10. |
Each stockholder’s holding period in his or her Holding Company common stock received in the exchange will include the period during which the Mid-Tier Holding Company common stock surrendered was held, provided that the Mid-
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Tier Holding Company common stock surrendered is a capital asset in the hands of the stockholder on the date of the exchange (Section 1223(2) of the Code). |
11. | Except with respect to cash received in lieu of fractional shares, current stockholders of the Mid-Tier Holding Company will not recognize any gain or loss upon their exchange of Mid-Tier Holding Company common stock for Holding Company common stock. (Section 354(a)(1) of the Code). |
12. | Cash received by any current stockholder of Mid-Tier Holding Company in lieu of a fractional share interest in shares of Holding Company common stock will be treated as having been received as a distribution in full payment in exchange for a fractional share interest of Holding Company common stock, which such stockholder would otherwise be entitled to receive. Accordingly, a stockholder will recognize gain or loss equal to the difference between the cash received and the basis of the fractional share. If the common stock is held by the stockholder as a capital asset, the gain or loss will be capital gain or loss (See, Rev. Rul. 74-36, 1974-1 C.B. 85). |
13. | It is more likely than not that the fair market value of the nontransferable subscription rights to purchase Holding Company common stock is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders, Supplemental Eligible Account Holders or Other Members upon distribution to them of nontransferable subscription rights to purchase shares of Holding Company common stock (Section 356(a) of the Code). Eligible Account Holders, Supplemental Eligible Account Holders and Other Members will not realize any taxable income as the result of the exercise by them of the nontransferable subscriptions rights (Rev. Rul. 56-572, 1956-2 C.B. 182). |
14. | It is more likely than not that the fair market value of the benefit provided by the Bank Liquidation Account supporting the payment of the Liquidation Account in the event the Holding Company lacks sufficient net assets is zero. Accordingly, it is more likely than not that no gain or loss will be recognized by Eligible Account Holders and Supplemental Eligible Account Holders upon the constructive distribution to the Holding Company for the benefit of the Eligible Account Holders and Supplemental Eligible Account Holders or rights in, or constructive distribution to Eligible Account Holders and Supplemental Eligible Account Holders of rights in the Bank Liquidation Account in the Mid-Tier Merger. (Section 356(a) of the Code). |
15. |
It is more likely than not that the basis of the shares of Holding Company common stock purchased in the offering by the exercise of nontransferable subscription rights will be the purchase price thereof. (Section 1012 of the Code). The holding period of the Holding Company common stock purchased pursuant
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to the exercise of nontransferable subscription rights will commence on the date the right to acquire such stock was exercised. (Section 1223(5) of the Code). |
16. | No gain or loss will be recognized by the Holding Company on the receipt of money in exchange for Holding Company common stock sold in the offering. (Section 1032 of the Code). |
The reasoning in support of our opinions in paragraphs 13 and 15 above is set forth below. We understand that the subscription rights will be granted at no cost to the recipients, will be legally nontransferable and of short duration, and will provide the recipient with the right only to purchase shares of Holding Company Common Stock at the same price to be paid by members of the general public in any Community Offering. We also note that the IRS has not in the past concluded that subscription rights have value. In addition, we are also relying on a letter from RP Financial, LC, to you stating its belief that subscription rights will have no ascertainable market value. Based on the foregoing, we believe it is more likely than not that the nontransferable subscription rights to purchase Holding Company Common Stock have no value. If the subscription rights are subsequently found to have an economic value, income may be recognized by various recipients of the subscription rights (in certain cases, whether or not the rights are exercised) and the Holding Company and/or the Bank may be taxable on the distribution of the subscription rights.
The reasoning in support of our opinion in paragraph 14 above is set forth below. We understand that: (i) there is no history of any holder of a liquidation account receiving any payment attributable to a liquidation account; (ii) the interests in the Liquidation Account and Bank Liquidation Account are not transferable; (iii) the amounts due under the Liquidation Account with respect to each Eligible Account Holder and Supplemental Eligible Account Holder will be reduced as their deposits in the Bank are reduced as described in the Plan; and (iv) the Bank Liquidation Account payment obligation arises only if the Holding Company lacks sufficient net assets to fund the Liquidation Account. In addition, we are relying on a letter from RP Financial, LC to you stating its belief that the benefit provided by the Bank Liquidation Account supporting the payment of the Liquidation Account in the event the Holding Company lacks sufficient net assets does not have any economic value at the time of the Mid-Tier Merger or upon the completion of the Conversion. Based on the foregoing, we believe it is more likely than not that such rights in the Bank Liquidation Account have no value. If such Bank Liquidation Account rights are subsequently found to have an economic value, income may be recognized by each Eligible Account Holder and Supplemental Eligible Account Holder in the amount of such fair market value as of the effective date of the Mid-Tier Merger.
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We hereby consent to the filing of the opinion as an exhibit to the Mutual Holding Company’s Application for Conversion filed with the Board of Governors of the Federal Reserve System and to the Holding Company’s Registration Statement on Form S-1, as amended, as filed with the SEC. We also consent to the references to our firm in the Prospectus contained in the Application for Conversion and Form S-1, as amended, under the captions “The Conversion and Offering—Material Income Tax Consequences” and “Legal and Tax Opinions.”
Very truly yours, | |
KILPATRICK TOWNSEND & STOCKTON LLP |
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If to the Executive:
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| | At the address maintained in the personnel records of the Bank. | |
| If to the Bancorp: | | | 10 Canal Street, Suite 104, Bristol, Pennsylvania 19007. Attn: Board of Directors | |
| If to the Bank: | | | 10 Canal Street, Suite 104, Bristol, Pennsylvania 19007. Attn: Board of Directors | |
|
If to the Executive:
|
| | At the address maintained in the personnel records of the Bank. | |
| If to the Bancorp: | | |
10 Canal Street, Suite 104, Bristol, Pennsylvania 19007.
Attn: Board of Directors |
|
| If to the Bank: | | |
10 Canal Street, Suite 104, Bristol, Pennsylvania 19007.
Attn: Board of Directors |
|
Exhibit 10.6
WILLIAM PENN BANK,
FSB
DEFERRED COMPENSATION PLAN FOR DIRECTORS AND ADVISORY DIRECTORS
As amended and restated
WHEREAS, William Penn Bank, FSB (the “Bank”) through its Board of Directors (the “Board”) adopted a Deferred Compensation Plan for Directors and Advisory Directors (the “Plan”) on December 19,1984 which plan has remained in effect since that date of approval; and
WHEREAS, certain revisions to the Plan are necessary in order to conform such Plan to the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) and related regulations and notices promulgated thereunder, with such revisions to be effective as of January 1,2009.
NOW THEREFORE, the Bank, acting through its Board, hereby adopts this Restated Deferred Compensation Plan (the “Restated Plan”), on_________, 2008 to be effective as of the 1st day of January 2009, for certain directors (the “Participants”) to be designated from time to time by the Board in accordance with the following provisions:
ARTICLE I
Purpose
1.1 The purpose of this Plan is to provide Directors and Advisory Directors of William Penn Bank, FSB the opportunity to defer the payment of compensation earned in that capacity with one common bookkeeping account being maintained for all Participants.
ARTICLE II
Definitions
2.1 “Account” means the one common bookkeeping account for all deferred compensation maintained on behalf of all Participants in the Plan.
2.2 Change in Control of the Bank or the Company shall mean: (i) a change in ownership of the Bank or the Company under paragraph (a) below, or (ii) a change in effective control of the Bank or the Company under paragraph (b) below, or (iii) a change in the ownership of a substantial portion of the assets of the Bank or the Company under paragraph (c) below:
(a) CHANGE IN THE OWNERSHIP OF THE BANK OR THE COMPANY. A change in the ownership of the Bank or the Company shall occur on the date that any one person, or more than one person acting as a group (as defined in paragraph (b)), acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of such corporation. However, if any one person or more than one person acting as a group, is considered to own more than 50 percent of the total fair market value or total voting power of the stock of a corporation, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the corporation (or to cause a change in the effective control of the corporation (within the meaning of paragraph (b) below). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the corporation acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this section. This paragraph (a) applies only when there is a transfer of stock of a corporation (or issuance of stock of a corporation) and stock in such corporation remains outstanding after the transaction.
(b) CHANGE IN THE EFFECTIVE CONTROL OF THE BANK OR THE COMPANY. A change in the effective control of the Bank or the Company shall occur on the date that either (i) any one person, or more than one person acting as a group (as determined below), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing 30 percent or more of the total voting power of the stock of such corporation; or (ii) a majority of members of the corporation’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of directors prior to the date of the appointment or election, provided that for purposes of this paragraph (b)(ii), the term corporation refers solely to a corporation for which no other corporation is a majority shareholder. In the absence of an event described in paragraph (i) or (ii), a change in the effective control of a corporation will not have occurred. If any one person, or more than one person acting as a group, is considered to effectively control a corporation (within the meaning of this paragraph (b)), the acquisition of additional control of the corporation by the same person or persons is not considered to cause a change in the effective control of the corporation (or to cause a change in the ownership of the corporation within the meaning of paragraph (a)). Persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering.
(c) CHANGE IN THE OWNERSHIP OF A SUBSTANTIAL PORTION OF THE BANK OR THE COMPANY’S ASSETS. A change in the ownership of a substantial portion of the Bank or the Company’s assets shall occur on the date that any one person, or more than one person acting as a group (as determined below), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. There is no Change in Control event under this paragraph (c) when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer.
(d) Each of the sub-paragraphs (a) through (c) above shall be construed and interpreted consistent with the requirements of Section 409A of the Code and any Treasury regulations or other guidance issued thereunder. However, a change in control shall not be deemed to have occurred as a result of a holding company reorganization of the Company and simultaneous acquisition of more than 50% of the Company’s stock (following the Company’s conversion to stock form) by a parent savings and loan holding company or bank holding company.
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2.3 “Company” shall mean William Penn Bancorp, Inc.
2.4 “Disability” means (A) the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (B) the Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Bank. As a condition to any benefits, the Bank may require the Participant to submit to such physical or mental evaluations and tests as the Board of Directors deems appropriate.
2.5 “Eligible Participant” shall mean individuals who are Directors or Advisory Directors of the Bank.
2.6 ‘Participant” means any Eligible Participant who has properly executed a Participation Agreement.
2.7 “Plan” means the William Penn Bank, FSB Deferred Compensation Plan for Directors and Advisory Directors as it may be amended from time to time, and the Participation Agreement executed by the Participant, both of which constitute the Plan.
2.8 “Bank” means William Penn Bank, FSB.
ARTICLE III
3.1 Any present or future Eligible Participant shall be eligible to participate in the Plan, provided a Participation Agreement is executed before such participation is desired.
ARTICLE IV
Deferment of Compensation
4.1 Participation in the Plan is optional. Any Director who elects to participate may defer all or part of his/her annual compensation earned as a Director. The Participant shall have the right to amend or terminate his/her election to participate in the Plan prior to January 1 of each year.
ARTICLE V
Plan Administration
5.1 The deferred compensation of the Participant will not be paid by the Bank to the Participant as it is earned by the Participant. Rather, the Bank shall credit to the Account referred to in Section 5.2 below the amount of Participant’s deferred compensation earned over that period.
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5.2 The Bank hereby establishes one bookkeeping Account for all Participants. The principal amount of compensation deferred in any and all Plan years together with the interest accrued on that amount at a rate equal to the highest rate offered on the Bank certificates of deposit on December 31, adjusted annually, will be payable to the Participant, or in the event of his/her death, to this/her beneficiary/estate, as the Participant elects under Article 8.1 of this document. The account shall not constitute or be treated as a trust fund of any kind.
5.3 Following the end of each year, the Bank will furnish each Participant with a prior year statement showing the amount of deferred compensation and interest credited to the Account during the prior year for that Participant at the close of the last business day of the prior calendar year. Notwithstanding the foregoing, amounts assigned to Participants are not assigned to their Account unconditionally, and shall always remain the property of the Bank. The Participants rights in the Account are limited to the rights to receive payments as hereinafter provided and the Participant’s position with respect thereto is that of a general unsecured creditor of the Bank.
ARTICLE VI
Distributions and Hardship Withdrawals
6.1 Normal Retirement Benefit. Upon the retirement of the Participant on or after age 70 (“Normal Retirement Age”), the Bank shall pay to the Participant by the first day of the first month following Normal Retirement Age the benefit described in this Section 6.1 in lieu of any other benefit under this Agreement.
6.1.1 Amount of Benefit. The benefit under this Section 6.1 is the bookkeeping Account balance at the date of the retirement after Normal Retirement Age.
6.1.2 Payment of Benefit. The Bank shall pay the benefit to the Participant in the form elected by the Participant on the Election Form. If the Participant elected to receive his benefit in the form of installments, the Bank shall continue to credit interest on the remaining account balance during any applicable installment period fixed at the rate in effect under Section 5.2 on the date of the Participant’s Termination of Service.
6.2 In the event of his/her death, a beneficiary properly designated in writing by him/her, shall receive distributions beginning on the first day of the first month after the Participant’s death.
6.3 A Participant may request a withdrawal under this Agreement prior to termination of Director status or prior to his 70th birthday which the Bank may, in its discretion, grant if the request is based on Hardship.
“Hardship” If an Unforeseeable Emergency occurs, the Participant, by written instructions to the Bank, may discontinue deferrals hereunder. Any subsequent Deferral Elections may be made only in accordance with Section 4.1 hereof.
“Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or the Participant’s dependent (as defined in Section 152(a) of the Code), loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.
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“Hardship Distribution” If an Unforeseeable Emergency occurs, the Participant may petition the Board to receive a distribution from the Plan. The Board in its sole discretion may grant such petition. If granted, the Participant shall receive, within sixty (60) days, a lump sum distribution from the Plan (i) only to the extent deemed necessary by the Board to remedy the Unforeseeable Emergency, plus an amount necessary to pay taxes reasonably anticipated as a result of the distribution; and (ii) after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation would not itself cause severe financial hardship). In any event, the maximum amount which may be paid out pursuant to this Section 6.3 is the Account balance as of the day that the Participant petitioned the Board to receive a Hardship Distribution under this Section.
6.4 Early Retirement Benefit. Upon Termination of Service prior to Normal Retirement Age for reasons other than death, Change in Control or Disability, the Bank shall pay to the Participant the benefit described in this Section 6.4 in lieu of any other benefit under this Agreement by the first day of the first month after the Termination of Service.
6.4.1 Amount of Benefit. The benefit under this Section 6.4 is the Account balance at the time of the Participant’s Termination of Service.
6.4.2 Payment of Benefit. The Bank shall pay the benefit to the Participant in the form elected by the Participant on the Election Form. If the Participant elected to receive his benefit in the form of installments, the Bank shall continue to credit interest on the remaining account balance during any applicable installment period fixed at the rate in effect under Section 5.2 on the date of the Participant’s Termination of Service.
6.5 Disability Benefit. If the Participant terminates service due to Disability prior to Normal Retirement Age, the Bank shall pay to the Participant the benefit described in this Section 6.5 in lieu of any other benefit under this Agreement.
6.5.1 Amount of Benefit. The benefit under this Section 6.5 is the Account balance at the time of the Participant’s termination of service following the Disability. The benefit shall be paid by the first day of the first month after the Disability.
6.5.2 Payment of Benefit. The Bank shall pay the benefit to the Participant in the form elected by the Participant on the Election Form. If the Participant elected to receive his benefit in the form of installments, the Bank shall continue to credit interest on the remaining account balance during any applicable installment period fixed at the rate in effect under Section 5.2 on the date of the Participant’s Termination of Service.
6.6 Change of Control Benefit. Upon Termination of Service within 12 months of a Change in Control, the Bank shall pay to the Participant the benefit described in this Section 6.6 in lieu of any other benefit under this Agreement.
6.6.1 Amount of Benefit. The benefit under this Section 6.6 shall be the Account balance at the time of the Participant’s termination of service following a Change in Control.
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6.6.2 Payment of Benefit. In the event of a Change in Control or its is imminent that a Change of Control will occur within six (6) months, the Bank shall establish a Rabbi Trust and shall place in the Rabbi Trust the present value of the amounts necessary to fully fund the Bank’s benefit obligation to the Participant, reduced amounts, if any, which have been paid to the Participant (or his beneficiary) in accordance with this Agreement.
6.7 The Board of Directors of the Bank shall establish a committee (hereinafter called the “Committee”) of three (3) of its members who are not Participants in the Plan and who shall be responsible for making the determination provided for in subparagraph 6.3 and for making any amendments to the Plan. The Committee’s determination shall be binding an final. This Committee shall have no right to amend this Plan without the consent of all of the Participants.
ARTICLE VII
Beneficiary in the Event of Death
7.1 The participant has the right to designate a beneficiary in the event of death and at any time change such designation by written notice delivered to the Bank. If there is no designated beneficiary, payment of any distributions which may be payable will be made to Participant’s spouse, if then living; otherwise, to Participant’s children, per stirpes; if there are no children, then the Participant’s executors and administrators; provided, however, that if payments to a designated beneficiary have commenced and said beneficiary dies before receiving all payments, the balance shall be paid to said beneficiary’s estate in a lump sum.
ARTICLE VIII
Forms of Distribution
8.1 Starting with the first year of distribution, the Bank will use one of the following forms of distribution:
(a) a lump sum distribution.
(b) 120 equal monthly installments.
(c) equal installments at specified further dates agreed upon by the Board of Directors of the Bank and the Participant in the Participation Agreement.
8.2 The form of distribution will be that form designated by the Participant in the Participation Agreement, which form of distribution shall not be subject to change by the Participant. In the event Participant should die prior to receiving any payments under Section 8.1 above, payments shall be made to a designated beneficiary in the form selected by the Participant for the beneficiary under Section 8.1 above. If no form of distribution is selected by the Participant for himself/herself or the beneficiary, distribution shall be made in a lump sum.
8.3 In the event of the Participant’s death after installment payments have commenced, but prior to receiving the full amount due the Participant, the unpaid balance will continue to be paid in installments to Participant’s designated beneficiary for the unexpired portion of the form of distribution selected by Participant for himself or herself under Section 8.1. In the event, however, that there is no beneficiary designated, the unpaid balance shall be paid to Participant’s spouse, if living, otherwise, to Participant’s executor or administrator, in a lump sum.
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ARTICLE IX
The Bank and the Participant
9.1. Nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Bank and a Participant, his or her designated beneficiary or any other person. Any compensation deferred under the provisions of this Plan, and interest credited thereto under Section 5.2, shall continue for all purposes to be a part of the general funds of the Bank. To the extent that any person acquires a right to receive payments from the Bank under this Plan, such rights shall be no greater than the right of any unsecured general creditor of the Bank.
9.2. Nothing contained herein shall be construed as conferring upon the Participant the right to continue in the employ of the Bank as a Director or in any other capacity.
ARTICLE X
Miscellaneous Provisions
10.1. The interest of the Participant under this Plan shall not be subject to alienation, assignment, garnishment, attachment, execution, or levy of any kind.
10.2. All matters pertaining to the construction, validity and effect of this Plan shall be determined in accordance with the laws of the Commonwealth of Pennsylvania.
10.3. This Plan shall be binding on the successors in interest of both the Bank and the Participants.
10.4 This Plan or the payments of any benefits hereunder shall not be construed as giving to the Participant any right to be retained as a member of the Board of Directors of the Bank.
10.5 Upon a termination of the Plan, the Participant may receive a lump sum payment immediately paid to the Participant (without regard to any actual Termination of Service) or designated beneficiary, provided, however, any such distributions to be made in accordance with this Section 10.5 shall comply with the requirements and limitation under Section 409A of the Code, including that such lump-sum distribution shall only be made: (1) within thirty (30) days before, or twelve (12) months after a change in the ownership or effective control of the Bank or the Company, or change in the ownership of a substantial portion of the assets of the Bank or the Company as described in Section 409A(2)(A)(v) of the Code, provided that all distributions are made no later than twelve (12) months following such termination of the Plan and further provided that all of the Bank’s arrangements which are substantially similar to the Plan are terminated so the Participant and all participants under similar arrangements shall receive all amounts of deferred compensation under such terminated agreements within twelve (12) months of the termination of the arrangements; (2) Upon the Bank’s dissolution or with the approval of a bankruptcy court provided that the amounts deferred under the Plan are included in the Participant’s gross income in the latest of (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or (3) Upon the Bank’s termination of this and all other account balance plans (as referenced in Section 409A of the Code or the regulations thereunder), provided that all distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such termination, and the Bank does not adopt any new account balance plans for a minimum of three (3) years following the date of such termination.
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ARTICLE XI
Section 409A Compliance
11.1 Notwithstanding anything herein to the contrary, the Committee shall make reasonable efforts to administer the Plan and make benefit payments hereunder in a manner that is not deemed to be contrary to the requirements set forth at Section 409A of the Code and regulations and notices promulgated thereunder such that any payments made would result in the requirement for the recipient of such payments to pay additional interest and taxes to be imposed in accordance with Section 409A(a)(l)(B) of the Code; provided, however, neither the Bank, nor the Committee shall have any responsibility to a Participant or beneficiary with respect to any tax liabilities that may be applicable to any payments made by the Plan.
11.2 If any provision of the Plan shall be determined to be inconsistent with the requirements of Section 409A of the Code, then, the Plan shall be construed, to the maximum extent possible, to give effect to such provision in a manner consistent with Section 409A of the Code, and if such construction is not possible, as if such provision had never been included.
11.3 Delay of Payment Commencement to Specified Employees. Notwithstanding any provision in the Plan to the contrary, if a Participant is a Specified Employee, such Participant’s benefit payments shall become first payable to him or her as of the first day of the seventh month next following his or her Termination of Service, if and only if such payments, if made earlier, would result in the recipient of such payments to pay additional interest and taxes to be imposed in accordance with Section 409A(a)(l)(B) of the Code; provide that such payment delay shall not be required in the event of the death of a Participant. “Specified Employee” shall mean a key employee who, at any time during the plan year, is (i) an officer of the Bank having an annual compensation greater than $150,000 (as indexed), (ii) a 5-percent owner of the Company, or (iii) a 1-percent owner of or the Company having an annual compensation from the Bank greater than $150,000; provided, however, that this subparagraph shall only be effective if the stock of the Bank or the Company or a parent corporation is publicly traded as set forth at Section 409A(a)(2)(B)(i).
11.4 Request to Delay Payment by Participant. Any request by a Participant to delay the commencement date of the Participant’s Account, as may be permitted in accordance with the Plan, shall be detailed in writing and approved by the Board not less than one year prior to Termination of Service or age 70 and such payment commencement date shall not be earlier than five years from Termination of Service or age 70 absent such subsequent written request.
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11.5 Termination of Service means that the Participant ceases service with the Bank for any reason whatsoever other than by reason of death, Disability, or a leave of absence, which is approved by the Bank. “Termination of Service” shall have the same meaning as “separation from service”, as that phrase is defined in Section 409A of the Code (taking into account all rules and presumptions provided for in the Section 409A regulations).
11.6 De Minimus Lump Sum Payment. Notwithstanding the foregoing, the Bank may, in its sole discretion, commence pay-out of a Participant’s Account at any time, provided that such pay-out amount shall be in an amount equal to not less than the lump sum value of such Account determined on the date of such pay-out; provided that such pay-out (1) accompanies the termination of the Participant’s entire interest under the Plan and all similar arrangements that constitute an account balance plan under Regulations at Section 1.409A-1(c) applicable to Section 409A of the Code; and (2) the payment is not greater than the applicable dollar amount under Code Section 402(g)(1)(B).
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PARTICIPATION AGREEMENT
FOR
WILLIAM PENN BANK, FSB
DEFERRED COMPENSATION PLAN
FOR
DIRECTORS AND ADVISORY DIRECTORS
1. The undersigned Applicant for participation in the William Penn Bank, FSB (the “Bank”) Deferred Compensation Plan for Directors and Advisory Directors hereby designates that_____% of the annual compensation payable to the Applicant by the Bank shall be deferred beginning January 1, 1985 for the year 1985. For all years thereafter, ____% of the annual compensation payable to Applicant by the Bank shall be deferred beginning January 1 of each year.
2. The Applicant reserves the right to amend or to terminate the future deferral of annual compensation by written notice to the Bank prior to January 1 of each year.
3. Form of distribution (check one block in each column): The form of distribution selected may not be changed.)
Participant | Beneficiary | |||
____ Lump Sum Distribution | ||||
____ Equal Monthly Installments | ||||
____ Other (Describe installment payment method agreed upon.): | ||||
I understand that I may change the amount of my deferrals and the form and distribution timing of my benefit; provided, however, that any subsequent Election Form with respect to the amount of my deferrals will not be effective until the calendar year following the year in which the new Election Form is received by the Bank.
Further, any change in the form and timing of distribution of my Deferrals shall not be effective until the one year anniversary date of such new election; and that such new election has been made at least one year in advance of the commencement date of such distribution, absent such new election. Further, any such change in the timing or form of the distribution shall postpone the commencement date of such distribution by not less than five years.
The Applicant has read, understands, and agrees to adopt and participate in the Plan in the manner designated above.
Applicant’s Signature | ||
Date: | ||
WILLIAM PENN BANK, FSB | ||
By: |
BENEFICIARY DESIGNATION
FOR
WILLIAM PENN BANK, FSB
DEFERRED COMPENSATION PLAN
FOR
DIRECTORS AND ADVISORY DIRECTORS
I hereby designate the following as Death Beneficiaries under Section 7.1 of the Plan.
1. | My primary beneficiary is: | ||
Name: | |||
Address: | |||
2. | My contingent beneficiary is: | ||
Name: | |||
Address: | |||
(If more than one beneficiary is designated, benefits payable shall be distributed in equal shares unless otherwise indicated by Participant.)
Date | Participant’s Signature |
Exhibit 10.7
*Effective January
1, 2009
Including 2013 Amendment
Including 2017 Amendment*
William Penn Bank
Levittown, Pennsylvania
DIRECTORS CONSULTATION AND RETIREMENT
PLAN
As Amended and Restated
WHEREAS, William Penn Bank, Levittown, Pennsylvania (the "Bank") has previously implemented the William Penn Bank Directors Consultation and Retirement Plan (the "Plan"), as amended and restated effective January 1, 2009, and
WHEREAS, the Bank wishes to make certain clarifications and revisions to the Plan with respect to retirement benefits to be provided thereunder.
NOW THEREFORE, BE IT RESOLVED that the Plan shall be revised, amended and restated, effective January 1, 2009, as follows:
ARTICLE I
DEFINITIONS
The following words and phrases as used herein shall, for the purpose of the Plan and any subsequent amendment thereof, have the following meanings unless a different meaning is plainly required by the content:
"Bank" means William Penn Bank, Levittown, Pennsylvania, or any successor thereto.
"Beneficiary" shall mean the Participant's surviving spouse, if any, or a designated beneficiary, or the Participant's estate, in descending order of priority.
"Board" means the Board of Directors of the Bank, as constituted from time to time, and successors thereto.
"Change in Control" shall mean: (i) a change in ownership of the Bank or the Company under paragraph (a) below, or (ii) a change in effective control of the Bank or the Company under paragraph (b) below, or (iii) a change in the ownership of a substantial portion of the assets of the Bank or the Company under paragraph (c) below:
(a) CHANGE IN THE OWNERSHIP OF THE BANK OR THE COMPANY. A change in the ownership of the Bank or the Company shall occur on the date that any one person, or more than one person acting as a group (as defined in paragraph (b)), acquires ownership of stock of
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the corporation that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of such corporation. However, if any one person or more than one person acting as a group, is considered to own more than 50 percent of the total fair market value or total voting power of the stock of a corporation, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the corporation (or to cause a change in the effective control of the corporation (within the meaning of paragraph (b) below). An increase in the percentage of stock owned by any one person, or persons acting as a group, as a result of a transaction in which the corporation acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this section. This paragraph (a) applies only when there is a transfer of stock of a corporation (or issuance of stock of a corporation) and stock in such corporation remains outstanding after the transaction.
(b) CHANGE IN THE EFFECTIVE CONTROL OF THE BANK OR THE COMPANY. A change in the effective control of the Bank or the Company shall occur on the date that either (i) any one person, or more than one person acting as a group (as determined below), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the corporation possessing 30 percent or more of the total voting power of the stock of such corporation; or (ii) a majority of members of the corporation's board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the corporation's board of directors prior to the date of the appointment or election, provided that for purposes of this paragraph (b)(ii), the term corporation refers solely to a corporation for which no other corporation is a majority shareholder. In the absence of an event described in paragraph (i) or (ii), a change in the effective control of a corporation will not have occurred. If any one person, or more than one person acting as a group, is considered to effectively control a corporation (within the meaning of this paragraph (b)), the acquisition of additional control of the corporation by the same person or persons is not considered to cause a change in the effective control of the corporation (or to cause a change in the ownership of the corporation within the meaning of paragraph (a)). Persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering.
(c) CHANGE IN THE OWNERSHIP OF A SUBSTANTIAL PORTION OF THE BANK'S OR THE COMPANY'S ASSETS. A change in the ownership of a substantial portion of the Bank's assets shall occur on the date that any one person, or more than one person acting as a group (as determined below), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. There is no Change in Control event under this paragraph (c) when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer.
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(d) Each of the sub-paragraphs (a) through (c) above shall be construed and interpreted consistent with the requirements of Section 409A of the Code and any Treasury regulations or other guidance issued thereunder. However, a change in control shall not be deemed to have occurred as a result of a holding company reorganization of the Bank and simultaneous acquisition of more than 50% of the Bank's stock (following the Bank's conversion to stock form) by a parent savings and loan holding company or bank holding company.
"Code" means the Internal Revenue Code of 1986, as amended, and regulations and guidance promulgated thereunder.
"Committee" means the Board or the administrative committee as appointed by the Board pursuant to Section 6.11 herein.
"Company" means William Penn Bancorp, Inc.
"Director" means a member of the Board of Directors of the Bank, including service as an Advisory Director.
"Disability" means total and permanent disability within the meaning of the Social Security Act.
"Effective Date" means March 18, 1998 with respect to the initial effective date of the Plan and January 1, 2009 with respect to the effective date of this amendment and restatement of the Plan.
"Participant" means a Director serving on or after the Effective Date and electing to participate in the Plan. A Director's participation in the Plan shall continue as long as he or she fulfills all the requirements for participation subject to the right of termination, amendment, and modification of the Plan set forth herein.
"Plan" means the William Penn Bank Directors Consultation and Retirement Plan as set forth herein, and as may be amended from time to time by the Board.
"Retirement Benefit Amount" means the benefit payable under the Plan in accordance Section 2.4 herein.
"Retirement Date" means the date of termination of service as a Director following a Participant's completion of not less than ten (10) years of service as a Director. Upon death or Disability, a Director shall be deemed to have terminated service as of such date.
"Service" means all years of service as a Director of the Bank, including William Penn Bank, William Penn Bank, FSB and William Penn Savings and Loan Association. Years of service as a Director need not be continuous. All years of service prior to the Effective Date shall be recognized for benefits determination. Years of service while a full-time employee of the Bank but not while simultaneously serving as a Director of the Bank shall not be recognized for purposes of the Plan.
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"Trust" shall mean any trust agreement entered into on behalf of the Plan by the Bank for the purpose of holding assets of the Bank in order to promote the efficient administration of the Plan.
ARTICLE II
BENEFITS
2.1 Retirement. Upon a Participant's termination from service as a Director on or after his or her Retirement Date, the Bank shall pay to the Participant the Retirement Benefit Amount, as described and in the amount set forth at Article II, Section 2.4. Payment of such Retirement Benefit Amount shall begin on the first business day of the calendar month immediately following a Participant's Retirement Date, or such later date as specified in the agreement contained at Schedule A hereto and approved by the Committee; provided that any such later date requested shall be requested in writing not less than one year prior to the Retirement Date and such commencement date shall be not earlier than five years from the Retirement Date. The payments will continue to be paid on the first business day of each subsequent calendar month until all scheduled payments are made to the Participant. Except as provided at Article II, Sections 2.2, 2.3, and 2.5 herein, upon a Participant's termination from service as a Director of the Bank prior to his or her Retirement Date, the Bank shall have no financial obligations to the Participant under the Plan.
2.2 Change in Control.
a. | Benefits payable to a Participant that has terminated from service as a Director prior to the date of a Change in Control of the Bank shall nevertheless remain payable thereafter without regard to such Change in Control. However, upon a Change in Control, all future benefits payable pursuant to Sections 2.1, 2.2, 2.3, and 2.5 of the Plan, shall be payable immediately in a lump sum payment equal to the present value of all future benefits payable to such Participant. The interest rate in effect for a one (1) year U.S. Treasury Note on the date of the lump sum payment shall be used for purposes of calculating the present value of amounts payable in accordance with Section 2.4. |
b. | A Participant that has not terminated from service as a Director prior to the date of Change in Control of the Bank shall, as of the date of a Change in Control, be presumed to have completed not less than fifteen (15) years of service as of such date of the Change in Control, and such Participant shall be eligible to receive the Retirement Benefit Amount set forth herein at Article II, Section 2.4 immediately upon termination of service as a Director following the date of a Change in Control without regard to the actual years of service of such Participant, if less than that provided herein. Such Retirement Benefit Amount shall be paid in the form of a lump sum payment equal to the present value of the Retirement Benefit |
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Amount payable under Section 2.4 discounted as provided at Section 2.2(a). Payment of the lump sum amount shall be made to the Participant as of the date of the Participant's Termination of Service occurring on or after a Change in Control.
2.3 Total and Permanent Disability. In the event of the Disability of a Participant, such Participant will be paid the Retirement Benefit Amount specified at Article II, Section 2.4; commencing as soon as administratively feasible following certification of such Disability, provided that such Participant shall have attained the Retirement Date. For purposes of benefits accrual, such Participant's years of service shall be determined based upon the date of certification of his or her Disability; provided that no benefits shall be payable hereunder if such Participant shall have completed less than ten (10) years of service as of the date of such Disability. Payment of such benefits shall begin on the first business day of the calendar month immediately following the Bank's receipt of a certification of such Participant's Disability.
2.4 Level of Benefit Payments. A Participant who retires as a Director on or after his or her Retirement Date and who enters into an agreement with the Bank to be a consulting director of the Bank (in a form similar to that contained at Schedule A hereto) shall receive the Retirement Benefit Amount for a period of up to sixty (60) monthly payments as follows:
a. | The Retirement Benefit Amount shall be equal to the product of: (i) the Retirement Benefit Percentage specified at Section 2.4(b), and (ii) the Monthly Retirement Benefit specified at Section 2.4(c) herein. | |
b. | The Retirement Benefit Percentage for a Participant shall be determined as follows: |
Years of Service as of the Retirement Date | Retirement Benefit Percentage |
less than 10 years | 0% | ||
10 but less than 15 years | 50% | ||
15 or more years | 100% |
c. | The Monthly Retirement Benefit shall be calculated as the greater of: | |
(i) | $900 per month , or | |
(ii) | the aggregate compensation paid to the Participant for service as a Director of the Bank during the 60 calendar months prior to the Retirement Date divided by 60, exclusive of committee meeting fees. For a Director who is also serving as an employee of the Bank, aggregate compensation paid will be computed based upon the regular Board meeting fees in effect at the time of Service whether or not such compensation is actually paid to such employee. |
Notwithstanding the foregoing, a Participant who retires as a Director on or after July 1, 2008, shall receive the Retirement Benefit Amount for a period of 120 monthly payments.
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2.5 Payment Upon Death of Participant. Upon the death of a Participant who is receiving benefit payments under the Plan prior to his or her death, the remaining number of benefit payments to be made under the Plan (if any) shall be paid to the Beneficiary after the Participant's death without any reduction in benefits payable to such Beneficiary. Upon the death of a Participant who is not receiving benefit payments under the Plan prior to his or her death who as such date of death otherwise meets the requirements set forth at Section 2.1, the Bank shall pay to the Beneficiary a benefit equal to the Retirement Benefit Amount determined in accordance with Section 2.4. If a Beneficiary dies after the Participant but prior to receiving all payments under the Plan, then the remaining payments will continue to be paid to the Beneficiary's estate in the form of a lump-sum payment, discounted using the interest rate in effect for a one (1) year U.S. Treasury Note on the date of the lump sum payments payable within 60 days of the date of death of the Participant.
2.6 Notice of Retirement. For purposes of administrative efficiency, a Participant intending to terminate from service as a Director in accordance with Article II, Section 2.1 of the Plan is requested to deliver written notice ("Notice") to the Board not less than thirty (30) days prior to the actual Retirement Date that such Director intends to retire. Such Notice, in a form similar to that contained at Schedule A hereto, shall specify the date of such retirement from the Board as a Director and the Participant's availability as a Consulting Director. Failure to provide such Notice shall not affect the time or form of payment as set forth in Article II, Section 2.1. A Participant who terminates from service as a Director upon death, Disability, or a Change in Control is not hereby requested to deliver such Notice.
2.7 Section 409A Compliance.
a. | Notwithstanding anything herein to the contrary, the Committee shall make reasonable efforts to administer the Plan and make benefit payments hereunder in a manner that is not deemed to be contrary to the requirements set forth at Section 409A of the Code and regulations and notices promulgated thereunder such that any payments made would result in the requirement for the recipient of such payments to pay additional interest and taxes to be imposed in accordance with Section 409A(a)(1)(B) of the Code; provided, however, neither the Bank, nor the Committee shall have any responsibility to a Participant or Beneficiary with respect to any tax liabilities that may be applicable to any payments made by the Plan. | |
b. | If any provision of the Plan shall be determined to be inconsistent with the requirements of Section 409A of the Code, then, the Plan shall be construed, to the maximum extent possible, to give effect to such provision in a manner consistent with Section 409A of the Code, and if such construction is not possible, as if such provision had never been included. | |
c. | Delay of Payment Commencement to Specified Employees. Notwithstanding any provision in the Plan to the contrary, if a Participant |
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is a Specified Employee, such Participant's benefit payments shall become first payable to him or her as of the first day of the seventh month next following his or her Retirement Date, or other termination of service, if and only if such payments, if made earlier, would result in the recipient of such payments to pay additional interest and taxes to be imposed in accordance with Section 409A(a)(1)(B) of the Code; provide that such payment delay shall not be required in the event of the death of a Participant. "Specified Employee" shall mean a key employee who, at any time during the plan year, is (i) an officer of the Bank having an annual compensation greater than $150,000 (as indexed), (ii) a 5-percent owner of Company, or (iii) a 1-percent owner of the Company having an annual compensation from the Bank greater than $150,000; provided, however, that this subparagraph shall only be effective if the stock of the Company or a parent corporation is publicly traded as set forth at Section 409A(a)(2)(B)(i). |
d. | "Termination of Service" means that the Participation ceases service with the Bank for any reason whatsoever other than by reason of death, Disability, or a leave of absence, which is approved by the Bank. "Termination of Service" shall have the same meaning as "separation from service", as that phrase is defined in Section 409A of the Code (taking into account all rules and presumptions provided for in the Section 409A regulations). | |
e. | De Minimus Lump Sum Payment. Notwithstanding the foregoing, the Bank may, in its sole discretion, commence pay-out of a Participant's Retirement Benefit Amount at any time, provided that such pay-out amount shall be in an amount equal to not less than the lump sum value of such Retirement Benefit Amount determined on the date of such pay-out; provided that such pay-out (1) accompanies the termination of the Participant's entire interest under the Plan and all similar arrangements that constitute a nonaccount balance plan under Regulations at Section 1.409A-1(c)(2) applicable to Section 409A of the Code; and (2) the payment is not greater than the applicable dollar amount under Code Section 402(g)(1)(B). |
2.8 No 280G Payments. Notwithstanding the forgoing, all sums payable hereunder shall be reduced in such manner and to such extent so that no such payments made hereunder when aggregated with all other payments to be made to the Participant by the Bank or the Company shall be deemed an "excess parachute payment" in accordance with Code 280G and regulations, promulgated thereunder and subject the Participant to the excise tax provided at Section 4999(a) of the Code.
ARTICLE III
TRUST/NON-FUNDED STATUS OF PLAN
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3.1 Trust/Non-Funded Status of Plan. Except as may be specifically provided, nothing contained in this Plan and no action taken pursuant to the provisions of this Plan shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Bank and the Participant or any other person. Any funds which may be invested under the provisions of this Plan shall continue for all purposes to be a part of the general funds of the Bank. No person other than the Bank shall by virtue of the provisions of this Plan have any interest in such funds. The Bank shall not be under any obligation to use such funds solely to provide benefits hereunder, and no representations have been made to any Participant that such funds can or will be used only to provide benefits hereunder. To the extent that any person acquires a right to receive payments from the Bank under the Plan, such rights shall be no greater than the right of any unsecured general creditor of the Bank.
In order to facilitate the accumulation of funds necessary to meet the costs of the Bank under this Plan (including the provision of funds necessary to pay premiums with respect to any life insurance policies purchased pursuant to Article III, and to pay benefits to the extent that the cash value and/or proceeds of any insurance policies are not adequate to make payments to a Participant when such payments shall become due under the Plan), the Bank may enter into a Trust Agreement. The Bank, in its discretion, may elect to place any life insurance policies purchased pursuant to Article III into a Trust. In addition, the Board may (in its sole discretion) place in said Trust such additional amounts as it deems appropriate from time to time. To the extent that the assets of said Trust and/or the proceeds of any life insurance policy purchased pursuant to Article III are not sufficient to pay benefits accrued under this Plan, such payments shall be made from the general assets of the Bank.
ARTICLE IV
VESTING
4.1 Vesting. All benefits under this Plan are deemed non-vested and forfeitable prior to a Participant meeting the requirements set forth at Sections 2.1, 2.2, 2.3 and 2.5 herein. All benefits payable hereunder shall be deemed 100% vested and non-forfeitable by the Participant upon his or her meeting the requirements set forth at Sections 2.1, 2.2, 2.3 or 2.5 herein. No benefits shall be deemed payable hereunder for any period prior to the time that such benefits shall be deemed 100% vested and non-forfeitable.
ARTICLE V
TERMINATION OF BENEFITS
5.1 Termination of Benefits Rights. All the rights of a Participant shall terminate immediately upon the Participant ceasing to be in the active service of the Bank prior to the time that benefits payable under the Plan shall be deemed to be 100% vested and non-forfeitable in accordance with Article V. A leave of absence approved by the Board shall not constitute a cessation of service within the meaning of this Section 4.1.
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ARTICLE VI
GENERAL PROVISIONS
6.1 Other Benefits. Nothing in this Plan shall diminish or impair a Participant's eligibility, participation or benefit entitlement under any other benefit, insurance or compensation plan or agreement of the Bank now or hereinafter in effect.
6.2 No Effect on Employment or Service. This Plan shall not be deemed to give any Participant or other person in the employ or service of the Bank any right to be retained in the employment or service of the Bank, or to interfere with the right of the Bank to terminate any Participant or such other person at any time and to treat him or her without regard to the effect which such treatment might have upon him or her as a Participant in this Plan.
6.3 Legally Binding. The rights, privileges, benefits and obligations under this Plan are intended to be legal obligations of the Bank and binding upon the Bank, its successors and assigns.
6.4 Modification. The Bank, by action of the Board of Directors, reserves the exclusive right to amend, modify, or terminate this Plan. Any such termination, modification or amendment shall not terminate or diminish any rights or benefits accrued by any Participant prior thereto without regard to whether such rights or benefits shall be deemed vested as of such date. The Bank shall give thirty (30) days notice in writing to any Participant prior to the effective date of any amendment, modification or termination of this Plan.
Upon a termination of the Plan, the Participant may receive a lump sum payment immediately paid to the Participant (without regard to any actual Termination of Service) or designated beneficiary, provided, however, any such distributions to be made in accordance with this Section 6.4 shall comply with the requirements and limitation under Section 409A of the Code, including that such lump-sum distribution shall only be made: (1) within thirty (30) days before, or twelve (12) months after a change in the ownership or effective control of the Bank or the Company, or change in the ownership of a substantial portion of the assets of the Bank or the Company as described in Section 409A(2)(A)(v) of the Code, provided that all distributions are made no later than twelve (12) months following such termination of the Plan and further provided that all of the Bank's arrangements which are substantially similar to the Plan are terminated so the Participant and all participants under similar arrangements shall receive all amounts of deferred compensation under such terminated agreements within twelve (12) months of the termination of the arrangements; (2) Upon the Bank's dissolution or with the approval of a bankruptcy court provided that the amounts deferred under the Plan are included in the Participant's gross income in the latest of (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practical; or (3) Upon the Bank's termination of this and all other non-account balance plans (as referenced in Section 409A of the Code or the regulations thereunder), provided that all distributions are made no earlier than twelve (12) months and no later than twenty-four (24) months following such
9
termination, and the Bank does not adopt any new non-account balance plans for a minimum of three (3) years following the date of such termination.
6.5 Arbitration. Any controversy or claim arising out of or relating to the Plan or the breach thereof shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, with such arbitration hearing to be held at the offices of the American Arbitration Association ("AAA") nearest to the home office of the Bank, unless otherwise mutually agreed to by the Participant and the Bank, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
6.6 Limitation. No rights of any Participant are assignable by any Participant, in whole or in part, either by voluntary or involuntary act or by operation of law. The rights of a Participant hereunder are not subject to anticipation, alienation, sale, transfer, assignment, pledge, hypothecation, encumbrance or garnishment by creditors of the Participant. Further, a Participant's rights under the Plan are not subject to the debts, contracts, liabilities, engagements, or torts of any Participant. No Participant shall have any right under this Plan or right against any assets held or acquired pursuant thereto other than the rights of a general, unsecured creditor of the Bank pursuant to the unsecured promise of the Bank to pay the benefits accrued hereunder in accordance with the terms of this Plan. The Bank has no obligation under this Plan to fund or otherwise secure its obligations to render payments hereunder to a Participant. No Participant shall have any discretion in the use, disposition, or investment of any asset acquired or set aside by the Bank to provide benefits under this Plan.
6.7 ERISA and IRC Disclaimer. It is intended that the Plan be neither an "employee welfare benefit plan" nor an "employee pension benefit plan" for purposes of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Further, it is intended that the Plan will not cause the interest of a Participant under the Plan to be includable in the gross income of such Participant prior to the actual receipt of a payment under the Plan for purposes of the Internal Revenue Code of 1986, as amended ("IRC").
6.8 Regulatory Matters.
a. | The Participant shall have no right to receive compensation or other benefits in accordance with the Plan for any period after termination of service for Just Cause. Termination for "Just Cause" shall include termination because of the Participant's personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the Plan. |
b. | Notwithstanding anything herein to the contrary, any payments made to a Participant pursuant to the Plan shall be subject to and conditioned upon compliance with 12 USC '1828(k) and any regulations promulgated thereunder. |
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6.9 Incompetency. If the Bank shall find that any person to whom any payment is payable under the Plan is deemed unable to care for his or her personal affairs because of illness or accident, any payment due (unless a prior claim therefor shall have been made by a duly appointed guardian, committee or other legal representative) may be paid to the spouse, a child, a parent, or a brother or sister, or to any person deemed by the Bank to have incurred expense for such person otherwise entitled to payment, in such manner and proportions as the Board may determine in its sole discretion. Any such payments shall constitute a complete discharge of the liabilities of the Bank under the Plan.
6.10 Construction. The Committee shall have full power and authority to interpret, construe and administer this Plan and the Committee's interpretations and construction thereof, and actions thereunder, shall be binding and conclusive on all persons for all purposes. Directors of the Bank shall not be liable to any person for any action taken or omitted in connection with the interpretation and administration of this Plan unless attributable to his or her own willful, gross misconduct or lack of good faith.
6.11 Plan Administration. The Board shall administer the Plan; provided, however, that the Board may appoint an administrative committee (i.e., the Committee) to provide administrative services or perform duties required by this Plan. The Committee shall have only the authority granted to it by the Board.
6.12 Governing Law. This Plan shall be construed in accordance with and governed by the laws of the Commonwealth of Pennsylvania, except to the extent that federal law shall be deemed to apply.
6.13 Successors and Assigns. The Plan shall be binding upon any successor or successors of the Bank, and unless clearly inapplicable, reference herein to the Bank shall be deemed to include any successor or successors of the Bank.
6.14 Sole Agreement. The Plan expresses, embodies, and supersedes all previous agreements, understandings, and commitments, whether written or oral, between the Bank and any Participants hereto with respect to the subject matter hereof.
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SCHEDULE A
William Penn Bank
Levittown, Pennsylvania
DIRECTORS' CONSULTATION AND RETIREMENT
PLAN
NOTICE OF RETIREMENT AND PARTICIPATION
WHEREAS, the Board of Directors of William Penn Bank Levittown, Pennsylvania ("Bank") has previously adopted the William Penn Bank Directors' Consultation and Retirement Plan ("Plan"); and
WHEREAS, upon retirement as a Director, I am eligible to elect to participate in the Plan.
My signature below hereby evidences my request to the Bank of my election to participate in the Plan, as follows:
1. | This election to participate in the Plan is being delivered to the Bank effective ; |
2. | I hereby resign as a director of the Bank as of _____________________________("Retirement Date"); |
3. | Upon retirement from the Board as of the Retirement Date, I shall be appointed as a Consulting Director to the Bank and shall be available to advise the Bank from time to time on business and community relations matters as may be requested; |
4. | As a Consulting Director, I will not have any specific duties or responsibilities, except as may be specifically requested from time to time by the Board; |
5. | Compensation as a Consulting Director shall be as specified at Article II of the Plan as a consulting retainer and retirement benefit; |
6. | Any benefits payable in accordance with the Plan shall upon my death be payable to my Beneficiary without any reduction in the benefit amount remaining to be paid. |
7. | I hereby acknowledge that benefit payments shall commence as of the first business day of the calendar month immediately following my Retirement Date. |
8. | I understand that the above listed items constitute the only benefits that shall be delivered to me as a Participant in the Plan as further detailed in the Plan. |
Entered into on such date as noted below:
Accepted: | ||||
Retiring Director | Date | |||
Accepted: | ||||
For the Bank | Date |
Exhibit 10.8
AGREEMENT
THIS AGREEMENT (the “Agreement”), dated this 4th day of August 2020, is by and among William Penn Bancorp, Inc. (the “Company”), William Penn, MHC (the “MHC”), WPH Holding Company, a newly formed Maryland corporation (“WPH”), and William Penn Bank (the “Bank” and, together with the Company, WPH and the MHC, “William Penn”), on the one hand, and Tyndall Capital Partners LP (“Tyndall”) and Jeffrey S. Halis, an individual (collectively, the “Tyndall Group” and individually, a “Tyndall Group Member”), on the other hand.
RECITALS
WHEREAS, William Penn and the Tyndall Group have agreed that it is in their mutual interests to enter into this Agreement.
NOW, THEREFORE, in consideration of the recitals and the representations, warranties, covenants and agreements contained herein and other good and valuable consideration, and intending to be legally bound hereby, the parties agree as follows:
1. Representations and Warranties of the Tyndall Group. The Tyndall Group Members hereby represent and warrant to William Penn as follows:
(a) The Tyndall Group has fully disclosed in Exhibit A to this Agreement the total number of shares of common stock of the Company, par value $0.01 per share (the “Company Common Stock”), to which it is the beneficial owner, and neither the Tyndall Group nor any Tyndall Group Member nor any of their affiliates has (i) a right to acquire any interest in any capital stock of the Company, or (ii) a right to vote any shares of capital stock of the Company other than as set forth in Exhibit A;
(b) The Tyndall Group and the Tyndall Group Members have full power and authority to enter into and perform their obligations under this Agreement, and the execution and delivery of this Agreement by the Tyndall Group and the Tyndall Group Members has been duly authorized by the Tyndall Group and the Tyndall Group Members. This Agreement constitutes a valid and binding obligation of the Tyndall Group and the Tyndall Group Members and the performance of its terms will not constitute a violation of any limited partnership agreement, articles of incorporation, bylaws, operating agreement or any agreement or instrument to which the Tyndall Group or any Tyndall Group Member is a party;
(c) There are no other persons who, by reason of their personal, business, professional or other arrangement with the Tyndall Group or any Tyndall Group Member, have agreed, in writing or orally, explicitly or implicitly, to take any action on behalf of or in lieu of the Tyndall Group or any Tyndall Group Member that would be prohibited by this Agreement; and
(d) There are no arrangements, agreements or understandings concerning the subject matter of this Agreement between the Tyndall Group and any Tyndall Group Member and William Penn other than as set forth in this Agreement.
2. Representations and Warranties of William Penn. The Company, the MHC, WPH and the Bank hereby represent and warrant to the Tyndall Group Members as follows:
(a) The Company, the MHC, WPH and the Bank have full power and authority to enter into and perform their respective obligations under this Agreement, and the execution and delivery of this Agreement by the Company, the MHC, WPH and the Bank has been duly authorized by the Board of Directors of the Company, the MHC, WPH and the Bank. This Agreement constitutes a valid and binding obligation of the Company, the MHC, WPH and the Bank and the performance of its terms will not constitute a violation of their respective articles of incorporation or bylaws or any agreement or instrument to which the Company, the MHC, WPH or the Bank is a party;
(b) Upon the completion of the fully public conversion of William Penn from the mutual holding company form of organization to the stock holding form of organization (the “Second Step Conversion”), WPH will change its legal name and become the stock holding company of the Bank; and
(c) The Company, the MHC, WPH and the Bank hereby represent and warrant to the Tyndall Group that there are no arrangements, agreements or understandings concerning the subject matter of this Agreement between the Tyndall Group or any Tyndall Group Member and William Penn other than as set forth in this Agreement.
3. Covenants. The Tyndall Group and the Tyndall Group Members, on the one hand, and William Penn, on the other hand, covenant and agree as follows:
(a) Voting of Company Common Stock. During the term of this Agreement, at any meeting of the shareholders of the Company, the Tyndall Group and each Tyndall Group Member covenant and agree, and shall require each of their affiliates, to cause the shares of Company Common Stock, or any other securities of the Company, of which they are the beneficial owner, to be present for quorum purposes and to be voted on all proposals at any meeting of the shareholders of the Company, or any adjournment or postponement thereof, in accordance with the recommendations of the Company’s Board of Directors, including, but not limited to, with the respect to a proposal to effect the Second Step Conversion. Notwithstanding the foregoing, with respect to any such proposal that requires only a majority of votes cast by Company shareholders to be approved (as opposed to a proposal requiring a majority or higher percentage of total shares of Company Common Stock outstanding, or a majority or higher percentage of the total shares of outstanding Company Common Stock held by shareholders other than the MHC, which shall both be subject to the voting requirement set forth in the first sentence of this Section 3(a)), the Tyndall Group and each Tyndall Group Member may abstain from voting their shares of Company Common Stock, or any other securities of the Company beneficially owned by them, on the proposal in lieu of voting their shares of Company Common Stock, or any other securities of the Company beneficially owned by them, in accordance with the recommendations of the Company’s Board of Directors with respect to the proposal.
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(b) Voting of WPH Common Stock. During the term of this Agreement, at any meeting of the shareholders of WPH, the Tyndall Group and each Tyndall Group Member covenant and agree, and shall require each of their affiliates, to cause the shares of common stock of WPH (the “WPH Common Stock”), or any other securities of WPH, of which they are the beneficial owner, to be present for quorum purposes and to be voted on all proposals at any meeting of the shareholders of the WPH, or any adjournment or postponement thereof, in accordance with the recommendations of WPH’s Board of Directors. Notwithstanding the foregoing, with respect to any such proposal that requires only a majority of votes cast by WPH shareholders to be approved (as opposed to a proposal requiring a majority or higher percentage of total shares of WPH Common Stock outstanding, which shall be subject to the voting requirement set forth in the first sentence of this Section 3(b)), the Tyndall Group and each Tyndall Group Member may abstain from voting their shares of WPH Common Stock, or any other securities of WPH beneficially owned by them, on the proposal in lieu of voting their shares of WPH Common Stock, or any other securities of WPH beneficially owned by them, in accordance with the recommendations of WPH’s Board of Directors with respect to the proposal.
(c) Voting on WPH Stock Benefit Plan. Notwithstanding the requirements of Section 3(b) of this Agreement but subject to the requirements set forth in Section 3(d) of this Agreement, with respect to any proposal submitted to the shareholders of WPH requesting that WPH shareholders approve the adoption or implementation of an omnibus stock incentive plan (“Stock Benefit Plan”), the Tyndall Group and each Tyndall Group Member may only either (i) abstain from voting their shares of WPH Common Stock, or any other securities of WPH beneficially owned by them, on the proposal to approve the Stock Benefit Plan in lieu of voting their shares of WPH Common Stock, or any other securities of WPH beneficially owned by them, or (ii) vote such shares of WPH Common Stock, or any other securities of WPH beneficially owned by them, in accordance with the recommendations of WPH’s Board of Directors in favor of the Stock Benefit Plan.
(d) Additional Tyndall Group Covenants and Forbearances. During the term of this Agreement, the Tyndall Group and each Tyndall Group Member covenant and agree not to do the following, directly or indirectly, alone or in concert with any affiliate, other group or other person:
(i) acquire, offer or propose to acquire or agree to acquire, whether by purchase, tender or exchange offer, or through the acquisition of control of another person or entity (including by way of merger or consolidation) any additional shares of the outstanding Company Common Stock or WPH Common Stock, any rights to vote or direct the voting of any additional shares of Company Common Stock or WPH Common Stock, or any securities convertible into Company Common Stock or WPH Common Stock (except by way of stock splits, stock dividends, stock reclassifications or other distributions or offerings made available and, if applicable, exercised on a pro rata basis, to holders of the Company Common Stock or WPH Common Stock generally); provided, however, that if the Tyndall Group or any Tyndall Group Member beneficially owns any shares of Company Common Stock at the effective time of the Second Step Conversion, such shares shall be converted into shares of WPH Common Stock in accordance with the final exchange ratio for the conversion of Company Common Stock applicable to all shareholders of the Company at the effective time of the Second Step Conversion;
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(ii) without the Company’s prior written consent, directly or indirectly, sell, transfer or otherwise dispose of any interest in the Tyndall Group’s shares of Company Common Stock prior to William Penn’s public announcement of its adoption of a plan of conversion with respect to the Second Step Conversion; provided, however, that if William Penn has not made a public announcement regarding its adoption of a plan of conversion with respect to the Second Step Conversion by September 30, 2020, William Penn will promptly either (a) make a public announcement regarding its intent to proceed with the Second Step Conversion or (b) notify the Tyndall Group in writing that it has determined not to proceed with the Second Step Conversion at such time and, upon such public announcement or the Tyndall Group’s receipt of such written notification, the Tyndall Group and each Tyndall Group Member may, subject to the provisions of this Agreement, sell, transfer or otherwise dispose of any interest in the Tyndall Group’s shares of Company Common Stock.
(iii) without the Company’s prior written consent, knowingly directly or indirectly, sell, transfer or otherwise dispose of any block of shares of Company Common Stock that constitute, in the aggregate, 5.0% or more of the outstanding shares of Company Common Stock held by stockholders other than the MHC, unless the purchaser or transferee of such shares of Company Common Stock agrees in writing for the benefit of William Penn, prior to such sale or transfer, to be bound by the terms of this Agreement and to be subject to all obligations of a Tyndall Group Member to William Penn under this Agreement for the remaining term of the Agreement;
(iv) without WPH’s prior written consent, knowingly directly or indirectly, sell, transfer or otherwise dispose of any block of shares of WPH Common Stock that constitute, in the aggregate, an amount of WPH Common Stock equal to 5.0% or more of the outstanding shares of Company Common Stock held by stockholders other than the MHC (after giving effect to the final exchange ratio for the Second Step Conversion) immediately prior to the effective time of the Second Step Conversion, unless the purchaser or transferee of such shares of WPH Common Stock agrees in writing for the benefit of William Penn, prior to such sale or transfer, to be bound by the terms of this Agreement and to be subject to all obligations of a Tyndall Group Member to William Penn under this Agreement for the remaining term of the Agreement;
(v) seek to exercise any control or influence over the management of the Company, WPH or the Bank or the Boards of Directors of the Company, WPH or the Bank or any of the businesses, operations or policies of the Company, WPH or the Bank,
(vi) except in connection with the enforcement of this Agreement, initiate or participate, by encouragement or otherwise, in any litigation against the Company, the MHC, WPH or the Bank or their respective officers and directors, or in any derivative litigation on behalf of the Company, the MHC, WPH or the Bank, except for testimony which may be required by law;
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(vii) request, or induce or encourage any other person to request, that William Penn amend or waive any of the provisions of this Agreement;
(viii) advise, assist, encourage or finance (or arrange, assist or facilitate financing to or for) any other person in connection with any of the matters restricted by, or otherwise seek to circumvent the limitations of, this Agreement;
(ix) (A) propose or seek to effect a merger, consolidation, recapitalization, reorganization, sale, lease, exchange or other disposition of substantially all the assets of, or other business combination involving, or a tender or exchange offer for securities of, the Company, WPH or the Bank or any material portion of the Company’s, WPH’s or the Bank’s business or assets or any type of transaction that would result in a change in control of the Company or WPH (any such transaction described in this clause (A) is a “William Penn Corporate Transaction” and any proposal or other action seeking to effect a William Penn Corporate Transaction as described in this clause (A) is defined as a “William Penn Corporate Transaction Proposal”), (B) present to the Company, WPH, their shareholders or any third party any proposal constituting or that could reasonably be expected to result in a William Penn Corporate Transaction, or (C) seek to effect a change in control of the Company or WPH;
(x) publicly suggest or announce its willingness or desire to engage in a transaction or group of transactions or have another person engage in a transaction or group of transactions that would constitute or could reasonably be expected to result in a William Penn Corporate Transaction or take any action that might require the Company or WPH to make a public announcement regarding any such William Penn Corporate Transaction;
(xi) initiate, request, induce, encourage or attempt to induce or give encouragement to any other person to initiate any proposal constituting or that can reasonably be expected to result in a William Penn Corporate Transaction Proposal, or otherwise provide assistance to any person who has made or is contemplating making, or enter into discussions or negotiations with respect to, any proposal constituting or that can reasonably be expected to result in a William Penn Transaction Proposal;
(xii) solicit proxies or written consents or assist or participate in any other way, directly or indirectly, in any solicitation of proxies or written consents, or otherwise become a “participant” in a “solicitation,” or assist any “participant” in a “solicitation” (as such terms are defined in Rule 14a-1 of Regulation 14A and Instruction 3 of Item 4 of Schedule 14A, respectively, under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) in opposition to any recommendation or proposal of the Board of Directors of the Company or WPH, or recommend or request or induce or attempt to induce any other person to take any such actions, or seek to advise, encourage or influence any other person with respect to the voting of (or the execution of a written consent in respect of) the Company Common Stock or the WPH Common Stock, or execute any written consent in lieu of a meeting of the holders of the Company Common Stock or the WPH Common Stock, or grant a proxy with respect to the voting of the capital stock of the
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Company to any person or entity other than the Board of Directors of the Company or the Board of Directors of WPH;
(xiii) initiate, propose, submit, encourage or otherwise solicit shareholders of the Company or of WPH for the approval of one or more shareholder proposals or induce or attempt to induce any other person to initiate any shareholder proposal, or seek election to, or seek to place a representative or other affiliate or nominee on, the Board of Directors of the Company or WPH, or seek removal of any member of the Board of Directors of the Company, WPH or the Bank;
(xiv) form, join in or in any other way (including by deposit of the Company’s or WPH’s capital stock) participate in a partnership, pooling agreement, syndicate, voting trust or other group with respect to Company Common Stock or WPH Common Stock, or enter into any agreement or arrangement or otherwise act in concert with any other person, for the purpose of acquiring, holding, voting or disposing of Company Common Stock or WPH Common Stock;
(xv) (A) join with or assist any person or entity, directly or indirectly, in opposing, or make any statement in opposition to, any proposal or director nomination submitted by the Company’s Board of Directors to a vote of the Company’s shareholders, (B) join with or assist any person or entity, directly or indirectly, in opposing, or make any statement in opposition to, any proposal or director nomination submitted by the WPH’s Board of Directors to a vote of WPH’s shareholders, or (C) join with or assist any person or entity, directly or indirectly, in supporting or endorsing (including supporting, requesting or joining in any request for a meeting of shareholders in connection with), or make any statement in favor of, any proposal submitted to a vote of the Company’s or WPH’s shareholders that is opposed by the Company’s Board of Directors or WPH’s Board of Directors; or
(xvi) vote for any nominee or nominees for election to the Board of Directors of the Company or the Board of Directors of WPH other than those nominated or supported by the Company’s Board of Directors or WPH’s Board of Directors.
(e) Special WPH Dividend. During the term of this Agreement, William Penn hereby covenants and agrees that, in the offering prospectus of WPH for shares of its common stock to be issued in connection with the Second Step Conversion (the “Prospectus”), WPH will disclose its intention to declare a one-time special cash dividend of up to $0.50 per share of WPH Common Stock, subject to the receipt of all required approvals from any applicable governmental or regulatory authority, following the completion of the Second Step Conversion.
(f) Non-Disparagement. During the term of this Agreement, the Tyndall Group and each Tyndall Group Member agrees not to disparage the Company, the MHC, WPH, the Bank or any of their directors (including nominees supported by the Company’s Board of Directors or WPH’s Board of Directors), officers or employees in any public or quasi-public forum, and the Company, the MHC, WPH, and the Bank agree not to disparage the Tyndall Group or any Tyndall Group Member in any public or quasi-public forum.
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4. Notice of Breach and Remedies.
(a) The parties expressly agree that an actual or threatened breach of this Agreement by any party will give rise to irreparable injury that cannot adequately be compensated by damages. Accordingly, in addition to any other remedy to which it may be entitled, each party shall be entitled to seek a temporary restraining order or injunctive relief to prevent a breach of the provisions of this Agreement or to secure specific enforcement of its terms and provisions.
(b) The Tyndall Group and each Tyndall Group Member expressly agree that they will not be excused or claim to be excused from performance under this Agreement as a result of any material breach by William Penn unless and until William Penn is given written notice of such breach and allowed fifteen (15) business days either to cure such breach or seek relief in court. If William Penn seeks relief in court, the Tyndall Group and each Tyndall Group Member irrevocably stipulate that any failure to perform by the Tyndall Group and/or any Tyndall Group Member or any assertion by the Tyndall Group and/or any Tyndall Group Member that they are excused from performing their obligations under this Agreement because it would cause William Penn irreparable harm, then William Penn shall not be required to provide further proof of irreparable harm in order to obtain equitable relief and that the Tyndall Group and each Tyndall Group Member shall not deny or contest that such circumstances would cause William Penn irreparable harm. If, after such fifteen (15) business day period, William Penn has not either reasonably cured such material breach or obtained relief in court, the Tyndall Group or each Tyndall Group Member may terminate this Agreement by delivery of written notice to William Penn.
(c) William Penn expressly agrees that it will not be excused or claim to be excused from performance under this Agreement as a result of any material breach by the Tyndall Group or any Tyndall Group Member unless and until the Tyndall Group and each Tyndall Group Member is given written notice of such breach and allowed fifteen (15) business days either to cure such breach or seek relief in court. If the Tyndall Group or any Tyndall Group Member seeks relief in court, William Penn irrevocably stipulates that any failure to perform by William Penn or any assertion by William Penn that it is excused from performing its obligations under this Agreement because it would cause the Tyndall Group and each Tyndall Group Member irreparable harm, then the Tyndall Group or any Tyndall Group Member shall not be required to provide further proof of irreparable harm in order to obtain equitable relief and that William Penn shall not deny or contest that such circumstances would cause the Tyndall Group and each Tyndall Group Member irreparable harm. If, after such fifteen (15) business day period, the Tyndall Group or the Tyndall Group Member has not either reasonably cured such material breach or obtained relief in court, William Penn may terminate this Agreement by delivery of written notice to the Tyndall Group and each Tyndall Group Member.
5. Term. This Agreement shall be effective upon the execution of the Agreement, and will remain in effect until 11:59 p.m. on August 4, 2025.
6. Publicity. During the term of this Agreement, no party to this Agreement shall (i) disclose the existence of this Agreement, or any of the terms of this Agreement, to any third party
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without the prior written consent of such other party or (ii) cause, discuss, cooperate or otherwise aid in the preparation of any press release or other publicity or public disclosure concerning this Agreement or any other party to this Agreement or its operations without the prior approval of such other party; provided, however, that William Penn may include a summary of the provisions of this Agreement in the Prospectus and include a copy of this Agreement, if required under applicable federal securities or banking laws, as an exhibit to any application, notice or registration statement filed with a governmental or regulatory authority in connection with the Second Step Conversion.
7. Notices. All notices, communications and deliveries required or permitted by this Agreement shall be made in writing signed by the party making the same, shall specify the Section of this Agreement pursuant to which it is given or being made and shall be deemed given or made (a) on the date delivered if delivered by telecopy or in person, (b) on the third Business Day after it is mailed if mailed by registered or certified mail (return receipt requested) (with postage and other fees prepaid) or (c) on the day after it is delivered, prepaid, to an overnight express delivery service that confirms to the sender delivery on such day, as follows:
Tyndall Group: | Jeffrey S. Halis |
Tyndall Capital Partners LP | |
150 E. 58th Street, 14th Floor | |
New York, New York 10155 | |
jhalis@tyndallmanagement.com |
with a copy to: | Michael Basile, Esq. |
Stroock & Stroock & Lavan LLP | |
200 S. Biscayne Boulevard, Suite 3100 | |
Miami, Florida 33131 | |
mbasile@stroock.com |
William Penn: | Kenneth J. Stephon |
President and Chief Executive Officer | |
William Penn Bancorp, Inc. | |
WPH Holding Company | |
William Penn, MHC | |
William Penn Bank | |
10 Canal Street, Suite 104 | |
Bristol, Pennsylvania 19007 | |
kstephon@williampenn.bank |
with a copy to: | Gary R. Bronstein, Esq. |
Kilpatrick Townsend & Stockton LLP | |
607 14th Street, NW, Suite 900 | |
Washington, DC 20005 | |
gbronstein@kilpatricktownsend.com |
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8. Governing Law and Choice of Forum. Unless applicable federal law or regulation is deemed controlling, Pennsylvania law shall govern the construction and enforceability of this Agreement. Any and all actions concerning any dispute arising hereunder shall be filed and maintained in the United States District Court for the Eastern District of Pennsylvania or, if there is no basis for federal jurisdiction, in the Philadelphia Court of Common Pleas. The Tyndall Group and the Tyndall Group Members agree that the United States District Court for the Eastern District of Pennsylvania and the Philadelphia Court of Common Pleas may exercise personal jurisdiction over them in any such actions.
9. Severability. If any term, provision, covenant or restriction of this Agreement is held by any governmental authority or a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.
10. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the successors and assigns, and transferees by operation of law, of the parties. Except as otherwise expressly provided, this Agreement shall not inure to the benefit of, be enforceable by or create any right or cause of action in any person, including any shareholder of the Company, other than the parties to the Agreement. Nothing contained herein shall prohibit any Tyndall Group Member from transferring any portion or all of the shares of Company Common Stock or WPH Common Stock owned thereby at any time to any affiliate of a Tyndall Group Member, but only if the transferee agrees in writing for the benefit of William Penn (with a copy thereof to be furnished to William Penn prior to such transfer) to be bound by the terms of this Agreement (any such transferee shall be included in the terms “Tyndall Group” and “Tyndall Group Member”).
11. Survival of Representations, Warranties and Covenants. All representations, warranties and covenants shall survive the execution and delivery of this Agreement and shall continue for the term of this Agreement unless otherwise provided.
12. Amendments. This Agreement may not be modified, amended, altered or supplemented except by a written agreement executed by all of the parties.
13. Definitions. As used in this Agreement, the following terms shall have the meanings indicated as follows, unless the context otherwise requires:
(a) The term “acquire” means every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise.
(b) The term “acting in concert” means (i) knowing participation in a joint activity or conscious parallel action towards a common goal, whether or not pursuant to an express agreement, or (ii) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise.
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(c) The term “affiliate” means, with respect to any person, a person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with such other person.
(d) The term “beneficial owner” shall have the meaning ascribed to it, and be determined in accordance with, Rule 13d-3 of the Securities and Exchange Commission’s Rules and Regulations promulgated under the Exchange Act.
(e) The term “change in control” denotes circumstances under which: (i) any person or group becomes the beneficial owner of shares of capital stock of the Company or the Bank representing 25% or more of the total number of votes that may be cast for the election of the Boards of Directors of the Company, WPH or the Bank, (ii) the persons who were directors of the Company or the Bank cease to be a majority of the Board of Directors, in connection with any tender or exchange offer (other than an offer by the Company, WPH or the Bank), merger or other business combination, sale of assets or contested election, or combination of the foregoing, or (iii) shareholders of the Company, WPH or the Bank approve a transaction pursuant to which substantially all of the assets of the Company, WPH or the Bank will be sold.
(f) The term “control” (including the terms “controlling,” “controlled by,” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management, activities or policies of a person or organization, whether through the ownership of capital stock, by contract, or otherwise.
(g) The term “group” has the meaning as defined in Section 13(d)(3) of the Exchange Act.
(h) The term “person” includes an individual, group acting in concert, corporation, partnership, association, joint stock company, trust, unincorporated organization or similar company, syndicate, or any other group formed for the purpose of acquiring, holding or disposing of the equity securities of the Company or of WPH.
(i) The term “transfer” means, directly or indirectly, to sell, gift, assign, pledge, encumber, hypothecate or similarly dispose of (by operation of law or otherwise), either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, gift, assignment, pledge, encumbrance, hypothecation or similar disposition of (by operation of law or otherwise), any Company Common Stock, any WPH Common Stock or any interest in any Company Common Stock or WPH Common Stock; provided, however, that a merger or consolidation in which the Company is a constituent corporation shall not be deemed to be the transfer of any common stock beneficially owned by the Tyndall Group or a Tyndall Group Member.
(j) The term “vote” means to vote in person or by proxy, or to give or authorize the giving of any consent as a stockholder on any matter.
14. Counterparts; Facsimile. This Agreement may be executed in any number of counterparts and by the parties in separate counterparts, and signature pages may be delivered
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by facsimile, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
15. Duty to Execute. Each party agrees to execute any and all documents, and to do and perform any and all acts and things necessary or proper to effectuate or further evidence the terms and provisions of this Agreement.
16. Termination. This Agreement shall cease, terminate and have no further force and effect upon the expiration of the term as set forth in Section 5, unless earlier terminated pursuant to Section 4 or Section 5 hereof or by mutual written agreement of the parties.
[Remainder of page intentionally blank]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the undersigned and is effective as of the day and year first written above.
TYNDALL CAPITAL PARTNERS LP | WILLIAM PENN BANCORP, INC. |
By: | /s/ Jeffrey S. Halis | By: | /s/ Kenneth J. Stephon | |
Jeffrey S. Halis | Kenneth J. Stephon | |||
General Partner of the General Partner of Tyndall Capital Partners LP | President and Chief Executive Officer | |||
JEFFREY S. HALIS | WILLIAM PENN, MHC |
By: | /s/ Jeffrey S. Halis | By: | /s/ Kenneth J. Stephon | |
Jeffrey S. Halis | Kenneth J. Stephon | |||
President and Chief Executive Officer | ||||
WPH HOLDING COMPANY |
By: | /s/ Kenneth J. Stephon | |||
Kenneth J. Stephon | ||||
President and Chief Executive Officer | ||||
WILLIAM PENN BANK |
By: | /s/ Kenneth J. Stephon | |||
Kenneth J. Stephon | ||||
President and Chief Executive Officer | ||||
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EXHIBIT A
The Tyndall Group beneficially owns 342,817 shares of Company Common Stock, (i) 235,940 shares of which are owned by Tyndall and (ii) 106,877 shares of which are owned by Jeffrey S. Halis directly.
Exhibit 23.2 |
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use in this Registration Statement on Form S-1 of William Penn Bancorporation of our report dated October 6, 2020, relating to the consolidated financial statements of William Penn Bancorp, Inc., appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to our firm under the heading “Experts” in the Prospectus that is part of the Registration Statement.
/s/ S.R. Snodgrass, P.C.
Cranberry Township, Pennsylvania
October 15, 2020
Exhibit 23.3
Consent of Independent Registered Public Accounting Firm
William Penn Bancorporation
Bristol, Pennsylvania
We hereby consent to the use in the Prospectus constituting a part of this Registration Statement of our report dated January 15, 2020, relating to the financial statements of Fidelity Savings and Loan Association of Bucks County as of June 30, 2019 and 2018 and for the years then ended, which is contained in that Prospectus.
/s/ BDO USA, LLP
BDO USA, LLP
Philadelphia, Pennsylvania
October 15, 2020
BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.
BDO is the brand name for the BDO network and for each of the BDO Member Firms.
Exhibit 23.4
CONSENT OF INDEPENDENT AUDITOR
We consent to the use in this Registration Statement on Form S-1 of William Penn Bancorporation of our report dated June 30, 2020, relating to the consolidated financial statements of Washington Savings Bank and subsidiary, appearing in the Prospectus, which is part of this Registration Statement.
/s/ S.R. Snodgrass, P.C.
Cranberry Township, Pennsylvania
October 15, 2020
Exhibit 23.5
October 14, 2020 |
Boards of Directors
William Penn, MHC
William Penn Bancorp, Inc.
William Penn Bancorporation
William Penn Bank
10 Canal Street
Bristol, Pennsylvania 19007
Members of the Boards of Directors:
We hereby consent to the use of our firm’s name in the Application for Conversion on Form FR MM-AC, and any amendments thereto, to be filed with the Federal Reserve Board, and in the Registration Statement on Form S-1, and any amendments thereto, to be filed with the Securities and Exchange Commission. We also hereby consent to the inclusion of, summary of and references to our Valuation Appraisal Report and any Valuation Appraisal Report Updates in such filings including the prospectus and proxy statement/prospectus of William Penn Bancorporation. We also consent to the reference to our firm under the heading “Experts” in the prospectus and proxy statement/prospectus.
Sincerely, | |
RP® FINANCIAL, LC. | |
Washington Headquarters | ||
1311-A Dolley Madison Boulevard | Telephone: (703) 528-1700 | |
Suite 2A | Fax No.: (703) 528-1788 | |
McLean, VA 22101 | Toll-Free No.: (866) 723-0594 | |
www.rpfinancial.com | E-Mail: mail@rpfinancial.com |
Exhibit 99.1
William Penn Bancorporation │Bristol, Pennsylvania |
PROPOSED HOLDING COMPANY FOR: |
William Penn Bank │ Bristol, Pennsylvania |
Dated as of September 2, 2020
1311-A Dolley Madison Boulevard
Suite 2A
McLean, Virginia 22101
703.528.1700
rpfinancial.com
September 2, 2020
Boards of Directors
William Penn, MHC
William Penn Bancorp, Inc.
William Penn Bancorporation
William Penn Bank
10 Canal Street
Bristol, Pennsylvania 19007
Members of the Boards of Directors:
At your request, we have completed and hereby provide an independent appraisal ("Appraisal") of the estimated pro forma market value of the common stock which is to be issued in connection with the mutual-to-stock conversion transaction described below.
This Appraisal is furnished pursuant to the requirements stipulated in the Code of Federal Regulations and has been prepared in accordance with the “Guidelines for Appraisal Reports for the Valuation of Savings and Loan Associations Converting from Mutual to Stock Form of Organization” (the “Valuation Guidelines”) of the Office of Thrift Supervision (“OTS”) and accepted by the Federal Reserve Board (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”) and the Office of the Comptroller of the Currency (“OCC”), and applicable regulatory interpretations thereof.
Description of Plan of Conversion
On September 16, 2020, the Boards of Directors of William Penn, MHC (the “MHC”) and William Penn Bancorp, Inc. (“WMPN”) adopted a plan of conversion whereby the MHC will convert to stock form. As a result of the conversion, WMPN, which currently owns all of the issued and outstanding common stock of William Penn Bank (the “Bank”), will be succeeded by a new Maryland corporation with the name of William Penn Bancorporation (the “Company”). Following the conversion, the MHC will no longer exist. For purposes of this document, the existing consolidated entity will hereinafter also be referred to as William Penn Bancorporation or the Company, unless otherwise identified as WMPN. As of June 30, 2020, the MHC had a majority ownership interest in, and its principal asset consisted of, approximately 82.66% of the common stock (the “MHC Shares”) of WMPN. The remaining 17.34% of WMPN’s common stock is owned by public stockholders.
It is our understanding that William Penn Bancorporation will offer its stock, representing the majority ownership interest held by the MHC, in a subscription offering to Eligible Account Holders, Tax-Qualified Employee Benefit Plans including the Bank’s employee stock ownership plan (the “ESOP”), Supplemental Eligible Account Holders and Other Members. To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the subscription offering, the shares may be offered for sale to the public at large in a
Washington Headquarters | |
1311-A Dolley Madison Boulevard | Telephone: (703) 528-1700 |
Suite 2A | Fax No.: (703) 528-1788 |
McLean, VA 22101 | Toll-Free No.: (866) 723-0594 |
www.rpfinancial.com | E-Mail: mail@rpfinancial.com |
Boards of Directors
September 2, 2020 Page 2 |
community offering and a syndicated community offering. Upon completing the mutual-to-stock conversion and stock offering (the “second-step conversion”), the Company will be 100% owned by public shareholders, the publicly-held shares of WMPN will be exchanged for shares in the Company at a ratio that retains their ownership interest at the time the conversion is completed and the MHC assets will be consolidated with the Company.
RP® Financial, LC.
RP® Financial, LC. (“RP Financial”) is a financial consulting firm serving the financial services industry nationwide that, among other things, specializes in financial valuations and analyses of business enterprises and securities, including the pro forma valuation for savings institutions converting from mutual-to-stock form. The background and experience of RP Financial is detailed in Exhibit V-1. We believe that, except for the fee we will receive for the Appraisal, we are independent of the Company, WMPN, the Bank, the MHC and the other parties engaged by the Bank or the Company to assist in the second-step conversion process.
Valuation Methodology
In preparing our Appraisal, we have reviewed the regulatory applications of the Company, the Bank and the MHC, including the prospectus as filed with the FRB and the Securities and Exchange Commission (“SEC”). We have conducted a financial analysis of the Company, the Bank and the MHC that has included a review of audited financial information for the fiscal years ended June 30, 2016 through June 30, 2020, a review of various unaudited information and internal financial reports through June 30, 2020, and due diligence related discussions with the Company’s management; S.R. Snodgrass, P.C., the Company’s independent auditor; Kilpatrick Townsend & Stockton LLP, the Company’s conversion counsel and Piper Sandler & Co., the Company’s marketing advisor in connection with the stock offering. All assumptions and conclusions set forth in the Appraisal were reached independently from such discussions. In addition, where appropriate, we have considered information based on other available published sources that we believe are reliable. While we believe the information and data gathered from all these sources are reliable, we cannot guarantee the accuracy and completeness of such information.
We have investigated the competitive environment within which William Penn Bancorporation operates and have assessed William Penn Bancorporation’s relative strengths and weaknesses. We have kept abreast of the changing regulatory and legislative environment for financial institutions and analyzed the potential impact on William Penn Bancorporation and the industry as a whole. We have analyzed the potential effects of the stock conversion on William Penn Bancorporation’s operating characteristics and financial performance as they relate to the pro forma market value of William Penn Bancorporation. We have analyzed the assets held by the MHC, which will be consolidated with William Penn Bancorporation’s assets and equity pursuant to the completion of the second-step conversion. We have reviewed the economic and demographic characteristics of the Company’s primary market area. We have compared William Penn Bancorporation’s financial performance and condition with selected publicly-traded thrifts in accordance with the Valuation Guidelines, as well as all publicly-traded thrifts and thrift holding companies. We have reviewed the current conditions in the securities markets in general and the market for thrift stocks in particular, including the market for existing
Boards of Directors
September 2, 2020 Page 3 |
thrift issues, initial public offerings by thrifts and thrift holding companies and second-step conversion offerings. We have excluded from such analyses thrifts subject to announced or rumored acquisition, and/or institutions that exhibit other unusual characteristics.
The Appraisal is based on William Penn Bancorporation’s representation that the information contained in the regulatory applications and additional information furnished to us by William Penn Bancorporation and its independent auditor, legal counsel and other authorized agents are truthful, accurate and complete. We did not independently verify the financial statements and other information provided by William Penn Bancorporation, or its independent auditor, legal counsel and other authorized agents nor did we independently value the assets or liabilities of William Penn Bancorporation. The valuation considers William Penn Bancorporation only as a going concern and should not be considered as an indication of William Penn Bancorporation’s liquidation value.
Our appraised value is predicated on a continuation of the current operating environment for William Penn Bancorporation and for all thrifts and their holding companies. Changes in the local, state and national economy, the legislative and regulatory environment for financial institutions and mutual holding companies, the stock market, interest rates, and other external forces (such as natural disasters or significant world events) may occur from time to time, often with great unpredictability and may materially impact the value of thrift stocks as a whole or the value of William Penn Bancorporation’s stock alone. It is our understanding that there are no current plans for selling control of William Penn Bancorporation following completion of the second-step conversion. To the extent that such factors can be foreseen, they have been factored into our analysis.
The estimated pro forma market value is defined as the price at which William Penn Bancorporation’s common stock, immediately upon completion of the second-step stock offering, would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.
In preparing the pro forma pricing analysis we have taken into account the pro forma impact of the MHC’s net assets (i.e., unconsolidated equity) that will be consolidated with the Company and thus will increase equity. After accounting for the impact of the MHC’s net assets, the public shareholders’ ownership interest was reduced by approximately 0.52%. Accordingly, for purposes of the Company’s pro forma valuation, the public shareholders’ pro forma ownership interest was reduced from 17.34% to 16.82% and the MHC’s ownership interest was increased from 82.66% to 83.18%.
Valuation Conclusion
It is our opinion that, as of September 2, 2020, the estimated aggregate pro forma valuation of the shares of the Company to be issued and outstanding at the end of the conversion offering – including (1) newly-issued shares representing the MHC’s current ownership interest in the Company and (2) exchange shares issued to existing public shareholders of WMPN – was $132,248,840 at the midpoint, equal to 13,224,884 shares at $10.00 per share. The resulting range of value and pro forma shares, all based on $10.00 per share, are as follows: $112,411,510 or 11,241,151 shares at the minimum and $152,086,160 or 15,208,616 shares at the maximum.
Boards of Directors
September 2, 2020 Page 4 |
Based on this valuation and taking into account the ownership interest represented by the shares owned by the MHC, the midpoint of the offering range is $110,000,000 equal to 11,000,000 shares at $10.00 per share. The resulting offering range and offering shares, all based on $10.00 per share, are as follows: $93,500,000 or 9,350,000 shares at the minimum and $126,500,000 or 12,650,000 shares at the maximum.
Establishment of the Exchange Ratio
The conversion regulations provide that in a conversion of a mutual holding company, the minority stockholders are entitled to exchange the public shares for newly issued shares in the fully converted company. The Boards of Directors of the MHC and WMPN have independently determined the exchange ratio, which has been designed to preserve the current aggregate percentage ownership in the Company (adjusted for the dilution resulting from the consolidation of the MHC’s unconsolidated equity into the Company). The exchange ratio to be received by the existing minority shareholders of the Company will be determined at the end of the offering, based on the total number of shares sold in the offering and the final appraisal. Based on the valuation conclusion herein, the resulting offering value and the $10.00 per share offering price, the indicated exchange ratio at the midpoint is 2.8589 shares of the Company’s stock for every one share held by public shareholders. Furthermore, based on the offering range of value, the indicated exchange ratio is 2.4301 at the minimum and 3.2877 at the maximum. RP Financial expresses no opinion on the proposed exchange of newly issued Company shares for the shares held by the public stockholders or on the proposed exchange ratio.
Limiting Factors and Considerations
The valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing shares of the common stock. Moreover, because such valuation is determined in accordance with applicable regulatory guidelines and is necessarily based upon estimates and projections of a number of matters, all of which are subject to change from time to time, no assurance can be given that persons who purchase shares of common stock in the conversion offering, or prior to that time, will thereafter be able to buy or sell such shares at prices related to the foregoing valuation of the estimated pro forma market value thereof. The appraisal reflects only a valuation range as of this date for the pro forma market value of William Penn Bancorporation immediately upon issuance of the stock and does not take into account any trading activity with respect to the purchase and sale of common stock in the secondary market on the date of issuance of such securities or at anytime thereafter following the completion of the second-step conversion.
RP Financial’s valuation was based on the financial condition, operations and shares outstanding of WMPN as of June 30, 2020, the date of the financial data included in the prospectus. The proposed exchange ratio to be received by the current public stockholders of WMPN and the exchange of the public shares for newly issued shares of William Penn Bancorporation’s common stock as a full public company was determined independently by the Boards of Directors of the MHC and WMPN. RP Financial expresses no opinion on the proposed exchange ratio to public stockholders or the exchange of public shares for newly issued shares.
Boards of Directors
September 2, 2020 Page 5 |
RP Financial is not a seller of securities within the meaning of any federal and state securities laws and any report prepared by RP Financial shall not be used as an offer or solicitation with respect to the purchase or sale of any securities. RP Financial maintains a policy which prohibits RP Financial, its principals or employees from purchasing stock of its client institutions.
This valuation may be updated as provided for in the conversion regulations and guidelines. These updates will consider, among other things, any developments or changes in the financial performance and condition of William Penn Bancorporation, management policies, and current conditions in the equity markets for thrift shares, both existing issues and new issues. These updates may also consider changes in other external factors which impact value including, but not limited to: various changes in the legislative and regulatory environment for financial institutions, the stock market and the market for thrift stocks, and interest rates. Should any such new developments or changes be material, in our opinion, to the valuation of the shares, appropriate adjustments to the estimated pro forma market value will be made. The reasons for any such adjustments will be explained in the update at the date of the release of the update. The valuation will also be updated at the completion of William Penn Bancorporation’s stock offering.
Respectfully submitted, | |
RP® FINANCIAL, LC. | |
Ronald S. Riggins | |
President and Managing Director | |
Gregory E. Dunn | |
Director |
RP® Financial, LC. |
TABLE OF CONTENTS i |
TABLE OF CONTENTS
WILLIAM PENN BANCORPORATION
WILLIAM PENN BANK
Bristol, Pennsylvania
RP® Financial, LC. |
TABLE OF CONTENTS ii
|
TABLE OF CONTENTS
WILLIAM PENN BANCORPORATION
WILLIAM PENN BANK
Bristol, Pennsylvania
(continued)
PAGE | ||
DESCRIPTION | NUMBER | |
CHAPTER FOUR | VALUATION ANALYSIS | |
Introduction | IV.1 | |
Appraisal Guidelines | IV.1 | |
RP Financial Approach to the Valuation | IV.1 | |
Valuation Analysis | IV.2 | |
1. Financial Condition | IV.2 | |
2. Profitability, Growth and Viability of Earnings | IV.4 | |
3. Asset Growth | IV.6 | |
4. Primary Market Area | IV.6 | |
5. Dividends | IV.8 | |
6. Liquidity of the Shares | IV.9 | |
7. Marketing of the Issue | IV.9 | |
A. The Public Market | IV.9 | |
B. The New Issue Market | IV.14 | |
C. The Acquisition Market | IV.15 | |
D. Trading in WMPN’s Stock | IV.17 | |
8. Management | IV.18 | |
9. Effect of Government Regulation and Regulatory Reform | IV.18 | |
Summary of Adjustments | IV.18 | |
Valuation Approaches | IV.19 | |
1. Price-to-Earnings (“P/E”) | IV.21 | |
2. Price-to-Book (“P/B”) | IV.23 | |
3. Price-to-Assets (“P/A”) | IV.23 | |
Comparison to Recent Offerings | IV.23 | |
Valuation Conclusion | IV.24 | |
Establishment of the Exchange Ratio | IV.25 |
RP® Financial, LC. |
LIST OF TABLES iii
|
LIST OF TABLES
WILLIAM PENN BANCORPORATION
WILLIAM PENN BANK
Bristol, Pennsylvania
TABLE | |||
Number | DESCRIPTION | page | |
1.1 | Historical Balance Sheet Data | I.6 | |
1.2 | Historical Income Statements | I.9 | |
2.1 | Summary Demographic Data | II.6 | |
2.2 | Primary Market Area Employment Sectors | II.8 | |
2.3 | Largest Employers in Local Market Area | II.8 | |
2.4 | Unemployment Trends | II.9 | |
2.5 | Deposit Summary | II.10 | |
2.6 | Market Area Deposit Competitors | II.11 | |
3.1 | Peer Group of Publicly-Traded Thrifts | III.3 | |
3.2 | Balance Sheet Composition and Growth Rates | III.6 | |
3.3 | Income as a % of Average Assets and Yields, Costs, Spreads | III.9 | |
3.4 | Loan Portfolio Composition and Related Information | III.11 | |
3.5 | Interest Rate Risk Measures and Net Interest Income Volatility | III.13 | |
3.6 | Credit Risk Measures and Related Information | III.15 | |
4.1 | Market Area Unemployment Rates | IV.7 | |
4.2 | Pricing Characteristics and After-Market Trends | IV.16 | |
4.3 | Market Pricing Versus Peer Group | IV.22 |
RP® Financial, LC. |
OVERVIEW
AND FINANCIAL ANALYSIS
I.1 |
I. Overview and Financial Analysis
Introduction
William Penn Bank, or the “Bank”, established in 1870, is a Pennsylvania chartered stock savings bank headquartered in Bristol, Pennsylvania. William Penn Bank serves the Philadelphia metropolitan area through the headquarters office and 12 branch offices. Eight of the branches are located in the Pennsylvania counties of Bucks (four branches) and Philadelphia (four branches), with the remaining four branches located in the New Jersey counties of Camden (three branches) and Burlington (one branch). A map of The William Penn Bank’s full serve branch office locations is provided in Exhibit I-1. William Penn Bank is a member of the Federal Home Loan Bank (“FHLB”) system and its deposits are insured up to the maximum allowable amount by the Federal Deposit Insurance Corporation (“FDIC”).
William Penn Bancorp, Inc. (“WMPN”) is the federally chartered mid-tier holding company of the Bank. WMPN owns 100% of the outstanding common stock of the Bank. Since its formation in 2008, WMPN has been engaged primarily in the business of holding the common stock of the Bank. WMPN completed its initial public offering on April 15, 2008, pursuant to which it sold 1,025,283 shares or 28.2% of its outstanding common stock to the public and issued 2,548,713 shares or 70.0% of its common stock outstanding to William Penn, MHC (the “MHC”), the mutual holding company parent of WMPN. Additionally, WMPN issued 67,022 shares of common stock or 1.8% of its common stock outstanding to the William Penn Community Foundation (the “Foundation”). The MHC and WMPN are subject to supervision and regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve Board” or the “FRB”). At June 30, 2020, WMPN had total consolidated assets of $736.5 million, deposits of $559.8 million and equity of $96.4 million or 13.09% of total assets. Excluding goodwill and core deposit intangibles of $6.1 million, WMPN’s tangible equity equaled $90.3 million or 12.26% of total assets at June 30, 2020. WMPN’s audited financial statements for the most recent period are included by reference as Exhibit I-2.
Plan of Conversion
On September 16, 2020, the respective Board of Directors of the MHC and WMPN adopted a Plan of Conversion, whereby the MHC will convert to stock form. As a result of the conversion, WMPN, which currently owns all of the issued and outstanding common stock of the
RP® Financial, LC. |
OVERVIEW
AND FINANCIAL ANALYSIS
I.2 |
Bank, will be succeeded by William Penn Bancorporation (the “Company”), a newly formed Maryland corporation. Following the conversion, the MHC will no longer exist. For purposes of this document, the existing consolidated entity will also hereinafter be also referred to as William Penn Bancorporation or the Company, unless otherwise identified as WMPN. As of June 30, 2020, the MHC had a majority ownership interest of approximately 82.66% in and its principal asset consisted of 3,711,114 common stock shares of WMPN (the “MHC Shares”). The remaining 778,231 shares or approximately 17.34% of WMPN’s common stock was owned by public shareholders.
It is our understanding that William Penn Bancorporation will offer its stock, representing the majority ownership interest held by the MHC, in a subscription offering to Eligible Account Holders, Tax-Qualified Plans including the Bank’s employee stock ownership plan (the “ESOP”), Supplemental Eligible Account Holders and Other Members. To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the subscription offering, the shares may be offered for sale to the public at large in a community offering and a syndicated offering. Upon completing the mutual-to-stock conversion and stock offering (the “second-step conversion”), the Company will be 100% owned by public shareholders, the publicly-held shares of WMPN will be exchanged for shares in the Company at a ratio that retains their ownership interest at the time the conversion is completed and the MHC assets will be consolidated with the Company.
Strategic Overview
William Penn Bancorporation maintains a local community banking emphasis, with a primary strategic objective of meeting the borrowing and savings needs of its local customer base. The Company is pursuing a strategy of strengthening its community bank franchise dedicated to meeting the banking needs of business and retail customers in the communities that are served by the Company. Growth strategies are emphasizing increased lending diversification that is primarily targeting growth of commercial real estate and commercial business loans. The Company’s objective is to fund asset growth primarily through deposit growth, emphasizing growth of lower cost core deposits. Core deposit growth is expected to be in part facilitated by growth of commercial lending relationships, pursuant to which the Company is seeking to establish a full service banking relationship with its commercial loan customers through offering a full range of commercial loan products that can be packaged with lower cost commercial deposit products.
RP® Financial, LC. |
OVERVIEW
AND FINANCIAL ANALYSIS
I.3 |
In recent years, the Company has supplemented organic growth with the acquisition of three mutual institutions. On July 1, 2018, the Bank completed the acquisition of Audubon Savings Bank, Audubon, New Jersey. With the acquisition of Audubon Savings Bank, the Bank added $149 million in assets, $107 million in deposits and three branch offices in southern New Jersey. In connection with the completion of the acquisition, William Penn Bancorporation issued 517,095 shares of common stock to the MHC. On May 1, 2020, the Bank completed the acquisitions of Fidelity Savings and Loan Association of Bucks County, Bristol, Pennsylvania (“Fidelity Savings”), and Washington Savings Bank, Philadelphia, Pennsylvania (“Washington Savings”). With the acquisition of Fidelity Savings, the Company added $86 million in assets, $66 million in deposits and two branch offices in Bucks County. With the acquisition of Washington Savings, the Company added $159 million in assets, $136 million in deposits and four branch offices in Philadelphia County. In connection with the completion of the acquisitions of Fidelity Savings and Washington Savings, William Penn Bancorporation issued 509,191 shares of common stock to the MHC.
Loans constitute the major portion of the Company’s composition of interest-earning assets, with 1-4 family permanent mortgage comprising more than half of the Company’s loan portfolio composition. Investments serve as a supplement to the Company’s lending activities and the investment portfolio is considered to be indicative of a low risk investment philosophy, as government-sponsored residential mortgage-backed securities constitute the largest concentration of the Company’s investment portfolio.
Deposits have consistently served as the primary funding source for the Company, supplemented with borrowings as an alternative funding source for purposes of managing funding costs and interest rate risk. Core deposits, consisting of transaction and savings account deposits, constitute the largest portion of the Company’s deposit base. Borrowings currently held by the Company consist of FHLB advances.
William Penn Bancorporation’s earnings base is largely dependent upon net interest income and operating expense levels. The Company experienced net interest margin expansion in fiscal years 2018 and 2019, which was facilitated by an increase in yield earned on interest-earnings assets and a decrease in the cost of funds paid on interest-bearing liabilities. Comparatively, the Company experienced net interest margin compression during fiscal year 2020, as the result of a decline in yield earned on interest-earning assets and an increase in the cost of funds paid on interest-bearing liabilities. Operating expense ratios have trended higher
RP® Financial, LC. |
OVERVIEW
AND FINANCIAL ANALYSIS
I.4 |
in recent years, primarily in connection with the infrastructure and personnel added with the acquisitions of the three mutual institutions. Non-interest operating income has been a somewhat limited contributor to the Company’s earnings, with the acquisitions of the three mutual institutions serving to increase the earnings contribution realized from sources of non-interest operating income. Loan loss provisions were a minor factor in the Company’s earnings during fiscal years 2016 through 2019. In fiscal year 2020 loan loss provisions were a more prominent component of the Company’s earnings, as the Company established additional loan loss provisions to address the continued economic uncertainty resulting from the COVID-19 pandemic.
A key component of the Company’s business plan is to complete a second-step conversion offering. The Company’s strengthened capital position will increase operating flexibility and facilitate implementation of planned growth strategies. Additionally, in the near term, the second-step offering will serve to substantially increase regulator capital and liquidity and, thereby, facilitate building and maintaining loss reserves while also providing the Company with greater flexibility to work with borrowers affected by the COVID-19-induced recession. The Company’s strengthened capital position will also provide more of a cushion against potential credit quality related losses in future periods. William Penn Bancorporation’s higher capital position resulting from the infusion of stock proceeds will also serve to reduce interest rate risk, particularly through enhancing the Company’s interest-earning assets/interest-bearing liabilities (“IEA/IBL”) ratio. The additional funds realized from the stock offering will serve to raise the level of interest-earning assets funded with equity and, thereby, reduce the ratio of interest-earning assets funded with interest-bearing liabilities as the balance of interest-bearing liabilities will initially remain relatively unchanged following the conversion, which may facilitate a reduction in William Penn Bancorporation’s funding costs. William Penn Bancorporation’s strengthened capital position will also position the Company to pursue additional expansion opportunities. Such expansion could potentially include establishing or acquiring additional banking offices to gain a market presence in nearby markets that are complementary to the Company’s existing branch network. As a fully-converted institution, the Company’s stronger capital position and greater capacity to offer stock as consideration for an acquisition may also facilitate increased opportunities to grow through acquisitions. At this time, the Company has no specific plans for further expansion through additional acquisitions.
The projected uses of proceeds are highlighted below.
RP® Financial, LC. |
OVERVIEW
AND FINANCIAL ANALYSIS
I.5 |
· | William Penn Bancorporation The Company is expected to retain up to 50% of the net offering proceeds. At present, funds at the Company level, net of the loan to the ESOP, are expected to be primarily invested initially into liquid funds, some of which may be held as a deposit at the Bank. Over time, the funds may be utilized for various corporate purposes, possibly including acquisitions, infusing additional equity into the Bank, repurchases of common stock and the payment of cash dividends. |
· | William Penn Bank. Approximately 50% of the net stock proceeds will be infused into the Bank in exchange for all of the Bank’s stock. Cash proceeds (i.e., net proceeds less deposits withdrawn to fund stock purchases) infused into the Bank are anticipated to become part of general operating funds and are expected to be primarily utilized to fund loan growth over time. |
Overall, it is the Company’s objective to pursue growth that will serve to increase returns, while, at the same time, growth will not be pursued that could potentially compromise the overall risk associated with William Penn Bancorporation’s operations.
Balance Sheet Trends
Table 1.1 shows the Company’s historical balance sheet data for the past five fiscal years. Since fiscal yearend 2016, the Company’s assets ranged from a low of $301.1 million at fiscal yearend 2018 to a high of $736.5 million at fiscal yearend 2020. Asset growth since fiscal yearend 2018 was largely realized through the acquisitions of the three mutual institutions. Overall, assets increased at an annual rate of 23.75% from fiscal yearend 2016 through fiscal yearend 2020. Asset growth was primarily driven by loan growth and mostly funded by deposit growth, most of which consisted of the loan portfolios and deposit bases acquired from the three mutual institutions. A summary of William Penn Bancorporation’s key operating ratios for the past five fiscal years is presented in Exhibit I-3.
William Penn Bancorporation’s loans receivable portfolio increased at a 21.69% annual rate from fiscal yearend 2016 through fiscal yearend 2020, with most of the loan growth occurring in fiscal years 2019 and 2020 in connection with the acquisitions completed during those years. The Company’s comparatively stronger asset growth relative to loan growth provided for a decrease in the loans-to-assets ratio from 73.84% at fiscal yearend 2016 to 69.06% at fiscal yearend 2020.
Over the past four fiscal years, 1-4 family permanent mortgage have been the most significant area of loan growth and such loans comprise the largest concentration of Company’s loan portfolio. Trends in the Company’s loan portfolio composition since fiscal yearend 2016
RP® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS |
I.6 |
Table 1.1
William Penn Bancorporation
Historical Balance Sheet Data
6/30/16- | ||||||||||||||||||||||||||||||||||||||||||||
6/30/20 | ||||||||||||||||||||||||||||||||||||||||||||
At June 30, | Annual. | |||||||||||||||||||||||||||||||||||||||||||
2016 | 2017 | 2018 | 2019 | 2020 | Growth Rate | |||||||||||||||||||||||||||||||||||||||
Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Pct | ||||||||||||||||||||||||||||||||||
($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | ($000) | (%) | (%) | ||||||||||||||||||||||||||||||||||
Total Amount of: | ||||||||||||||||||||||||||||||||||||||||||||
Assets | $ | 314,074 | 100.00 | % | $ | 315,997 | 100.00 | % | $ | 301,109 | 100.00 | % | $ | 415,829 | 100.00 | % | $ | 736,452 | 100.00 | % | 23.75 | % | ||||||||||||||||||||||
Cash and cash equivalents | 10,992 | 3.50 | % | 12,954 | 4.10 | % | 16,128 | 5.36 | % | 26,168 | 6.29 | % | 82,915 | 11.26 | % | 65.73 | % | |||||||||||||||||||||||||||
Interest-bearing time deposits | 45,645 | 14.53 | % | 45,400 | 14.37 | % | 32,422 | 10.77 | % | 8,486 | 2.04 | % | 2,300 | 0.31 | % | -52.62 | % | |||||||||||||||||||||||||||
Investment securities | 9,256 | 2.95 | % | 7,434 | 2.35 | % | 4,963 | 1.65 | % | 22,566 | 5.43 | % | 89,998 | 12.22 | % | 76.58 | % | |||||||||||||||||||||||||||
Loans receivable, net | 231,911 | 73.84 | % | 234,865 | 74.33 | % | 233,389 | 77.51 | % | 326,017 | 78.40 | % | 508,605 | 69.06 | % | 21.69 | % | |||||||||||||||||||||||||||
FHLB/ACBB stock | 3,437 | 1.09 | % | 3,287 | 1.04 | % | 2,727 | 0.91 | % | 2,785 | 0.67 | % | 4,200 | 0.57 | % | 5.14 | % | |||||||||||||||||||||||||||
Bank-owned life insurance | 5,627 | 1.79 | % | 5,786 | 1.83 | % | 5,932 | 1.97 | % | 11,203 | 2.69 | % | 14,758 | 2.00 | % | 27.26 | % | |||||||||||||||||||||||||||
Goodwill and other intangible assets | - | 0.00 | % | - | 0.00 | % | - | 0.00 | % | 6,030 | 1.45 | % | 6,050 | 0.82 | % | NM | ||||||||||||||||||||||||||||
Deposits | $ | 177,300 | 56.45 | % | $ | 182,199 | 57.66 | % | $ | 180,657 | 60.00 | % | $ | 281,206 | 67.63 | % | $ | 559,858 | 76.02 | % | 33.30 | % | ||||||||||||||||||||||
Borrowings | 70,500 | 22.45 | % | 65,500 | 20.73 | % | 51,500 | 17.10 | % | 50,000 | 12.02 | % | 64,892 | 8.81 | % | -2.05 | % | |||||||||||||||||||||||||||
Equity | $ | 59,903 | 19.07 | % | $ | 61,604 | 19.50 | % | $ | 61,895 | 20.56 | % | $ | 76,630 | 18.43 | % | $ | 96,365 | 13.09 | % | 12.62 | % | ||||||||||||||||||||||
Tangible equity | 59,903 | 19.07 | % | 61,604 | 19.50 | % | 61,895 | 20.56 | % | 70,600 | 16.98 | % | 90,315 | 12.26 | % | 10.81 | % | |||||||||||||||||||||||||||
Loans/Deposits | 130.80 | % | 128.91 | % | 129.19 | % | 115.94 | % | 90.85 | % | ||||||||||||||||||||||||||||||||||
Number of Full Service Offices | 3 | 3 | 3 | 6 | 12 |
(1) Ratios are as a percent of ending assets.
Sources: William Penn Bancorporation's prospectus, auditedfinancial statements, and RP Financial calculations.
RP® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS |
I.7 |
show that the concentration of 1-4 family permanent mortgage loans comprising total loans has remained fairly stable, equaling 66.26% of total loans at fiscal yearend 2016 and 66.85% of total loans at fiscal yearend 2020. Comparatively, from fiscal yearend 2016 through fiscal yearend 2020, commercial real estate loans, including multi-family loans, increased from 16.03% to 17.72% of total loans and construction and land loans decreased from 7.09% to 4.34% of total loans. Over the same time period, the relative concentrations of home equity loans and lines of credit decreased from 10.12% of total loans to 9.10% of total loans, commercial business loans increased from 0.02% of total loans to 1.24% of total loans and consumer loans increased from 0.48% of total loans to 0.75% of total loans.
The intent of the Company’s investment policy is to provide adequate liquidity and to generate a favorable return within the context of supporting overall credit and interest rate risk objectives. It is anticipated that proceeds retained at the holding company level will initially be primarily invested into liquid funds, some of which may be held as a deposit at the Bank. Since fiscal yearend 2016, the Company’s level of cash and investment securities (inclusive of FHLB stock) ranged from a low of 14.43% of assets at fiscal yearend 2019 to a high of 24.36% of assets at fiscal yearend 2020. As of June 30, 2020, the Company held investment securities totaling $90.0 million or 12.22% of assets. Mortgage-backed securities totaling $55.0 million comprised the most significant component of the Company’s investment portfolio at June 30, 2020. Other investments held by the Company at June 30, 2020 consisted of corporate bonds ($17.4 million), municipal bonds ($10.5 million), U.S. Government agency securities ($6.2 million) and U.S. Treasury securities ($1.0 million). As of June 30, 2020, the entire investment portfolio was maintained as available for sale and had a net unrealized gain of $103,000 at June 30, 2020. Exhibit I-4 provides historical detail of the Company’s investment portfolio. As of June 30, 2020, the Company also held $82.9 million of cash and cash equivalents, $2.3 million of interest-bearing time deposits and $4.2 million of FHLB/ACBB stock.
The Company also maintains an investment in bank-owned life insurance (“BOLI”) policies, which covers the lives of certain former officers of the Company and certain current and former Board members of the Company. The life insurance policies earn tax-exempt income through cash value accumulation and death proceeds. As of June 30, 2020, the cash surrender value of the Company’s BOLI equaled $14.8 million or 2.00% of assets.
William Penn Bancorporation’s funding needs have been addressed through a combination of deposits, borrowings and internal cash flows. From fiscal yearend 2016 through
RP® Financial, LC. | OVERVIEW AND FINANCIAL ANALYSIS |
I.8 |
fiscal yearend 2020, the Company’s deposits increased at a 33.30% annual rate. Most of the Company’s deposit growth was realized through the three mutual institutions acquired in fiscal years 2019 and 2020. The acquisitions of the three mutual institutions served to increase the concentration of core deposits that comprise total deposits. Core deposits equaled 65.26% of total deposits at June 30, 2020, versus 53.60% of total deposits at June 30, 2018.
Borrowings serve as an alternative funding source for the Company to address funding needs for growth and to support management of deposit costs and interest rate risk. Over the five-year period covered in Table 1.1, borrowings ranged from a low of $50.0 million or 12.02% of assets at fiscal yearend 2019 to a high of $70.5 million or 22.45% of assets at fiscal yearend 2016. As of June 30, 2020, borrowings totaled $64.9 million or 8.81% of assets and consisted entirely of FHLB advances.
The Company’s equity increased at a 12.62% annual rate from fiscal yearend 2016 through fiscal yearend 2020, with most of the growth occurring in fiscal years 2019 and 2020 in connection with acquisitions of the three mutual institutions. Largely as the result of the acquisitions of the three mutual institutions, stronger asset growth relative to capital growth provided for a decrease in the Company’s equity-to-assets ratio from 19.07% at fiscal yearend 2016 to 13.09% at June 30, 2020. Comparatively, as the result of the goodwill and intangibles created from the acquisitions of the three mutual institutions, the Company’s tangible equity-to-assets ratio decreased from 19.07% at fiscal yearend 2016 to 12.26% at fiscal yearend 2020. Goodwill and other intangibles totaled $6.1 million or 0.82% of assets at June 30, 2020. The Bank maintained capital surpluses relative to all of its regulatory capital requirements at June 30, 2020. The addition of stock proceeds will serve to strengthen the Company’s capital position, as well as support growth opportunities. At the same time, the significant increase in William Penn Bancorporation’s pro forma capital position will initially depress its ROE.
Income and Expense Trends
Table 1.2 shows the Company’s historical income statements for the fiscal years ended June 30, 2016 through June 30, 2020. During the period covered in Table 1.2, the Company’s reported earnings from a low of $1.3 million or 0.27% of average assets during fiscal year 2020 to a high of $3.8 million or 0.92% of average assets during fiscal year 2019. The Company’s earnings for fiscal year 2020 included merger related expenses totaling $3.3 million or 0.67% of average assets. Net interest income and operating expenses represent the primary components of the Company’s earnings, while non-interest operating income has been a fairly
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I.9 |
Table 1.2
William Penn Bancorporation
Historical Income Statements
For the Fiscal Year Ended June 30, | ||||||||||||||||||||||||||||||||||||||||
2016 | 2017 | 2018 | 2019 | 2020 | ||||||||||||||||||||||||||||||||||||
Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | Amount | Pct(1) | |||||||||||||||||||||||||||||||
($ | 000 | ) | (%) | ($ | 000 | ) | (%) | ($ | 000 | ) | (%) | ($ | 000 | ) | (%) | ($ | 000 | ) | (%) | |||||||||||||||||||||
Interest income | $ | 12,435 | 3.94 | % | $ | 11,950 | 3.79 | % | $ | 12,175 | 3.96 | % | $ | 17,821 | 4.36 | % | $ | 19,817 | 4.04 | % | ||||||||||||||||||||
Interest expense | (3,524 | ) | -1.12 | % | (3,448 | ) | -1.09 | % | (3,182 | ) | -1.04 | % | (3,591 | ) | -0.88 | % | (5,018 | ) | -1.02 | % | ||||||||||||||||||||
Net interest income | $ | 8,911 | 2.82 | % | $ | 8,502 | 2.70 | % | $ | 8,993 | 2.93 | % | $ | 14,230 | 3.48 | % | $ | 14,799 | 3.01 | % | ||||||||||||||||||||
Provision for loan losses | (5 | ) | 0.00 | % | (15 | ) | 0.00 | % | 120 | 0.04 | % | (88 | ) | -0.02 | % | (626 | ) | -0.13 | % | |||||||||||||||||||||
Net interest income after provisions | $ | 8,906 | 2.82 | % | $ | 8,487 | 2.69 | % | $ | 9,113 | 2.97 | % | $ | 14,142 | 3.46 | % | $ | 14,173 | 2.89 | % | ||||||||||||||||||||
Other non-interest operating income | $ | 493 | 0.16 | % | $ | 511 | 0.16 | % | $ | 594 | 0.19 | % | $ | 1,005 | 0.25 | % | $ | 1,176 | 0.24 | % | ||||||||||||||||||||
Gain on sale of loans | - | 0.00 | % | - | 0.00 | % | - | 0.00 | % | 12 | 0.00 | % | - | 0.00 | % | |||||||||||||||||||||||||
Operating expense | (5,589 | ) | -1.77 | % | (5,205 | ) | -1.65 | % | (5,908 | ) | -1.92 | % | (9,657 | ) | -2.36 | % | (12,098 | ) | -2.46 | % | ||||||||||||||||||||
Net operating income | $ | 3,810 | 1.21 | % | $ | 3,793 | 1.20 | % | $ | 3,799 | 1.24 | % | $ | 5,502 | 1.34 | % | $ | 3,251 | 0.66 | % | ||||||||||||||||||||
Non-Operating Income/(Losses) | ||||||||||||||||||||||||||||||||||||||||
Gain (loss) on sale of OREO | ($ | 133 | ) | -0.04 | % | $ | 96 | 0.03 | % | $ | 47 | 0.02 | % | ($ | 30 | ) | -0.01 | % | - | 0.00 | % | |||||||||||||||||||
Merger related expenes | - | 0.00 | % | - | 0.00 | % | (375 | ) | -0.12 | % | (796 | ) | -0.19 | % | (3,294 | ) | -0.67 | % | ||||||||||||||||||||||
Gain on sale of securities | - | 0.00 | % | - | 0.00 | % | - | 0.00 | % | 140 | 0.03 | % | 238 | 0.05 | % | |||||||||||||||||||||||||
Gain on bargain purchase | - | 0.00 | % | - | 0.00 | % | - | 0.00 | % | - | 0.00 | % | 746 | 0.15 | % | |||||||||||||||||||||||||
Net non-operating income(losses) | ($ | 133 | ) | -0.04 | % | $ | 96 | 0.03 | % | ($ | 328 | ) | -0.10 | % | ($ | 686 | ) | -0.17 | % | ($ | 2,310 | ) | -0.47 | % | ||||||||||||||||
Net income before tax | $ | 3,677 | 1.16 | % | $ | 3,889 | 1.23 | % | $ | 3,471 | 1.13 | % | $ | 4,816 | 1.18 | % | $ | 941 | 0.19 | % | ||||||||||||||||||||
Income tax provision | (1,246 | ) | -0.39 | % | (1,325 | ) | -0.42 | % | (2,007 | ) | -0.65 | % | (1,060 | ) | -0.26 | % | 387 | 0.08 | % | |||||||||||||||||||||
Net income (loss) | $ | 2,431 | 0.77 | % | $ | 2,564 | 0.81 | % | $ | 1,464 | 0.48 | % | $ | 3,756 | 0.92 | % | $ | 1,328 | 0.27 | % | ||||||||||||||||||||
Adjusted Earnings | ||||||||||||||||||||||||||||||||||||||||
Net income | $ | 2,431 | 0.77 | % | $ | 2,564 | 0.81 | % | $ | 1,464 | 0.48 | % | $ | 3,756 | 0.92 | % | $ | 1,328 | 0.27 | % | ||||||||||||||||||||
Add(Deduct): Non-operating income | 133 | 0.04 | % | (96 | ) | -0.03 | % | 328 | 0.11 | % | 686 | 0.17 | % | 2,310 | 0.47 | % | ||||||||||||||||||||||||
Tax effect (2) | (45 | ) | -0.01 | % | 33 | 0.01 | % | (112 | ) | -0.04 | % | (154 | ) | -0.04 | % | (520 | ) | -0.11 | % | |||||||||||||||||||||
Adjusted earnings | $ | 2,519 | 0.80 | % | $ | 2,501 | 0.79 | % | $ | 1,680 | 0.55 | % | $ | 4,288 | 1.05 | % | $ | 3,118 | 0.64 | % | ||||||||||||||||||||
Expense Coverage Ratio (3) | 1.59 | x | 1.64 | x | 1.53 | x | 1.47 | x | 1.22 | x | ||||||||||||||||||||||||||||||
Efficiency Ratio (4) | 59.40 | % | 57.69 | % | 61.54 | % | 63.27 | % | 75.69 | % |
(1) Ratios are as a percent of average assets.
(2) Assumes a 34.0% effective tax rate for fiscal years 2016 through 2018 and a 22.5% effective tax rate for fiscal years 2019 and 2020.
(3) Expense coverage ratio calculated as net interest income before provisions for loan losses divided by operating expenses.
(4) Efficiency ratio calculated as operating expenses divided by the sum of net interest income before provisions for loan losses plus non-interest operating income.
Sources: William Penn Bancorporation's prospectus, audited financial statements and RP Financial calculations.
RP® Financial, LC. |
OVERVIEW AND FINANCIAL ANALYSIS
I.10 |
limited contributor to the Company’s earnings. Loan loss provisions have typically been a relatively minor factor in the Company’s earnings, but were a more significant earnings factor during fiscal year 2020 for purposes of addressing continued economic uncertainty resulting from the COVID-19 pandemic. With the exception of merger related expenses recorded during fiscal years 2019 and 2020 and the gain on bargain purchase recorded during fiscal year 2020, non-operating income and losses have been a relatively minor earnings factor throughout the period covered in Table 1.2
For the period covered in Table 1.2, the Company’s net interest income to average assets ratio ranged from a low of 2.70% during fiscal year 2017 to a high of 3.48% during fiscal year 2019 and then declined to 3.01% of average assets during fiscal year 2020. The increase in the Company’s net interest income ratio from fiscal year 2017 through fiscal year 2019 was realized through an increase in the interest income ratio and a decrease in the interest expense ratio. The increase in the interest income ratio was facilitated by a shift in the Company’s interest-earning asset composition towards a higher concentration of comparatively higher yielding loans relative to investments, which served to increase the Company’s overall yield on interest-earning assets. Likewise, the decrease in the interest expense ratio was facilitate by a shift in the Company’s funding composition towards lower costing deposits relative to borrowings, which served to reduce the Company’s overall cost of funds. The decline in the Company’s net interest income ratio during fiscal year 2020 was due to interest rate spread compression that resulted from a decrease in the yield on interest-earnings assets and an increase in the cost of interest-bearing liabilities. During fiscal year 2020, the decline in yield earned on interest-earning reflects a shift in the Company’s interest-earning asset composition towards a higher concentration of comparatively lower yielding investments relative to loans, as well as a decline in the weighted average yield earned on loans. Comparatively, the increase in the Company interest expense ratio during fiscal year 2020 was largely related to an increase in the weighted average cost of interest-bearing deposits. Overall, during the past five fiscal years, the Company’s interest rate spread ranged from a low of 2.62% during fiscal year 2017 to a high of 3.57% during fiscal year 2019 and equaled 3.05% during fiscal year 2020. The Company’s net interest rate spreads and yields and costs for the past five fiscal years are set forth in Exhibit I-3 and Exhibit I-5.
Non-interest operating income has been somewhat of a limited contributor to the Company’s earnings over the past five fiscal years, although those sources of revenues have become a slightly larger earnings factor pursuant to the non-interest operating income added
RP® Financial, LC. |
OVERVIEW
AND FINANCIAL ANALYSIS
I.11 |
through the acquisitions of the three mutual institutions. Throughout the period shown in Table 1.2, sources of non-interest operating income ranged from a low of $493,000 or 0.16% of average assets during fiscal year 2016 to a high of $1.2 million or 0.24% of average assets during fiscal year 2020. Fees and service charges and income earned on BOLI constitute the major sources of the Company’s non-interest operating revenues.
Operating expenses represent the other major component of the Bank’s earnings, ranging from a low of $5.2 million or 1.65% of average assets during fiscal year 2017 to a high of $12.1 million or 2.46% of average assets during fiscal year 2020. Most of the increase in operating expenses occurred during fiscal years 2019 and 2020, as the result of the infrastructure and personnel that were added with the acquisitions of the three mutual institutions.
Overall, the general trends in the Company’s net interest income ratio and operating expense ratio showed a decline in core earnings, as indicated by the Company’s expense coverage ratios (net interest income divided by operating expenses). William Penn Bancorporation’s expense coverage ratio equaled 1.59 times during fiscal year 2016, versus a ratio of 1.22 times during fiscal year 2020. Likewise, William Penn Bancorporation’s efficiency ratio (operating expenses as a percent of the sum of net interest income and other operating income) of 59.40% during fiscal year 2016 was more favorable compared to its efficiency ratio of 75.69% recorded during fiscal year 2020.
During the period covered in Table 1.2, the amount of loan loss provisions and recoveries recorded by the Company ranged from a recovery of $120,000 or 0.04% of average assets during fiscal year 2018 to loan loss provisions of $626,000 or 0.13% of average assets during fiscal year 2020. Significantly higher loan loss provisions were established in the fourth quarter of fiscal year 2020 to address the continued economic uncertainty resulting from the COVID-19 pandemic. As of June 30, 2020, the Company maintained valuation allowances of $3.5 million, equal to 0.68% of total loans and 107.88% of non-performing loans. As of June 30, 2020, non-performing loans totaled $3.3 million or 0.63% of total loans. After taking into account the $3.680 million of fair value credit adjustment applied to the loan portfolios of Fidelity Savings and Washington Savings, the Company’s reserve coverage ratios equaled 1.39% of total loans and 220.69% of non-performing loans. Exhibit I-6 sets forth the Company’s loan loss allowance activity during the past five fiscal years.
RP® Financial, LC. |
OVERVIEW
AND FINANCIAL ANALYSIS
I.12 |
Except for merger expenses related to the acquisitions of the three mutual institutions and the gain on bargain purchase related to the acquisitions of Fidelity Savings and Washington Savings, non-operating income and losses have not been a significant factor in the Company’s earnings. Merger related expenses equaled $375,000 or 0.12% of average assets during fiscal year 2018, $796,000 or 0.19% of average assets during fiscal year 2019 and $3.3 million or 0.67% of average assets during fiscal year 2020. In fiscal year 2020, the Company recorded a gain on bargain purchase of $746,000 or 0.15% of average assets. Other sources of non-operating income and losses consisted of gains and losses on the sale other real estate owned (“OREO”) and gains on the sale of investment securities. Overall, during the period covered in Table 1.2, net non-operating income and losses ranged from a loss of $2.3 million or 0.47% of average assets during fiscal year 2020 to non-operating income of $96,000 or 0.03% of average assets during fiscal year 2017. Overall, the items that comprise the Company’s non-operating income and losses are not viewed to be part of the Company’s core or recurring earnings base.
The Company’s effective tax rate ranged from 57.82% during fiscal year 2018 to a tax benefit of 41.13% during fiscal year 2020. The relatively high effective tax rate recorded for fiscal year 2018 includes a reduction in the value of William Penn Bancorporation’s deferred tax assets and a corresponding charge to income tax expense of $959,000 as a result of the enactment of the Tax Cuts and Jobs Act of 2017, which reduced the maximum federal corporate income tax rate to 21% from 35%. As set forth in the prospectus, the Company’s effective marginal tax rate is 22.5%.
Interest Rate Risk Management
The Company’s balance sheet is liability-sensitive in the short-term (less than one year) and, thus, the net interest margin will typically be adversely affected during periods of rising and higher interest rates. As interest rates have remained at or near historically low levels for an extended period of time, the Company experienced interest spread compression during fiscal year 2020 as the average yield on interest-earning assets declined and the average cost of interest-bearing liabilities increased. The Company’s interest rate risk analysis indicated that as of June 30, 2020, in the event of a 200 basis point instantaneous parallel increase in interest rates, net interest income would decline by 1.38% in year 1 and net portfolio value would decrease by 4.16% (see Exhibit I-7).
The Company pursues a number of strategies to manage interest rate risk, particularly with respect to seeking to limit the repricing mismatch between interest rate sensitive assets
RP® Financial, LC. |
OVERVIEW
AND FINANCIAL ANALYSIS
I.13 |
and liabilities. The Company manages interest rate risk from the asset side of the balance sheet through investing in securities that have adjustable interest rates, maintaining the investment securities portfolio as available for sale and lending diversification into other types of lending beyond 1-4 family permanent mortgage loans which consist primarily of adjustable rate or shorter term fixed rate loans. As of June 30, 2020, ARM loans comprised 42.42% of the dollar amount of all loans due after June 30, 2021 (see Exhibit I-8). On the liability side of the balance sheet, management of interest rate risk has been pursued through emphasizing growth of lower costing and less interest rate sensitive transaction, money market and savings account deposits and utilizing longer term fixed rate FHLB advances with laddered terms. Transaction, money market and savings deposits comprised 65.26% of William Penn Bancorporation’s total deposits at June 30, 2020.
The infusion of stock proceeds will serve to further limit the Company’s interest rate risk exposure, as most of the net proceeds will be redeployed into interest-earning assets and the increase in the Company’s capital position will lessen the proportion of interest rate sensitive liabilities funding assets.
Lending Activities and Strategy
William Penn Bancorporation’s lending activities have emphasized 1-4 family permanent mortgage loans and such loans comprise the largest concentration of the Company’s loan portfolio. Beyond 1-4 family loans, lending diversification by the Company has emphasized commercial real estate/multi-family loans followed by home equity loans and lines of credit. Other areas of lending diversification for the Company include construction/land loans commercial business loans and consumer loans. Pursuant to the Company’s strategic plan, the Company is pursuing a diversified lending strategy emphasizing commercial real estate and commercial business loans as the primary areas of targeted loan growth. Exhibit I-9 provides historical detail of William Penn Bancorporation’s loan portfolio composition over the past five fiscal years and Exhibit I-10 provides the contractual maturity of the Company’s loan portfolio by loan type as of June 30, 2020.
1-4 Family Residential Real Estate Loans. William Penn Bancorporation offers both fixed rate and adjustable rate 1-4 family residential real estate loans with terms of up to 30 years, which are substantially secured by local properties. Loan originations are generally underwritten to secondary market guidelines, so as to provide the Company with the flexibility to
RP® Financial, LC. |
OVERVIEW
AND FINANCIAL ANALYSIS
I.14 |
sell the loans into the secondary market for purposes of managing interest rate risk. The Company’s current practice is to generally retain all originations for investment. ARM loans offered by the Company have initial repricing terms of up to ten years and then reprice annually for the balance of the loan term. ARM loans are indexed to the comparable monthly Constant Maturity Treasury indices. The Company’s 1-4 family lending activities include origination of loans secured by non-owner occupied 1-4 family residential properties. As of June 30, 2020, the Company’s outstanding balance of 1-4 family residential real estate loans totaled $345.9 million equal to 66.85% of total loans outstanding. As of June 30, 2020, loans secured by non-owner-occupied properties totaled $114.1 million equal to 33.0% of the 1-4 family loan portfolio.
Commercial Real Estate and Multi-family Loans Commercial real estate and multi-family loans consist largely of loans originated by the Company, which are generally collateralized by properties in the Company’s regional lending area. On a limited basis, the Company supplements originations of commercial real estate and multi-family loans with purchased loan participations from local banks. Loan participations are subject to the same underwriting criteria and loan approvals as applied to loans originated by the Company. As of June 30, 2020, the Company’s loan portfolio included $5.7 million in purchased loan participations outstanding. William Penn Bancorporation generally originates commercial real estate and multi-family loans up to a loan-to-value (“LTV”) ratio of 80% and generally requires a minimum debt-coverage ratio of 1.25 times. Commercial real estate and multi-family loans are originated with amortization terms of up to 25 years. Loan terms offered on commercial real estate and multi-family loans include fixed rate and adjustable rate loans. Interest rates for adjustable rate loans are typically adjusted to a rate equal to the interest rate for 1-4 family loan products, plus an additional spread based on credit-worthiness and risk. Properties securing the commercial real estate and multi-family loan portfolio include office buildings, retail and mixed-use properties, condominiums, apartment buildings, single-family subdivisions and owner occupied properties used for businesses. At June 30, 2020, the Company’s largest commercial real estate loan had an outstanding balance of $6.1 million and was secured by a shopping center and church. At June 30, 2020, this loan was performing in accordance with its original terms. As of June 30, 2020, the Company’s outstanding balance of commercial real estate and multi-family loans totaled $91.7 million equal to 17.72% of total loans outstanding.
Home Equity Loans and Lines of Credit. The Company’s 1-4 family lending activities include home equity loans and lines of credit. Home equity loans are originated as fixed rate loans with amortization terms up to 20 years. Home equity lines of credit are tied to the prime
RP® Financial, LC. |
OVERVIEW
AND FINANCIAL ANALYSIS
I.15 |
rate as published in The Wall Street Journal and are generally offered with terms of up to a ten year draw period followed by a repayment term of 15 years. The Company will generally originate home equity loans and lines of credit up to a maximum loan-to value (“LTV”) ratio of 80%, inclusive of other liens on the property, on owner occupied properties. As of June 30, 2020, the Company’s outstanding balance of home equity loans and lines of credit totaled $47.1 million equal to 9.10% of total loans outstanding.
Construction and Land Loans. Residential construction loans originated by the Company consist of loans to individuals that finance the construction of residential dwellings for personal use. Commercial construction loans originated by the Company consist of loans for the development of projects including condominiums, apartment buildings, single-family subdivisions, non-owner-occupied residential dwellings and owner-occupied properties used for business. Residential construction loans are originated as interest-only loans during the construction phase, which is typically up to 18 months. At the end of the construction phase, the loan may convert to a permanent mortgage loan or the loan may be paid in full. Residential construction loans are generally originated up to a maximum LTV ratio of 80% of the appraised market value. Commercial construction loans are originated up to a maximum LTV ratio of 75% of the lower of cost or the appraised market value. The Company does not currently offer land loans, but has historically offered land loans to individuals on approved residential building lots for personal use. Land loans in the Company’s loan portfolio have terms of up to 15 years and a maximum LTV ratio of 80%. The largest construction or land loan in the Company’s loan portfolio at June 30, 2020 was a commercial land loan for $3.0 million, of which $2.9 million was disbursed and outstanding. At June 30, 2020, this loan was performing in accordance with its original terms. As of June 30, 2020, William Penn Bancorporation’s outstanding balance of construction and land loans equaled $22.5 million or 4.35% of total loans outstanding.
Commercial Business Loans. The commercial business loan portfolio is generated through extending loans to small-to medium-sized businesses operating in the local market area. Commercial business lending is a targeted area of loan growth for the Company, pursuant to which the Company is seeking to become a full service community bank to its commercial loan customers through offering a full range of commercial loan products that can be packaged with lower cost commercial deposit products. Commercial business loans offered by the Company include operating lines of credit secured by general business assets and equipment. Operating lines of credit are generally floating rate loans with repricing occurring daily, monthly or quarterly. Equipment loans are typically fixed rate loans with terms of five
RP® Financial, LC. |
OVERVIEW
AND FINANCIAL ANALYSIS
I.16 |
years or less. As of June 30, 2020, the Bank’s outstanding balance of commercial business loans totaled $6.5 million equal to 1.24% of total loans outstanding.
Consumer Loans. Consumer lending other than home equity loans and lines of credit has been a limited area of lending diversification for the Company, with such loans consisting of automobile loans and personal secured and unsecured loans. As of June 30, 2020, the Company held $3.9 million of consumer loans equal to 0.75% of total loans outstanding.
Asset Quality
Over the past five fiscal years, William Penn Bancorporation’s balance of non-performing assets ranged from a low of $2.0 million or 0.48% of assets at June 30, 2019 to a high of $5.7 million or 1.81% of assets at June 30, 2017. As of June 30, 2020, non-performing assets totaled $3.4 million or 0.46% of assets. As shown in Exhibit I-11, non-performing assets at June 30, 2020 consisted of $3.2 million of non-accruing loans, $90,000 of accruing loans 90 days or more past due and $100,000 of OREO. The increase in the balance of non-performing assets during fiscal year 2020 was primarily due to an increase in non-accruing 1-4 family loans, which increased from $1.3 million at fiscal yearend 2019 to $2.4 million at fiscal yearend 2020 and mostly consisted of loans that were acquired with the acquisitions of Fidelity Savings and Washington Savings.
To track the Company’s asset quality and the adequacy of valuation allowances, the Company has established detailed asset classification policies and procedures which are consistent with regulatory guidelines. Classified assets are reviewed monthly by senior management and the Board. Pursuant to these procedures, when needed, the Company establishes additional valuation allowances to cover anticipated losses in classified or non-classified assets. As of June 30, 2020, the Company maintained loan loss allowances of $3.5 million, equal to 0.68% of total loans outstanding and 107.88% of non-performing loans. After taking into account the $3.680 million of fair value credit adjustment applied to the loan portfolios of Fidelity Savings and Washington Savings, the Company’s reserve coverage ratios equaled 1.39% of total loans and 220.69% of non-performing loans.
Funding Composition and Strategy
Deposits have consistently served as the Company’s primary funding source and at June 30, 2020 deposits accounted for 89.61% of William Penn Bancorporation’s combined
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OVERVIEW
AND FINANCIAL ANALYSIS
I.17 |
balance of deposits and borrowings. Exhibit I-12 sets forth the Company’s deposit composition for the past three fiscal years. Transaction and savings account deposits constituted 65.26% of total deposits at June 30, 2020, as compared to 53.60% of total deposits at June 30, 2018. The increase in the concentration of core deposits comprising total deposits since fiscal yearend 2018 was largely related to the deposits acquired in the acquisitions of the three mutual institutions. As of June 30, 2020, checking accounts and money market accounts comprised the two largest concentrations of the Company’s core deposits equaling 38.93% and 35.32% of core deposits, respectively.
The balance of the Company’s deposits consists of CDs, which equaled 34.74% of total deposits at June 30, 2020 compared to 46.40% of total deposits at June 30, 2018. William Penn Bancorporation’s current CD composition reflects a higher concentration of short-term CDs (maturities of one year or less). The CD portfolio totaled $194.5 million at June 30, 2020 and $113.6 million or 58.41% of the CDs were scheduled to mature in one year or less. Exhibit I-13 sets forth the maturity schedule of the Company’s CDs as of June 30, 2020. As of June 30, 2020, jumbo CDs (CD accounts with balances of $100,000 or more) amounted to $84.8 million or 43.59% of total CDs. The Company held $3.8 million of brokered CDs at June 30, 2020.
Borrowings serve as an alternative funding source for the Company to facilitate management of funding costs and interest rate risk. FHLB advances have been the only source of borrowings utilized by the Company over the past five fiscal years. The Company maintained $64.9 million of FHLB advances at June 30, 2020 with a weighted average rate of 2.53%. FHLB advances held by the Company at June 30, 2020 had laddered terms, most of which had maturity dates by fiscal year 2025. Exhibit I-14 provides further detail of the Company’s borrowings activities during the past three fiscal years.
Subsidiaries
The Company’s only subsidiary is William Penn Bank. The Bank maintains the following subsidiaries:
WPSLA Investment Corporation is a Delaware corporation organized in April 2000 to hold certain investment securities and loans for William Penn Bank. At June 30, 2020, WPSLA Investment Corporation held $60.0 million of William Penn Bank’s $90.0 million securities portfolio and $31.1 million of William Penn Bank’s $517.5 million loan portfolio.
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OVERVIEW
AND FINANCIAL ANALYSIS
I.18 |
Fidelity Asset Recovery Specialists, LLC is a Pennsylvania limited liability company organized in March 2015 that William Penn Bank acquired in connection with its acquisition of Fidelity Savings. This subsidiary, which is currently inactive and in the process of dissolution, was formerly utilized by Fidelity Savings to manage and hold other real estate owned properties in Pennsylvania until disposition.
Washington Service Corporation is a Pennsylvania corporation organized in October 2000 that William Penn Bank acquired in connection with its acquisition of Washington Savings. This subsidiary holds commercial real estate, including a branch office, located in Philadelphia, Pennsylvania that was previously owned by Washington Savings.
Legal Proceedings
From time to time, the Company is involved in routine legal proceedings in the ordinary course of business. Such routine legal proceedings, in the aggregate, are believed by management to be immaterial to the Company’s financial condition, results of operations and cash flows.
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MARKET AREA
II.1 |
II. MARKET AREA
Introduction |
William Penn Bancorporation serves the Philadelphia metropolitan area through the headquarters office and 12 branch offices. Eight of the branches are located in the Pennsylvania counties of Bucks (four branches) and Philadelphia (four branches), with the remaining four branches located in the New Jersey counties of Camden (three branches) and Burlington (one branch). Exhibit II-1 provides information on the Company’s office properties.
With operations in a major metropolitan area, the Company’s competitive environment includes a significant number of thrifts, commercial banks and other financial services companies, some of which have a regional or national presence and are larger than the Company in terms of deposits, loans, scope of operations, and number of branches. These institutions also have greater resources at their disposal than the Company.
Future growth opportunities for William Penn Bancorporation depend on the future growth and stability of the national and regional economy, demographic growth trends and the nature and intensity of the competitive environment. These factors have been examined to help determine the growth potential that exists for the Company, the relative economic health of the Company’s market area, and the resultant impact on value.
National Economic Factors
The future success of the Company’s operations is partially dependent upon various national and local economic trends. In assessing national economic trends over the past few quarters, manufacturing activity for January 2020 expanded for the first time since July 2019, with an index reading of 50.9. January service sector activity also accelerated to an index reading of 55.5, which was its highest reading since August 2019. U.S. employers added 225,000 jobs in January and the unemployment rate for January increased to 3.6%. Low mortgage rates and more housing inventory spurred an 11.8% increase in February existing home sales. February new home sales increased 4.9%, which was an 11-month high. Manufacturing activity for February slowed to an index reading of 50.1, while February service sector activity accelerated to a 1-year high index reading of 57.3. February’s employment report showed a pick-up in hiring, as U.S. employers added 275,000 jobs and the February unemployment rate dropped to 3.5%. Retail sales for February showed a decline of 0.5%. February existing home sales showed a healthy increase of 11.8%, while February new home
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MARKET AREA
II.2 |
sales declined 4.4%. The impact that the COVID-19 pandemic was starting to have on the U.S. economy was evident in the economic data for March. Manufacturing activity for March fell to an index reading of 49.1, while service sector activity for March slowed to a more than three and one-half year low index reading of 52.5. The U.S. economy shed 701,000 jobs in March and the March unemployment rate jumped to 4.4%. Retail sales for March plunged 8.7%. Existing and new home sales for March fell 8.5% and 15.4%, respectively. First quarter GDP contracted at a 4.8% annual rate (subsequently revised to a 5.0% annualized rate of contraction).
April 2020 data showed that the damage the COVID-19 pandemic was having on the U.S. economy was becoming more devastating. Manufacturing activity for April contracted at the sharpest rate since the last recession, with an index reading of 41.5. Similarly, service sector activity for April fell to an index reading of 41.8, its lowest level since March 2009. The U.S. economy shed a record 20.5 million jobs in April and the April unemployment rate jumped to 14.7%, the highest level since the Great Depression. The April consumer price index declined 0.8%, which was the largest monthly decline since December 2008. Retail sales for April plummeted 16.4%. Existing home sales tumbled 17.8% in April, while new home sales for April increased 0.7%. Mortgage delinquencies spiked by 1.6 million in April, which was the largest 1-month increase ever recorded. Durable-goods orders for April fell 17.2%. May manufacturing activity increased to an index reading of 43.1, indicating some modest easing in the COVID-19 pandemic driven slowdown in industrial activity. Similarly, service sector activity for May increased to an index reading of 45.4. The U.S. economy unexpectedly added 2.5 million jobs in May and the May unemployment rate fell to 13.3%. May retail sales rebounded by 17.7%, adding another sign that the economy was recovering from earlier lockdowns to contain the pandemic. Existing home sales for May declined 9.7%, while new home sales for May increased 16.6%. Manufacturing and service sector activity for June continued to pick-up, with respective index readings of 52.6 and 57.1. The June employment report also showed the U.S. economy was making progress towards a recovery, as 4.8 million jobs were added in June and the June unemployment rate fell to 11.1%. Likewise, retail sales for June beat expectations, increasing 7.5% from May. Record low mortgage rates helped to fuel a rebound in June home sales, as June existing and new home sales rose by 20.7% and 13.8%, respectively.
July 2020 manufacturing activity increased to an index reading of 54.2, while July service sector activity accelerated to an index reading of 58.1. U.S. employers added 1.8 million jobs in July and the July unemployment rate fell to 10.2%. In late-July, economic data
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MARKET AREA
II.3 |
suggested that the economic recovery was stalling, as filings for initial unemployment claims rose for two consecutive weeks after nearly four months of declining weekly unemployment claims and second quarter GDP contracted at a record annual rate of 32.9%. July existing home sales increased 24.7%, while new home sales in July rose 13.9%. At the same time, the number of homeowners that were at least 90 days delinquent soared to a 10-year high in July. August manufacturing activity accelerated to an index reading of 56.0. Comparatively, August service sector activity slowed to an index 56.9.
In terms of interest rates trends over the past few quarters, long-term Treasury yields edged lower at the start of 2020 and then stabilized through mid-January as investors reacted to a report that December manufacturing activity declined to its lowest reading since the financial crisis. The downward trend in long-term Treasury yields resumed during the second half of January, as the Federal Reserve concluded its late-January policy meeting leaving its benchmark interest rate unchanged and reaffirmed its current policy stance. Some favorable economic reports pushed Treasury yields higher in early-February, which was followed by a rally in Treasury bonds in the final week of February and the first week of March as long-term yields fell to record lows. On March 3rd the Federal Reserve executed an emergency half-percentage point rate cut, based on increased recession risks as the result of the coronavirus. Long-term Treasury yields fell to new record lows following the rate cut, as investors moved into safe haven investments amid growing worries that the COVID-19 pandemic could seriously disrupt an already sluggish global economy. The yield on the 30-year Treasury fell below 1% for the first time in its history. The Federal Reserve delivered another emergency rate cut of 1% on March 13th, which slashed its target rate to a range between 0% and 0.25%. Long-term Treasury yields spiked higher going into the second of March, as investors dumped long-term bonds for cash and short-term Treasuries. After spiking up to a yield of 1.26% on March 18th, the yield on the 10-year Treasury trended lower as the Federal Reserve took further steps to increase market liquidity by extending loans and buying unlimited amounts of U.S. government debt.
The downward trend in long-term Treasury yields continued into early-April 2020, with the 10-year Treasury yield declining to 0.59% following the release of the March employment report. A stock market rally provided for a slight upward trend in long-term Treasury yields going into mid-April, which was followed by long-term Treasury yields edging lower on news that March retail sales plunged 8.7%. With the collapse in oil prices heading into late-April, the 10-year Treasury yield dipped below 0.6%. The Federal Reserve concluded its end of April policy
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MARKET AREA
II.4 |
meeting keeping its benchmark interest rate near zero. Following the Federal Reserve meeting, the 10-year Treasury yield stabilized in the range of 0.6% to 0.7% through the first half of May. The 10-year Treasury yield edged back above 0.7% going into the second half of May, as investors retreated from bonds in favor of stocks on promising data for a coronavirus vaccine. With the release of more economic data showing the significant disruption the COVID-19 pandemic was inflicting on the U.S. economy, the 10-year Treasury yield settled in a range of 0.65% to 0.70% through the end of May and into early-June. The 10-year Treasury yield increased to 0.90% with the release of the stronger-than-expected May employment report and then declined back to a range of 0.65% to 0.70% following the Federal Reserve’s June policy meeting that concluded on June 10th. At the conclusion of its June policy meeting, the Federal Reserve signaled plans to keep it benchmark interest rate near zero for years.
The stable interest rate environment continued to prevail at the start of the third quarter of 2020, which was followed by long-term Treasury yields edging lower going into the second half of July as a surge in coronavirus cases forced a number of states to reimpose lockdown measures. In mid-July, the average rate on a 30-year fixed rate mortgage fell to 2.98%, its lowest level on record. The 10-year Treasury yield edged below 0.60% going into late-July. At the conclusion of its late-July policy meeting, the Federal Reserve left its benchmark rate near zero and reiterated that it would continue to support the economy. The 10-year Treasury yield remained below 0.60% heading into mid-August and then trended up slightly to above 0.70% in late-August after the Federal Reserve dropped its long standing practice of pre-emptively lifting interest rates to head off higher inflation. At the start of September, the 10-year Treasury yield edged back below 0.70%. As of September 2, 2020, the bond equivalent yields for U.S. Treasury bonds with terms of one and ten years equaled 0.13% and 0.65%, respectively, versus comparable year ago yields of 1.76% and 1.50%. Exhibit II-2 provides historical interest rate trends.
Based on the consensus outlook of economists surveyed by The Wall Street Journal in August 2020, GDP was projected to contract 5.3% in 2020. The U.S. unemployment rate was forecasted to equal 9.0% in December 2020 and then decline to 7.6% in June 2021. An average of 829,000 jobs were projected to be added per month over the next four quarters. On average, the economists forecasted the federal funds rate to equal 0.13% in December 2020 and 0.15% in June 2021. On average, the economists forecasted that the 10-year Treasury yield would equal 0.76% in December 2020 and then increase to 0.96% in June 2021. The surveyed economists also forecasted home prices would increase by 3.6% in 2020 housing
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OVERVIEW AND FINANCIAL ANALYSIS
II.5 |
starts were forecasted to decrease from 1.29 million in 2019 to 1.24 million in 2020.
The August 2020 mortgage finance forecast from the Mortgage Bankers Association was for 2020 existing home sales to decrease by 3.2% from 2019 sales, while 2020 new home sales were forecasted to increase by 6.9% from 2019 sales. The 2020 median sale prices for existing and new homes were projected to increase by 4.8% and 2.3%, respectively. Total mortgage production was forecasted to increase in 2020 to $2.986 trillion, compared to $2.173 trillion in 2019. The forecasted increase in 2020 originations was based on a 5.3% increase in purchase volume and an 82.7% increase in refinancing volume. Purchase mortgage originations were forecasted to total $1.340 trillion in 2020, versus refinancing volume totaling $1.646 trillion. Housing starts for 2020 were projected to increase by 2.7% to total 1.330 million.
Market Area Demographics
Demographic and economic growth trends, measured by changes in population, number of households, age distribution and median household income, provide key insight into the health of the market area served by William Penn Bancorporation. Demographic data for Bucks, Philadelphia, Camden and Burlington Counties, as well as for Pennsylvania, New Jersey and the U.S., is provided in Table 2.1.
Population and household data indicate that the market area served by the Company’s branches is a mix of urban and suburban markets. For 2020, the Company’s market area counties ranged in population from a low of 445,000 in Camden County, New Jersey to a high of 1.6 million in Philadelphia County, Pennsylvania. From 2015 through 2020, annual population growth rates ranged from a 0.3% decrease in population for Burlington County to a 0.4% increase in population for Philadelphia County. Comparatively, both Pennsylvania and New Jersey essentially showed no change in their respective populations over the past five years, versus a comparable annual population growth rate for the U.S. of 0.7%. Comparative growth trends for households generally paralleled population growth trends, as Philadelphia County experienced the strongest growth in households and both Camden County and Burlington County recorded slight declines in households over the past five years. Population and household growth trends for Bucks County and Philadelphia County are generally projected to continue over the next five years through 2025, while projected growth trends for Camden County and Burlington County show population and households remaining fairly stable over the next five years.
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II.6 |
Table 2.1
William Penn Bancorporation
Summary Demographic Data
Year | Growth Rate | |||||||||||||||||||
2015 | 2020 | 2025 | 2015-2020 | 2020-2025 | ||||||||||||||||
(%) | (%) | |||||||||||||||||||
Population (000) | ||||||||||||||||||||
USA | 319,460 | 330,342 | 341,133 | 0.7 | % | 0.6 | % | |||||||||||||
Pennsylvania | 12,795 | 12,818 | 12,886 | 0.0 | % | 0.1 | % | |||||||||||||
Philadelphia, PA | 1,563 | 1,591 | 1,616 | 0.4 | % | 0.3 | % | |||||||||||||
Bucks, PA | 628 | 629 | 633 | 0.1 | % | 0.1 | % | |||||||||||||
New Jersey | 8,945 | 8,927 | 9,003 | 0.0 | % | 0.2 | % | |||||||||||||
Camden, NJ | 512 | 506 | 506 | -0.2 | % | 0.0 | % | |||||||||||||
Burlington, NJ | 451 | 445 | 444 | -0.3 | % | 0.0 | % | |||||||||||||
Households (000) | ||||||||||||||||||||
USA | 121,099 | 125,476 | 129,799 | 0.7 | % | 0.7 | % | |||||||||||||
Pennsylvania | 5,079 | 5,110 | 5,151 | 0.1 | % | 0.2 | % | |||||||||||||
Philadelphia, PA | 617 | 632 | 644 | 0.5 | % | 0.4 | % | |||||||||||||
Bucks, PA | 238 | 240 | 243 | 0.2 | % | 0.2 | % | |||||||||||||
New Jersey | 3,274 | 3,270 | 3,301 | 0.0 | % | 0.2 | % | |||||||||||||
Camden, NJ | 191 | 190 | 190 | -0.1 | % | 0.0 | % | |||||||||||||
Burlington, NJ | 168 | 167 | 167 | -0.1 | % | 0.0 | % | |||||||||||||
Median Household Income ($) | ||||||||||||||||||||
USA | 53,706 | 66,010 | 72,525 | 4.2 | % | 1.9 | % | |||||||||||||
Pennsylvania | 53,788 | 64,654 | 70,883 | 3.7 | % | 1.9 | % | |||||||||||||
Philadelphia, PA | 36,553 | 44,190 | 47,738 | 3.9 | % | 1.6 | % | |||||||||||||
Bucks, PA | 76,011 | 93,477 | 104,914 | 4.2 | % | 2.3 | % | |||||||||||||
New Jersey | 71,094 | 86,883 | 96,147 | 4.1 | % | 2.0 | % | |||||||||||||
Camden, NJ | 60,931 | 72,231 | 79,125 | 3.5 | % | 1.8 | % | |||||||||||||
Burlington, NJ | 76,301 | 92,079 | 101,566 | 3.8 | % | 2.0 | % | |||||||||||||
Per Capita Income ($) | ||||||||||||||||||||
USA | 28,840 | 36,492 | 40,799 | 4.8 | % | 2.3 | % | |||||||||||||
Pennsylvania | 29,729 | 36,890 | 41,215 | 4.4 | % | 2.2 | % | |||||||||||||
Philadelphia, PA | 22,254 | 28,060 | 30,902 | 4.7 | % | 1.9 | % | |||||||||||||
Bucks, PA | 37,953 | 50,216 | 56,738 | 5.8 | % | 2.5 | % | |||||||||||||
New Jersey | 36,221 | 46,356 | 51,482 | 5.1 | % | 2.1 | % | |||||||||||||
Camden, NJ | 29,863 | 37,953 | 42,035 | 4.9 | % | 2.1 | % | |||||||||||||
Burlington, NJ | 37,591 | 47,125 | 52,600 | 4.6 | % | 2.2 | % |
2020 Age Distribution (%) | 0-14 Yrs. | 15-34 Yrs. | 35-54 Yrs. | 55-69 Yrs. | 70+ Yrs. | |||||||||||||||
USA | 19.1 | 26.8 | 24.8 | 18.5 | 11.0 | |||||||||||||||
Pennsylvania | 17.2 | 25.8 | 23.6 | 20.3 | 12.7 | |||||||||||||||
Philadelphia, PA | 19.1 | 31.1 | 25.6 | 16.2 | 9.5 | |||||||||||||||
Bucks, PA | 17.0 | 23.4 | 23.1 | 22.6 | 12.8 | |||||||||||||||
New Jersey | 18.3 | 25.5 | 24.9 | 19.3 | 11.3 | |||||||||||||||
Camden, NJ | 19.2 | 25.8 | 25.4 | 18.9 | 10.9 | |||||||||||||||
Burlington, NJ | 17.6 | 24.9 | 24.5 | 20.6 | 11.9 | |||||||||||||||
Less Than | $25,000 to | $50,000 to | ||||||||||||||||||
2020 HH Income Dist. (%) | 25,000 | 50,000 | 100,000 | $100,000+ | ||||||||||||||||
USA | 18.6 | 20.7 | 29.2 | 31.5 | ||||||||||||||||
Pennsylvania | 19.2 | 20.8 | 29.9 | 30.1 | ||||||||||||||||
Philadelphia, PA | 33.6 | 21.1 | 24.5 | 20.8 | ||||||||||||||||
Bucks, PA | 11.1 | 15.1 | 27.1 | 46.7 | ||||||||||||||||
New Jersey | 14.5 | 15.9 | 25.8 | 43.8 | ||||||||||||||||
Camden, NJ | 18.5 | 17.6 | 28.0 | 35.9 | ||||||||||||||||
Burlington, NJ | 10.3 | 14.6 | 29.4 | 45.6 |
Source: S&P Global Market Intelligence |
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II.7 |
Income measures show that the counties of Bucks and Burlington are relatively affluent markets, with median household and per capita income measures that were above the comparable state and U.S. measures. Median household and per capita income measures for Camden County were also higher than the U.S. measures, but were lower than the New Jersey measures. Comparatively, median household and per capita income measures for Philadelphia County were somewhat lower than the comparable Pennsylvania and U.S. measures, reflecting some areas of poverty in the inner city. Projected income growth rates for the primary market area counties were generally in line with the comparable projected growth rates for Pennsylvania, New Jersey and the U.S, with the strongest growth projected for Bucks County.
A comparison of household income distribution measures provides another indication of the relative affluence of Bucks and Burlington Counties, which maintained higher percentages of households with incomes above $100,000 compared to the U.S and state measures. Camden County also maintained a high percentage of households with incomes above $100,000 compared to the U.S., but was at a lower percentage compared to New Jersey. The less affluent nature of Philadelphia County is also indicated by the household income distribution measures, which show that, in comparison to the U.S. and Pennsylvania, Philadelphia County maintained a much higher percentage of households with incomes of less than $25,000 and a much lower percentage of households with incomes above $100,000.
Age distribution measures for the primary market area counties were fairly similar to the comparable U.S. and state measures, with Bucks County exhibiting a slightly older population and Philadelphia County exhibiting a slight younger population among the four primary market area counties.
Regional Economy
Comparative employment data shown in Table 2.2 shows that, except for Bucks County and New Jersey, employment in education/healthcare/social services followed by services were the largest and second largest employment sectors in all of the primary market area counties, as well as Pennsylvania. Service jobs constituted the largest employment sector for Bucks County and New Jersey, followed by employment in education/healthcare/social services. Wholesale/retail trade jobs were the third largest employment sector for all four of the primary area counties, as well as for Pennsylvania and New Jersey. Other noteworthy employment sectors for the primary market area counties included manufacturing and finance/insurance/real
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II.8 |
estate. Overall, the distribution of employment exhibited in the primary market area is indicative of a diverse economic environment.
Table 2.2
William Penn Bancorporation
Primary Market Area Employment Sectors
(Percent of Labor Force)
Philadelphia | Bucks | Camden | Burlington | |||||||||||||||||||||
Employment Sector | Pennsylvania | New Jersey | County | County | County | County | ||||||||||||||||||
Services | 23.4 | % | 26.1 | % | 25.7 | % | 25.0 | % | 25.9 | % | 23.0 | % | ||||||||||||
Education,Healthcare, Soc. Serv. | 25.8 | % | 23.5 | % | 30.9 | % | 23.6 | % | 26.2 | % | 25.2 | % | ||||||||||||
Government | 4.0 | % | 4.1 | % | 5.8 | % | 3.5 | % | 4.7 | % | 6.9 | % | ||||||||||||
Wholesale/Retail Trade | 14.3 | % | 14.4 | % | 11.9 | % | 15.6 | % | 15.6 | % | 15.5 | % | ||||||||||||
Finance/Insurance/Real Estate | 6.5 | % | 8.6 | % | 6.5 | % | 8.3 | % | 7.3 | % | 8.0 | % | ||||||||||||
Manufacturing | 12.3 | % | 8.3 | % | 6.7 | % | 11.2 | % | 7.1 | % | 7.4 | % | ||||||||||||
Construction | 5.7 | % | 5.8 | % | 4.5 | % | 6.4 | % | 5.3 | % | 5.5 | % | ||||||||||||
Information | 1.7 | % | 2.8 | % | 2.0 | % | 2.1 | % | 1.9 | % | 2.6 | % | ||||||||||||
Transportation/Utility | 5.4 | % | 6.1 | % | 5.8 | % | 4.0 | % | 5.9 | % | 5.6 | % | ||||||||||||
Agriculture | 0.9 | % | 0.3 | % | 0.2 | % | 0.3 | % | 0.1 | % | 0.3 | % | ||||||||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Source: S&P Global Market Intelligence
The market area served by the Company, characterized primarily as the Philadelphia metropolitan area, has a highly developed and diverse economy, with the region’s many colleges and universities serving to attract industries in need of a highly skilled and educated workforce. In addition to the colleges and universities, healthcare, financial services, bio-technology and pharmaceutical companies constitute major sources of employment in the Company’s regional market area. Table 2.3 lists the major employers in Philadelphia metropolitan area.
Table 2.3
William Penn Bancorporation
Largest Employers in Local Market Area
Company | Community | Industry | Employees | |||||
Philadelphia Area | ||||||||
University of Pennsylvania and Health System | Philadelphia | Higher Education | 41,676 | |||||
Thomas Jefferson University | Philadelphia | Higher Education | 30,500 | |||||
ACCU Staffing Services | Camden | Staffing Services | 27,530 | |||||
Comcast Corp. | Philadelphia | Telecom | 14,444 | |||||
Tower Health | Berks | Healthcare | 12,000 | |||||
Main Line Health | Montgomery | Healthcare | 11,000 | |||||
Drexel University | Philadelphia | Higher Education | 10,225 | |||||
Temple Univeristy Health System | Philadelphia | Healthcare | 9,722 | |||||
CVS Health | Burlington | Pharmacy | 9,600 | |||||
Virtua | Burlington | Healthcare | 9,202 |
Source: BizJournals Philadelphia
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II.9 |
Unemployment Trends
Comparative unemployment rates for the primary market area counties, as well as for the U.S., Pennsylvania and New Jersey, are shown in Table 2.4. July 2020 unemployment rates for the primary market area counties ranged from a low of 13.2% for Bucks County to a high of 19.6% for Philadelphia County. Comparative unemployment rates for the U.S., Pennsylvania and New Jersey equaled 10.5%, 14.1% and 14.0%, respectively. Pursuant to the coronavirus-induced recession, the July 2020 unemployment rates for the primary market area counties, Pennsylvania, New Jersey and the U.S. were all significantly higher compared to a year ago.
Table 2.4
William Penn Bancorporation
Unemployment Trends(1)
July 2019 | July 2020 | |||||||
Region | Unemployment | Unemployment | ||||||
USA | 4.0 | % | 10.5 | % | ||||
Pennsylvania | 4.9 | % | 14.1 | % | ||||
Philadelphia, PA | 6.3 | % | 19.6 | % | ||||
Bucks, PA | 4.3 | % | 13.2 | % | ||||
New Jersey | 3.9 | % | 14.0 | % | ||||
Camden, NJ | 4.5 | % | 14.1 | % | ||||
Burlington, NJ | 3.7 | % | 11.8 | % |
(1) Unemployment rates are not seasonally adjusted. | ||||||||
Source: S&P Global Market Intelligence |
Market Area Deposit Characteristics and Competition
The Company’s deposit base is closely tied to the economic fortunes of the Philadelphia metropolitan area and, in particular, the areas that are nearby to one of William Penn Bancorporation’s branches. The deposit and branches acquired with the acquisitions of the three mutual institutions are include included in the data for William Penn Bancorporation. Table 2.5 displays deposit market trends from June 30, 2014 through June 30, 2019 for all commercial bank and savings institution branches located in the market area counties, as well as Pennsylvania and New Jersey. Consistent with Pennsylvania and New Jersey, commercial banks maintained a larger market share of deposits than savings institutions in all the primary
RP® Financial, LC. | MARKET AREA |
II.10 |
market area counties. Overall, from June 30, 2014 to June 30, 2019, bank and thrift deposits increased in all of the primary market area counties.
Table 2.5
William Penn Bancorporation
Deposit Summary(1)
As of June 30, | ||||||||||||||||||||||||||||
2014 | 2019 | Deposit | ||||||||||||||||||||||||||
Market | No. of | Market | No. of | Growth Rate | ||||||||||||||||||||||||
Deposits | Share | Branches | Deposits | Share | Branches | 2014-2019 | ||||||||||||||||||||||
(Dollars in Thousands) | (%) | |||||||||||||||||||||||||||
Pennsylvania | $ | 318,418,000 | 100.0 | % | 4,477 | $ | 415,911,000 | 100.0 | % | 4,013 | 5.5 | % | ||||||||||||||||
Commercial Banks | 264,003,000 | 82.9 | % | 3,526 | 384,185,000 | 92.4 | % | 2,499 | 7.8 | % | ||||||||||||||||||
Savings Institutions | 54,416,000 | 17.1 | % | 951 | 31,726,000 | 7.6 | % | 514 | -10.2 | % | ||||||||||||||||||
Philadelphia County | $ | 41,033,000 | 100.0 | % | 304 | $ | 49,823,000 | 100.0 | % | 288 | 4.0 | % | ||||||||||||||||
Commercial Banks | 31,925,000 | 77.8 | % | 193 | 46,507,000 | 93.3 | % | 246 | 7.8 | % | ||||||||||||||||||
Savings Institutions | 9,108,000 | 22.2 | % | 111 | 3,316,000 | 6.7 | % | 42 | -18.3 | % | ||||||||||||||||||
William Penn Bancorporation | 137,277 | 0.3 | % | 4 | 128,762 | 0.3 | % | 4 | -1.3 | % | ||||||||||||||||||
Bucks County | $ | 15,612,000 | 100.0 | % | 250 | $ | 18,984,000 | 100.0 | % | 228 | 4.0 | % | ||||||||||||||||
Commercial Banks | 11,567,000 | 74.1 | % | 173 | 16,035,000 | 84.5 | % | 182 | 6.8 | % | ||||||||||||||||||
Savings Institutions | 4,045,000 | 25.9 | % | 77 | 2,949,000 | 15.5 | % | 46 | -6.1 | % | ||||||||||||||||||
William Penn Bancorporation | 257,565 | 1.6 | % | 5 | 247,411 | 1.3 | % | 5 | -0.8 | % | ||||||||||||||||||
New Jersey | $ | 286,333,000 | 100.0 | % | 3,171 | $ | 342,875,000 | 100.0 | % | 2,812 | 3.7 | % | ||||||||||||||||
Commercial Banks | 216,778,000 | 75.7 | % | 2,420 | 287,260,000 | 83.8 | % | 2,237 | 5.8 | % | ||||||||||||||||||
Savings Institutions | 69,556,000 | 24.3 | % | 751 | 55,615,000 | 16.2 | % | 575 | -4.4 | % | ||||||||||||||||||
Camden County | $ | 9,196,000 | 100.0 | % | 119 | $ | 11,432,000 | 100.0 | % | 118 | 4.4 | % | ||||||||||||||||
Commercial Banks | 7,579,000 | 82.4 | % | 97 | 10,567,000 | 92.4 | % | 106 | 6.9 | % | ||||||||||||||||||
Savings Institutions | 1,618,000 | 17.6 | % | 22 | 866,000 | 7.6 | % | 12 | -11.8 | % | ||||||||||||||||||
William Penn Bancorporation | 94,675 | 1.0 | % | 2 | 86,732 | 0.8 | % | 2 | -1.7 | % | ||||||||||||||||||
Burlington County | $ | 9,080,000 | 100.0 | % | 123 | $ | 11,188,000 | 100.0 | % | 115 | 4.3 | % | ||||||||||||||||
Commercial Banks | 6,483,000 | 71.4 | % | 78 | 8,731,000 | 78.0 | % | 87 | 6.1 | % | ||||||||||||||||||
Savings Institutions | 2,596,000 | 28.6 | % | 45 | 2,457,000 | 22.0 | % | 28 | -1.1 | % | ||||||||||||||||||
William Penn Bancorporation | 24,279 | 0.3 | % | 1 | 20,805 | 0.2 | % | 1 | -3.0 | % |
(1) Deposit data for William Penn Bancorporation includes deposits that were acquired subsequent to the periods shown.
Source: FDIC.
The Company maintains its largest balance of deposits in Bucks County, where the Company is headquartered. Based on June 30, 2019 deposit data, William Penn Bancorporation’s $247.4 million of deposits provided for a 1.3% market share of bank and thrift deposits in Bucks County. The Bank’s deposit market share in the primary market area counties ranged from 0.2% in Burlington County to 1.3% in Bucks County. Five year annual deposit growth rates for the primary market area counties ranged from 3.7% for Bucks County to 4.4% for Camden County. Inclusive of the acquired deposits, the Company’s deposits declined in all four of the primary market area counties during the five year period shown in Table 2.5.
RP® Financial, LC. | MARKET AREA |
II.11 |
As implied by the Company’s relatively low market shares of deposits in the primary market area counties, competition among financial institutions in the Company’s market area is significant. Among the Company’s competitors are much larger and more diversified institutions, which have greater resources than maintained by William Penn Bancorporation. Financial institution competitors in the Company’s primary market area include other locally based thrifts and banks, as well as regional, super regional and money center banks. From a competitive standpoint, William Penn Bancorporation has sought to emphasize its community orientation in the markets served by its branches. Table 2.6 lists the Company’s largest competitors in the market area counties, based on deposit market share.
Table 2.6
William Penn Bancorporation
Market Area Deposit Competitors
Location | Name | Market Share | Rank | |||||
Philadelphia County, PA | Wells Fargo & Co. (CA) | 23.35 | % | |||||
PNC Financial Services Group (PA) | 18.70 | % | ||||||
Bank of America Corporation (NC) | 17.46 | % | ||||||
Citizens Financial Group Inc. (RI) | 14.55 | % | ||||||
Toronto-Dominion Bank | 7.00 | % | ||||||
William Penn Bancorpation | 0.26 | % | 20 out of 36 | |||||
Bucks County, PA | Wells Fargo & Co. (CA) | 19.28 | % | |||||
Toronto-Dominion Bank | 13.60 | % | ||||||
Citizens Financial Group Inc. (RI) | 8.96 | % | ||||||
Penn Community Mutual Holdings (PA) | 8.25 | % | ||||||
PNC Financial Services Group (PA) | 7.34 | % | ||||||
William Penn Bancorporation | 1.29 | % | 17 out of 32 | |||||
Camden County, NJ | ||||||||
Toronto-Dominion Bank | 38.41 | % | ||||||
PNC Financial Services Group (PA) | 12.71 | % | ||||||
Wells Fargo & Co. (CA) | 8.48 | % | ||||||
Republic First Bancorp Inc. (PA) | 7.05 | % | ||||||
Bank of America Corporation (NC) | 4.94 | % | ||||||
William Penn Bancorporation | 0.76 | % | 18 out of 24 | |||||
Burlington County, NJ | ||||||||
Toronto-Dominion Bank | 25.67 | % | ||||||
Wells Fargo & Co. (CA) | 12.80 | % | ||||||
PNC Financial Services Group (PA) | 11.48 | % | ||||||
Bank of America Corporation (NC) | 10.12 | % | ||||||
Investors Bancorp Inc (NJ) | 9.75 | % | ||||||
William Penn Bancorporation | 0.19 | % | 20 out of 22 |
Source: S&P Global Market Intelligence
RP® Financial, LC. | PEER GROUP ANALYSIS |
III.1 |
III. PEER GROUP ANALYSIS
This chapter presents an analysis of William Penn Bancorporation’s operations versus a group of comparable savings institutions (the "Peer Group") selected from the universe of all publicly-traded savings institutions in a manner consistent with the regulatory valuation guidelines. The basis of the pro forma market valuation of William Penn Bancorporation is derived from the pricing ratios of the Peer Group institutions, incorporating valuation adjustments for key differences in relation to the Peer Group. Since no Peer Group can be exactly comparable to William Penn Bancorporation, key areas examined for differences are: financial condition; profitability, growth and viability of earnings; asset growth; primary market area; dividends; liquidity of the shares; marketing of the issue; management; and effect of government regulations and regulatory reform.
Peer Group Selection
The Peer Group selection process is governed by the general parameters set forth in the regulatory valuation guidelines. Accordingly, the Peer Group is comprised of only those publicly-traded savings institutions whose common stock is either listed on the NYSE or NASDAQ, since their stock trading activity is regularly reported and generally more frequent than non-publicly traded and closely-held institutions. Institutions that are not listed on the NYSE or NASDAQ are inappropriate, since the trading activity for thinly-traded or closely-held stocks are typically highly irregular in terms of frequency and price and thus may not be a reliable indicator of market value. We have also excluded from the Peer Group those companies under acquisition or subject to rumored acquisition, mutual holding companies and recent conversions, since their pricing ratios are subject to unusual distortion and/or have limited trading history. A recent listing of the universe of all publicly-traded savings institutions is included as Exhibit III-1.
Ideally, the Peer Group, which must have at least 10 members to comply with the regulatory valuation guidelines, should be comprised of locally- or regionally-based institutions with comparable resources, strategies and financial characteristics. There are approximately 43 fully-converted, publicly-traded institutions nationally and, thus, it is typically the case that the Peer Group will be comprised of institutions with relatively comparable characteristics. To the extent that differences exist between the converting institution and the Peer Group, valuation adjustments will be applied to account for the differences. Since William Penn Bancorporation
RP® Financial, LC. | PEER GROUP ANALYSIS |
III.2 |
will be a full public company upon completion of the offering, we considered only full public companies to be viable candidates for inclusion in the Peer Group. From the universe of publicly-traded thrifts, we selected ten institutions with characteristics similar to those of William Penn Bancorporation. In the selection process, we applied two “screens” to the universe of all public companies that were eligible for consideration:
o | Screen #1 Mid-Atlantic, New England and Midwest institutions with assets between $350 million and $1.2 billion, tangible equity/tangible assets ratios of greater than 7.0% and positive core earnings. Nine companies met the criteria for Screen #1 and all nine were included in the Peer Group: Elmira Savings Bank of New York, HV Bancorp, Inc. of Pennsylvania, IF Bancorp, Inc. of Illinois, HMN Financial, Inc. of Minnesota, Prudential Bancorp, Inc. of Pennsylvania, Randolph Bancorp, Inc. of Massachusetts, Severn Bancorp, Inc. of Maryland, Standard AVB Financial Corp. of Pennsylvania, and WVS Financial Corp. of Pennsylvania. Exhibit III-2 provides financial and public market pricing characteristics of all publicly-traded Mid-Atlantic, New England and Midwest thrifts. |
o | Screen #2 Southeast and Southwest institutions with assets between $350 million and $1.2 billion, tangible equity/tangible assets ratios of greater than 7.0% and positive core earnings. One company met the criteria for Screen #2 and was included in the Peer Group: Home Federal Bancorp, Inc. of Louisiana. Exhibit III-3 provides financial and public market pricing characteristics of all publicly-traded Southeast and Southwest thrifts. |
Table 3.1 shows the general characteristics of each of the ten Peer Group companies and Exhibit III-4 provides summary demographic and deposit market share data for the primary market areas served by each of the Peer Group companies. While there are expectedly some differences between the Peer Group companies and William Penn Bancorporation, we believe that the Peer Group companies, on average, provide a good basis for valuation subject to valuation adjustments. The following sections present a comparison of William Penn Bancorporation’s financial condition, income and expense trends, loan composition, interest rate risk and credit risk versus the Peer Group as of the most recent publicly available date. Comparative data for all publicly-traded thrifts has been included in the Chapter III tables as well.
In addition to the selection criteria used to identify the Peer Group companies, a summary description of the key comparable characteristics of each of the Peer Group companies relative to William Penn Bancorporation’s characteristics is detailed below.
o | Prudential Bancorp, Inc. of Pennsylvania. Comparable due to completed second-step conversion in 2013, Philadelphia market area, similar size of branch network, limited earnings contribution from sources of non-interest operating income and similar concentrations of commercial real estate and multi-family loans as a percent of assets. |
RP® Financial, LC. | Peer Group Analysis |
Page III.3 |
Table 3.1 |
Peer Group of Publicly-Traded Thrifts |
As of June 30, 2020 or the Most Recent Date Available |
As of | ||||||||||||||||||||||||
September 2, 2020 | ||||||||||||||||||||||||
Total | Fiscal | Conv. | Stock | Market | ||||||||||||||||||||
Ticker | Financial Institution | Exchange | Region | City | State | Assets | Offices | Mth End | Date | Price | Value | |||||||||||||
($Mil) | ($) | ($Mil) | ||||||||||||||||||||||
PBIP | Prudential Bancorp, Inc. | NASDAQ | MA | Philadelphia | PA | $ | 1,188 | 10 | Sep | 3/29/2005 | 9.87 | 80 | ||||||||||||
ESBK | Elmira Savings Bank | NASDAQ | MA | Elmira | NY | $ | 676 | 12 | Dec | 3/1/1985 | 10.63 | 37 | ||||||||||||
HMNF | HMN Financial, Inc. | NASDAQ | MW | Rochester | MN | $ | 863 | 14 | Dec | 6/30/1994 | 14.25 | 69 | ||||||||||||
HFBL | Home Federal Bancorp, Inc. of Louisiana | NASDAQ | SW | Shreveport | LA | $ | 518 | 8 | Jun | 1/18/2005 | 23.36 | 38 | ||||||||||||
HVBC | HV Bancorp, Inc. | NASDAQ | MA | Doylestown | PA | $ | 425 | 6 | Dec | 1/11/2017 | 12.44 | 28 | ||||||||||||
IROQ | IF Bancorp, Inc. | NASDAQ | MW | Watseka | IL | $ | 736 | 8 | Jun | 7/7/2011 | 16.25 | 53 | ||||||||||||
RNDB | Randolph Bancorp, Inc. | NASDAQ | NE | Stoughton | MA | $ | 724 | 5 | Dec | 7/1/2016 | 11.24 | 57 | ||||||||||||
SVBI | Severn Bancorp, Inc. | NASDAQ | MA | Annapolis | MD | $ | 924 | 7 | Dec | NA | 6.00 | 77 | ||||||||||||
STND | Standard AVB Financial Corp. | NASDAQ | MA | Monroeville | PA | $ | 1,061 | 19 | Dec | 10/6/2010 | 18.55 | 84 | ||||||||||||
WVFC | WVS Financial Corp. | NASDAQ | MA | Pittsburgh | PA | $ | 357 | 6 | Jun | 11/29/1993 | 13.37 | 23 |
Source: S&P Global Market Intelligence.
RP® Financial, LC. | PEER GROUP ANALYSIS | |
III.4 |
o | Elmira Savings Bank of New York. Comparable due to similar asset size, same size of branch network, similar interest-bearing funding composition, similar impact of loan loss provisions on earnings, similar operating expense ratio as a percent of average assets, similar concentrations of 1-4 family, construction/land and commercial real estate loans as percent of assets and similar ratio of non-performing assets as a percent of assets. |
o | HMN Financial, Inc. of Minnesota. Comparable due to similar asset size, similar size of branch network and similar impact of loan loss provisions on earnings. |
o | Home Federal Bancorp, In. of Louisiana. Comparable due to completed second-step conversion in 2010, similar interest-earning asset composition and similar operating expense ratio as a percent of average assets. |
o | HV Bancorp, Inc. of Pennsylvania. Comparable due to Philadelphia market area, similar concentration of 1-4 family loans as a percent of assets and similar ratio of non-performing assets as a percent of assets. |
o | IF Bancorp, Inc. of Illinois. Comparable due to similar asset size, similar interest-earning asset composition, similar interest-bearing funding composition and similar operating expense ratio as a percent of average assets. |
o | Randolph Bancorp, Inc. of Massachusetts. Comparable due to similar asset size, similar interest-bearing funding composition, similar concentrations of 1-4 family, multi-family and commercial real estate loans as a percent of asset and similar ratio of non-performing assets as a percent of assets. |
o | Severn Bancorp, Inc. of Maryland. Similar interest-earning asset composition and similar interest-bearing funding composition. |
o | Standard AVB Financial Corp. of Pennsylvania. Comparable due to similar interest-earning asset composition, similar interest-bearing funding composition and similar ratio of non-performing assets as a percent of assets. |
o | WVS Financial Corp. of Pennsylvania. Comparable due to limited earnings contribution from sources of non-interest operating income. |
In aggregate, the Peer Group companies maintained a lower level of tangible equity compared to the industry average (10.21% of assets versus 11.84% for all public companies), generated lower earnings as a percent of average assets (0.73% core ROAA versus 0.82% for all public companies) and earned a similar ROE (6.47% core ROE versus 6.66% for all public companies). Overall, the Peer Group's average P/TB ratio and average core P/E multiple were below the respective averages for all publicly-traded thrifts.
All
Publicly-Traded |
Peer Group | |||||||
Financial Characteristics (Averages) | ||||||||
Assets ($Mil) | $ | 5,043 | $ | 747 | ||||
Market capitalization ($Mil) | $ | 451 | $ | 55 | ||||
Tangible equity/assets (%) | 11.84 | % | 10.21 | % | ||||
Core return on average assets (%) | 0.82 | 0.73 | ||||||
Core return on average equity (%) | 6.66 | 6.47 |
RP® Financial, LC. | PEER GROUP ANALYSIS | |
III.5 |
All
Publicly-Traded |
Peer Group | |||||||
Pricing Ratios (Averages)(1) | ||||||||
Core price/earnings (x) | 12.05 | x | 11.04 | x | ||||
Price/tangible book (%) | 88.11 | % | 72.84 | % | ||||
Price/assets (%) | 9.91 | 7.39 |
(1) Based on market prices as of September 2, 2020.
Ideally, the Peer Group companies would be comparable to William Penn Bancorporation in terms of all of the selection criteria, but the universe of publicly-traded thrifts does not provide for an appropriate number of such companies. However, in general, the companies selected for the Peer Group were fairly comparable to William Penn Bancorporation, as will be highlighted in the following comparative analysis. Comparative data for all publicly-traded thrifts has been included in the Chapter III tables as well.
Financial Condition
Table 3.2 shows comparative balance sheet measures for William Penn Bancorporation and the Peer Group, reflecting the expected similarities and some differences given the selection procedures outlined above. The Company’s and the Peer Group's ratios reflect balances as of June 30, 2020. William Penn Bancorporation’s equity-to-assets ratio of 13.09% was above the Peer Group's average net worth ratio of 10.73%. The Company’s pro forma capital position will increase with the addition of stock proceeds, which will provide the Company with an equity-to-assets ratio that will further exceed the Peer Group’s ratio. Tangible equity-to-assets ratios for the Company and the Peer Group equaled 12.26% and 10.21%, respectively. The increase in William Penn Bancorporation’s pro forma capital position will be favorable from a risk perspective and in terms of future earnings potential that could be realized through leverage and lower funding costs. At the same time, the Company’s higher pro forma capitalization will initially depress return on equity. Both William Penn Bancorporation’s and the Peer Group's capital ratios reflected capital surpluses with respect to the regulatory capital requirements.
The interest-earning asset compositions for the Company and the Peer Group were somewhat similar, with loans constituting the largest concentration of interest-earning assets for both William Penn Bancorporation and the Peer Group. The Company’s loans-to-assets ratio of 69.06% was slightly higher than the comparable Peer Group ratio of 67.31%. Comparatively, the Company’s cash and investments-to-assets ratio of 24.36% was lower than the comparable
RP® Financial, LC. | Peer Group Analysis |
Page III.6 |
Table 3.2
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of June 30, 2020
Balance Sheet as a Percent of Assets | Balance Sheet Annual Growth Rates | Regulatory Capital | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash & | MBS & | Net | Borrowed | Sub. | Total | Goodwill | Tangible | MBS, Cash | Borrows. | Total | Tangible | Tier 1 | Tier 1 | Risk-Based | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equival. | Invest | BOLI | Loans (1) | Deposits | Funds | Debt | Equity | & Intang | Equity | Assets | Invests | Loans | Deposits | &Subdebt | Equity | Equity | Leverage | Risk-Based | Capital | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
William Penn Bancorporation | PA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2020 | 11.26 | % | 13.10 | % | 2.00 | % | 69.06 | % | 76.02 | % | 8.81 | % | 0.00 | % | 13.09 | % | 0.82 | % | 12.26 | % | 77.10 | % | 199.00 | % | 56.01 | % | 99.09 | % | 29.78 | % | 25.75 | % | 27.92 | % | 13.67 | % | 19.19 | % | 19.97 | % | |||||||||||||||||||||||||||||||||||||||||||||
All Non-MHC Public Companies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Averages | 8.09 | % | 11.55 | % | 1.62 | % | 73.42 | % | 74.05 | % | 10.32 | % | 0.34 | % | 12.80 | % | 0.98 | % | 11.84 | % | 13.48 | % | 34.19 | % | 11.00 | % | 13.48 | % | 19.49 | % | 10.58 | % | 2.65 | % | 10.78 | % | 15.34 | % | 16.71 | % | |||||||||||||||||||||||||||||||||||||||||||||
Medians | 7.39 | % | 10.17 | % | 1.77 | % | 75.04 | % | 75.26 | % | 7.87 | % | 0.00 | % | 11.63 | % | 0.35 | % | 10.34 | % | 11.28 | % | 30.16 | % | 8.01 | % | 11.02 | % | 4.88 | % | 2.40 | % | 1.57 | % | 10.21 | % | 13.14 | % | 14.45 | % | |||||||||||||||||||||||||||||||||||||||||||||
Comparable Group | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Averages | 8.42 | % | 19.52 | % | 1.46 | % | 67.31 | % | 74.39 | % | 13.28 | % | 0.22 | % | 10.73 | % | 0.52 | % | 10.21 | % | 9.76 | % | 34.68 | % | 6.00 | % | 9.63 | % | 33.16 | % | 2.99 | % | 3.50 | % | 10.26 | % | 14.29 | % | 15.30 | % | |||||||||||||||||||||||||||||||||||||||||||||
Medians | 7.33 | % | 11.81 | % | 1.37 | % | 72.13 | % | 77.81 | % | 9.80 | % | 0.00 | % | 11.01 | % | 0.05 | % | 10.60 | % | 8.96 | % | 35.04 | % | 2.82 | % | 8.35 | % | 2.74 | % | 2.17 | % | 2.57 | % | 10.36 | % | 14.11 | % | 15.13 | % | |||||||||||||||||||||||||||||||||||||||||||||
Comparable Group | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PBIP | Prudential Bancorp, Inc. | PA | 5.25 | % | 40.42 | % | 2.72 | % | 49.20 | % | 61.22 | % | 24.63 | % | 0.00 | % | 10.80 | % | 0.54 | % | 10.25 | % | -0.30 | % | -1.21 | % | -0.37 | % | -0.33 | % | -2.90 | % | -4.83 | % | -3.17 | % | 9.30 | % | 11.45 | % | 12.57 | % | |||||||||||||||||||||||||||||||||||||||||||
ESBK | Elmira Savings Bank | NY | 11.77 | % | 3.50 | % | 2.25 | % | 77.33 | % | 81.56 | % | 8.69 | % | 0.00 | % | 8.80 | % | 1.82 | % | 6.98 | % | 10.72 | % | 65.66 | % | 5.03 | % | 6.76 | % | 88.26 | % | 1.95 | % | 0.97 | % | 8.36 | % | 11.67 | % | 12.85 | % | |||||||||||||||||||||||||||||||||||||||||||
HMNF | HMN Financial, Inc. | MN | 7.63 | % | 11.46 | % | 0.00 | % | 78.07 | % | 87.25 | % | 0.42 | % | 0.00 | % | 11.37 | % | 0.11 | % | 11.27 | % | 19.37 | % | 69.30 | % | 11.96 | % | 20.73 | % | -13.97 | % | 10.48 | % | 3.30 | % | 10.50 | % | 13.56 | % | 14.81 | % | |||||||||||||||||||||||||||||||||||||||||||
HFBL | Home Federal Bancorp, Inc. of Louisiana | LA | 10.59 | % | 12.16 | % | 1.37 | % | 72.31 | % | 88.92 | % | 0.65 | % | 0.00 | % | 9.75 | % | 0.00 | % | 9.75 | % | 17.12 | % | 38.34 | % | 12.62 | % | 18.72 | % | 86.15 | % | 0.38 | % | 1.77 | % | 10.21 | % | 16.37 | % | 17.63 | % | |||||||||||||||||||||||||||||||||||||||||||
HVBC | HV Bancorp, Inc. | PA | 6.75 | % | 4.89 | % | 1.49 | % | 83.12 | % | 70.77 | % | 19.53 | % | 0.00 | % | 8.30 | % | 0.00 | % | 8.30 | % | 23.40 | % | -14.27 | % | 28.60 | % | 9.25 | % | 160.94 | % | 7.89 | % | 4.27 | % | 8.24 | % | 13.87 | % | 14.68 | % | |||||||||||||||||||||||||||||||||||||||||||
IROQ | IF Bancorp, Inc. | IL | 4.55 | % | 22.49 | % | 1.27 | % | 69.31 | % | 81.81 | % | 5.61 | % | 0.00 | % | 11.23 | % | 0.00 | % | 11.23 | % | 1.61 | % | -3.95 | % | 4.52 | % | -0.88 | % | 58.52 | % | 0.12 | % | 3.94 | % | 10.69 | % | NA | NA | |||||||||||||||||||||||||||||||||||||||||||||
RNDB | Randolph Bancorp, Inc. | MA | 10.56 | % | 8.08 | % | 1.18 | % | 76.32 | % | 74.44 | % | 12.01 | % | 0.00 | % | 11.67 | % | 0.00 | % | 11.67 | % | 10.95 | % | 99.73 | % | -0.37 | % | 22.03 | % | -28.46 | % | 6.52 | % | 6.52 | % | 11.58 | % | 14.34 | % | 15.44 | % | |||||||||||||||||||||||||||||||||||||||||||
SVBI | Severn Bancorp, Inc. | MD | 18.90 | % | 4.27 | % | 0.59 | % | 71.96 | % | 81.08 | % | 3.79 | % | 2.23 | % | 11.58 | % | 0.12 | % | 11.46 | % | 7.14 | % | 61.69 | % | -3.60 | % | 9.26 | % | -22.37 | % | 4.18 | % | 1.21 | % | 13.77 | % | NA | NA | |||||||||||||||||||||||||||||||||||||||||||||
STND | Standard AVB Financial Corp. | PA | 7.03 | % | 16.60 | % | 2.32 | % | 69.97 | % | 74.53 | % | 10.92 | % | 0.00 | % | 13.45 | % | 2.59 | % | 10.86 | % | 7.19 | % | 31.73 | % | 1.12 | % | 7.45 | % | 8.22 | % | 0.83 | % | 1.84 | % | 11.10 | % | 16.87 | % | 17.93 | % | |||||||||||||||||||||||||||||||||||||||||||
WVFC | WVS Financial Corp. | PA | 1.22 | % | 71.33 | % | 1.37 | % | 25.49 | % | 42.38 | % | 46.53 | % | 0.00 | % | 10.34 | % | 0.00 | % | 10.34 | % | 0.36 | % | -0.27 | % | 0.49 | % | 3.35 | % | -2.73 | % | 2.40 | % | 14.38 | % | 8.89 | % | 16.19 | % | 16.52 | % |
(1) Includes loans held for sale.
Source: S&P Global Market Intelligence and RP® Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.
Copyright (c) 2020 by RP® Financial, LC.
RP® Financial, LC. | PEER GROUP ANALYSIS | |
---|---|---|
III.7 |
Peer Group ratio of 27.94%. Overall, William Penn Bancorporation’s interest-earning assets amounted to 93.42% of assets, which was slightly less than the comparable Peer Group ratio of 95.25%. The Peer Group’s non-interest earning assets included bank-owned life insurance (“BOLI”) equal to 1.46% of assets and goodwill/intangibles equal to 0.52% of assets, while the Company maintained BOLI equal to 2.00% of assets and goodwill/intangibles equal to 0.82% of assets.
William Penn Bancorporation’s funding liabilities reflected a funding composition that was somewhat similar to that of the Peer Group's funding composition. The Company’s deposits equaled 76.02% of assets, which was slightly above the Peer Group’s ratio of 74.39%. Comparatively, the Company maintained a lower level of borrowings than the Peer Group, as indicated by borrowings-to-assets ratios of 8.81% and 13.50% for William Penn Bancorporation and the Peer Group, respectively. Total interest-bearing liabilities maintained by the Company and the Peer Group, as a percent of assets, equaled 84.83% and 87.89%, respectively.
A key measure of balance sheet strength for a thrift institution is its interest-earning assets/interest-bearing liabilities (“IEA/IBL”) ratio. Presently, the Company’s IEA/IBL ratio is higher than the Peer Group’s ratio, based on IEA/IBL ratios of 110.13% and 108.37%, respectively. The additional capital realized from stock proceeds should serve to provide William Penn Bancorporation with an IEA/IBL ratio that further exceeds the Peer Group’s ratio, as the increase in capital provided by the infusion of stock proceeds will serve to lower the level of interest-bearing liabilities funding assets and will be primarily deployed into interest-earning assets.
The growth rate section of Table 3.2 shows annual growth rates for key balance sheet items. William Penn Bancorporation’s and the Peer Group’s growth rates are based on annual growth for the twelve months ended June 30, 2020. William Penn Bancorporation recorded a 77.10% increase in assets, versus asset growth of 9.76% recorded by the Peer Group. William Penn Bancorporation’s significantly higher asset growth rate was largely related to completing the acquisitions of Fidelity Savings and Washington Savings during the twelve-month period. Asset growth for William Penn Bancorporation included a 56.01% increase in loans and a 199.00% increase in cash and investments. Asset growth for the Peer Group included a 6.00% increase in loans and a 34.68% increase in cash and investments.
Deposit growth of 99.09% and a 29.78% increase in borrowings funded the Company’s asset growth. Comparatively, asset growth for the Peer Group was funded through deposit growth of 9.63% and a 33.16% increase in borrowings. The Company’s tangible capital
RP® Financial, LC. | PEER GROUP ANALYSIS | |
---|---|---|
III.8 |
increased 27.92%, which was largely related to the capital added with the acquisitions of Fidelity Savings and Washington Savings. Comparatively, the Peer Group’s tangible capital increased 3.50%, as retention of earnings was partially offset by stock repurchases and dividend payments. The Company’s post-conversion capital growth rate will initially be constrained by maintenance of a higher pro forma capital position. Additional implementation of any stock repurchases and dividend payments, pursuant to regulatory limitations and guidelines, could also slow the Company’s capital growth rate in the longer term following the stock offering.
Income and Expense Components
Table 3.3 displays statements of operations for the Company and the Peer Group. The Company’s and the Peer Group’s ratios are based on earnings for the twelve months ended June 30, 2020. William Penn Bancorporation and the Peer Group reported net income to average assets ratios of 0.27% and 0.76%, respectively. Higher ratios of non-interest operating income and non-operating income represented earnings advantages for the Peer Group, while a higher net interest income ratio, a lower operating expense ratio and a tax benefit were earnings advantages for the Company.
The Company’s higher net interest income to average assets ratio was primarily realized through a higher interest income ratio, which was facilitated by a higher yield earned on interest-earning assets (4.37% versus 3.98% for the Peer Group). Likewise, the Company’s lower interest expense ratio was facilitated by a lower cost of funds (1.32% versus 1.36% for the Company), as well as maintaining a lower concentration of interest-bearing liabilities as a percent of assets. Overall, William Penn Bancorporation and the Peer Group reported net interest income to average assets ratios of 3.01% and 2.72%, respectively.
In another key area of core earnings strength, the Company maintained a lower level of operating expenses than the Peer Group. For the period covered in Table 3.3, the Company and the Peer Group reported operating expense to average assets ratios of 2.46% and 2.96%, respectively. The Company’s lower operating expense ratio was achieved despite maintaining a comparatively higher number of employees relative to its asset size. Assets per full time equivalent employee equaled $6.883 million for the Company, versus $7.034 million for the Peer Group.
When viewed together, net interest income and operating expenses provide considerable insight into a thrift's earnings strength, since those sources of income and expenses are typically the most prominent components of earnings and are generally more
RP® Financial, LC. | Peer Group Analysis |
Page III.9 |
Table 3.3
Income as Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the 12 Months Ended June 30, 2020 or the Most Recent 12 Months Available
Net Interest Income | Non-Interest Income | NonOp Items | Yields, Costs, and Spreads | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss | NII | Gain | Other | Total | Provision | MEMO: | MEMO: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Provis. | After | on Sale of | Non-Int | Non-Int | Net Gains/ | Extrao. | for | Yield | Cost | Yld-Cost | Assets/ | Effective | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income | Income | Expense | NII | on IEA | Provis. | Loans | Income | Expense | Losses (1) | Items | Taxes | On IEA | Of IBL | Spread | FTE Emp. | Tax Rate | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
(%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | ($000) | (%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
William Penn Bancorporation | PA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
June 30, 2020 | 0.27 | % | 4.04 | % | 1.02 | % | 3.01 | % | 0.13 | % | 2.89 | % | 0.00 | % | 0.24 | % | 2.46 | % | -0.47 | % | 0.00 | % | -0.08 | % | 4.37 | % | 1.32 | % | 3.05 | % | $ | 6,883 | -41.13 | % | |||||||||||||||||||||||||||||||||||||
All Non-MHC Public Companies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Averages | 0.81 | % | 3.93 | % | 0.95 | % | 2.98 | % | 0.25 | % | 2.73 | % | 0.65 | % | 0.43 | % | 2.76 | % | 0.02 | % | 0.00 | % | 0.25 | % | 4.18 | % | 1.27 | % | 2.93 | % | $ | 8,489 | 19.92 | % | |||||||||||||||||||||||||||||||||||||
Medians | 0.77 | % | 3.79 | % | 0.99 | % | 2.82 | % | 0.19 | % | 2.61 | % | 0.07 | % | 0.35 | % | 2.67 | % | 0.00 | % | 0.00 | % | 0.23 | % | 4.00 | % | 1.27 | % | 2.82 | % | $ | 7,044 | 22.33 | % | |||||||||||||||||||||||||||||||||||||
Comparable Group | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Averages | 0.76 | % | 3.78 | % | 1.06 | % | 2.72 | % | 0.16 | % | 2.56 | % | 0.96 | % | 0.38 | % | 2.96 | % | 0.04 | % | 0.00 | % | 0.22 | % | 3.98 | % | 1.36 | % | 2.62 | % | $ | 7,034 | 22.48 | % | |||||||||||||||||||||||||||||||||||||
Medians | 0.69 | % | 3.79 | % | 1.06 | % | 2.72 | % | 0.15 | % | 2.52 | % | 0.49 | % | 0.45 | % | 2.67 | % | 0.01 | % | 0.00 | % | 0.22 | % | 4.02 | % | 1.34 | % | 2.66 | % | $ | 6,278 | 22.90 | % | |||||||||||||||||||||||||||||||||||||
Comparable Group | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PBIP | Prudential Bancorp, Inc. | PA | 0.92 | % | 3.51 | % | 1.64 | % | 1.88 | % | 0.12 | % | 1.76 | % | 0.02 | % | 0.12 | % | 1.29 | % | 0.51 | % | 0.00 | % | 0.21 | % | 3.66 | % | 1.92 | % | 1.74 | % | $ | 13,346 | 18.31 | % | |||||||||||||||||||||||||||||||||||
ESBK | Elmira Savings Bank | NY | 0.61 | % | 3.79 | % | 1.10 | % | 2.68 | % | 0.17 | % | 2.51 | % | 0.44 | % | 0.44 | % | 2.66 | % | 0.01 | % | 0.00 | % | 0.14 | % | 4.29 | % | 1.46 | % | 2.83 | % | $ | 5,681 | 18.69 | % | |||||||||||||||||||||||||||||||||||
HMNF | HMN Financial, Inc. | MN | 0.94 | % | 4.04 | % | 0.44 | % | 3.59 | % | 0.08 | % | 3.52 | % | 0.70 | % | 0.69 | % | 3.55 | % | 0.00 | % | 0.00 | % | 0.41 | % | 4.18 | % | 0.70 | % | 3.48 | % | $ | 4,954 | 30.29 | % | |||||||||||||||||||||||||||||||||||
HFBL | Home Federal Bancorp, Inc. of Louisiana | LA | 0.83 | % | 4.40 | % | 1.11 | % | 3.28 | % | 0.41 | % | 2.87 | % | 0.54 | % | 0.26 | % | 2.68 | % | 0.05 | % | 0.00 | % | 0.21 | % | 4.64 | % | 1.50 | % | 3.14 | % | $ | 8,649 | 19.91 | % | |||||||||||||||||||||||||||||||||||
HVBC | HV Bancorp, Inc. | PA | 0.61 | % | 3.52 | % | 1.06 | % | 2.46 | % | 0.23 | % | 2.22 | % | 2.11 | % | 0.54 | % | 4.14 | % | 0.10 | % | 0.00 | % | 0.23 | % | 3.68 | % | 1.33 | % | 2.35 | % | $ | 4,229 | 27.31 | % | |||||||||||||||||||||||||||||||||||
IROQ | IF Bancorp, Inc. | IL | 0.62 | % | 3.92 | % | 1.26 | % | 2.65 | % | 0.02 | % | 2.64 | % | 0.12 | % | 0.54 | % | 2.48 | % | 0.03 | % | 0.00 | % | 0.24 | % | 4.06 | % | 1.56 | % | 2.50 | % | $ | 6,874 | 27.86 | % | |||||||||||||||||||||||||||||||||||
RNDB | Randolph Bancorp, Inc. | MA | 0.97 | % | 3.79 | % | 1.03 | % | 2.76 | % | 0.29 | % | 2.46 | % | 4.99 | % | -0.07 | % | 6.08 | % | -0.24 | % | 0.00 | % | 0.10 | % | 3.99 | % | 1.35 | % | 2.64 | % | $ | 3,471 | 9.16 | % | |||||||||||||||||||||||||||||||||||
SVBI | Severn Bancorp, Inc. | MD | 0.69 | % | 4.23 | % | 0.97 | % | 3.26 | % | 0.03 | % | 3.23 | % | 0.65 | % | 0.71 | % | 3.62 | % | -0.01 | % | 0.00 | % | 0.27 | % | 4.43 | % | 1.29 | % | 3.14 | % | $ | 5,439 | 28.52 | % | |||||||||||||||||||||||||||||||||||
STND | Standard AVB Financial Corp. | PA | 0.68 | % | 3.67 | % | 0.89 | % | 2.78 | % | 0.26 | % | 2.52 | % | 0.07 | % | 0.46 | % | 2.15 | % | -0.06 | % | 0.00 | % | 0.16 | % | 3.93 | % | 1.24 | % | 2.69 | % | $ | 6,935 | 18.85 | % | |||||||||||||||||||||||||||||||||||
WVFC | WVS Financial Corp. | PA | 0.69 | % | 2.90 | % | 1.07 | % | 1.84 | % | 0.02 | % | 1.82 | % | 0.00 | % | 0.11 | % | 0.99 | % | -0.01 | % | 0.00 | % | 0.24 | % | 2.98 | % | 1.28 | % | 1.70 | % | $ | 10,757 | 25.89 | % |
(1) Net gains/losses includes gain/loss on sale of securities and nonrecurring income and expense.
Source: | S&P Global Market Intelligence and RP® Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information. |
Copyright (c) 2020 by RP® Financial, LC.
RP® Financial, LC. | PEER GROUP ANALYSIS | |||
III.10 |
predictable than losses and gains realized from the sale of assets or other non-recurring activities. In this regard, as measured by their expense coverage ratios (net interest income divided by operating expenses), the Company’s earnings were more favorable than the Peer Group’s earnings. Expense coverage ratios for William Penn Bancorporation and the Peer Group equaled 1.22x and 0.92x, respectively.
Sources of non-interest operating income provided a larger contribution to the Peer Group’s earnings, with such income amounting to 0.24% and 1.34% of William Penn Bancorporation’s and the Peer Group’s average assets, respectively. Taking non-interest operating income into account in comparing the Company’s and the Peer Group's earnings, William Penn Bancorporation’s efficiency ratio (operating expenses, as a percent of the sum of non-interest operating income and net interest income) of 75.69% was slightly less favorable than the Peer Group's efficiency ratio of 72.91%.
Loan loss provisions had a fairly similar impact on the Company’s and the Peer Group’s earnings, as loan loss provisions established by the Company and the Peer Group equaled 0.13% and 0.16% of average assets, respectively
The Company recorded a net non-operating loss equal to 0.47% of average assets, which was largely due to merger related expenses. Comparatively, the Peer Group recorded a net non-operating gain equal to 0.04% of average assets. Typically, gains and losses generated from the sale of assets and other non-operating activities are viewed as earnings with a relatively high degree of volatility, and, thus, are not considered to be part of an institution’s core earnings. Extraordinary items were not a factor in either the Company’s or the Peer Group's earnings.
The Company recorded an effective tax benefit of 41.13% compared to an effective tax rate of 22.48% for the Peer Group. As indicated in the prospectus, the Company’s effective marginal tax rate is equal to 22.50%.
Loan Composition
Table 3.4 presents data related to the Company’s and the Peer Group’s loan portfolio compositions (including the investment in mortgage-backed securities). In comparison to the Peer Group, the Company’s loan portfolio composition reflected a higher combined concentration of 1-4 family permanent mortgage loans and mortgage-backed securities (60.82% of assets versus 43.48% for the Peer Group), as the Company’s higher concentration of 1-4
RP® Financial, LC. | Peer Group Analysis | ||
Page III.11 |
Table 3.4
Loan Portfolio Composition and Related Information
Comparable Institution Analysis
As of June 30, 2020
Portfolio Composition as a Percent of Assets | ||||||||||||||||||||||||||||||||||||||||||
1-4 | Constr. | Multi- | Commerc. | RWA/ | Servicing | |||||||||||||||||||||||||||||||||||||
MBS | Family | & Land | Family | Comm RE | Business | Consumer | Assets | Assets | ||||||||||||||||||||||||||||||||||
(%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | ($000) | ||||||||||||||||||||||||||||||||||
William Penn Bancorporation | PA | |||||||||||||||||||||||||||||||||||||||||
June 30, 2020 | 7.46 | % | 53.36 | % | 3.05 | % | 2.03 | % | 10.42 | % | 0.87 | % | 0.53 | % | 61.41 | % | $ | 186 | ||||||||||||||||||||||||
All Public Companies | ||||||||||||||||||||||||||||||||||||||||||
Averages | 7.96 | % | 28.29 | % | 4.28 | % | 11.59 | % | 17.67 | % | 10.67 | % | 1.71 | % | 67.97 | % | $ | 7,876 | ||||||||||||||||||||||||
Medians | 6.95 | % | 25.26 | % | 4.10 | % | 4.36 | % | 15.55 | % | 8.23 | % | 0.22 | % | 70.87 | % | $ | 382 | ||||||||||||||||||||||||
Comparable Group | ||||||||||||||||||||||||||||||||||||||||||
Averages | 10.63 | % | 32.85 | % | 5.08 | % | 4.36 | % | 14.93 | % | 9.60 | % | 1.26 | % | 65.72 | % | $ | 1,436 | ||||||||||||||||||||||||
Medians | 6.42 | % | 26.73 | % | 4.33 | % | 3.40 | % | 15.07 | % | 8.69 | % | 0.61 | % | 62.64 | % | $ | 621 | ||||||||||||||||||||||||
Comparable Group | ||||||||||||||||||||||||||||||||||||||||||
PBIP | Prudential Bancorp, Inc. | PA | 22.62 | % | 19.30 | % | 13.92 | % | 2.77 | % | 11.79 | % | 1.92 | % | 0.06 | % | 78.31 | % | $ | 0 | ||||||||||||||||||||||
ESBK | Elmira Savings Bank | NY | 0.98 | % | 47.47 | % | 2.42 | % | 5.79 | % | 9.09 | % | 7.97 | % | 5.36 | % | 62.95 | % | $ | 1,158 | ||||||||||||||||||||||
HMNF | HMN Financial, Inc. | MN | 5.86 | % | 19.81 | % | 6.12 | % | 4.28 | % | 33.58 | % | 12.78 | % | 2.48 | % | 75.24 | % | $ | 2,647 | ||||||||||||||||||||||
HFBL | Home Federal Bancorp, Inc. of Louisiana | LA | 11.52 | % | 26.45 | % | 4.88 | % | 8.46 | % | 16.64 | % | 16.86 | % | 0.18 | % | 60.68 | % | $ | 0 | ||||||||||||||||||||||
HVBC | HV Bancorp, Inc. | PA | 2.00 | % | 55.61 | % | 0.58 | % | 1.30 | % | 3.76 | % | 21.39 | % | 1.37 | % | 53.80 | % | $ | 508 | ||||||||||||||||||||||
IROQ | IF Bancorp, Inc. | IL | 20.24 | % | 18.79 | % | 3.79 | % | 13.07 | % | 18.92 | % | 14.56 | % | 1.02 | % | NA | $ | 715 | |||||||||||||||||||||||
RNDB | Randolph Bancorp, Inc. | MA | 6.25 | % | 51.94 | % | 4.86 | % | 1.82 | % | 13.51 | % | 3.17 | % | 1.86 | % | 75.90 | % | $ | 8,094 | ||||||||||||||||||||||
SVBI | Severn Bancorp, Inc. | MD | 3.04 | % | 27.00 | % | 11.92 | % | 1.03 | % | 24.07 | % | 8.50 | % | 0.20 | % | NA | $ | 615 | |||||||||||||||||||||||
STND | Standard AVB Financial Corp. | PA | 6.58 | % | 39.37 | % | 1.66 | % | 4.04 | % | 16.79 | % | 8.88 | % | 0.05 | % | 62.33 | % | $ | 626 | ||||||||||||||||||||||
WVFC | WVS Financial Corp. | PA | 27.19 | % | 22.79 | % | 0.65 | % | 1.05 | % | 1.15 | % | 0.00 | % | 0.02 | % | 56.58 | % | $ | 0 |
Source: S&P Global Market Intelligence and RP® Financial, LC. calculations. The information provided in this table has been obtained from sources
we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.
Copyright (c) 2020 by RP® Financial, LC.
RP® Financial, LC. | Peer Group Analysis | ||
Page III.12 |
family loans more than offset the Peer Group’s higher concentration of mortgage-backed securities. Loan servicing intangibles constituted a more significant balance sheet item for the Peer Group, equal to an average of $1.4 million for the Peer Group compared to $186,000 for the Company.
Diversification into higher risk and higher yielding types of lending was more significant for the Peer Group. The Peer Group’s loan portfolio composition reflected higher concentrations of commercial real estate loans (14.93% of assets versus 10.42% of assets for the Company), multi-family loans (4.36% of assets versus 2.03% of assets for the Company), construction/land loans (5.08% of assets versus 3.05% of assets for the Company), commercial business loans (9.60% of assets versus 0.87% of assets for the Company) and consumer loans (1.26% of assets versus 0.53% of assets for the Company). In total, construction/land, commercial real estate, multi-family, commercial business and consumer loans comprised 16.90% and 35.23% of the Company’s and the Peer Group’s assets, respectively. Overall, the Company’s asset composition provided for a slightly lower risk weighted assets-to-assets ratio of 61.41% compared to 65.72% for the Peer Group.
Interest Rate Risk
Table 3.5 reflects various key ratios highlighting the relative interest rate risk exposure of the Company versus the Peer Group. In terms of balance sheet composition, William Penn Bancorporation’s interest rate risk characteristics implied a slightly lower degree of interest rate risk exposure relative to the comparable measures for the Peer Group. In particular, the Company’s tangible equity-to-assets ratio and IEA/IBL ratio were slightly above the respective Peer Group ratios. At the same time, the Company’s higher ratio of non-interest earning assets as a percent of assets implied a slightly greater degree of balance sheet interest rate risk exposure for the Company. On a pro forma basis, the infusion of stock proceeds should serve to strengthen the Company’s balance sheet interest rate risk characteristics, given the increases that will be realized in Company’s tangible equity-to-assets and IEA/IBL ratios.
To analyze interest rate risk associated with the net interest margin, we reviewed quarterly changes in net interest income as a percent of average assets for William Penn Bancorporation and the Peer Group. In general, the comparative fluctuations in the Company’s and the Peer Group’s net interest income ratios implied that a greater degree of interest rate risk was associated with the Company’s net interest margin, based on the interest rate environment that prevailed during the period covered in Table 3.5. The stability of the Company’s net
RP® Financial, LC. |
Peer Group Analysis
Page III.13 |
Table 3.5
Interest Rate Risk Measures and Net Interest Income Volatility
Comparable Institution Analysis
As of June 30, 2020 or the Most Recent Date Available.
Balance Sheet Measures | ||||||||||||||||||||||||||||||||||||||||
Tangible | Non-Earn. | Quarterly Change in Net Interest Income | ||||||||||||||||||||||||||||||||||||||
Equity/ | IEA/ | Assets/ | ||||||||||||||||||||||||||||||||||||||
Assets | IBL | Assets | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | ||||||||||||||||||||||||||||||||
(%) | (%) | (%) | (change in net interest income is annualized in basis points) | |||||||||||||||||||||||||||||||||||||
William Penn Bancorporation | PA | |||||||||||||||||||||||||||||||||||||||
June 30, 2020 | 12.3 | % | 110.1 | % | 6.6 | % | -35 | 11 | -17 | -8 | -27 | -7 | ||||||||||||||||||||||||||||
All Public Thrifts | ||||||||||||||||||||||||||||||||||||||||
Average | 11.9 | % | 135.1 | % | 8.5 | % | -14 | -3 | -5 | -3 | -5 | -3 | ||||||||||||||||||||||||||||
Median | 10.3 | % | 133.0 | % | 9.0 | % | -13 | -4 | -5 | -2 | -4 | -5 | ||||||||||||||||||||||||||||
Comparable Group | ||||||||||||||||||||||||||||||||||||||||
Average | 10.3 | % | 108.4 | % | 4.7 | % | -6 | -3 | -9 | -4 | -5 | -1 | ||||||||||||||||||||||||||||
Median | 10.7 | % | 109.7 | % | 5.0 | % | -11 | -3 | -9 | -2 | -8 | -4 | ||||||||||||||||||||||||||||
Comparable Group | ||||||||||||||||||||||||||||||||||||||||
PBIP | Prudential Bancorp, Inc. | PA | 10.3 | % | 110.5 | % | 5.1 | % | -7 | -15 | -4 | -8 | -10 | -5 | ||||||||||||||||||||||||||
ESBK | Elmira Savings Bank | NY | 7.1 | % | 102.6 | % | 7.4 | % | -30 | 15 | 8 | -7 | -10 | -15 | ||||||||||||||||||||||||||
HMNF | HMN Financial, Inc. | MN | 11.3 | % | 110.8 | % | 2.8 | % | -18 | -4 | -20 | -35 | 27 | -6 | ||||||||||||||||||||||||||
HFBL | Home Federal Bancorp, Inc. of Louisiana | LA | 9.8 | % | 106.1 | % | 4.9 | % | 22 | -21 | -14 | 9 | -22 | -7 | ||||||||||||||||||||||||||
HVBC | HV Bancorp, Inc. | PA | 8.3 | % | 104.9 | % | 5.2 | % | 23 | 5 | -9 | -5 | -2 | 4 | ||||||||||||||||||||||||||
IROQ | IF Bancorp, Inc. | IL | 11.2 | % | 110.2 | % | 3.7 | % | 1 | 11 | -12 | 10 | -10 | -5 | ||||||||||||||||||||||||||
RNDB | Randolph Bancorp, Inc. | MA | 11.7 | % | 109.9 | % | 5.0 | % | -5 | 3 | -9 | 3 | -12 | 5 | ||||||||||||||||||||||||||
SVBI | Severn Bancorp, Inc. | MD | 11.5 | % | 109.2 | % | 4.9 | % | -15 | -14 | -5 | -1 | -6 | 12 | ||||||||||||||||||||||||||
STND | Standard AVB Financial Corp. | PA | 11.1 | % | 109.5 | % | 6.4 | % | -17 | -1 | -9 | -1 | -4 | -3 | ||||||||||||||||||||||||||
WVFC | WVS Financial Corp. | PA | 10.3 | % | 110.3 | % | 2.0 | % | -15 | -5 | -16 | -2 | -4 | 9 |
NA=Change is greater than 100 basis points during the quarter.
Source: S&P Global Market Intelligence and RP® Financial, LC. calculations. The information provided in this table has been obtained from sources we believe
are reliable, but we cannot guarantee the accuracy or completeness of such information.
Copyright (c) 2020 by RP® Financial, LC.
RP® Financial, LC. |
PEER GROUP ANALYSIS
III.14 |
interest margin should be enhanced by the infusion of stock proceeds, as interest rate sensitive liabilities will be funding a lower portion of William Penn Bancorporation’s assets and the proceeds will be substantially deployed into interest-earning assets.
Credit Risk
Overall, based on a comparison of credit risk measures, the Company’s implied credit risk exposure was viewed to be similar to the Peer Group’s credit risk exposure. As shown in Table 3.6, the Company’s ratios for non-performing/assets and non-performing loans/loans equaled 0.65% and 0.90%, respectively, versus comparable measures of 0.76% and 0.99% for the Peer Group. These ratios include accruing loans that are classified as troubled debt restructurings, which accounted for 30% of the Company’s non-performing loan balance at June 30, 2020. The Company’s and Peer Group’s loss reserves as a percent of non-performing loans equaled 75.48% and 152.25%, respectively. Loss reserves maintained as percent of loans receivable equaled 0.68% for the Company, versus 1.03% for the Peer Group. The Company’s lower reserve ratios reflect fair value accounting for the acquisitions of the three mutual institutions. Net loan charge-offs were a similar factor for the Peer Group and the Company, as net loan charge-offs for the Peer Group equaled 0.07% of loans compared to 0.06% of loans for the Company.
Summary
Based on the above analysis, RP Financial concluded that the Peer Group forms a reasonable basis for determining the pro forma market value of the Company. Such general characteristics as asset size, capital position, interest-earning asset composition, funding composition, core earnings measures, loan composition, credit quality and exposure to interest rate risk all tend to support the reasonability of the Peer Group from a financial standpoint. Those areas where differences exist will be addressed in the form of valuation adjustments to the extent necessary.
RP® Financial, LC. | Peer Group Analysis |
Page III.15 |
Table 3.6
Credit Risk Measures and Related Information
Comparable Institution Analysis
As of June 30, 2020
NPAs & | Rsrves/ | ||||||||||||||||||||||||||||||||||||
REO/ | 90+Del/ | NPLs/ | Rsrves/ | Rsrves/ | NPAs & | Net Loan | NLCs/ | ||||||||||||||||||||||||||||||
Assets | Assets (1) | Loans (2) | Loans HFI | NPLs (2) | 90+Del (1) | Chargeoffs (3) | Loans | ||||||||||||||||||||||||||||||
(%) | (%) | (%) | (%) | (%) | (%) | ($000) | (%) | ||||||||||||||||||||||||||||||
William Penn Bancorporation | PA | ||||||||||||||||||||||||||||||||||||
June 30, 2020 | 0.01 | % | 0.65 | % | 0.90 | % | 0.68 | % | 75.48 | % | 73.90 | % | $ | 316 | 0.06 | % | |||||||||||||||||||||
All Public Companies | |||||||||||||||||||||||||||||||||||||
Averages | 0.05 | % | 0.68 | % | 0.89 | % | 1.06 | % | 170.87 | % | 144.01 | % | $ | 2,845 | 0.05 | % | |||||||||||||||||||||
Medians | 0.02 | % | 0.56 | % | 0.73 | % | 1.07 | % | 131.26 | % | 115.47 | % | $ | 222 | 0.03 | % | |||||||||||||||||||||
Comparable Group | |||||||||||||||||||||||||||||||||||||
Averages | 0.06 | % | 0.76 | % | 0.99 | % | 1.03 | % | 152.25 | % | 123.54 | % | $ | 353 | 0.07 | % | |||||||||||||||||||||
Medians | 0.04 | % | 0.71 | % | 0.81 | % | 1.13 | % | 91.20 | % | 87.19 | % | $ | 180 | 0.04 | % | |||||||||||||||||||||
Comparable Group | |||||||||||||||||||||||||||||||||||||
PBIP | Prudential Bancorp, Inc. | PA | 0.03 | % | 1.18 | % | 2.31 | % | 1.13 | % | 49.03 | % | 47.62 | % | $ | 115 | 0.02 | % | |||||||||||||||||||
ESBK | Elmira Savings Bank | NY | 0.04 | % | 0.85 | % | 1.04 | % | 0.96 | % | 91.20 | % | 87.19 | % | $ | 494 | 0.09 | % | |||||||||||||||||||
HMNF | HMN Financial, Inc. | MN | 0.08 | % | 0.37 | % | 0.37 | % | 1.28 | % | 342.81 | % | 269.78 | % | $ | 569 | 0.09 | % | |||||||||||||||||||
HFBL | Home Federal Bancorp, Inc. of Louisiana | LA | 0.18 | % | 1.34 | % | 1.57 | % | 1.12 | % | 68.66 | % | 58.55 | % | $ | 1,262 | 0.37 | % | |||||||||||||||||||
HVBC | HV Bancorp, Inc. | PA | 0.00 | % | 0.66 | % | 0.78 | % | 0.59 | % | 66.49 | % | 66.49 | % | $ | 180 | 0.06 | % | |||||||||||||||||||
IROQ | IF Bancorp, Inc. | IL | 0.05 | % | 0.30 | % | 0.29 | % | 1.21 | % | 419.52 | % | 286.49 | % | $ | 222 | 0.04 | % | |||||||||||||||||||
RNDB | Randolph Bancorp, Inc. | MA | 0.02 | % | 0.75 | % | 0.84 | % | 1.22 | % | 128.53 | % | 111.62 | % | $ | 31 | 0.01 | % | |||||||||||||||||||
SVBI | Severn Bancorp, Inc. | MD | 0.11 | % | 1.66 | % | 2.11 | % | 1.23 | % | 57.39 | % | 53.57 | % | $ | 174 | 0.03 | % | |||||||||||||||||||
STND | Standard AVB Financial Corp. | PA | 0.06 | % | 0.50 | % | 0.63 | % | 0.93 | % | 146.60 | % | 130.52 | % | $ | 131 | 0.02 | % | |||||||||||||||||||
WVFC | WVS Financial Corp. | PA | 0.00 | % | 0.00 | % | 0.00 | % | 0.67 | % | NA | NA | — | 0.00 | % |
(1) | NPAs are defined as nonaccrual loans, accruing loans 90 days or more past due, performing TDRs, and OREO. |
(2) | NPLs are defined as nonaccrual loans, accruing loans 90 days or more past due and performing TDRs. |
(3) | Net loan chargeoffs are shown on a last twelve month basis. |
Source: | S&P Global Market Intelligence and RP® Financial, LC. calculations. The information provided in this table has been obrained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information. |
Copyright (c) 2020 by RP® Financial, LC.
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.1 |
IV. VALUATION ANALYSIS
Introduction
This chapter presents the valuation analysis and methodology, prepared pursuant to the regulatory valuation guidelines, and valuation adjustments and assumptions used to determine the estimated pro forma market value of the common stock to be issued in conjunction with the Company’s conversion transaction.
Appraisal Guidelines
The federal regulatory appraisal guidelines required by the FRB, the OCC, the FDIC and state banking agencies specify the pro forma market value methodology for estimating the pro forma market value of a converting thrift. Pursuant to this methodology: (1) a peer group of comparable publicly-traded institutions is selected; (2) a financial and operational comparison of the subject company to the peer group is conducted to discern key differences; and (3) a valuation analysis in which the pro forma market value of the subject company is determined based on the market pricing of the peer group as of the date of valuation, incorporating valuation adjustments for key differences. In addition, the pricing characteristics of recent conversions, both at conversion and in the aftermarket, must be considered.
RP Financial Approach to the Valuation
The valuation analysis herein complies with such regulatory approval guidelines. Accordingly, the valuation incorporates a detailed analysis based on the Peer Group, discussed in Chapter III, which constitutes “fundamental analysis” techniques. Additionally, the valuation incorporates a “technical analysis” of recently completed stock conversions, particularly second-step conversions, including closing pricing and aftermarket trading of such offerings. It should be noted that these valuation analyses cannot possibly fully account for all the market forces which impact trading activity and pricing characteristics of a particular stock on a given day.
The pro forma market value determined herein is a preliminary value for the Company’s to-be-issued stock. Throughout the conversion process, RP Financial will: (1) review changes in William Penn Bancorporation’s operations and financial condition; (2) monitor William Penn Bancorporation’s operations and financial condition relative to the Peer Group to identify any fundamental changes; (3) monitor the external factors affecting value including, but not limited
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.2 |
to, local and national economic conditions, interest rates, and the stock market environment, including the market for thrift stocks and WMPN’s stock specifically; and (4) monitor pending conversion offerings, particularly second-step conversions, (including those in the offering phase), both regionally and nationally. If during the second-conversion process material changes occur, RP Financial will determine if updated valuation reports should be prepared to reflect such changes and their related impact on value, if any. RP Financial will also prepare a final valuation update at the closing of the offering to determine if the prepared valuation analysis and resulting range of value continues to be appropriate.
The appraised value determined herein is based on the current market and operating environment for the Company and for all thrifts. Subsequent changes in the local and national economy, the legislative and regulatory environment, the stock market, interest rates, and other external forces (such as natural disasters or major world events), which may occur from time to time (often with great unpredictability) may materially impact the market value of all thrift stocks, including William Penn Bancorporation’s value or William Penn Bancorporation’s value alone. To the extent a change in factors impacting the Company’s value can be reasonably anticipated and/or quantified, RP Financial has incorporated the estimated impact into the analysis.
Valuation Analysis
A fundamental analysis discussing similarities and differences relative to the Peer Group was presented in Chapter III. The following sections summarize the key differences between the Company and the Peer Group and how those differences affect the pro forma valuation. Emphasis is placed on the specific strengths and weaknesses of the Company relative to the Peer Group in such key areas as financial condition, profitability, growth and viability of earnings, asset growth, primary market area, dividends, liquidity of the shares, marketing of the issue, management and the effect of government regulations and/or regulatory reform. We have also considered the market for thrift stocks, in particular new issues, to assess the impact on value of the Company coming to market at this time.
1. Financial Condition
The financial condition of an institution is an important determinant in pro forma market value because investors typically look to such factors as liquidity, capital, asset composition and quality and funding sources in assessing investment attractiveness. The similarities and differences in the Company’s and the Peer Group’s financial strengths are noted as follows:
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.3 |
§ | Overall A/L Composition. In comparison to the Peer Group, the Company’s interest-earning asset composition showed a slightly higher concentration of loans and a slightly lower concentration of cash and investments. Diversification into higher risk and higher yielding types of loans was more significant for the Peer Group, while the Company maintained a higher concentration of 1-4 family loans. Overall, in comparison to the Peer Group, the Company’s interest-earning asset composition provided for higher yield earned on interest-earning assets with a lower risk weighted assets-to-assets ratio. William Penn Bancorporation’s funding composition reflected a slightly higher level of deposits and a lower level of borrowings relative to the comparable Peer Group measures, which translated into a similar cost of funds for the Company and the Peer Group. Overall, as a percent of assets, the Company maintained slightly lower levels of interest-earning assets and interest-bearing liabilities compared to the Peer Group’s ratios, which resulted in a slightly higher IEA/IBL ratio for the Company. After factoring in the impact of the net stock proceeds, the Company’s IEA/IBL ratio should further exceed the Peer Group’s IEA/IBL ratio. On balance, RP Financial concluded that asset/liability composition was a slightly positive factor in our adjustment for financial condition. |
§ | Credit Quality. The Company’s ratios for non-performing assets as a percent of assets and non-performing loans as a percent of loans were similar to the comparable ratios for the Peer Group. In comparison to the Peer Group, the Company maintained lower loss reserves as a percent of non-performing loans and as a percent of loans. The lower reserve ratios maintained by the Company were the result of the fair value accounting adjustments applied for the acquisitions of the three mutual institutions. Net loan charge-offs as a percent of loans were similar for the Company and the Peer Group. The Company’s risk weighted assets-to-assets ratio was lower than the Peer Group’s ratio. Overall, RP Financial concluded that credit quality was a neural factor in our adjustment for financial condition. |
§ | Balance Sheet Liquidity. The Company operated with a slightly lower level of cash and investment securities relative to the Peer Group (24.36% of assets versus 27.94% for the Peer Group). Following the infusion of stock proceeds, the Company’s cash and investments ratio is expected to increase as the net proceeds realized from the second-step offering will be initially deployed into cash and investments. The Company was viewed as having slightly greater future borrowing capacity relative to the Peer Group, based on the higher level of borrowings currently funding the Peer Group’s assets. Overall, RP Financial concluded that balance sheet liquidity was a neutral factor in our adjustment for financial condition. |
§ | Funding Liabilities. The Company’s interest-bearing funding composition reflected a higher concentration of deposits and a lower concentration of borrowings relative to the comparable Peer Group ratios, which translated into a similar cost of funds for the Company and the Peer Group. Total interest-bearing liabilities as a percent of assets were slightly lower for the Company. Following the stock offering, the increase in the Company’s capital position will reduce the level of interest-bearing liabilities funding the Company’s assets. Overall, RP Financial concluded that funding liabilities was a neutral factor in our adjustment for financial condition. |
§ | Capital. The Company currently operates with a higher tangible equity-to-assets ratio than the Peer Group. Following the stock offering, William Penn Bancorporation’s pro forma tangible capital position will significantly exceed the Peer Group's tangible equity-to-assets ratio. The increase in the Company's pro forma |
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.4 |
capital position will result in greater leverage potential and reduce the level of interest-bearing liabilities utilized to fund assets. At the same time, the Company’s more significant capital surplus will likely result in a lower ROE. On balance, RP Financial concluded that capital strength was a slightly positive factor in our adjustment for financial condition. |
On balance, William Penn Bancorporation’s balance sheet strength was considered to be more favorable relative to the Peer Group’s balance sheet strength and, thus, a slight upward adjustment was applied for the Company’s financial condition.
2. Profitability, Growth and Viability of Earnings
Earnings are a key factor in determining pro forma market value, as the level and risk characteristics of an institution’s earnings stream and the prospects and ability to generate future earnings heavily influence the multiple that the investment community will pay for earnings. The major factors considered in the valuation are described below.
§ | Reported Earnings. The Company’s reported earnings were lower than the Peer Group’s on a ROAA basis (0.27% of average assets versus 0.76% for the Peer Group). The Company’s lower return was primarily due to significant non-recurring merger related expenses, while non-operating items were not a significant factor in the Peer Group’s earnings. Excluding non-operating items, the Company’s earnings advantages with respect to a higher net interest income ratio and a lower operating expense ratio were more than by the Peer Group’s earnings advantage with respect to a higher ratio of non-interest operating income. Reinvestment of stock proceeds into interest-earning assets will serve to increase the Company’s earnings, with the benefit of reinvesting proceeds expected to be somewhat offset by implementation of additional stock benefit plans in connection with the second-step offering. Overall, the Company’s pro forma reported earnings were considered to be slightly less favorable than the Peer Group’s reported earnings and, thus, RP Financial concluded that this was a slightly negative factor in our adjustment for profitability, growth and viability of earnings. |
§ | Core Earnings. Net interest income, operating expenses, non-interest operating income and loan loss provisions were reviewed in assessing the relative strengths and weaknesses of the Company’s and the Peer Group’s core earnings. The Company maintained a higher net interest income ratio, a lower operating expense ratio and a lower level of non-interest operating income. The Company’s more favorable net interest income and operating expense ratios translated into a higher expense coverage ratio in comparison to the Peer Group’s ratio (equal to 1.22x versus 0.92x for the Peer Group). Comparatively, the Company’s efficiency ratio of 75.69% was slightly less favorable than the Peer Group’s efficiency ratio of 72.91%. Loan loss provisions had a similar impact on the Company’s and the Peer Group’s earnings. After adjusting for non-operating losses and gains, the Company’s ROAA ratio remained slightly below the comparable Peer Group ratio. Overall, these measures, as well as the expected earnings benefits the Company should realize from the redeployment of stock proceeds into interest-earning assets and leveraging |
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.5 |
of post-conversion capital, which will be somewhat negated by expenses associated with the stock benefit plans, indicate that the Company’s pro forma core earnings will remain slightly less favorable than the Peer Group’s core earnings. Therefore, RP Financial concluded that this was a slightly negative factor in our adjustment for profitability, growth and viability of earnings. |
§ | Interest Rate Risk. Quarterly changes in the Company’s and the Peer Group's net interest income to average assets ratios indicated a greater degree of volatility was associated with the Company’s net interest margin. Other measures of interest rate risk, such as capital, IEA/IBL and non-interest earning asset ratios were more favorable for the Company, with the exception of the Company’s higher ratio of non-interest earning assets. On a pro forma basis, the infusion of stock proceeds can be expected to provide the Company with higher equity-to-assets and IEA/ILB ratios and perhaps provide greater stability in the quarterly net interest margin. On balance, RP Financial concluded that interest rate risk was a neutral factor in our adjustment for profitability, growth and viability of earnings. |
§ | Credit Risk. Loan loss provisions were a similar factor in the Company’s and the Peer Group’s earnings (0.13% of average assets versus 0.16% of average assets for the Peer Group). In terms of future exposure to credit quality related losses, lending diversification into higher risk types of loans was more significant for the Peer Group. The Company’s credit quality measures generally implied a similar degree of credit risk exposure relative to the comparable credit quality measures indicated for the Peer Group, particularly as differences in the Company’s and the Peer Group’s reserve coverage ratios narrowed after taking into consideration the fair value accounting adjustments applied for the Company’s acquisitions of the three mutual institutions. Overall, RP Financial concluded that credit risk was a neutral factor in our adjustment for profitability, growth and viability of earnings. |
§ | Earnings Growth Potential. Several factors were considered in assessing earnings growth potential. First, the Company maintained a higher interest rate spread than the Peer Group, which would tend to facilitate continuation of a higher net interest margin for the Company going forward based on the current prevailing interest rate environment. The reinvestment of the net proceeds will add to net interest income, but the initial reinvestment yields are expected to reduce the overall spread. Second, the infusion of stock proceeds will provide the Company with greater growth potential through leverage than currently maintained by the Peer Group. Third, the Peer Group’s higher ratio of non-interest operating income and the Company’s lower operating expense ratio were viewed as respective advantages to sustain earnings growth during periods when net interest margins come under pressure as the result of adverse changes in interest rates. Overall, earnings growth potential was considered to be a slightly positive factor in our adjustment for profitability, growth and viability of earnings. |
§ | Return on Equity. Currently, the Company’s core ROE is lower than the Peer Group’s core ROE. As the result of the increase in capital that will be realized from the infusion of net stock proceeds into the Company’s equity, the Company’s pro forma return equity on a core earnings basis will remain lower than the Peer Group’s core ROE. Accordingly, this was a slightly negative factor in the adjustment for profitability, growth and viability of earnings. |
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.6 |
On balance, William Penn Bancorporation’s pro forma earnings strength was considered to be less favorable than the Peer Group’s earnings strength and, thus, a slight downward adjustment was applied for profitability, growth and viability of earnings.
3. Asset Growth
Comparative annual asset growth rates for the Company and the Peer Group showed respective increases of 77.10% and 9.76%, as the Company’s significantly higher growth rate was driven by the acquisitions of Washington Savings and Fidelity Savings. The Company’s asset growth was realized through a 199.00% increase in cash and investments and a 56.01% increase in loans. Comparatively, asset growth for the Peer Group consisted of a 34.68% increase in cash and investments and a 6.00% increase in loans. Overall, the Company’s acquisition related growth is viewed as providing the Company with greater earnings growth potential relative to the earnings growth potential that may be realized from the Peer Group’s asset growth, particularly as Company’s trailing twelve month earnings do not fully reflect the cost savings and synergies that are expected to be realized from the mergers of Washington Savings and Fidelity Savings. On a pro forma basis, the Company’s tangible equity-to-assets ratio will further exceed the Peer Group's tangible equity-to-assets ratio, indicating greater leverage capacity for the Company. On balance, a slight upward adjustment was applied for asset growth.
4. Primary Market Area
The general condition of an institution’s market area has an impact on value, as future success is in part dependent upon opportunities for profitable activities in the local market served. William Penn Bancorporation serves the Philadelphia metropolitan area through 12 full service branch offices. Operating in a densely populated market area provides the Company with growth opportunities, but such growth must be achieved in a highly competitive market environment. The Company competes against significantly larger institutions that provide a larger array of services and have significantly larger branch networks than maintained by William Penn Bancorporation.
The Peer Group companies generally operate in markets with similarly sized populations compared to Bucks County. Population growth for the primary market area counties served by the Peer Group companies reflected a range of growth rates, but, overall, population growth rates in the markets served by the Peer Group companies were fairly similar to Bucks County’s recent historical and projected population growth
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.7 |
rates. Bucks County has a higher per capita income compared to the Peer Group’s average per capita income and, on average, the Peer Group’s primary market area counties were less affluent markets within their respective states compared to Bucks County’s per capita income as a percent of Pennsylvania’s per capita income (102.0% for the Peer Group versus 136.1% for Bucks County). The average and median deposit market shares maintained by the Peer Group companies were higher than the Company’s market share of deposits in Bucks County. Overall, the degree of competition faced by the Peer Group companies was viewed as less than the Company’s competitive environment in Bucks County, while the growth potential in the markets served by the Peer Group companies was for the most part viewed to be comparable to the growth potential provided by the Company’s primary market area. Summary demographic and deposit market share data for the Company and the Peer Group companies is provided in Exhibit III-4. As shown in Table 4.1, the average unemployment rate for the primary market area counties served by the Peer Group companies was lower than the unemployment rate reflected for Bucks County. On balance, we concluded that no adjustment was appropriate for the Company’s market area.
Table 4.1
Market Area Unemployment Rates
William Penn Bancorporation and the Peer Group Companies(1)
July 2020 | |||||||
County | Unemployment | ||||||
William Penn Bancorporation - PA | Bucks | 13.2 | % | ||||
Peer Group Average | 12.1 | % | |||||
Prudential Bancorp, Inc. – PA | Philadelphia | 19.6 | |||||
Elmira Savings Bank - NY | Chemung | 12.5 | |||||
HMN Financial, Inc. – MN | Olmstead | 7.0 | |||||
Home Federal Bancorp, Inc. of LA – LA | Caddo | 10.7 | |||||
HV Bancorp, Inc. - PA | Bucks | 13.2 | |||||
IF Bancorp, Inc. – IL | Iroquois | 6.2 | |||||
Randolph Bancorp, Inc. - MA | Norfolk | 15.5 |
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.8 |
Table 4.1
(continued)
Market Area Unemployment Rates
William Penn Bancorporation and the Peer Group Companies(1)
July 2020 | |||||||
County | Unemployment | ||||||
Severn Bancorp, Inc. - MD | Anne Arundel | 6.7 | |||||
Standard AVB Financial Corp. - PA | Allegheny | 14.6 | |||||
WVS Financial Corp. – PA | Allegheny | 14.6 |
(1) Unemployment rates are not seasonally adjusted.
Source: S&P Global Market Intelligence.
5. Dividends
William Penn Bancorporation has indicated its intention to continue to pay cash dividends following the second-step conversion. In connection with the completion of the second-step offering, the Company will seek regulatory approval to pay a one-time special dividend of up to $0.50 per share. However, there is no assurance that the Company will obtain such approval or when such approval may be obtained. The amount and future declarations of dividends by the Board of Directors will depend upon a number of factors, including investment opportunities, growth objectives, financial condition, profitability, tax considerations, minimum capital requirements, regulatory limitations, stock market characteristics and general economic conditions.
Seven out of the ten Peer Group companies pay regular cash dividends, with implied dividend yields ranging from 1.85% to 5.65%. The average dividend yield on the stocks of the Peer Group institutions was 2.36% as of September 2, 2020. Comparatively, as of September 2, 2020, the average dividend yield on the stocks of all fully-converted publicly-traded thrifts equaled 3.00%.
While the Company has not established a definitive dividend policy prior to its second-step conversion, the Company will have the capacity to pay a dividend comparable to the Peer Group’s average dividend yield based on pro forma earnings and capitalization. On balance, we concluded that no adjustment was warranted for this factor.
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.9 |
6. Liquidity of the Shares
The Peer Group is by definition composed of companies that are traded in the public markets. All of the Peer Group companies trade on NASDAQ. Typically, the number of shares outstanding and market capitalization provides an indication of how much liquidity there will be in a particular stock. The market capitalization of the Peer Group companies ranged from $23.4 million to $83.8 million as of September 2, 2020, with average and median market values of $54.7 million and $55.0 million, respectively. The shares issued and outstanding of the Peer Group companies ranged from 1.7 million to 12.8 million, with average and median shares outstanding equal to 4.8 million and 4.0 million, respectively. The Company’s second-step stock offering is expected to provide for a pro forma market value that will be above the Peer Group’s range of market values and pro forma shares outstanding that will be at the high end or exceed the Peer Group’s range of shares outstanding. Following the second-step conversion, the Company’s stock will be traded on the NASDAQ Capital Market. Overall, we anticipate that the Company’s stock will have a fairly comparable trading market as the Peer Group companies on average and, therefore, concluded no adjustment was necessary for this factor.
7. Marketing of the Issue
We believe that four separate markets exist for thrift stocks, including those coming to market such as William Penn Bancorporation: (A) the after-market for public companies, in which trading activity is regular and investment decisions are made based upon financial condition, earnings, capital, ROE, dividends and future prospects; (B) the new issue market in which converting thrifts are evaluated on the basis of the same factors, but on a pro forma basis without the benefit of prior operations as a fully-converted company; (C) the acquisition market for thrift and bank franchises based in Pennsylvania; and (D) the market for the public stock of WMPN. All of these markets were considered in the valuation of the Company’s to-be-issued stock.
A. The Public Market
The value of publicly-traded thrift stocks is easily measurable, and is tracked by most investment houses and related organizations. Exhibit IV-1 provides pricing and financial data on all publicly-traded thrifts. In general, thrift stock values react to market stimuli such as interest rates, inflation, perceived industry health, projected rates of economic growth, regulatory issues and stock market conditions in general. Exhibit IV-2 displays historical stock
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.10 |
market trends for various indices and includes historical stock price index values for publicly-traded thrifts and commercial banks. Exhibit IV-3 displays various stock price indices as of September 2, 2020.
In terms of assessing general stock market conditions, the performance of the overall stock market has been mixed in recent quarters. News that China was planning to further loosen its monetary policy to help re-invigorate China’s economy contributed to major U.S. stock indexes closing at new record highs on the first day of trading in 2020, which was followed by a one day sell-off. A report showing a decline in December manufacturing activity and a U.S. airstrike that killed a top Iranian military official were noted factors that prompted the sell-off. Signs of easing tensions between the U.S. and Iran, as well as reassuring indications that trade negotiations remained on track with China, contributed to major U.S. stock indexes rebounding to record highs heading into mid-January. More record highs were posted by the major U.S. stock indexes in mid-January, with the Dow Jones Industrial Average (“DJIA”) closing above 29000 for the first time following the signing of a trade agreement between the U.S. and China. Fears that the spreading COVID-19 pandemic would slow economic growth fueled a sell-off in the broader stock market in the second half of January. An upbeat manufacturing report for January and diminished worries about the economic impact of the coronavirus contributed to stocks rallying in the first week of February. Major U.S. stock indexes closed at record highs heading into mid-February, as investors focused on signs of strength in the U.S. economy. Stocks retreated in mid-February and then plunged sharply lower in the last week of February, as COVID-19 pandemic fears fueled the worst weekly loss in the stock market since 2008. All three major U.S. stock indexes slipped into correction territory at the end of February.
Volatility prevailed in the broader stock market throughout March 2020, with speculation on the severity of the COVID-19 pandemic and its long-term impact on the global economy continuing to dominate trading activity. After the DJIA posted its worst one-day decline since 1987 on March 12th, stocks rebounded when President Trump declared a national emergency to combat the spread of the coronavirus. Stock market turmoil extended into the third week of March, with the major U.S. stock indexes recording their worst week since the financial crisis. Fears that the emergency measures taken by the Federal Reserve would not be enough to ward off a COVID-19 induced recession, a flight to liquidity and oil prices dropping below $20 a barrel all contributed to the historic sell-off. Stocks traded sharply higher in the fourth week of March, which was fueled by U.S. lawmakers reaching an agreement on a $2
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.11 |
trillion stimulus package. Notwithstanding the end of March rally, the first quarter of 2020 was the worst quarter for major U.S. stock market indexes since the financial crisis.
Stocks opened the second quarter of 2020 with a bruising sell-off after President Trump issued a warning on the coronavirus pandemic, which was followed by major U.S. stock indexes surging higher. News that New York recorded its first daily decline in COVID-19 deaths and the Federal Reserve’s commitment to provide an unprecedent level of support for the economy were noted factors that powered the stock market rally. The second week of April concluded with stocks posting their biggest week of gains since 1974. Stocks advanced a second consecutive week going into mid-April, as investors reacted to reports that an antiviral medicine was showing promise and the growing potential for the gradual reopening of the U.S. economy. Energy shares led stocks lower heading into the second half of April, as oil prices plunged below $0 a barrel. Promising news for a coronavirus drug and the Federal Reserve’s statement that it was in no hurry to end stimulus measures contributed to broader stock market gains through the end of April. Overall, April was the best month for stocks in decades, as the DJIA and S&P 500 posted respective gains of 11% and 13%. Comparatively, the NASDAQ was down 0.3% in April. Following a sell-off at the start of May, the broader stock market trended higher ahead of the April employment report and then rallied sharply higher with the release of the April employment report on May 8th. Stocks fell broadly the first few trading days the following week, as investors reacted to a sharp decline in the April consumer price index and the Federal Reserve’s grim assessment on how long it would take the U.S. economy to recover. Going into the second half of May, stocks surged higher on positive results reported by a drugmaker’s early study of a potential coronavirus vaccine and optimism that the U.S. economy would start to recover as all 50 states relaxed some of their coronavirus restrictions. Optimism about economies reopening and the potential development of a coronavirus vaccine continued to propel stock market gains in late-May and early-June 2020. Stocks continued to surge higher to close out the first week of trading in June, as investors reacted to a surprisingly strong May employment report. The rebound in the broader stock market continued into the beginning of the second week of June, with the NASDAQ closing at a record high and the S&P 500 moving into positive territory for the year. Stocks closed out the second week of trading in June posting their worst weekly loss since March, as growing fears of a surge in coronavirus infections fueled a stock market route on June 11th. After Federal Reserve officials highlighted the pandemic’s potential to weaken the U.S. economy over the long-term, shares of banks and manufacturers were among the hardest hit stocks in the sell-off. A rebound in May retail sales and the Federal
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.12 |
Reserve’s announcement that it would broaden its program to purchase bonds of U.S. companies translated into stocks rallying going into the second half of June, which was followed by a wavering stock market environment through multiple trading sessions as investors weighed a rise in coronavirus infections against signs of the U.S. economy recovering. A record number of new coronavirus cases in some large states fueled a late-June sell-off in the broader stock market, as investors reacted to reinstatement of lockdown measures by some of those states. Growing expectations for additional stimulus from the Federal Reserve contributed to stocks rallying to close out the second quarter, as U.S. stocks wrapped up their best quarter in more than 20 years. For the second quarter of 2020, the DJIA was up 18%, the S&P 500 was up 20% and the NASDAQ was up 31%.
Stocks started out the third quarter of 2020 trading mixed ahead of the release of the June employment report and then rallied higher with the release of the June employment report, which showed the U.S. economy added more jobs than expected. Volatility prevailed in the broader stock market through mid-July, as investors weighed hopes of a COVID-19 vaccine after two companies received “fast track” designations for the development of their coronavirus vaccine candidates against a resurgence in COVID-19 positive cases that was providing for an uneven reopening of the U.S. economy. Stocks retreated heading into the last week of July, as the first weekly increase in new unemployment claims since March raised concerns that mounting coronavirus infections and a renewed wave of mandated lockdowns could slow an economic recovery. The broader stock market continued to trade unevenly in the final week of July, as investors reacted to mixed second quarter earnings reports by some large companies, a record decline in second quarter GDP and the Federal Reserve’s reiteration that it would continue to support the U.S. economy. Overall, technology stocks were the strongest performing stocks during July, as the NASDAQ closed out July at a new record high. Progress in Congressional negotiations for a new coronavirus relief package and initial weekly unemployment claims falling to their lowest level since the coronavirus hit the U.S. in March fueled stock market gains during the first week of August. The DJIA extended its winning streak to seven sessions on August 10th, as investors assessed the likelihood of another round of stimulus spending and the slowing pace of new coronavirus infections. Led by advances in technology shares, the broader stock market continued to surge higher through the second half of August with the NASDAQ and S&P 500 posting a number of new record highs. Overall, the month of August was the best month for U.S. stocks since April, with stimulus from the U.S. Government, signs of economic revival and progress toward a coronavirus vaccine fueling the
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.13 |
gains in the broader stock market. An upbeat report on August manufacturing activity helped to extend the stock market rally into early-September, as the DJIA closed above 29000 for the first time since February. On September 2, 2020, the DJIA closed at 29100.50, an increase of 10.4% from one year ago and an increase of 2.0% year-to-date, and the NASDAQ closed at 12056.44, an increase of 51.1% from one year ago and an increase of 34.4% year-to-date. The S&P 500 Index closed at 3580.84 on September 2, 2020, an increase of 21.9% from one year ago and an increase of 10.8% year-to-date.
The market for thrift stocks has also experienced varied trends in recent quarters, but, in general, has underperformed the broader stock market. Growing tensions between the U.S. and Iraq, along with manufacturing activity showing another decline in December, pulled financial institution shares lower during the initial trading days of 2020. Financial institution shares edged higher going into mid-January, as some big banks kicked-off fourth quarter earnings season with mostly favorable results. Financial institution shares traded in a narrow range going into late-January and then pulled back at the end of January, as worries that the COVID-19 pandemic would slow economic growth escalated. After rebounding along with the broader stock market in early-February, bank and thrift stocks stabilized going into the second half of February. Driven by worries that the COVID-19 pandemic could have a significant impact on the economy, financial institution shares followed the broader stock market lower in late-February and early-March. The sell-off in financial institution shares accelerated through the third week of March, as historically low interest rates and a free-falling U.S. economy threatened to upend almost all of a bank’s business lines. News that U.S. lawmakers were nearing an agreement to approve the stimulus package helped financial stocks to rebound in late-March.
Market volatility continued to prevail for financial institution stocks during the first two weeks of April 2020. Financial shares stocks spiked lower with the release of the March employment report, which was followed by bank and thrift stocks rebounding along with the broader stock market ahead of the start of first quarter earnings season. First quarter earnings reports posted by some of the big banks fueled a sell-off in financial shares in mid-April, as plunging profits due to significant increases in loan loss provisions sent a message that big banks were preparing for a bad recession and a flood of borrower defaults. Growing expectations of the U.S. economy gradually reopening helped financial stocks rebound along with the broader stock market at the end of April. Financial shares traded lower during the first half of May, amid uncertainty of how quickly the economy would rebound with the gradual
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.14 |
easing of social distancing rules. Beaten down financial shares rebounded along with the broader stock market going in the second half of May, as investors reacted to promising early-stage results for a potential coronavirus vaccine and all 50 states had entered the initial phase of reopening the U.S. economy. Financial shares generally drifted lower at the end of May and the start of June, which was followed by thrift and bank shares surging higher with the release of the May employment report. Fears of a surge in coronavirus infections and statements from Federal Reserve officials concerning the potential long term impact that the pandemic would have on the U.S. economy prompted a sell-off in bank and thrift stocks going into the second half of June, as economically sensitive shares were particularly hard hit by the threat of a prolonged economic downturn. The roll back of federal regulations that placed curbs on swaps and investing contributed to a one-day rally in financial shares in late-June, which was followed by a sharp sell-off in bank and thrift shares on fears of possible reinstatement of lockdown measures in states that were experiencing an increase in COVID-19 cases. Financial shares participated in the broader stock market rally to close out the second quarter, although fell well short of the gains posted by the major stock U.S. indexes for the entire second quarter.
Financial shares pulled back in early-July 2020 amid a dramatic surge in confirmed coronavirus infections in the south and west regions of the U.S., which forced several states to pause or reverse plans to reopen businesses. Growing optimism of a COVID-19 vaccine being developed in the near term contributed to financial shares trading higher along with the broader stock market heading into mid-July, which was followed by a slight pullback in financial shares as big bank second quarter earnings reports warned of a protracted downturn for the U.S. economy. Financial shares traded unevenly throughout the second half of July, in light of uncertainty over the outlook for the U.S. economy and related impact on credit quality. After trading lower the first few trading days of August, financial shares participated in the broader stock market rally going into mid-August. Financial shares diverged from the broader stock market rally in the second half of August and into early-September, as economic uncertainty revolving around the COVID-19 pandemic weighed on the shares of economically sensitive stocks. On September 2, 2020, the SNL Thrift Index for all publicly-traded thrifts closed at 638.6, a decrease of 23.9% from one year ago and a decrease of 30.6% year-to-date.
B. The New Issue Market
In addition to thrift stock market conditions in general, the new issue market for converting thrifts is also an important consideration in determining the Company’s pro forma
RP® Financial, LC. | VALUATION ANALYSIS |
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IV.15 |
market value. The new issue market is separate and distinct from the market for seasoned thrift stocks in that the pricing ratios for converting issues are computed on a pro forma basis, specifically: (1) the numerator and denominator are both impacted by the conversion offering amount, unlike existing stock issues in which price change affects only the numerator; and (2) the pro forma pricing ratio incorporates assumptions regarding source and use of proceeds, effective tax rates, stock plan purchases, etc. which impact pro forma financials, whereas pricing for existing issues are based on reported financials. The distinction between pricing of converting and existing issues is perhaps no clearer than in the case of the price/book (“P/B”) ratio in that the P/B ratio of a converting thrift will typically result in a discount to book value whereas in the current market for existing thrifts the P/B ratio may reflect a premium to book value. Therefore, it is appropriate to also consider the market for new issues, both at the time of the conversion and in the aftermarket.
As shown in Table 4.2, three second-step conversion offerings have been completed during the past twelve months and no second-step conversion offerings have been completed during the past three months. The average closing pro forma price/tangible book ratio of the three second-step conversion offerings equaled 83.1%. On average, the three second-step conversion offerings reflected price appreciation of 9.5% after the first week of trading. As of September 2, 2020, the three second-step conversion offerings reflected an 18.3% decrease in price on average from their IPO prices.
In light of the less favorable stock market conditions and weaker economic environment since the three second-step conversions were completed, the heightened uncertainty associated with completing a public stock offering in the prevailing stock market environment warrants a downward adjustment for the new issue market.
C. The Acquisition Market
Also considered in the valuation was the potential impact on William Penn Bancorporation’s stock price of recently completed and pending acquisitions of other thrift and bank institutions operating in Pennsylvania. As shown in Exhibit IV-4, there were 22 acquisitions of Pennsylvania based bank and savings institutions completed from the beginning of 2017 through September 2, 2020, including WMPN’s acquisitions of Fidelity Savings and Washington Savings, and there are currently no acquisitions pending for a Pennsylvania based bank or savings institution. The recent acquisition activity involving Pennsylvania bank and
RP® Financial, LC. | Valuation Analysis |
IV.16 |
Table 4.2
Pricing Characteristics and After-Market Trends
Conversions Completed Trailing 12 Months
Institutional Information | Pre-Conversion Data | Offering Information | Contribution to | Insider Purchases | Pro Forma Data | Post-IPO Pricing Trends | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Info. | Asset Quality | Char. Found. | % Off Incl. Fdn.+Merger Shares | Pricing Ratios(2)(5) | Financial Charac. | Closing Price: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Excluding Foundation | % of | Benefit Plans | Initial | First | After | After | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion | Equity/ | NPAs/ | Res. | Gross | % | % of | Exp./ | Public Off. | Recog. | Stk | Mgmt.& | Div. | Core | Core | Core | IPO | Trading | % | First | % | First | % | Thru | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Institution | Date | Ticker | Assets | Assets | Assets | Cov. | Proc. | Offer | Mid. | Proc. | Form | Inc. Fdn. | ESOP | Plans | Option | Dirs. | Yield | P/TB | P/E | P/A | ROA | TE/A | ROE | Price | Day | Chg | Week(3) | Chg | Month(4) | Chg | 9/2/2020 | Chg | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
($Mil) | (%) | (%) | (%) | ($Mil.) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (%)(1) | (%) | (%) | (x) | (%) | (%) | (%) | (%) | ($) | ($) | (%) | ($) | (%) | ($) | (%) | ($) | (%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Standard Conversions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Second Step Conversions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cincinnati Bancorp, Inc., OH | 1/24/20 | CNNB-NASDAQ | $ | 221 | 10.60 | % | 0.14 | % | 469 | % | $ | 16.5 | 56 | % | 132 | % | 7.9 | % | N.A. | N.A. | 8.0 | % | 4.0 | % | 10.0 | % | 7.1 | % | 0.00 | % | 81.3 | % | 54.3 | x | 12.7 | % | 0.2 | % | 15.6 | % | 1.5 | % | $ | 10.00 | $ | 10.72 | 7.2 | % | $ | 10.69 | 6.9 | % | $ | 10.70 | 7.0 | % | $ | 8.81 | -11.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FFBW, Inc., WI | 1/17/20 | FFBW-NASDAQ | $ | 258 | 23.76 | % | 0.50 | % | 186 | % | $ | 42.7 | 55 | % | 115 | % | 3.1 | % | N.A. | N.A. | 8.0 | % | 4.0 | % | 10.0 | % | 0.8 | % | 0.00 | % | 79.1 | % | 64.2 | x | 26.2 | % | 0.4 | % | 33.1 | % | 1.2 | % | $ | 10.00 | $ | 10.75 | 7.5 | % | $ | 10.70 | 7.0 | % | $ | 10.66 | 6.6 | % | $ | 7.97 | -20.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provident Bancorp, Inc., MA* | 10/17/19 | PVBC-NASDAQ | $ | 1,032 | 12.81 | % | 0.69 | % | 218 | % | $ | 102.1 | 52 | % | 89 | % | 2.6 | % | N.A. | N.A. | 8.0 | % | 4.0 | % | 10.0 | % | 2.8 | % | 0.00 | % | 88.8 | % | 20.2 | x | 17.4 | % | 0.9 | % | 19.6 | % | 4.4 | % | $ | 10.00 | $ | 10.82 | 8.2 | % | $ | 11.45 | 14.5 | % | $ | 11.75 | 17.5 | % | $ | 7.72 | -22.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Averages - Second Step Conversions: | $ | 504 | 15.72 | % | 0.44 | % | 291 | % | $ | 53.8 | 54 | % | 112 | % | 4.5 | % | N.A. | N.A. | 8.0 | % | 4.0 | % | 10.0 | % | 3.6 | % | 0.00 | % | 83.1 | % | 46.3 | x | 18.8 | % | 0.5 | % | 22.8 | % | 2.4 | % | $ | 10.00 | $ | 10.76 | 7.6 | % | $ | 10.95 | 9.5 | % | $ | 11.04 | 10.4 | % | $ | 8.17 | -18.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Medians - Second Step Conversions: | $ | 258 | 12.81 | % | 0.50 | % | 218 | % | $ | 42.7 | 55 | % | 115 | % | 3.1 | % | N.A. | N.A. | 8.0 | % | 4.0 | % | 10.0 | % | 2.8 | % | 0.00 | % | 81.3 | % | 54.3 | x | 17.4 | % | 0.4 | % | 19.6 | % | 1.5 | % | $ | 10.00 | $ | 10.75 | 7.5 | % | $ | 10.70 | 7.0 | % | $ | 10.70 | 7.0 | % | $ | 7.97 | -20.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mutual Holding Companies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bogota Financial Corp., NJ* | 1/17/20 | BSBK-NASDAQ | $ | 666 | 11.13 | % | 0.08 | % | 375 | % | $ | 56.6 | 43 | % | 132 | % | 3.4 | % | C/S | 4.4 | % | 8.7 | % | 4.4 | % | 10.9 | % | 2.2 | % | 0.00 | % | 71.0 | % | 55.6 | x | 16.9 | % | 0.4 | % | 17.0 | % | 2.1 | % | $ | 10.00 | $ | 11.63 | 16.30 | % | $ | 11.68 | 16.8 | % | $ | 11.25 | 12.5 | % | $ | 8.21 | -17.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Averages - MHC Conversions: | $ | 666 | 11.13 | % | 0.08 | % | 375 | % | $ | 56.6 | 43 | % | 132 | % | 3.4 | % | N.A. | N.A. | 8.7 | % | 4.4 | % | 10.9 | % | 2.2 | % | 0.00 | % | 71.0 | % | 55.6 | x | 16.9 | % | 0.4 | % | 17.0 | % | 2.1 | % | $ | 10.00 | $ | 11.63 | 16.3 | % | $ | 11.68 | 16.8 | % | $ | 11.25 | 12.5 | % | $ | 8.21 | -17.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Medians - MHC Conversions: | $ | 666 | 11.13 | % | 0.08 | % | 375 | % | $ | 56.6 | 43 | % | 132 | % | 3.4 | % | N.A. | N.A. | 8.7 | % | 4.4 | % | 10.9 | % | 2.2 | % | 0.00 | % | 71.0 | % | 55.6 | x | 16.9 | % | 0.4 | % | 17.0 | % | 2.1 | % | $ | 10.00 | $ | 11.63 | 16.3 | % | $ | 11.68 | 16.8 | % | $ | 11.25 | 12.5 | % | $ | 8.21 | -17.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Averages - All Conversions: | $ | 544 | 14.58 | % | 0.35 | % | 312 | % | $ | 54.5 | 52 | % | 117 | % | 4.2 | % | N.A. | N.A. | 8.2 | % | 4.1 | % | 10.2 | % | 3.2 | % | 0.00 | % | 80.1 | % | 48.6 | x | 18.3 | % | 0.5 | % | 21.3 | % | 2.3 | % | $ | 10.00 | $ | 10.98 | 9.8 | % | $ | 11.13 | 11.3 | % | $ | 11.09 | 10.9 | % | $ | 8.18 | -18.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Medians - All Conversions: | $ | 462 | 11.97 | % | 0.32 | % | 296 | % | $ | 49.6 | 54 | % | 124 | % | 3.2 | % | N.A. | N.A. | 8.0 | % | 4.0 | % | 10.0 | % | 2.5 | % | 0.00 | % | 80.2 | % | 55.0 | x | 17.2 | % | 0.4 | % | 18.3 | % | 1.8 | % | $ | 10.00 | $ | 10.79 | 7.9 | % | $ | 11.08 | 10.8 | % | $ | 10.98 | 9.8 | % | $ | 8.09 | -19.1 | % |
Note: * - Appraisal performed by RP Financial; BOLD = RP Financial assisted in the business plan preparation, "NT" - Not Traded; "NA" - Not Applicable, Not Available; C/S-Cash/Stock.
(1) | As a percent of MHC offering for MHC transactions. |
(2) | Does not take into account the adoption of SOP 93-6. |
(3) | Latest price if offering is less than one week old. |
(4) | Latest price if offering is more than one week but less than one month old. |
(5) | Mutual holding company pro forma data on full conversion basis. |
(6) | Simultaneously completed acquisition of another financial institution. |
(7) | Simultaneously converted to a commercial bank charter. |
(8) | Former credit union. | 9/2/2020 |
RP® Financial, LC. | VALUATION ANALYSIS | |
IV. 17 |
savings institutions may imply a certain degree of acquisition speculation for the Company’s stock. To the extent that acquisition speculation may impact the Company’s offering, we have largely taken this into account in selecting companies for the Peer Group that could be subject to the same type of acquisition speculation that may influence William Penn Bancorporation’s stock. However, since converting thrifts are subject to a three-year regulatory moratorium from being acquired, acquisition speculation in William Penn Bancorporation’s stock would tend to be less compared to the stocks of the Peer Group companies.
D. Trading in WMPN’s Stock
Since WMPN’s minority stock currently trades under the symbol “WMPN” on the OTC Pink Sheets, RP Financial also considered the recent trading activity in the valuation analysis. WMPN had a total of 4,489,345 shares issued and outstanding at June 30, 2020, of which 778,231 shares were held by public shareholders and traded as public securities. The Company’s stock has had a 52 week trading range of $20.00 to $44.00 per share and its closing price on September 2, 2020 was $29.30 per share. There are significant differences between the Company’s minority stock (currently being traded) and the conversion stock that will be issued by the Company. Such differences include different liquidity characteristics, a different return on equity for the conversion stock and the stock is currently traded based on its MHC ownership structure. Since the pro forma impact has not been publicly disseminated to date, it is appropriate to discount the current trading level. As the pro forma impact is made known publicly, the trading level will become more informative.
* * * * * * * * * * *
In determining our valuation adjustment for marketing of the issue, we considered trends in both the overall thrift market, the new issue market including the new issue market for second-step conversions, the acquisition market and recent trading activity in the Company’s minority stock. Taking these factors and trends into account, RP Financial concluded that a slight downward adjustment was appropriate in the valuation analysis for purposes of marketing of the issue.
RP® Financial, LC. | VALUATION ANALYSIS | |
IV. 18 |
8. Management
The Company’s management team appears to have experience and expertise in all of the key areas of the Company’s operations. Exhibit IV-5 provides summary resumes of the Company’s Board of Directors and senior management. The financial characteristics of the Company and the successful completion of recent mergers suggest that the Board and senior management have been effective in implementing an operating strategy that can be well managed by the Company’s present organizational structure. The Company currently does not have any senior management positions that are vacant.
Similarly, the returns, equity positions and other operating measures of the Peer Group companies are indicative of well-managed financial institutions, which have Boards and management teams that have been effective in implementing competitive operating strategies. Therefore, on balance, we concluded no valuation adjustment relative to the Peer Group was appropriate for this factor.
9. Effect of Government Regulation and Regulatory Reform
As a fully-converted regulated institution, William Penn Bancorporation will operate in substantially the same regulatory environment as the Peer Group members -- all of whom are adequately capitalized institutions and are operating with no apparent restrictions. Exhibit IV-6 reflects the Bank’s pro forma regulatory capital ratios. On balance, no adjustment has been applied for the effect of government regulation and regulatory reform.
Summary of Adjustments
Overall, based on the factors discussed above, we concluded that the Company’s pro forma market value should reflect the following valuation adjustments relative to the Peer Group:
Key Valuation Parameters: | Valuation Adjustment |
Financial Condition | Slight Upward |
Profitability, Growth and Viability of Earnings | Slight Downward |
Asset Growth | Slight Upward |
Primary Market Area | No Adjustment |
Dividends | No Adjustment |
Liquidity of the Shares | No Adjustment |
Marketing of the Issue | Slight Downward |
Management | No Adjustment |
Effect of Govt. Regulations and Regulatory Reform | No Adjustment |
RP® Financial, LC. | VALUATION ANALYSIS | |
IV. 19 |
Valuation Approaches
In applying the accepted valuation methodology promulgated by the FRB, i.e., the pro forma market value approach, we considered the three key pricing ratios in valuing the Company’s to-be-issued stock -- price/earnings (“P/E”), price/book (“P/B”), and price/assets (“P/A”) approaches -- all performed on a pro forma basis including the effects of the stock proceeds. In computing the pro forma impact of the conversion and the related pricing ratios, we have incorporated the valuation parameters disclosed in the Company’s prospectus for reinvestment rate, effective tax rate, stock benefit plan assumptions and expenses (summarized in Exhibits IV-7 and IV-8). In our estimate of value, we assessed the relationship of the pro forma pricing ratios relative to the Peer Group and recent conversion offerings.
RP Financial’s valuation placed an emphasis on the following:
§ | P/E Approach. The P/E approach is generally the best indicator of long-term value for a stock and we have given it significant weight among the valuation approaches. Given certain similarities between the Company’s and the Peer Group’s earnings composition and overall financial condition, the P/E approach was carefully considered in this valuation. At the same time, recognizing that (1) the earnings multiples will be evaluated on a pro forma basis for the Company; and (2) the Peer Group companies have had the opportunity to realize the benefit of reinvesting and leveraging their offering proceeds, we also gave weight to the other valuation approaches. |
§ | P/B Approach. P/B ratios have generally served as a useful benchmark in the valuation of thrift stocks, particularly in the context of a public offering, as the earnings approach involves assumptions regarding the use of proceeds. RP Financial considered the P/B approach to be a valuable indicator of pro forma value, taking into account the pricing ratios under the P/E and P/A approaches. We have also modified the P/B approach to exclude the impact of intangible assets (i.e., price/tangible book value or “P/TB”), in that the investment community frequently makes this adjustment in its evaluation of this pricing approach. |
§ | P/A Approach. P/A ratios are generally a less reliable indicator of market value, as investors typically assign less weight to assets and attribute greater weight to book value and earnings. Furthermore, this approach as set forth in the regulatory valuation guidelines does not take into account the amount of stock purchases funded by deposit withdrawals, thus understating the pro forma P/A ratio. At the same time, the P/A ratio is an indicator of franchise value, and, in the case of highly capitalized institutions, high P/A ratios may limit the investment community’s willingness to pay market multiples for earnings or book value when ROE is expected to be low. |
§ | Trading of WMPN stock. Converting institutions generally do not have stock outstanding. WMPN, however, has public shares outstanding due to the mutual |
RP® Financial, LC. | VALUATION ANALYSIS | |
IV. 20 |
holding company form of ownership and first-step minority stock offering. Since WMPN’s stock is currently quoted on the OTC Pink Sheets, it is an indicator of the Company’s current market value and therefore received some weight in our valuation. Based on the September 2, 2020 closing stock price of $29.30 per share and the 4,489,345 shares of WMPN common stock outstanding, the Company’s implied market value of $131.5 million was considered in the valuation process. However, since the Company’s stock is not actively traded, the conversion stock will have different characteristics than the minority shares, and the pro forma information has not been publicly disseminated to date, the current trading price of WMPN’s stock was somewhat discounted herein but will become more important towards the closing of the offering. |
The Company has adopted “Employers’ Accounting for Employee Stock Ownership Plans” (“ASC 718-40”), which causes earnings per share computations to be based on shares issued and outstanding excluding unreleased ESOP shares. For purposes of preparing the pro forma pricing analyses, we have reflected all shares issued in the offering, including all ESOP shares, to capture the full dilutive impact, particularly since the ESOP shares are economically dilutive, receive dividends and can be voted. However, we did consider the impact of ASC 718-40 in the valuation.
In preparing the pro forma pricing analysis we have taken into account the pro forma impact of the MHC’s net assets (i.e., unconsolidated equity) that will be consolidated with the Company and, thus, will increase equity. At June 30, 2020, the MHC had net assets of $3.9 million, which has been added to the Company’s June 30, 2020 pro forma equity to reflect the consolidation of the MHC into the Company’s operations. Exhibit IV-9 shows that after accounting for the impact of the MHC’s net assets, the public shareholders’ ownership interest was reduced by approximately 0.52%. Accordingly, for purposes of the Company’s pro forma valuation, the public shareholders’ ownership interest was reduced from 17.34% to 16.82% and the MHC’s ownership interest was increased from 82.66% to 83.18%.
Based on the application of the three valuation approaches, taking into consideration the valuation adjustments discussed above, RP Financial concluded that as of September 2, 2020, the aggregate pro forma market value of William Penn Bancorporation’s conversion stock equaled $132,248,840 at the midpoint, equal to 13,224,884 shares at $10.00 per share. The $10.00 per share price was determined by the Boards of Directors of WMPN and the MHC. The midpoint and resulting valuation range is based on the sale of an 83.18% ownership interest to the public, which provides for a $110,000,000 public offering at the midpoint value.
RP® Financial, LC. | VALUATION ANALYSIS | |
IV. 21 |
1. Price-to-Earnings (“P/E”). The application of the P/E valuation method requires calculating the Company’s pro forma market value by applying a valuation P/E multiple to the pro forma earnings base. In applying this technique, we considered both reported earnings and a recurring earnings base, that is, earnings adjusted to exclude any one-time non-operating items, plus the estimated after-tax earnings benefit of the reinvestment of the net proceeds. The Company’s reported earnings equaled $1.328 million for the twelve months ended June 30, 2020. In deriving William Penn Bancorporation’s core earnings, the adjustments we made to reported earnings included the elimination of merger related expenses of $3.294 million, gains on the sale of investment securities of $238,000 and gain on bargain purchase of $746,000. As shown below, on a tax effected basis, assuming an effective marginal tax rate of 22.5% for the earnings adjustments, the Company’s core earnings were determined to equal $3.118 million for the twelve months ended June 30, 2020.
Amount | ||||
($000 | ) | |||
Net income(loss) | $ | 1,328 | ||
Add: Merger related expenses(1) | 2,553 | |||
Deduct: Gain on sale of investment securities(1) | (185 | ) | ||
Deduct: Gain on bargain purchase(1) | (578 | ) | ||
Core earnings estimate | $ | 3,118 |
(1) Tax effected at 22.5%.
Based on the Company’s reported earnings and incorporating the impact of the pro forma assumptions discussed previously, the Company’s pro forma reported P/E multiple at the $110.0 million midpoint value was not meaningful (“NM”), as the result of pro forma net loss shown for the twelve month period at the midpoint of the valuation range. The Company’s core P/E multiple at the $132.3 million midpoint value equaled 75.00 times. Comparatively, the Peer Group’s average reported and core P/E multiples equaled 10.51 times and 11.04 times, respectively (see Table 4.3). In comparison to the Peer Group’s average core P/E multiple, the Company’s pro forma core P/E multiple at the midpoint value indicated a premium of 579.35%. The Peer Group’s median reported and core earnings multiples equaled 10.38 times and 11.29 times, respectively. In comparison to the Peer Group’s median core P/E multiple, the Company’s pro forma core P/E multiple at the midpoint value indicated a premium of 564.30%. The Company’s pro forma core P/E ratios at the minimum and the maximum equaled 57.14x and 97.54x, respectively.
RP® Financial, LC. | VALUATION ANALYSIS |
IV.22 |
Table 4.3
Market Pricing Versus Peer Group
William Penn Bancorporation
As of September 2, 2020
Market | Per Share Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalization | Core | Book | Dividends(3) | Financial Characteristics(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Price/ | Market | 12 Month | Value/ | Pricing Ratios(2) | Amount/ | Payout | Total | Equity/ | Tang. Eq./ | NPAs/ | Reported | Core | Exchange | Offering | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share | Value | EPS(1) | Share | P/E | P/B | P/A | P/TB | P/Core | Share | Yield | Ratio(4) | Assets | Assets | T. Assets | Assets | ROAA | ROAE | ROAA | ROAE | Ratio | Size | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
($) | ($Mil) | ($) | ($) | (x) | (%) | (%) | (%) | (x) | ($) | (%) | (%) | ($Mil) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (x) | ($Mil) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
William Penn Bancorporation | PA | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum | $ | 10.00 | $ | 152.09 | $ | 0.10 | $ | 13.74 | NM | 72.78 | % | 17.91 | % | 74.96 | % | 97.54 | x | $ | 0.00 | 0.00 | % | 0.00 | % | $ | 849 | 24.62 | % | 24.08 | % | 0.56 | % | -0.03 | % | -0.11 | % | 0.18 | % | 0.75 | % | 3.2877 | x | $ | 126.50 | |||||||||||||||||||||||||||||||||||||||||||||
Midpoint | $ | 10.00 | $ | 132.25 | $ | 0.13 | $ | 14.72 | NM | 67.93 | % | 15.84 | % | 70.13 | % | 75.00 | x | $ | 0.00 | 0.00 | % | 0.00 | % | $ | 835 | 23.32 | % | 22.76 | % | 0.57 | % | 0.00 | % | -0.01 | % | 0.21 | % | 0.91 | % | 2.8589 | x | $ | 110.00 | |||||||||||||||||||||||||||||||||||||||||||||
Minimum | $ | 10.00 | $ | 112.41 | $ | 0.18 | $ | 16.04 | 633.71 | x | 62.34 | % | 13.70 | % | 64.52 | % | 57.14 | x | $ | 0.00 | 0.00 | % | 0.00 | % | $ | 820 | 21.98 | % | 21.40 | % | 0.58 | % | 0.02 | % | 0.10 | % | 0.24 | % | 1.09 | % | 2.4301 | x | $ | 93.50 | ||||||||||||||||||||||||||||||||||||||||||||
All Non-MHC Public Companies(6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Averages | $ | 17.65 | $ | 450.53 | $ | 1.66 | $ | 19.62 | 12.56 | x | 78.62 | % | 9.91 | % | 88.11 | % | 12.05 | x | $ | 0.42 | 3.00 | % | 50 | % | $ | 5,043 | 12.80 | % | 11.94 | % | 0.69 | % | 0.81 | % | 6.41 | % | 0.82 | % | 6.66 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Median | $ | 11.95 | $ | 139.97 | $ | 0.97 | $ | 15.74 | 11.11 | x | 72.88 | % | 9.00 | % | 82.26 | % | 11.48 | x | $ | 0.32 | 2.84 | % | 35 | % | $ | 1,657 | 11.63 | % | 10.34 | % | 0.57 | % | 0.77 | % | 6.14 | % | 0.75 | % | 5.97 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
All Non-MHC State of PA(6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Averages | $ | 12.90 | $ | 274.64 | $ | 1.14 | $ | 18.52 | 11.42 | x | 71.64 | % | 7.52 | % | 80.78 | % | 11.83 | x | $ | 0.55 | 4.29 | % | 61 | % | $ | 3,148 | 10.60 | % | 9.57 | % | 0.87 | % | 0.70 | % | 6.39 | % | 0.66 | % | 5.97 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Medians | $ | 12.72 | $ | 82.09 | $ | 1.15 | $ | 16.71 | 10.61 | x | 71.28 | % | 7.11 | % | 77.01 | % | 12.13 | x | $ | 0.44 | 3.39 | % | 53 | % | $ | 1,125 | 10.57 | % | 9.64 | % | 0.98 | % | 0.68 | % | 6.76 | % | 0.69 | % | 5.60 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Comparable Group | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Averages | $ | 13.60 | $ | 54.69 | $ | 1.27 | $ | 19.72 | 10.51 | x | 69.28 | % | 7.39 | % | 72.84 | % | 11.04 | x | $ | 0.33 | 2.36 | % | 29.94 | % | $ | 747 | 10.73 | % | 10.26 | % | 0.76 | % | 0.76 | % | 6.74 | % | 0.73 | % | 6.47 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Medians | $ | 12.90 | $ | 54.95 | $ | 1.37 | $ | 18.12 | 10.38 | x | 69.65 | % | 7.47 | % | 72.74 | % | 11.29 | x | $ | 0.29 | 2.75 | % | 29.25 | % | $ | 730 | 11.01 | % | 10.74 | % | 0.69 | % | 0.69 | % | 6.76 | % | 0.70 | % | 5.99 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
Comparable Group | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PBIP | Prudential Bancorp, Inc. | PA | $ | 9.87 | $ | 80.41 | $ | 0.75 | $ | 15.74 | 7.42 | x | 62.70 | % | 6.77 | % | 66.03 | % | 13.13 | x | $ | 0.28 | 2.84 | % | 53.38 | % | $ | 1,188 | 10.80 | % | 10.31 | % | 1.15 | % | 0.92 | % | 8.26 | % | 0.53 | % | 4.71 | % | ||||||||||||||||||||||||||||||||||||||||||||||
ESBK | Elmira Savings Bank | NY | $ | 10.63 | $ | 37.43 | $ | 1.06 | $ | 16.87 | 9.84 | x | 62.97 | % | 5.54 | % | 79.43 | % | 10.04 | x | $ | 0.60 | 5.65 | % | 70.37 | % | $ | 676 | 8.80 | % | 7.11 | % | 0.85 | % | 0.61 | % | 6.38 | % | 0.60 | % | 6.26 | % | ||||||||||||||||||||||||||||||||||||||||||||||
HMNF | HMN Financial, Inc. | MN | $ | 14.25 | $ | 69.08 | $ | 1.62 | $ | 20.29 | 8.91 | x | 70.24 | % | 7.99 | % | 70.90 | % | 8.80 | x | $ | 0.00 | 0.00 | % | 0.00 | % | $ | 863 | 11.37 | % | 11.28 | % | 0.44 | % | 0.94 | % | 7.93 | % | 0.96 | % | 8.03 | % | ||||||||||||||||||||||||||||||||||||||||||||||
HFBL | Home Federal Bancorp, Inc. of Louisiana | LA | $ | 23.36 | $ | 38.24 | $ | 2.04 | $ | 29.30 | 10.92 | x | 79.72 | % | 7.77 | % | 79.72 | % | 11.43 | x | $ | 0.66 | 2.83 | % | 30.14 | % | $ | 518 | 9.75 | % | 9.75 | % | 1.30 | % | 0.83 | % | 7.75 | % | 0.80 | % | 7.40 | % | ||||||||||||||||||||||||||||||||||||||||||||||
HVBC | HV Bancorp, Inc. | PA | $ | 12.44 | $ | 27.81 | $ | 0.93 | $ | 15.74 | 11.74 | x | 79.01 | % | 6.56 | % | 79.01 | % | 13.44 | x | $ | 0.00 | 0.00 | % | 0.00 | % | $ | 425 | 8.30 | % | 8.30 | % | 0.71 | % | 0.61 | % | 6.55 | % | 0.53 | % | 5.72 | % | ||||||||||||||||||||||||||||||||||||||||||||||
IROQ | IF Bancorp, Inc. | IL | $ | 16.25 | $ | 52.66 | $ | 1.30 | $ | 25.48 | 12.04 | x | 63.78 | % | 7.16 | % | 63.78 | % | 12.50 | x | $ | 0.30 | 1.85 | % | 22.22 | % | $ | 736 | 11.23 | % | 11.23 | % | 0.30 | % | 0.62 | % | 5.32 | % | 0.60 | % | 5.11 | % | ||||||||||||||||||||||||||||||||||||||||||||||
RNDB | Randolph Bancorp, Inc. | MA | $ | 11.24 | $ | 57.25 | $ | 1.47 | $ | 15.43 | 9.14 | x | 72.87 | % | 8.51 | % | 72.87 | % | 7.64 | x | $ | 0.00 | 0.00 | % | 0.00 | % | $ | 724 | 11.67 | % | 11.67 | % | 0.67 | % | 0.97 | % | 7.85 | % | 1.15 | % | 9.38 | % | ||||||||||||||||||||||||||||||||||||||||||||||
SVBI | Severn Bancorp, Inc. | MD | $ | 6.00 | $ | 76.88 | $ | 0.46 | $ | 8.35 | 13.04 | x | 71.86 | % | 8.32 | % | 72.61 | % | 12.92 | x | $ | 0.16 | 2.67 | % | 34.78 | % | $ | 924 | 11.58 | % | 11.48 | % | 1.67 | % | 0.69 | % | 5.57 | % | 0.69 | % | 5.62 | % | ||||||||||||||||||||||||||||||||||||||||||||||
STND | Standard AVB Financial Corp. | PA | $ | 18.55 | $ | 83.77 | $ | 1.66 | $ | 30.62 | 12.62 | x | 60.57 | % | 8.15 | % | 75.01 | % | 11.14 | x | $ | 0.88 | 4.77 | % | 60.14 | % | $ | 1,061 | 13.45 | % | 11.15 | % | 0.50 | % | 0.68 | % | 4.79 | % | 0.77 | % | 5.43 | % | ||||||||||||||||||||||||||||||||||||||||||||||
WVFC | WVS Financial Corp. | PA | $ | 13.37 | $ | 23.37 | $ | 1.43 | $ | 19.36 | 9.48 | x | 69.06 | % | 7.14 | % | 69.06 | % | 9.34 | x | $ | 0.40 | 2.99 | % | 28.37 | % | $ | 357 | 10.34 | % | 10.34 | % | 0.00 | % | 0.69 | % | 6.97 | % | 0.70 | % | 7.08 | % |
(1) | Core income, on a diluted per-share basis. Core income is net income after taxes and before extraordinary items, less net income attributable to noncontrolling interest, gain on the sale of securities, amortization of intangibles, goodwill and nonrecurring items. Assumed tax rate is 35%. |
(2) | P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; and P/Core = Price to core earnings. P/E and P/Core =NM if the ratio is negative or above 35x. |
(3) | Indicated 12 month dividend, based on last quarterly dividend declared. |
(4) | Indicated 12 month dividend as a percent of trailing 12 month earnings. |
(5) | Equity and tangible equity equal common equity and tangible common equity, respectively. ROAA (return on average assets) and ROAE (return on average equity) are indicated ratios based on trailing 12 month earnings and average equity and assets balances. |
(6) | Excludes from averages and medians those companies the subject of actual or rumored acquisition activities or unusual operating characteristics. |
Source: | S&P Global Market Intelligence and RP Financial, LC. calculations. The information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information. |
Copyright (c) 2020 by RP® Financial, LC.
RP® Financial, LC. | VALUATION ANALYSIS | |||
IV.23 |
2. Price-to-Book (“P/B”). The application of the P/B valuation method requires calculating the Company’s pro forma market value by applying a valuation P/B ratio, as derived from the Peer Group’s P/B ratio, to the Company’s pro forma book value. Based on the $132.3 million midpoint valuation, the Company’s pro forma P/B and P/TB ratios equaled 67.93% and 70.13%, respectively. In comparison to the average P/B and P/TB ratios for the Peer Group of 69.28% and 72.84%, respectively, the Company’s ratios reflected discounts of 1.95% on a P/B basis and 3.72% on a P/TB basis. In comparison to the Peer Group’s median P/B and P/TB ratios of 69.65% and 72.74%, respectively, the Company’s pro forma P/B and P/TB ratios at the midpoint value reflected discounts of 2.47% on a P/B basis and 3.59% on a P/TB basis. At the maximum of the range, the Company’s P/B and P/TB ratios equaled 72.78% and 74.96%, respectively. In comparison to the Peer Group’s average P/B and P/TB ratios, the Company’s P/B and P/TB ratios at the maximum of the range reflected premiums of 5.05% and 2.91%, respectively. In comparison to the Peer Group’s median P/B and P/TB ratios, the Company’s P/B and P/TB ratio at the maximum of the range reflected premiums of 4.49% and 3.05%, respectively.
3. Price-to-Assets (“P/A”). The P/A valuation methodology determines market value by applying a valuation P/A ratio to the Company’s pro forma asset base, conservatively assuming no deposit withdrawals are made to fund stock purchases. In all likelihood there will be deposit withdrawals, which results in understating the pro forma P/A ratio which is computed herein. At the $132.3 million midpoint of the valuation range, the Company’s value equaled 15.84% of pro forma assets. Comparatively, the Peer Group companies exhibited an average P/A ratio of 7.39%, which implies a premium of 114.34% has been applied to the Company’s pro forma P/A ratio. In comparison to the Peer Group’s median P/A ratio of 7.47%, the Company’s pro forma P/A ratio at the midpoint value reflects a premium of 112.05%.
Comparison to Recent Offerings
As indicated at the beginning of this chapter, RP Financial’s analysis of recent conversion offering pricing characteristics at closing and in the aftermarket has been limited to a “technical” analysis and, thus, the pricing characteristics of recent conversion offerings cannot be a primary determinate of value. Particular focus was placed on the P/TB approach in this analysis, since the P/E multiples do not reflect the actual impact of reinvestment and the source of the stock proceeds (i.e., external funds vs. deposit withdrawals). As discussed previously,
RP® Financial, LC. | VALUATION ANALYSIS | |||
IV.24 |
three second-step offerings were completed during the past twelve months and no second-offerings have been completed during the past three months. In comparison, to the 83.10% average closing pro P/TB ratio of the three second-step offerings, the Company’s pro forma P/TB ratio of 70.13% at the midpoint value reflects an implied discount of 15.61%. At the maximum of the offering range, the Company’s P/TB ratio of 74.96% reflects an implied discount of 9.80% relative to the three second-step offerings average P/TB ratio at closing.
Valuation Conclusion
Based on the foregoing, it is our opinion that, as of September 2, 2020, the estimated aggregate pro forma valuation of the shares of the Company to be issued and outstanding at the end of the conversion offering – including (1) newly-issued shares representing the MHC’s current ownership interest in the Company and (2) exchange shares issued to existing public shareholders of the Company - was $132,248,840 at the midpoint, equal to 13,224,884 shares at a per share value of $10.00. The resulting range of value and pro forma shares, all based on $10.00 per share, are shown below.
Exchange Shares | |||||||||||||||||
Offering | Issued to Public | Exchange | |||||||||||||||
Total Shares | Shares | Shareholders | Ratio | ||||||||||||||
Shares | |||||||||||||||||
Maximum | 15,208,616 | 12,650,000 | 2,558,616 | 3.2877 | |||||||||||||
Midpoint | 13,224,884 | 11,000,000 | 2,224,884 | 2.8589 | |||||||||||||
Minimum | 11,241,151 | 9,350,000 | 1,891,151 | 2.4301 | |||||||||||||
Distribution of Shares | |||||||||||||||||
Maximum | 100.00 | % | 83.18 | % | 16.82 | % | |||||||||||
Midpoint | 100.00 | % | 83.18 | % | 16.82 | % | |||||||||||
Minimum | 100.00 | % | 83.18 | % | 16.82 | % | |||||||||||
Aggregate Market Value at $10 per share | |||||||||||||||||
Maximum | $ | 152,086,160 | $ | 126,500,000 | $ | 25,586,160 | |||||||||||
Midpoint | $ | 132,248,840 | $ | 110,000,000 | $ | 22,248,840 | |||||||||||
Minimum | $ | 112,411,510 | $ | 93,500,000 | $ | 18,911,510 |
The pro forma valuation calculations relative to the Peer Group are shown in Table 4.3 and are detailed in Exhibit IV-7 and Exhibit IV-8.
RP® Financial, LC. | VALUATION ANALYSIS | |||
IV.25 |
Establishment of the Exchange Ratio
Conversion regulations provide that in a conversion of a mutual holding company, the minority shareholders are entitled to exchange the public shares for newly issued shares in the fully converted company. The Boards of Directors of the MHC and WMPN have independently determined the exchange ratio, which has been designed to preserve the current aggregate percentage ownership in the Company (adjusted for the dilution resulting from the consolidation of the MHC’s unconsolidated equity into the Company). The exchange ratio to be received by the existing minority shareholders of the Company will be determined at the end of the offering, based on the total number of shares sold in the second-step conversion offering and the final appraisal. Based on the valuation conclusion herein, the resulting offering value and the $10.00 per share offering price, the indicated exchange ratio at the midpoint is 2.8589 shares of the Company for every one public share held by public shareholders. Furthermore, based on the offering range of value, the indicated exchange ratio is 2.4301 at the minimum and 3.2877 at the maximum. RP Financial expresses no opinion on the proposed exchange of newly issued Company shares for the shares held by the public shareholders or on the proposed exchange ratio.
EXHIBITS
LIST OF EXHIBITS
Exhibit | |
Number | Description |
I-1 | Map of Office Locations |
I-2 | Audited Financial Statements |
I-3 | Key Operating Ratios |
I-4 | Investment Portfolio Composition |
I-5 | Yields and Costs |
I-6 | Loan Loss Allowance Activity |
I-7 | Interest Rate Risk Analysis |
I-8 | Fixed and Adjustable Rate Loans |
I-9 | Loan Portfolio Composition |
I-10 | Contractual Maturity by Loan Type |
I-11 | Non-Performing Assets |
I-12 | Deposit Composition |
I-13 | Maturity of Time Deposits |
I-14 | Borrowing Activity |
II-1 | Description of Office Properties |
II-2 | Historical Interest Rates |
III-1 | Characteristics of Publicly-Traded Thrifts |
III-2 | Public Market Pricing of Mid-Atlantic, New England and Midwest Thrifts |
III-3 | Public Market Pricing of Southeast and Southwest Thrifts |
III-4 | Peer Group Market Area Comparative Analysis |
LIST OF EXHIBITS (continued) | |
Exhibit
Number |
Description |
IV-1 | Stock Prices: As of September 2, 2020 |
IV-2 | Historical Stock Price Indices |
IV-3 | Stock Price Indices as of September 2, 2020 |
IV-4 | Pennsylvania Bank and Thrift Acquisitions 2017 - Present |
IV-5 | Director and Senior Management Summary Resumes |
IV-6 | Pro Forma Regulatory Capital Ratios |
IV-7 | Pro Forma Analysis Sheet |
IV-8 | Pro Forma Effect of Conversion Proceeds |
IV-9 | Calculation of Minority Ownership Dilution in a Second-Step Offering |
V-1 | Firm Qualifications Statement |
EXHIBIT I-1
William Penn Bancorporation
Map of Office Locations
Exhibit I-1
William Penn Bancorporation
Map of Office Locations
EXHIBIT I-2
William Penn Bancorporation
Audited Financial Statements
[Incorporated by Reference]
EXHIBIT I-3
William Penn Bancorporation
Key Operating Ratios
Exhibit I-3
William Penn Bancorporation
Key Operating Ratios
At or For the Year Ended June 30, | ||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Performance Ratios: | ||||||||||||||||||||
Return on average assets | 0.27 | % | 0.92 | % | 0.48 | % | 0.81 | % | 0.77 | % | ||||||||||
Return on average assets (excluding merger charges and gain on bargain purchase) (1) | 0.79 | 1.11 | 0.60 | 0.81 | 0.77 | |||||||||||||||
Return on average equity | 1.64 | 5.01 | 2.39 | 4.22 | 4.08 | |||||||||||||||
Return on average equity (excluding merger charges and gain on bargain purchase) (2) | 4.78 | 6.08 | 3.00 | 4.22 | 4.08 | |||||||||||||||
Interest rate spread (3) | 3.10 | 3.57 | 2.84 | 2.62 | 2.72 | |||||||||||||||
Net interest margin (4) | 3.30 | 3.76 | 3.08 | 2.85 | 2.95 | |||||||||||||||
Non-interest expense to average assets | 3.13 | 2.55 | 2.05 | 1.62 | 1.81 | |||||||||||||||
Efficiency ratio (5) | 90.76 | 68.07 | 65.22 | 56.68 | 60.85 | |||||||||||||||
Efficiency ratio (excluding merger charges and gain on bargain purchase) (6) | 74.62 | 62.88 | 61.32 | 56.68 | 60.85 | |||||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 117.92 | 120.23 | 121.88 | 120.36 | 120.33 | |||||||||||||||
Average equity to average assets | 16.52 | 18.31 | 19.95 | 19.28 | 18.81 | |||||||||||||||
Capital Ratios (7): | ||||||||||||||||||||
Total capital (to risk-weighted assets) | N/A | 25.82 | % | 33.69 | % | 30.76 | % | 30.70 | % | |||||||||||
Tier 1 capital (to risk-weighted assets) | N/A | 24.68 | 32.49 | 29.50 | 29.45 | |||||||||||||||
Common equity Tier 1 capital (to risk-weighted assets) | N/A | 24.68 | 32.49 | 29.50 | 29.45 | |||||||||||||||
Tier 1 leverage capital (to adjusted total assets) | 13.67 | 16.94 | 20.00 | 18.72 | 18.18 | |||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||||
Allowance for loan losses as a percent of total loans | 0.68 | % | 0.96 | % | 1.29 | % | 1.35 | % | 1.33 | % | ||||||||||
Allowance for loan losses as a percent of non-performing loans | 107.88 | 161.18 | 75.76 | 58.33 | 81.61 | |||||||||||||||
Net charge-offs (recoveries) to average outstanding loans during the period | 0.09 | 0.01 | 0.02 | (0.02 | ) | 0.15 | ||||||||||||||
Non-performing loans as a percent of total loans (8) | 0.64 | 0.60 | 1.75 | 2.38 | 1.69 | |||||||||||||||
Non-performing assets as a percent of total assets (8) | 0.46 | 0.48 | 1.42 | 1.81 | 1.51 | |||||||||||||||
Other Data: | ||||||||||||||||||||
Number of full-service branch offices | 12 | 6 | 3 | 3 | 3 |
(1) | Return on average assets (excluding merger charges and gain on bargain purchase) represents our adjusted net income divided by average assets. Management believes that the presentation of this non-GAAP measure assists investors in understanding the impact of non-recurring items on our return on average assets ratio. The following table provides a reconciliation of our return on average assets ratio (excluding merger charges and gain on bargain purchase) for each of the periods presented in the table above: |
For the Year Ended June 30, | ||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Net income | $ | 1,328 | $ | 3,756 | $ | 1,464 | $ | 2,564 | $ | 2,431 | ||||||||||
Less adjustments: | ||||||||||||||||||||
Merger charges | 3,294 | 796 | 375 | — | — | |||||||||||||||
Gain on bargain purchase | (746 | ) | — | — | — | — | ||||||||||||||
Adjusted net income | $ | 3,876 | $ | 4,552 | $ | 1,839 | $ | 2,564 | $ | 2,431 | ||||||||||
Average assets | $ | 490,981 | $ | 409,142 | $ | 307,132 | $ | 315,036 | $ | 316,681 | ||||||||||
Return on average assets (excluding merger charges and gain on bargain purchase) | 0.79 | % | 1.11 | % | 0.60 | % | 0.81 | % | 0.77 | % |
(2) | Return on average equity (excluding merger charges and gain on bargain purchase) represents our adjusted net income divided by average equity. Management believes that the presentation of this non-GAAP measure assists investors in understanding the impact of non-recurring items on our return on average equity ratio. The following table provides a reconciliation of our return on average equity ratio (excluding merger charges and gain on bargain purchase) for each of the periods presented in the table above: |
For the Year Ended June 30, | ||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Net income | $ | 1,328 | $ | 3,756 | $ | 1,464 | $ | 2,564 | $ | 2,431 | ||||||||||
Less adjustments: | ||||||||||||||||||||
Merger charges | 3,294 | 796 | 375 | — | — | |||||||||||||||
Gain on bargain purchase | (746 | ) | — | — | — | — | ||||||||||||||
Adjusted net income | $ | 3,876 | $ | 4,552 | $ | 1,839 | $ | 2,564 | $ | 2,431 | ||||||||||
Average equity | $ | 81,122 | $ | 74,912 | $ | 61,269 | $ | 60,754 | $ | 59,576 | ||||||||||
Return on average equity (excluding merger charges and gain on bargain purchase) | 4.78 | % | 6.08 | % | 3.00 | % | 4.22 | % | 4.08 | % |
(3) | Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of average interest-bearing liabilities. | |
(4) | Represents net interest income as a percent of average interest-earning assets. | |
(5) | Represents non-interest expenses divided by the sum of net interest income and non-interest income. | |
(6) | Efficiency ratio (excluding merger charges and gain on bargain purchase) represents our adjusted non-interest expenses divided by the sum of net interest income and adjusted non-interest expense. Management believes that the presentation of this non-GAAP measure assists investors in understanding the impact of non-recurring items on our efficiency ratio. The following table provides a reconciliation of our efficiency ratio (excluding merger charges and gain on bargain purchase) for each of the periods presented in the table above: |
For the Year Ended June 30, | ||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Non-interest expense | $ | 15,392 | $ | 10,453 | $ | 6,283 | $ | 5,109 | $ | 5,722 | ||||||||||
Less adjustments: | ||||||||||||||||||||
Merger charges | 3,294 | 796 | 375 | — | — | |||||||||||||||
Adjusted non-interest expense | $ | 12,098 | $ | 9,657 | $ | 5,908 | $ | 5,109 | $ | 5,722 | ||||||||||
Net interest income | $ | 14,799 | $ | 14,230 | $ | 8,993 | $ | 8,502 | $ | 8,911 | ||||||||||
Non-interest income | $ | 2,160 | $ | 1,127 | $ | 641 | $ | 511 | $ | 493 | ||||||||||
Less adjustments: | ||||||||||||||||||||
Gain on bargain purchase | 746 | — | — | — | — | |||||||||||||||
Adjusted non-interest income | $ | 1,414 | $ | 1,127 | $ | 641 | $ | 511 | $ | 493 | ||||||||||
Efficiency ratio (excluding merger charges and gain on bargain purchase) | 74.62 | % | 62.88 | % | 61.32 | % | 56.68 | % | 60.85 | % |
(7) | Ratios are for William Penn Bank. During the fiscal year ended June 30, 2020, William Penn Bank elected the “community bank leverage ratio” alternative reporting framework. | |
(8) | Non-performing loans and assets include loans on non-accrual, accruing loans past due 90 days or more and other real estate owned. |
Source: William Penn Bancorporation’s prospectus.
EXHIBIT I-4
William Penn Bancorporation
Investment Portfolio Composition
Exhibit I-4
William Penn Bancorporation
Investment Portfolio Composition
At June 30, | ||||||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||||||
(Dollars in thousands) |
Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value |
||||||||||||||||||
Securities available-for-sale: | ||||||||||||||||||||||||
Mortgage-backed securities | $ | 51,570 | $ | 51,738 | $ | 3,609 | $ | 3,678 | $ | - | $ | - | ||||||||||||
U.S. agency collateralized mortgage obligations | 3,215 | 3,215 | 5,634 | 5,767 | - | - | ||||||||||||||||||
U.S. government agency securities | 6,226 | 6,155 | 10,865 | 10,912 | - | - | ||||||||||||||||||
U.S. treasury securities | 1,000 | 1,000 | - | - | - | - | ||||||||||||||||||
Private label collateralized mortgage obligations | - | - | 264 | 303 | 1,539 | 1,816 | ||||||||||||||||||
Municipal bonds | 10,485 | 10,508 | - | - | - | - | ||||||||||||||||||
Corporate bonds | 17,399 | 17,382 | - | - | - | - | ||||||||||||||||||
Total securities available-for-sale | 89,895 | 89,998 | 20,372 | 20,660 | 1,539 | 1,816 | ||||||||||||||||||
Securities held-to-maturity:
|
||||||||||||||||||||||||
Mortgage-backed securities | - | - | 1,500 | 1,522 | 2,336 | 2,305 | ||||||||||||||||||
U.S. agency collateralized mortgage obligations | - | - | 206 | 214 | 611 | 634 | ||||||||||||||||||
Municipal bonds | - | - | 100 | 100 | 100 | 100 | ||||||||||||||||||
Corporate bonds | - | - | 100 | 101 | 100 | 102 | ||||||||||||||||||
Total securities held-to-maturity | - | - | 1,906 | 1,937 | 3,147 | 3,141 | ||||||||||||||||||
Total investment securities | $ | 89,895 | $ | 89,998 | $ | 22,278 | $ | 22,597 | $ | 4,686 | $ | 4,957 |
Source: William Penn Bancorporation’s prospectus.
EXHIBIT I-5
William Penn Bancorporation
Yields and Costs
Exhibit I-5
William Penn Bancorporation
Yields and Costs
Year Ended June 30, | ||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest and Dividends |
Yield/ Cost |
Average Balance | Interest and Dividends |
Yield/ Cost |
Average Balance | Interest and Dividends |
Yield/ Cost |
|||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||
Loans (1) | $ | 366,961 | $ | 17,914 | 4.88 | % | $ | 330,102 | $ | 16,595 | 5.03 | % | $ | 237,950 | $ | 10,992 | 4.62 | % | ||||||||||||||||||
Investment securities (2) | 56,755 | 1,557 | 2.74 | 17,181 | 415 | 2.42 | 8,569 | 317 | 3.70 | |||||||||||||||||||||||||||
Other interest-earning assets | 22,072 | 346 | 1.18 | 30,899 | 811 | 2.62 | 45,585 | 866 | 1.90 | |||||||||||||||||||||||||||
Total interest-earning assets | 445,788 | 19,817 | 4.37 | 378,182 | 17,821 | 4.71 | 292,104 | 12,175 | 4.17 | |||||||||||||||||||||||||||
Non-interest-earning assets | 45,193 | 30,960 | 15,028 | |||||||||||||||||||||||||||||||||
Total assets | $ | 490,981 | $ | 409,142 | $ | 307,132 | ||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
Interest-bearing accounts | $ | 63,389 | 82 | 0.13 | % | $ | 56,605 | 53 | 0.09 | % | $ | 27,577 | 16 | 0.06 | % | |||||||||||||||||||||
Money market deposit accounts | 88,965 | 1,136 | 1.28 | 64,363 | 524 | 0.81 | 48,002 | 209 | 0.44 | |||||||||||||||||||||||||||
Savings and club accounts | 42,044 | 67 | 0.16 | 39,354 | 48 | 0.12 | 21,443 | 33 | 0.15 | |||||||||||||||||||||||||||
Certificates of deposit | 127,553 | 2,319 | 1.82 | 105,464 | 1,672 | 1.59 | 85,137 | 1,228 | 1.44 | |||||||||||||||||||||||||||
Total interest-bearing deposits | 321,951 | 3,604 | 1.12 | 265,786 | 2,297 | 0.86 | 182,159 | 1,486 | 0.82 | |||||||||||||||||||||||||||
FHLB advances | 58,401 | 1,414 | 2.42 | 48,772 | 1,294 | 2.65 | 57,503 | 1,696 | 2.95 | |||||||||||||||||||||||||||
Total interest-bearing liabilities | 380,352 | 5,018 | 1.32 | 314,558 | 3,591 | 1.14 | 239,662 | 3,182 | 1.33 | |||||||||||||||||||||||||||
Non-interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
Non-interest-bearing deposits | 20,311 | 11,901 | - | |||||||||||||||||||||||||||||||||
Other non-interest-bearing liabilities | 9,196 | 7,771 | 6,201 | |||||||||||||||||||||||||||||||||
Total liabilities | 409,859 | 334,230 | 245,863 | |||||||||||||||||||||||||||||||||
Total equity | 81,122 | 74,912 | 61,269 | |||||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 490,981 | $ | 409,142 | $ | 307,132 | ||||||||||||||||||||||||||||||
Net interest income | $ | 14,799 | $ | 14,230 | $ | 8,993 | ||||||||||||||||||||||||||||||
Interest rate spread (3) | 3.13 | % | 3.57 | % | 2.84 | % | ||||||||||||||||||||||||||||||
Net interest-earning assets (4) | $ | 68,148 | $ | 63,624 | $ | 52,442 | ||||||||||||||||||||||||||||||
Net interest margin (5) | 3.32 | % | 3.76 | % | 3.08 | % | ||||||||||||||||||||||||||||||
Ratio of interest-earning assets to interest-bearing liabilities | 117.20 | % | 120.23 | % | 121.88 | % |
(1) | Includes nonaccrual loan balances and interest recognized on such loans. |
(2) | Includes securities available for sale, securities held to maturity and Federal Home Loan Bank stock. |
(3) | Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. |
(4) | Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities. |
(5) Net interest margin represents net interest income divided by average total interest-earning assets.
Source: William Penn Bancorporation’s prospectus.
EXHIBIT I-6
William Penn Bancorporation
Loan Loss Allowance Activity
Exhibit I-6
William Penn Bancorporation
Loan Loss Allowance Activity
At or For the Year Ended June 30, | ||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2018 | 2017 | 2016 | |||||||||||||||
Allowance at beginning of period | $ | 3,209 | $ | 3,138 | $ | 3,303 | $ | 3,248 | $ | 3,606 | ||||||||||
Provision (recovery) for loan losses | 626 | 88 | (120 | ) | 15 | 5 | ||||||||||||||
Charge-offs: | ||||||||||||||||||||
Residential real estate loans: | ||||||||||||||||||||
One- to four-family | (260 | ) | (21 | ) | (82 | ) | (56 | ) | (384 | ) | ||||||||||
Home equity and HELOCs | (6 | ) | - | - | - | - | ||||||||||||||
Residential construction | - | - | - | - | - | |||||||||||||||
Total residential real estate loans | (266 | ) | (21 | ) | (82 | ) | (56 | ) | (384 | ) | ||||||||||
Commercial real estate loans: | ||||||||||||||||||||
Multi-family | - | - | - | - | - | |||||||||||||||
Commercial non-residential | (35 | ) | - | - | - | - | ||||||||||||||
Commercial construction and land | - | - | - | - | - | |||||||||||||||
Total commercial real estate loans | (35 | ) | - | - | - | - | ||||||||||||||
Commercial loans | (3 | ) | - | - | - | - | ||||||||||||||
Consumer loans | (12 | ) | - | - | - | - | ||||||||||||||
Total charge-offs | (316 | ) | (21 | ) | (82 | ) | (56 | ) | (384 | ) | ||||||||||
Recoveries: | ||||||||||||||||||||
Residential real estate loans: | ||||||||||||||||||||
One- to four-family | - | 4 | 31 | 36 | 14 | |||||||||||||||
Home equity and HELOCs | - | - | - | - | - | |||||||||||||||
Residential construction | - | - | - | - | - | |||||||||||||||
Total residential real estate loans | - | 4 | 31 | 36 | 14 | |||||||||||||||
Commercial real estate loans: | ||||||||||||||||||||
Multi-family | - | - | 6 | - | 7 | |||||||||||||||
Commercial non-residential | - | - | - | 60 | - | |||||||||||||||
Commercial construction and land | - | - | - | - | - | |||||||||||||||
Total commercial real estate loans | - | - | 6 | 60 | 7 | |||||||||||||||
Commercial loans | - | - | - | - | - | |||||||||||||||
Consumer loans | - | - | - | - | - | |||||||||||||||
Total recoveries | - | 4 | 37 | 96 | 21 | |||||||||||||||
Net (charge-offs) recoveries | (316 | ) | (17 | ) | (45 | ) | 40 | (363 | ) | |||||||||||
Allowance at end of period | $ | 3,519 | $ | 3,209 | $ | 3,138 | $ | 3,303 | $ | 3,248 | ||||||||||
Total loans(1) | $ | 512,124 | $ | 329,226 | $ | 236,527 | $ | 238,168 | $ | 235,159 | ||||||||||
Average loans outstanding | 366,961 | 330,102 | 237,950 | 237,060 | 243,116 | |||||||||||||||
Ratio of allowance to non-
performing loans |
107.88 | % | 161.18 | % | 75.76 | % | 58.33 | % | 81.61 | % | ||||||||||
Ratio of allowance to total loans | 0.69 | % | 0.96 | % | 1.29 | % | 1.35 | % | 1.33 | % | ||||||||||
Ratio of net charge-offs (recoveries)
to average loans |
0.09 | % | 0.01 | % | 0.02 | % | (0.02 | )% | 0.15 | % |
(1)Net of loans in process and unearned loan origination fees.
Source: William Penn Bancorporation’s prospectus.
EXHIBIT I-7
William Penn Bancorporation
Interest Rate Risk Analysis
Exhibit I-7
William Penn Bancorporation
Interest Rate Risk Analysis
Change in |
Twelve Month Net Interest Income |
Net Portfolio Value | ||||||||||
Interest Rates
(Basis Points) |
Percent of Change |
Estimated
NPV |
Percent of Change |
|||||||||
+200 | (1.38 | )% | $ | 125,172 | (4.16 | )% | ||||||
+100 | (0.61 | ) | 127,658 | (2.25 | ) | |||||||
0 | - | 130,600 | - | |||||||||
-50 | 1.05 | 120,470 | (7.76 | ) |
Source: William Penn Bancorporation’s prospectus.
EXHIBIT I-8
William Penn Bancorporation
Fixed and Adjustable Rate Loans
Exhibit I-8
William Penn Bancorporation
Fixed and Adjustable Rate Loans
The following table sets forth all loans at June 30, 2020 that are due after June 30, 2021 and have either fixed interest rates or floating or adjustable interest rates:
(Dollars in thousands) | Fixed Rates |
Floating or
Adjustable
|
Total | |||||||||
Residential real estate loans: | ||||||||||||
One- to four-family | $ | 223,169 | $ | 118,665 | $ | 341,834 | ||||||
Home equity and HELOCs | 17,294 | 28,580 | 45,874 | |||||||||
Residential construction | 5,185 | 2,613 | 7,798 | |||||||||
Commercial real estate loans: | ||||||||||||
Multi-family | 5,280 | 7,855 | 13,135 | |||||||||
Commercial non-residential | 23,023 | 48,201 | 71,224 | |||||||||
Commercial construction and land | 4,232 | 1,711 | 5,943 | |||||||||
Commercial loans | 5,072 | 432 | 5,504 | |||||||||
Consumer loans | 1,400 | 1,680 | 3,080 | |||||||||
Total | $ | 284,655 | $ | 209,737 | $ | 494,392 |
Source: William Penn Bancorporation’s prospectus.
EXHIBIT I-9
William Penn Bancorporation
Loan Portfolio Composition
Exhibit I-9
William Penn Bancorporation
Loan Portfolio Composition
At June 30, | ||||||||||||||||
2020 | 2019 | |||||||||||||||
(Dollars in thousands) | Amount | Percent | Amount | Percent | ||||||||||||
Residential real estate loans: | ||||||||||||||||
One- to four-family | $ | 345,915 | 66.85 | % | $ | 220,176 | 65.98 | % | ||||||||
Home equity and HELOCs | 47,054 | 9.10 | 31,905 | 9.56 | ||||||||||||
Residential construction | 15,799 | 3.05 | 9,739 | 2.92 | ||||||||||||
Total residential real estate loans | 408,768 | 79.00 | 261,820 | 78.46 | ||||||||||||
Commercial real estate loans: | ||||||||||||||||
Multi-family | 14,964 | 2.89 | 11,028 | 3.30 | ||||||||||||
Commercial non-residential | 76,707 | 14.83 | 53,557 | 16.05 | ||||||||||||
Commercial construction and land | 6,690 | 1.29 | 4,438 | 1.33 | ||||||||||||
Total commercial real estate loans | 98,361 | 19.01 | 69,023 | 20.68 | ||||||||||||
Commercial loans | 6,438 | 1.24 | 2,099 | 0.63 | ||||||||||||
Consumer loans | 3,900 | 0.75 | 741 | 0.23 | ||||||||||||
Total loans | 517,467 | 100.00 | % | 333,683 | 100.00 | % | ||||||||||
Loans in process | (4,895 | ) | (3,669 | ) | ||||||||||||
Unearned loan origination fees | (448 | ) | (788 | ) | ||||||||||||
Allowance for loan losses | (3,519 | ) | (3,209 | ) | ||||||||||||
Loans, net | $ | 508,605 | $ | 326,017 |
Exhibit I-9 (continued)
William Penn Bancorporation
Loan Portfolio Composition
At June 30, | ||||||||||||||||||||||||
2018 | 2017 | 2016 | ||||||||||||||||||||||
(Dollars in thousands) | Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||
Residential real estate loans: | ||||||||||||||||||||||||
One- to four-family | $ | 170,322 | 70.00 | % | $ | 166,219 | 67.82 | % | $ | 162,395 | 66.26 | % | ||||||||||||
Home equity and HELOCS | 21,158 | 8.70 | 22,938 | 9.36 | 24,799 | 10.12 | ||||||||||||||||||
Residential construction | 11,831 | 4.86 | 8,836 | 3.61 | 12,050 | 4.92 | ||||||||||||||||||
Total residential real estate loans | 203,311 | 83.56 | 197,993 | 80.79 | 199,244 | 81.30 | ||||||||||||||||||
Commercial real estate loans: | ||||||||||||||||||||||||
Multi-family | 12,061 | 4.96 | 12,076 | 4.93 | 12,539 | 5.12 | ||||||||||||||||||
Commercial non-residential | 23,759 | 9.76 | 24,820 | 10.13 | 26,744 | 10.91 | ||||||||||||||||||
Commercial construction and land | 3,131 | 1.29 | 9,120 | 3.72 | 5,319 | 2.17 | ||||||||||||||||||
Total commercial real estate loans | 38,951 | 16.01 | 46,016 | 18.78 | 44,602 | 18.20 | ||||||||||||||||||
Commercial loans | 196 | 0.08 | 129 | 0.05 | 51 | 0.02 | ||||||||||||||||||
Consumer loans | 859 | 0.35 | 947 | 0.38 | 1,183 | 0.48 | ||||||||||||||||||
Total loans | 243,317 | 100.00 | % | 245,085 | 100.00 | % | 245,080 | 100.00 | % | |||||||||||||||
Loans in process | (5,716 | ) | (5,879 | ) | (8,896 | ) | ||||||||||||||||||
Unearned loan origination fees | (1,074 | ) | (1,038 | ) | (1,025 | ) | ||||||||||||||||||
Allowance for loan losses | (3,138 | ) | (3,303 | ) | (3,248 | ) | ||||||||||||||||||
Loans, net | $ | 233,389 | $ | 234,865 | $ | 231,911 |
Source: William Penn Bancorporation’s prospectus.
EXHIBIT I-10
William Penn Bancorporation
Contractual Maturity by Loan Type
Exhibit I-10
William Penn Bancorporation
Contractual Maturity by Loan Type
June 30, 2020
(Dollars in thousands) |
One- to Four-Family | Home Equity and HELOCs | Residential Construction |
Multi- Family |
Commercial Non-Residential | Commercial Construction and Land | Commercial | Consumer |
Total Loans |
|||||||||||||||||||||||||||
Amounts due in: | ||||||||||||||||||||||||||||||||||||
One year or less | $ | 4,081 | $ | 1,180 | $ | 8,001 | $ | 1,829 | $ | 5,483 | $ | 747 | $ | 934 | $ | 820 | $ | 23,075 | ||||||||||||||||||
More than 1-5 years | 18,928 | 5,624 | 7,798 | 1,777 | 8,614 | 5,543 | 4,069 | 1,287 | 48,949 | |||||||||||||||||||||||||||
More than 5-10 years | 53,496 | 10,580 | - | 2,802 | 12,717 | - | 1,435 | 371 | 81,426 | |||||||||||||||||||||||||||
More than 10 years | 269,410 | 29,670 | - | 8,556 | 49,893 | - | - | 1,422 | 364,017 | |||||||||||||||||||||||||||
Total | $ | 345,915 | $ | 47,054 | $ | 15,799 | $ | 14,964 | $ | 76,707 | $ | 6,690 | $ | 6,438 | $ | 3,900 | $ | 517,467 |
Source: William Penn Bancorporation’s prospectus.
EXHIBIT I-11
William Penn Bancorporation
Non-Performing Assets
Exhibit I-11
William Penn Bancorporation
Non-Performing Assets
At June 30, | ||||||||||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2018 | 2017 | 2016 | |||||||||||||||
Non-accrual loans: | ||||||||||||||||||||
Residential real estate loans: | ||||||||||||||||||||
One- to four-family | $ | 2,353 | $ | 1,270 | $ | 1,100 | $ | 2,559 | $ | 969 | ||||||||||
Home equity and HELOCs | 384 | 385 | 41 | 103 | 10 | |||||||||||||||
Residential construction | - | - | - | - | - | |||||||||||||||
Total residential real estate loans | 2,737 | 1,655 | 1,141 | 2,662 | 979 | |||||||||||||||
Commercial real estate loans: | ||||||||||||||||||||
Multi-family | 185 | 189 | - | - | - | |||||||||||||||
Commercial non-residential | 135 | - | - | - | - | |||||||||||||||
Commercial construction and land | - | - | - | - | - | |||||||||||||||
Total commercial real estate loans | 320 | 189 | - | - | - | |||||||||||||||
Commercial loans | - | - | - | - | - | |||||||||||||||
Consumer loans | 115 | - | - | - | - | |||||||||||||||
Total non-accrual loans | 3,172 | 1,844 | 1,141 | 2,662 | 979 | |||||||||||||||
Accruing loans past due 90 days or more: | ||||||||||||||||||||
Residential real estate loans: | ||||||||||||||||||||
One- to four-family | - | 7 | - | - | - | |||||||||||||||
Home equity and HELOCs | 90 | 140 | - | - | - | |||||||||||||||
Residential construction | - | - | - | - | - | |||||||||||||||
Total residential real estate loans | 90 | 147 | - | - | - | |||||||||||||||
Commercial real estate loans: | ||||||||||||||||||||
Multi-family | - | - | - | - | - | |||||||||||||||
Commercial non-residential | - | - | - | - | - | |||||||||||||||
Commercial construction and land | - | - | 3,001 | 3,001 | 3,001 | |||||||||||||||
Total commercial real estate loans | - | - | 3,001 | 3,001 | 3,001 | |||||||||||||||
Commercial loans | - | - | - | - | - | |||||||||||||||
Consumer loans | - | - | - | - | - | |||||||||||||||
Total accruing loans past due 90 days or more | 90 | 147 | 3,001 | 3,001 | 3,001 | |||||||||||||||
Total non-performing loans | 3,262 | 1,991 | 4,142 | 5,663 | 3,980 | |||||||||||||||
Real estate owned | 100 | - | 135 | 69 | 755 | |||||||||||||||
Total non-performing assets | $ | 3,362 | $ | 1,991 | $ | 4,277 | $ | 5,732 | $ | 4,735 | ||||||||||
Total non-performing loans to total loans | 0.64 | % | 0.60 | % | 1.75 | % | 2.38 | % | 1.69 | % | ||||||||||
Total non-performing assets to total assets | 0.46 | 0.48 | 1.42 | 1.81 | 1.51 |
Source: William Penn Bancorporation’s prospectus.
EXHIBIT I-12
William Penn Bancorporation
Deposit Composition
Exhibit I-12
William Penn Bancorporation
Deposit Composition
At June 30, | ||||||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||||||
(Dollars in thousands) | Amount |
Percent of Total Deposits |
Amount |
Percent of Total Deposits |
Amount |
Percent of Total Deposits |
||||||||||||||||||
Checking accounts | $ | 142,223 | 25.40 | % | $ | 67,547 | 24.02 | % | $ | 28,278 | 15.66 | % | ||||||||||||
Money market accounts | 129,048 | 23.05 | 67,648 | 24.06 | 50,010 | 27.68 | ||||||||||||||||||
Savings and club accounts | 94,097 | 16.81 | 33,172 | 11.79 | 18,542 | 10.26 | ||||||||||||||||||
Certificates of deposit | 194,480 | 34.74 | 112,839 | 40.13 | 83,827 | 46.40 | ||||||||||||||||||
Total | $ | 559,848 | 100.00 | % | $ | 281,206 | 100.00 | % | $ | 180,657 | 100.00 | % |
Source: William Penn Bancorporation’s prospectus. |
EXHIBIT I-13
William Penn Bancorporation
Maturity of Time Deposits
Exhibit I-13
William Penn Bancorporation
Maturity of Time Deposits
Period to Maturity | ||||||||||||||||||||||||||||
(Dollars in thousands) |
One Year
or Less |
More
than One Year to Two Years |
More than
Two Years to Three Years |
More
than Three Years to Four Years |
More
than Four Years |
Total |
Percent
|
|||||||||||||||||||||
Less than 0.50% | $ | 6,418 | $ | 117 | $ | - | $ | - | $ | - | $ | 6,535 | 3.36 | % | ||||||||||||||
0.50% to 0.99% | 11,374 | 2,168 | 56 | - | - | 13,598 | 6.99 | |||||||||||||||||||||
1.00% to 1.49% | 24,513 | 5,200 | 2,524 | 423 | 660 | 33,320 | 17.13 | |||||||||||||||||||||
1.50% to 1.99% | 27,882 | 14,997 | 4,321 | 2,881 | 5,218 | 55,299 | 28.43 | |||||||||||||||||||||
2.00% to 2.99% | 42,465 | 13,731 | 10,118 | 5,546 | 5,990 | 77,850 | 40.03 | |||||||||||||||||||||
3.00% and greater | 944 | 860 | 1,066 | 4,576 | 432 | 7,878 | 4.06 | |||||||||||||||||||||
Total | $ | 113,596 | $ | 37,073 | $ | 18,085 | $ | 13,426 | $ | 12,300 | $ | 194,480 | 100.00 | % |
Source: William Penn Bancorporation’s prospectus.
EXHIBIT I-14
William Penn Bancorporation
Borrowing Activity
Exhibit I-14
William Penn Bancorporation
Borrowing Activity
At or For the Year Ended June 30, |
||||||||||||
(Dollars in thousands) | 2020 | 2019 | 2018 | |||||||||
Maximum amount outstanding at any month-end during
period: |
||||||||||||
Federal Home Loan Bank advances | $ | 65,922 | $ | 51,500 | $ | 65,500 | ||||||
Average outstanding balance during period: | ||||||||||||
Federal Home Loan Bank advances | $ | 58,401 | $ | 48,772 | $ | 57,503 | ||||||
Weighted average interest rate during period: | ||||||||||||
Federal Home Loan Bank advances | 2.42 | % | 2.65 | % | 2.95 | % | ||||||
Balance outstanding at end of period: | ||||||||||||
Federal Home Loan Bank advances | $ | 64,892 | $ | 50,000 | $ | 51,500 | ||||||
Weighted average interest rate at end of period: | ||||||||||||
Federal Home Loan Bank advances | 2.53 | % | 2.58 | % | 2.71 | % |
Source: William Penn Bancorporation’s prospectus.
EXHIBIT II-1
Description of Office Properties
Exhibit II-1
William Penn Bancorporation
Description of Office Properties
Properties
At June 30, 2020, we conducted business through our administrative headquarters located in Bristol, Pennsylvania and our twelve branch offices located in Bucks and Philadelphia Counties in Pennsylvania and Burlington and Camden Counties in New Jersey. We own ten of our branch office locations, lease building space at one of our branch office locations and lease the land at one of our branch office locations. We also lease our administrative headquarters located in Bristol, Pennsylvania and own two additional administrative offices located in Bucks County, Pennsylvania and one additional administrative office located in Camden County, New Jersey. However, we do not currently conduct any significant business operations from any of these three additional administrative offices. At June 30, 2020, the total net book value of our land, buildings, furniture, fixtures and equipment was $16.7 million.
Source: William Penn Bancorporation’s prospectus.
EXHIBIT II-2
Historical Interest Rates
Exhibit II-2 | ||||||||||||||||||
Historical Interest Rates(1) |
||||||||||||||||||
Prime | 90 Day | One Year | 10 Year | |||||||||||||||
Year/Qtr. Ended | Rate | T-Note | T-Note | T-Note | ||||||||||||||
2005: | Quarter 1 | 5.75 | % | 2.80 | % | 3.43 | % | 4.51 | % | |||||||||
Quarter 2 | 6.00 | % | 3.12 | % | 3.51 | % | 3.98 | % | ||||||||||
Quarter 3 | 6.75 | % | 3.55 | % | 4.01 | % | 4.34 | % | ||||||||||
Quarter 4 | 7.25 | % | 4.08 | % | 4.38 | % | 4.39 | % | ||||||||||
2006: | Quarter 1 | 7.75 | % | 4.63 | % | 4.82 | % | 4.86 | % | |||||||||
Quarter 2 | 8.25 | % | 5.01 | % | 5.21 | % | 5.15 | % | ||||||||||
Quarter 3 | 8.25 | % | 4.88 | % | 4.91 | % | 4.64 | % | ||||||||||
Quarter 4 | 8.25 | % | 5.02 | % | 5.00 | % | 4.71 | % | ||||||||||
2007: | Quarter 1 | 8.25 | % | 5.04 | % | 4.90 | % | 4.65 | % | |||||||||
Quarter 2 | 8.25 | % | 4.82 | % | 4.91 | % | 5.03 | % | ||||||||||
Quarter 3 | 7.75 | % | 3.82 | % | 4.05 | % | 4.59 | % | ||||||||||
Quarter 4 | 7.25 | % | 3.36 | % | 3.34 | % | 3.91 | % | ||||||||||
2008: | Quarter 1 | 5.25 | % | 1.38 | % | 1.55 | % | 3.45 | % | |||||||||
Quarter 2 | 5.00 | % | 1.90 | % | 2.36 | % | 3.99 | % | ||||||||||
Quarter 3 | 5.00 | % | 0.92 | % | 1.78 | % | 3.85 | % | ||||||||||
Quarter 4 | 3.25 | % | 0.11 | % | 0.37 | % | 2.25 | % | ||||||||||
2009: | Quarter 1 | 3.25 | % | 0.21 | % | 0.57 | % | 2.71 | % | |||||||||
Quarter 2 | 3.25 | % | 0.19 | % | 0.56 | % | 3.53 | % | ||||||||||
Quarter 3 | 3.25 | % | 0.14 | % | 0.40 | % | 3.31 | % | ||||||||||
Quarter 4 | 3.25 | % | 0.06 | % | 0.47 | % | 3.85 | % | ||||||||||
2010: | Quarter 1 | 3.25 | % | 0.16 | % | 0.41 | % | 3.84 | % | |||||||||
Quarter 2 | 3.25 | % | 0.18 | % | 0.32 | % | 2.97 | % | ||||||||||
Quarter 3 | 3.25 | % | 0.18 | % | 0.32 | % | 2.97 | % | ||||||||||
Quarter 4 | 3.25 | % | 0.12 | % | 0.29 | % | 3.30 | % | ||||||||||
2011: | Quarter 1 | 3.25 | % | 0.09 | % | 0.30 | % | 3.47 | % | |||||||||
Quarter 2 | 3.25 | % | 0.03 | % | 0.19 | % | 3.18 | % | ||||||||||
Quarter 3 | 3.25 | % | 0.02 | % | 0.13 | % | 1.92 | % | ||||||||||
Quarter 4 | 3.25 | % | 0.02 | % | 0.12 | % | 1.89 | % | ||||||||||
2012: | Quarter 1 | 3.25 | % | 0.07 | % | 0.19 | % | 2.23 | % | |||||||||
Quarter 2 | 3.25 | % | 0.09 | % | 0.21 | % | 1.67 | % | ||||||||||
Quarter 3 | 3.25 | % | 0.10 | % | 0.17 | % | 1.65 | % | ||||||||||
Quarter 4 | 3.25 | % | 0.05 | % | 0.16 | % | 1.78 | % | ||||||||||
2013: | Quarter 1 | 3.25 | % | 0.07 | % | 0.14 | % | 1.87 | % | |||||||||
Quarter 2 | 3.25 | % | 0.04 | % | 0.15 | % | 2.52 | % | ||||||||||
Quarter 3 | 3.25 | % | 0.02 | % | 0.10 | % | 2.64 | % | ||||||||||
Quarter 4 | 3.25 | % | 0.07 | % | 0.13 | % | 3.04 | % | ||||||||||
2014: | Quarter 1 | 3.25 | % | 0.05 | % | 0.13 | % | 2.73 | % | |||||||||
Quarter 2 | 3.25 | % | 0.04 | % | 0.11 | % | 2.53 | % | ||||||||||
Quarter 3 | 3.25 | % | 0.02 | % | 0.13 | % | 2.52 | % | ||||||||||
Quarter 4 | 3.25 | % | 0.04 | % | 0.25 | % | 2.17 | % | ||||||||||
2015: | Quarter 1 | 3.25 | % | 0.03 | % | 0.26 | % | 1.94 | % | |||||||||
Quarter 2 | 3.25 | % | 0.01 | % | 0.28 | % | 2.35 | % | ||||||||||
Quarter 3 | 3.25 | % | 0.00 | % | 0.33 | % | 2.06 | % | ||||||||||
Quarter 4 | 3.50 | % | 0.16 | % | 0.65 | % | 2.27 | % | ||||||||||
2016: | Quarter 1 | 3.50 | % | 0.21 | % | 0.59 | % | 1.78 | % | |||||||||
Quarter 2 | 3.50 | % | 0.26 | % | 0.45 | % | 1.49 | % | ||||||||||
Quarter 3 | 3.50 | % | 0.29 | % | 0.59 | % | 1.60 | % | ||||||||||
Quarter 4 | 3.75 | % | 0.51 | % | 0.85 | % | 2.45 | % | ||||||||||
2017: | Quarter 1 | 4.00 | % | 0.76 | % | 1.03 | % | 2.40 | % | |||||||||
Quarter 2 | 4.25 | % | 1.03 | % | 1.24 | % | 2.31 | % | ||||||||||
Quarter 3 | 4.25 | % | 1.06 | % | 1.31 | % | 2.33 | % | ||||||||||
Quarter 4 | 4.50 | % | 1.39 | % | 1.76 | % | 2.40 | % | ||||||||||
2018: | Quarter 1 | 4.75 | % | 1.73 | % | 2.09 | % | 2.74 | % | |||||||||
Quarter 2 | 5.00 | % | 1.93 | % | 2.33 | % | 2.85 | % | ||||||||||
Quarter 3 | 5.25 | % | 2.19 | % | 2.59 | % | 3.05 | % | ||||||||||
Quarter 4 | 5.50 | % | 2.45 | % | 2.63 | % | 2.69 | % | ||||||||||
2019: | Quarter 1 | 5.50 | % | 2.40 | % | 2.40 | % | 2.41 | % | |||||||||
Quarter 2 | 5.00 | % | 2.12 | % | 1.92 | % | 2.00 | % | ||||||||||
Quarter 3 | 4.75 | % | 1.88 | % | 1.75 | % | 1.68 | % | ||||||||||
Quarter 4 | 4.75 | % | 1.55 | % | 1.59 | % | 1.92 | % | ||||||||||
2020: | Quarter 1 | 3.25 | % | 0.11 | % | 0.17 | % | 0.70 | % | |||||||||
Quarter 2 | 3.25 | % | 0.16 | % | 0.16 | % | 0.66 | % | ||||||||||
As of September 2, 2020 | 3.25 | % | 0.12 | % | 0.13 | % | 0.65 | % |
(1) End of period data.
Sources: Federal Reserve and The Wall Street Journal.
EXHIBIT III-1
Characteristics of Publicly-Traded Thrifts
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September
2, 2020
As of | ||||||||||||||||||||||||||||||||||||
September 2, 2020 | ||||||||||||||||||||||||||||||||||||
Total | Fiscal | Conv. | Stock | Market | ||||||||||||||||||||||||||||||||
Ticker | Financial Institution | Exchange | Region | City | State | Assets | Offices | Mth End | Date | Price | Value | |||||||||||||||||||||||||
($Mil) | ($) | ($Mil) | ||||||||||||||||||||||||||||||||||
AX | Axos Financial, Inc. | NYSE | WE | Las Vegas | NV | $ | 13,852 | 1 | Jun | 3/14/05 | $ | 24.95 | $ | 1,485 | ||||||||||||||||||||||
BYFC | Broadway Financial Corporation | NASDAQ | WE | Los Angeles | CA | $ | 491 | 3 | Dec | 1/8/96 | $ | 1.74 | $ | 33 | ||||||||||||||||||||||
CFFN | Capitol Federal Financial, Inc. | NASDAQ | MW | Topeka | KS | $ | 9,559 | 54 | Sep | 3/31/99 | $ | 9.43 | $ | 1,302 | ||||||||||||||||||||||
CARV | Carver Bancorp, Inc. | NASDAQ | MA | New York | NY | $ | 671 | 7 | Mar | 10/24/94 | $ | 6.00 | $ | 17 | ||||||||||||||||||||||
CBMB | CBM Bancorp, Inc. | NASDAQ | MA | Baltimore | MD | $ | 235 | 4 | Dec | 9/27/18 | $ | 11.95 | $ | 42 | ||||||||||||||||||||||
CNNB | Cincinnati Bancorp, Inc. | NASDAQ | MW | Cincinnati | OH | $ | 234 | 6 | Dec | 10/14/15 | $ | 8.81 | $ | 26 | ||||||||||||||||||||||
ESBK | Elmira Savings Bank | NASDAQ | MA | Elmira | NY | $ | 676 | 12 | Dec | 3/1/85 | $ | 10.63 | $ | 37 | ||||||||||||||||||||||
ESSA | ESSA Bancorp, Inc. | NASDAQ | MA | Stroudsburg | PA | $ | 2,009 | 23 | Sep | 4/3/07 | $ | 12.99 | $ | 131 | ||||||||||||||||||||||
FFBW | FFBW, Inc. | NASDAQ | MW | Brookfield | WI | $ | 293 | 4 | Dec | 10/10/17 | $ | 7.97 | $ | 57 | ||||||||||||||||||||||
FNWB | First Northwest Bancorp | NASDAQ | WE | Port Angeles | WA | $ | 1,479 | 12 | Dec | 1/29/15 | $ | 11.28 | $ | 108 | ||||||||||||||||||||||
FBC | Flagstar Bancorp, Inc. | NYSE | MW | Troy | MI | $ | 27,468 | 161 | Dec | 4/30/97 | $ | 31.93 | $ | 1,818 | ||||||||||||||||||||||
FSBW | FS Bancorp, Inc. | NASDAQ | WE | Mountlake Terrace | WA | $ | 2,009 | 23 | Dec | 7/9/12 | $ | 40.70 | $ | 175 | ||||||||||||||||||||||
HONE | HarborOne Bancorp, Inc. | NASDAQ | NE | Brockton | MA | $ | 4,465 | 29 | Dec | 6/29/16 | $ | 8.54 | $ | 465 | ||||||||||||||||||||||
HIFS | Hingham Institution for Savings | NASDAQ | NE | Hingham | MA | $ | 2,724 | 12 | Dec | 12/13/88 | $ | 194.48 | $ | 416 | ||||||||||||||||||||||
HMNF | HMN Financial, Inc. | NASDAQ | MW | Rochester | MN | $ | 863 | 14 | Dec | 6/30/94 | $ | 14.25 | $ | 69 | ||||||||||||||||||||||
HFBL | Home Federal Bancorp, Inc. of Louisiana | NASDAQ | SW | Shreveport | LA | $ | 518 | 8 | Jun | 1/18/05 | $ | 23.36 | $ | 38 | ||||||||||||||||||||||
HVBC | HV Bancorp, Inc. | NASDAQ | MA | Doylestown | PA | $ | 425 | 6 | Dec | 1/11/17 | $ | 12.44 | $ | 28 | ||||||||||||||||||||||
IROQ | IF Bancorp, Inc. | NASDAQ | MW | Watseka | IL | $ | 736 | 8 | Jun | 7/7/11 | $ | 16.25 | $ | 53 | ||||||||||||||||||||||
KRNY | Kearny Financial Corp. | NASDAQ | MA | Fairfield | NJ | $ | 6,758 | 51 | Jun | 2/23/05 | $ | 7.90 | $ | 684 | ||||||||||||||||||||||
EBSB | Meridian Bancorp, Inc. | NASDAQ | NE | Peabody | MA | $ | 6,418 | 42 | Dec | 1/22/08 | $ | 11.60 | $ | 582 | ||||||||||||||||||||||
MSVB | Mid-Southern Bancorp, Inc. | NASDAQ | MW | Salem | IN | $ | 217 | 3 | Dec | 4/8/98 | $ | 12.66 | $ | 40 | ||||||||||||||||||||||
NYCB | New York Community Bancorp, Inc. | NYSE | MA | Westbury | NY | $ | 54,210 | 240 | Dec | 11/23/93 | $ | 9.04 | $ | 4,194 | ||||||||||||||||||||||
NFBK | Northfield Bancorp, Inc. | NASDAQ | MA | Woodbridge | NJ | $ | 5,042 | 44 | Dec | 11/7/07 | $ | 9.78 | $ | 520 | ||||||||||||||||||||||
NWBI | Northwest Bancshares, Inc. | NASDAQ | MA | Warren | PA | $ | 13,845 | 216 | Dec | 11/4/94 | $ | 10.18 | $ | 1,301 | ||||||||||||||||||||||
PCSB | PCSB Financial Corporation | NASDAQ | MA | Yorktown Heights | NY | $ | 1,792 | 16 | Jun | 4/20/17 | $ | 13.08 | $ | 206 | ||||||||||||||||||||||
PVBC | Provident Bancorp, Inc. | NASDAQ | NE | Amesbury | MA | $ | 1,415 | 7 | Dec | 7/15/15 | $ | 7.72 | $ | 140 | ||||||||||||||||||||||
PROV | Provident Financial Holdings, Inc. | NASDAQ | WE | Riverside | CA | $ | 1,177 | 14 | Jun | 6/27/96 | $ | 12.14 | $ | 90 | ||||||||||||||||||||||
PFS | Provident Financial Services, Inc. | NYSE | MA | Jersey City | NJ | $ | 10,514 | 103 | Dec | 1/15/03 | $ | 13.24 | $ | 874 | ||||||||||||||||||||||
PBIP | Prudential Bancorp, Inc. | NASDAQ | MA | Philadelphia | PA | $ | 1,188 | 10 | Sep | 3/29/05 | $ | 9.87 | $ | 80 | ||||||||||||||||||||||
RNDB | Randolph Bancorp, Inc. | NASDAQ | NE | Stoughton | MA | $ | 724 | 5 | Dec | 7/1/16 | $ | 11.24 | $ | 57 | ||||||||||||||||||||||
RVSB | Riverview Bancorp, Inc. | NASDAQ | WE | Vancouver | WA | $ | 1,377 | 19 | Mar | 10/26/93 | $ | 4.21 | $ | 94 | ||||||||||||||||||||||
SVBI | Severn Bancorp, Inc. | NASDAQ | MA | Annapolis | MD | $ | 924 | 7 | Dec | $ | 6.00 | $ | 77 | |||||||||||||||||||||||
STXB | Spirit of Texas Bancshares, Inc. | NASDAQ | SW | Conroe | TX | $ | 2,963 | 38 | Dec | 5/3/18 | $ | 12.53 | $ | 217 | ||||||||||||||||||||||
STND | Standard AVB Financial Corp. | NASDAQ | MA | Monroeville | PA | $ | 1,061 | 19 | Dec | 10/6/10 | $ | 18.55 | $ | 84 | ||||||||||||||||||||||
SBT | Sterling Bancorp, Inc. | NASDAQ | MW | Southfield | MI | NA | 30 | Dec | 11/16/17 | $ | 2.97 | $ | 148 | |||||||||||||||||||||||
TBNK | Territorial Bancorp Inc. | NASDAQ | WE | Honolulu | HI | $ | 2,089 | 30 | Dec | 7/13/09 | $ | 21.30 | $ | 194 | ||||||||||||||||||||||
TSBK | Timberland Bancorp, Inc. | NASDAQ | WE | Hoquiam | WA | $ | 1,522 | 24 | Sep | 1/12/98 | $ | 18.40 | $ | 153 | ||||||||||||||||||||||
TBK | Triumph Bancorp, Inc. | NASDAQ | SW | Dallas | TX | $ | 5,617 | 64 | Dec | 11/6/14 | $ | 28.89 | $ | 715 | ||||||||||||||||||||||
TRST | TrustCo Bank Corp NY | NASDAQ | MA | Glenville | NY | $ | 5,677 | 148 | Dec | $ | 5.88 | $ | 567 | |||||||||||||||||||||||
WSBF | Waterstone Financial, Inc. | NASDAQ | MW | Wauwatosa | WI | $ | 2,218 | 15 | Dec | 10/4/05 | $ | 15.59 | $ | 381 | ||||||||||||||||||||||
WNEB | Western New England Bancorp, Inc. | NASDAQ | NE | Westfield | MA | $ | 2,435 | 27 | Dec | 12/27/01 | $ | 5.45 | $ | 140 | ||||||||||||||||||||||
WSFS | WSFS Financial Corporation | NASDAQ | MA | Wilmington | DE | $ | 13,573 | 96 | Dec | 11/26/86 | $ | 29.56 | $ | 1,498 | ||||||||||||||||||||||
WVFC | WVS Financial Corp. | NASDAQ | MA | Pittsburgh | PA | $ | 357 | 6 | Jun | 11/29/93 | $ | 13.37 | $ | 23 | ||||||||||||||||||||||
BCOW | 1895 Bancorp Of Wisconsin, Inc. (MHC) | NASDAQ | MW | Greenfield | WI | $ | 495 | 6 | Dec | 1/8/19 | $ | 8.24 | $ | 38 | ||||||||||||||||||||||
BSBK | Bogota Financial Corp. (MHC) | NASDAQ | MA | Teaneck | NJ | $ | 739 | 4 | Dec | 1/15/20 | $ | 7.07 | $ | 89 | ||||||||||||||||||||||
CLBK | Columbia Financial, Inc. (MHC) | NASDAQ | MA | Fair Lawn | NJ | $ | 8,963 | 62 | Dec | 4/19/18 | $ | 10.81 | $ | 1,200 | ||||||||||||||||||||||
CFBI | Community First Bancshares, Inc. (MHC) | NASDAQ | SE | Covington | GA | $ | 906 | 3 | Dec | 4/27/17 | $ | 6.63 | $ | 50 | ||||||||||||||||||||||
FSEA | First Seacoast Bancorp (MHC) | NASDAQ | NE | Dover | NH | $ | 471 | 5 | Dec | 7/16/19 | $ | 6.40 | $ | 38 | ||||||||||||||||||||||
GCBC | Greene County Bancorp, Inc. (MHC) | NASDAQ | MA | Catskill | NY | $ | 1,677 | 18 | Jun | 12/30/98 | $ | 23.08 | $ | 196 | ||||||||||||||||||||||
KFFB | Kentucky First Federal Bancorp (MHC) | NASDAQ | MW | Frankfort | KY | $ | 331 | 7 | Jun | 3/2/05 | $ | 6.08 | $ | 50 | ||||||||||||||||||||||
LSBK | Lake Shore Bancorp, Inc. (MHC) | NASDAQ | MA | Dunkirk | NY | $ | 678 | 12 | Dec | 4/3/06 | $ | 12.61 | $ | 72 | ||||||||||||||||||||||
MGYR | Magyar Bancorp, Inc. (MHC) | NASDAQ | MA | New Brunswick | NJ | $ | 758 | 7 | Sep | 1/23/06 | $ | 8.05 | $ | 47 | ||||||||||||||||||||||
OFED | Oconee Federal Financial Corp. (MHC) | NASDAQ | SE | Seneca | SC | $ | 516 | 8 | Jun | 1/13/11 | $ | 26.74 | $ | 151 | ||||||||||||||||||||||
PDLB | PDL Community Bancorp (MHC) | NASDAQ | MA | Bronx | NY | $ | 1,220 | 14 | Dec | 9/29/17 | $ | 8.40 | $ | 140 |
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
September
2, 2020
As of | ||||||||||||||||||||||||||||||||||||
September 2, 2020 | ||||||||||||||||||||||||||||||||||||
Total | Fiscal | Conv. | Stock | Market | ||||||||||||||||||||||||||||||||
Ticker | Financial Institution | Exchange | Region | City | State | Assets | Offices | Mth End | Date | Price | Value | |||||||||||||||||||||||||
($Mil) | ($) | ($Mil) | ||||||||||||||||||||||||||||||||||
PBFS | Pioneer Bancorp, Inc. (MHC) | NASDAQ | MA | Albany | NY | $ | 1,500 | 23 | Jun | 7/17/19 | $ | 8.46 | $ | 212 | ||||||||||||||||||||||
RBKB | Rhinebeck Bancorp, Inc. (MHC) | NASDAQ | MA | Poughkeepsie | NY | $ | 1,128 | 15 | Dec | 1/16/19 | $ | 6.60 | $ | 71 | ||||||||||||||||||||||
TFSL | TFS Financial Corporation (MHC) | NASDAQ | MW | Cleveland | OH | $ | 14,835 | 37 | Sep | 4/20/07 | $ | 15.59 | $ | 4,303 |
Source: S&P Global Market Intelligence.
EXHIBIT III-2
Public Market Pricing of Mid-Atlantic, New England and Midwest Thrifts
Exhibit III-2
Public Market Pricing of Mid-Atlantic, Midwest and New England Institutions
As of September 2, 2020
Market | Per Share Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalization | Core | Book | Dividends(3) | Financial Characteristics(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Price/ | Market | 12 Month | Value/ | Pricing Ratios(2) | Amount/ | Payout | Total | Equity/ | Tang. Eq./ | NPAs/ | Reported | Core | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share | Value | EPS(1) | Share | P/E | P/B | P/A | P/TB | P/Core | Share | Yield | Ratio(4) | Assets | Assets | T. Assets | Assets | ROAA | ROAE | ROAA | ROAE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
($) | ($Mil) | ($) | ($) | (x) | (%) | (%) | (%) | (x) | ($) | (%) | (%) | ($Mil) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All Non-MHC Public Companies(6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Averages | $ | 17.65 | $ | 450.53 | $ | 1.66 | $ | 19.62 | 12.56 | 78.6 | % | 9.9 | % | 88.1 | % | 12.05 | $ | 0.42 | 3.00 | % | 50 | % | $ | 5,043 | 12.80 | % | 11.94 | % | 0.69 | % | 0.81 | % | 6.41 | % | 0.82 | % | 6.66 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Median | $ | 11.95 | $ | 139.97 | $ | 0.97 | $ | 15.74 | 11.11 | 72.9 | % | 9.0 | % | 82.3 | % | 11.48 | $ | 0.32 | 2.84 | % | 35 | % | $ | 1,657 | 11.63 | % | 10.34 | % | 0.57 | % | 0.77 | % | 6.14 | % | 0.75 | % | 5.97 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Comparable Group | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Averages | $ | 17.48 | $ | 501.77 | $ | 1.54 | $ | 19.05 | 13.32x | 76.54 | % | 10.23 | % | 85.63 | % | 12.57x | $ | 0.40 | 2.98 | % | 53.36 | % | $ | 5,765 | 13.48 | % | 12.66 | % | 0.72 | % | 0.75 | % | 5.76 | % | 0.76 | % | 6.00 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Medians | $ | 10.93 | $ | 139.93 | $ | 0.78 | $ | 14.69 | 11.83x | 71.86 | % | 9.40 | % | 79.53 | % | 12.03x | $ | 0.32 | 2.84 | % | 41.78 | % | $ | 1,792 | 11.67 | % | 11.14 | % | 0.63 | % | 0.69 | % | 5.53 | % | 0.74 | % | 5.57 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Comparable Group | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CARV | Carver Bancorp, Inc. | NY | $ | 6.00 | $ | 17.14 | $ | (1.51 | ) | $ | 0.67 | NM | NA | 3.62 | % | NA | NM | $ | 0.00 | 0.00 | % | NA | $ | 671 | 7.01 | % | 7.01 | % | 1.99 | % | -0.86 | % | -10.14 | % | -0.98 | % | -11.50 | % | ||||||||||||||||||||||||||||||||||||||||||||||
CBMB | CBM Bancorp, Inc. | MD | $ | 11.95 | $ | 42.00 | $ | 0.18 | $ | 14.16 | NM | 84.42 | % | 19.29 | % | 84.42 | % | NM | NA | NA | 238.10 | % | $ | 235 | 22.85 | % | 22.85 | % | 0.56 | % | 0.34 | % | 1.32 | % | 0.29 | % | 1.12 | % | ||||||||||||||||||||||||||||||||||||||||||||||
ESBK | Elmira Savings Bank | NY | $ | 10.63 | $ | 37.43 | $ | 1.06 | $ | 16.87 | 9.84x | 62.97 | % | 5.54 | % | 79.43 | % | 10.04x | $ | 0.60 | 5.65 | % | 70.37 | % | $ | 676 | 8.80 | % | 7.11 | % | NA | 0.61 | % | 6.38 | % | 0.60 | % | 6.26 | % | |||||||||||||||||||||||||||||||||||||||||||||
ESSA | ESSA Bancorp, Inc. | PA | $ | 12.99 | $ | 131.41 | $ | 1.37 | $ | 17.67 | 9.41x | 73.51 | % | 7.09 | % | 79.53 | % | 9.46x | $ | 0.44 | 3.39 | % | 31.88 | % | $ | 2,009 | 9.64 | % | 8.98 | % | 1.02 | % | 0.77 | % | 7.41 | % | 0.77 | % | 7.37 | % | ||||||||||||||||||||||||||||||||||||||||||||
HVBC | HV Bancorp, Inc. | PA | $ | 12.44 | $ | 27.81 | $ | 0.93 | $ | 15.74 | 11.74x | 79.01 | % | 6.56 | % | 79.01 | % | 13.44x | NA | NA | NA | $ | 425 | 8.30 | % | 8.30 | % | 0.71 | % | 0.61 | % | 6.55 | % | 0.53 | % | 5.72 | % | |||||||||||||||||||||||||||||||||||||||||||||||
KRNY | Kearny Financial Corp. | NJ | $ | 7.90 | $ | 683.80 | $ | 0.58 | $ | 12.96 | 14.36x | 60.96 | % | 9.78 | % | 76.05 | % | 13.63x | $ | 0.32 | 4.05 | % | 56.36 | % | $ | 6,758 | 16.04 | % | 13.28 | % | 0.67 | % | 0.67 | % | 4.10 | % | 0.71 | % | 4.32 | % | ||||||||||||||||||||||||||||||||||||||||||||
NYCB | New York Community Bancorp, Inc. | NY | $ | 9.04 | $ | 4,193.74 | $ | 0.78 | $ | 13.34 | 11.30x | 67.75 | % | 7.81 | % | 111.43 | % | 11.65x | $ | 0.68 | 7.52 | % | 85.00 | % | $ | 54,210 | 12.35 | % | 8.24 | % | 0.15 | % | 0.77 | % | 6.07 | % | 0.75 | % | 5.91 | % | ||||||||||||||||||||||||||||||||||||||||||||
NFBK | Northfield Bancorp, Inc. | NJ | $ | 9.78 | $ | 519.57 | $ | 0.79 | $ | 14.46 | 11.93x | 67.61 | % | 9.56 | % | 71.54 | % | 12.41x | $ | 0.44 | 4.50 | % | 53.66 | % | $ | 5,042 | 14.13 | % | 13.46 | % | 0.44 | % | 0.78 | % | 5.53 | % | 0.75 | % | 5.31 | % | ||||||||||||||||||||||||||||||||||||||||||||
NWBI | Northwest Bancshares, Inc. | PA | $ | 10.18 | $ | 1,301.06 | $ | 0.70 | $ | 11.97 | 17.86x | 85.01 | % | 9.40 | % | 116.05 | % | 14.48x | $ | 0.76 | 7.47 | % | 131.58 | % | $ | 13,845 | 11.06 | % | 8.35 | % | 0.98 | % | 0.54 | % | 4.36 | % | 0.68 | % | 5.49 | % | ||||||||||||||||||||||||||||||||||||||||||||
PCSB | PCSB Financial Corporation | NY | $ | 13.08 | $ | 206.14 | $ | 0.60 | $ | 16.20 | 21.80x | 80.75 | % | 12.33 | % | 82.66 | % | 21.70x | $ | 0.16 | 1.22 | % | 26.67 | % | $ | 1,792 | 15.27 | % | 14.97 | % | NA | 0.56 | % | 3.36 | % | 0.56 | % | 3.38 | % | |||||||||||||||||||||||||||||||||||||||||||||
PFS | Provident Financial Services, Inc. | NJ | $ | 13.24 | $ | 874.34 | $ | 1.43 | $ | 21.45 | 9.88x | 61.71 | % | 8.28 | % | 89.24 | % | 9.24x | $ | 0.92 | 6.95 | % | 68.66 | % | $ | 10,514 | 13.42 | % | 9.68 | % | 0.72 | % | 0.86 | % | 6.14 | % | 0.92 | % | 6.56 | % | ||||||||||||||||||||||||||||||||||||||||||||
PBIP | Prudential Bancorp, Inc. | PA | $ | 9.87 | $ | 80.41 | $ | 0.75 | $ | 15.74 | 7.42x | 62.70 | % | 6.77 | % | 66.03 | % | 13.13x | $ | 0.28 | 2.84 | % | 53.38 | % | $ | 1,188 | 10.80 | % | 10.31 | % | 1.15 | % | 0.92 | % | 8.26 | % | 0.53 | % | 4.71 | % | ||||||||||||||||||||||||||||||||||||||||||||
SVBI | Severn Bancorp, Inc. | MD | $ | 6.00 | $ | 76.88 | $ | 0.46 | $ | 8.35 | 13.04x | 71.86 | % | 8.32 | % | 72.61 | % | 12.92x | $ | 0.16 | 2.67 | % | 34.78 | % | $ | 924 | 11.58 | % | 11.48 | % | 1.67 | % | 0.69 | % | 5.57 | % | 0.69 | % | 5.62 | % | ||||||||||||||||||||||||||||||||||||||||||||
STND | Standard AVB Financial Corp. | PA | $ | 18.55 | $ | 83.77 | $ | 1.66 | $ | 30.62 | 12.62x | 60.57 | % | 8.15 | % | 75.01 | % | 11.14x | $ | 0.88 | 4.77 | % | 60.14 | % | $ | 1,061 | 13.45 | % | 11.15 | % | 0.50 | % | 0.68 | % | 4.79 | % | 0.77 | % | 5.43 | % | ||||||||||||||||||||||||||||||||||||||||||||
TRST | TrustCo Bank Corp NY | NY | $ | 5.88 | $ | 567.02 | $ | 0.54 | $ | 5.74 | 10.69x | 102.46 | % | 9.99 | % | 102.56 | % | 10.88x | $ | 0.27 | 4.63 | % | 49.55 | % | $ | 5,677 | 9.75 | % | 9.74 | % | 0.59 | % | 1.01 | % | 9.92 | % | 0.99 | % | 9.75 | % | ||||||||||||||||||||||||||||||||||||||||||||
WSFS | WSFS Financial Corporation | DE | $ | 29.56 | $ | 1,497.52 | $ | 1.98 | $ | 36.00 | 15.01x | 82.12 | % | 11.03 | % | 118.50 | % | 14.95x | $ | 0.48 | 1.62 | % | 24.37 | % | $ | 13,573 | 13.42 | % | 9.70 | % | 0.33 | % | 0.82 | % | 5.52 | % | 0.82 | % | 5.55 | % | ||||||||||||||||||||||||||||||||||||||||||||
WVFC | WVS Financial Corp. | PA | $ | 13.37 | $ | 23.37 | $ | 1.43 | $ | 19.36 | 9.48x | 69.06 | % | 7.14 | % | 69.06 | % | 9.34x | $ | 0.40 | 2.99 | % | 28.37 | % | $ | 357 | 10.34 | % | 10.34 | % | NA | 0.69 | % | 6.97 | % | 0.70 | % | 7.08 | % | |||||||||||||||||||||||||||||||||||||||||||||
CFFN | Capitol Federal Financial, Inc. | KS | $ | 9.43 | $ | 1,301.92 | $ | 0.50 | $ | 9.19 | 19.24x | 102.61 | % | 13.96 | % | 103.83 | % | 18.80x | $ | 0.34 | 3.61 | % | 138.78 | % | $ | 9,559 | 13.61 | % | 13.47 | % | NA | 0.73 | % | 5.21 | % | 0.74 | % | 5.33 | % | |||||||||||||||||||||||||||||||||||||||||||||
CNNB | Cincinnati Bancorp, Inc. | OH | $ | 8.81 | $ | 26.21 | $ | 0.34 | $ | 13.02 | 26.77x | 67.64 | % | 11.21 | % | 67.97 | % | 26.23x | NA | NA | NA | $ | 234 | 16.58 | % | 16.51 | % | 0.54 | % | 0.43 | % | 3.68 | % | 0.44 | % | 3.75 | % | |||||||||||||||||||||||||||||||||||||||||||||||
FFBW | FFBW, Inc. | WI | $ | 7.97 | $ | 56.66 | NA | $ | 13.23 | 31.88x | 60.22 | % | 20.93 | % | 60.26 | % | NM | NA | NA | NA | $ | 293 | 34.76 | % | 34.74 | % | 0.77 | % | 0.60 | % | 2.36 | % | NA | NA | ||||||||||||||||||||||||||||||||||||||||||||||||||
FBC | Flagstar Bancorp, Inc. | MI | $ | 31.93 | $ | 1,818.22 | $ | 5.13 | $ | 34.61 | 6.46x | 92.25 | % | 6.62 | % | 100.63 | % | 6.22x | $ | 0.20 | 0.63 | % | 3.85 | % | $ | 27,468 | 7.18 | % | 6.62 | % | 0.32 | % | 1.21 | % | 15.39 | % | 1.25 | % | 16.39 | % | ||||||||||||||||||||||||||||||||||||||||||||
HMNF | HMN Financial, Inc. | MN | $ | 14.25 | $ | 69.08 | $ | 1.62 | $ | 20.29 | 8.91x | 70.24 | % | 7.99 | % | 70.90 | % | 8.80x | $ | 0.00 | 0.00 | % | NA | $ | 863 | 11.37 | % | 11.28 | % | 0.44 | % | 0.94 | % | 7.93 | % | 0.96 | % | 8.03 | % | |||||||||||||||||||||||||||||||||||||||||||||
IROQ | IF Bancorp, Inc. | IL | $ | 16.25 | $ | 52.66 | NA | $ | 25.48 | 12.04x | 63.78 | % | 7.16 | % | 63.78 | % | NM | $ | 0.30 | 1.85 | % | 22.22 | % | $ | 736 | 11.23 | % | 11.23 | % | NA | 0.62 | % | 5.32 | % | NA | NA | ||||||||||||||||||||||||||||||||||||||||||||||||
MSVB | Mid-Southern Bancorp, Inc. | IN | $ | 12.66 | $ | 39.76 | $ | 0.33 | $ | 14.97 | NM | 84.55 | % | 19.80 | % | 84.55 | % | NM | $ | 0.08 | 0.63 | % | 25.81 | % | $ | 217 | 23.42 | % | 23.42 | % | 1.23 | % | 0.49 | % | 2.03 | % | 0.52 | % | 2.17 | % | ||||||||||||||||||||||||||||||||||||||||||||
SBT | Sterling Bancorp, Inc. | MI | $ | 2.97 | $ | 148.34 | NA | $ | 6.72 | NM | 44.18 | % | NA | NA | NM | $ | 0.00 | 0.00 | % | 28.57 | % | NA | NA | NA | NA | NA | 1.05 | % | NA | NA | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
WSBF | Waterstone Financial, Inc. | WI | $ | 15.59 | $ | 380.89 | $ | 1.85 | $ | 14.92 | 8.43x | 104.48 | % | 18.17 | % | 104.66 | % | 8.43x | $ | 0.48 | 3.08 | % | 52.97 | % | $ | 2,218 | 17.39 | % | 17.36 | % | 0.42 | % | 2.28 | % | 12.08 | % | 2.28 | % | 12.08 | % | ||||||||||||||||||||||||||||||||||||||||||||
HONE | HarborOne Bancorp, Inc. | MA | $ | 8.54 | $ | 465.09 | $ | 0.53 | $ | 11.72 | 17.43x | 72.89 | % | 11.17 | % | 81.85 | % | 16.11x | $ | 0.12 | 1.41 | % | 6.12 | % | $ | 4,465 | 15.33 | % | 13.88 | % | 1.16 | % | 0.66 | % | 4.22 | % | 0.72 | % | 4.57 | % | ||||||||||||||||||||||||||||||||||||||||||||
HIFS | Hingham Institution for Savings | MA | $ | 194.48 | $ | 415.58 | $ | 16.88 | $ | 123.57 | 10.90x | 157.39 | % | 15.26 | % | 157.39 | % | 11.52x | $ | 1.72 | 0.88 | % | 12.67 | % | $ | 2,724 | 9.69 | % | 9.69 | % | 0.28 | % | 1.50 | % | 15.72 | % | 1.41 | % | 14.87 | % | ||||||||||||||||||||||||||||||||||||||||||||
EBSB | Meridian Bancorp, Inc. | MA | $ | 11.60 | $ | 581.61 | $ | 1.27 | $ | 14.01 | 8.92x | 82.76 | % | 9.47 | % | 85.34 | % | 9.15x | $ | 0.32 | 2.76 | % | 24.62 | % | $ | 6,418 | 11.44 | % | 11.13 | % | 0.09 | % | 1.05 | % | 9.27 | % | 1.03 | % | 9.05 | % | ||||||||||||||||||||||||||||||||||||||||||||
PVBC | Provident Bancorp, Inc. | MA | $ | 7.72 | $ | 139.90 | $ | 0.61 | $ | 12.14 | 13.08x | 63.61 | % | 10.63 | % | 63.61 | % | 12.60x | $ | 0.12 | 1.55 | % | 10.17 | % | $ | 1,415 | 16.70 | % | 16.70 | % | NA | 0.90 | % | 5.37 | % | 0.94 | % | 5.57 | % | |||||||||||||||||||||||||||||||||||||||||||||
RNDB | Randolph Bancorp, Inc. | MA | $ | 11.24 | $ | 57.25 | $ | 1.47 | $ | 15.43 | 9.14x | 72.87 | % | 8.51 | % | NA | 7.64x | NA | NA | NA | $ | 724 | 11.67 | % | NA | 0.67 | % | 0.97 | % | 7.85 | % | 1.15 | % | 9.38 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
WNEB | Western New England Bancorp, Inc. | MA | $ | 5.45 | $ | 139.97 | $ | 0.42 | $ | 8.95 | 13.29x | 60.89 | % | 5.74 | % | 65.34 | % | 12.99x | $ | 0.20 | 3.67 | % | 48.78 | % | $ | 2,435 | 9.43 | % | 8.84 | % | NA | 0.49 | % | 4.65 | % | 0.50 | % | 4.76 | % | |||||||||||||||||||||||||||||||||||||||||||||
MHCs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BSBK | Bogota Financial Corp. (MHC) | NJ | $ | 7.07 | $ | 89.46 | NA | $ | 9.60 | NM | 73.63 | % | 12.59 | % | 73.63 | % | NM | NA | NA | NA | $ | 739 | 17.10 | % | 17.10 | % | NA | 0.22 | % | 1.56 | % | 0.46 | % | 3.36 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
CLBK | Columbia Financial, Inc. (MHC) | NJ | $ | 10.81 | $ | 1,199.78 | $ | 0.47 | $ | 9.05 | 24.02x | 119.49 | % | 13.88 | % | 131.10 | % | 23.09x | NA | NA | NA | $ | 8,963 | 11.61 | % | 10.70 | % | NA | 0.62 | % | 4.95 | % | 0.65 | % | 5.16 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
GCBC | Greene County Bancorp, Inc. (MHC) | NY | $ | 23.08 | $ | 196.49 | NA | $ | 15.13 | 10.49x | 152.55 | % | 11.72 | % | 152.55 | % | NM | $ | 0.48 | 2.08 | % | 20.45 | % | $ | 1,677 | 7.68 | % | 7.68 | % | NA | 1.28 | % | 15.55 | % | NA | NA | ||||||||||||||||||||||||||||||||||||||||||||||||
LSBK | Lake Shore Bancorp, Inc. (MHC) | NY | $ | 12.61 | $ | 72.26 | $ | 0.74 | $ | 14.38 | 16.82x | 87.72 | % | 10.94 | % | 87.72 | % | 16.96x | $ | 0.48 | 3.81 | % | 64.00 | % | $ | 678 | 12.47 | % | 12.47 | % | 0.61 | % | 0.72 | % | 5.36 | % | 0.72 | % | 5.31 | % | ||||||||||||||||||||||||||||||||||||||||||||
MGYR | Magyar Bancorp, Inc. (MHC) | NJ | $ | 8.05 | $ | 46.78 | $ | 0.36 | $ | 9.65 | 21.18x | 83.40 | % | 6.17 | % | 83.40 | % | 22.16x | NA | NA | NA | $ | 758 | 7.40 | % | 7.40 | % | 2.43 | % | 0.33 | % | 3.98 | % | 0.31 | % | 3.79 | % | |||||||||||||||||||||||||||||||||||||||||||||||
PDLB | PDL Community Bancorp (MHC) | NY | $ | 8.40 | $ | 139.61 | $ | (0.02 | ) | $ | 8.99 | NM | 93.40 | % | 11.86 | % | 93.40 | % | NM | NA | NA | NA | $ | 1,220 | 12.70 | % | 12.70 | % | 1.42 | % | -0.78 | % | -5.32 | % | -0.03 | % | -0.19 | % | ||||||||||||||||||||||||||||||||||||||||||||||
PBFS | Pioneer Bancorp, Inc. (MHC) | NY | $ | 8.46 | $ | 211.69 | NA | $ | 8.80 | NM | 96.17 | % | 14.65 | % | 100.36 | % | NM | NA | NA | NA | $ | 1,500 | 15.24 | % | 14.70 | % | 0.76 | % | -0.21 | % | -1.49 | % | 0.26 | % | 1.87 | % | ||||||||||||||||||||||||||||||||||||||||||||||||
RBKB | Rhinebeck Bancorp, Inc. (MHC) | NY | $ | 6.60 | $ | 70.82 | $ | 0.60 | $ | 10.21 | 11.19x | 64.64 | % | 6.51 | % | 65.58 | % | 11.05x | NA | NA | NA | $ | 1,128 | 10.08 | % | 9.94 | % | 1.01 | % | 0.63 | % | 5.65 | % | 0.64 | % | 5.72 | % | |||||||||||||||||||||||||||||||||||||||||||||||
BCOW | 1895 Bancorp Of Wisconsin, Inc. (MHC) | WI | $ | 8.24 | $ | 38.45 | $ | 0.30 | $ | 12.52 | 27.45x | 65.78 | % | 8.04 | % | 65.78 | % | 27.30x | NA | NA | NA | $ | 495 | 12.22 | % | 12.22 | % | 0.46 | % | 0.31 | % | 2.64 | % | 0.31 | % | 2.66 | % | |||||||||||||||||||||||||||||||||||||||||||||||
KFFB | Kentucky First Federal Bancorp (MHC) | KY | $ | 6.08 | $ | 50.03 | $ | 0.13 | $ | 7.94 | NM | 76.62 | % | 15.18 | % | 98.38 | % | NM | $ | 0.40 | 6.58 | % | 307.69 | % | $ | 331 | 19.81 | % | 16.13 | % | NA | 0.31 | % | 1.55 | % | 0.31 | % | 1.54 | % | |||||||||||||||||||||||||||||||||||||||||||||
TFSL | TFS Financial Corporation (MHC) | OH | $ | 15.59 | $ | 4,303.35 | NA | $ | 5.91 | NM | 263.82 | % | 29.44 | % | 265.38 | % | NM | $ | 1.12 | 7.18 | % | 336.36 | % | $ | 14,835 | 11.16 | % | 11.10 | % | 1.05 | % | 0.62 | % | 5.31 | % | NA | NA | |||||||||||||||||||||||||||||||||||||||||||||||
FSEA | First Seacoast Bancorp (MHC) | NH | $ | 6.40 | $ | 37.52 | $ | 0.10 | $ | 9.60 | NM | 66.70 | % | 8.26 | % | 66.70 | % | NM | NA | NA | NA | $ | 471 | 12.38 | % | 12.38 | % | 0.21 | % | 0.08 | % | 0.58 | % | 0.15 | % | 1.19 | % |
(1) Core income, on a diluted per-share basis. Core income is net income after taxes and before extraordinary items, less net income attributable to noncontrolling interest, gain on the sale of securities, amortization of intangibles, goodwill and nonrecurring items. Assumed tax rate is 35%.
(2) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; and P/Core = Price to core earnings. P/E and P/Core =NM if the ratio is negative or above 35x.
(3) Indicated 12 month dividend, based on last quarterly dividend declared.
(4) Indicated 12 month dividend as a percent of trailing 12 month earnings.
(5) Equity and tangible equity equal common equity and tangible common equity, respectively. ROAA (return on average assets) and ROAE (return on average equity) are indicated ratios based on trailing 12 month earnings and average equity and assets balances.
(6) Excludes from averages and medians those companies the subject of actual or rumored acquisition activities or unusual operating characteristics.
Source: SNL Financial, LC. and RP Financial, LC. calculations. The information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.
Copyright (c) 2020 by RP® Financial, LC.
EXHIBIT III-3
Public Market Pricing of Southeast and Southwest Thrifts
Exhibit III-3
Public Market Pricing of Southeast and Southwest Institutions
As of September 2, 2020
Market | Per Share Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalization | Core | Book | Dividends(3) | Financial Characteristics(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Price/ | Market | 12 Month | Value/ | Pricing Ratios(2) | Amount/ | Payout | Total | Equity/ | Tang. Eq./ | NPAs/ | Reported | Core | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share | Value | EPS(1) | Share | P/E | P/B | P/A | P/TB | P/Core | Share | Yield | Ratio(4) | Assets | Assets | T. Assets | Assets | ROAA | ROAE | ROAA | ROAE | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
($) | ($Mil) | ($) | ($) | (x) | (%) | (%) | (%) | (x) | ($) | (%) | (%) | ($Mil) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
All Non-MHC Public Companies(6) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Averages | $ | 17.65 | $ | 450.53 | $ | 1.66 | $ | 19.62 | 12.56 | 78.6 | % | 9.9 | % | 88.1 | % | 12.05 | $ | 0.42 | 3.00 | % | 50 | % | $ | 5,043 | 12.80 | % | 11.94 | % | 0.69 | % | 0.81 | % | 6.41 | % | 0.82 | % | 6.66 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Median | $ | 11.95 | $ | 139.97 | $ | 0.97 | $ | 15.74 | 11.11 | 72.9 | % | 9.0 | % | 82.3 | % | 11.48 | $ | 0.32 | 2.84 | % | 35 | % | $ | 1,657 | 11.63 | % | 10.34 | % | 0.57 | % | 0.77 | % | 6.14 | % | 0.75 | % | 5.97 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Comparable Group | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Averages | $ | 21.59 | $ | 323.61 | $ | 1.71 | $ | 24.87 | 12.75 | x | 85.53 | % | 9.22 | % | 109.56 | % | 12.81 | x | $ | 0.66 | 2.83 | % | 30.14 | % | $ | 3,033 | 11.06 | % | 9.12 | % | 0.85 | % | 0.87 | % | 7.11 | % | 0.90 | % | 7.31 | % | ||||||||||||||||||||||||||||||||||||||||||||
Medians | $ | 23.36 | $ | 217.33 | $ | 1.58 | $ | 25.28 | 10.92 | x | 79.72 | % | 7.77 | % | 84.72 | % | 11.43 | x | $ | 0.66 | 2.83 | % | 30.14 | % | $ | 2,963 | 11.69 | % | 8.94 | % | 0.88 | % | 0.83 | % | 7.27 | % | 0.80 | % | 7.40 | % | ||||||||||||||||||||||||||||||||||||||||||||
Comparable Group | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
HFBL | Home Federal Bancorp, Inc. of Louisiana | LA | $ | 23.36 | $ | 38.24 | $ | 2.04 | $ | 29.30 | 10.92 | x | 79.72 | % | 7.77 | % | 79.72 | % | 11.43 | x | $ | 0.66 | 2.83 | % | 30.14 | % | $ | 518 | 9.75 | % | 9.75 | % | 1.30 | % | 0.83 | % | 7.75 | % | 0.80 | % | 7.40 | % | ||||||||||||||||||||||||||||||||||||||||||
STXB | Spirit of Texas Bancshares, Inc. | TX | $ | 12.53 | $ | 217.33 | $ | 1.58 | $ | 20.01 | 9.28 | x | 62.61 | % | 7.34 | % | 84.72 | % | 7.92 | x | NA | NA | NA | $ | 2,963 | 11.73 | % | 8.94 | % | 0.38 | % | 0.99 | % | 7.27 | % | 1.16 | % | 8.51 | % | |||||||||||||||||||||||||||||||||||||||||||||
TBK | Triumph Bancorp, Inc. | TX | $ | 28.89 | $ | 715.27 | $ | 1.51 | $ | 25.28 | 18.06 | x | 114.28 | % | 12.55 | % | 164.25 | % | 19.09 | x | NA | NA | NA | $ | 5,617 | 11.69 | % | 8.67 | % | 0.88 | % | 0.79 | % | 6.32 | % | 0.75 | % | 6.03 | % | |||||||||||||||||||||||||||||||||||||||||||||
MHCs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CFBI | Community First Bancshares, Inc. (MHC) | GA | $ | 6.63 | $ | 50.16 | $ | 0.24 | $ | 10.20 | NM | 64.93 | % | 5.53 | % | 86.17 | % | 27.71 | x | NA | NA | NA | $ | 906 | 8.52 | % | 6.56 | % | 0.80 | % | -0.02 | % | -0.13 | % | 0.39 | % | 2.48 | % | ||||||||||||||||||||||||||||||||||||||||||||||
OFED | Oconee Federal Financial Corp. (MHC) | SC | $ | 26.74 | $ | 150.58 | NA | NA | NM | 169.70 | % | NA | 175.24 | % | NM | $ | 0.40 | 1.50 | % | 59.70 | % | $ | 516 | NA | NA | NA | 0.76 | % | NA | NA | NA |
(1) Core income, on a diluted per-share basis. Core income is net income after taxes and before extraordinary items, less net income attributable to noncontrolling interest, gain on the sale of securities, amortization of intangibles, goodwill and nonrecurring items. Assumed tax rate is 35%.
(2) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB = Price to tangible book value; and P/Core = Price to core earnings. P/E and P/Core =NM if the ratio is negative or above 35x.
(3) Indicated 12 month dividend, based on last quarterly dividend declared.
(4) Indicated 12 month dividend as a percent of trailing 12 month earnings.
(5) Equity and tangible equity equal common equity and tangible common equity, respectively. ROAA (return on average assets) and ROAE (return on average equity) are indicated ratios based on trailing 12 month earnings and average equity and assets balances.
(6) Excludes from averages and medians those companies the subject of actual or rumored acquisition activities or unusual operating characteristics.
Source: SNL Financial, LC. and RP Financial, LC. calculations. The information provided in this report has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.
Copyright (c) 2020 by RP® Financial, LC.
EXHIBIT III-4
Peer Group Market Area Comparative Analysis
Exhibit IV-4
Pennsylvania Bank and Thrift Acquisitions 2017-Present
Target Financials at Announcement | Deal Terms and Pricing at Announcement | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total | NPAs/ | Rsrvs/ | Deal | Value/ | Prem/ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Announce | Complete | Assets | E/A | TE/A | ROAA | ROAE | Assets | NPLs | Value | Share | P/B | P/TB | P/E | P/A | Cdeps | |||||||||||||||||||||||||||||||||||||||||||||||
Date | Date | Buyer Name | Target Name | ($000) | (%) | (%) | (%) | (%) | (%) | (%) | ($M) | ($) | (%) | (%) | (x) | (%) | (%) | |||||||||||||||||||||||||||||||||||||||||||||
12/18/2019 | 07/01/2020 | Citizens & Northern Corp. | PA | Covenant Financial Inc. | PA | 512,146 | 10.14 | 10.14 | 1.04 | 10.24 | 0.93 | 133.63 | 77.2 | 16.746 | 193.99 | 193.99 | 20.81 | 15.08 | 14.13 | |||||||||||||||||||||||||||||||||||||||||||
12/10/2019 | 05/01/2020 | Fidelity D & D Bancorp Inc. | PA | MNB Corporation | PA | 412,642 | 9.51 | 9.51 | 0.94 | 10.79 | 0.53 | 126.81 | 78.7 | 69.447 | 200.40 | 200.40 | 20.98 | 19.07 | 11.56 | |||||||||||||||||||||||||||||||||||||||||||
12/05/2019 | 05/01/2020 | William Penn Bncp Inc. (MHC) | PA | Fidelity Savings and Loan Association of Bucks County | PA | 85,921 | 14.91 | 14.91 | 0.36 | 2.46 | 1.51 | 42.34 | NA | NA | NA | NA | NA | NA | NA | |||||||||||||||||||||||||||||||||||||||||||
12/05/2019 | 05/01/2020 | William Penn Bncp Inc. (MHC) | PA | Washington Savings Bank | PA | 159,367 | 8.50 | 8.50 | -0.36 | -4.30 | 0.11 | 430.64 | NA | NA | NA | NA | NA | NA | NA | |||||||||||||||||||||||||||||||||||||||||||
06/05/2019 | 11/30/2019 | S&T Bancorp Inc. | PA | DNB Financial Corporation | PA | 1,166,694 | 9.86 | 8.61 | 0.94 | 9.76 | 0.96 | 87.17 | 206.0 | 47.275 | 177.92 | 206.36 | 19.22 | 17.66 | NA | |||||||||||||||||||||||||||||||||||||||||||
02/08/2019 | 10/01/2019 | Somerset Trust Holding Company | PA | First Bank of Lilly | PA | 20,485 | 17.13 | 17.13 | 0.16 | 0.97 | 0.32 | 122.73 | 3.4 | NA | 96.89 | 96.89 | NM | 16.60 | -0.72 | |||||||||||||||||||||||||||||||||||||||||||
09/28/2018 | 04/01/2019 | Citizens & Northern Corp. | PA | Monument Bancorp, Inc. | PA | 347,773 | 9.35 | 9.35 | 0.92 | 9.64 | 0.87 | 272.01 | 42.7 | 26.736 | 163.80 | 163.80 | 16.73 | 12.27 | 12.28 | |||||||||||||||||||||||||||||||||||||||||||
07/19/2018 | 04/01/2019 | MHC of Western Pennsylvania | PA | Union Building and Loan Savings Bank | PA | 32,981 | 24.60 | 24.60 | 0.46 | 1.88 | 1.74 | 29.67 | NA | NA | NA | NA | NA | NA | NA | |||||||||||||||||||||||||||||||||||||||||||
06/12/2018 | 03/08/2019 | Northwest Bancshares, Inc. | PA | Donegal Financial Services Corp. | PA | 577,379 | NA | NA | NA | NA | NA | NA | 86.1 | 4817.480 | 170.58 | 174.33 | 20.30 | 15.72 | 7.40 | |||||||||||||||||||||||||||||||||||||||||||
08/08/2018 | 03/01/2019 | WSFS Financial Corp. | DE | Beneficial Bancorp, Inc. | PA | 5,770,311 | 17.72 | 15.20 | 0.48 | 2.70 | 0.36 | 206.21 | 1507.4 | 19.607 | 143.73 | 172.71 | 52.99 | 26.12 | 16.62 | |||||||||||||||||||||||||||||||||||||||||||
06/26/2018 | 10/05/2018 | LinkBancorp Inc | PA | Stonebridge Bank | PA | 57,698 | 6.62 | 6.62 | -2.04 | -31.01 | 7.55 | 8.19 | 1.1 | NA | 29.47 | 29.47 | NM | 1.95 | NM | |||||||||||||||||||||||||||||||||||||||||||
05/31/2018 | 10/01/2018 | Orrstown Financial Services | PA | Mercersburg Financial Corporation | PA | 183,950 | 11.21 | 11.21 | 0.50 | 4.48 | 0.23 | 372.79 | 32.2 | 39.728 | 156.01 | 156.01 | 35.68 | 17.49 | 8.49 | |||||||||||||||||||||||||||||||||||||||||||
05/25/2018 | 10/01/2018 | Emclaire Financial Corp | PA | Community First Bancorp, Inc. | PA | 129,186 | 10.18 | 10.18 | 0.67 | 6.53 | NA | NA | 17.7 | 48.077 | 195.38 | 195.38 | 26.86 | 13.66 | 11.11 | |||||||||||||||||||||||||||||||||||||||||||
01/16/2018 | 07/31/2018 | Mid Penn Bancorp Inc. | PA | First Priority Financial Corp. | PA | 612,033 | 8.25 | 7.81 | 0.52 | 6.11 | 0.37 | 194.09 | 90.7 | 13.054 | 182.42 | 194.44 | 32.63 | 14.82 | 11.15 | |||||||||||||||||||||||||||||||||||||||||||
12/29/2017 | 04/30/2018 | Juniata Valley Financial Corp. | PA | Liverpool Community Bank | PA | 46,432 | 20.96 | 20.96 | 1.16 | 5.68 | 0.33 | 264.94 | 7.6 | 4052.058 | 130.41 | 130.41 | 23.18 | 27.11 | 9.65 | |||||||||||||||||||||||||||||||||||||||||||
03/29/2017 | 01/08/2018 | Mid Penn Bancorp Inc. | PA | Scottdale Bank & Trust Company | PA | 263,308 | 17.28 | 17.28 | 0.21 | 1.23 | 0.31 | 128.01 | 59.1 | 1166.000 | 129.97 | 129.97 | NM | 22.46 | 6.41 | |||||||||||||||||||||||||||||||||||||||||||
01/31/2017 | 12/15/2017 | Bryn Mawr Bank Corp. | PA | Royal Bancshares of Pennsylvania, Inc. | PA | 832,485 | 6.28 | 6.28 | 1.36 | 15.92 | 1.36 | 133.57 | 125.9 | 4.176 | 241.04 | 241.04 | 13.47 | 15.13 | 14.45 | |||||||||||||||||||||||||||||||||||||||||||
06/05/2017 | 10/01/2017 | Penn Community Mutual Holdings | PA | Chelten Hills Savings Bank | PA | 25,666 | 13.87 | 13.87 | -0.19 | -1.50 | 0.14 | NM | NA | NA | NA | NA | NA | NA | NA | |||||||||||||||||||||||||||||||||||||||||||
04/20/2017 | 10/01/2017 | Riverview Financial Corp. | PA | CBT Financial Corporation | PA | 488,060 | 9.96 | 8.12 | 0.66 | 6.43 | 1.21 | 69.94 | 49.2 | 34.034 | 101.24 | 126.68 | 15.76 | 10.08 | 2.78 | |||||||||||||||||||||||||||||||||||||||||||
09/27/2017 | 09/27/2017 | Private Investor-Richard Green | 0 | Semperverde Holding Company | PA | 3,172,807 | 11.98 | NA | NA | NA | NA | NA | NA | NA | NA | NA | NA | NA | NA | |||||||||||||||||||||||||||||||||||||||||||
03/29/2017 | 09/15/2017 | First Bank | NJ | Bucks County Bank | PA | 197,771 | 11.04 | 11.04 | 0.29 | 2.70 | 2.16 | 48.40 | 27.2 | 11.074 | 124.70 | 124.70 | 46.70 | 13.77 | 5.17 | |||||||||||||||||||||||||||||||||||||||||||
02/17/2017 | 05/31/2017 | Ambler Savings Bank | PA | Bally Savings Bank | PA | 53,023 | 9.28 | 9.28 | 0.72 | 8.01 | 3.11 | 15.29 | NA | NA | NA | NA | NA | NA | NA | |||||||||||||||||||||||||||||||||||||||||||
Average: | 688,551 | 12.32 | 12.03 | 0.44 | 3.44 | 1.27 | 149.25 | 152.37 | 158.54 | 26.56 | 16.19 | 9.32 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Median: | 230,540 | 10.18 | 10.16 | 0.51 | 5.08 | 0.87 | 127.41 | 159.91 | 168.26 | 20.98 | 15.43 | 10.38 |
Source: S&P Global Market Intelligence.
EXHIBIT IV-1
Stock Prices:
As of September 2, 2020
RP® Financial, LC.
Exhibit IV-1A
Weekly Thrift Market Line - Part One
Prices As of September 2, 2020
Market Capitalization | Price Change Data | Current Per Share Financials | ||||||||||||||||||||||||||||||||||||||||||||
Price/ | Shares | Market | 52 Week (1) | % Change From | LTM | LTM Core | BV/ | TBV/ | Assets/ | |||||||||||||||||||||||||||||||||||||
Share(1) | Outstanding | Capitalization | High | Low | Last Wk | Last Wk | 52 Wks (2) | MRY (2) | EPS (3) | EPS (3) | Share | Share (4) | Share | |||||||||||||||||||||||||||||||||
($) | (000) | ($Mil) | ($) | ($) | ($) | (%) | (%) | (%) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||||||||
Companies | ||||||||||||||||||||||||||||||||||||||||||||||
AX | Axos Financial, Inc. | WE | 24.95 | 59,507 | 1,484.7 | 30.89 | 13.69 | 24.78 | 0.69 | -0.28 | -17.60 | 2.98 | 3.23 | 20.56 | 18.46 | 232.78 | ||||||||||||||||||||||||||||||
BYFC | Broadway Financial Corporation | WE | 1.74 | 27,456 | 47.8 | 7.23 | 1.04 | 1.77 | -1.69 | -1.69 | 12.99 | 0.00 | 0.00 | 1.77 | 1.77 | 17.89 | ||||||||||||||||||||||||||||||
CFFN | Capitol Federal Financial, Inc. | MW | 9.43 | 138,062 | 1,301.9 | 14.57 | 9.27 | 9.31 | 1.29 | -29.57 | -31.32 | 0.49 | 0.50 | 9.19 | 9.08 | 69.24 | ||||||||||||||||||||||||||||||
CARV | Carver Bancorp, Inc. | MA | 6.00 | 2,857 | 17.1 | 22.97 | 1.25 | 6.30 | -4.76 | 100.00 | 146.81 | -1.38 | -1.51 | 0.67 | 0.67 | 234.71 | ||||||||||||||||||||||||||||||
CBMB | CBM Bancorp, Inc. | MA | 11.95 | 3,515 | 42.0 | 14.44 | 10.61 | 11.93 | 0.20 | -13.41 | -15.37 | 0.21 | 0.18 | 14.16 | 14.16 | 66.94 | ||||||||||||||||||||||||||||||
CNNB | Cincinnati Bancorp, Inc. | MW | 8.81 | 2,976 | 26.2 | 11.01 | 6.33 | 8.69 | 1.35 | -7.09 | -14.02 | 0.33 | 0.34 | 13.02 | 12.96 | 78.56 | ||||||||||||||||||||||||||||||
ESBK | Elmira Savings Bank | MA | 10.63 | 3,523 | 37.4 | 17.40 | 10.31 | 10.60 | 0.26 | -25.07 | -29.64 | 1.08 | 1.06 | 16.87 | 13.38 | 191.85 | ||||||||||||||||||||||||||||||
ESSA | ESSA Bancorp, Inc. | MA | 12.99 | 10,116 | 131.4 | 17.73 | 9.70 | 12.95 | 0.31 | -13.75 | -23.36 | 1.38 | 1.37 | 17.67 | 16.33 | 0.00 | ||||||||||||||||||||||||||||||
FFBW | FFBW, Inc. | MW | 7.97 | 7,110 | 56.7 | 12.30 | 6.74 | 8.11 | -1.73 | -20.30 | -31.00 | 0.25 | NA | 13.23 | 13.23 | 0.00 | ||||||||||||||||||||||||||||||
FNWB | First Northwest Bancorp | WE | 11.28 | 9,535 | 107.6 | 18.25 | 8.77 | 11.94 | -5.53 | -28.83 | -37.78 | 0.78 | 0.66 | 16.90 | 16.90 | 0.00 | ||||||||||||||||||||||||||||||
FBC | Flagstar Bancorp, Inc. | MW | 31.93 | 56,944 | 1,818.2 | 40.00 | 16.76 | 30.89 | 3.37 | -11.67 | -16.52 | 4.94 | 5.13 | 34.61 | 31.73 | 0.00 | ||||||||||||||||||||||||||||||
FSBW | FS Bancorp, Inc. | WE | 40.70 | 4,167 | 174.7 | 64.41 | 27.50 | 38.93 | 4.55 | -14.68 | -36.20 | 6.32 | 6.19 | 49.15 | 47.40 | 0.00 | ||||||||||||||||||||||||||||||
HONE | HarborOne Bancorp, Inc. | NE | 8.54 | 54,461 | 465.1 | 11.20 | 6.45 | 9.00 | -5.11 | -13.12 | -22.29 | 0.49 | 0.53 | 11.72 | 10.43 | 0.00 | ||||||||||||||||||||||||||||||
HIFS | Hingham Institution for Savings | NE | 194.48 | 2,137 | 415.6 | 216.82 | 125.55 | 193.03 | 0.75 | 8.10 | -7.48 | 17.84 | 16.88 | 123.57 | 123.57 | 0.00 | ||||||||||||||||||||||||||||||
HMNF | HMN Financial, Inc. | MW | 14.25 | 4,848 | 69.1 | 23.00 | 13.30 | 14.30 | -0.35 | -33.81 | -32.18 | 1.60 | 1.62 | 20.29 | 20.10 | 0.00 | ||||||||||||||||||||||||||||||
HFBL | Home Federal Bancorp, Inc. of Louisiana | SW | 23.36 | 1,642 | 38.2 | 37.99 | 20.00 | 23.50 | -0.60 | -26.90 | -34.66 | 2.14 | 2.04 | 29.30 | 29.30 | 0.00 | ||||||||||||||||||||||||||||||
HVBC | HV Bancorp, Inc. | MA | 12.44 | 2,235 | 27.8 | 17.25 | 9.75 | 12.36 | 0.68 | -14.00 | -26.82 | 1.06 | 0.93 | 15.74 | 15.74 | 0.00 | ||||||||||||||||||||||||||||||
IROQ | IF Bancorp, Inc. | MW | 16.25 | 3,240 | 52.7 | 24.05 | 15.07 | 16.45 | -1.22 | -24.40 | -29.41 | 1.35 | NA | 25.48 | 25.48 | 0.00 | ||||||||||||||||||||||||||||||
KRNY | Kearny Financial Corp. | MA | 7.90 | 86,557 | 683.8 | 14.40 | 7.23 | 7.73 | 2.20 | -36.50 | -42.88 | 0.55 | 0.58 | 12.96 | 10.39 | 0.00 | ||||||||||||||||||||||||||||||
EBSB | Meridian Bancorp, Inc. | NE | 11.60 | 50,161 | 581.6 | 20.86 | 8.88 | 11.42 | 1.53 | -33.17 | -42.28 | 1.30 | 1.27 | 14.01 | 13.59 | 0.00 | ||||||||||||||||||||||||||||||
MSVB | Mid-Southern Bancorp, Inc. | MW | 12.66 | 3,140 | 39.8 | 14.00 | 9.71 | 12.34 | 2.62 | 0.32 | -5.73 | 0.31 | 0.33 | 14.97 | 14.97 | 0.00 | ||||||||||||||||||||||||||||||
NYCB | New York Community Bancorp, Inc. | MA | 9.04 | 463,910 | 4,193.7 | 13.79 | 8.19 | 9.04 | 0.00 | -21.12 | -24.79 | 0.80 | 0.78 | 13.34 | 8.11 | 0.00 | ||||||||||||||||||||||||||||||
NFBK | Northfield Bancorp, Inc. | MA | 9.78 | 53,126 | 519.6 | 17.55 | 9.27 | 9.53 | 2.62 | -36.62 | -42.33 | 0.82 | 0.79 | 14.46 | 13.67 | 0.00 | ||||||||||||||||||||||||||||||
NWBI | Northwest Bancshares, Inc. | MA | 10.18 | 127,806 | 1,301.1 | 17.74 | 8.52 | 10.00 | 1.80 | -35.04 | -38.79 | 0.57 | 0.70 | 11.97 | 8.77 | 0.00 | ||||||||||||||||||||||||||||||
PCSB | PCSB Financial Corporation | MA | 13.08 | 15,760 | 206.1 | 20.78 | 11.01 | 12.96 | 0.93 | -33.54 | -35.41 | 0.60 | 0.60 | 16.20 | 15.82 | 0.00 | ||||||||||||||||||||||||||||||
PVBC | Provident Bancorp, Inc. | NE | 7.72 | 18,122 | 139.9 | 12.92 | 7.21 | 7.71 | 0.13 | -37.06 | -37.99 | 0.59 | 0.61 | 12.14 | 12.14 | 0.00 | ||||||||||||||||||||||||||||||
PROV | Provident Financial Holdings, Inc. | WE | 12.14 | 7,436 | 90.3 | 22.99 | 11.60 | 12.03 | 0.91 | -38.81 | -44.57 | 1.01 | 1.01 | 16.67 | 16.67 | 0.00 | ||||||||||||||||||||||||||||||
PFS | Provident Financial Services, Inc. | MA | 13.24 | 66,038 | 874.3 | 25.86 | 9.05 | 13.21 | 0.23 | -43.83 | -46.29 | 1.34 | 1.43 | 21.45 | 14.84 | 0.00 | ||||||||||||||||||||||||||||||
PBIP | Prudential Bancorp, Inc. | MA | 9.87 | 8,147 | 80.4 | 18.59 | 9.67 | 10.58 | -6.71 | -37.73 | -46.74 | 1.33 | 0.75 | 15.74 | 14.95 | 0.00 | ||||||||||||||||||||||||||||||
RNDB | Randolph Bancorp, Inc. | NE | 11.24 | 5,093 | 57.2 | 18.34 | 7.92 | 11.12 | 1.08 | -24.73 | -36.32 | 1.23 | 1.47 | 15.43 | NA | 0.00 | ||||||||||||||||||||||||||||||
RVSB | Riverview Bancorp, Inc. | WE | 4.21 | 22,245 | 93.7 | 8.55 | 4.05 | 4.17 | 0.96 | -38.72 | -48.72 | 0.53 | 0.53 | 6.63 | 5.38 | 0.00 | ||||||||||||||||||||||||||||||
SVBI | Severn Bancorp, Inc. | MA | 6.00 | 12,813 | 76.9 | 9.50 | 4.26 | 6.10 | -1.64 | -24.05 | -35.55 | 0.46 | 0.46 | 8.35 | 8.26 | 0.00 | ||||||||||||||||||||||||||||||
STXB | Spirit of Texas Bancshares, Inc. | SW | 12.53 | 17,345 | 217.3 | 23.48 | 8.96 | 12.70 | -1.34 | -39.20 | -45.52 | 1.35 | 1.58 | 20.01 | 14.79 | 0.00 | ||||||||||||||||||||||||||||||
STND | Standard AVB Financial Corp. | MA | 18.55 | 4,516 | 83.8 | 31.40 | 17.01 | 18.89 | -1.80 | -31.27 | -38.10 | 1.47 | 1.66 | 30.62 | 24.73 | 0.00 | ||||||||||||||||||||||||||||||
SBT | Sterling Bancorp, Inc. | MW | 2.97 | 49,944 | 148.3 | 10.27 | 2.53 | 3.03 | -1.98 | -67.47 | -63.33 | 0.07 | NA | 6.72 | NA | 0.00 | ||||||||||||||||||||||||||||||
TBNK | Territorial Bancorp Inc. | WE | 21.30 | 9,098 | 193.8 | 32.45 | 20.25 | 21.34 | -0.19 | -21.14 | -31.16 | 2.05 | 1.99 | 25.65 | 25.65 | 0.00 | ||||||||||||||||||||||||||||||
TSBK | Timberland Bancorp, Inc. | WE | 18.40 | 8,311 | 152.9 | 31.00 | 13.60 | 17.11 | 7.54 | -26.55 | -38.13 | 2.87 | 2.95 | 22.00 | 19.97 | 0.00 | ||||||||||||||||||||||||||||||
TBK | Triumph Bancorp, Inc. | SW | 28.89 | 24,759 | 715.3 | 43.15 | 19.03 | 29.16 | -0.93 | -2.40 | -24.01 | 1.60 | 1.51 | 25.28 | 17.59 | 0.00 | ||||||||||||||||||||||||||||||
TRST | TrustCo Bank Corp NY | MA | 5.88 | 96,433 | 567.0 | 9.10 | 4.30 | 5.82 | 1.03 | -22.43 | -32.18 | 0.55 | 0.54 | 5.74 | 5.73 | 0.00 | ||||||||||||||||||||||||||||||
WSBF | Waterstone Financial, Inc. | MW | 15.59 | 24,432 | 380.9 | 19.48 | 12.10 | 15.62 | -0.19 | -6.25 | -18.08 | 1.85 | 1.85 | 14.92 | 14.90 | 0.00 | ||||||||||||||||||||||||||||||
WNEB | Western New England Bancorp, Inc. | NE | 5.45 | 25,682 | 140.0 | 10.10 | 4.45 | 5.05 | 7.92 | -38.56 | -43.41 | 0.41 | 0.42 | 8.95 | 8.34 | 0.00 | ||||||||||||||||||||||||||||||
WSFS | WSFS Financial Corporation | MA | 29.56 | 50,660 | 1,497.5 | 46.05 | 17.84 | 29.22 | 1.16 | -27.32 | -32.80 | 1.97 | 1.98 | 36.00 | 24.95 | 0.00 | ||||||||||||||||||||||||||||||
WVFC | WVS Financial Corp. | MA | 13.37 | 1,748 | 23.4 | 17.06 | 13.00 | 13.47 | -0.75 | -16.96 | -18.73 | 1.41 | 1.43 | 19.36 | 19.36 | 0.00 | ||||||||||||||||||||||||||||||
MHCs | ||||||||||||||||||||||||||||||||||||||||||||||
BCOW | 1895 Bancorp Of Wisconsin, Inc. (MHC) | MW | 8.24 | 4,669 | 38.5 | 12.01 | 7.43 | 8.50 | -3.11 | -12.38 | -23.60 | 0.30 | 0.30 | 12.52 | 12.52 | 0.00 | ||||||||||||||||||||||||||||||
BSBK | Bogota Financial Corp. (MHC) | MA | 7.07 | 12,654 | 89.5 | 11.97 | 6.07 | 7.12 | -0.70 | -29.30 | -29.30 | NA | NA | 9.60 | 9.60 | 0.00 | ||||||||||||||||||||||||||||||
CLBK | Columbia Financial, Inc. (MHC) | MA | 10.81 | 110,988 | 1,199.8 | 17.34 | 10.27 | 10.75 | 0.56 | -28.17 | -36.19 | 0.45 | 0.47 | 9.05 | 8.25 | 0.00 | ||||||||||||||||||||||||||||||
CFBI | Community First Bancshares, Inc. (MHC) | SE | 6.63 | 7,571 | 50.2 | 12.05 | 5.36 | 6.62 | 0.11 | -34.40 | -42.14 | -0.02 | 0.24 | 10.20 | 7.69 | 0.00 | ||||||||||||||||||||||||||||||
FSEA | First Seacoast Bancorp (MHC) | NE | 6.40 | 5,863 | 37.5 | 10.37 | 5.07 | 6.32 | 1.35 | -28.73 | -32.06 | 0.02 | 0.10 | 9.60 | 9.60 | 0.00 | ||||||||||||||||||||||||||||||
GCBC | Greene County Bancorp, Inc. (MHC) | MA | 23.08 | 8,513 | 196.5 | 30.25 | 15.01 | 22.92 | 0.70 | -13.40 | -19.83 | 2.20 | NA | 15.13 | 15.13 | 0.00 | ||||||||||||||||||||||||||||||
KFFB | Kentucky First Federal Bancorp (MHC) | MW | 6.08 | 8,229 | 50.0 | 8.15 | 4.40 | 6.16 | -1.29 | -10.58 | -21.54 | 0.13 | 0.13 | 7.94 | 6.18 | 0.00 | ||||||||||||||||||||||||||||||
LSBK | Lake Shore Bancorp, Inc. (MHC) | MA | 12.61 | 5,729 | 72.3 | 15.90 | 8.95 | 11.20 | 12.61 | -15.63 | -17.56 | 0.75 | 0.74 | 14.38 | 14.38 | 0.00 | ||||||||||||||||||||||||||||||
MGYR | Magyar Bancorp, Inc. (MHC) | MA | 8.05 | 5,811 | 46.8 | 14.30 | 7.50 | 8.01 | 0.50 | -29.45 | -34.55 | 0.38 | 0.36 | 9.65 | 9.65 | 0.00 | ||||||||||||||||||||||||||||||
OFED | Oconee Federal Financial Corp. (MHC) | SE | 26.74 | 5,631 | 150.6 | 28.00 | 15.25 | 26.26 | 1.83 | 18.27 | 2.41 | 0.67 | NA | NA | NA | 0.00 | ||||||||||||||||||||||||||||||
PDLB | PDL Community Bancorp (MHC) | MA | 8.40 | 16,620 | 139.6 | 14.85 | 7.31 | 8.68 | -3.23 | -39.13 | -42.86 | -0.49 | -0.02 | 8.99 | 8.99 | 0.00 | ||||||||||||||||||||||||||||||
PBFS | Pioneer Bancorp, Inc. (MHC) | MA | 8.46 | 25,023 | 211.7 | 15.35 | 8.02 | 8.44 | 0.24 | -41.61 | -44.74 | NA | NA | 8.80 | 8.43 | 0.00 | ||||||||||||||||||||||||||||||
RBKB | Rhinebeck Bancorp, Inc. (MHC) | MA | 6.60 | 10,730 | 70.8 | 11.44 | 5.90 | 6.60 | 0.00 | -38.03 | -41.64 | 0.59 | 0.60 | 10.21 | 10.06 | 0.00 | ||||||||||||||||||||||||||||||
TFSL | TFS Financial Corporation (MHC) | MW | 15.59 | 276,033 | 4,303.3 | 22.47 | 12.65 | 15.24 | 2.30 | -11.47 | -20.78 | 0.33 | NA | 5.91 | 5.87 | 0.00 |
(1) Average of High/Low or Bid/Ask price per share.
(2) Or since offering price if converted of first listed in the past 52 weeks. Percent change figures are actual year-to-date and are not annualized.
(3) EPS (earnings per share) is based on actual trailing 12 month data and is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing 12 month common earnings and average common equity and total assets balances.
(6) Annualized based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing 12 month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public (non-MHC) shares.
RP® Financial, LC.
Exhibit IV-1B
Weekly Thrift Market Line - Part Two
Prices As of September 2, 2020
Key Financial Ratios | Asset Quality Ratios | Pricing Ratios | Dividend Data (6) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Equity/ | Tang Equity/ | Reported Earnings | Core Earnings | NPAs/ | Rsvs/ | Price/ | Price/ | Price/ | Price/Tang | Price/Core | Div/ | Dividend | Payout | |||||||||||||||||||||||||||||||||||||||||
Assets(1) | Assets(1) | ROA(5) | ROE(5) | ROA(5) | ROE(5) | Assets | NPLs | Earnings | Book | Assets | Book | Earnings | Share | Yield | Ratio (7) | |||||||||||||||||||||||||||||||||||||||
(%) | (%) | (%) | (%) | (%) | (%) | (%) | (%) | (x) | (%) | (%) | (%) | (x) | ($) | (%) | (%) | |||||||||||||||||||||||||||||||||||||||
Companies | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
AX | Axos Financial, Inc. | WE | 8.89 | 8.05 | 1.53 | 15.61 | 1.66 | 16.93 | 0.68 | 86.20 | 8.37 | 121.34 | 10.74 | 135.16 | 7.72 | NA | NA | NM | ||||||||||||||||||||||||||||||||||||
BYFC | Broadway Financial Corporation | WE | 10.08 | 10.08 | -0.04 | -0.34 | -0.04 | -0.34 | 1.03 | 63.25 | NM | 98.52 | 9.93 | 98.52 | NM | 0.00 | 0.00 | NM | ||||||||||||||||||||||||||||||||||||
CFFN | Capitol Federal Financial, Inc. | MW | 13.61 | 13.47 | 0.73 | 5.21 | 0.74 | 5.33 | NA | NA | 19.24 | 102.61 | 13.96 | 103.83 | 18.80 | 0.34 | 3.61 | 138.78 | ||||||||||||||||||||||||||||||||||||
CARV | Carver Bancorp, Inc. | MA | 7.01 | 7.01 | -0.86 | -10.14 | -0.98 | -11.50 | 1.99 | 36.53 | NM | NM | 3.62 | NM | NM | 0.00 | 0.00 | NM | ||||||||||||||||||||||||||||||||||||
CBMB | CBM Bancorp, Inc. | MA | 22.85 | 22.85 | 0.34 | 1.32 | 0.29 | 1.12 | 0.56 | 320.34 | 56.90 | 84.42 | 19.29 | 84.42 | 67.95 | NA | NA | 238.10 | ||||||||||||||||||||||||||||||||||||
CNNB | Cincinnati Bancorp, Inc. | MW | 16.58 | 16.51 | 0.43 | 3.68 | 0.44 | 3.75 | 0.54 | 117.65 | 26.77 | 67.64 | 11.21 | 67.97 | 26.23 | NA | NA | NM | ||||||||||||||||||||||||||||||||||||
ESBK | Elmira Savings Bank | MA | 8.80 | 7.11 | 0.61 | 6.38 | 0.60 | 6.26 | NA | 91.20 | 9.84 | 62.97 | 5.54 | 79.43 | 10.04 | 0.60 | 5.65 | 70.37 | ||||||||||||||||||||||||||||||||||||
ESSA | ESSA Bancorp, Inc. | MA | 9.64 | 8.98 | 0.77 | 7.41 | 0.77 | 7.37 | 1.02 | 71.40 | 9.41 | 73.51 | 7.09 | 79.53 | 9.46 | 0.44 | 3.39 | 31.88 | ||||||||||||||||||||||||||||||||||||
FFBW | FFBW, Inc. | MW | 34.76 | 34.74 | 0.60 | 2.36 | NA | NA | 0.77 | 132.95 | 31.88 | 60.22 | 20.93 | 60.26 | NA | NA | NA | NM | ||||||||||||||||||||||||||||||||||||
FNWB | First Northwest Bancorp | WE | 11.92 | 11.92 | 0.59 | 4.29 | 0.49 | 3.62 | 0.40 | 210.92 | 14.46 | 66.75 | 7.96 | 66.75 | 17.20 | 0.20 | 1.77 | 24.36 | ||||||||||||||||||||||||||||||||||||
FBC | Flagstar Bancorp, Inc. | MW | 7.18 | 6.62 | 1.21 | 15.39 | 1.25 | 16.39 | 0.32 | 286.25 | 6.46 | 92.25 | 6.62 | 100.63 | 6.22 | 0.20 | 0.63 | 3.85 | ||||||||||||||||||||||||||||||||||||
FSBW | FS Bancorp, Inc. | WE | 10.39 | 10.05 | 1.61 | 14.18 | 1.57 | 13.88 | 0.40 | 272.56 | 6.44 | 82.81 | 8.60 | 85.86 | 6.58 | 0.84 | 2.06 | 13.13 | ||||||||||||||||||||||||||||||||||||
HONE | HarborOne Bancorp, Inc. | NE | 15.33 | 13.88 | 0.66 | 4.22 | 0.72 | 4.57 | 1.16 | 70.23 | 17.43 | 72.89 | 11.17 | 81.85 | 16.11 | 0.12 | 1.41 | 6.12 | ||||||||||||||||||||||||||||||||||||
HIFS | Hingham Institution for Savings | NE | 9.69 | 9.69 | 1.50 | 15.72 | 1.41 | 14.87 | 0.28 | 438.41 | 10.90 | 157.39 | 15.26 | 157.39 | 11.52 | 1.72 | 0.88 | 12.67 | ||||||||||||||||||||||||||||||||||||
HMNF | HMN Financial, Inc. | MW | 11.37 | 11.28 | 0.94 | 7.93 | 0.96 | 8.03 | 0.44 | 275.80 | 8.91 | 70.24 | 7.99 | 70.90 | 8.80 | 0.00 | 0.00 | NM | ||||||||||||||||||||||||||||||||||||
HFBL | Home Federal Bancorp, Inc. of Louisiana | SW | 9.75 | 9.75 | 0.83 | 7.75 | 0.80 | 7.40 | 1.30 | 70.70 | 10.92 | 79.72 | 7.77 | 79.72 | 11.43 | 0.66 | 2.83 | 30.14 | ||||||||||||||||||||||||||||||||||||
HVBC | HV Bancorp, Inc. | MA | 8.30 | 8.30 | 0.61 | 6.55 | 0.53 | 5.72 | 0.71 | 61.13 | 11.74 | 79.01 | 6.56 | 79.01 | 13.44 | NA | NA | NM | ||||||||||||||||||||||||||||||||||||
IROQ | IF Bancorp, Inc. | MW | 11.23 | 11.23 | 0.62 | 5.32 | NA | NA | NA | NA | 12.04 | 63.78 | 7.16 | 63.78 | NA | 0.30 | 1.85 | 22.22 | ||||||||||||||||||||||||||||||||||||
KRNY | Kearny Financial Corp. | MA | 16.04 | 13.28 | 0.67 | 4.10 | 0.71 | 4.32 | 0.67 | 82.76 | 14.36 | 60.96 | 9.78 | 76.05 | 13.63 | 0.32 | 4.05 | 56.36 | ||||||||||||||||||||||||||||||||||||
EBSB | Meridian Bancorp, Inc. | NE | 11.44 | 11.13 | 1.05 | 9.27 | 1.03 | 9.05 | 0.09 | NM | 8.92 | 82.76 | 9.47 | 85.34 | 9.15 | 0.32 | 2.76 | 24.62 | ||||||||||||||||||||||||||||||||||||
MSVB | Mid-Southern Bancorp, Inc. | MW | 23.42 | 23.42 | 0.49 | 2.03 | 0.52 | 2.17 | 1.23 | 61.33 | 40.84 | 84.55 | 19.80 | 84.55 | 38.43 | 0.08 | 0.63 | 25.81 | ||||||||||||||||||||||||||||||||||||
NYCB | New York Community Bancorp, Inc. | MA | 12.35 | 8.24 | 0.77 | 6.07 | 0.75 | 5.91 | 0.15 | 250.21 | 11.30 | 67.75 | 7.81 | 111.43 | 11.65 | 0.68 | 7.52 | 85.00 | ||||||||||||||||||||||||||||||||||||
NFBK | Northfield Bancorp, Inc. | MA | 14.13 | 13.46 | 0.78 | 5.53 | 0.75 | 5.31 | 0.44 | 174.29 | 11.93 | 67.61 | 9.56 | 71.54 | 12.41 | 0.44 | 4.50 | 53.66 | ||||||||||||||||||||||||||||||||||||
NWBI | Northwest Bancshares, Inc. | MA | 11.06 | 8.35 | 0.54 | 4.36 | 0.68 | 5.49 | 0.98 | 105.39 | 17.86 | 85.01 | 9.40 | 116.05 | 14.48 | 0.76 | 7.47 | 131.58 | ||||||||||||||||||||||||||||||||||||
PCSB | PCSB Financial Corporation | MA | 15.27 | 14.97 | 0.56 | 3.36 | 0.56 | 3.38 | NA | NA | 21.80 | 80.75 | 12.33 | 82.66 | 21.70 | 0.16 | 1.22 | 26.67 | ||||||||||||||||||||||||||||||||||||
PVBC | Provident Bancorp, Inc. | NE | 16.70 | 16.70 | 0.90 | 5.37 | 0.94 | 5.57 | NA | NA | 13.08 | 63.61 | 10.63 | 63.61 | 12.60 | 0.12 | 1.55 | 10.17 | ||||||||||||||||||||||||||||||||||||
PROV | Provident Financial Holdings, Inc. | WE | 10.53 | 10.53 | 0.69 | 6.26 | 0.69 | 6.26 | 0.42 | 167.85 | 12.02 | 72.82 | 7.67 | 72.82 | 12.02 | 0.56 | 4.61 | 55.45 | ||||||||||||||||||||||||||||||||||||
PFS | Provident Financial Services, Inc. | MA | 13.42 | 9.68 | 0.86 | 6.14 | 0.92 | 6.56 | 0.72 | 118.37 | 9.88 | 61.71 | 8.28 | 89.24 | 9.24 | 0.92 | 6.95 | 68.66 | ||||||||||||||||||||||||||||||||||||
PBIP | Prudential Bancorp, Inc. | MA | 10.80 | 10.31 | 0.92 | 8.26 | 0.53 | 4.71 | 1.15 | 50.59 | 7.42 | 62.70 | 6.77 | 66.03 | 13.13 | 0.28 | 2.84 | 53.38 | ||||||||||||||||||||||||||||||||||||
RNDB | Randolph Bancorp, Inc. | NE | 11.67 | NA | 0.97 | 7.85 | 1.15 | 9.38 | 0.67 | 128.53 | 9.14 | 72.87 | 8.51 | NA | 7.64 | NA | NA | NM | ||||||||||||||||||||||||||||||||||||
RVSB | Riverview Bancorp, Inc. | WE | 10.71 | 8.87 | 1.00 | 8.18 | 1.00 | 8.20 | NA | 320.98 | 7.94 | 63.50 | 6.80 | 78.25 | 7.92 | 0.20 | 4.75 | 36.79 | ||||||||||||||||||||||||||||||||||||
SVBI | Severn Bancorp, Inc. | MA | 11.58 | 11.48 | 0.69 | 5.57 | 0.69 | 5.62 | 1.67 | 56.82 | 13.04 | 71.86 | 8.32 | 72.61 | 12.92 | 0.16 | 2.67 | 34.78 | ||||||||||||||||||||||||||||||||||||
STXB | Spirit of Texas Bancshares, Inc. | SW | 11.73 | 8.94 | 0.99 | 7.27 | 1.16 | 8.51 | 0.38 | 131.26 | 9.28 | 62.61 | 7.34 | 84.72 | 7.92 | NA | NA | NM | ||||||||||||||||||||||||||||||||||||
STND | Standard AVB Financial Corp. | MA | 13.45 | 11.15 | 0.68 | 4.79 | 0.77 | 5.43 | 0.50 | 146.54 | 12.62 | 60.57 | 8.15 | 75.01 | 11.14 | 0.88 | 4.77 | 60.14 | ||||||||||||||||||||||||||||||||||||
SBT | Sterling Bancorp, Inc. | MW | NA | NA | NA | 1.05 | NA | NA | NA | NA | 42.43 | 44.18 | NA | NA | NA | 0.00 | 0.00 | 28.57 | ||||||||||||||||||||||||||||||||||||
TBNK | Territorial Bancorp Inc. | WE | 11.68 | 11.68 | 0.92 | 7.82 | 0.89 | 7.58 | 0.06 | 319.04 | 10.39 | 83.04 | 9.70 | 83.04 | 10.71 | 0.92 | 4.32 | 69.27 | ||||||||||||||||||||||||||||||||||||
TSBK | Timberland Bancorp, Inc. | WE | 12.01 | 11.03 | 1.85 | 13.90 | 1.90 | 14.29 | 0.50 | 218.88 | 6.41 | 83.65 | 10.05 | 92.15 | 6.24 | 0.80 | 4.35 | 29.62 | ||||||||||||||||||||||||||||||||||||
TBK | Triumph Bancorp, Inc. | SW | 11.69 | 8.67 | 0.79 | 6.32 | 0.75 | 6.03 | 0.88 | 117.77 | 18.06 | 114.28 | 12.55 | 164.25 | 19.09 | NA | NA | NM | ||||||||||||||||||||||||||||||||||||
TRST | TrustCo Bank Corp NY | MA | 9.75 | 9.74 | 1.01 | 9.92 | 0.99 | 9.75 | 0.59 | 147.10 | 10.69 | 102.46 | 9.99 | 102.56 | 10.88 | 0.27 | 4.63 | 49.55 | ||||||||||||||||||||||||||||||||||||
WSBF | Waterstone Financial, Inc. | MW | 17.39 | 17.36 | 2.28 | 12.08 | 2.28 | 12.08 | 0.42 | 207.44 | 8.43 | 104.48 | 18.17 | 104.66 | 8.43 | 0.48 | 3.08 | 52.97 | ||||||||||||||||||||||||||||||||||||
WNEB | Western New England Bancorp, Inc. | NE | 9.43 | 8.84 | 0.49 | 4.65 | 0.50 | 4.76 | NA | NA | 13.29 | 60.89 | 5.74 | 65.34 | 12.99 | 0.20 | 3.67 | 48.78 | ||||||||||||||||||||||||||||||||||||
WSFS | WSFS Financial Corporation | MA | 13.42 | 9.70 | 0.82 | 5.52 | 0.82 | 5.55 | 0.33 | 569.59 | 15.01 | 82.12 | 11.03 | 118.50 | 14.95 | 0.48 | 1.62 | 24.37 | ||||||||||||||||||||||||||||||||||||
WVFC | WVS Financial Corp. | MA | 10.34 | 10.34 | 0.69 | 6.97 | 0.70 | 7.08 | NA | NA | 9.48 | 69.06 | 7.14 | 69.06 | 9.34 | 0.40 | 2.99 | 28.37 | ||||||||||||||||||||||||||||||||||||
MHCs | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
BCOW | 1895 Bancorp Of Wisconsin, Inc. (MHC) | MW | 12.22 | 12.22 | 0.31 | 2.64 | 0.31 | 2.66 | 0.46 | 91.83 | 27.45 | 65.78 | 8.04 | 65.78 | 27.30 | NA | NA | NM | ||||||||||||||||||||||||||||||||||||
BSBK | Bogota Financial Corp. (MHC) | MA | 17.10 | 17.10 | 0.22 | 1.56 | 0.46 | 3.36 | NA | NA | NA | 73.63 | 12.59 | 73.63 | NA | NA | NA | NA | ||||||||||||||||||||||||||||||||||||
CLBK | Columbia Financial, Inc. (MHC) | MA | 11.61 | 10.70 | 0.62 | 4.95 | 0.65 | 5.16 | NA | NA | 24.02 | 119.49 | 13.88 | 131.10 | 23.09 | NA | NA | NM | ||||||||||||||||||||||||||||||||||||
CFBI | Community First Bancshares, Inc. (MHC) | SE | 8.52 | 6.56 | -0.02 | -0.13 | 0.39 | 2.48 | 0.80 | 82.59 | NM | 64.93 | 5.53 | 86.17 | 27.71 | NA | NA | NM | ||||||||||||||||||||||||||||||||||||
FSEA | First Seacoast Bancorp (MHC) | NE | 12.38 | 12.38 | 0.08 | 0.58 | 0.15 | 1.19 | 0.21 | 323.72 | NM | 66.70 | 8.26 | 66.70 | 63.46 | NA | NA | NM | ||||||||||||||||||||||||||||||||||||
GCBC | Greene County Bancorp, Inc. (MHC) | MA | 7.68 | 7.68 | 1.28 | 15.55 | NA | NA | NA | NA | 10.49 | 152.55 | 11.72 | 152.55 | NA | 0.48 | 2.08 | 20.45 | ||||||||||||||||||||||||||||||||||||
KFFB | Kentucky First Federal Bancorp (MHC) | MW | 19.81 | 16.13 | 0.31 | 1.55 | 0.31 | 1.54 | NA | NA | 46.77 | 76.62 | 15.18 | 98.38 | 47.11 | 0.40 | 6.58 | 307.69 | ||||||||||||||||||||||||||||||||||||
LSBK | Lake Shore Bancorp, Inc. (MHC) | MA | 12.47 | 12.47 | 0.72 | 5.36 | 0.72 | 5.31 | 0.61 | 128.27 | 16.82 | 87.72 | 10.94 | 87.72 | 16.96 | 0.48 | 3.81 | 64.00 | ||||||||||||||||||||||||||||||||||||
MGYR | Magyar Bancorp, Inc. (MHC) | MA | 7.40 | 7.40 | 0.33 | 3.98 | 0.31 | 3.79 | 2.43 | 48.99 | 21.18 | 83.40 | 6.17 | 83.40 | 22.16 | NA | NA | NM | ||||||||||||||||||||||||||||||||||||
OFED | Oconee Federal Financial Corp. (MHC) | SE | NA | NA | 0.76 | NA | NA | NA | NA | NA | 39.91 | 169.70 | NA | 175.24 | NA | 0.40 | 1.50 | 59.70 | ||||||||||||||||||||||||||||||||||||
PDLB | PDL Community Bancorp (MHC) | MA | 12.70 | 12.70 | -0.78 | -5.32 | -0.03 | -0.19 | 1.42 | 79.49 | NM | 93.40 | 11.86 | 93.40 | NM | NA | NA | NM | ||||||||||||||||||||||||||||||||||||
PBFS | Pioneer Bancorp, Inc. (MHC) | MA | 15.24 | 14.70 | -0.21 | -1.49 | 0.26 | 1.87 | 0.76 | 186.40 | NA | 96.17 | 14.65 | 100.36 | NA | NA | NA | NA | ||||||||||||||||||||||||||||||||||||
RBKB | Rhinebeck Bancorp, Inc. (MHC) | MA | 10.08 | 9.94 | 0.63 | 5.65 | 0.64 | 5.72 | 1.01 | 84.35 | 11.19 | 64.64 | 6.51 | 65.58 | 11.05 | NA | NA | NM | ||||||||||||||||||||||||||||||||||||
TFSL | TFS Financial Corporation (MHC) | MW | 11.16 | 11.10 | 0.62 | 5.31 | NA | NA | 1.05 | 29.40 | 47.24 | 263.82 | 29.44 | 265.38 | NA | 1.12 | 7.18 | 336.36 |
(1) Average of High/Low or Bid/Ask price per share.
(2) Or since offering price if converted of first listed in the past 52 weeks. Percent change figures are actual year-to-date and are not annualized.
(3) EPS (earnings per share) is based on actual trailing 12 month data and is not shown on a pro forma basis.
(4) Exludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios based on trailing 12 month common earnings and average common equity and total assets balances.
(6) Annualized based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing 12 month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by public (non-MHC) shares.
Source: S&P Global Market Intelligence and RP® Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reliable, but we cannot guarantee the accuracy or completeness of such information.
Copyright (c) 2020 by RP® Financial, LC.
EXHIBIT IV-2
Historical Stock Price Indices
Exhibit IV-2
Historical Stock Price Indices(1)
SNL | SNL | |||||||||||||||||||||
NASDAQ | Thrift | Bank | ||||||||||||||||||||
Year/Qtr. Ended | DJIA | S&P 500 | Composite | Index | Index | |||||||||||||||||
2005: | Quarter 1 | 10503.8 | 1180.6 | 1999.2 | 1516.6 | 551.00 | ||||||||||||||||
Quarter 2 | 10275.0 | 1191.3 | 2057.0 | 1577.1 | 563.27 | |||||||||||||||||
Quarter 3 | 10568.7 | 1228.8 | 2151.7 | 1527.2 | 546.30 | |||||||||||||||||
Quarter 4 | 10717.5 | 1248.3 | 2205.3 | 1616.4 | 582.80 | |||||||||||||||||
2006: | Quarter 1 | 11109.3 | 1294.8 | 2339.8 | 1661.1 | 595.50 | ||||||||||||||||
Quarter 2 | 11150.2 | 1270.2 | 2172.1 | 1717.9 | 601.14 | |||||||||||||||||
Quarter 3 | 11679.1 | 1335.9 | 2258.4 | 1727.1 | 634.00 | |||||||||||||||||
Quarter 4 | 12463.2 | 1418.3 | 2415.3 | 1829.3 | 658.60 | |||||||||||||||||
2007: | Quarter 1 | 12354.4 | 1420.9 | 2421.6 | 1703.6 | 634.40 | ||||||||||||||||
Quarter 2 | 13408.6 | 1503.4 | 2603.2 | 1645.9 | 622.63 | |||||||||||||||||
Quarter 3 | 13895.6 | 1526.8 | 2701.5 | 1523.3 | 595.80 | |||||||||||||||||
Quarter 4 | 13264.8 | 1468.4 | 2652.3 | 1058.0 | 492.85 | |||||||||||||||||
2008: | Quarter 1 | 12262.9 | 1322.7 | 2279.1 | 1001.5 | 442.5 | ||||||||||||||||
Quarter 2 | 11350.0 | 1280.0 | 2293.0 | 822.6 | 332.2 | |||||||||||||||||
Quarter 3 | 10850.7 | 1166.4 | 2082.3 | 760.1 | 414.8 | |||||||||||||||||
Quarter 4 | 8776.4 | 903.3 | 1577.0 | 653.9 | 268.3 | |||||||||||||||||
2009: | Quarter 1 | 7608.9 | 797.9 | 1528.6 | 542.8 | 170.1 | ||||||||||||||||
Quarter 2 | 8447.0 | 919.3 | 1835.0 | 538.8 | 227.6 | |||||||||||||||||
Quarter 3 | 9712.3 | 1057.1 | 2122.4 | 561.4 | 282.9 | |||||||||||||||||
Quarter 4 | 10428.1 | 1115.1 | 2269.2 | 587.0 | 260.8 | |||||||||||||||||
2010: | Quarter 1 | 10856.6 | 1169.4 | 2398.0 | 626.3 | 301.1 | ||||||||||||||||
Quarter 2 | 9744.0 | 1030.7 | 2109.2 | 564.5 | 257.2 | |||||||||||||||||
Quarter 3 | 9744.0 | 1030.7 | 2109.2 | 564.5 | 257.2 | |||||||||||||||||
Quarter 4 | 11577.5 | 1257.6 | 2652.9 | 592.2 | 290.1 | |||||||||||||||||
2011: | Quarter 1 | 12319.7 | 1325.8 | 2781.1 | 578.1 | 293.1 | ||||||||||||||||
Quarter 2 | 12414.3 | 1320.6 | 2773.5 | 540.8 | 266.8 | |||||||||||||||||
Quarter 3 | 10913.4 | 1131.4 | 2415.4 | 443.2 | 198.9 | |||||||||||||||||
Quarter 4 | 12217.6 | 1257.6 | 2605.2 | 481.4 | 221.3 | |||||||||||||||||
2012: | Quarter 1 | 13212.0 | 1408.5 | 3091.6 | 529.3 | 284.9 | ||||||||||||||||
Quarter 2 | 12880.1 | 1362.2 | 2935.1 | 511.6 | 257.3 | |||||||||||||||||
Quarter 3 | 13437.1 | 1440.7 | 3116.2 | 557.6 | 276.8 | |||||||||||||||||
Quarter 4 | 13104.1 | 1426.2 | 3019.5 | 565.8 | 292.7 | |||||||||||||||||
2013: | Quarter 1 | 14578.5 | 1569.2 | 3267.5 | 602.3 | 318.9 | ||||||||||||||||
Quarter 2 | 14909.6 | 1606.3 | 3404.3 | 625.3 | 346.7 | |||||||||||||||||
Quarter 3 | 15129.7 | 1681.6 | 3771.5 | 650.8 | 354.4 | |||||||||||||||||
Quarter 4 | 16576.7 | 1848.4 | 4176.6 | 706.5 | 394.4 | |||||||||||||||||
2014: | Quarter 1 | 16457.7 | 1872.3 | 4199.0 | 718.9 | 410.8 | ||||||||||||||||
Quarter 2 | 16826.6 | 1960.2 | 4408.2 | 723.9 | 405.2 | |||||||||||||||||
Quarter 3 | 17042.9 | 1972.3 | 4493.4 | 697.7 | 411.0 | |||||||||||||||||
Quarter 4 | 17823.1 | 2058.9 | 4736.1 | 738.7 | 432.8 | |||||||||||||||||
2015: | Quarter 1 | 17776.1 | 2067.9 | 4900.9 | 749.3 | 418.8 | ||||||||||||||||
Quarter 2 | 17619.5 | 2063.1 | 4986.9 | 795.7 | 448.4 | |||||||||||||||||
Quarter 3 | 16284.7 | 1920.0 | 4620.2 | 811.7 | 409.4 | |||||||||||||||||
Quarter 4 | 17425.0 | 2043.9 | 5007.4 | 809.1 | 431.5 | |||||||||||||||||
2016: | Quarter 1 | 17685.1 | 2059.7 | 4869.9 | 788.1 | 381.4 | ||||||||||||||||
Quarter 2 | 17930.0 | 2098.9 | 4842.7 | 780.9 | 385.6 | |||||||||||||||||
Quarter 3 | 18308.2 | 2168.3 | 5312.0 | 827.2 | 413.7 | |||||||||||||||||
Quarter 4 | 19762.6 | 2238.8 | 5383.1 | 966.7 | 532.7 | |||||||||||||||||
2017: | Quarter 1 | 20663.2 | 2362.7 | 5911.7 | 918.9 | 535.8 | ||||||||||||||||
Quarter 2 | 21349.6 | 2423.4 | 6140.4 | 897.1 | 552.4 | |||||||||||||||||
Quarter 3 | 22405.1 | 2519.4 | 6496.0 | 939.3 | 573.2 | |||||||||||||||||
Quarter 4 | 24719.2 | 2673.6 | 6903.4 | 937.6 | 617.7 | |||||||||||||||||
2018: | Quarter 1 | 24103.1 | 2640.9 | 7063.5 | 941.5 | 606.8 | ||||||||||||||||
Quarter 2 | 24271.4 | 2718.4 | 7510.3 | 961.2 | 597.8 | |||||||||||||||||
Quarter 3 | 26458.3 | 2914.0 | 8046.4 | 905.6 | 597.8 | |||||||||||||||||
Quarter 4 | 23327.5 | 2506.9 | 6635.3 | 772.0 | 502.9 | |||||||||||||||||
2019: | Quarter 1 | 25928.7 | 2834.4 | 7729.3 | 837.8 | 543.8 | ||||||||||||||||
Quarter 2 | 26600.0 | 2941.8 | 8006.2 | 845.3 | 573.0 | |||||||||||||||||
Quarter 3 | 26916.8 | 2976.7 | 7999.3 | 890.5 | 584.5 | |||||||||||||||||
Quarter 4 | 28538.4 | 3230.8 | 8972.6 | 920.7 | 663.9 | |||||||||||||||||
2020: | Quarter 1 | 21917.2 | 2584.6 | 7700.1 | 632.8 | 392.9 | ||||||||||||||||
Quarter 2 | 25812.9 | 3100.3 | 10058.8 | 658.5 | 430.8 | |||||||||||||||||
As of September 2, 2020 | 29100.5 | 3580.8 | 12056.4 | 638.6 | 449.4 |
(1) End of period data.
Sources: S&P Global Market Intelligence and The Wall Street Journal.
EXHIBIT IV-3
Stock Price Indices as of September 2, 2020
Index Summary (Current Data)
Industry Banking
Geography All
Index Name | Current Value | As Of | Day's Change |
Day's Change
(%) |
|||||||||||
SNL Banking Indexes | |||||||||||||||
SNL U.S. Bank and Thrift | 428.26 | 9/2/2020 | 5.47 | 1.29 | |||||||||||
SNL U.S. Bank | 449.42 | 9/2/2020 | 5.78 | 1.30 | |||||||||||
SNL U.S. Thrift | 638.63 | 9/2/2020 | 4.82 | 0.76 | |||||||||||
SNL TARP Participants | 79.21 | 9/2/2020 | 1.02 | 1.30 | |||||||||||
KBW Nasdaq Bank Index | 78.15 | 9/2/2020 | 1.16 | 1.51 | |||||||||||
KBW Nasdaq Regional Bank Index | 70.82 | 9/2/2020 | 0.42 | 0.60 | |||||||||||
S&P 500 Bank | 256.33 | 9/2/2020 | 3.67 | 1.45 | |||||||||||
NASDAQ Bank | 2,729.23 | 9/2/2020 | 19.33 | 0.71 | |||||||||||
S&P 500 Commercial Banks | 366.20 | 9/2/2020 | 5.24 | 1.45 | |||||||||||
S&P 500 Diversified Banks | 440.41 | 9/2/2020 | 6.79 | 1.57 | |||||||||||
S&P 500 Regional Banks | 87.99 | 9/2/2020 | 0.92 | 1.06 | |||||||||||
SNL Asset Size Indexes | |||||||||||||||
SNL U.S. Bank < $250M | 23.64 | 9/2/2020 | 0.56 | 2.42 | |||||||||||
SNL U.S. Bank $250M-$500M | 434.32 | 9/2/2020 | (16.59 | ) | (3.68 | ) | |||||||||
SNL U.S. Thrift < $250M | 1,300.04 | 9/2/2020 | 0.13 | 0.01 | |||||||||||
SNL U.S. Thrift $250M-$500M | 4,679.32 | 9/2/2020 | 31.16 | 0.67 | |||||||||||
SNL U.S. Bank < $500M | 823.45 | 9/2/2020 | (20.50 | ) | (2.43 | ) | |||||||||
SNL U.S. Thrift < $500M | 1,640.36 | 9/2/2020 | 7.82 | 0.48 | |||||||||||
SNL U.S. Bank $500M-$1B | 954.77 | 9/2/2020 | 5.73 | 0.60 | |||||||||||
SNL U.S. Thrift $500M-$1B | 2,911.38 | 9/2/2020 | 3.36 | 0.12 | |||||||||||
SNL U.S. Bank $1B-$5B | 832.92 | 9/2/2020 | 6.38 | 0.77 | |||||||||||
SNL U.S. Thrift $1B-$5B | 1,827.43 | 9/2/2020 | 6.60 | 0.36 | |||||||||||
SNL U.S. Bank $5B-$10B | 1,031.18 | 9/2/2020 | 5.49 | 0.54 | |||||||||||
SNL U.S. Thrift $5B-$10B | 704.19 | 9/2/2020 | 2.82 | 0.40 | |||||||||||
SNL U.S. Bank > $10B | 362.59 | 9/2/2020 | 4.79 | 1.34 | |||||||||||
SNL U.S. Thrift > $10B | 115.32 | 9/2/2020 | 1.17 | 1.03 | |||||||||||
SNL Market Cap Indexes | |||||||||||||||
SNL Micro Cap U.S. Bank | 464.80 | 9/2/2020 | 1.94 | 0.42 | |||||||||||
SNL Micro Cap U.S. Thrift | 845.93 | 9/2/2020 | 3.10 | 0.37 | |||||||||||
SNL Micro Cap U.S. Bank & Thrift | 542.26 | 9/2/2020 | 2.23 | 0.41 | |||||||||||
SNL Small Cap U.S. Bank | 487.66 | 9/2/2020 | 2.36 | 0.49 | |||||||||||
SNL Small Cap U.S. Thrift | 486.91 | 9/2/2020 | 1.31 | 0.27 | |||||||||||
SNL Small Cap U.S. Bank & Thrift | 500.50 | 9/2/2020 | 2.32 | 0.47 | |||||||||||
SNL Mid Cap U.S. Bank | 276.96 | 9/2/2020 | 1.58 | 0.57 | |||||||||||
SNL Mid Cap U.S. Thrift | 214.36 | 9/2/2020 | 2.10 | 0.99 | |||||||||||
SNL Mid Cap U.S. Bank & Thrift | 274.86 | 9/2/2020 | 1.68 | 0.61 | |||||||||||
SNL Large Cap U.S. Bank | 288.90 | 9/2/2020 | 4.11 | 1.44 | |||||||||||
SNL Large Cap U.S. Thrift | 105.08 | 7/30/2020 | (3.13 | ) | |||||||||||
SNL Large Cap U.S. Bank & Thrift | 291.35 | 9/2/2020 | 4.15 | 1.44 | |||||||||||
SNL Geographic Indexes | |||||||||||||||
SNL Mid-Atlantic U.S. Bank | 475.53 | 9/2/2020 | 6.12 | 1.30 | |||||||||||
SNL Mid-Atlantic U.S. Thrift | 2,232.01 | 9/2/2020 | 21.76 | 0.98 | |||||||||||
SNL Midwest U.S. Bank | 477.87 | 9/2/2020 | 8.16 | 1.74 | |||||||||||
SNL Midwest U.S. Thrift | 2,572.39 | 9/2/2020 | 21.47 | 0.84 | |||||||||||
SNL New England U.S. Bank | 438.58 | 9/2/2020 | 7.30 | 1.69 | |||||||||||
SNL New England U.S. Thrift | 2,337.46 | 9/2/2020 | (2.38 | ) | (0.10 | ) | |||||||||
SNL Southeast U.S. Bank | 313.20 | 9/2/2020 | 3.14 | 1.01 | |||||||||||
SNL Southeast U.S. Thrift | 415.01 | 9/2/2020 | 0.00 | 0.00 | |||||||||||
SNL Southwest U.S. Bank | 798.53 | 9/2/2020 | 6.28 | 0.79 | |||||||||||
SNL Southwest U.S. Thrift | 643.36 | 9/2/2020 | (2.49 | ) | (0.39 | ) | |||||||||
SNL Western U.S. Bank | 800.95 | 9/2/2020 | 12.26 | 1.55 | |||||||||||
SNL Western U.S. Thrift | 118.44 | 9/2/2020 | 0.62 | 0.52 | |||||||||||
SNL Stock Exchange Indexes | |||||||||||||||
SNL U.S. Bank NYSE | 394.15 | 9/2/2020 | 5.48 | 1.41 | |||||||||||
SNL U.S. Thrift NYSE | 90.53 | 9/2/2020 | 1.14 | 1.27 | |||||||||||
SNL U.S. Bank NYSE American | 637.32 | 9/2/2020 | 1.34 | 0.21 | |||||||||||
SNL U.S. Bank NASDAQ | 626.55 | 9/2/2020 | 5.28 | 0.85 | |||||||||||
SNL U.S. Thrift NASDAQ | 1,879.08 | 9/2/2020 | 9.73 | 0.52 | |||||||||||
SNL U.S. Bank Pink | 388.99 | 9/2/2020 | 0.79 | 0.20 | |||||||||||
SNL U.S. Thrift Pink | 329.87 | 9/2/2020 | 0.85 | 0.26 | |||||||||||
SNL Bank TSX | 1,045.30 | 9/2/2020 | 1.50 | 0.14 | |||||||||||
SNL OTHER Indexes | |||||||||||||||
SNL U.S. Thrift MHCs | 4,771.23 | 9/2/2020 | 33.15 | 0.70 | |||||||||||
SNL Pink Asset Size Indexes | |||||||||||||||
SNL U.S. Bank Pink < $100M | 190.17 | 9/2/2020 | 0.00 | 0.00 | |||||||||||
SNL U.S. Bank Pink $100M-$500M | 459.76 | 9/2/2020 | (0.49 | ) | (0.11 | ) | |||||||||
SNL U.S. Bank Pink > $500M | 334.70 | 9/2/2020 | 0.85 | 0.26 | |||||||||||
Broad Market Indexes |
DJIA | 29,100.50 | 9/2/2020 | 454.84 | 1.59 | |||||||||||
S&P 500 | 3,580.84 | 9/2/2020 | 54.19 | 1.54 | |||||||||||
S&P 400 Mid Cap | 1,966.45 | 9/2/2020 | 25.42 | 1.31 | |||||||||||
S&P 600 Small Cap | 920.20 | 9/2/2020 | 10.86 | 1.19 | |||||||||||
S&P 500 Financials | 422.68 | 9/2/2020 | 6.25 | 1.50 | |||||||||||
SNL U.S. Financial Institutions | 881.58 | 9/2/2020 | 12.01 | 1.38 | |||||||||||
MSCI US IMI Financials | 1,503.79 | 9/2/2020 | 20.49 | 1.38 | |||||||||||
NASDAQ | 12,056.44 | 9/2/2020 | 116.77 | 0.98 | |||||||||||
NASDAQ Finl | 4,633.45 | 9/2/2020 | 42.80 | 0.93 | |||||||||||
NYSE | 13,276.74 | 9/2/2020 | 163.00 | 1.24 | |||||||||||
Russell 1000 | 1,989.08 | 9/2/2020 | 26.58 | 1.35 | |||||||||||
Russell 2000 | 1,592.29 | 9/2/2020 | 13.71 | 0.87 | |||||||||||
Russell 3000 | 2,089.83 | 9/2/2020 | 27.38 | 1.33 | |||||||||||
S&P TSX Composite | 16,697.97 | 9/2/2020 | 52.97 | 0.32 |
Intraday data is available for certain exchanges. In all cases, the data is at least 15 minutes delayed.
* - Intraday data is not currently available. Data is as of the previous close.
** - Non-publicly traded institutions and institutions outside of your current subscription are not included in custom indexes. Data is as of the previous close.
All SNL indexes are market-value weighted; i.e., an institution's effect on an index is proportional to that institution's market capitalization.
Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other
EXHIBIT IV-4
Pennsylvania Bank and Thrift Acquisitions 2017 - Present
Exhibit IV-4
Pennsylvania Bank and Thrift Acquisitions 2017-Present
Target Financials at Announcement | Deal Terms and Pricing at Announcement | ||||||||||||||||||||||||||||||||||||||
Total | NPAs/ | Rsrvs/ | Deal | Value/ | Prem/ | ||||||||||||||||||||||||||||||||||
Announce | Complete | Assets | E/A | TE/A | ROAA | ROAE | Assets | NPLs | Value | Share | P/B | P/TB | P/E | P/A | Cdeps | ||||||||||||||||||||||||
Date | Date | Buyer Name | Target Name | ($000) | (%) | (%) | (%) | (%) | (%) | (%) | ($M) | ($) | (%) | (%) | (x) | (%) | (%) | ||||||||||||||||||||||
12/18/2019 | 07/01/2020 | Citizens & Northern Corp. | PA | Covenant Financial Inc. | PA | 512,146 | 10.14 | 10.14 | 1.04 | 10.24 | 0.93 | 133.63 | 77.2 | 16.746 | 193.99 | 193.99 | 20.81 | 15.08 | 14.13 | ||||||||||||||||||||
12/10/2019 | 05/01/2020 | Fidelity D & D Bancorp Inc. | PA | MNB Corporation | PA | 412,642 | 9.51 | 9.51 | 0.94 | 10.79 | 0.53 | 126.81 | 78.7 | 69.447 | 200.40 | 200.40 | 20.98 | 19.07 | 11.56 | ||||||||||||||||||||
12/05/2019 | 05/01/2020 | William Penn Bncp Inc. (MHC) | PA | Fidelity Savings and Loan Association of Bucks County | PA | 85,921 | 14.91 | 14.91 | 0.36 | 2.46 | 1.51 | 42.34 | NA | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||
12/05/2019 | 05/01/2020 | William Penn Bncp Inc. (MHC) | PA | Washington Savings Bank | PA | 159,367 | 8.50 | 8.50 | -0.36 | -4.30 | 0.11 | 430.64 | NA | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||
06/05/2019 | 11/30/2019 | S&T Bancorp Inc. | PA | DNB Financial Corporation | PA | 1,166,694 | 9.86 | 8.61 | 0.94 | 9.76 | 0.96 | 87.17 | 206.0 | 47.275 | 177.92 | 206.36 | 19.22 | 17.66 | NA | ||||||||||||||||||||
02/08/2019 | 10/01/2019 | Somerset Trust Holding Company | PA | First Bank of Lilly | PA | 20,485 | 17.13 | 17.13 | 0.16 | 0.97 | 0.32 | 122.73 | 3.4 | NA | 96.89 | 96.89 | NM | 16.60 | -0.72 | ||||||||||||||||||||
09/28/2018 | 04/01/2019 | Citizens & Northern Corp. | PA | Monument Bancorp, Inc. | PA | 347,773 | 9.35 | 9.35 | 0.92 | 9.64 | 0.87 | 272.01 | 42.7 | 26.736 | 163.80 | 163.80 | 16.73 | 12.27 | 12.28 | ||||||||||||||||||||
07/19/2018 | 04/01/2019 | MHC of Western Pennsylvania | PA | Union Building and Loan Savings Bank | PA | 32,981 | 24.60 | 24.60 | 0.46 | 1.88 | 1.74 | 29.67 | NA | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||
06/12/2018 | 03/08/2019 | Northwest Bancshares, Inc. | PA | Donegal Financial Services Corp. | PA | 577,379 | NA | NA | NA | NA | NA | NA | 86.1 | 4817.480 | 170.58 | 174.33 | 20.30 | 15.72 | 7.40 | ||||||||||||||||||||
08/08/2018 | 03/01/2019 | WSFS Financial Corp. | DE | Beneficial Bancorp, Inc. | PA | 5,770,311 | 17.72 | 15.20 | 0.48 | 2.70 | 0.36 | 206.21 | 1507.4 | 19.607 | 143.73 | 172.71 | 52.99 | 26.12 | 16.62 | ||||||||||||||||||||
06/26/2018 | 10/05/2018 | LinkBancorp Inc | PA | Stonebridge Bank | PA | 57,698 | 6.62 | 6.62 | -2.04 | -31.01 | 7.55 | 8.19 | 1.1 | NA | 29.47 | 29.47 | NM | 1.95 | NM | ||||||||||||||||||||
05/31/2018 | 10/01/2018 | Orrstown Financial Services | PA | Mercersburg Financial Corporation | PA | 183,950 | 11.21 | 11.21 | 0.50 | 4.48 | 0.23 | 372.79 | 32.2 | 39.728 | 156.01 | 156.01 | 35.68 | 17.49 | 8.49 | ||||||||||||||||||||
05/25/2018 | 10/01/2018 | Emclaire Financial Corp | PA | Community First Bancorp, Inc. | PA | 129,186 | 10.18 | 10.18 | 0.67 | 6.53 | NA | NA | 17.7 | 48.077 | 195.38 | 195.38 | 26.86 | 13.66 | 11.11 | ||||||||||||||||||||
01/16/2018 | 07/31/2018 | Mid Penn Bancorp Inc. | PA | First Priority Financial Corp. | PA | 612,033 | 8.25 | 7.81 | 0.52 | 6.11 | 0.37 | 194.09 | 90.7 | 13.054 | 182.42 | 194.44 | 32.63 | 14.82 | 11.15 | ||||||||||||||||||||
12/29/2017 | 04/30/2018 | Juniata Valley Financial Corp. | PA | Liverpool Community Bank | PA | 46,432 | 20.96 | 20.96 | 1.16 | 5.68 | 0.33 | 264.94 | 7.6 | 4052.058 | 130.41 | 130.41 | 23.18 | 27.11 | 9.65 | ||||||||||||||||||||
03/29/2017 | 01/08/2018 | Mid Penn Bancorp Inc. | PA | Scottdale Bank & Trust Company | PA | 263,308 | 17.28 | 17.28 | 0.21 | 1.23 | 0.31 | 128.01 | 59.1 | 1166.000 | 129.97 | 129.97 | NM | 22.46 | 6.41 | ||||||||||||||||||||
01/31/2017 | 12/15/2017 | Bryn Mawr Bank Corp. | PA | Royal Bancshares of Pennsylvania, Inc. | PA | 832,485 | 6.28 | 6.28 | 1.36 | 15.92 | 1.36 | 133.57 | 125.9 | 4.176 | 241.04 | 241.04 | 13.47 | 15.13 | 14.45 | ||||||||||||||||||||
06/05/2017 | 10/01/2017 | Penn Community Mutual Holdings | PA | Chelten Hills Savings Bank | PA | 25,666 | 13.87 | 13.87 | -0.19 | -1.50 | 0.14 | NM | NA | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||
04/20/2017 | 10/01/2017 | Riverview Financial Corp. | PA | CBT Financial Corporation | PA | 488,060 | 9.96 | 8.12 | 0.66 | 6.43 | 1.21 | 69.94 | 49.2 | 34.034 | 101.24 | 126.68 | 15.76 | 10.08 | 2.78 | ||||||||||||||||||||
09/27/2017 | 09/27/2017 | Private Investor-Richard Green | 0 | Semperverde Holding Company | PA | 3,172,807 | 11.98 | NA | NA | NA | NA | NA | NA | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||
03/29/2017 | 09/15/2017 | First Bank | NJ | Bucks County Bank | PA | 197,771 | 11.04 | 11.04 | 0.29 | 2.70 | 2.16 | 48.40 | 27.2 | 11.074 | 124.70 | 124.70 | 46.70 | 13.77 | 5.17 | ||||||||||||||||||||
02/17/2017 | 05/31/2017 | Ambler Savings Bank | PA | Bally Savings Bank | PA | 53,023 | 9.28 | 9.28 | 0.72 | 8.01 | 3.11 | 15.29 | NA | NA | NA | NA | NA | NA | NA | ||||||||||||||||||||
Average: | 688,551 | 12.32 | 12.03 | 0.44 | 3.44 | 1.27 | 149.25 | 152.37 | 158.54 | 26.56 | 16.19 | 9.32 | |||||||||||||||||||||||||||
Median: | 230,540 | 10.18 | 10.16 | 0.51 | 5.08 | 0.87 | 127.41 | 159.91 | 168.26 | 20.98 | 15.43 | 10.38 |
Source: S&P Global Market Intelligence.
EXHIBIT IV-5
William Penn Bancorporation
Director and Senior Management Summary Resumes
Exhibit IV-5
William Penn Bancorporation
Director and Senior Management Summary Resumes
The following directors have terms ending in 2021:
Charles Corcoran retired as Executive Vice President and Chief Financial Officer of William Penn Bank, William Penn Bancorp and William Penn, MHC in May 2018. Mr. Corcoran served as Executive Vice President and Chief Financial Officer from April 2010 until his retirement and, prior to that time, served in various roles at William Penn Bank since 1979. Mr. Corcoran also serves as a director of the William Penn Bank Community Foundation. Mr. Corcoran’s service as our former Executive Vice President and Chief Financial Officer, as well as his long history with William Penn Bank, provides the board of directors with valuable insight regarding the operations of William Penn Bank and the markets in which we operate. Age 68. Director since 1989.
Christopher M. Molden has served as the President of Molden Development, a real estate development company located in Bristol, Pennsylvania, since June 2016 and has also served as a consultant to Molden Funeral Chapel and Cremation Service, a funeral services company located in Bristol, Pennsylvania, since June 2016. From June 1981 to June 2016, Mr. Molden was the President and Funeral Director of Molden Funeral Chapel in Bristol, Pennsylvania. Prior to joining the board of directors in 2020, Mr. Molden served as a director of Fidelity Savings and Loan Association of Bucks County until its merger with William Penn Bank on May 1, 2020. Mr. Molden has extensive ties to our market area, as well as valuable business and leadership experience that he brings to the board of directors. Age 61. Director since 2020.
William B.K. Parry, Jr. is President of William B. Parry & Son, Ltd., an insurance agency located in Langhorne, Pennsylvania, of which he is also a partial owner. Mr. Parry also serves as President of Bucks County Contributionship, a mutual insurance company located in Langhorne, Pennsylvania. As a result of his local business operations, Mr. Parry has extensive ties to our market area, as well as valuable business and leadership experience that he brings to the board of directors. Age 72. Director since 1986.
Vincent P. Sarubbi is a partner in the law firm of Archer & Greiner, P.C. at the firm’s Haddonfield, New Jersey office. Before joining Archer & Greiner, P.C., he was appointed by the Governor of New Jersey and served as the Camden County Prosecutor from July 2002 to March 2006. Prior to joining the board of directors in 2018, Mr. Sarubbi served as the Chairman of the Board of Audubon Savings Bank until its merger with William Penn Bank on July 1, 2018. Mr. Sarubbi’s extensive legal experience provides the board of directors with valuable experience regarding legal matters associated with our operations. Age 60. Director since 2018.
The following directors have terms ending in 2022:
D. Michael Carmody, Jr. is the owner of an accounting firm located in Haddon Heights, New Jersey. He is a certified public accountant and is also a member of the board of directors of the Automobile Association of America-South Jersey located in Voorhees, New Jersey. Prior to joining the board of directors in 2018, Mr. Carmody served as the Vice Chairman of the Board of Audubon Savings Bank until its merger with William Penn Bank on July 1, 2018. As a certified public accountant, Mr. Carmody provides the board of directors with significant experience regarding financial and accounting matters. Age 64. Director since 2018.
William J. Feeney has served as the Chairman of our Board since 2008. Mr. Feeney is a retired police chief of Richboro, Pennsylvania, and currently serves as the president of KevinBuilt, Inc., a Plumsteadville, Pennsylvania building contractor, and the owner of Occasions of Naples, Inc., a floral and gift company located in Naples, Florida. As a former local police chief and building contractor, Mr. Feeney has extensive ties to our market area, as well as valuable business and leadership experience that he brings to the board of directors. Age 76. Director since 1985.
Exhibit IV-5 (continued)
William Penn Bancorporation
Director and Senior Management Summary Resumes
Terry L. Sager is the former President and Chief Executive Officer of William Penn Bank, William Penn Bancorp and William Penn, MHC. She served as President of William Penn Bank, William Penn Bancorp and William Penn, MHC from April 2010 until October 2018 and as Chief Executive Officer of William Penn Bank, William Penn Bancorp and William Penn, MHC from April 2010 until February 2019. Ms. Sager is also is a certified public accountant and serves on the Board of Directors of Bucks County Contributionship, a mutual insurance company located in Langhorne, Pennsylvania. Ms. Sager’s service as our former President and Chief Executive Officer, as well as her long history with William Penn Bank, provides the board of directors with valuable insight regarding the operations of William Penn Bank and the markets in which we operate. Age 59. Director since 2010.
The following directors have terms ending in 2023:
Craig Burton is a certified public accountant and is a Principal in Bee, Bergvall & Co., Certified Public Accountants, located in Warrington, Pennsylvania. As a certified public accountant, Mr. Burton provides the board of directors with significant experience regarding financial and accounting matters. Age 71. Director since 1993.
Glenn Davis is the owner of G Davis Properties LLC, an owner and operator of nonresidential real estate located in Lansdale, Pennsylvania, since 2016. Mr. Davis retired as the president and owner of Davis Pontiac, Inc., an automobile dealership located in Richboro, Pennsylvania, in 2007. Mr. Davis is also a member of the Board of Trustees of the Auto Dealers Caring for Kids Foundation. As a result of his local business operations, Mr. Davis has extensive ties to our market area, as well as valuable business and leadership experience that he brings to the board of directors. Age 68. Director since 1986.
William C. Niemczura is retired and previously served as the Chairman of the Board and President of Fidelity Savings and Loan Association of Bucks County from September 2011 to December 2016. Following his retirement, Mr. Niemczura continued to serve as the Chairman of the Board of Fidelity Savings and Loan Association of Bucks County until its merger with William Penn Bank on May 1, 2020. Mr. Niemczura’s extensive ties to our market area, as well as his banking experience and former service as Chairman and President of Fidelity Savings and Loan Association of Bucks County, provides the board of directors with valuable insight regarding the local banking community and the markets in which we operate. Age 73. Director since 2020.
Kenneth J. Stephon is the President and Chief Executive Officer of William Penn Bank, William Penn Bancorp and William Penn, MHC. Mr. Stephon previously served as Senior Executive Vice President and Chief Operating Officer of William Penn Bank, William Penn Bancorp and William Penn, MHC from July 2018 until October 2018, when he became President. He was appointed Chief Executive Officer of William Penn Bank, William Penn Bancorp and William Penn, MHC in February 2019. Mr. Stephon has over 40 years of banking industry experience and previously served as President and Chief Executive Officer, as well as a director, of Audubon Savings Bank from October 2013 until its merger with William Penn Bank on July 1, 2018. He also serves as a director of the Pennsylvania Association of Community Bankers and the Insured Financial Institutions of the Delaware Valley. Mr. Stephon’s extensive banking experience and extensive leadership experience, as well as his history and familiarity with William Penn Bank and Audubon Savings Bank, position him well to continue to serve as our President and Chief Executive Officer. Age 61. Director since 2018.
Exhibit IV-5 (continued)
William Penn Bancorporation
Director and Senior Management Summary Resumes
Executive Officers
Our executive officers are elected annually by the board of directors and serve at the board’s discretion. The following individuals currently serve as our executive officers and will serve in the same positions following the conversion and offering:
Name | Position |
Kenneth J. Stephon | President and Chief Executive Officer of William Penn Bancorporation, William Penn Bancorp, William Penn, MHC and William Penn Bank |
Jill M. Ross | Executive Vice President and Chief Retail and Commercial Officer of William Penn Bancorporation, William Penn Bancorp, William Penn, MHC and William Penn Bank |
Gregory S. Garcia | Executive Vice President and Chief Operating Officer of William Penn Bancorporation, William Penn Bancorp, William Penn, MHC and William Penn Bank |
Jonathan T. Logan | Senior Vice President and Chief Financial Officer of William Penn Bancorporation, William Penn Bancorp, William Penn, MHC and William Penn Bank |
Below is information regarding our executive officers who are not also directors. Each executive officer has held his or her current position for the period indicated below. Ages presented are as of June 30, 2020.
Jill M. Ross joined William Penn Bancorp, William Penn, MHC and William Penn Bank in March 2019 as Senior Vice President and Chief Retail Officer, and was promoted to Executive Vice President and Chief Retail and Commercial Officer in April 2020. Prior to that time, Ms. Ross served as Senior Vice President and New Jersey Regional Director of Beneficial Bank in Philadelphia, Pennsylvania, from June 2012 to March 2019, and as Vice President and Relationship Manager of Beneficial Bank from March 2008 to June 2012. Ms. Ross has 25 years of banking industry experience. She is a member of the board of directors of the Virtua Foundation and the Girl Scouts of Southern New Jersey. Age 43.
Gregory S. Garcia joined William Penn Bancorp, William Penn, MHC and William Penn Bank in September 2018 as Senior Vice President and was appointed as Chief Financial Officer in January 2019. In April 2020, Mr. Garcia was again promoted to Executive Vice President and Chief Operating Officer of William Penn Bancorp, William Penn, MHC and William Penn Bank. Mr. Garcia previously served as an Executive Managing Director of FinPro, Inc. from September 2016 to July 2018, and as a Senior Managing Director of FinPro, Inc. from February 2004 to September 2016. Age 43.
Jonathan T. Logan joined William Penn Bancorp, William Penn, MHC and William Penn Bank as Senior Vice President and Chief Financial Officer in April 2020. Mr. Logan served as Vice President and Controller of Towne Park, a hospitality services company, from March 2019 to March 2020. Prior to that time, Mr. Logan served as Vice President and Corporate Controller of Beneficial Bank in Philadelphia, Pennsylvania from April 2011 to March 2019. Age 36.
Source: William Penn Bancorporation’s prospectus.
EXHIBIT IV-6
William Penn Bancorporation
Pro Forma Regulatory Capital Ratios
Exhibit IV-6
William Penn Bancorporation
Pro Forma Regulatory Capital Ratios
William
Penn Bank
Historical at |
Pro Forma at June 30, 2020, Based Upon the Sale in the Offering of |
|||||||||||||||||||||||||||||||
June 30, 2020 | 9,350,000 Shares | 11,000,000 Shares | 12,650,000 Shares | |||||||||||||||||||||||||||||
Amount |
Percent
of
Assets |
Amount |
Percent
of
Assets |
Amount |
Percent
of
Assets |
Amount |
Percent
of
Assets |
|||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
Equity | $ | 93,401 | 12.68 | % | $ | 127,807 | 16.34 | % | $ | 134,002 | 16.95 | % | $ | 140,196 | 17.55 | % | ||||||||||||||||
Tier 1 leverage capital (1)(2) | $ | 86,822 | 13.67 | % | $ | 121,228 | 17.81 | % | 127,423 | 18.50 | % | $ | 133,617 | 19.17 | % | |||||||||||||||||
Tier 1 leverage requirement | 31,746 | 5.00 | 34,027 | 5.00 | 34,436 | 5.00 | 34,845 | 5.00 | ||||||||||||||||||||||||
Excess | $ | 55,076 | 8.67 | % | $ | 87,201 | 12.81 | % | $ | 92,987 | 13.50 | % | $ | 98,772 | 14.17 | % | ||||||||||||||||
Tier 1 risk-based capital (1)(2) | $ | 86,822 | 19.19 | % | $ | 121,228 | 26.26 | % | $ | 127,423 | 27.51 | % | $ | 133,617 | 28.74 | % | ||||||||||||||||
Tier 1 risk-based requirement | 36,197 | 8.00 | 36,297 | 8.00 | 37,058 | 8.00 | 37,189 | 8.00 | ||||||||||||||||||||||||
Excess | $ | 50,625 | 11.19 | % | $ | 84,301 | 18.26 | % | $ | 90,365 | 19.51 | % | $ | 96,428 | 20.74 | % | ||||||||||||||||
Total risk-based capital (1)(2) | $ | 90,341 | 19.97 | % | $ | 124,747 | 27.03 | % | $ | 130,942 | 28.27 | % | $ | 137,136 | 29.50 | % | ||||||||||||||||
Total risk-based requirement | 45,247 | 10.00 | 46,159 | 10.00 | 46,323 | 10.00 | 46,486 | 10.00 | ||||||||||||||||||||||||
Excess | $ | 45,094 | 9.97 | % | $ | 78,588 | 17.03 | % | $ | 84,619 | 18.27 | % | $ | 90,650 | 19.50 | % | ||||||||||||||||
Common equity tier 1 risk-based capital (1)(2) | $ | 86,822 | 19.19 | % | $ | 121,228 | 26.26 | % | $ | 127,423 | 27.51 | % | $ | 133,617 | 28.74 | % | ||||||||||||||||
Common equity tier 1 risk-based requirement | 29,410 | 6.50 | 30,003 | 6.50 | 30,110 | 6.50 | 30,216 | 6.50 | ||||||||||||||||||||||||
Excess | $ | 57,412 | 12.69 | % | $ | 91,225 | 19.76 | % | $ | 97,313 | 21.01 | % | $ | 103,401 | 22.24 | % | ||||||||||||||||
Reconciliation of capital infused into William Penn Bank: | ||||||||||||||||||||||||||||||||
Net proceeds | $ | 45,626 | $ | 53,801 | $ | 61,975 | ||||||||||||||||||||||||||
Less: Common stock acquired by new equity incentive plan | (3,740 | ) | (4,400 | ) | (5,060 | ) | ||||||||||||||||||||||||||
Less: Common stock acquired by employee stock ownership plan | (7,480 | ) | (8,800 | ) | (10,120 | ) | ||||||||||||||||||||||||||
Pro forma increase | $ | 34,406 | $ | 40,601 | $ | 46,795 |
(1) | Tier 1 leverage capital levels are shown as a percentage of total average assets. Risk-based capital levels are shown as a percentage of risk-weighted assets. | |
(2) | Pro forma amounts and percentages assume net proceeds are invested in assets that carry a 20% risk weighting. |
Source: William Penn Bancorporation’s prospectus.
EXHIBIT IV-7
William Penn Bancorporation
Pro Forma Analysis Sheet
EXHIBIT IV-7 | ||
PRO FORMA ANALYSIS SHEET | ||
William Penn Bancorporation | ||
Prices as of September 2, 2020 |
Subject at | Peer Group | Pennsylvania | All Public | ||||||||||||||||||||||||||
Valuation Midpoint Pricing Multiples | Symbol | Midpoint | Mean | Median | Mean | Median | Mean | Median | |||||||||||||||||||||
Price-earnings multiple | = | P/E | NM | x | 10.51 | x | 10.38 | x | 11.42 | x | 10.61 | x | 12.56 | x | 11.11x | ||||||||||||||
Price-core earnings multiple | = | P/CE | 75.00 | x | 11.04 | x | 11.29 | x | 11.83 | x | 12.13 | x | 12.05 | x | 11.48x | ||||||||||||||
Price-book ratio | = | P/B | 67.96 | % | 69.28 | % | 69.65 | % | 71.64 | % | 71.28 | % | 78.62 | % | 72.88% | ||||||||||||||
Price-tangible book ratio | = | P/TB | 70.09 | % | 72.84 | % | 72.74 | % | 80.78 | % | 77.01 | % | 88.11 | % | 82.26% | ||||||||||||||
Price-assets ratio | = | P/A | 15.84 | % | 7.39 | % | 7.47 | % | 7.52 | % | 7,11 | % | 9.91 | % | 9.00% |
Valuation Parameters | Adjusted | |||||||||||||||||
Pre-Conversion Earnings (Y) | $ | 1,336,772 | (12 Mths 6/20(2) | ESOP Stock (% of Offering + Foundation) (E) | 8.00 | % | ||||||||||||
Pre-Conversion Core Earnings (YC) | $ | 3,126,772 | (12 Mths 6/20(2) | Cost of ESOP Borrowings (S) | 0.00 | % | ||||||||||||
Pre-Conversion Book Value (B) | $ | 100,268,000 | (2 | ) | ESOP Amortization (T) | 25.00 | Years | |||||||||||
Pre-Conv. Tang. Book Value (B) | $ | 94,218,000 | (2 | ) | Stock Program (% of Offering + Foundation (M) | 4.00 | % | |||||||||||
Pre-Conversion Assets (A) | $ | 740,355,000 | (2 | ) | Stock Programs Vesting (N) | 5.00 | Years | |||||||||||
Reinvestment Rate (R) | 0.29 | % | Fixed Expenses | $ | 1,500,000 | |||||||||||||
Tax rate (TAX) | 22.50 | % | Variable Expenses (Blended Commission %) | 0.91 | % | |||||||||||||
After Tax Reinvest. Rate (R) | 0.22 | % | Percentage Sold (PCT) | 83.1765 | % | |||||||||||||
Est. Conversion Expenses (1)(X) | 2.18 | % | MHC Assets | $ | 3,903,000 | |||||||||||||
Insider Purchases | $ | 1,300,000 | Options as (% of Offering + Foundation) (O1) | 10.00 | % | |||||||||||||
Price/Share | $ | 10.00 | Estimated Option Value (O2) | 29.90 | % | |||||||||||||
Foundation Cash Contribution (FC) | $ | - | Option Vesting Period (O3) | 5.00 | Years | |||||||||||||
Foundation Stock Contribution (FS) | $ | - | % of Options taxable (O4) | 25.00 | % | |||||||||||||
Foundation Tax Benefit (FT) | $ | - |
Shares | 2nd Step | Full | Plus: | Total Market | |||||||||||||||||||||
2nd Step | Exchange | Conversion | Foundation | Capitalization | Exchange | ||||||||||||||||||||
Conclusion | Offering Shares | Shares | Shares | Shares | Shares | Ratio | |||||||||||||||||||
Maximum | 12,650,000 | 2,558,616 | 15,208,616 | 0 | 15,208,616 | 3.2877 | |||||||||||||||||||
Midpoint | 11,000,000 | 2,224,884 | 13,224,884 | 0 | 13,224,884 | 2.8589 | |||||||||||||||||||
Minimum | 9,350,000 | 1,891,151 | 11,241,151 | 0 | 11,241,151 | 2.4301 |
Market Value | 2nd Step | Full | Total Market | ||||||||||||||||||
2nd Step | Exchange | Conversion | Foundation | Capitalization | |||||||||||||||||
Conclusion | Offering Value | Shares Value | $ Value | $ Value | $ Value | ||||||||||||||||
Maximum | $ | 126,500,000 | $ | 25,586,160 | $ | 152,086,160 | 0 | $ | 152,086,160 | ||||||||||||
Midpoint | $ | 110,000,000 | $ | 22,248,840 | $ | 132,248,840 | 0 | $ | 132,248,840 | ||||||||||||
Minimum | $ | 93,500,000 | $ | 18,911,510 | $ | 112,411,510 | 0 | $ | 112,411,510 |
(1) Estimated offering expenses at midpoint of the offering. | ||||||||
(2) Adjusted to reflect consolidation and reinvesment of $3.9 million of MHC net assets. |
EXHIBIT IV-8
William Penn Bancorporation
Pro Forma Effect of Conversion Proceeds
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
William Penn Bancorporation
At the Minimum of the Range
1. | Fully Converted Value and Exchange Ratio | ||||
Fully Converted Value | $ | 112,411,510 | |||
Exchange Ratio | 2.43006 | ||||
2nd Step Offering Proceeds | $ | 93,500,000 | |||
Less: Estimated Offering Expenses | 2,247,180 | ||||
2nd Step Net Conversion Proceeds | $ | 91,252,820 |
2. | Estimated Additional Income from Conversion Proceeds | ||||
Net Conversion Proceeds | $ | 91,252,820 | |||
Less: Cash Contribution to Foundation | 0 | ||||
Less: ESOP Stock Purchases (1) | (7,480,000 | ) | |||
Less: RRP Stock Purchases (2) | (3,740,000 | ) | |||
Net Cash Proceeds | $ | 80,032,820 | |||
Estimated after-tax net incremental rate of return | 0.22 | % | |||
Earnings Increase | $ | 179,874 | |||
Less: Consolidated interest cost of ESOP borrowings | 0 | ||||
Less: Amortization of ESOP borrowings(3) | (231,880 | ) | |||
Less: RRP Vesting (3) | (579,700 | ) | |||
Less: Option Plan Vesting (4) | (527,679 | ) | |||
Net Earnings Increase | $ | (1,159,385 | ) |
Net | |||||||||||||
Before | Earnings | After | |||||||||||
3. | Pro Forma Earnings | Conversion(5) | Increase | Conversion | |||||||||
12 Months ended June 30, 2020 (reported) | $ | 1,336,772 | $ | (1,159,385 | ) | $ | 177,387 | ||||||
12 Months ended June 30, 2020 (core) | $ | 3,126,772 | $ | (1,159,385 | ) | $ | 1,967,387 |
Before | Net Cash | Tax Benefit | After | ||||||||||||||
4. | Pro Forma Net Worth | Conversion(5) | Proceeds | and Other | Conversion | ||||||||||||
June 30, 2020 | $ | 100,268,000 | $ | 80,032,820 | $ | 0 | $ | 180,300,820 | |||||||||
June 30, 2020 (Tangible) | $ | 94,218,000 | $ | 80,032,820 | $ | 0 | $ | 174,250,820 |
Before | Net Cash | Tax Benefit | After | ||||||||||||||
5. | Pro Forma Assets | Conversion(5) | Proceeds | and Other | Conversion | ||||||||||||
June 30, 2020 | $ | 740,355,000 | $ | 80,032,820 | $ | 0 | $ | 820,387,820 |
(1) Includes ESOP purchases of 8.0% of the second step offering. | |||
(2) Includes RRP purchases of 4.0% of the second step offering. | |||
(3) ESOP amortized over 25 years, RRP amortized over 5 years, tax effected at: | 22.50% | ||
(4) Option valuation based on Black-Scholes model, 5 year vesting, and assuming 25% of the options are taxable. | |||
(5) Adjusted to reflect consolidation and reinvestment of net MHC assets. |
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
William Penn Bancorporation
At the Midpoint of the Range
1. | Fully Converted Value and Exchange Ratio | ||||
Fully Converted Value | $ | 132,248,840 | |||
Exchange Ratio | 2.85890 | ||||
2nd Step Offering Proceeds | $ | 110,000,000 | |||
Less: Estimated Offering Expenses | 2,398,980 | ||||
2nd Step Net Conversion Proceeds | $ | 107,601,020 |
2. | Estimated Additional Income from Conversion Proceeds | ||||
Net Conversion Proceeds | $ | 107,601,020 | |||
Less: Cash Contribution to Foundation | 0 | ||||
Less: ESOP Stock Purchases (1) | (8,800,000 | ) | |||
Less: RRP Stock Purchases (2) | (4,400,000 | ) | |||
Net Cash Proceeds | $ | 94,401,020 | |||
Estimated after-tax net incremental rate of return | 0.22 | % | |||
Earnings Increase | $ | 212,166 | |||
Less: Consolidated interest cost of ESOP borrowings | 0 | ||||
Less: Amortization of ESOP borrowings(3) | (272,800 | ) | |||
Less: RRP Vesting (3) | (682,000 | ) | |||
Less: Option Plan Vesting (4) | (620,799 | ) | |||
Net Earnings Increase | $ | (1,363,432 | ) |
Net | |||||||||||||
Before | Earnings | After | |||||||||||
3. | Pro Forma Earnings | Conversion(5) | Increase | Conversion | |||||||||
12 Months ended June 30, 2020 (reported) | $ | 1,336,772 | $ | (1,363,432 | ) | $ | (26,660 | ) | |||||
12 Months ended June 30, 2020 (core) | $ | 3,126,772 | $ | (1,363,432 | ) | $ | 1,763,340 |
Before | Net Cash | Tax Benefit | After | ||||||||||||||
4. | Pro Forma Net Worth | Conversion (5) | Proceeds | of Foundation | Conversion | ||||||||||||
June 30, 2020 | $ | 100,268,000 | $ | 94,401,020 | $ | 0 | $ | 194,669,020 | |||||||||
June 30, 2020 (Tangible) | $ | 94,218,000 | $ | 94,401,020 | $ | 0 | $ | 188,619,020 |
Before | Net Cash | Tax Benefit | After | ||||||||||||||
5. | Pro Forma Assets | Conversion (5) | Proceeds | of Foundation | Conversion | ||||||||||||
June 30, 2020 | $ | 740,355,000 | $ | 94,401,020 | $ | 0 | $ | 834,756,020 |
(1) Includes ESOP purchases of 8.0% of the second step offering. | |||
(2) Includes RRP purchases of 4.0% of the second step offering. | |||
(3) ESOP amortized over 25 years, RRP amortized over 5 years, tax effected at: | 22.50% | ||
(4) Option valuation based on Black-Scholes model, 5 year vesting, and assuming 25% of the options are taxable. | |||
(5) Adjusted to reflect consolidation and reinvestment of net MHC assets. |
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
William Penn Bancorporation
At the Maximum of the Range
1. | Fully Converted Value and Exchange Ratio | ||||
Fully Converted Value | $ | 152,086,160 | |||
Exchange Ratio | 3.28773 | ||||
2nd Step Offering Proceeds | $ | 126,500,000 | |||
Less: Estimated Offering Expenses | 2,550,780 | ||||
2nd Step Net Conversion Proceeds | $ | 123,949,220 |
2. | Estimated Additional Income from Conversion Proceeds | ||||
Net Conversion Proceeds | $ | 123,949,220 | |||
Less: Cash Contribution to Foundation | 0 | ||||
Less: ESOP Stock Purchases (1) | (10,120,000 | ) | |||
Less: RRP Stock Purchases (2) | (5,060,000 | ) | |||
Net Cash Proceeds | $ | 108,769,220 | |||
Estimated after-tax net incremental rate of return | 0.22 | % | |||
Earnings Increase | $ | 244,459 | |||
Less: Consolidated interest cost of ESOP borrowings | 0 | ||||
Less: Amortization of ESOP borrowings(3) | (313,720 | ) | |||
Less: RRP Vesting (3) | (784,300 | ) | |||
Less: Option Plan Vesting (4) | (713,919 | ) | |||
Net Earnings Increase | ($ | 1,567,480 | ) |
Net | |||||||||||||
Before | Earnings | After | |||||||||||
3. | Pro Forma Earnings | Conversion(5) | Increase | Conversion | |||||||||
12 Months ended June 30, 2020 (reported) | $ | 1,336,772 | $ | (1,567,480 | ) | $ | (230,708 | ) | |||||
12 Months ended June 30, 2020 (core) | $ | 3,126,772 | $ | (1,567,480 | ) | $ | 1,559,292 |
Before | Net Cash | Tax Benefit | After | ||||||||||||||
4. | Pro Forma Net Worth | Conversion (5) | Proceeds | of Foundation | Conversion | ||||||||||||
June 30, 2020 | $ | 100,268,000 | $ | 108,769,220 | $ | 0 | $ | 209,037,220 | |||||||||
June 30, 2020 (Tangible) | $ | 94,218,000 | $ | 108,769,220 | $ | 0 | $ | 202,987,220 |
Before | Net Cash | Tax Benefit | After | ||||||||||||||
5. | Pro Forma Assets | Conversion (5) | Proceeds | of Foundation | Conversion | ||||||||||||
June 30, 2020 | $ | 740,355,000 | $ | 108,769,220 | $ | 0 | $ | 849,124,220 |
(1) Includes ESOP purchases of 8.0% of the second step offering. | |
(2) Includes RRP purchases of 4.0% of the second step offering. | |
(3) ESOP amortized over 25 years, RRP amortized over 5 years, tax effected at: | 22.50% |
(4) Option valuation based on Black-Scholes model, 5 year vesting, and assuming 25% of the options are taxable. | |
(5) Adjusted to reflect consolidation and reinvestment of net MHC assets. |
EXHIBIT IV-9
Calculation of Minority Ownership Dilution in a Second-Step Offering
Exhibit IV-9
William Penn Bancorporation
Calculation of Minority Ownership Dilution in a Second-Step Offering
Stock Ownership Data as of June 30, 2020
Financial Data as of June 30, 2020
Reflects Pro Forma Market Value as of September 2, 2020
Key Input Assumptions | ||||||
Mid-Tier Stockholders' Equity | $ | 96,365,000 | (BOOK) | |||
Aggregate Dividends Waived by MHC | $ | 0 | (WAIVED DIVIDENDS) | |||
Minority Ownership Interest | 17.3351 | % | (PCT) | |||
Pro Forma Market Value | $ | 132,248,840 | (VALUE) | |||
Market Value of MHC Assets (Other than Stock in Mid-Tier) | $ | 3,903,000 | (MHC ASSETS) |
Current Ownership | ||||||||
MHC Shares | 3,711,114 | 82.66 | % | |||||
Public Shares | 778,231 | 17.34 | % | |||||
Total Shares | 4,489,345 | 100.00 | % |
EXHIBIT V-1
RP® Financial, LC.
Firm Qualifications Statement
FIRM QUALIFICATION STATEMENT
RP® Financial (“RP®) provides financial and management consulting, merger advisory and valuation services to the financial services industry nationwide. We offer a broad array of services, high quality and prompt service, hands-on involvement by principals and senior staff, careful structuring of strategic initiatives and sophisticated valuation and other analyses consistent with industry practices and regulatory requirements. Our staff maintains extensive background in financial and management consulting, valuation and investment banking. Our clients include commercial banks, thrifts, credit unions, mortgage companies, insurance companies and other financial services companies.
STRATEGIC PLANNING SERVICES
RP®’s strategic planning services are designed to provide effective feasible plans with quantifiable results. We analyze strategic options to enhance shareholder value, achieve regulatory approval or realize other objectives. Such services involve conducting situation analyses; establishing mission/vision statements, developing strategic goals and objectives; and identifying strategies to enhance franchise and/or market value, capital management, earnings enhancement, operational matters and organizational issues. Strategic recommendations typically focus on: capital formation and management, asset/liability targets, profitability, return on equity and stock pricing. Our proprietary financial simulation models provide the basis for evaluating the impact of various strategies and assessing their feasibility and compatibility with regulations.
MERGER ADVISORY SERVICES
RP®’s merger advisory services include targeting potential buyers and sellers, assessing acquisition merit, conducting due diligence, negotiating and structuring merger transactions, preparing merger business plans and financial simulations, rendering fairness opinions, preparing mark-to-market analyses, valuing intangible assets and supporting the implementation of post-acquisition strategies. Our merger advisory services involve transactions of financially healthy companies and failed bank deals. RP® is also expert in de novo charters and shelf charters. Through financial simulations, comprehensive data bases, valuation proficiency and regulatory familiarity, RP®’s merger advisory services center on enhancing shareholder returns.
VALUATION SERVICES
RP®’s extensive valuation practice includes bank and thrift mergers, thrift mutual-to-stock conversions, goodwill impairment, insurance company demutualizations, ESOPs, subsidiary companies, merger accounting and other purposes. We are highly experienced in performing appraisals which conform to regulatory guidelines and appraisal standards. RP® is the nation’s leading valuation firm for thrift mutual-to-stock conversions, with appraised values ranging up to $4 billion.
OTHER CONSULTING SERVICES
RP® offers other consulting services including evaluating the impact of regulatory changes (TARP, etc.), branching and diversification strategies, feasibility studies and special research. We assist banks/thrifts in preparing CRA plans and evaluating wealth management activities on a de novo or merger basis. Our other consulting services are facilitated by proprietary valuation and financial simulation models.
KEY PERSONNEL (Years of Relevant Experience & Contact Information)
Ronald S. Riggins, Managing Director (39) | (703) 647-6543 | rriggins@rpfinancial.com | |
William E. Pommerening, Managing Director (35) | (703) 647-6546 | wpommerening@rpfinancial.com | |
Gregory E. Dunn, Director (36) | (703) 647-6548 | gdunn@rpfinancial.com | |
James P. Hennessey, Director (32) | (703) 647-6544 | jhennessey@rpfinancial.com | |
James J. Oren, Director (32) | (703) 647-6549 | joren@rpfinancial.com |
Washington Headquarters | ||
1311-A Dolley Madison Boulevard | Telephone: (703) 528-1700 | |
Suite 2A | Fax No.: (703) 528-1788 | |
McLean, VA 22101 | Toll-Free No.: (866) 723-0594 | |
www.rpfinancial.com | E-Mail: mail@rpfinancial.com |