As filed with the Securities and Exchange
Commission on March 12, 2019
Registration No. 333-________
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Pioneer
Bancorp, Inc.
Pioneer Bank 401(k) Plan
(Exact Name of Registrant as Specified in
Its Charter)
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Maryland
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6036
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Pending
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(State or Other Jurisdiction of
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(Primary Standard Industrial
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(I.R.S. Employer
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Incorporation or Organization)
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Classification Code Number)
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Identification Number)
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652 Albany-Shaker Rd.
Albany, NY 12211
(518) 730-3999
(Address, Including Zip Code, and Telephone
Number, Including Area Code, of Registrant’s Principal Executive Offices)
Thomas L. Amell
President and Chief Executive Officer
Pioneer Bancorp, Inc.
652 Albany-Shaker Rd.
Albany, NY 12211
(518) 730-3999
(Address, Including Zip Code, and Telephone
Number, Including Area Code, of Agent for Service)
Copies to
:
Benjamin M. Azoff, Esq.
Jeffrey M. Cardone, Esq.
Eric Luse, Esq.
Luse Gorman, PC
5335 Wisconsin Avenue, N.W., Suite 780
Washington, D.C. 20015
(202) 274-2000
Approximate date of commencement of
proposed sale to the public:
As soon as practicable after this registration statement becomes effective.
If any of the securities being registered
on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the
following box:
x
If this Form is filed to register additional
shares for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering:
¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering:
¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering:
¨
Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company,
or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company” and “emerging growth company” in Rule 12b-2 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”):
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Large accelerated filer
¨
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Accelerated filer
¨
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Non-accelerated filer
x
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Smaller reporting company
x
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Emerging growth company
x
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If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
¨
CALCULATION OF REGISTRATION FEE
Title of each class of securities to be
registered
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Amount to be
registered
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Proposed maximum
offering price per share
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Proposed maximum
aggregate offering price
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Amount of
registration fee
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Common Stock, $0.01 par value per share
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11,689,956 shares
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$
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10.00
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$116,899,560
(1)
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$
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14,169
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Participation Interests
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1,527,369
(2)
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(2
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)
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(2
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)
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(2
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)
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(1)
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Estimated solely for the purpose of calculating the registration fee.
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(2)
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The securities to be purchased by the Pioneer Bank 401(k) Plan are included in the amount shown
for the common stock. Accordingly, no separate fee is required for the participation interests.
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The registrant hereby amends this
registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said Section 8(a), may determine.
Prospectus Supplement
Interests in
PIONEER BANK
401(k) SAVINGS PLAN
Offering of Participation Interests of
up to 1,527,370 Shares of
PIONEER BANCORP, INC.
Common Stock
In connection with
the reorganization of Pioneer Savings Bank (“Pioneer Bank”), a New York-chartered savings bank, into the mutual holding
company structure (the “Reorganization”), Pioneer Bancorp, Inc., a newly-formed Maryland corporation (“Pioneer
Bancorp), is offering shares of its common stock for sale at $10.00 per share. Following the Reorganization, it is expected that
shares of Pioneer Bancorp common stock (“Common Stock”) will be listed on the Nasdaq Capital Markets under the symbol
“PBFS.”
In connection with
the stock offering, Pioneer Bancorp is allowing participants in the Pioneer Bank 401(k) Savings Plan (the “401(k) Plan”)
to make a one-time election to purchase participation interests in shares of Common Stock through the 401(k) Plan. Based upon the
value of the 401(k) Plan assets at December 31, 2018, the trustee of the 401(k) Plan could purchase up to 1,527,370 shares of Common
Stock, assuming a purchase price of $10.00 per share. As a participant in the 401(k) Plan, you may direct the trustee of the 401(k)
Plan to invest up to 100% of your 401(k) Plan account in Pioneer Bancorp Common Stock at the time of the stock offering. This prospectus
supplement relates to the one-time election of 401(k) Plan participants to direct the trustee of the 401(k) Plan to invest their
401(k) Plan accounts in Pioneer Bancorp Common Stock at the time of the stock offering.
Before you consider
investing, you should read the prospectus of Pioneer Bancorp dated
[DATE]
, which is provided with this prospectus supplement.
It contains detailed information regarding the Reorganization and related stock offering of Pioneer Bancorp and the financial condition,
results of operations and business of Pioneer Bank. This prospectus supplement provides information regarding the 401(k) Plan.
You should read this prospectus supplement together with the prospectus and keep both for future reference.
________________________________
For a discussion
of risks that you should consider, see “Risk Factors” beginning on page 18 of the prospectus.
The interests in
the 401(k) Plan and the offering of the shares of Common Stock have not been approved or disapproved by the Board of Governors
of the Federal Reserve System, the New York State Department of Financial Services, the Securities and Exchange Commission or any
other federal or state agency. Any representation to the contrary is a criminal offense.
The securities offered
in this prospectus supplement are not deposits or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation
or any other government agency.
This prospectus supplement
may be used only in connection with offers and sales by Pioneer Bancorp in the stock offering, of Pioneer Bancorp Common Stock
acquired by the 401(k) Plan. No one may use this prospectus supplement to reoffer or resell interests in shares of Common Stock
acquired through the 401(k) Plan.
You should rely only
on the information contained in this prospectus supplement and the prospectus. Pioneer Bancorp, Pioneer Bank and the 401(k) Plan
have not authorized anyone to provide you with information that is different.
This prospectus supplement
does not constitute an offer to sell or solicitation of an offer to buy any securities in any jurisdiction to any person to whom
it is unlawful to make an offer or solicitation in that jurisdiction. Neither the delivery of this prospectus supplement and the
prospectus nor any sale of Pioneer Bancorp Common Stock shall under any circumstances imply that there has been no change in the
affairs of Pioneer Bancorp, Pioneer Bank, or the 401(k) Plan since the date of this prospectus supplement, or that the information
contained in this prospectus supplement or incorporated by reference is correct as of any time after the date of this prospectus
supplement.
The date of this prospectus
supplement is
[DATE]
.
TABLE OF CONTENTS
THE OFFERING
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Securities Offered
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Pioneer
Bancorp is offering participants of the 401(k) Plan the opportunity to purchase participation interests in shares of Common Stock
through the 401(k) Plan at the stock offering purchase price of $10.00 per share. A “participation interest” represents
your indirect ownership of a share of Pioneer Bancorp Common Stock that is acquired by the 401(k) Plan and is equivalent to one
share of Pioneer Bancorp Common Stock. In this prospectus supplement, “participation interests” will be referred to
as shares of “Pioneer Bancorp Common Stock.” At the stock offering purchase price of $10.00 per share, the 401(k) Plan
may acquire up to 1,527,370 shares of Pioneer Bancorp Common Stock in the stock offering, based on the fair market value of the
401(k) Plan’s assets as of December 31, 2018.
Only
employees of Pioneer Bank may become participants in the 401(k) Plan and only participants may purchase Common Stock through the
401(k) Plan. Your investment in shares of Common Stock in connection with the stock offering is subject to the purchase priorities
listed below.
Information with regard to the 401(k) Plan
is contained in this prospectus supplement and information with regard to the financial condition, results of operations and business
of Pioneer Bancorp and Pioneer Bank is contained in the accompanying prospectus. The address of the principal executive office
of Pioneer Bancorp, and Pioneer Bank is 652 Albany-Shaker Road, Albany, New York 12211.
All questions about this
prospectus supplement should be addressed to Susan Hollister, Executive Vice President and Chief Human Resources Officer
at Pioneer Bank; telephone #: (518) 730-3059; email:
hollisters@pioneerbanking.com
.
Questions about
the stock offering, the prospectus, or purchasing Common Stock in the stock offering outside the 401(k) Plan may be directed to
the Stock Information Center toll-free, at [sic number] Monday through Friday, 10:00 a.m. through 4:00 p.m., Eastern Time.
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Election to Purchase Common Stock
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In connection with the stock offering, you may elect to designate a percentage of your 401(k) Plan account balance to be used to purchase shares of Pioneer Bancorp Common Stock in the stock offering. The trustee of the 401(k) Plan will purchase Pioneer Bancorp Common Stock in accordance with your directions. However, such directions are subject to purchase priorities and purchase limitations, as described below.
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Purchase Priorities
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All Plan participants are eligible to purchase
Pioneer Bancorp Common Stock in the offering. However, such directions are subject to the purchase priorities in the Plan of Reorganization,
which provides for a subscription offering and a community offering. In the offering, purchase priorities are as follows and apply
in case more shares of Pioneer Bancorp Common Stock are ordered than are available for sale (an “oversubscription”):
Subscription Offering:
(1) Depositors
with deposit account(s) at Pioneer Bank with aggregate account balances of at least $100.00 at the close of business on December
31, 2017, get first priority.
(2) Pioneer
Bank’s tax-qualified plans, including the employee stock ownership plan and the 401(k) Plan, get second priority.
(3) Depositors
(other than officers, trustees, and directors of Pioneer Bancorp, MHC and Pioneer Bank) with deposit account(s) at Pioneer Bank
with aggregate account balances of at least $100.00 at the close of business on
[supplemental date]
who are not in the first
priority, get third priority.
(4) Other
depositors of Pioneer Bank as of the close of business on
[voting record date]
, get fourth priority.
Community Offering:
(5) Shares
of Common Stock not purchased in the subscription offering may be offered for sale to the general public in a “community
offering,” with a preference given to natural persons and trusts of natural persons residing in Albany, Greene, Rensselaer,
Saratoga, Schenectady and Warren Counties in New York.
If you fall into subscription offering
categories (1), (3) or (4), you have subscription rights to purchase Pioneer Bancorp Common Stock in the subscription offering
and you may use funds in the 401(k) Plan to pay for the shares of Common Stock. You may also be able to purchase shares of Common
Stock in the subscription offering even though you are ineligible to purchase through subscription offering categories (1), (3)
or (4) through subscription offering category (2), reserved for its tax-qualified employee plans. If you fall into purchase priority
(1), (3) or (4), you will separately receive offering materials in the mail, including a stock order form. You may use the stock
order form to purchase shares of Common Stock outside the 401(k) Plan. Please refer to the prospectus for information on how to
make such purchases.
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Additionally, instead of (or in addition to) placing an order outside the 401(k) Plan using a stock order form, you may place an order for the purchase of Common Stock through the 401(k) Plan, using the enclosed Special Investment Election Form, to be completed and submitted in the manner described below under “How to Order Common Stock in the Offering.”
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Purchase in the Offering and Oversubscriptions
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The trustee of the 401(k) Plan will purchase
shares of Common Stock in the stock offering based on the designated percentage set forth in your Special Investment Election Form.
Specifically, on the second business day following the conclusion of the 401(k) Plan Offering Period (as defined below), each of
your current investments within your 401(k) Plan account will be liquidated pro-rata based on your designated percentage, and the
proceeds (rounded down to the nearest $10 increment) will be transferred to an interest bearing account held by the 401(k) Plan
pending the formal closing of the stock offering several weeks later. At the end of the stock offering period, we will determine
whether all, or any portion of, your order will be filled (if the offering is oversubscribed, you may not receive any, or all of,
your order, depending on your purchase priority, as described above). The amount that can be used toward your order will be applied
to the purchase of shares of Common Stock. Following the formal closing of the stock offering, your purchased shares of Pioneer
Bancorp Common Stock will be transferred to the 401(k) Plan and will be reflected in your 401(k) Plan account as soon as practicable
thereafter.
In the event the offering
is oversubscribed,
i.e.
, there are more orders for Pioneer Bancorp Common Stock than shares available for sale in the stock
offering, and the trustee is unable to use the full amount allocated by you to purchase Common Stock in the offering, the amount
that cannot be invested in Common Stock, and any interest earned on such amount, will be reinvested in the existing investment
funds of the 401(k) Plan, in accordance with your then existing investment elections (in proportion to your investment direction
for future contributions). The prospectus describes the allocation procedures in the event of an oversubscription. If you choose
not to direct the investment of your 401(k) Plan account balances towards the purchase of Common Stock in the stock offering, your
account balances will remain in the investment funds of the 401(k) Plan as previously directed by you.
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Composition of the Pioneer Bancorp Stock Fund
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Shares purchased by the 401(k) Plan in
the stock offering will be transferred to the 401(k) Plan and held by the Pioneer Bancorp Stock Fund. The Pioneer Bancorp Stock
Fund is neither a mutual fund nor a diversified or managed investment option. Rather, it is merely a recordkeeping mechanism established
by the 401(k) Plan custodian to track the shares purchased by the participants in the stock offering through the 401(k) Plan. The
Pioneer Bancorp Stock Fund will consist solely of shares of Pioneer Bancorp Common Stock purchased by participants in the 401(k)
Plan, which will be initially valued at $10.00 per share (i.e., the purchase price).
Following
the stock offering, each day the aggregate value of Pioneer Bancorp Stock Fund will be determined by dividing the total market
value of the fund at the end of the day by the total number of shares held in the fund by all participants as of the previous day’s
end. The change in share value reflects the day’s change in stock price of Pioneer Bancorp Common Stock, and the value of
each participation interest should be the same as one share of Pioneer Bancorp Common Stock.
Investment in Pioneer Bancorp
Common Stock involves risks common to investments in shares of stock.
For a discussion of material
risks you should consider, see the “Risk Factors” section of the accompanying prospectus and the section of the prospectus
supplement called “Notice of Your Rights Concerning Employer Securities” (see below).
The portion of your 401(k) Plan account
invested in the Pioneer Bancorp Stock Fund will be reported to you on your regular 401(k) Plan participant statements, which may
be accessed through your participant website.
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Minimum and Maximum Investment
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In connection with
the stock offering, the 401(k) Plan will permit you to use up to 100% of your 401(k) Plan account balance for the purchase of Pioneer
Bancorp Common Stock in the stock offering.
The
trustee of the 401(k) Plan will subscribe for shares of Pioneer Bancorp Common Stock offered for sale in the stock offering, in
accordance with each participant’s direction. The trustee will pay $10.00 per share, which will be the same price paid by
all other persons who purchase shares in the stock offering. In order to purchase Pioneer Bancorp Common Stock through the 401(k)
Plan, the minimum investment is $250, which will purchase 25 shares.
No individual may purchase more than $150,000 (15,000
shares) of
Pioneer Bancorp
Common Stock. Furthermore, no person or entity, together with
associates or persons acting in concert with such person or entity, may purchase more than $300,000 (30,000 shares) of
Pioneer
Bancorp
Common Stock in all categories of the stock offering combined
. Please see the prospectus
for further details regarding additional maximum purchase limits for investors in the stock offering.
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Value of Plan Assets
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As of December 31,
2018, the market value of the assets of the 401(k) Plan was approximately $15,273,695, 100 percent of which is eligible to purchase
Pioneer Bancorp Common Stock in the stock offering.
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How to Order Common Stock in the Offering
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Enclosed is a Special
Investment Election Form on which you can elect to purchase Pioneer Bancorp Common Stock in the stock offering through the 401(k)
Plan. This is done by following the procedures described below. Please note the following stipulations concerning this election:
·
You
can designate a percentage (up to 100%) of your total 401(k) Plan account balance on your Special Investment Election Form to purchase
Pioneer Bancorp Common Stock.
·
Your
election is subject to a minimum purchase of 25 shares, which equals $250.
·
Your
election, plus any order you placed outside the 401(k) Plan, are together subject to a maximum purchase limit of no more than 15,000
shares of Pioneer Bancorp Common Stock, which equals $150,000. The prospectus describes an additional purchase limitation of 30,000
shares of Pioneer Bancorp Common Stock, which equals $300,000, for an individual, together with associates or persons acting in
concert with such individual.
·
The
election period for the 401(k) Plan opens
[opening date]
and closes 4:00 p.m., Eastern Time, on
[expiration day, date]
(the “401(k) Plan Offering Period”).
·
During
the stock offering period, you will continue to have the ability to transfer amounts that are not directed to purchase Pioneer
Bancorp Common Stock among all other investment funds. However, you will not be permitted to change the investment amounts that
you designated to be used to purchase Pioneer Bancorp Common Stock on your Special Investment Election Form.
·
As
soon as practicable following the 401(k) Plan Offering Period, the 401(k) Plan trustee will sell, on a pro-rata basis, a percentage
of each of your investment funds within your 401(k) Plan account based on the percentage designated in your Special Investment
Election Form.
You cannot choose the particular investment fund that will be liquidated to fund the stock purchase
. Thereafter,
the proceeds (rounded down to the nearest $10.00 increment) will be transferred to an interest bearing account held by the 401(k)
Plan pending the formal closing of the stock offering several weeks after the 401(k) Plan Offering Period. Therefore, this money
will
not
be available for distributions, loans or withdrawals until it is used to purchase Pioneer Bancorp Common Stock.
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·
Following
the completion of the stock offering, your purchased shares of Pioneer Bancorp Common stock will be reflected in your 401(k) Plan
account through the Pioneer Bancorp Stock Fund.
If you wish to purchase
Pioneer Bancorp Common Stock in the stock offering through the 401(k) Plan, you should indicate that on your Special Investment
Election Form.
If you do
not wish to make an election, you should check box D on the Special Investment Election Form and return the form either
using the self-addressed pre-paid envelope, by faxing it to (518) 730-3059, or by delivering it in person or by email
at
hollisters@pioneerbanking.com
, to Susan Hollister, Executive Vice President and Chief Human Resources Officer
at Pioneer Bank, 652 Albany-Shaker Road, Albany, New York 12211, no later than 4:00 p.m., Eastern Time, on [expiration
day, date].
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Special Investment Election Form Delivery Deadline
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If
you wish to purchase Pioneer Bancorp Common Stock with a portion of your Plan account balance,
you must return you Special Investment
Election Form to
Susan Hollister at Pioneer Bank, 652 Albany-Shaker Road, Albany, New York 12211 or by faxing it
to (518) 730-3059, to be received no later than 4:00 p.m., Eastern Time, on [expiration day, date]. You may return your Special
Investment Election Form by hand delivery, mail using the self-addressed pre-paid envelope, email (sending it to hollisters@pioneerbanking.com)
or by faxing it so long as it is returned by the time specified.
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Irrevocability of Transfer Direction
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Once you make an election
to transfer amounts in your Plan account to be used to purchase shares of Pioneer Bancorp Common Stock in connection with the stock
offering, you may not change your election.
Your election is irrevocable
. You will, however, continue to have the ability
to transfer amounts not directed towards the purchase of shares of Pioneer Bancorp Common Stock among all of the other investment
funds in the 401(k) Plan on a daily basis.
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Future Direction to Purchase and Sell Common Stock
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You will be able to purchase Pioneer Bancorp Common Stock
after
the stock offering through the 401(k) Plan by investing your future contributions through the Pioneer Bancorp Stock Fund. You will also be able to sell your interest in the Pioneer Bancorp Stock Fund (subject to the restrictions below).
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After the stock offering, to the extent
that shares are available, the trustee of the 401(k) Plan will acquire shares of Pioneer Bancorp Common Stock at your election
in open market transactions at the prevailing price, which may be less than or more than $10.00 per share. You may change your
investment allocation on a daily basis.
However, please be advised that your ability to buy or sell Pioneer Bancorp Common
Stock within the 401(k) Plan largely depends upon the existence of an active market for the stock. If Pioneer Bancorp Common Stock
is illiquid (meaning there are a low number of buyers and sellers of the stock) on the date you elect to buy or sell Pioneer Bancorp
Common Stock within the 401(k) Plan, your election may not be immediately processed. As a result, the prevailing price for Pioneer
Bancorp Common Stock may be less than or more than its fair market value on the date of your election
.
Special restrictions may apply to purchasing
shares of Pioneer Bancorp Common Stock by the participants who are subject to the provisions of Section 16(b) of the Securities
Exchange Act of 1934, as amended, relating to the purchase and sale of securities by officers, directors and principal stockholders
of Pioneer Bancorp.
Please note that if you are an officer
of Pioneer Bank that is restricted by the regulations of the Board of Governors of the Federal Reserve System from selling shares
of Pioneer Bancorp, Common Stock acquired in the stock offering for one year, the Pioneer Bancorp Common Stock that you purchased
in the stock offering will not be tradable until the one-year trading restriction has lapsed.
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Voting Rights of Common Stock
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The 401(k) Plan provides that you may direct the trustee as to how to vote your shares of Pioneer Bancorp Common stock held in the Pioneer Bancorp Stock Fund. If the trustee does not receive your voting instructions, the trustee will be directed by Pioneer Bank to vote your shares in the same proportion as the voting instructions received from other participants related to their shares of Pioneer Bancorp Common Stock held by the 401(k) Plan, provided that such vote is made in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). All voting instructions will be kept confidential.
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DESCRIPTION OF THE PLAN
Introduction
Pioneer Bank originally
adopted the Pioneer Bank 401(k) Savings Plan (the “401(k) Plan”) effective as of January 1, 1990. The 401(k) Plan is
a tax-qualified plan with a cash or deferred compensation feature established in accordance with the requirements under Section
401(a) and Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”).
Pioneer Bank intends
that the 401(k) Plan, in operation, will comply with the requirements under Section 401(a) and Section 401(k) of the Code. Pioneer
Bank will adopt any amendments to the 401(k) Plan that may be necessary to ensure the continuing qualified status of the 401(k)
Plan under the Code and applicable Treasury Regulations.
Employee Retirement
Income Security Act (“ERISA”).
The Plan is an “individual account plan” other than a “money purchase
pension plan” within the meaning of ERISA. As such, the 401(k) Plan is subject to all of the provisions of Title I (Protection
of Employee Benefit Rights) and Title II (Amendments to the Code Relating to Retirement Plans) of ERISA, except for the funding
requirements contained in Part 3 of Title I of ERISA which by their terms do not apply to an individual account plan (other than
a money purchase plan). The Plan is not subject to Title IV (Plan Termination Insurance) of ERISA. The funding requirements contained
in Title IV of ERISA are not applicable to participants or beneficiaries under the 401(k) Plan.
Reference to Full
Text of Plan.
The following portions of this prospectus supplement summarize certain provisions of the 401(k) Plan. They are
not complete and are qualified in their entirety by the full text of the 401(k) Plan. Copies of the 401(k) Plan are available to
all employees by filing a request with the 401(k) Plan administrator c/o Pioneer Bank, Attn: Susan Hollister. You are urged to
read carefully the full text of the 401(k) Plan.
Eligibility and Participation
Employees who are at
least age 21 and have worked for Pioneer Bank for at least three months are eligible to enter the 401(k) Plan on the first day
of the next month following the date on which the employee meets the eligibility requirements. All employees except for union employees,
leased employees, and employees who are not classified as salaried or commission-paid employees are eligible to participate in
the 401(k) Plan upon meeting the eligibility requirements. The Plan Year is January 1 to December 31.
As of December 31,
2018, there were approximately 239 employees and former employees eligible to participate in the 401(k) Plan.
Contributions Under the Plan
Salary Deferrals
.
Eligible employees will automatically have 6% of their salary deferred as a pre-tax contribution; however, you may elect to change
or stop this automatic deferral at any time. You are permitted to defer, on a pre-tax basis, up to 100% of your compensation, subject
to certain restrictions imposed by the Code, and to have that amount contributed to the 401(k) Plan on your behalf. You may further
elect to designate your salary deferrals as pre-tax contributions or after-tax Roth contributions. For purposes of the 401(k) Plan,
“compensation” means your total wages received from Pioneer Bank, with all pre-tax contributions added. “Compensation”
includes your total taxable wages or salary, including any salary deferrals under the 401(k) Plan or any other pre-tax salary reduction
contributions you may make to any other plans maintained by Pioneer Bank. In 2019, the annual compensation of each participant
taken into account under the 401(k) Plan is limited to $280,000. (Limits established by the Internal Revenue Service are subject
to increase pursuant to an annual cost-of-living adjustment, as permitted by the Code).
You may
elect to modify the amount contributed to the 401(k) Plan by filing a new elective deferral agreement with the 401(k) Plan administrator
at the beginning of the next payroll period.
Employer Matching
Contributions
. Pioneer Bank will make matching contributions to the 401(k) Plan, equal to 100% of the amount contributed for
the first 1% of the participant’s plan compensation, plus 50% of the amount contributed between 1% and 6% of the participant’s
plan compensation.
Discretionary Employer
Contributions
. Pioneer Bank may make discretionary employer contributions to the 401(k) Plan.
Qualified Non-Elective
Contributions
. Pioneer Bank may also make discretionary qualified non-elective contributions (“QNEC”) to the 401(k)
Plan. You will be automatically 100% vested in any QNECs.
Rollover Contributions
. You are permitted
to make rollover contributions to the 401(k) Plan.
Limitations on Contributions
Limitations on Employee
Salary Deferrals
. For the Plan Year beginning January 1, 2019, the amount of your before-tax contributions may not exceed $19,000
per calendar year. In addition, if you are at least 50 years old in 2019, you will be able to make a “catch-up” contribution
of up to $6,000 in addition to the $19,000 limit. The “catch-up” contribution limit may be adjusted periodically by
law, based on changes in the cost of living. Contributions in excess of these limits, as applicable to you, are known as excess
deferrals. If you defer amounts in excess of these limitations, as applicable to you, your gross income for federal income tax
purposes will include the excess in the year of the deferral.
In addition, unless the excess deferral
is distributed before April 15 of the following year, it will be taxed again in the year distributed. Income on the excess deferral
distributed by April 15 of the immediately succeeding year will be treated, for federal income tax purposes, as earned and received
by you in the tax year in which the contribution is made.
Contribution Limit
.
Generally, the law imposes a maximum limit on the amount of contributions you may receive under the 401(k) Plan. This limit applies
to all contributions to the 401(k) Plan, including your salary deferrals and all other employer contributions made on your behalf
during the year, excluding earnings and any transfers/rollovers. For the Plan Year beginning January 1, 2019, this total cannot
exceed the lesser of $56,000 or 100% of your annual base compensation.
Benefits Under the Plan
Vesting
. At
all times, you have a fully vested, nonforfeitable interest in the salary deferrals you have made to the 401(k) Plan and in any
employer safe harbor contributions made to your 401(k) Account by Pioneer Bank. Employer contributions (except for QNECs and safe
harbor contributions) are subject to a six-year vesting schedule such that the first 20% of your account attributable to employer
matching and employer discretionary contributions after two years of service and an additional 20% each year thereafter until fully
vested after six years. In the event of your death, disability or attainment of the early retirement age (the earlier of (1) attainment
of age 60 and the completion of 20 years of service; or (2) the completion of 30 years of service), your employer contributions
would immediately become 100% vested.
Withdrawals and Distributions from the Plan
Applicable federal
law requires the 401(k) Plan to impose substantial restrictions on the right of a Plan participant to withdraw amounts held for
his or her benefit under the 401(k) Plan prior to the participant’s termination of employment with the employer.
Withdrawals upon
Termination
. You may request a distribution from your account following your termination of employment. Following your termination,
you may elect to leave your account balance in the 401(k) Plan and defer commencement of receipt of your vested balance until no
later than April 1 of the calendar year following the calendar year in which you attain age 70½. Notwithstanding the foregoing,
if the value of your vested account balance does not exceed $1,000, your vested account balance will be distributed from the 401(k)
Plan, whether or not you consent.
Withdrawal upon
Disability
. If you are disabled in accordance with the definition of disability under the 401(k) Plan, you will be entitled
to the same withdrawal rights as if you had terminated your employment.
Withdrawal upon
Death
. If you die while you are a participant in the 401(k) Plan, the value of your entire account will be payable to your
beneficiary in accordance with the 401(k) Plan.
In-Service Distribution
.
While employed, you are eligible to receive an in-service distribution from your account after your attainment of age 59½.
However, you will be eligible to request a distribution of your rollover contributions at any time.
Hardship
. In
the event you incur a financial hardship, you may request an in-service withdrawal of a portion of your Plan account attributable
to your salary deferrals.
Participant Loans
.
Participant loans are allowed in accordance with the 401(k) Plan’s participant loan procedures.
Form of Distribution
.
You may elect to have your benefits under the 401(k) Plan distributed to you or your beneficiary in a single lump-sum payment or
in equal annual installments over a set number of years.
Investment of Contributions and Account Balances
All amounts credited
to your accounts under the 401(k) Plan are held in the 401(k) Plan trust, which is administered by the trustee of the 401(k) Plan.
Prior to the effective date of the stock offering, you are currently provided the opportunity to direct the investment of your
account into one of the following investment options:
[List of Funds]
In connection with
the stock offering, the 401(k) Plan now provides that in addition to the investment options specified above, you may direct the
trustee, or its representative, to invest a portion of your account in shares of Pioneer Bancorp Common Stock.
Performance History and Description of Funds
The following provides
performance data with respect to the investment options available under the 401(k) Plan:
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Performance as of December 31, 2018
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Fund
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Total Return
YTD
1
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Total Return
1 Yr
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Total Return
Annualized
3 Yrs
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Total Return
Annualized
5 Yrs
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Total Return
Annualized
10 Yrs
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[funds and history to be added]
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The following is a description of each of the 401(k) Plan’s
investment funds and other investments:
[Descriptions of
Funds]
Investors should carefully consider
a mutual fund's investment objectives, risks, charges, and expenses prior to investing. A prospectus, or summary prospectus if
available, containing this and other information can be obtained by contacting the 401(k) Plan administrator. Read the prospectus
carefully before investing.
Before directing retirement funds
to a separate account, investors should carefully consider the investment objectives, risks, charges, and expenses of the separate
account as well as their individual risk tolerance, time horizon and goals. For additional information, contact the 401(k) Plan
administrator.
Pioneer Bancorp
Common Stock.
In connection with the stock offering, you may, in the manner described earlier, direct the trustee to invest
all or a portion of your 401(k) Plan account in Pioneer Bancorp Common Stock. The trustee will use all amounts elected by participants
to acquire shares of Pioneer Bancorp Common Stock in the reorganization and common stock offering. Your purchased shares will be
held within the 401(k) Plan by the Pioneer Bancorp Stock Fund. The Pioneer Bancorp Stock Fund is neither a mutual fund nor a diversified
or managed investment option. Rather, it is merely a recordkeeping mechanism established by the 401(k) Plan custodian to track
the shares purchased by the participants in the stock offering through the 401(k) Plan.
The Pioneer
Bancorp Stock Fund will consist solely of shares of Pioneer Bancorp Common Stock purchased by participants in the 401(k) Plan,
which will be initially valued at $10.00 per share (i.e., the purchase price). Your interest in the Pioneer Bancorp Stock Fund
will be denominated in shares of Common Stock.
As of the date of this
prospectus supplement, there is no established market for Pioneer Bancorp Common Stock. Accordingly, there is no record of the
historical performance of the Pioneer Bancorp Stock Fund. Performance of the Pioneer Bancorp Stock Fund depends on a number of
factors, including the financial condition and profitability of Pioneer Bancorp and Pioneer Bank and market conditions for shares
of Pioneer Bancorp Common Stock generally.
Investment in Pioneer
Bancorp Common Stock involves risks common to investments in the shares of stock.
For a discussion of material risks you should
consider, see “Risk Factors” section of the accompanying prospectus and the section of the prospectus supplement called
“Notice of Your Rights Concerning Employer Securities” (see below).
You may elect to have
both past contributions and earnings, as well as future contributions to your account invested among the options listed above,
including the Pioneer Bancorp Stock Fund. Transfers of past contributions and the earnings thereon do not affect the investment
mix of future contributions. You may change your investment directions at any time.
An investment in any of the
investment options listed above is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation
or any other government agency. As with any investment option, there is always a risk that you may lose money on your investment
in any of the investment options listed above.
Administration of the Plan
The
Trustee and Custodian
.
Pentegra Trust Company serves as trustee of, and Reliance Trust Company as custodian for
all the investment funds under, the 401(k) Plan.
Plan Administrator
.
Pursuant to the terms of the 401(k) Plan, the 401(k) Plan is administered by the Benefits Committee of Pioneer Bank. The address
of the 401(k) Plan administrator is Pioneer Bank, 652 Albany-Shaker Road, Albany, New York, 12211, telephone number is (518) 730-3000.
The 401(k) Plan administrator is responsible for the administration of the 401(k) Plan, interpretation of the provisions of the
401(k) Plan, prescribing procedures for filing applications for benefits, preparation and distribution of information explaining
the 401(k) Plan, maintenance of Plan records, books of account and all other data necessary for the proper administration of the
401(k) Plan, preparation and filing of all returns and reports relating to the 401(k) Plan which are required to be filed with
the U.S. Department of Labor and the Internal Revenue Service, and for all disclosures required to be made to participants, beneficiaries
and others under Sections 104 and 105 of ERISA.
Reports to Plan
Participants
. The 401(k) Plan administrator will furnish you a statement at least quarterly showing the balance in your
account as of the end of that period, the amount of contributions allocated to your account for that period, and any adjustments
to your account to reflect earnings or losses (if any).
Amendment and Termination
It is the intention
of Pioneer Bank to continue the 401(k) Plan indefinitely. Nevertheless, Pioneer Bank may terminate the 401(k) Plan at any time.
If the 401(k) Plan is terminated in whole or in part, then regardless of other provisions in the 401(k) Plan, you will have a fully
vested interest in your accounts. Pioneer Bank reserves the right to make any amendment or amendments to the 401(k) Plan which
do not cause any part of the trust to be used for, or diverted to, any purpose other than the exclusive benefit of participants
or their beneficiaries; provided, however, that Pioneer Bank may make any amendment it determines necessary or desirable, with
or without retroactive effect, to comply with ERISA.
Merger, Consolidation or Transfer
In the event of the
merger or consolidation of the 401(k) Plan with another plan, or the transfer of the trust assets to another plan, the 401(k) Plan
requires that you would, if either the 401(k) Plan or the other plan terminates, receive a benefit immediately after the merger,
consolidation or transfer which is equal to or greater than the benefit you would have been entitled to receive immediately before
the merger, consolidation or transfer, if the 401(k) Plan had then terminated.
Federal Income Tax Consequences
The following is a
brief summary of the material federal income tax aspects of the 401(k) Plan. You should not rely on this summary as a complete
or definitive description of the material federal income tax consequences relating to the 401(k) Plan. Statutory provisions change,
as do their interpretations, and their application may vary in individual circumstances. Finally, the consequences under applicable
state and local income tax laws may not be the same as under the federal income tax laws. Please consult your tax advisor with
respect to any distribution from the 401(k) Plan and transactions involving the 401(k) Plan.
As a “tax-qualified
retirement plan,” the Code affords the 401(k) Plan special tax treatment, including:
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(1)
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the sponsoring employer is allowed an immediate tax deduction for the amount contributed to the
401(k) Plan each year;
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(2)
|
participants pay no current income tax on amounts contributed by the employer on their behalf;
and
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(3)
|
earnings of the 401(k) Plan are tax-deferred, thereby permitting the tax-free accumulation of income
and gains on investments.
|
Pioneer Bank will administer
the 401(k) Plan to comply with the requirements of the Code as of the applicable effective date of any change in the law.
Lump-Sum Distribution
.
A distribution from the 401(k) Plan to a participant or the beneficiary of a participant will qualify as a lump-sum distribution
if it is made within one taxable year, on account of the participant’s death, disability or separation from service, or after
the participant attains age 59½, and consists of the balance credited to participants under the 401(k) Plan and all other
profit sharing plans, if any, maintained by Pioneer Bank. The portion of any lump-sum distribution required to be included in your
taxable income for federal income tax purposes consists of the entire amount of the lump-sum distribution, less the amount of after-tax
contributions, if any, you have made to this Plan and any other profit sharing plans maintained by Pioneer Bank, which is included
in the distribution.
Pioneer Bancorp
Common Stock Included in Lump-Sum Distribution
. If a lump-sum distribution includes Pioneer Bancorp Common Stock, the distribution
generally will be taxed in the manner described above, except that the total taxable amount may be reduced by the amount of any
net unrealized appreciation with respect to Pioneer Bancorp Common Stock; that is, the excess of the value of Pioneer Bancorp at
the time of the distribution over its cost or other basis of the securities to the trust. The tax basis of Pioneer Bancorp Common
Stock, for purposes of computing gain or loss on its subsequent sale, equals the value of Pioneer Bancorp Common Stock at the time
of distribution, less the amount of net unrealized appreciation. Any gain on a subsequent sale or other taxable disposition of
Pioneer Bancorp Common Stock, to the extent of the amount of net unrealized appreciation at the time of distribution, will constitute
long-term capital gain, regardless of the holding period of Pioneer Bancorp Common Stock. Any gain on a subsequent sale or other
taxable disposition of Pioneer Bancorp Common Stock, in excess of the amount of net unrealized appreciation at the time of distribution,
will be considered long-term capital gain. The recipient of a distribution may elect to include the amount of any net unrealized
appreciation in the total taxable amount of the distribution, to the extent allowed by regulations to be issued by the Internal
Revenue Service.
Distributions: Rollovers
and Direct Transfers to Another Qualified Plan or to an IRA
. You may roll over virtually all distributions from the 401(k)
Plan to another qualified plan or to an individual retirement account in accordance with the terms of the other plan or account.
Notice of Your Rights Concerning Employer Securities.
Federal law provides
specific rights concerning investments in employer securities. Because you may in the future have investments in Pioneer Bancorp
Common Stock under the 401(k) Plan, you should take the time to read the following information carefully.
Your Rights Concerning
Employer Securities
. The Plan must allow you to elect to move any portion of your account that is invested in Pioneer Bancorp
Common Stock from that investment into other investment alternatives under the 401(k) Plan. You may contact the 401(k) Plan administrator
shown above for specific information regarding this right, including how to make this election. In deciding whether to exercise
this right, you will want to give careful consideration to the information below that describes the importance of diversification.
All of the investment options under the 401(k) Plan are available to you if you decide to diversify out of your investment in Pioneer
Bancorp Common Stock.
The Importance of
Diversifying Your Retirement Savings
. To help achieve long-term retirement security, you should give careful consideration
to the benefits of a well-balanced and diversified investment portfolio. Spreading your assets among different types of investments
can help you achieve a favorable rate of return, while minimizing your overall risk of losing money. This is because market or
other economic conditions that cause one category of assets, or one particular security, to perform very well often cause another
asset category, or another particular security, to perform poorly. If you invest more than 20% of your retirement savings in any
one company or industry, your savings may not be properly diversified. Although diversification is not a guarantee against loss,
it is an effective strategy to help you manage investment risk.
In deciding how to
invest your retirement savings, you should take into account all of your assets, including any retirement savings outside of the
401(k) Plan. No single approach is right for everyone because, among other factors, individuals have different financial goals,
different time horizons for meeting their goals, and different tolerance for risk. Therefore, you should carefully consider the
rights described here and how these rights affect the amount of money that you invest in employer common stock through the 401(k)
Plan.
It is also important
to periodically review your investment portfolio, your investment objectives, and the investment options under the 401(k) Plan
to help ensure that your retirement savings will meet your retirement goals.
Additional Employee Retirement Income Security Act (“ERISA”)
Considerations
As noted above, the
401(k) Plan is subject to certain provisions of ERISA, including special provisions relating to control over the 401(k) Plan’s
assets by participants and beneficiaries. The Plan’s feature that allows you to direct the investment of your account balances
is intended to satisfy the requirements of Section 404(c) of ERISA relating to control over plan assets by a participant or beneficiary.
The effect of this is two-fold. First, you will not be deemed a “fiduciary” because of your exercise of investment
discretion. Second, no person who otherwise is a fiduciary, such as Pioneer Bank, the 401(k) Plan administrator, or the 401(k)
Plan’s trustee is liable under the fiduciary responsibility provision of ERISA for any loss which results from your exercise
of control over the assets in your Plan account.
Because you will be
entitled to invest all or a portion of your account balance in the 401(k) Plan in Pioneer Bancorp Common Stock, the regulations
under Section 404(c) of the ERISA require that the 401(k) Plan establish procedures that ensure the confidentiality of your decision
to purchase, hold, or sell employer securities, except to the extent that disclosure of such information is necessary to comply
with federal or state laws not preempted by ERISA. These regulations also require that your exercise of voting and similar rights
with respect to Pioneer Bancorp Common Stock be conducted in a way that ensures the confidentiality of your exercise of these rights.
Securities and Exchange Commission Reporting and Short-Swing
Profit Liability
Section 16 of the Securities
Exchange Act of 1934 imposes reporting and liability requirements on officers, directors, and persons beneficially owning more
than 10% of public companies such as Pioneer Bancorp. Section 16(a) of the Securities Exchange Act of 1934 requires the filing
of reports of beneficial ownership. Within 10 days of becoming an officer, director or person beneficially owning more than 10%
of the shares of Pioneer Bancorp, a Form 3 reporting initial beneficial ownership must be filed with the Securities and Exchange
Commission. Changes in beneficial ownership, such as purchases, sales and gifts generally must be reported periodically, either
on a Form 4 within two business days after the change occurs, or annually on a Form 5 within 45 days after the close of Pioneer
Bancorp’s fiscal year. Discretionary transactions in and beneficial ownership of Pioneer Bancorp Common Stock by officers,
directors and persons beneficially owning more than 10% of Pioneer Bancorp Common Stock generally must be reported to the Securities
and Exchange Commission by such individuals.
In addition to the
reporting requirements described above, Section 16(b) of the Securities Exchange Act of 1934, as amended, provides for the recovery
by Pioneer Bancorp of profits realized by an officer, director or any person beneficially owning more than 10% of Pioneer Bancorp
Common Stock resulting from non-exempt purchases and sales of Pioneer Bancorp Common Stock within any six-month period.
The Securities and
Exchange Commission has adopted rules that provide exemptions from the profit recovery provisions of Section 16(b) for all transactions
in employer securities within an employee benefit plan, provided certain requirements are met. These requirements generally involve
restrictions upon the timing of elections to acquire or dispose of employer securities for the accounts of Section 16(b) persons.
Except for distributions
of Pioneer Bancorp Common Stock due to death, disability, retirement, termination of employment or under a qualified domestic relations
order, persons affected by Section 16(b) are required to hold shares of Pioneer Bancorp Common Stock distributed from the 401(k)
Plan for six months following such distribution and are prohibited from directing additional purchases of Pioneer Bancorp Common
Stock for six months after receiving such a distribution.
Financial Information Regarding Plan Assets
Financial information
representing the net assets available for Plan benefits and the change in net assets available for Plan benefits at December 31,
2018, is available upon written request to the 401(k) Plan administrator at the address shown above.
LEGAL OPINION
The validity of the
issuance of Pioneer Bancorp Common Stock has been passed upon by Luse Gorman, PC, Washington, D.C., which firm acted as special
counsel to Pioneer Bank in connection with Pioneer Bancorp’s stock offering.
PROSPECTUS
PIONEER BANCORP, INC.
(Proposed Holding Company for Pioneer
Bank)
Up to 9,713,393 Shares of Common Stock
(Subject to increase to up to 11,170,402
Shares)
Pioneer Bancorp, Inc.,
a Maryland corporation, is offering up to 9,713,393 shares of its common stock for sale at $10.00 per share on a best efforts basis
as part of the reorganization of Pioneer Savings Bank (“Pioneer Bank”), a New York-chartered savings bank, from a mutual
savings bank (meaning no stockholders) into the “two-tier” mutual holding company structure. In connection with the
sale of our common stock, we intend to contribute 2% of the outstanding shares of common stock of Pioneer Bancorp, Inc. and $250,000
in cash to our charitable foundation. Pioneer Bancorp, Inc. has never offered common stock for sale to the public and, as a result,
currently there is no trading market for our common stock. We expect to list our common stock on the Nasdaq Capital Market under
the symbol “PBFS.” We are an “emerging growth company” as defined in the Jumpstart Our Business Startups
Act of 2012.
The shares of common stock being offered,
including shares issued to the charitable foundation, represent 45% of our shares of common stock that will be outstanding upon
completion of the stock offering. After the stock offering, 55% of our outstanding shares of common stock will be owned by our
new mutual holding company parent, Pioneer Bancorp, MHC, a New York-chartered mutual holding company. These percentages will not
be affected by the number of shares we sell in the stock offering. We must sell a minimum of 7,179,465 shares to complete the stock
offering, and we will terminate the stock offering if we do not sell the minimum number of shares. We may sell up to 11,170,402
shares because of changes in market conditions without resoliciting subscribers.
The shares of common stock
are first being offered in a subscription offering to eligible depositors of Pioneer Bank and to Pioneer Bank’s tax-qualified
employee benefit plans. Shares not purchased in the subscription offering may be offered for sale to the general public in a community
offering, with a preference given to residents of the communities served by Pioneer Bank. Any shares of common stock not purchased
in the subscription or community offerings may be offered for sale to the public in a syndicated offering through a syndicate of
broker-dealers. The syndicated offering may begin before the subscription and community offerings (including any extensions) have
ended. However, shares purchased in the subscription offering or the community offering will not be issued until the completion
of any syndicated community offering. The subscription, community, and syndicated community offerings are collectively referred
to as the “offering.”
The minimum order is 25
shares of common stock. Generally, no individual may purchase more than 15,000 shares of common stock, and no individual or other
person, along with their associates and those with whom they are acting in concert, may purchase more than 30,000 shares of common
stock. The subscription and community offerings are expected to expire at 5:00 p.m., Eastern Time, on [expiration date]. We may
extend this expiration time and date, without notice to you, until [extension date #1]. Once submitted, stock orders are irrevocable
unless the subscription and community offerings are terminated or extended, with regulatory approval, beyond [extension date #1],
or the number of shares of common stock offered for sale is increased to more than 11,170,402 shares or decreased to less than
7,179,465 shares. If the subscription and community offerings are extended beyond [extension date #1], we will notify all subscribers
and give them an opportunity to confirm, change or cancel their orders. If you do not respond to this notice, we will promptly
return your funds with interest or cancel your deposit account withdrawal authorization. If the number of shares to be sold in
the offering is increased to more than 11,170,402 shares or decreased to less than 7,179,465 shares, we will resolicit subscribers,
and all funds delivered to us to purchase shares of common stock in the subscription and community offerings will be returned promptly
with interest. Funds received in the subscription and the community offerings will be held in a segregated account at Pioneer Bank
and will earn interest at [interest rate]% per annum until completion or termination of the offering.
Sandler O’Neill
& Partners, L.P. is assisting us in selling the shares on a best efforts basis in the subscription and community offerings,
and will serve as sole manager for any syndicated community offering. Sandler O’Neill & Partners, L.P. is not required
to purchase any shares of common stock that are sold in the subscription offering, community offering or syndicated community offering.
OFFERING SUMMARY
Price: $10.00 per Share
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Minimum
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Midpoint
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Maximum
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Adjusted Maximum
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Number of shares
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7,179,465
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8,446,429
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9,713,393
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11,170,402
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Gross offering proceeds
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$
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71,794,650
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$
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84,464,290
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$
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97,133,930
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$
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111,704,020
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Estimated offering expenses, excluding selling agent fees and expenses
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$
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1,467,000
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$
|
1,467,000
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$
|
1,467,000
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$
|
1,467,000
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Selling agent fees and expenses (1)
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$
|
640,997
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$
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756,143
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$
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871,289
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$
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1,003,708
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Estimated net proceeds
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$
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69,686,654
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$
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82,241,147
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$
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94,795,641
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$
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109,233,312
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Estimated net proceeds per share
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$
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9.71
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$
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9.74
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$
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9.76
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$
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9.78
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(1)
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Assumes all shares are sold in the subscription and community offerings and includes reimbursement
of selling agent’s expenses. See
“
Pro Forma Data” and
“
The Reorganization and Offering—Plan
of Distribution; Selling Agent Compensation” for information regarding compensation to be received by Sandler O’Neill
& Partners, L.P. in the subscription and community offerings and the compensation to be received by Sandler O’Neill &
Partners, L.P. and other participating broker-dealers in the syndicated offering. If all shares are sold in the syndicated offering,
excluding those purchased by our insiders and by our employee stock ownership plan and contributed to our charitable foundation,
for which no selling agent fee will be paid, the selling agent fees and expenses would be approximately $3.2 million, $3.8 million,
$4.4 million and $5.1 million at the minimum, midpoint, maximum, and adjusted maximum of the offering range, respectively.
|
This investment involves
a degree of risk, including the possible loss of principal.
See “Risk Factors”
beginning on page 18.
Shares of our common stock are not deposits
or accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or by any other government agency. Neither
the Securities and Exchange Commission, the New York State Department of Financial Services, the Board of Governors of the Federal
Reserve System, nor any state securities regulator has approved or disapproved of these securities or determined if this prospectus
is accurate or complete. Any representation to the contrary is a criminal offense.
Sandler O’Neill
+ Partners, L.P.
For assistance, please contact the Stock
Information Center at [sic number].
The date of this prospectus is [prospectus
date].
[MAP TO BE INSERTED ON INSIDE FRONT COVER]
TABLE OF CONTENTS
SUMMARY
The following summary provides material
information about the contents of this prospectus, but it may not contain all of the information that is important to you. Before
making an investment decision, you should read carefully this entire document, including the consolidated financial statements
and the notes thereto that appear starting on page F-1 of this prospectus and the section entitled “Risk Factors.”
The terms “we,” “our,” and “us” refer to Pioneer Bancorp, MHC, Pioneer Bancorp, Inc. and Pioneer
Bank, unless the context indicates another meaning.
Pioneer Bancorp, MHC
Pioneer Bancorp, MHC will be formed as a
New York-chartered mutual holding company in connection with the reorganization of Pioneer Bank into the “two-tier”
mutual holding company form of organization. As a mutual holding company, Pioneer Bancorp, MHC will be a non-stock company. Pioneer
Bancorp, MHC’s principal assets will be the common stock of Pioneer Bancorp, Inc. it receives in the reorganization and offering
and $100,000 in cash for its initial capitalization. It is expected that the only business activity of Pioneer Bancorp, MHC will
be to own a majority of Pioneer Bancorp, Inc.’s common stock. Pioneer Bancorp, MHC will be authorized, however, to engage
in any other business activities that are permissible for mutual holding companies under New York law, including investing in loans
and securities. Pioneer Bancorp, MHC will be regulated by the Board of Governors of the Federal Reserve System (the “Federal
Reserve Board”) and the New York State Department of Financial Services (the “NYSDFS”).
Pioneer Bancorp, Inc.
Pioneer Bancorp, Inc., a Maryland corporation,
was incorporated in March 2019. The offering of common stock by means of this prospectus is being made by Pioneer Bancorp, Inc.
in connection with the reorganization of Pioneer Bank into the “two-tier” mutual holding company form of organization.
Upon completion of the reorganization, Pioneer Bancorp, Inc. will become the bank holding company for Pioneer Bank by owning all
the outstanding shares of capital stock of Pioneer Bank and will be regulated by the Federal Reserve Board and the NYSDFS. To date,
Pioneer Bancorp, Inc. has engaged in organizational activities only. Following the reorganization and offering, Pioneer Bancorp,
Inc.’s primary business activity will be to own all the outstanding shares of capital stock of Pioneer Bank.
Pioneer Bank
Founded in 1889, Pioneer Bank is a New York-chartered
savings bank that operates 22 retail banking offices in Albany, Rensselaer, Saratoga, Greene, Schenectady and Warren Counties in
New York. We consider these six counties, Schoharie County and the surrounding areas, as our primary market area for our business
operations. We attract deposits from the general public and municipalities and use those funds along with advances from the Federal
Home Loan Bank of New York and funds generated from operations to originate commercial real estate loans, commercial and industrial
loans, commercial construction loans and home equity loans and lines of credit and, to a lesser extent, consumer loans. We purchase
certain one- to four-family residential real estate loans through our relationship with a mortgage banking company. We also invest
in securities, which have historically consisted primarily of U.S. Government and agency obligations, municipal obligations and
Federal Home Loan Bank of New York stock. We offer a variety of deposit accounts, including demand accounts, savings accounts,
money market accounts and certificate of deposit accounts. Municipal deposit banking services are provided through a limited purpose
commercial bank subsidiary, Pioneer Commercial Bank. Pioneer Bank also sells commercial and consumer insurance products and employee
benefit products and services through Anchor Agency, Inc., its insurance agency subsidiary, and provides wealth management services
through its subsidiary, Pioneer Financial Services, Inc.
At December 31, 2018, we had consolidated
total assets of $1.3 billion, total deposits of $1.1 billion and net worth of $126.4 million. We are subject to regulation and
examination by the NYSDFS and by the Federal Deposit Insurance Corporation. Our executive offices are located at 652 Albany-Shaker
Road, Albany, NY 12211. Our website address is
www.pioneerbanking.com
. Information on our website is not and should not
be considered a part of this prospectus.
Our Reorganization into a Mutual Holding Company and the
Stock Offering
We do not have stockholders in our current
mutual form of ownership. Our depositors have the right to vote on certain specific matters pertaining to Pioneer Bank, such as
the proposed reorganization of Pioneer Bank into the mutual holding company form of ownership or the establishment and formation
of a charitable foundation. The mutual holding company reorganization is a series of transactions by which we will reorganize from
a mutual savings bank to the mutual holding company form of ownership by establishing Pioneer Bancorp, MHC and Pioneer Bancorp,
Inc. and converting our mutual savings bank organization certificate to a stock savings bank organization certificate. The reorganization
will be conducted pursuant to a plan of reorganization and minority stock issuance, which we refer to as the “plan of reorganization.”
Following the reorganization, Pioneer Bank will become a wholly-owned subsidiary of Pioneer Bancorp, Inc., and Pioneer Bancorp,
Inc. will be a majority-owned subsidiary of Pioneer Bancorp, MHC. After the reorganization, our depositors will continue to have
the same limited voting rights in Pioneer Bancorp, MHC as they had in Pioneer Bank before the reorganization.
In connection with the reorganization, we
are offering for sale shares of common stock of Pioneer Bancorp, Inc. at a price of $10.00 per share. All investors will pay the
same price per share in the offering. The $10.00 per share price was selected primarily because it is the price most commonly used
in mutual holding company reorganizations and stock offerings. See “—Terms of the Offering.”
The primary reason for our decision to reorganize
into the mutual holding company form of organization and offer our shares of common stock for sale in the offering is to establish
an organizational structure that will enable us to:
|
|
·
|
preserve Pioneer Bank’s mutual form of ownership and our ability to remain an independent community savings bank;
|
|
|
·
|
increase our capital to support future growth and profitability although we currently have capital well in excess of all applicable
regulatory requirements;
|
|
|
·
|
grow our banking franchise through acquisitions of insurance, wealth management and other financial service businesses, branch
offices and financial institutions or organically through de novo branching;
|
|
|
·
|
compete more effectively in the financial services marketplace; and
|
|
|
·
|
offer our depositors, employees, management and trustees an equity ownership interest in Pioneer Bank, and thereby an economic
interest in our future success.
|
The reorganization and the capital raised
in the offering are expected to provide us with additional capital to support new loans and higher lending limits, support the
growth of our banking franchise, provide an additional cushion against unforeseen risks and allows us to expand our asset and deposit
base. The reorganization and offering also will allow us to establish stock-based benefit plans for management and other employees
that we believe will permit us to attract and retain qualified personnel.
Unlike a standard mutual-to-stock conversion
transaction in which all the common stock of the holding company of the converting savings bank is sold to the public, only a minority
interest in the stock of a mutual holding company subsidiary is sold to the public in a mutual holding company minority stock offering.
Federal and New York laws and regulations require that a majority of the outstanding common stock of Pioneer Bancorp, Inc. be held
by our mutual holding company. Consequently, the shares that we are permitted to sell in the offering represent a minority of the
shares of Pioneer Bancorp, Inc. that will be outstanding when the offering is completed. As a result, a mutual holding company
offering raises less than half the capital that would be raised in a standard conversion offering. Based on these restrictions
and an evaluation of our capital needs, our board of trustees has decided that 43% of our outstanding shares of common stock will
be offered for sale in the offering, 2% of our outstanding shares will be issued to the charitable foundation, and 55% of our shares
will be retained by Pioneer Bancorp, MHC. Our board of trustees has determined that offering 43% of our outstanding shares of common
stock for sale in the offering will enable management to effectively invest the capital raised in the offering. See “—Possible
Conversion of Pioneer Bancorp, MHC to Stock Form.”
The following diagram illustrates our current
pre-reorganization organizational structure:
The following diagram illustrates our proposed
post-reorganization organizational structure:
Business Strategy
Our business strategy is to operate as a
well-capitalized and profitable community bank dedicated to providing personal service to our individual and business customers.
We believe that we have a competitive advantage in the markets we serve because of our 130-year history in the community, our knowledge
of the local marketplace and our long-standing reputation for providing superior, relationship-based customer service. We believe
we can distinguish ourselves by maintaining the culture of a local community bank, but offering the products of a comprehensive
financial services provider by promoting and continuing to expand our insurance, consulting and wealth management businesses. The
following are the key elements of our business strategy:
Continue our emphasis on commercial
lending.
Over the last five and a half years, we have increased our commercial loan portfolio, which consists of commercial
real estate, commercial and industrial and commercial construction loans, consistent with safe and sound underwriting practices.
This has had the benefit of increasing the yield on our loan portfolio and reducing the average term to repricing of our loans.
At December 31, 2018, our commercial loan portfolio totaled $658.5 million, or 63.3% of total loans, compared with $389.1 million,
or 61.0% of total loans, at June 30, 2014. We view the growth of commercial lending as a means of increasing our interest income
and establishing relationships with local businesses, which offer a recurring and potentially broader source of fee income through
commercial deposits, commercial insurance, and our employee benefits products and consulting. We also generally require that commercial
and industrial loan borrowers establish a commercial deposit account with us, which assists our efforts to grow core deposits and
cross-sell our other products and services. The additional capital raised in the offering will enable us to increase our originations
of commercial real estate, commercial and industrial and commercial construction loans in our primary market area, and originate
loans with larger balances that we intend to retain in our portfolio.
Diversify our products and services
in order to increase non-interest income.
We continue to seek ways of increasing our non-interest income by growing our
financial services businesses. We initially entered into the wealth management services business by establishing Pioneer Financial
Services, Inc. as a wholly-owned subsidiary of Pioneer Bank (which operates under the name Pioneer Wealth Management). We substantially
grew this business with the acquisition of substantially all of the operating assets of Ward Financial Management, LTD in 2018.
At December 31, 2018, Pioneer Financial Services, Inc. had $481.5 million of assets under management. We also sell commercial and
personal insurance products and provide employee benefits products and services through our wholly-owned subsidiary, Anchor Agency,
Inc., which we acquired in 2016. We expanded our employee benefits products and services business through our acquisition in 2017
of substantially all of the operating assets of Capital Region Strategic Employee Benefits Services, LLC, an employee benefits
and consulting firm. The growth of our financial services businesses has contributed to the increase in non-interest income to
$3.3 million for the six months ended December 31, 2018 compared to $2.4 million for the six months ended December 31, 2017 and
to $5.1 million for fiscal 2018 compared to $3.7 million for fiscal 2017. We believe that there will be opportunities to cross-sell
these products to our deposit and borrower customers which may further increase our non-interest income, and also to cross-sell
our banking services and products to customers and clients of Pioneer Financial Services, Inc. and Anchor Agency, Inc. We intend
to consider future acquisition opportunities to expand our wealth management activities, including the amount of the assets that
we have under management, insurance or other complementary financial services businesses, although we do not currently have any
agreements regarding any specific acquisition.
Increase our Share of Lower-Cost Core
Deposits
.
We continue to emphasize offering core deposits (demand deposit accounts, savings accounts and money market accounts)
to businesses, municipalities and individuals located in our market area. Core deposits represent our best opportunity to develop
customer relationships that enable us to cross-sell the products and services of our complementary subsidiaries. We attract and
retain transaction accounts by offering competitive products and rates and providing quality customer service. Our core deposits
increased $403.7 million to $990.9 million at December 31, 2018 from $587.1 million at June 30, 2014. At December 31, 2018, core
deposits comprised 88.9% of our total deposits. Core deposits are our least costly source of funds which improves our interest
rate spread and also contributes non-interest income from account related services.
Strategically Grow our Balance Sheet
.
We believe there is a large customer base in our market that prefers doing business with local institutions and may be dissatisfied
with the service they receive from the larger regional banks. By offering personalized customer service, along with our extensive
knowledge of our local markets and employees who have strong relationships with our customers which leads to referrals and repeat
business, we believe we can leverage these strengths to attract and retain customers. We have recently undergone a significant
rebranding effort and updated our branch layout, website and other technology infrastructure that prioritizes the customer experience
and moves away from the traditional single branch channel. We also believe we can capitalize on commercial deposit and personal
banking relationships derived from an increase in commercial real estate and commercial business lending. Based on the foregoing,
our attractive market area and strategic investment in technology to enhance the customer experience, we believe we are well-positioned
to increase our balance sheet, particularly loans and deposits.
Continue to Emphasize Operating Efficiencies
and Cost Controls
.
Despite significant growth of our loan portfolio, product offerings and financial services businesses
in recent years, we have remained focused on expense control while increasing our net income. We remain disciplined in our approach
to non-interest expenses by identifying cost savings opportunities such as renegotiating key third-party contracts and reducing
other operating expenses. Our efficiency ratio was 60.0% (annualized) during the six months ended December 31, 2018, compared to
79.4% during the year ended June 30, 2014. While we expect that our non-interest expenses will increase when we become a public
company, we intend to continue to diligently monitor and control expenses as we focus our efforts on continued growth. In order
to support our growth in a cost-effective way, we plan to continue to invest prudently in technology to help improve our operational
infrastructure.
Maintain Disciplined Underwriting
.
We emphasize a disciplined credit culture based on intimate knowledge of the market, close ties to our customers, sound underwriting
standards and experienced loan officers. We are committed to actively monitoring and managing all segments of our loan portfolio
in an effort to proactively identify and mitigate credit risks within the portfolio. At December 31, 2018, non-performing assets
totaled $11.8 million, which represented 0.92% of total assets. At December 31, 2018, there were $5.5 million of non-performing
commercial real estate loans and $137,000 of non-performing commercial and industrial loans.
Terms of the Offering
We are offering between 7,179,465 and 9,713,393
shares of common stock in a subscription offering to eligible depositors of Pioneer Bank and to our tax-qualified employee benefit
plans, and, to the extent shares remain available, to the general public in a community offering. If necessary, we will also offer
shares to the general public in a syndicated community offering. The number of shares of common stock to be sold may be increased
up to 11,170,402 shares as a result of demand for the shares of common stock in the offering or changes in market conditions. Unless
the number of shares of common stock to be offered is increased to more than 11,170,402 shares or decreased to fewer than 7,179,465
shares, or the subscription and community offerings are extended beyond [extension date #1], subscribers will not have the opportunity
to change or cancel their stock orders once submitted. If the subscription and community offerings are extended past [extension
date #1], all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. If you do not respond
to this notice, your order will be canceled and we will promptly return your funds with interest at [interest rate]% per annum
or cancel your deposit account withdrawal authorization. If the number of shares to be sold is increased to more than 11,170,402
shares or decreased to less than 7,179,465 shares, all subscribers’ stock orders will be canceled, all withdrawal authorizations
will be canceled and funds delivered to us to purchase shares of common stock in the subscription and community offerings will
be returned promptly with interest at the same rate. We will then resolicit subscribers, giving them an opportunity to place new
orders for a period of time. No shares purchased in the subscription offering and community offering will be issued until the completion
of any syndicated community offering.
The purchase price of each share of common
stock offered for sale in the offering is $10.00. All investors will pay the same purchase price per share, regardless of whether
the shares are purchased in the subscription offering, the community offering, or the syndicated community offering. Investors
will not be charged a commission to purchase shares of common stock in the offering. Sandler O’Neill & Partners, L.P.,
our marketing agent in the subscription and community offerings, will use its best efforts to assist us in selling shares of our
common stock in the subscription and community offerings but is not obligated to purchase any shares of common stock in the subscription
and community offerings or the syndicated community offering.
How We Determined the Offering Range and the $10.00 per
Share Offering Price
The amount of common stock we are offering
for sale is based on an independent appraisal of the estimated market value of Pioneer Bancorp, Inc., assuming the offering has
been completed, the charitable foundation has been established and shares of common stock and cash have been contributed to the
charitable foundation. RP Financial, LC. (“RP Financial”), our independent appraiser, has estimated that, as of February
8, 2019, assuming we were undertaking the offering, this market value, including the shares to be issued to the charitable foundation
and Pioneer Bancorp, MHC, was $196.4 million. Based on applicable regulations, this market value forms the midpoint of a valuation
range with a minimum of $167.0 million and a maximum of $225.9 million.
Based on this valuation range and assuming
43% of the shares of Pioneer Bancorp, Inc. common stock is being offered for sale in the offering at $10.00 per share, 2% of our
outstanding shares is issued to the charitable foundation, and 55% of the shares is retained by Pioneer Bancorp, MHC, Pioneer Bancorp,
Inc. is offering for sale 7,179,465 shares at the minimum of the offering range, 8,446,429 shares at the midpoint of the offering
range, and 9,713,393 shares at the maximum of the offering range. The $10.00 per share price was selected primarily because it
is the price most commonly used in mutual holding company and standard stock conversion offerings by savings banks. If demand for
shares or market conditions warrant, the appraisal can be increased by up to 15%, which would result in an appraised value of $259.8
million, and we may sell up to 11,170,402 shares of common stock in the offering.
RP Financial advised the board of trustees
that the appraisal was prepared in conformance with the regulatory appraisal methodology, which requires a valuation based on an
analysis of the trading prices of comparable public companies whose stock has traded for at least one year prior to the valuation
date. RP Financial selected a group of ten comparable public companies for this analysis.
RP Financial considered adjustments to the
pro forma market value based on a comparison of Pioneer Bancorp, Inc. with the peer group set forth below. RP Financial advised
the board of trustees that the valuation analysis took into consideration that relative to the peer group slight upward adjustments
were applied for: (1) profitability, growth and viability of earnings; and (2) asset growth. RP Financial applied a slight downward
adjustment for (1) dividends and made no adjustments for: (1) financial condition; (2) marketing of the issue; (3) management;
(4) effect of government regulations and regulatory reform; and (5) liquidity of the shares of common stock.
The appraisal is based in part on Pioneer
Bank’s financial condition and results of operations, the pro forma effect of the additional capital raised by the sale of
shares of common stock in the offering, and an analysis of a peer group of ten publicly-traded bank holding companies and savings
and loan holding companies that RP Financial considers comparable to Pioneer Bancorp, Inc. The appraisal peer group consists of
the following companies, all of which are traded on the Nasdaq Stock Market.
|
Company Name
|
|
Ticker
Symbol
|
|
Headquarters
|
|
Total Assets at
September 30, 2018
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
ESSA Bancorp, Inc.
|
|
ESSA
|
|
Stroudsburg, PA
|
|
$
|
1,834
|
|
|
Hingham Institution for Savings
|
|
HIFS
|
|
Hingham, MA
|
|
$
|
2,370
|
|
|
HMN Financial, Inc.
|
|
HMNF
|
|
Rochester, MN
|
|
$
|
737
|
|
|
PCSB Financial Corporation
|
|
PCSB
|
|
Yorktown Heights, NY
|
|
$
|
1,474
|
|
|
Prudential Bancorp, Inc.
|
|
PBIP
|
|
Philadelphia, PA
|
|
$
|
1,081
|
|
|
Severn Bancorp, Inc.
|
|
SVBI
|
|
Annapolis, MD
|
|
$
|
889
|
|
|
Standard AVB Financial Corp.
|
|
STND
|
|
Monroeville, PA
|
|
$
|
983
|
|
|
Waterstone Financial, Inc.
|
|
WSBF
|
|
Wauwatosa, WI
|
|
$
|
1,919
|
|
|
Wellesley Bancorp, Inc.
|
|
WEBK
|
|
Wellesley, MA
|
|
$
|
837
|
|
|
Western New England Bancorp, Inc.
|
|
WNEB
|
|
Westfield, MA
|
|
$
|
2,151
|
|
The characteristics of publicly-traded shares
of a mutual holding company differ from those of publicly-traded shares of fully converted stock holding companies (those in which
all shares are held by public stockholders) in several ways, including that: (1) publicly-traded shares of a mutual holding company
subsidiary tend to have less liquidity because they represent less than 50% of the outstanding shares of the company; (2) the holders
of publicly-traded shares of a mutual holding company subsidiary cannot exercise voting control; (3) publicly-traded shares of
a mutual holding company subsidiary are affected by the possibility of a “second-step” conversion transaction; and
(4) the publicly-traded shares of a mutual holding company subsidiary are adversely affected by regulatory restrictions on the
ability of the mutual holding company to waive the receipt of dividends declared by its subsidiary, thereby precluding or limiting
the subsidiary’s ability to pay dividends to public stockholders. To account for the unique characteristics of publicly-traded
shares of a mutual holding company, RP Financial included in its appraisal the pricing ratios of Pioneer Bancorp, Inc. on both
a non-fully converted basis and a fully converted basis and compared each to the pricing ratios of the peer group. The decision
to also provide Pioneer Bancorp, Inc.’s pricing ratios on a fully converted basis is meant to: (1) facilitate the comparison
of the peer group, which consists of fully converted companies, to Pioneer Bancorp, Inc.; and (2) establish the pro forma market
value range of 100% of the shares of Pioneer Bancorp, Inc., which forms the basis for determining the offering range. Tables presenting
select pricing ratios of Pioneer Bancorp, Inc. on both a non-fully converted basis and a fully converted basis and comparing such
ratios to similar ratios for the peer group follow.
The following table presents a summary of
selected pricing ratios for the peer group companies on a fully converted basis and for Pioneer Bancorp, Inc. on a non-fully converted
basis (
i.e.
, the table assumes that 43% of our outstanding shares of common stock is sold in the offering, as opposed to
100% of our outstanding shares of common stock). These figures are from the RP Financial appraisal report. Compared to the average
pricing ratios of the peer group, and based upon the information in the following table, our pro forma pricing ratios at the midpoint
of the offering range indicated a discount of 20.2% on a non-fully converted price-to-earnings basis, a discount of 19.4% on a
non-fully converted price-to-book value basis, and a discount of 19.1% on a non-fully converted price-to-tangible book value basis.
|
|
|
Non-Fully Converted Pro
Forma Price-to-Earnings
Multiple
|
|
|
Non-Fully Converted Pro
Forma Price-to-Book Value
Ratio
|
|
|
Non-Fully Converted Pro
Forma Price-to-Tangible
Book Value Ratio
|
|
|
Pioneer Bancorp, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Maximum
|
|
|
15.54
|
x
|
|
|
117.37
|
%
|
|
|
123.00
|
%
|
|
Maximum
|
|
|
13.51
|
|
|
|
108.23
|
|
|
|
113.64
|
|
|
Midpoint
|
|
|
11.74
|
|
|
|
99.30
|
|
|
|
104.60
|
|
|
Minimum
|
|
|
9.98
|
|
|
|
89.37
|
|
|
|
94.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fully Converted
Pro
Forma Price-to-Earnings
Multiple
(1)
|
|
|
Fully Converted Pro
Forma Price-to-Book Value
Ratio
(1)
|
|
|
Fully Converted Pro
Forma Price-to-Tangible
Book Value Ratio
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation of peer group companies as of February 8, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
14.72
|
x
|
|
|
123.16
|
%
|
|
|
129.23
|
%
|
|
Medians
|
|
|
14.63
|
|
|
|
117.29
|
|
|
|
125.03
|
|
|
|
(1)
|
Information for the peer group companies is based upon actual earnings for the twelve months ended September 30, 2018 (or for
the latest available date) and information for Pioneer Bancorp, Inc. is based upon actual earnings for the twelve months ended
December 31, 2018. These ratios are different from the ratios in “Pro Forma Data.”
|
The following table presents a summary of
selected pricing ratios for the peer group companies, and the resulting pricing ratios for Pioneer Bancorp, Inc. on a fully converted
equivalent basis. Compared to the average fully converted pricing ratios of the peer group, Pioneer Bancorp, Inc.’s pro forma
fully converted pricing ratios at the midpoint of the offering range indicated a discount of 21.67% on a fully converted price-to-earnings
basis, a discount of 45.54% on a fully converted price-to-book value basis and a discount of 46.27% on a fully converted price-to-tangible
book value basis.
|
|
|
Fully Converted Pro
Forma Price-to-Earnings
Multiple
(1)
|
|
|
Fully Converted Pro
Forma
Price-to-Book Value
Ratio
(1)
|
|
|
Fully Converted Pro
Forma
Price-to-Tangible
Book Value Ratio
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pioneer Bancorp, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Maximum
|
|
|
15.20
|
x
|
|
|
75.36
|
%
|
|
|
77.64
|
%
|
|
Maximum
|
|
|
13.23
|
|
|
|
71.07
|
|
|
|
73.42
|
|
|
Midpoint
|
|
|
11.53
|
|
|
|
67.07
|
|
|
|
69.44
|
|
|
Minimum
|
|
|
9.83
|
|
|
|
62.62
|
|
|
|
65.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation of peer group companies as of February 8, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
14.72
|
x
|
|
|
123.16
|
%
|
|
|
129.23
|
%
|
|
Medians
|
|
|
14.63
|
|
|
|
117.29
|
|
|
|
125.03
|
|
|
|
(1)
|
Information for the peer group companies is based upon actual earnings for the twelve months ended September 30, 2018 (or for
the latest available date) and information for Pioneer Bancorp, Inc. is based upon actual earnings for the twelve months ended
December 31, 2018. These ratios are different from the ratios in “Pro Forma Data.”
|
The fully converted pro forma calculations
for Pioneer Bancorp, Inc. are based on the following assumptions:
|
|
·
|
A number of shares equal to 8% of the shares sold in a full conversion and contributed to the charitable foundation are purchased
by the employee stock ownership plan, with the expense to be amortized over 20 years;
|
|
|
·
|
A number of restricted stock awards equal to 4% of the shares sold in a full conversion and contributed to the charitable foundation
are purchased by a stock-based benefit plan, with the expense to be amortized over five years; and
|
|
|
·
|
A number of options equal to 10% of the shares sold in a full conversion and contributed to the charitable foundation are granted
under a stock-based benefit plan, with option expense of $2.92 per option amortized over five years.
|
The independent appraisal does not indicate
trading market value. Do not assume or expect that our valuation as indicated in the appraisal means that after the offering the
shares of our common stock will trade at or above the $10.00 per share price. Furthermore, RP Financial used the pricing ratios
presented in the appraisal to estimate our pro forma appraised value for regulatory purposes and not to compare the relative value
of shares of our common stock with the value of the capital stock of the peer group. The value of the capital stock of a particular
company may be affected by a number of factors such as financial performance, asset size and market location.
For a more complete discussion of the amount
of common stock we are offering for sale and the independent appraisal, see “The Reorganization and Offering—Stock
Pricing and Number of Shares to be Issued.”
How We Intend to Use the Proceeds from the Offering
We intend to invest at least 50% of the
net proceeds from the offering in Pioneer Bank, fund the loan to our employee stock ownership plan to finance its purchase of shares
of common stock in the offering, contribute $250,000 to the charitable foundation and retain the remainder of the net proceeds
at Pioneer Bancorp, Inc.
Assuming we sell 8,446,429 shares of common
stock in the offering at the midpoint of the offering range, resulting in estimated net proceeds of $82.3 million, we intend to
invest $41.1 million in Pioneer Bank, lend $7.7 million to our employee stock ownership plan to fund its purchase of shares of
common stock, use $250,000 of the net proceeds to fund the cash contribution to the charitable foundation, and retain the remaining
$33.2 million of the net proceeds at Pioneer Bancorp, Inc. Assuming we sell 11,170,402 shares of common stock in the offering at
the adjusted maximum of the offering range, resulting in estimated net proceeds of $109.2 million, we intend to invest $54.6 million
in Pioneer Bank, lend $10.2 million to our employee stock ownership plan to fund its purchase of shares of common stock, use $250,000
of the net proceeds to fund the cash contribution to the charitable foundation and retain the remaining $44.2 million of the net
proceeds at Pioneer Bancorp, Inc.
Pioneer Bancorp, Inc. may use the funds
it retains for investment, to invest in securities, to repurchase shares of common stock when permitted under applicable laws and
regulations, to acquire other financial institutions or financial services companies, or for other general corporate purposes.
Pioneer Bank may use the proceeds it receives to support increased lending and investment, to expand its retail banking franchise
by establishing or acquiring new branches or to acquire other financial institutions or financial services companies or for other
corporate purposes. We do not currently have any agreement regarding any acquisition transaction.
See “How We Intend to Use the Proceeds
from the Offering” for more information on the proposed use of the proceeds from the offering.
Persons Who May Order Shares of Common Stock in the Offering
We are offering the shares of common stock
in a subscription offering in the following descending order of priority:
|
|
1.
|
To depositors with deposit account(s) at Pioneer Bank with aggregate balances of at least $100.00 at the close of business
on December 31, 2017.
|
|
|
2.
|
To our tax-qualified employee benefit plans (including Pioneer Bank’s employee stock ownership plan and its 401(k) plan),
which may subscribe for, in the aggregate, up to 4.90% of the outstanding shares of common stock of Pioneer Bancorp, Inc. at the
completion of the offering, including shares issued to Pioneer Bancorp, MHC and contributed to the charitable foundation. We expect
our employee stock ownership plan to purchase 3.92% of the outstanding shares of common stock of Pioneer Bancorp, Inc. at the completion
of the offering, including shares issued to Pioneer Bancorp, MHC and contributed to the charitable foundation.
|
|
|
3.
|
To depositors (other than officers, trustees and directors of Pioneer Bancorp, MHC, Pioneer Bancorp, Inc. and Pioneer Bank)
with deposit account(s) at Pioneer Bank with aggregate balances of at least $100.00 at the close of business on [supplemental date],
who are not eligible in the first priority.
|
|
|
4.
|
To other depositors of Pioneer Bank at the close of business on [voting record date].
|
Shares of common stock not purchased in
the subscription offering may be offered for sale to the general public in a community offering, with a preference given first
to natural persons residing in Albany, Greene, Rensselaer, Saratoga, Schenectady and Warren Counties in New York. The community
offering may begin concurrently with, during or promptly after the subscription offering. We also may offer for sale shares of
common stock not purchased in the subscription offering and the community offering through a syndicated community offering. Sandler
O’Neill & Partners, L.P. will act as sole manager for the syndicated community offering. We have the right to accept
or reject, in our sole discretion, orders received in the community offering or syndicated community offering, and our interpretation
of the terms and conditions of the plan of reorganization will be final. Any determination to accept or reject stock orders in
the community offering or syndicated community offering will be based on the facts and circumstances then available to us.
If we receive orders for more shares than
we are offering, we may not be able to fully or partially fill your order. See “The Reorganization and Offering” for
a detailed description of the subscription offering, the community offering and the syndicated community offering, as well as a
discussion regarding allocation procedures.
Limits on How Much Common Stock You May Purchase
The minimum number of shares of common stock
that may be purchased is 25 shares.
Generally, no individual may purchase more
than 15,000 shares ($150,000) of common stock. If any of the following persons purchase shares of common stock, their purchases,
in all categories of the offering, when combined with your purchases, cannot exceed 30,000 shares ($300,000) of common stock:
|
|
·
|
most companies, trusts or other entities in which you are a senior officer, partner, trustee or have a substantial beneficial
interest;
|
|
|
·
|
your spouse or any relative of you or your spouse living in your house or who is a director, trustee, or officer of Pioneer
Bancorp, Inc., Pioneer Bancorp, MHC or Pioneer Bank; or
|
|
|
·
|
other persons who may be your associates or persons acting in concert with you.
|
Unless we determine otherwise, persons having
the same address and persons exercising subscription rights through qualifying deposit accounts registered to the same address
will be subject to the overall purchase limitation of 30,000 shares ($300,000).
Subject to regulatory approval, we may increase
or decrease the purchase limitations at any time. See “The Reorganization and Offering—Additional Limitations on Common
Stock Purchases.”
How You May Purchase Shares of Common Stock in the Subscription
Offering and the Community Offering
In the subscription offering and community
offering, you may pay for your shares only by:
|
|
1.
|
personal check, bank check or money order made payable to Pioneer Bancorp, Inc.; or
|
|
|
2.
|
authorizing us to withdraw available funds from your deposit account(s) at Pioneer Bank.
|
Pioneer Bank is prohibited from lending
funds to anyone to purchase shares of common stock in the offering. Additionally, you may not use a line of credit check from Pioneer
Bank or any type of third-party check (such as a check payable to you and endorsed over to Pioneer Bancorp, Inc.) to pay for shares
of common stock. Do not submit cash. No wire transfer will be accepted without our prior approval. You may not authorize direct
withdrawal from an individual retirement account (“IRA”) at Pioneer Bank. See “—Using Individual Retirement
Account Funds to Purchase Shares of Common Stock.”
You may subscribe for shares of common stock
in the subscription and community offerings by delivering a signed and completed original stock order form, together with full
payment payable to Pioneer Bancorp, Inc. or authorization to withdraw funds from one or more of your deposit accounts at Pioneer
Bank, provided that
we receive
your stock order form before 5:00 p.m., Eastern Time, on [expiration date], which is the
end of the subscription offering period. You may submit your stock order form and payment by mail using the stock order reply envelope
provided or by overnight delivery to our Stock Information Center, which is located at 652 Albany-Shaker Road, Albany, NY 12211.
You may also hand-deliver stock order forms to the Stock Information Center. We will accept hand-delivered stock order forms only
at this location. We will not accept stock order forms at our banking offices.
Do not mail stock order forms to any of Pioneer
Bank’s banking offices.
See “The Reorganization and Offering—Procedure
for Purchasing Shares in Subscription and Community Offerings—Payment for Shares” for a complete description of how
to purchase shares in the subscription and community offerings.
Using IRA Funds to Purchase Shares of Common
Stock
You may be able to subscribe for shares
of common stock using funds in your IRA. If you wish to use some or all of the funds in an IRA at Pioneer Bank, the applicable
funds must be transferred to a self-directed account maintained by an independent trustee, such as a brokerage firm, and the purchase
must be made through that account. If you do not have such an account, you will need to establish one before placing your stock
order. A one-time and/or annual administrative fee may be payable to the independent trustee. Because individual circumstances
differ and the processing of retirement fund orders takes additional time, we recommend that you contact our Stock Information
Center promptly, preferably at least two weeks before the [expiration date] offering deadline, for assistance with purchases using
your IRA or other retirement account you may have at Pioneer Bank or elsewhere. Whether you may use such funds to purchase shares
in the offering may depend on timing constraints and, possibly, limitations imposed by the institution holding the funds.
See “The Reorganization and Offering—Procedure
for Purchasing Shares in Subscription and Community Offerings—Payment for Shares” and “—Using Individual
Retirement Account Funds.”
Market for Common Stock
We expect that our common stock will be
traded on the Nasdaq Capital Market under the symbol “PBFS.” Sandler O’Neill & Partners, L.P. has advised
us that it intends to make a market in our common stock following the completion of the offering, but is not obligated to do so.
Our Dividend Policy
Following completion of the stock offering,
our board of directors will have the authority to declare dividends on our common stock, subject to statutory and regulatory requirements.
However, we currently intend to retain all future earnings, if any, for use in our business and do not expect to pay any cash dividends
on our common stock for the foreseeable future. Any future determination to pay cash dividends on our common stock will be made
by our board of directors and will depend upon our results of operations, financial condition, capital requirements, regulatory
restrictions, including the Federal Reserve’s Board’s current policy of prohibiting mutual holding companies from waiving
the receipt of dividends, our business strategy and other factors that our board of directors deems relevant. See “Our Policy
Regarding Dividends” for additional information regarding our dividend policy.
Stock Purchases by Trustees and Executive Officers
We expect our trustees and executive officers,
together with their associates, to subscribe for 215,000 shares of common stock in the offering, representing 3.0% of the shares
sold in the offering and 1.3% of to be “outstanding shares” at the minimum of the offering range. “Outstanding
shares” of common stock are all shares issued by Pioneer Bancorp, Inc. as of the completion of the offering, including shares
sold in the offering, shares purchased by tax-qualified employee benefit plans, shares issued to Pioneer Bancorp, MHC and shares
contributed to the charitable foundation. Trustees and executive officers will pay the same $10.00 per share price that will be
paid by all other persons who purchase shares of common stock in the offering. See “Subscriptions by Directors and Executive
Officers.”
Deadline for Orders of Shares of Common Stock in the Subscription
and Community Offerings
The deadline for ordering shares of common
stock in the subscription and community offerings is 5:00 p.m., Eastern Time, on [expiration date], unless we extend this deadline.
If you wish to order shares of common stock, a properly completed and signed original stock order form, together with full payment,
must be received (not postmarked) by this time.
Although we will make reasonable attempts
to provide this prospectus and offering materials to holders of subscription rights, the subscription offering and all subscription
rights will expire at 5:00 p.m., Eastern Time, on [expiration date], whether or not we have been able to locate each person entitled
to subscription rights.
See “The Reorganization and Offering—
Procedure for Purchasing Shares in Subscription and Community Offerings—Expiration Date” for a complete description
of the deadline for ordering shares in the offering.
You May Not Sell or Transfer Your Subscription Rights
Applicable regulations prohibit you from
transferring your subscription rights. If you order shares of common stock in the subscription offering, you must sign a written
certification that you are purchasing the common stock for yourself and that you have no agreement or understanding to sell or
transfer your subscription rights or the shares that you are purchasing. We intend to take legal action, including reporting persons
to federal or state agencies, against anyone who we believe has sold or transferred his or her subscription rights. We will not
accept your order if we have reason to believe that you have sold or transferred your subscription rights. On the order form, you
cannot add the names of other individuals for joint stock registration unless they are also named on the qualifying deposit account.
Doing so may jeopardize your subscription rights. In addition, the stock order form requires that you list all deposit accounts,
giving all names on each account and the account number at the applicable eligibility date. Failure to provide this information,
or providing incomplete or incorrect information, may result in a loss of part or all of your share allocation if there is an oversubscription.
Delivery of Shares of Common Stock
All shares of common stock sold will be
issued in book entry form. Stock certificates will not be issued. A statement reflecting ownership of shares of common stock issued
in the subscription and community offerings will be mailed by our transfer agent to the persons entitled thereto at the registration
address noted by them on their stock order forms as soon as practicable following consummation of the offering. We expect trading
in the stock to begin on the day of completion of the offering or the next business day. The offering is expected to be completed
as soon as practicable following satisfaction of the conditions described below in “—Conditions to Completion of the
Reorganization.”
Until a statement reflecting ownership of shares of common stock is available and delivered to purchasers,
purchasers might not be able to sell the shares of common stock that they purchased, even though the common stock will have begun
trading.
Your ability to sell your shares of common stock before receiving your statement will depend on arrangements you may
make with a brokerage firm.
Conditions to Completion of the Reorganization
We cannot complete the reorganization and
offering unless:
|
|
·
|
The plan of reorganization is approved by the required vote of the depositors of Pioneer Bank at a special meeting of depositors
to be held on [special meeting date];
|
|
|
·
|
We receive orders for at least the minimum number of shares of common stock offered in the offering; and
|
|
|
·
|
We receive final regulatory approval from the NYSDFS, the Federal Deposit Insurance Corporation and the Federal Reserve Board
to complete the reorganization and offering.
|
Steps We May Take if We Do Not Receive Orders for the Minimum
Number of Shares
If we do not receive orders for at least
7,179,465 shares of common stock, we may take several steps to sell the minimum number of shares of common stock in the offering
range. Specifically, we may:
|
|
·
|
increase the purchase and ownership limitations; and/or
|
|
|
·
|
seek regulatory approval to extend the offering beyond [extension date #1], so long as we resolicit subscribers who previously
submitted subscriptions in the offering.
|
If we extend the offering past [extension
date #1], all subscribers will be notified and given an opportunity to confirm, change or cancel their orders. If you do not respond
to this notice, we will cancel your stock order and promptly return your funds with interest at [interest rate]% per annum for
funds received in the subscription and community offering or cancel your deposit account withdrawal authorization. If one or more
purchase limitations are increased, subscribers in the subscription offering who ordered the maximum amount will be given the opportunity
to increase their subscriptions up to the then-applicable limit.
Possible Change in the Offering Range
RP Financial will update its appraisal before
we complete the offering. If, as a result of demand for the shares or changes in market conditions, RP Financial determines that
our pro forma market value has increased, we may sell up to 11,170,402 shares in the offering without further notice to you. If,
however, the updated appraisal indicates our pro forma market value is either below $167.0 million or above $259.8 million, then,
after consulting with the NYSDFS, the Federal Deposit Insurance Corporation and the Federal Reserve Board, we may:
|
|
·
|
terminate the offering and promptly return all funds (with interest paid on funds received in the subscription and community
offerings);
|
|
|
·
|
set a new offering range; or
|
|
|
·
|
take such other actions as may be permitted by the NYSDFS, the Federal Deposit Insurance Corporation, the Federal Reserve Board
and the Securities and Exchange Commission.
|
If we set a new offering range, we will
promptly return funds, with interest at [interest rate]% per annum for funds received for purchases in the subscription and community
offerings, and cancel any authorization to withdraw funds from deposit accounts for the purchase of shares of common stock. We
will then resolicit subscribers, allowing them to place new stock orders for a period of time.
Possible Termination of the Offering
We may terminate the offering at any time
with regulatory approval. If we terminate the offering, we will promptly return your funds with interest at [interest rate]% per
annum, and we will cancel deposit account withdrawal authorizations.
Our Contribution of Shares of Common Stock to the Charitable
Foundation
To further our commitment to our local community,
we intend to fund our charitable foundation as part of the reorganization and offering. Assuming we receive regulatory and depositor
approvals, we intend to contribute to the charitable foundation a number of shares of our common stock equal to 2.0% of our outstanding
shares of common stock as of the completion of the offering (including shares issued to Pioneer Bancorp, MHC), and up to $250,000
in cash. At the minimum, midpoint, maximum and adjusted maximum of the offering range, we would contribute to the charitable foundation
333,928, 392,857, 451,786 and 519,554 shares of common stock, respectively. As a result of the contribution, we expect to record
an after-tax expense of approximately $3.1 million during the quarter in which the reorganization and offering is completed, assuming
the offering closes at the midpoint of the offering range.
The charitable foundation will be dedicated
exclusively to supporting charitable causes and community development activities in the communities in which we operate. The contribution
of common stock and cash to the charitable foundation will:
|
|
·
|
with respect to the contribution of shares of common stock, dilute the voting interests of purchasers of shares of our common
stock in the offering; and
|
|
|
·
|
result in an expense, and a reduction in capital, during the quarter in which the contribution is made, equal to the full amount
of the contribution to the charitable foundation, offset in part by a corresponding tax benefit.
|
The amount of common stock that we would
offer for sale in the offering would be greater if the offering were completed without funding the charitable foundation. For a
further discussion of the financial impact of the charitable foundation, including its effect on those who purchase shares in the
offering, see “Risk Factors—The contribution to the charitable foundation will dilute your ownership interest and adversely
affect net income in 2019,” “Risk Factors—Our contribution to the charitable foundation may not be tax deductible,
which could reduce our profits,” “Comparison of Valuation and Pro Forma Information With and Without the Charitable
Foundation” and “Pioneer Bank Charitable Foundation.”
Our Officers, Directors and Employees Will Receive Additional
Benefits and Compensation after the Offering
In connection with the offering, we are
establishing an employee stock ownership plan, and, subject to receipt of stockholder approval, we intend to implement one or more
stock-based benefit plans that will provide for grants of stock options and restricted stock.
Employee Stock Ownership Plan
.
Pioneer Bank intends to adopt an employee stock ownership plan, which will grant shares of Pioneer Bancorp, Inc. common stock to
eligible employees primarily based on their compensation. The board of directors of Pioneer Bancorp, Inc. will, at the completion
of the offering, ratify the loan to the employee stock ownership plan and the sale of common stock to the employee stock ownership
plan. It is expected that our employee stock ownership plan will purchase in the offering 3.92% of the outstanding shares of common
stock of Pioneer Bancorp, Inc. at the conclusion of the offering.
Stock-Based Benefit Plans
.
Following the completion of the offering, we intend to implement one or more stock-based benefit plans that will provide for grants
of stock options and awards of shares of restricted common stock. In accordance with applicable regulations, we anticipate the
plans will authorize a number of stock options and a number of shares of restricted common stock, not to exceed 4.90% and 1.96%,
respectively, of the outstanding shares of common stock of Pioneer Bancorp, Inc. as of the conclusion of the offering. These limitations
will not apply if the plans are implemented more than one year after the completion of the reorganization and offering.
The stock-based benefit plans will not be
established sooner than six months after the offering and, if implemented within one year after the stock offering, the plans must
be approved by a majority of the votes eligible to be cast by our stockholders, as well as a majority of the votes eligible to
be cast by our stockholders other than Pioneer Bancorp, MHC. If stock-based benefit plans are established more than one year after
the offering is completed, they must be approved by a majority of votes cast by our stockholders, as well as a majority of votes
cast by our stockholders other than Pioneer Bancorp, MHC.
Certain additional restrictions would apply
to our stock-based benefit plans if implemented within one year after completion of the offering, including:
|
|
·
|
non-employee directors in the aggregate may not receive more than 30% of the options and shares of restricted common stock
authorized under the plans;
|
|
|
·
|
no non-employee director may receive more than 5% of the options and restricted stock awards authorized under the plans;
|
|
|
·
|
no individual may receive more than 25% of the options and restricted stock awards authorized under the plans;
|
|
|
·
|
the options and shares of restricted common stock may not vest more rapidly than 20% per year, beginning on the first anniversary
of stockholder approval of the plans; and
|
|
|
·
|
accelerated vesting of options and restricted stock is not permitted except for death, disability or upon a change in control
of Pioneer Bancorp, Inc. or Pioneer Bank.
|
We have not yet determined whether we will
present stock-based benefit plans for stockholder approval within one year or more than one year following the completion of the
offering. If applicable regulations or policies regarding stock-based benefit plans change, including any regulations or policies
restricting the size of awards and vesting of benefits as described above, the restrictions described above may not be applicable.
We may obtain the shares needed for our
stock-based benefit plans by issuing additional shares of common stock from authorized but unissued shares or by repurchasing our
common stock.
Equity Plan Expenses.
The
implementation of an employee stock ownership plan and one or more stock-based benefit plans will increase our future compensation
costs, thereby reducing our earnings. For example, under our employee stock ownership plan we will be required to expense each
year the fair market value of the shares committed to be released for that year to the participating employees. Similarly, if we
issue restricted stock awards under a stock-based benefit plan, we would be required to expense as the shares vest, the fair market
value of such shares as of the grant date. Finally, if we issue stock options, we would be required to expense as the options vest,
the estimated fair value of such options as of the grant date. See “Risk Factors—Risks Related to the Offering—Our
stock-based benefit plans will increase our expenses and reduce our income” and “Management—Benefits to be Considered
Following Completion of the Stock Offering.”
Benefits to Management.
The
following table summarizes the stock benefits that our officers, directors and employees may receive following the reorganization
and offering, at the adjusted maximum of the offering range and assuming our employee stock ownership plan purchases 3.92% of our
outstanding shares as of the completion of the offering, and we implement one or more stock-based benefit plans that would authorize
(1) granting options to purchase up to 4.90% of the outstanding shares of common stock of Pioneer Bancorp, Inc. at the completion
of the offering and (2) awarding shares of restricted common stock equal to 1.96% of the outstanding shares of common stock of
Pioneer Bancorp, Inc. at the completion of the offering.
|
Plan
|
|
Individuals Eligible to Receive Awards
|
|
Percent of
Outstanding Shares
|
|
|
Value of Benefits Based on
Adjusted Maximum of
Offering Range (In
Thousands)
|
|
|
Employee stock ownership plan
|
|
All employees
|
|
|
3.92
|
%
|
|
$
|
10,183
|
|
|
Stock awards
|
|
Directors, officers and employees
|
|
|
1.96
|
|
|
|
5,092
|
|
|
Stock options
|
|
Directors, officers and employees
|
|
|
4.90
|
|
|
|
3,717
|
(1)
|
|
Total
|
|
|
|
|
10.78
|
%
|
|
$
|
18,992
|
|
|
|
(1)
|
The fair value of stock options has been estimated at $2.92 per option using the Black-Scholes option pricing model with the
following assumptions: a grant-date share price and option exercise price of $10.00; no dividend yield; expected option life of
10 years; risk free interest rate of 2.69%; and a volatility rate of 13.20% based on an index of publicly traded thrift institutions.
|
The actual value of the shares of restricted
common stock awarded under stock-based benefit plans will be based on the price of Pioneer Bancorp, Inc.’s common stock at
the time the shares are awarded. The following table presents the total value of all shares of restricted common stock to be available
for award and issuance under the stock-based benefit plans, assuming receipt of stockholder approval and the shares are awarded
when market prices range from $8.00 per share to $14.00 per share.
|
Share Price
|
|
|
327,250 Shares
Awarded at Minimum
of Offering Range
|
|
|
385,000 Shares
Awarded at Midpoint of
Offering Range
|
|
|
442,750 Shares
Awarded at Maximum
of Offering Range
|
|
|
509,163 Shares
Awarded at Adjusted
Maximum of Offering
Range
|
|
|
|
|
|
|
|
|
$
|
8.00
|
|
|
$
|
2,618,000
|
|
|
$
|
3,080,000
|
|
|
$
|
3,542,000
|
|
|
$
|
4,073,300
|
|
|
$
|
10.00
|
|
|
$
|
3,272,500
|
|
|
$
|
3,850,000
|
|
|
$
|
4,427,500
|
|
|
$
|
5,091,625
|
|
|
$
|
12.00
|
|
|
$
|
3,927,000
|
|
|
$
|
4,620,000
|
|
|
$
|
5,313,000
|
|
|
$
|
6,109,950
|
|
|
$
|
14.00
|
|
|
$
|
4,581,500
|
|
|
$
|
5,390,000
|
|
|
$
|
6,198,500
|
|
|
$
|
7,128,275
|
|
The grant-date fair value of the options
granted under the stock-based benefit plans would be based in part on the trading price of Pioneer Bancorp, Inc. common stock at
the time the options are granted. The value will also depend on the various assumptions used in the option pricing model ultimately
adopted. The following table presents the total estimated value of the options to be available for grant under the stock-based
benefit plans, assuming receipt of stockholder approval, using a Black-Scholes option pricing model, and assuming the market price
and exercise price for the stock options are equal and the range of market prices for the shares is $8.00 per share to $14.00 per
share. The Black-Scholes option pricing model provides an estimate only of the fair value of the options, and the actual value
of the options may differ significantly from the value set forth in this table.
Market/Exercise
Price
|
|
|
Grant Date Fair
Value Per Option
|
|
|
818,125 Options at
Minimum of
Offering Range
|
|
|
962,500 Options at
Midpoint of
Offering Range
|
|
|
1,106,875 Options
at Maximum of
Offering Range
|
|
|
1,272,906 Options
at Adjusted
Maximum of
Offering Range
|
|
|
|
|
|
|
|
|
$
|
8.00
|
|
|
$
|
2.34
|
|
|
$
|
1,914,413
|
|
|
$
|
2,252,250
|
|
|
$
|
2,590,088
|
|
|
$
|
2,978,601
|
|
|
$
|
10.00
|
|
|
$
|
2.92
|
|
|
$
|
2,388,925
|
|
|
$
|
2,810,500
|
|
|
$
|
3,232,075
|
|
|
$
|
3,716,886
|
|
|
$
|
12.00
|
|
|
$
|
3.50
|
|
|
$
|
2,863,438
|
|
|
$
|
3,368,750
|
|
|
$
|
3,874,063
|
|
|
$
|
4,455,172
|
|
|
$
|
14.00
|
|
|
$
|
4.09
|
|
|
$
|
3,346,131
|
|
|
$
|
3,936,625
|
|
|
$
|
4,527,119
|
|
|
$
|
5,206,187
|
|
Restrictions on the Acquisition of Pioneer Bancorp, Inc.
and Pioneer Bank
Federal and state regulations, as well as
provisions contained in the governing documents or Pioneer Bank and Pioneer Bancorp, Inc., restrict the ability of any person,
firm or entity to acquire Pioneer Bancorp, Inc., Pioneer Bank, or their respective capital stock. These restrictions include the
requirement that a potential acquirer of common stock obtain prior regulatory approval before acquiring in excess of 10% of the
voting stock of Pioneer Bancorp, Inc. or Pioneer Bank, as well as a provision in Pioneer Bancorp, Inc.’s articles of incorporation
that generally provides that, no person, other than Pioneer Bancorp, MHC, may directly or indirectly offer to acquire or acquire
the beneficial ownership of more than 10% of any class of equity security of Pioneer Bancorp, Inc. and that any shares acquired
in excess of this limit would not be entitled to be voted and would not be counted as voting stock in connection with any matters
submitted to the stockholders for a vote.
Because a majority of the shares of outstanding
common stock of Pioneer Bancorp, Inc. must be owned by Pioneer Bancorp, MHC, any acquisition of Pioneer Bancorp, Inc. must be approved
by Pioneer Bancorp, MHC. Furthermore, Pioneer Bancorp, MHC would not be required to pursue or approve a sale of Pioneer Bancorp,
Inc. even if such sale were favored by a majority of Pioneer Bancorp, Inc.’s public stockholders. Finally, although a mutual
holding company with a subsidiary stock holding company with public stockholders may be acquired by a mutual institution or another
mutual holding company in what is known as a “remutualization” transaction, current regulatory policy may make such
transactions unlikely because of the heightened regulatory scrutiny given to the structure and pricing of such transactions. Specifically,
current regulatory policy views remutualization transactions as raising significant issues concerning disparate treatment of minority
stockholders and mutual members of the target entity, and raising issues concerning the effect on the mutual members of the acquiring
entity. As a result, a remutualization transaction for Pioneer Bancorp, Inc. would be unlikely unless the applicant can clearly
demonstrate that the regulatory concerns are not warranted in the particular case.
Possible Conversion of Pioneer Bancorp, MHC to Stock Form
In the future, Pioneer Bancorp, MHC may
convert from the mutual to capital stock form of ownership, in a transaction commonly referred to as a “second-step conversion.”
In a second-step conversion, depositors of Pioneer Bank would have subscription rights to purchase common stock of Pioneer Bancorp,
Inc. and the public stockholders of Pioneer Bancorp, Inc. would be entitled to exchange their shares of common stock for an equal
percentage of shares of the fully-converted Pioneer Bancorp, Inc. This percentage may be adjusted to reflect any assets owned by
Pioneer Bancorp, MHC.
Our board of trustees has no current plans
to undertake a second-step conversion transaction. Any second-step conversion transaction would require the approval of holders
of a majority of the outstanding shares of Pioneer Bancorp, Inc. common stock (excluding shares held by Pioneer Bancorp, MHC) and
the approval of depositors of Pioneer Bank. Stockholders who purchase our common stock in the offering will not be able to force
a second-step conversion without the consent of Pioneer Bancorp, MHC since a second-step conversion also requires the approval
of a majority of all of the outstanding common stock of Pioneer Bancorp, Inc., which can only be achieved if Pioneer Bancorp, MHC
votes to approve the second-step conversion.
Tax Consequences
Pioneer Bancorp, Inc. and Pioneer Bank have
received an opinion of counsel, Luse Gorman, PC, regarding the material federal income tax consequences, and have received the
opinion of Bonadio & Co., LLP regarding the material New York State income tax consequences, of the reorganization and offering.
As a general matter, the reorganization and offering will not be a taxable transaction for purposes of federal or state income
taxes to Pioneer Bancorp, Inc., Pioneer Bank or persons eligible to subscribe for shares of stock in the subscription offering.
Emerging Growth Company Status
We qualify as an “emerging growth
company” under the Jumpstart Our Business Startups Act of 2012. For as long as we so qualify we are exempt from various reporting
requirements applicable to other public companies but not to emerging growth companies. See “Risk Factors—We are an
emerging growth company, and any decision on our part to comply only with certain reduced reporting and disclosure requirements
applicable to emerging growth companies could make our common stock less attractive to investors” and “Supervision
and Regulation—Federal Securities Laws—Emerging Growth Company Status.”
An emerging growth company may elect to
use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to public companies
until such pronouncements are made applicable to private companies, but must make such election when the company is first required
to file a registration statement. Such an election is irrevocable during the period a company is an emerging growth company. We
have elected to use the extended transition period to delay adoption of new or revised accounting pronouncements applicable to
public companies until such pronouncements are made applicable to private companies. Accordingly, our financial statements may
not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.
How You Can Obtain Additional Information—Stock Information
Center
Our banking personnel may not, by law, assist
with investment-related questions about the offering. If you have any questions regarding the reorganization and offering, call
our Stock Information Center at [sic number]. The Stock Information Center is open Monday through Friday between 10:00 a.m.
and 4:00 p.m., Eastern Time. The Stock Information Center will be closed on weekends and bank holidays.
Delivery of Prospectus
To ensure that each purchaser in the offering
receives a prospectus at least 48 hours prior to the expiration of the offering, in accordance with federal laws and regulations,
we may not mail a prospectus later than five days prior to the expiration date or hand deliver a prospectus any later than two
days prior to that date.
RISK FACTORS
You should consider carefully the following
risk factors in evaluating an investment in the shares of our common stock.
Risks Related to Our Business
Our loan portfolio consists of a
high percentage of loans secured by commercial real estate. These loans carry a greater credit risk than loans secured by one-
to four-family properties.
Our loan portfolio
includes commercial real estate loans, primarily loans secured by office buildings, industrial facilities, retail facilities, multi-family
properties and other commercial properties. At December 31, 2018, our commercial real estate loans totaled $379.5 million, or 36.5%,
of our total loan portfolio. Our commercial real estate loans expose us to greater risk of nonpayment and loss than one- to four-family
residential mortgage loans because repayment of the loans often depends on the successful operation and income stream of the borrowers.
If we foreclose on these loans, our holding period for the collateral typically is longer than for a one- to four-family residential
property because there are fewer potential purchasers of the collateral. In addition, commercial real estate loans typically involve
larger loan balances to single borrowers or groups of related borrowers compared to one- to four-family residential loans. Accordingly,
charge-offs on commercial real estate loans may be larger on a per loan basis than those incurred with our residential or consumer
loan portfolios. An unexpected adverse development on one or more of these types of loans can expose us to a significantly greater
risk of loss compared to an adverse development with respect to a one- to four-family residential mortgage loan. In addition, the
physical condition of non-owner occupied properties may be below that of owner-occupied properties due to lax property maintenance
standards, which have a negative impact on the value of the collateral properties. As our commercial real estate loans increase,
the corresponding risks and potential for losses from these loans may also increase.
A large portion of our loan portfolio
is comprised of commercial and industrial loans secured by accounts receivable, inventory, equipment or other business assets,
the deterioration in value of which could increase the potential for future losses.
At December 31,
2018, $183.3 million, or 17.6% of our total loan portfolio, was comprised of commercial and industrial loans and variable lines
of credit to a variety of small and medium-sized businesses in our market area collateralized by general business assets including,
among other things, accounts receivable and inventory, and we may augment this collateral with additional liens on real property.
These commercial and industrial loans are typically larger in amount than loans to individuals and, therefore, have the potential
for larger losses on a per loan basis. Additionally, the repayment of commercial and industrial loans is subject to the ongoing
business operations of the borrower. The collateral securing such loans generally includes moveable property such as inventory,
which may decline in value more rapidly than we anticipate, or may be difficult to market and sell, exposing us to increased credit
risk. Significant adverse changes in the economy or local market conditions in which our commercial lending customers operate could
cause rapid declines in loan collectability and the values associated with general business assets, resulting in inadequate collateral
coverage that may expose us to credit losses and could adversely affect our business, financial condition and results of operations.
We make and hold in our portfolio
commercial construction loans, which are considered to have greater credit risk than residential loans made by financial institutions.
We originate and
purchase commercial construction loans primarily to local developers to finance the construction of commercial and multi-family
properties or to acquire land for development of commercial and multi-family properties and to finance infrastructure improvements.
We also provide commercial construction loans to local developers for the construction of one- to four-family residential developments,
and originate rehabilitation loans, enabling the borrower to partially or totally refurbish an existing structure. At December
31, 2018, commercial construction loans were $95.8 million, or 9.2% of our total loan portfolio. We also had undrawn amounts on
the commercial construction loans totaling $84.0 million at December 31, 2018. Commercial construction loans are considered more
risky than residential mortgage loans. The primary credit risks associated with construction lending are underwriting risks, project
risks and market risks. Project risks include cost overruns, borrower credit risk, project completion risk, general contractor
credit risk, and environmental and other hazard risks. Market risks are risks associated with the sale of the completed project.
They include affordability risk, which means the risk of affordability of financing by borrowers, product design risk, and risks
posed by competing projects.
We have a significant number of
loans secured by real estate, and a downturn in the local real estate market could negatively impact our profitability.
At
December 31, 2018, approximately $834.7 million, or 80.2%, of our total loan portfolio was secured by real estate, most of which
is located in our primary lending market. Future declines in the real estate values in the Capital Region of New York and surrounding
markets could significantly impair the value of the particular collateral securing our loans and our ability to sell the collateral
upon foreclosure for an amount necessary to satisfy the borrower’s obligations to us. This could require increasing our allowance
for loan losses to address the decrease in the value of the real estate securing our loans, which could have a material adverse
effect on our business, financial condition, results of operations and growth prospects.
Unlike larger financial institutions that
are more geographically diversified, our profitability depends primarily on the general economic conditions in our primary market
area. Local economic conditions have a significant impact on our residential real estate, commercial real estate, construction,
commercial and industrial and consumer lending, including, the ability of borrowers to repay these loans and the value of the collateral
securing these loans.
While economic conditions in our primary
market remain strong, deterioration in economic conditions could result in the following consequences, any of which could have
a material adverse effect on our business, financial condition, liquidity and results of operations:
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·
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demand for our products and services may decrease;
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·
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loan delinquencies, problem assets and foreclosures may increase;
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·
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collateral for loans, especially real estate, may decline in value, thereby reducing customers’
future borrowing power, and reducing the value of assets and collateral associated with existing loans;
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·
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the value of our securities portfolio may decrease; and
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·
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the net worth and liquidity of loan guarantors may decrease, thereby impairing their ability to honor
commitments made to us.
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Moreover, a significant decline in general
economic conditions, caused by inflation, recession, acts of terrorism, an outbreak of hostilities or other international or domestic
calamities, unemployment or other factors beyond our control could further impact these local economic conditions and could further
negatively affect our financial performance. In addition, deflationary pressures, while possibly lowering our operating costs,
could have a significant negative effect on our borrowers, especially our business borrowers, and the values of underlying collateral
securing loans, which could negatively affect our financial performance.
Our allowance for loan losses may not be sufficient to cover
actual loan losses.
We maintain an allowance for loan losses,
which is established through a provision for loan losses that represents management’s best estimate of probable incurred
losses within the existing portfolio of loans. We make various assumptions and judgments about the collectability of loans in our
portfolio, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral
for the repayment of loans. In determining the adequacy of the allowance for loan losses, we rely on our experience and our evaluation
of economic conditions. If our assumptions prove to be incorrect, our allowance for loan losses may not be sufficient to cover
losses inherent in our loan portfolio, and adjustments may be necessary to address different economic conditions or adverse developments
in the loan portfolio. Consequently, a problem with one or more loans could require us to significantly increase our provision
for loan losses. In addition, federal and state regulators periodically review our allowance for loan losses and may require us
to increase our provision for loan losses or recognize additional loan charge-offs. Material additions to the allowance would materially
decrease our net income.
The Financial Accounting Standards Board
has adopted a new accounting standard that will be effective for Pioneer Bancorp, Inc. and Pioneer Bank for our first fiscal year
beginning after December 15, 2021. This standard, referred to as Current Expected Credit Loss, or CECL, will require financial
institutions to determine periodic estimates of lifetime expected credit losses on loans, and recognize the expected credit losses
as allowances for loan losses. This will change the current method of establishing allowances for loan losses that are probable,
which may require us to increase our allowance for loan losses, and increase the data we would need to collect and review to determine
the appropriate level of our allowance for loan losses.
Changes in interest rates may reduce our profits.
Our profitability, like that of most financial
institutions, depends to a large extent upon our net interest income, which is the difference between our interest income on interest-earning
assets, such as loans and securities, and our interest expense on interest-bearing liabilities, such as deposits and borrowed funds.
Accordingly, our results of operations depend largely on movements in market interest rates and our ability to manage our interest-rate-sensitive
assets and liabilities in response to these movements. Factors such as inflation, recession and instability in financial markets,
among other factors beyond our control, may affect interest rates.
If interest rates rise, and the interest
rates on our deposits increase faster than the interest rates we receive on our loans and investments, our interest rate spread
would decrease, which would have a negative effect on our net interest income and profitability. Furthermore, increases in interest
rates may adversely affect the ability of borrowers to make loan repayments on adjustable-rate loans, as the interest owed on such
loans would increase as interest rates increase. Conversely, decreases in interest rates can result in increased prepayments of
loans and mortgage-related securities, as borrowers refinance to reduce their borrowing costs. Under these circumstances, we are
subject to reinvestment risk as we may have to reinvest such loan or securities prepayments into lower-yielding assets, which may
also negatively impact our income.
If interest rates rise, we expect that our
net portfolio value of equity would decrease. Net portfolio value of equity represents the present value of the expected cash flows
from our assets less the present value of the expected cash flows arising from our liabilities, adjusted for the value of off-balance
sheet contracts. At December 31, 2018, and assuming a 200 basis points increase in market interest rates, we estimate that our
net portfolio value would decrease by $12.8 million, or 6.8%. Conversely, at December 31, 2018 and assuming a 200 basis points
decrease in market interest rates, we estimate that our net portfolio value would increase by $9.6 million, or 5.0%. See “Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Management of Market Risk—Net Portfolio Value
Simulation.”
Any substantial, unexpected or prolonged
change in market interest rates could have a material adverse effect on our financial condition, liquidity and results of operations.
While we pursue an asset/liability strategy designed to mitigate our risk from changes in interest rates, changes in interest rates
can still have a material adverse effect on our financial condition and results of operations. Changes in interest rates also may
negatively affect our ability to originate real estate loans, the value of our assets and our ability to realize gains from the
sale of our assets, all of which ultimately affect our earnings. Also, our interest rate risk modeling techniques and assumptions
cannot fully predict or capture the impact of actual interest rate changes on our balance sheet or projected operating results.
For further discussion of how changes in interest rates could impact us, see “Management’s Discussion and Analysis
of Financial Condition and Results of Operations—Management of Market Risk.”
Municipal deposits are price sensitive and could result in
an increase in interest expense or funding fluctuations.
Municipal
deposits are a significant source of funds for our lending and investment activities. At December 31, 2018, $216.5 million, or
19.4% of our total deposits, consisted of municipal deposits from local government entities such as towns, cities, school districts
and other municipalities, which are collateralized by letters of credit from the Federal Home Loan Bank of New York and investment
securities. Given our dependence on high-average balance municipal funds deposits as a source of funds, our inability to retain
such funds could significantly and adversely affect our liquidity. Further, our municipal deposits are primarily demand deposit
accounts and are therefore more sensitive to interest rate risks. If we are forced to pay higher rates on our municipal accounts
to retain those funds, or if we are unable to retain such funds and we are forced to resort to other sources of funds for our lending
and investment activities, such as borrowings from the Federal Home Loan Bank of New York, the interest expense associated with
these other funding sources may be higher than the rates we are currently paying on our municipal deposits, which would adversely
affect our net income.
The level of our commercial real
estate loan portfolio subjects us to additional regulatory scrutiny.
The
Federal Deposit Insurance Corporation and the other federal bank regulatory agencies have promulgated joint guidance on sound
risk management practices for financial institutions with concentrations in commercial real estate lending. Under the
guidance, a financial institution that, like us, is actively involved in commercial real estate lending should perform a risk
assessment to identify concentrations. A financial institution may have a concentration in commercial real estate lending if,
among other factors, (i) total reported loans for construction, land acquisition and development, and other land
represent 100% or more of total capital, or (ii) total reported loans secured by multi-family and
non-owner occupied, non-farm, non-residential properties, loans for construction, land acquisition and
development and other land, and loans otherwise sensitive to the general commercial real estate market, including loans to
commercial real estate related entities, represent 300% or more of total capital. Based on these factors, we have a
concentration in loans of the type described in (ii), above, or 276.1% of our total capital at December 31, 2018. The purpose
of the guidance is to assist banks in developing risk management practices and capital levels commensurate with the level and
nature of real estate concentrations. The guidance states that management should employ heightened risk management
practices including board and management oversight and strategic planning, development of underwriting standards,
risk assessment and monitoring through market analysis and stress testing. Our bank regulators could require us to implement
additional policies and procedures consistent with their interpretation of the guidance that may result in additional costs
to us or that may result in a curtailment of our commercial real estate and multi-family lending and/or the requirement that
we maintain higher levels of regulatory capital, either of which would adversely affect our loan originations and
profitability.
We use a third party to originate one- to four-family residential
mortgage loans.
We have used a third-party mortgage banking
company to underwrite, process and close our residential mortgage loans since January 2016. We use this company in order to offer
our customers this loan product without the expense of an in-house residential mortgage loan department. Should we discontinue
this relationship or otherwise be unable to use this company in the future, our ability to purchase residential mortgage loans
may be disrupted unless we are able to find a suitable replacement or have or re-develop the capability to originate residential
mortgage loans through our lending staff. Should we add more staff in such an event, our compensation expense would increase. Our
income may be negatively affected if our residential mortgage lending program is disrupted.
Our business strategy involves moderate growth, and our financial
condition and results of operations may be adversely affected if we fail to grow or fail to manage our growth effectively.
Our assets increased $462.3 million, or
56.1%, from $824.6 million at June 30, 2014 to $1.3 billion at December 31, 2018, primarily due to increases in loans receivable.
Over the next several years, we expect to experience moderate growth in our total assets and deposits, and the scale of our operations.
Achieving our growth targets requires us to attract customers that currently bank at other financial institutions in our market.
Our ability to grow successfully will depend on a variety of factors, including our ability to attract and retain experienced bankers,
the availability of attractive business opportunities, competition from other financial institutions in our market area and our
ability to manage our growth. While we believe we have the management resources and internal systems in place to successfully
manage our future growth, there can be no assurance growth opportunities will be available or that we will successfully manage
our growth. If we do not manage our growth effectively, we may not be able to achieve our business plan, which would have
an adverse effect on our financial condition and results of operations.
Changes in the valuation of our securities portfolio may
reduce our profits and our capital levels.
Our securities portfolio may be affected
by fluctuations in market value, potentially reducing accumulated other comprehensive income or earnings. Fluctuations in market
value may be caused by changes in market interest rates, lower market prices for securities and limited investor demand. Management
evaluates securities for other-than-temporary impairment on a quarterly basis, with more frequent evaluation for selected issues.
In analyzing a debt issuer’s financial condition, management considers whether the securities are issued by the federal government
or its agencies, whether downgrades by bond rating agencies have occurred, industry analysts’ reports and spread differentials
between the effective rates on instruments in the portfolio compared to risk-free rates. If this evaluation shows impairment to
the actual or projected cash flows associated with one or more securities, we may take a charge to earnings to reflect such impairment.
Changes in interest rates may also have an adverse effect on our financial condition, as our available-for-sale securities are
reported at their estimated fair value, and therefore are affected by fluctuations in interest rates. We increase or decrease our
stockholders’ equity by the amount of change in the estimated fair value of the available-for-sale securities, net of taxes.
Declines in market value may result in other-than-temporary impairments of these assets, which may lead to accounting charges that
could have a material adverse effect on our net income and stockholders’ equity.
A portion of our loan portfolio consists
of loan participations secured by properties outside our market area. Loan participations may have a higher risk of loss than loans
we originate because we are not the lead lender and we have limited control over credit monitoring.
We occasionally purchase commercial real
estate, commercial and industrial and commercial construction loan participations secured by properties outside our market area
in which we are not the lead lender. We have purchased loan participations secured by various types of collateral such as real
estate, equipment and other business assets located in New York, Connecticut and Vermont. Loan participations may have a higher
risk of loss than loans we originate because we rely on the lead lender to monitor the performance of the loan. Moreover, our decision
regarding the classification of a loan participation and loan loss provisions associated with a loan participation are made in
part based upon information provided by the lead lender. A lead lender also may not monitor a participation loan in the same manner
as we would for loans that we originate. At December 31, 2018, our loan participations where we are not the lead lender totaled
$64.7 million, or 6.2% of our loan portfolio. At December 31, 2018, commercial and industrial loan participations outside our market
area totaled $18.0 million, or 9.8% of the commercial and industrial loan portfolio, commercial construction loan participations
outside our market area totaled $8.6 million, or 8.9% of the commercial construction loan portfolio and commercial real estate
loan participations outside our market area totaled $2.0 million, or 0.5% of the commercial real estate loan portfolio. At December
31, 2018, no loan participations were delinquent 60 days or more. If our underwriting of these participation loans is not sufficient,
our non-performing loans may increase and our earnings may decrease.
We may, in the future, participate in structured
financing transactions involving businesses inside and outside our market area that require alternative financing arrangements.
While these types of arrangements may generate more income than our traditional commercial loans that we originate and hold in
portfolio, they generally have greater credit risk because they involve lending to borrowers with higher risk profiles, the issuance
of more complex financial instruments and the valuation of more complex underlying collateral.
We may be adversely affected by recent changes in U.S. tax
laws.
The Tax Cuts and Jobs Act, which was enacted
in December 2017, is likely to have both positive and negative effects on our financial performance. Although the legislation’s
reduction in our federal corporate tax rate has had a favorable impact on our earnings and capital generation abilities, the legislation
also enacted limitations on certain deductions that will have an impact on the banking industry, borrowers and the market for single-family
residential real estate. These limitations include (i) a lower limit on the deductibility of mortgage interest on single-family
residential mortgage and home equity loans, (ii) a limitation on the deductibility of business interest expense and (iii) a limitation
on the deductibility of property taxes and state and local income taxes.
The recent changes in the tax laws may have
an adverse effect on the market for, and valuation of, residential properties, and on the demand for such loans in the future and
could make it harder for borrowers to make their loan payments. In addition, these recent changes may also have a disproportionate
effect on taxpayers in states with high residential home prices and high state and local taxes, like New York. If home ownership
becomes less attractive, demand for mortgage loans could decrease. The value of the properties securing loans in our loan portfolio
may be adversely impacted as a result of the changing economics of home ownership, which could require an increase in our provision
for loan losses, which would reduce our profitability and could materially adversely affect our business, financial condition and
results of operations.
Conditions in insurance markets could adversely affect our
earnings.
As we have diversified our sources of income,
we have become increasingly reliant on non-interest income, particularly insurance fees and commissions. Revenue from these sources
could be negatively affected by fluctuating premiums in the insurance markets or other factors beyond our control. Other factors
that affect our insurance revenue are the profitability and growth of our clients, continued development of new products and services,
as well as our access to new markets. Our insurance revenues and profitability may also be adversely affected by regulatory developments
impacting healthcare and insurance markets, possibly including recent legislative proposals and discussions relating to national
health insurance and the elimination of the private health insurance market.
Involvement in wealth management
creates risks associated with the industry.
Our wealth management
operations with Pioneer Financial Services, Inc. present special risks not borne by institutions that focus exclusively on other
traditional retail and commercial banking products. For example, the investment advisory industry is subject to fluctuations in
the stock market that may have a significant adverse effect on transaction fees, client activity and client investment portfolio
gains and losses. Also, additional or modified regulations may adversely affect our wealth management operations. In addition,
our wealth management operations, are dependent on a small number of established financial advisors, whose departure could result
in the loss of a significant number of client accounts. A significant decline in fees and commissions or trading losses suffered
in the investment portfolio could adversely affect our income and potentially require the contribution of additional capital to
support our operations.
Changes in market conditions, changes in discount rates,
changes in mortality assumptions or lower returns on assets may increase required contributions to, and costs associated with,
our tax-qualified defined benefit plan in future periods.
The
funded status and benefit obligations of our tax-qualified defined benefit plan (“pension plan”) is dependent upon
may factors, including returns on invested assets, certain market interest rates, the discount rates and mortality assumptions
used to determine pension obligations. The pension plan liability is calculated based on various actuarial assumptions, including
mortality expectations, discount rates and expected long-term rates of return on plan assets. Unfavorable returns on plan assets
could materially change the amount of required plan funding, which would reduce the cash available for our operations. In addition,
a decrease in the discount rate and/or changes in the mortality assumptions used to determine pension obligations could increase
the estimated value of our pension obligations, which would require us to increase the amounts of future contributions to the plan,
thereby reducing our equity and our costs associated with the plan may substantially increase in future periods.
Changes in laws and regulations and
the cost of regulatory compliance with new laws and regulations may adversely affect our operations and/or increase our costs of
operations.
We are subject to extensive regulation,
supervision and examination by our banking regulators. Such regulation and supervision govern the activities in which a financial
institution and its holding company may engage and are intended primarily for the protection of insurance funds and the depositors
and borrowers of Pioneer Bank rather than for the protection of our stockholders. Regulatory authorities have extensive discretion
in their supervisory and enforcement activities, including the ability to impose restrictions on our operations, classify our assets
and determine the level of our allowance for loan losses. These regulations, along with the currently existing tax, accounting,
securities, deposit insurance and monetary laws, rules, standards, policies, and interpretations, control the ways financial institutions
conduct business, implement strategic initiatives, and prepare financial reporting and disclosures. Any change in such regulation
and oversight, whether in the form of regulatory policy, new regulations, legislation or supervisory action, may have a material
impact on our operations. Further, changes in accounting standards can be both difficult to predict and may involve judgment and
discretion in their interpretation by us and our independent accounting firms. These changes could materially impact, potentially
retroactively, how we report our financial condition and results of operations.
Strong competition within our market area may reduce our
profits and slow growth.
We face strong competition in making loans
and attracting deposits. Price competition for loans and deposits sometimes requires us to charge lower interest rates on our loans
and pay higher interest rates on our deposits, and may reduce our net interest income. Competition also makes it more difficult
and costly to attract and retain qualified employees. Many of the institutions with which we compete have substantially greater
resources and lending limits than we have and may offer services that we do not provide. Our competitors often aggressively price
loan and deposit products when they enter into new lines of business or new market areas. If we are unable to effectively compete
in our market area, our profitability would be negatively affected. The greater resources and broader offering of deposit and loan
products of some of our competitors may also limit our ability to increase our interest-earning assets. For more information about
our market area and the competition we face, see “Business of Pioneer Bank—Market Area” and “—Competition.”
We are subject to stringent capital requirements, which may
adversely impact our return on equity, require us to raise additional capital, or restrict us from paying dividends or repurchasing
shares.
Federal regulations establish minimum capital
requirements for insured depository institutions, including minimum risk-based capital and leverage ratios, which were effective
for us on January 1, 2015, and define what constitutes “capital” for calculating these ratios. The new minimum capital
requirements are: (1) a new common equity Tier 1 capital ratio of 4.5%; (2) a Tier 1 to risk-based assets capital ratio of 6%;
(3) a total capital ratio of 8%; and (4) a Tier 1 leverage ratio of 4%. The regulations also require unrealized gains and losses
on certain “available-for-sale” securities holdings to be included for calculating regulatory capital requirements
unless a one-time opt-out is exercised. We elected to exercise our one-time option to opt-out of the requirement under the final
rule to include certain “available-for-sale” securities holdings for calculating our regulatory capital requirements.
The regulations also establish a “capital conservation buffer” of 2.5%, resulting in the following minimum ratios:
(1) a common equity Tier 1 capital ratio of 7.0%, (2) a Tier 1 to risk-based assets capital ratio of 8.5%, and (3) a total capital
ratio of 10.5%. The capital conservation buffer requirement began being phased in January 2016 at 0.625% of risk-weighted assets
and increased each year until it was fully implemented in January 2019. An institution will be subject to limitations on paying
dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount.
These limitations will establish a maximum percentage of eligible retained income that can be utilized for such actions.
The recently enacted Economic Growth, Regulatory
Relief, and Consumer Protection Act (the “Regulatory Relief Act”) simplifies capital calculations by requiring the
federal regulators to establish for institutions under $10 billion in assets a community bank leverage ratio (tangible equity to
average consolidated assets) at a percentage not less than 8% and not greater than 10% that eligible institutions may choose to
elect to replace the risk-based capital requirements under the Basel III capital rules for such institutions. Institutions that
meet the community bank leverage ratio will automatically be deemed to be well-capitalized under the federal regulator’s
prompt corrective action framework, although the regulators retain the flexibility to determine that an institution may not qualify
for the community bank leverage ratio test based on the institution’s risk profile. The federal regulators jointly issued
a proposed rule on November 21, 2018, whereby a qualifying community bank organization may elect to use the community bank leverage
ratio capital framework, in which case it will be considered well-capitalized so long as its community bank leverage ratio is greater
than 9%.
Until the federal regulators issue their
final rule, the Basel III risk-based and leverage ratios apply. The effective date of the final rule and the specific community
bank leverage ratio have not been determined at this time.
The application of more stringent Basel
III capital requirements could, among other things, result in lower returns on equity, require the raising of additional capital,
and result in regulatory actions if we were to be unable to comply with such requirements. Implementation of changes to asset risk
weightings for risk-based capital calculations, items included or deducted in calculating Basel III regulatory capital and/or additional
Basel III capital conservation buffers could result in management modifying its business strategy, and could limit our ability
to make distributions, including paying dividends or buying back shares.
Non-compliance with the USA PATRIOT Act, Bank Secrecy Act,
or other laws and regulations could result in fines or sanctions.
The USA PATRIOT and Bank
Secrecy Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering
and terrorist activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports
with the U.S. Treasury’s Office of Financial Crimes Enforcement Network. These rules require financial institutions
to establish procedures for identifying and verifying the identity of customers that open new financial accounts. Failure to comply
with these regulations could result in fines or sanctions, including restrictions on conducting acquisitions or establishing new
branches. Several banking institutions have received large fines for non-compliance with these laws and regulations. While we have
developed policies and procedures designed to assist in compliance with these laws and regulations, these policies and procedures
may not be effective in preventing violations of these laws and regulations.
Our success depends on retaining certain key personnel.
Our performance largely depends on the talents
and efforts of highly skilled individuals who comprise our senior management team. We rely on key personnel to manage and operate
our business, including major revenue generating functions such as loan and deposit generation, wealth management and insurance
businesses. The loss of key staff may adversely affect our ability to maintain and manage these functions effectively, which could
negatively affect our income. In addition, loss of key personnel could result in increased recruiting and hiring expenses, which
would reduce our net income. Our continued ability to compete effectively depends on our ability to attract new employees and to
retain and motivate our existing employees.
Systems failures or breaches of our network security could
subject us to increased operating costs as well as litigation and other liabilities.
Our operations depend upon our ability to
protect our computer systems and network infrastructure against damage from physical theft, fire, power loss, telecommunications
failure or a similar catastrophic event, as well as from security breaches, denial of service attacks, viruses, worms and other
disruptive problems caused by hackers. Any damage or failure that causes an interruption in our operations could have a material
adverse effect on our financial condition and results of operations. Computer break-ins, phishing and other disruptions could also
jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure, which
may result in significant liability to us and may cause existing and potential customers to refrain from doing business with us.
Although we, with the help of third-party service providers, intend to continue to implement security technology and establish
operational procedures designed to prevent such damage, our security measures may not be successful. In addition, advances in computer
capabilities, new discoveries in the field of cryptography or other developments could result in a compromise or breach of the
algorithms we and our third-party service providers use to encrypt and protect customer transaction data. A failure of such security
measures could have a material adverse effect on our financial condition and results of operations.
It is possible that we could incur significant
costs associated with a breach of our computer systems. While we have cyber liability insurance, there are limitations on coverage.
Furthermore, cyber incidents carry a greater risk of injury to our reputation. Finally, depending on the type of incident, banking
regulators can impose restrictions on our business and consumer laws may require reimbursement of customer losses.
Changes in accounting standards could affect reported earnings.
The bodies responsible for establishing
accounting standards, including the Financial Accounting Standards Board, the Securities and Exchange Commission and bank regulators,
periodically change the financial accounting and reporting guidance that governs the preparation of our financial statements. These
changes can be hard to predict and can materially impact how we record and report our financial condition and results of operations.
In some cases, we could be required to apply new or revised guidance retroactively.
Changes in management’s estimates and assumptions may
have a material impact on our consolidated financial statements and our financial condition or operating results.
In preparing this prospectus as well as
periodic reports we will be required to file under the Securities Exchange Act of 1934, including our consolidated financial statements,
our management is and will be required under applicable rules and regulations to make estimates and assumptions as of specified
dates. These estimates and assumptions are based on management’s best estimates and experience at such times and are subject
to substantial risk and uncertainty. Materially different results may occur as circumstances change and additional information
becomes known. Areas requiring significant estimates and assumptions by management include our evaluation of the adequacy of our
allowance for loan losses, the determination of our deferred income taxes, our fair value measurements, our determination of goodwill
impairment, and our evaluation of our defined benefit pension plan obligations.
The cost of additional finance and accounting systems, procedures
and controls in order to satisfy our new public company reporting requirements will increase our expenses.
As a result of the completion of this offering,
we will become a public reporting company. We expect that the obligations of being a public company, including the substantial
public reporting obligations, will require significant expenditures and place additional demands on our management team. We have
made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems
to meet our reporting obligations as a stand-alone public company. However, the measures we take may not be sufficient to satisfy
our obligations as a public company. Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes Oxley Act”) requires
annual management assessments of the effectiveness of our internal control over financial reporting, starting with the second annual
report that we would expect to file with the Securities and Exchange Commission. Any failure to achieve and maintain an effective
internal control environment could have a material adverse effect on our business and stock price. In addition, we may need to
hire additional compliance, accounting and financial staff with appropriate public company experience and technical knowledge,
and we may not be able to do so in a timely fashion. As a result, we may need to rely on outside consultants to provide these services
for us until qualified personnel are hired. These obligations will increase our operating expenses and could divert our management’s
attention from our operations.
Our risk management framework may not be effective in mitigating
risk and reducing the potential for significant losses.
Our risk management framework is designed
to minimize risk and loss to us. We try to identify, measure, monitor, report and control our exposure to risk, including strategic,
market, liquidity, compliance and operational risks. While we use broad and diversified risk monitoring and mitigation techniques,
these techniques are inherently limited because they cannot anticipate the existence or future development of currently unanticipated
or unknown risks. Recent economic conditions and heightened legislative and regulatory scrutiny of the financial services industry,
among other developments, have increased our level of risk. Accordingly, we could suffer losses if we fail to properly anticipate
and manage these risks.
We are subject to environmental
liability risk associated with lending activities.
A
significant portion of our loan portfolio is secured by real estate, and we could become subject to environmental liabilities with
respect to one or more of these properties. During the ordinary course of business, we may foreclose on and take title to properties
securing defaulted loans. In doing so, there is a risk that hazardous or toxic substances could be found on these properties. If
hazardous conditions or toxic substances are found on these properties, we may be liable for remediation costs, as well as for
personal injury and property damage, civil fines and criminal penalties regardless of when the hazardous conditions or toxic substances
first affected any particular property. Environmental laws may require us to incur substantial expenses to address unknown liabilities
and may materially reduce the affected property’s value or limit our ability to use or sell the affected property. In addition,
future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to
environmental liability. Although we have policies and procedures to perform an environmental review before initiating any foreclosure
on nonresidential real property, these reviews may not be sufficient to detect all potential environmental hazards. The remediation
costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on us.
We are a community bank and our ability to maintain our reputation
is critical to the success of our business and the failure to do so may materially adversely affect our performance.
We are a community bank, and our reputation
is one of the most valuable components of our business. A key component of our business strategy is to rely on our reputation for
customer service and knowledge of local markets to expand our presence by capturing new business opportunities from existing and
prospective customers in our market area and contiguous areas. As such, we strive to conduct our business in a manner that enhances
our reputation. This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral
part of the communities we serve, delivering superior service to our customers and caring about our customers and associates. If
our reputation is negatively affected by the actions of our employees, by our inability to conduct our operations in a manner that
is appealing to current or prospective customers, or otherwise, our business and, therefore, our operating results may be materially
adversely affected.
Risks Related to the Offering
The future price of our shares of common stock may be less
than the $10.00 offering price per share.
If you purchase
shares of common stock in the offering, you may not be able to sell them later at or above the $10.00 offering price. In many cases,
shares of common stock issued by newly converted savings institutions have traded below the initial offering price. The aggregate
purchase price of the shares of common stock sold in the offering will be based on an independent appraisal. The independent appraisal
is not intended, and should not be construed, as a recommendation of any kind as to the advisability of purchasing shares of common
stock. The independent appraisal is based on certain estimates, assumptions and projections, all of which are subject to change
from time to time. After the shares begin trading, the trading price of our common stock will be determined by the marketplace,
and may be influenced by many factors, including our performance, prevailing interest rates, the overall performance of the economy,
changes in federal tax laws, new regulations, investor perceptions of Pioneer Bancorp, Inc. and the outlook for the financial services
industry in general. Price fluctuations in our common stock may be unrelated to our operating performance.
Pioneer Bancorp, MHC’s majority control of our common
stock will enable it to exercise voting control over most matters put to a vote of stockholders and will prevent stockholders from
forcing a sale or a second-step conversion transaction you may find advantageous.
Pioneer Bancorp, MHC will own a majority
of Pioneer Bancorp, Inc.’s common stock after the offering and, through its board of trustees, will be able to exercise voting
control over most matters put to a vote of stockholders. Most of the directors and officers who will manage Pioneer Bancorp, Inc.
and Pioneer Bank will also manage Pioneer Bancorp, MHC. As a New York-chartered mutual holding company, the board of trustees of
Pioneer Bancorp, MHC must ensure that the interests of depositors of Pioneer Bank are represented and considered in matters put
to a vote of stockholders of Pioneer Bancorp, Inc. Therefore, the votes cast by Pioneer Bancorp, MHC may not be in your personal
best interests as a stockholder. For example, Pioneer Bancorp, MHC may exercise its voting control to defeat a stockholder nominee
for election to the board of directors of Pioneer Bancorp, Inc. and will be able to elect all of the directors of Pioneer Bancorp,
Inc. Some stockholders may desire a sale or merger transaction, since stockholders typically receive a premium for their shares,
or a second-step conversion transaction, since, on a fully converted basis most fully stock institutions tend to trade at higher
multiples of book value than mutual holding companies. However, stockholders will not be able to force a merger or a second-step
conversion transaction without the consent of Pioneer Bancorp, MHC since such transactions also require, under New York and federal
law, the approval of a majority of all of the outstanding voting stock, which can only be achieved if Pioneer Bancorp, MHC votes
to approve such transactions.
Our failure to effectively deploy the net proceeds may
have an adverse effect on our financial performance.
We intend to invest
between $34.8 million and $47.4 million of the net proceeds of the offering (or $54.6 million at the adjusted maximum of the offering
range) in Pioneer Bank. We may use the remaining net proceeds to invest in securities and for general corporate purposes, including,
subject to regulatory limitations, repurchasing shares of common stock. We also expect to use a portion of the net proceeds we
retain to fund a loan to Pioneer Bank’s employee stock ownership plan to purchase shares of common stock in the offering
and to fund the charitable foundation. Pioneer Bank may use the net proceeds it receives to fund new loans, expand its retail banking
franchise by establishing or acquiring new branches or by acquiring other financial institutions or other financial services companies,
or for other general corporate purposes. However, except for funding the loan to the employee stock ownership plan and funding
the charitable foundation, we have not allocated specific amounts of the net proceeds for any of these purposes. Therefore, we
will have significant flexibility in determining the amount of the net proceeds we apply to different uses and when we apply or
reinvest such proceeds. Also, certain of these uses, such as opening new branches or acquiring other financial institutions, may
require prior regulatory approval. We have not established a timetable for reinvesting the net proceeds, and we cannot predict
how long it will take to reinvest the net proceeds. Our failure to utilize these funds effectively and timely would reduce our
profitability and may adversely affect the value of our common stock.
Our return on equity may be low following the offering and
this could negatively affect the trading price of our shares of common stock.
Net income divided by average stockholders’
equity, known as “return on equity,” is a ratio many investors use to compare the performance of financial institutions.
Our return on equity may be low until we are able to leverage the additional capital we receive from the offering. Our return on
equity will be negatively affected by added expenses associated with our employee stock ownership plan and the stock-based benefit
plans we intend to implement. Until we can increase our net interest income and non-interest income and deploy the capital raised
in the offering, we expect our return on equity to be lower, which may reduce the market price of our shares of common stock. At
the midpoint of the offering range, Pioneer Bancorp, Inc.’s pro forma consolidated return on equity for the six months ended
December 31, 2018 would have equaled 9.31% (annualized), compared to Pioneer Bank’s return on equity for the six months ended
December 31, 2018 of 15.48% (annualized).
We are an emerging growth company, and if we elect to comply
only with the reduced reporting and disclosure requirements applicable to emerging growth companies, our common stock may be less
attractive to investors.
We are an emerging growth company, and,
for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting
requirements applicable to other public companies but not to “emerging growth companies,” including, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not
previously approved. Investors may find our common stock less attractive if we choose to rely on these exemptions.
As an emerging growth company, we also will
not be subject to Section 404(b) of the Sarbanes-Oxley Act, which would require that our independent auditors review and attest
to the effectiveness of our internal control over financial reporting. We could be an emerging growth company for up to five years
following the completion of this offering. We will cease to be an emerging growth company upon the earliest of: (1) the end of
the fiscal year following the fifth anniversary of this offering; (2) the first fiscal year after our annual gross revenues are
$1.07 billion or more; (3) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible
debt securities; or (4) the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded
$700 million at the end of the second quarter of that fiscal year.
Our stock-based benefit plans, if implemented, will increase
our expenses and reduce our income.
We intend to implement one or more stock-based
benefit plans after the offering, subject to stockholder approval, which would increase our annual compensation and benefit expenses
related to stock options and stock awards granted to participants under the stock-based benefit plans. The amount of these stock-related
compensation and benefit expenses would depend on the number of options and stock awards granted, the fair value of the options
and our stock on the date of grant, the vesting period, and other factors that we cannot predict at this time. If we implement
stock-based benefit plans within 12 months following the offering, the total shares of common stock reserved for issuance pursuant
to awards of restricted stock and grants of options under such plans would be limited to 1.96% and 4.90%, respectively, of the
outstanding shares of common stock of Pioneer Bancorp, Inc. at the completion of the offering. If we award restricted shares of
common stock or grant options in excess of these amounts under stock-based benefit plans implemented more than 12 months after
the completion of the offering, our costs would increase further.
We anticipate that our employee stock ownership
plan will purchase 3.92% of our outstanding shares. The cost of acquiring the shares of common stock for the employee stock ownership
plan is estimated to be between $6.5 million at the minimum of the offering range and $10.2 million at the adjusted maximum of
the offering range (assuming we are able to purchase all of such shares in the offering). We will record annual employee stock
ownership plan expenses in an amount equal to the fair value of shares of common stock committed to be released to employees. If
shares of common stock appreciate in value over time, compensation expense relating to the employee stock ownership plan will increase.
The estimated expense in the first year
following the offering for shares purchased in the offering (or in the after-market if the offering is oversubscribed by the eligible
account holders) by our employee stock ownership plan and for stock-based benefit plans implemented within one year after the offering,
subject to receipt of stockholder approval, is approximately $2.3 million ($1.8 million after tax) at the adjusted maximum of the
offering range as set forth in the pro forma financial information under “Pro Forma Data,” assuming the $10.00 per
share offering price as fair market value. Actual expense may be higher if the price of our common stock at the time the shares
are allocated or awarded is greater than $10.00 per share. For further discussion of our proposed stock-based plans, see “Management—Benefits
to be Considered Following Completion of the Offering.”
Implementing stock-based benefit plans may dilute your
ownership interest. Historically, stockholders have approved these stock-based benefit plans.
We intend to adopt one
or more new stock-based benefit plans following the offering, subject to stockholder approval. These plans may be funded either
through open market purchases or by issuing additional authorized but unissued shares of common stock. Our ability to repurchase
shares of common stock to fund these plans will be subject to many factors, including applicable regulatory restrictions on common
stock repurchases, the availability of stock in the market, the trading price of our stock, our capital levels, alternative uses
for our capital and our financial performance. While we intend to fund the new stock-based benefit plans through open market purchases,
stockholders would experience a 6.4% dilution in ownership interest if newly issued shares of our common stock are used to fund
stock options and shares of restricted common stock in amounts equal to 4.90% and 1.96%, respectively, of the outstanding shares
of common stock of Pioneer Bancorp, Inc. at the completion of offering. If we implement the plans more than 12 months following
the offering, new stock-based benefit plans would not be subject to these limitations and stockholders could experience greater
dilution.
Although our stockholders must approve the
implementation of any stock-based benefit plans follow the offering, the overwhelming majority of stock-based benefit plans implemented
by converting institutions and their holding companies have been approved by stockholders.
Federal Reserve Board regulations and policy
effectively prohibit Pioneer Bancorp, MHC from waiving the receipt of dividends, which will likely preclude us from paying any
dividends on our common stock.
Pioneer Bancorp, Inc.’s board of directors
will have the authority to declare dividends on our common stock subject to statutory and regulatory requirements. We currently
intend to retain all our future earnings, if any, for use in our business and do not expect to pay any cash dividends on our common
stock in the foreseeable future. Any future determination to pay cash dividends will be made by our board of directors and will
depend upon our financial condition, results of operations, capital requirements, restrictions under Federal Reserve Board regulations
and policy, our business strategy and other factors that our board of directors deems relevant.
Under Federal Reserve Board regulations
and policy, if Pioneer Bancorp, Inc. pays dividends to its public stockholders, it also would be required to pay dividends to Pioneer
Bancorp, MHC, unless Pioneer Bancorp, MHC waives the receipt of such dividends. Current Federal Reserve Board policy has been to
prohibit mutual holding companies that are regulated as bank holding companies, such as Pioneer Bancorp, MHC, from waiving the
receipt of dividends and the Federal Reserve Board ’s regulations implemented after the enactment of the Dodd-Frank Act effectively
prohibit federally-chartered mutual holding companies from waiving dividends declared by their subsidiaries. See “Subscription
and Regulation—Holding Company Regulation—Waivers of Dividends by Pioneer Bancorp, MHC” for a further discussion
of the applicable requirements related to the potential waiver of dividends by a mutual holding company. Moreover, since Pioneer
Bancorp, Inc. will sell only a minority of its shares to the public and will contribute the remaining shares to Pioneer Bancorp,
MHC, Pioneer Bancorp, Inc. will raise significantly less capital than would have been the case if it sold all its shares to the
public. As a result, paying dividends to Pioneer Bancorp, MHC — an entity that will not be paying for the shares of Pioneer
Bancorp, Inc. common stock it receives in connection with the offering, may be inequitable to public stockholders and not in their
best financial interests. Therefore, unless Federal Reserve Board regulations and policy change by allowing Pioneer Bancorp, MHC
to waive the receipt of dividends declared by Pioneer Bancorp, Inc. without diluting minority stockholders, it is unlikely that
Pioneer Bancorp, Inc. will pay any dividends.
Various factors may make takeover attempts more difficult
to achieve.
Stock banks and savings banks or holding
companies, as well as individuals, may not acquire control of a mutual holding company, such as Pioneer Bancorp, Inc. As result,
the only persons that may acquire control of a mutual holding company are other mutual savings institutions or mutual holding companies.
Accordingly, it is very unlikely, that Pioneer Bancorp, Inc. would be subject to any takeover attempt by activist stockholders
or other financial institutions. In addition, certain provisions of our articles of incorporation and bylaws and state and federal
banking laws, including regulatory approval requirements, could make it more difficult for a third party to acquire control of
Pioneer Bancorp, Inc. without our board of directors’ prior approval.
Under Federal Reserve Board regulations,
for a period of three years following completion of the offering, no person may directly or indirectly acquire or offer to acquire
beneficial ownership of more than 10% of our common stock without prior approval of the Federal Reserve Board. Under federal law,
subject to certain exemptions, a person, entity or group must notify the Federal Reserve Board before acquiring control of a bank
holding company. Acquisition of 10% or more of any class of voting stock of a bank holding company creates a rebuttable presumption
that the acquirer “controls” the bank holding company. Also, a bank holding company must obtain the prior approval
of the Federal Reserve Board and the NYSDFS before, among other things, acquiring direct or indirect ownership or control of more
than 5% of any class of voting shares of any bank, including Pioneer Bank.
There also are provisions in our articles
of organization that may be used to delay or block a takeover attempt, including a provision that prohibits any person, other than
Pioneer Bancorp, MHC, from voting more than 10% of the shares of common stock outstanding. Taken as a whole, these statutory provisions
and provisions in our articles of incorporation could result in our being less attractive to a potential acquirer and thus could
adversely affect the market price of our common stock.
For additional information, see “Restrictions
on Acquisition of Pioneer Bancorp, Inc.,” “Management—Employment Agreements” and “—Benefits
to be Considered Following Completion of the Offering.”
Our stock value may be negatively affected by applicable
regulations that restrict stock repurchases.
Applicable regulations restrict us from
repurchasing any of our shares of common stock during the first year following the offering and limit us from repurchasing our
shares of common stock during each of the second and third years following the offering to 5% of our outstanding shares, unless
we obtain prior approval from the NYSDFS. Stock repurchases are a capital management tool that can enhance the value of a company’s
stock, and our inability to repurchase any of our shares of common stock during the first year following the offering and limitations
on our ability to repurchase our shares of common stock during the second and third years following the offering may negatively
affect our stock price.
We have never issued common stock to the public, and there
is no guarantee that a liquid market will develop.
We have never issued common stock to the
public and there is no established market for our common stock. We expect that our common stock will be listed for trading on the
Nasdaq Capital Market under the symbol “PBFS,” subject to completion of the offering and compliance with certain conditions,
including the presence of at least three registered and active market makers. Sandler O’Neill & Partners, L.P. has advised
us that it intends to make a market in shares of our common stock following the offering, but it is not obligated to do so or to
continue to do so once it begins. While we will attempt before completion of the offering to obtain commitments from at least two
other broker-dealers to make a market in shares of our common stock, we may not be able to obtain such commitments. This would
result in our common stock not being listed for trading on the Nasdaq Capital Market, which could reduce the liquidity of our common
stock.
The development of an active trading market depends on the existence of willing buyers
and sellers, the presence of which is not within our control, or that of any market maker. The number of active buyers and sellers
of the shares of common stock at any particular time may be limited. Under such circumstances, you could have difficulty selling
your shares of common stock on short notice, and, therefore, you should not view the shares of common stock as a short-term investment.
In addition, our public “float,” which is the total number of our outstanding shares less the shares held by
Pioneer Bancorp, MHC and our directors and executive officers, is likely to be limited. As a result, an active trading market for
the common stock may not develop or, if it does develop, it may not continue. Additionally, if you purchase shares of common stock,
you may not be able to sell them at or above $10.00 per share. Purchasers of common stock in this offering should have long-term
investment intent and should recognize that there will be a limited trading market in the common stock. This may make it difficult
to sell the common stock after the completion of the offering and may have an adverse impact on the price at which the common stock
can be sold.
You may not revoke your order to purchase common stock
in the subscription or community offerings after you send us your order form.
Funds submitted or automatic withdrawals
authorized in connection with the purchase of shares of common stock in the subscription and community offerings will be held by
us until the completion or termination of the offering, including any extension of the expiration date and consummation of a syndicated
community offering. Because completion of the offering will be subject to regulatory approvals and an update of the independent
appraisal prepared by RP Financial, among other factors, there may be one or more delays in completing the offering. Orders submitted
in the subscription and community offerings are irrevocable, and purchasers will have no access to their funds unless the offering
is terminated, or extended beyond [extension date #1], or the number of shares to be sold in the offering is increased to more
than 11,170,402 shares or decreased to fewer than 7,179,465 shares.
You may not be able to sell your shares of common stock until
you have received a statement reflecting ownership of shares, which will affect your ability to take advantage of changes in the
stock price immediately following the offering.
A statement reflecting ownership of shares
of common stock purchased in the offering may not be delivered for several days after the completion of the offering and the commencement
of trading in the common stock. Your ability to sell the shares of common stock before receiving your ownership statement will
depend on arrangements you may make with a brokerage firm, and you may not be able to sell your shares of common stock until you
have received your ownership statement. As a result, you may not be able to take advantage of fluctuations in the price of the
common stock immediately following the offering.
The distribution of subscription rights could have adverse
income tax consequences.
If the subscription rights granted to eligible
current or former depositors of Pioneer Bank are deemed to have an ascertainable value, receipt of the rights may be taxable in
an amount equal to the ascertained value. Whether subscription rights are considered to have ascertainable value is an inherently
factual determination. We have received an opinion of counsel, Luse Gorman, PC, that it is more likely than not that subscription
rights have no ascertainable value; however, the opinion is not binding on the Internal Revenue Service.
Risks Related to the Charitable Foundation
The contribution to the charitable foundation will dilute
your ownership interest and adversely affect net income in 2019.
We intend to fund our charitable foundation
in connection with the offering. We intend to contribute shares of our common stock equal to 2.0% of the outstanding shares of
common stock of Pioneer Bancorp, Inc. at the completion of the offering and up to $250,000 in cash. At the minimum, midpoint, maximum
and adjusted maximum of the offering range, we will contribute to the charitable foundation 333,928, 392,857, 451,786 and 519,554
shares of common stock, respectively. The contribution will have an adverse effect on our net income for the quarter and year in
which we complete the offering and make the contribution to the charitable foundation. The after-tax expense of the contribution
is expected to reduce net income for the year ended June 30, 2019 by approximately $3.1 million, assuming the offering closes at
the midpoint of the offering range. Our net income for the six months ended December 31, 2018 and for the year ended June 30, 2018
was $9.2 million and $11.5 million, respectively. In addition, persons purchasing shares in the offering will have their ownership
and voting interests in Pioneer Bancorp, Inc. diluted by up to 2.0% due to the contribution of shares of common stock to the charitable
foundation.
Our contribution to the charitable foundation may not be
tax deductible, which could reduce our profits.
We may not have sufficient profits to be
able to fully use the tax deduction from our contribution to the charitable foundation. Under the Internal Revenue Code, an entity
is permitted to deduct up to 10% of its taxable income (generally income before federal income taxes and charitable contributions
expense) in any one year for charitable contributions. Any contribution in excess of the 10% limit may be deducted for federal
income tax purposes over each of the five years following the year in which the charitable contribution is made. Accordingly, a
charitable contribution could, if necessary, be deducted over a six-year period and expires thereafter.
SELECTED CONSOLIDATED FINANCIAL AND
OTHER DATA
The following tables set forth selected
consolidated historical financial and other data for Pioneer Bank, on a consolidated basis, at the dates and for the periods indicated.
It is only a summary and it should be read in conjunction with the business and financial information contained elsewhere in this
prospectus, including the consolidated financial statements that appear starting on page F-1 of this prospectus. The information
at December 31, 2018 and for the six months ended December 31, 2018 and 2017 is not audited but, in the opinion of management,
includes all adjustments necessary for a fair presentation. All adjustments are normal and recurring. The results of operations
for the six months ended December 31, 2018 are not necessarily indicative of the results that may be expected for the year ending
June 30, 2019 or any other period. The information at June 30, 2018 and 2017 and for the years ended June 30, 2018 and 2017 is
derived in part from the audited consolidated financial statements appearing in this prospectus. The information at June 30, 2016,
2015 and 2014 and for the years ended June 30, 2016, 2015 and 2014 is derived in part from audited consolidated financial statements
not appearing in this prospectus.
|
|
|
|
|
|
|
At December
|
|
|
At June 30,
|
|
|
|
|
|
|
|
|
31, 2018
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Selected Financial Condition Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
$
|
1,286,967
|
|
|
$
|
1,284,128
|
|
|
$
|
1,134,139
|
|
|
$
|
995,918
|
|
|
$
|
881,285
|
|
|
$
|
824,620
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
56,456
|
|
|
|
120,280
|
|
|
|
40,261
|
|
|
|
34,518
|
|
|
|
35,141
|
|
|
|
58,809
|
|
|
Securities available for sale
|
|
|
|
|
|
|
107,144
|
|
|
|
88,063
|
|
|
|
81,975
|
|
|
|
100,951
|
|
|
|
108,750
|
|
|
|
82,253
|
|
|
Securities held to maturity
|
|
|
|
|
|
|
4,275
|
|
|
|
5,297
|
|
|
|
2,213
|
|
|
|
3,811
|
|
|
|
3,389
|
|
|
|
7,539
|
|
|
Loans, net of allowance for loan losses
|
|
|
|
|
|
|
1,028,920
|
|
|
|
985,902
|
|
|
|
932,762
|
|
|
|
789,010
|
|
|
|
678,796
|
|
|
|
629,134
|
|
|
Bank-owned life insurance
|
|
|
|
|
|
|
17,779
|
|
|
|
17,715
|
|
|
|
17,601
|
|
|
|
17,527
|
|
|
|
17,423
|
|
|
|
17,279
|
|
|
Premises and equipment, net
|
|
|
|
|
|
|
42,010
|
|
|
|
42,902
|
|
|
|
37,384
|
|
|
|
30,703
|
|
|
|
20,629
|
|
|
|
14,605
|
|
|
Federal Home Loan Bank stock
|
|
|
|
|
|
|
2,233
|
|
|
|
883
|
|
|
|
1,149
|
|
|
|
1,584
|
|
|
|
986
|
|
|
|
958
|
|
|
Deposits
|
|
|
|
|
|
|
1,114,959
|
|
|
|
1,150,262
|
|
|
|
1,010,026
|
|
|
|
864,189
|
|
|
|
769,124
|
|
|
|
716,487
|
|
|
Borrowings
|
|
|
|
|
|
|
30,000
|
|
|
|
—
|
|
|
|
5,000
|
|
|
|
17,000
|
|
|
|
6,758
|
|
|
|
1,750
|
|
|
Net worth
|
|
|
|
|
|
|
126,394
|
|
|
|
118,063
|
|
|
|
104,012
|
|
|
|
93,610
|
|
|
|
93,620
|
|
|
|
93,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
December 31,
|
|
For the Years Ended June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
(In thousands)
|
|
|
Selected Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend income
|
|
$
|
26,332
|
|
|
$
|
22,282
|
|
|
$
|
46,486
|
|
|
$
|
37,621
|
|
|
$
|
32,161
|
|
|
$
|
28,805
|
|
|
$
|
28,237
|
|
|
Interest expense
|
|
|
2,053
|
|
|
|
1,481
|
|
|
|
3,186
|
|
|
|
2,411
|
|
|
|
1,648
|
|
|
|
1,314
|
|
|
|
1,478
|
|
|
Net interest income
|
|
|
24,279
|
|
|
|
20,801
|
|
|
|
43,300
|
|
|
|
35,210
|
|
|
|
30,513
|
|
|
|
27,491
|
|
|
|
26,759
|
|
|
Provision for loan losses
|
|
|
1,210
|
|
|
|
950
|
|
|
|
1,970
|
|
|
|
2,395
|
|
|
|
1,180
|
|
|
|
962
|
|
|
|
890
|
|
|
Net interest income after provision for loan losses
|
|
|
23,069
|
|
|
|
19,851
|
|
|
|
41,330
|
|
|
|
32,815
|
|
|
|
29,333
|
|
|
|
26,529
|
|
|
|
25,869
|
|
|
Non-interest income
|
|
|
6,569
|
|
|
|
5,983
|
|
|
|
12,804
|
|
|
|
10,897
|
|
|
|
8,226
|
|
|
|
7,398
|
|
|
|
7,253
|
|
|
Non-interest expense
|
|
|
18,507
|
|
|
|
17,926
|
|
|
|
36,325
|
|
|
|
35,366
|
|
|
|
30,272
|
|
|
|
27,327
|
|
|
|
27,017
|
|
|
Income before income taxes
|
|
|
11,131
|
|
|
|
7,908
|
|
|
|
17,809
|
|
|
|
8,346
|
|
|
|
7,287
|
|
|
|
6,600
|
|
|
|
6,105
|
|
|
Income tax expense
|
|
|
1,888
|
|
|
|
3,963
|
|
|
|
6,310
|
|
|
|
2,715
|
|
|
|
2,289
|
|
|
|
2,220
|
|
|
|
1,745
|
|
|
Net income
|
|
$
|
9,243
|
|
|
$
|
3,945
|
|
|
$
|
11,499
|
|
|
$
|
5,631
|
|
|
$
|
4,998
|
|
|
$
|
4,380
|
|
|
$
|
4,360
|
|
|
|
|
At or For the Six Months
Ended December 31, (1)
|
|
|
At or For the Years Ended June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
|
1.41
|
%
|
|
|
0.64
|
%
|
|
|
0.92
|
%
|
|
|
0.52
|
%
|
|
|
0.53
|
%
|
|
|
0.52
|
%
|
|
|
0.54
|
%
|
|
Return on average equity
|
|
|
15.48
|
%
|
|
|
7.45
|
%
|
|
|
10.51
|
%
|
|
|
5.83
|
%
|
|
|
5.18
|
%
|
|
|
4.59
|
%
|
|
|
4.87
|
%
|
|
Interest rate spread (2)
|
|
|
3.93
|
%
|
|
|
3.64
|
%
|
|
|
3.67
|
%
|
|
|
3.47
|
%
|
|
|
3.43
|
%
|
|
|
3.40
|
%
|
|
|
3.52
|
%
|
|
Net interest margin (3)
|
|
|
4.07
|
%
|
|
|
3.74
|
%
|
|
|
3.78
|
%
|
|
|
3.57
|
%
|
|
|
3.51
|
%
|
|
|
3.46
|
%
|
|
|
3.59
|
%
|
|
Non-interest expenses to average assets
|
|
|
2.81
|
%
|
|
|
2.92
|
%
|
|
|
2.91
|
%
|
|
|
3.27
|
%
|
|
|
3.19
|
%
|
|
|
3.23
|
%
|
|
|
3.32
|
%
|
|
Efficiency ratio (4)
|
|
|
60.00
|
%
|
|
|
66.33
|
%
|
|
|
64.75
|
%
|
|
|
76.70
|
%
|
|
|
78.14
|
%
|
|
|
78.33
|
%
|
|
|
79.43
|
%
|
|
Average interest-earning assets to average interest-bearing liabilities
|
|
|
145.54
|
%
|
|
|
140.35
|
%
|
|
|
141.31
|
%
|
|
|
139.29
|
%
|
|
|
139.05
|
%
|
|
|
136.82
|
%
|
|
|
133.33
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average equity to average assets
|
|
|
9.41
|
%
|
|
|
8.79
|
%
|
|
|
8.77
|
%
|
|
|
8.93
|
%
|
|
|
10.17
|
%
|
|
|
11.26
|
%
|
|
|
11.01
|
%
|
|
Total capital to risk weighted assets
|
|
|
13.29
|
%
|
|
|
12.60
|
%
|
|
|
12.86
|
%
|
|
|
12.41
|
%
|
|
|
14.10
|
%
|
|
|
15.65
|
%
|
|
|
16.11
|
%
|
|
Tier 1 capital to risk weighted assets
|
|
|
12.04
|
%
|
|
|
11.33
|
%
|
|
|
11.59
|
%
|
|
|
11.18
|
%
|
|
|
12.91
|
%
|
|
|
14.38
|
%
|
|
|
14.72
|
%
|
|
Common equity tier 1 capital to risk weighted assets
|
|
|
12.04
|
%
|
|
|
11.33
|
%
|
|
|
11.59
|
%
|
|
|
11.18
|
%
|
|
|
12.91
|
%
|
|
|
14.38
|
%
|
|
|
14.72
|
%
|
|
Tier 1 capital to average assets
|
|
|
9.70
|
%
|
|
|
9.13
|
%
|
|
|
9.17
|
%
|
|
|
9.60
|
%
|
|
|
10.87
|
%
|
|
|
11.79
|
%
|
|
|
12.04
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses as a percentage of total loans
|
|
|
1.31
|
%
|
|
|
1.28
|
%
|
|
|
1.35
|
%
|
|
|
1.25
|
%
|
|
|
1.23
|
%
|
|
|
1.31
|
%
|
|
|
1.43
|
%
|
|
Allowance for loan losses as a percentage of non-performing loans
|
|
|
115.83
|
%
|
|
|
160.05
|
%
|
|
|
142.05
|
%
|
|
|
149.68
|
%
|
|
|
155.44
|
%
|
|
|
143.85
|
%
|
|
|
152.68
|
%
|
|
Net charge-offs to average outstanding loans during the period
|
|
|
0.22
|
%
|
|
|
0.05
|
%
|
|
|
0.03
|
%
|
|
|
0.04
|
%
|
|
|
0.05
|
%
|
|
|
0.16
|
%
|
|
|
0.06
|
%
|
|
Non-performing loans as a percentage of total loans
|
|
|
1.13
|
%
|
|
|
0.80
|
%
|
|
|
0.95
|
%
|
|
|
0.84
|
%
|
|
|
0.79
|
%
|
|
|
0.91
|
%
|
|
|
0.94
|
%
|
|
Non-performing loans as a percentage of total assets
|
|
|
0.91
|
%
|
|
|
0.63
|
%
|
|
|
0.74
|
%
|
|
|
0.70
|
%
|
|
|
0.63
|
%
|
|
|
0.71
|
%
|
|
|
0.72
|
%
|
|
Total non-performing assets as a percentage of total assets
|
|
|
0.92
|
%
|
|
|
0.63
|
%
|
|
|
0.75
|
%
|
|
|
0.70
|
%
|
|
|
0.63
|
%
|
|
|
0.78
|
%
|
|
|
0.77
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of offices
|
|
|
22
|
|
|
|
22
|
|
|
|
22
|
|
|
|
22
|
|
|
|
18
|
|
|
|
17
|
|
|
|
17
|
|
|
Number of full-time equivalent employees
|
|
|
256
|
|
|
|
255
|
|
|
|
259
|
|
|
|
251
|
|
|
|
215
|
|
|
|
230
|
|
|
|
228
|
|
|
|
(2)
|
Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost
of interest-bearing liabilities.
|
|
|
(3)
|
Represents net interest income as a percentage of average interest-earning assets.
|
|
|
(4)
|
Represents non-interest expenses divided by the sum of net interest income and non-interest income.
|
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking
statements, which can be identified by the use of words such as “estimate,” “project,” “believe,”
“intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar
meaning. These forward-looking statements include, but are not limited to:
|
|
·
|
statements of our goals, intentions and expectations;
|
|
|
·
|
statements regarding our business plans, prospects, growth and operating strategies;
|
|
|
·
|
statements regarding the quality of our loan and investment portfolios; and
|
|
|
·
|
estimates of our risks and future costs and benefits.
|
These forward-looking statements are based
on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject
to assumptions with respect to future business strategies and decisions that are subject to change.
The following factors, among others, could
cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:
|
|
·
|
general economic conditions, either nationally or in our market area, that are worse than expected;
|
|
|
·
|
changes in the level and direction of loan delinquencies and charge-offs and changes in estimates of the adequacy of the allowance
for loan losses;
|
|
|
·
|
our ability to access cost-effective funding;
|
|
|
·
|
fluctuations in real estate values and both residential and commercial real estate market conditions;
|
|
|
·
|
demand for loans and deposits in our market area;
|
|
|
·
|
our ability to continue to implement our business strategies;
|
|
|
·
|
competition among depository and other financial institutions;
|
|
|
·
|
inflation and changes in market interest rates that reduce our margins and yields, reduce the fair value of financial instruments
or reduce our volume of loan originations, or increase the level of defaults, losses and prepayments on loans we have made and
make whether held in portfolio or sold in the secondary market;
|
|
|
·
|
adverse changes in the securities markets;
|
|
|
·
|
changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees
and capital requirements;
|
|
|
·
|
our ability to manage market risk, credit risk and operational risk;
|
|
|
·
|
our ability to enter new markets successfully and capitalize on growth opportunities;
|
|
|
·
|
the imposition of tariffs or other domestic or international governmental polices impacting the value of the agricultural or
other products of our borrowers;
|
|
|
·
|
our ability to successfully integrate into our operations any assets, liabilities or systems we may acquire, as well as new
management personnel or customers, and our ability to realize related revenue synergies and cost savings within expected time frames
and any goodwill charges related thereto;
|
|
|
·
|
changes in consumer spending, borrowing and savings habits;
|
|
|
·
|
changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards
Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;
|
|
|
·
|
our ability to retain key employees;
|
|
|
·
|
our compensation expense associated with equity allocated or awarded to our employees; and
|
|
|
·
|
changes in the financial condition, results of operations or future prospects of issuers of securities that we own.
|
Because of these and other uncertainties,
our actual future results may be materially different from the results indicated by these forward-looking statements. See “Risk
Factors” beginning on page 18.
HOW WE INTEND TO USE THE PROCEEDS FROM
THE OFFERING
Although we cannot determine what the actual
net offering proceeds will be until the offering is completed, we estimate that the net proceeds will be between $69.7 million
and $94.8 million, or $109.2 million if the offering range is increased by 15%.
We intend to distribute the net proceeds
as follows:
|
|
|
Based Upon the Sale at $10.00 Per Share of
|
|
|
|
|
7,179,465 Shares
|
|
|
8,446,429 Shares
|
|
|
9,713,393 Shares
|
|
|
11,170,402 Shares (1)
|
|
|
|
|
Amount
|
|
|
Percent of
Net
Proceeds
|
|
|
Amount
|
|
|
Percent of
Net
Proceeds
|
|
|
Amount
|
|
|
Percent of
Net
Proceeds
|
|
|
Amount
|
|
|
Percent of
Net
Proceeds
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross offering proceeds
|
|
$
|
71,795
|
|
|
|
|
|
|
$
|
84,464
|
|
|
|
|
|
|
$
|
97,134
|
|
|
|
|
|
|
$
|
111,704
|
|
|
|
|
|
|
Less: offering expenses
|
|
|
(2,108
|
)
|
|
|
|
|
|
|
(2,223
|
)
|
|
|
|
|
|
|
(2,338
|
)
|
|
|
|
|
|
|
(2,471
|
)
|
|
|
|
|
|
Net offering proceeds
|
|
|
69,687
|
|
|
|
100.0
|
%
|
|
|
82,241
|
|
|
|
100.0
|
%
|
|
|
94,796
|
|
|
|
100.0
|
%
|
|
|
109,233
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution of net proceeds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds contributed to Pioneer Bank
|
|
|
34,844
|
|
|
|
50.0
|
%
|
|
|
41,121
|
|
|
|
50.0
|
%
|
|
|
47,398
|
|
|
|
50.0
|
%
|
|
|
54,617
|
|
|
|
50.0
|
%
|
|
Cash contribution to the charitable foundation
|
|
|
250
|
|
|
|
0.4
|
%
|
|
|
250
|
|
|
|
0.3
|
%
|
|
|
250
|
|
|
|
0.3
|
%
|
|
|
250
|
|
|
|
0.2
|
%
|
|
Loan to employee stock ownership plan
|
|
|
6,545
|
|
|
|
9.4
|
%
|
|
|
7,700
|
|
|
|
9.4
|
%
|
|
|
8,855
|
|
|
|
9.3
|
%
|
|
|
10,183
|
|
|
|
9.3
|
%
|
|
Proceeds retained by Pioneer Bancorp, Inc.
|
|
$
|
28,048
|
|
|
|
40.2
|
%
|
|
$
|
33,172
|
|
|
|
40.4
|
%
|
|
$
|
38,293
|
|
|
|
40.4
|
%
|
|
$
|
44,183
|
|
|
|
40.5
|
%
|
|
|
(1)
|
As adjusted to give effect to an increase in the number of shares, which increase could occur due to a 15% increase in the
offering range to reflect demand for the shares or changes in market conditions following the commencement of the offering.
|
Payments for shares of common stock made
through withdrawals from existing deposit accounts will not result in the receipt of new funds for investment but will reduce Pioneer
Bank’s deposits. The net proceeds may vary because total expenses relating to the offering may be more or less than our estimates.
For example, our expenses would increase if fewer shares were sold in the subscription and community offerings and more in the
syndicated offering than we have assumed.
Pioneer Bancorp, Inc. may use the proceeds
it retains from the offering:
|
|
·
|
to invest in securities;
|
|
|
·
|
to finance the potential acquisition of financial institutions or insurance, wealth management and other financial services
companies, although we do not currently have any agreements regarding any specific acquisition transaction;
|
|
|
·
|
to repurchase shares of our common stock, including repurchases to fund stock-based benefit plans; and
|
|
|
·
|
for other general corporate purposes.
|
See “Our Dividend Policy” for
a discussion of our expected dividend policy following the completion of the offering. Under NYSDFS regulations, we may not repurchase
shares of our common stock during the first year following the completion of the offering and, in the second and third years, we
may not repurchase more than 5% of our then-outstanding shares of common stock in each of those years without the prior approval
of the NYSDFS.
Pioneer Bank may use the net proceeds it
receives from the offering:
|
|
·
|
to invest in securities;
|
|
|
·
|
to expand its retail banking franchise by establishing or acquiring new branches or by acquiring other financial institutions
or other financial services companies as opportunities arise, although we do not currently have any agreements to acquire a financial
institution or other entity; and
|
|
|
·
|
for other general corporate purposes.
|
Initially, a substantial portion of the
net proceeds retained by Pioneer Bancorp, Inc. will be invested in an interest-bearing deposit account in Pioneer Bank and in short-term
investment securities of the type currently held by Pioneer Bank. We have not determined specific amounts of the net proceeds that
would be used for the purposes described above. The use of proceeds outlined above may change based on many factors, including
changes in interest rates, equity markets, laws and regulations affecting the financial services industry, the attractiveness of
potential acquisitions to expand our operations, and overall market conditions.
We expect our return on equity to be low
until we are able to effectively deploy the additional capital raised in the offering. See “Risk Factors—Risks Related
to the Offering—Our failure to effectively deploy the net proceeds may have an adverse effect on our financial performance.”
OUR DIVIDEND POLICY
Following completion of the offering, our
board of directors will have the authority to declare dividends on our shares of common stock, subject to statutory and regulatory
requirements. However, we currently do not intend to pay cash dividends. The decision to pay a dividend in the future would depend
upon a number of factors, including: regulatory capital requirements; our financial condition and results of operations; our other
uses of funds for the long-term value of stockholders; tax considerations; statutory and regulatory limitations, including the
Federal Reserve Board’s dividend waiver regulations and policy, which effectively prohibit us from paying any dividends to
our public stockholders without also paying the same dividends per share to Pioneer Bancorp, MHC; and general economic conditions.
We cannot assure you that any dividends will be paid on our common stock as long as we operate in the mutual holding company form,
unless there is a change in Federal Reserve Board regulations or policy that would allow mutual holding companies to waive the
receipt of dividends. Moreover, even if we pay dividends on our common stock in the future, we cannot assure you that dividends
will not be reduced or eliminated. Special cash dividends, stock dividends or returns of capital, to the extent permitted by applicable
law, regulations and policy, may be paid in addition to, or in lieu of, regular cash dividends. See “Risk Factors—Risks
Related to the Offering—You may not receive dividends on our common stock, and if we were to declare dividends on our common
stock, Pioneer Bancorp, MHC would be restricted from waiving the receipt of dividends.”
We will file a consolidated federal tax
return with Pioneer Bank. Accordingly, it is anticipated that any cash distributions that we make to our stockholders would be
treated as cash dividends and not as a non-taxable return of capital for federal and state tax purposes. Additionally, pursuant
to applicable regulations, during the three-year period following the offering, we will not take any action to declare an extraordinary
dividend to stockholders that would be treated by recipients as a tax-free return of capital for federal income tax purposes.
Pursuant to our articles of incorporation,
we are authorized to issue preferred stock. If we issue preferred stock, the holders thereof may have a priority over the holders
of our shares of common stock with respect to the payment of dividends. For a further discussion concerning the payment of dividends
on our shares of common stock, see “Description of Capital Stock of Pioneer Bancorp, Inc.—Common Stock.” Dividends
we can declare and pay also will depend, in part, upon receipt of dividends from Pioneer Bank, because initially we will have no
source of income other than dividend income from Pioneer Bank and earnings from the investment of the net proceeds from the sale
of shares of common stock retained by us and interest payments received in connection with the loan to the employee stock ownership
plan. New York banking law imposes limitations on capital distributions (including dividends) by Pioneer Bank. See “Supervision
and Regulation—New York Banking Laws and Supervision—Dividends.”
Any payment of dividends by Pioneer Bank
to us that would be deemed to be drawn out of Pioneer Bank’s tax bad debt reserves, if any, would require a payment of taxes
at the then-current tax rate by Pioneer Bank on the amount of earnings deemed to be removed from the reserves for such distribution.
Pioneer Bank does not intend to make any distribution to Pioneer Bancorp, Inc. that would create such a federal tax liability.
MARKET FOR THE COMMON STOCK
We have never issued capital stock and there
is no established market for our shares of common stock. We expect that our shares of common stock will be listed for trading on
the Nasdaq Capital Market under the symbol “PBFS,” subject to completion of the offering and compliance with certain
listing conditions, including the presence of at least three registered and active market makers. Sandler O’Neill & Partners,
L.P. has advised us that it intends to make a market in shares of our common stock following the offering, but it is not obligated
to do so or to continue to do so once it begins. While we will attempt before completion of the offering to obtain commitments
from at least two other broker-dealers to make a market in shares of our common stock, there can be no assurance that we will be
successful in obtaining such commitments.
The development and maintenance of a public
market, having the desirable characteristics of depth, liquidity and orderliness, depends on the existence of willing buyers and
sellers, the presence of which is not within our control or that of any market maker. The number of active buyers and sellers of
shares of our common stock at any particular time may be limited, which may have an adverse effect on the price at which shares
of our common stock can be sold. There can be no assurance that persons purchasing the shares of common stock will be able to sell
their shares at or above the $10.00 offering purchase price per share.
HISTORICAL AND PRO FORMA REGULATORY
CAPITAL COMPLIANCE
At December 31, 2018, Pioneer Bank exceeded
all applicable regulatory capital requirements and was considered “well capitalized.” The table below sets forth, at
December 31, 2018, the historical equity capital and regulatory capital and the pro forma equity capital and regulatory capital
of Pioneer Bank after giving effect to the sale of shares of common stock at $10.00 per share. The tabular data assumes the receipt
by Pioneer Bank of 50% of the net offering proceeds. See “How We Intend to Use the Proceeds from the Offering.”
|
|
|
Pioneer Bank
Historical at
|
|
|
Pro Forma at December 31, 2018 Based Upon the Sale in the Offering of:
|
|
|
|
|
December 31, 2018
|
|
|
7,179,465 Shares
|
|
|
8,446,429 Shares
|
|
|
9,713,393 Shares
|
|
|
11,170,402 Shares (1)
|
|
|
|
|
Amount
|
|
|
Percent of
Assets (2)
|
|
|
Amount
|
|
|
Percent of
Assets (2)
|
|
|
Amount
|
|
|
Percent of
Assets (2)
|
|
|
Amount
|
|
|
Percent of
Assets (2)
|
|
|
Amount
|
|
|
Percent of
Assets (2)
|
|
|
|
|
(unaudited)
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
Equity
capital
|
|
$
|
126,394
|
|
|
|
9.82
|
%
|
|
$
|
151,420
|
|
|
|
11.46
|
%
|
|
$
|
155,965
|
|
|
|
11.74
|
%
|
|
$
|
160,509
|
|
|
|
12.03
|
%
|
|
$
|
165,737
|
|
|
|
12.35
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage capital
|
|
$
|
126,257
|
|
|
|
9.69
|
%
|
|
$
|
151,283
|
|
|
|
11.31
|
%
|
|
$
|
155,828
|
|
|
|
11.60
|
%
|
|
$
|
160,372
|
|
|
|
11.88
|
%
|
|
$
|
165,600
|
|
|
|
12.20
|
%
|
|
Tier
1 leverage requirement
|
|
|
65,115
|
|
|
|
5.00
|
%
|
|
|
66,857
|
|
|
|
5.00
|
%
|
|
|
67,171
|
|
|
|
5.00
|
%
|
|
|
67,484
|
|
|
|
5.00
|
%
|
|
|
67,845
|
|
|
|
5.00
|
%
|
|
Excess
|
|
$
|
61,143
|
|
|
|
4.69
|
%
|
|
$
|
84,426
|
|
|
|
6.31
|
%
|
|
$
|
88,657
|
|
|
|
6.60
|
%
|
|
$
|
92,888
|
|
|
|
6.88
|
%
|
|
$
|
97,755
|
|
|
|
7.20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 risk-based
capital (3)
|
|
$
|
126,257
|
|
|
|
12.04
|
%
|
|
$
|
151,283
|
|
|
|
14.33
|
%
|
|
$
|
155,828
|
|
|
|
14.74
|
%
|
|
$
|
160,372
|
|
|
|
15.15
|
%
|
|
$
|
165,600
|
|
|
|
15.63
|
%
|
|
Tier
1 risk-based requirement
|
|
|
83,908
|
|
|
|
8.00
|
%
|
|
|
84,466
|
|
|
|
8.00
|
%
|
|
|
84,566
|
|
|
|
8.00
|
%
|
|
|
84,667
|
|
|
|
8.00
|
%
|
|
|
84,782
|
|
|
|
8.00
|
%
|
|
Excess
|
|
$
|
42,349
|
|
|
|
4.04
|
%
|
|
$
|
66,817
|
|
|
|
6.33
|
%
|
|
$
|
71,262
|
|
|
|
6.74
|
%
|
|
$
|
75,705
|
|
|
|
7.15
|
%
|
|
$
|
80,818
|
|
|
|
7.63
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-based capital
(3)
|
|
$
|
139,353
|
|
|
|
13.29
|
%
|
|
$
|
164,379
|
|
|
|
15.57
|
%
|
|
$
|
168,924
|
|
|
|
15.98
|
%
|
|
$
|
173,468
|
|
|
|
16.39
|
%
|
|
$
|
178,696
|
|
|
|
16.86
|
%
|
|
Total
risk-based requirement
|
|
|
104,885
|
|
|
|
10.00
|
%
|
|
|
105,582
|
|
|
|
10.00
|
%
|
|
|
105,708
|
|
|
|
10.00
|
%
|
|
|
105,833
|
|
|
|
10.00
|
%
|
|
|
105,978
|
|
|
|
10.00
|
%
|
|
Excess
|
|
$
|
34,468
|
|
|
|
3.29
|
%
|
|
$
|
58,797
|
|
|
|
5.57
|
%
|
|
$
|
63,216
|
|
|
|
5.98
|
%
|
|
$
|
67,635
|
|
|
|
6.39
|
%
|
|
$
|
72,718
|
|
|
|
6.86
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity tier
1 capital
|
|
$
|
126,257
|
|
|
|
12.04
|
%
|
|
$
|
151,283
|
|
|
|
14.33
|
%
|
|
$
|
155,828
|
|
|
|
14.74
|
%
|
|
$
|
160,372
|
|
|
|
15.15
|
%
|
|
$
|
165,600
|
|
|
|
15.63
|
%
|
|
Common
equity tier 1 requirement
|
|
|
68,176
|
|
|
|
6.50
|
%
|
|
|
68,628
|
|
|
|
6.50
|
%
|
|
|
68,710
|
|
|
|
6.50
|
%
|
|
|
68,792
|
|
|
|
6.50
|
%
|
|
|
68,886
|
|
|
|
6.50
|
%
|
|
Excess
|
|
$
|
58,081
|
|
|
|
5.54
|
%
|
|
$
|
82,655
|
|
|
|
7.83
|
%
|
|
$
|
87,118
|
|
|
|
8.24
|
%
|
|
$
|
91,580
|
|
|
|
8.65
|
%
|
|
$
|
96,714
|
|
|
|
9.13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
proceeds infused into Pioneer Bank
|
|
|
|
|
|
|
|
|
|
$
|
34,844
|
|
|
|
|
|
|
$
|
41,121
|
|
|
|
|
|
|
$
|
47,398
|
|
|
|
|
|
|
$
|
54,617
|
|
|
|
|
|
|
Less: Common
stock acquired by employee stock ownership plan
|
|
|
|
|
|
|
|
|
|
|
(6,545
|
)
|
|
|
|
|
|
|
(7,700
|
)
|
|
|
|
|
|
|
(8,855
|
)
|
|
|
|
|
|
|
(10,183
|
)
|
|
|
|
|
|
Less: Common
stock acquired by stock-based benefit plan
|
|
|
|
|
|
|
|
|
|
|
(3,273
|
)
|
|
|
|
|
|
|
(3,850
|
)
|
|
|
|
|
|
|
(4,428
|
)
|
|
|
|
|
|
|
(5,092
|
)
|
|
|
|
|
|
Pro
forma increase in tier 1 and risk-based capital
|
|
|
|
|
|
|
|
|
|
$
|
25,026
|
|
|
|
|
|
|
$
|
29,571
|
|
|
|
|
|
|
$
|
34,115
|
|
|
|
|
|
|
$
|
39,342
|
|
|
|
|
|
|
|
(1)
|
As adjusted to give effect to an increase in the number of shares, which increase could occur due to a 15% increase in the
offering range to reflect demand for the shares or changes in market conditions following the commencement of the offering.
|
|
|
(2)
|
Equity and 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.
|
|
|
(3)
|
Pro forma amounts and percentages assume net proceeds are invested in assets that carry a 20% risk weighting.
|
CAPITALIZATION
The following table presents, at December
31, 2018, the historical consolidated capitalization of Pioneer Bank and the pro forma consolidated capitalization of Pioneer Bancorp,
Inc. after giving effect to the offering based upon the assumptions set forth under “Pro Forma Data.”
|
|
|
Pioneer Bank
Historical at
|
|
|
Pioneer Bancorp, Inc. Pro Forma at December 31, 2018 Based upon the Sale
in the Offering at $10.00 per Share of:
|
|
|
|
|
December 31,
2018
|
|
|
7,179,465
Shares
|
|
|
8,446,429
Shares
|
|
|
9,713,393
Shares
|
|
|
11,170,402
Shares (1)
|
|
|
|
|
(unaudited)
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits (2)
|
|
$
|
1,114,959
|
|
|
$
|
1,114,959
|
|
|
$
|
1,114,959
|
|
|
$
|
1,114,959
|
|
|
$
|
1,114,959
|
|
|
Borrowings
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
30,000
|
|
|
Total deposits and borrowed funds
|
|
$
|
1,144,959
|
|
|
$
|
1,144,959
|
|
|
$
|
1,144,959
|
|
|
$
|
1,144,959
|
|
|
$
|
1,144,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, 5,000,000 shares authorized; none
issued
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Common stock, $0.01 par value, 75,000,000 shares authorized; shares
to be issued as reflected (3)
|
|
|
—
|
|
|
|
167
|
|
|
|
196
|
|
|
|
226
|
|
|
|
260
|
|
|
Additional paid-in capital
|
|
|
10,658
|
|
|
|
83,517
|
|
|
|
96,633
|
|
|
|
109,746
|
|
|
|
124,827
|
|
|
Tax benefit of contribution to the charitable foundation
|
|
|
—
|
|
|
|
933
|
|
|
|
1,086
|
|
|
|
1,240
|
|
|
|
1,416
|
|
|
Retained earnings (4)
|
|
|
125,637
|
|
|
|
125,637
|
|
|
|
125,637
|
|
|
|
125,637
|
|
|
|
125,637
|
|
|
Accumulated other comprehensive loss
|
|
|
(9,901
|
)
|
|
|
(9,901
|
)
|
|
|
(9,901
|
)
|
|
|
(9,901
|
)
|
|
|
(9,901
|
)
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense of stock contribution to the charitable foundation
|
|
|
—
|
|
|
|
(3,339
|
)
|
|
|
(3,929
|
)
|
|
|
(4,518
|
)
|
|
|
(5,196
|
)
|
|
Expense of cash contribution to the charitable foundation
|
|
|
—
|
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
Capital retained by Pioneer Bancorp, MHC
|
|
|
—
|
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
Common stock to be acquired by employee stock ownership plan (5)
|
|
|
—
|
|
|
|
(6,545
|
)
|
|
|
(7,700
|
)
|
|
|
(8,855
|
)
|
|
|
(10,183
|
)
|
|
Common stock to be acquired by stock-based
benefit plans (6)
|
|
|
—
|
|
|
|
(3,273
|
)
|
|
|
(3,850
|
)
|
|
|
(4,428
|
)
|
|
|
(5,092
|
)
|
|
Total stockholders’ equity
|
|
$
|
126,394
|
|
|
$
|
186,846
|
|
|
$
|
197,822
|
|
|
$
|
208,797
|
|
|
$
|
221,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shares issued
|
|
|
—
|
|
|
|
16,696,428
|
|
|
|
19,642,857
|
|
|
|
22,589,286
|
|
|
|
25,977,679
|
|
|
Shares contributed to charitable foundation
|
|
|
—
|
|
|
|
333,928
|
|
|
|
392,857
|
|
|
|
451,786
|
|
|
|
519,554
|
|
|
Shares issued to Pioneer Bancorp, MHC
|
|
|
—
|
|
|
|
9,183,035
|
|
|
|
10,803,571
|
|
|
|
12,424,107
|
|
|
|
14,287,723
|
|
|
Shares sold in the offering
|
|
|
—
|
|
|
|
7,179,465
|
|
|
|
8,446,429
|
|
|
|
9,713,393
|
|
|
|
11,170,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity as a percentage of total assets
|
|
|
9.82
|
%
|
|
|
13.87
|
%
|
|
|
14.56
|
%
|
|
|
15.25
|
%
|
|
|
16.02
|
%
|
|
|
(1)
|
As adjusted to give effect to an increase in the number of shares, which increase could occur due to a 15% increase in the
offering range to reflect demand for the shares or changes in market conditions following the commencement of the offering.
|
|
|
(2)
|
Does not reflect withdrawals from deposit accounts at Pioneer Bank for the purchase of shares of common stock. These withdrawals
would reduce pro forma deposits and assets by the amount of the withdrawals.
|
|
|
(3)
|
No effect has been given to the issuance of additional shares of common stock pursuant to the exercise of options under one
or more stock-based benefit plans. If the plans are implemented within the first year after the closing of the offering, an amount
up to 4.90% of the outstanding shares of common stock of Pioneer Bancorp, Inc. at the completion of the offering will be reserved
for issuance upon the exercise of options under the plans. See “Management.”
|
|
|
(4)
|
The retained earnings of Pioneer Bank will be substantially restricted after the offering. See “Supervision and Regulation—New
York Banking Laws and Supervision—Dividends.”
|
|
|
(5)
|
Assumes that 3.92% of the outstanding shares of common stock of Pioneer Bancorp, Inc. at the completion of the offering will
be acquired by the employee stock ownership plan financed by a loan from Pioneer Bancorp, Inc. The loan will be repaid principally
from Pioneer Bank’s contributions to the employee stock ownership plan. Since Pioneer Bancorp, Inc. will finance the employee
stock ownership plan debt, this debt will be eliminated through consolidation and no liability will be reflected on Pioneer Bancorp,
Inc.’s consolidated balance sheet. Accordingly, the number of shares of common stock acquired by the employee stock ownership
plan is shown in this table as a reduction of total stockholders’ equity.
|
|
|
(6)
|
Assumes a number of shares of common stock equal to 1.96% of the outstanding shares of common stock of Pioneer Bancorp, Inc.
at the completion of the offering will be purchased for grant by one or more stock-based benefit plans. The funds to be used by
such plans to purchase shares will be provided by Pioneer Bancorp, Inc. The dollar amount of common stock to be purchased is based
on the $10.00 per share offering price and represents unearned compensation. This amount does not reflect possible increases or
decreases in the value of common stock relative to the offering price. Pioneer Bancorp, Inc. will accrue compensation expense to
reflect the vesting of shares pursuant to such stock-based benefit plans and will credit capital in an amount equal to the charge
to operations. Implementation of such plans will require stockholder approval.
|
PRO FORMA DATA
The following tables summarize historical
and pro forma data of Pioneer Bancorp, Inc. at and for the six months ended December 31, 2018 and at and for the year ended June
30, 2018. This information is based on assumptions set forth below and, in the tables, and should not be used as a basis for projections
of market value of the shares of common stock following the offering.
The net proceeds in the table are based
upon the following assumptions:
|
|
1.
|
all shares of common stock will be sold in the subscription and community offerings;
|
|
|
2.
|
our trustees, executive officers, and their associates will purchase 215,000 shares of common stock;
|
|
|
3.
|
our employee stock ownership plan will purchase 3.92% of the outstanding shares of common stock of Pioneer Bancorp, Inc. at
the completion of the offering with the proceeds of a loan from Pioneer Bancorp, Inc. The loan will be repaid in substantially
equal payments of principal and interest (at the prime rate of interest, calculated at the date of the loan origination) over a
20-year period. Interest income that we earn on the loan will offset the interest paid by Pioneer Bank;
|
|
|
4.
|
Pioneer Bancorp, Inc. will contribute $250,000 in cash to the charitable foundation;
|
|
|
5.
|
we will pay Sandler O’Neill & Partners, L.P. a fee equal to 1.0% of the aggregate amount of common stock sold in
the subscription and community offerings;
|
|
|
6.
|
no fee will be paid to Sandler O’Neill & Partners, L.P. with respect to shares of common stock purchased by our tax-qualified
and non-qualified employee stock benefit plans or contributed to our charitable foundation, or stock purchased by our officers,
trustees, directors and employees, and their immediate families; and
|
|
|
7.
|
total expenses of the offering, other than the fees and commissions to be paid to Sandler O’Neill & Partners, L.P.
and other broker-dealers, will be $1.5 million.
|
We calculated pro forma consolidated net
income for the six months ended December 31, 2018 and the year ended June 30, 2018 as if the estimated net proceeds had been invested
at the beginning of the period at an assumed interest rate of 2.51% (1.86% after-tax). This rate represents the yield on the five-year
U.S. Treasury Note at December 31, 2018, which, in light of current market interest rates, we consider to more accurately reflect
the pro forma reinvestment rate than the arithmetic average of the weighted average yield earned on our interest-earning assets
and the weighted average rate paid on our deposits, which is the reinvestment rate generally required by applicable regulations.
We further believe that the reinvestment
rate is factually supportable because:
|
|
·
|
the yield on the U.S Treasury Note can be determined or estimated from third-party sources; and
|
|
|
·
|
we believe that U.S. Treasury securities are not subject to credit losses due to a U.S. Government guarantee of payment of
principal and interest.
|
We calculated historical and pro forma per
share amounts by dividing historical and pro forma amounts of consolidated net income and stockholders’ equity by the indicated
number of shares of common stock. For purposes of pro forma earnings per share calculations, we adjusted these figures to give
effect to the shares of common stock purchased by the employee stock ownership plan. We computed per share amounts as if the shares
of common stock were outstanding at the beginning of the period, but we did not adjust per share historical or pro forma stockholders’
equity to reflect the earnings on the estimated net proceeds.
The pro forma tables give effect to the
implementation of one or more stock-based benefit plans. Subject to the receipt of stockholder approval, we have assumed that stock-based
benefit plans will acquire to fund restricted stock awards a number of shares of common stock equal to 1.96% of the outstanding
shares of common stock of Pioneer Bancorp, Inc. at the completion of the offering at the same price for which they were sold in
the offering. We assume that awards of common stock granted under such plans vest over a five-year period.
We have also assumed that options will be
granted under stock-based benefit plans to acquire a number of shares of common stock equal to 4.90% of the outstanding shares
of common stock of Pioneer Bancorp, Inc. at the completion of the offering. In preparing the tables below, we assumed that stockholder
approval was obtained, that the exercise price of the stock options and the market price of the stock at the date of grant were
$10.00 per share and that the stock options had a term of ten years and vested over five years. We applied the Black-Scholes option
pricing model to estimate a grant-date fair value of $2.92 for each option. In addition to the terms of the options described above,
the Black-Scholes option pricing model assumed an estimated volatility rate of 13.20% for the shares of common stock, no dividend
yield, an expected option term of 10 years and a risk-free rate of return of 2.69%.
We may grant options and award shares of
common stock under one or more stock-based benefit plans in excess of 4.90% and 1.96%, respectively, of the outstanding shares
of common stock of Pioneer Bancorp, Inc. at the completion of the offering and that vest sooner than over a five-year period if
the stock-based benefit plans are implemented more than one year following the completion of the offering.
As discussed under “How We Intend
to Use the Proceeds from the Offering,” we intend to contribute 50% of the net offering proceeds to Pioneer Bank, and we
will retain the remainder of the net offering proceeds. We will use a portion of the proceeds we retain to fund a loan to the employee
stock ownership plan and retain the rest for future use.
The pro forma tables do not give effect
to:
|
|
·
|
withdrawals from deposit accounts at Pioneer Bank to purchase shares of common stock in the offering;
|
|
|
·
|
our results of operations after the offering;
|
|
|
·
|
increased fees that we would pay Sandler O’Neill & Partners, L.P. and other broker-dealers if we would have to conduct
a syndicated community offering; or
|
|
|
·
|
changes in the market price of the shares of common stock after the offering.
|
The following pro forma information may
not be representative of the financial effects of the offering at the dates on which the offering actually occurs, and should not
be taken as indicative of future results of operations. Pro forma consolidated stockholders’ equity represents the difference
between the stated amounts of our assets and liabilities. The pro forma stockholders’ equity is not intended to represent
the fair market value of the shares of common stock and may be different than the amounts that would be available for distribution
to stockholders if we liquidated. Moreover, pro forma stockholders’ equity per share does not give effect to the liquidation
account to be established by Pioneer Bank or, in the unlikely event of a liquidation of Pioneer Bank, to the tax effect of the
recapture of the bad debt reserve.
|
|
|
At or for the Six Months Ended December 31, 2018
Based Upon the Sale at $10.00 Per Share of:
|
|
|
|
|
7,179,465
Shares
|
|
|
8,446,429
Shares
|
|
|
9,713,393
Shares
|
|
|
11,170,402
Shares (1)
|
|
|
|
|
(Dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross proceeds of stock offering
|
|
$
|
71,795
|
|
|
$
|
84,464
|
|
|
$
|
97,134
|
|
|
$
|
111,704
|
|
|
Plus: market value of shares issued to Pioneer Bancorp, MHC
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Plus: market value of shares contributed to charitable foundation
|
|
|
3,339
|
|
|
|
3,929
|
|
|
|
4,518
|
|
|
|
5,196
|
|
|
Pro forma market capitalization
|
|
$
|
75,134
|
|
|
$
|
88,393
|
|
|
$
|
101,652
|
|
|
$
|
116,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross proceeds of stock offering
|
|
$
|
71,795
|
|
|
$
|
84,464
|
|
|
$
|
97,134
|
|
|
$
|
111,704
|
|
|
Less: expenses
|
|
|
2,108
|
|
|
|
2,223
|
|
|
|
2,338
|
|
|
|
2,471
|
|
|
Estimated net proceeds
|
|
|
69,687
|
|
|
|
82,241
|
|
|
|
94,796
|
|
|
|
109,233
|
|
|
Less: Cash contribution to charitable foundation
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
Less: Common stock purchased by employee stock ownership plan
|
|
|
(6,545
|
)
|
|
|
(7,700
|
)
|
|
|
(8,855
|
)
|
|
|
(10,183
|
)
|
|
Less: Common stock purchased by stock-based benefit plans
|
|
|
(3,273
|
)
|
|
|
(3,850
|
)
|
|
|
(4,428
|
)
|
|
|
(5,092
|
)
|
|
Estimated net proceeds, as adjusted
|
|
$
|
59,619
|
|
|
$
|
70,441
|
|
|
$
|
81,263
|
|
|
$
|
93,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$
|
9,243
|
|
|
$
|
9,243
|
|
|
$
|
9,243
|
|
|
$
|
9,243
|
|
|
Pro forma income on net proceeds
|
|
|
554
|
|
|
|
654
|
|
|
|
755
|
|
|
|
871
|
|
|
Pro forma capitalization of Pioneer Bancorp, MHC
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
Pro forma employee stock ownership plan adjustment (2)
|
|
|
(121
|
)
|
|
|
(143
|
)
|
|
|
(164
|
)
|
|
|
(189
|
)
|
|
Pro forma stock award adjustment (3)
|
|
|
(242
|
)
|
|
|
(285
|
)
|
|
|
(328
|
)
|
|
|
(377
|
)
|
|
Pro forma stock option plan adjustment (4)
|
|
|
(224
|
)
|
|
|
(263
|
)
|
|
|
(302
|
)
|
|
|
(348
|
)
|
|
Pro forma net income (5)(6)
|
|
$
|
9,209
|
|
|
$
|
9,206
|
|
|
$
|
9,203
|
|
|
$
|
9,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$
|
0.58
|
|
|
$
|
0.49
|
|
|
$
|
0.43
|
|
|
$
|
0.37
|
|
|
Pro forma income on net proceeds
|
|
|
0.03
|
|
|
|
0.03
|
|
|
|
0.03
|
|
|
|
0.03
|
|
|
Pro forma capitalization of Pioneer Bancorp, MHC
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Pro forma employee stock ownership plan adjustment (2)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
Pro forma stock award adjustment (3)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
Pro forma stock option plan adjustment (4)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
Pro forma earnings per share (5)(6)
|
|
$
|
0.57
|
|
|
$
|
0.48
|
|
|
$
|
0.42
|
|
|
$
|
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock price as a multiple of pro forma earnings per share
|
|
|
8.77
|
x
|
|
|
10.42
|
x
|
|
|
11.90
|
x
|
|
|
13.89
|
x
|
|
Shares used for calculating pro forma earnings per share
|
|
|
16,058,290
|
|
|
|
18,892,107
|
|
|
|
21,725,923
|
|
|
|
24,984,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$
|
126,394
|
|
|
$
|
126,394
|
|
|
$
|
126,394
|
|
|
$
|
126,394
|
|
|
Estimated net proceeds
|
|
|
69,687
|
|
|
|
82,241
|
|
|
|
94,796
|
|
|
|
109,233
|
|
|
Less: Capitalization of MHC
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
Plus: market value of shares contributed to charitable foundation
|
|
|
3,339
|
|
|
|
3,929
|
|
|
|
4,518
|
|
|
|
5,196
|
|
|
Less: expense of contribution to charitable foundation
|
|
|
(3,339
|
)
|
|
|
(3,929
|
)
|
|
|
(4,518
|
)
|
|
|
(5,196
|
)
|
|
Plus: tax benefit of contribution to charitable foundation
|
|
|
933
|
|
|
|
1,086
|
|
|
|
1,240
|
|
|
|
1,416
|
|
|
Less: cash contribution to charitable foundation
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
Less: common stock acquired by employee stock ownership plan (2)
|
|
|
(6,545
|
)
|
|
|
(7,700
|
)
|
|
|
(8,855
|
)
|
|
|
(10,183
|
)
|
|
Less: common stock acquired by stock-based benefit plans (3)
|
|
|
(3,273
|
)
|
|
|
(3,850
|
)
|
|
|
(4,428
|
)
|
|
|
(5,092
|
)
|
|
Pro forma stockholders’ equity (7)
|
|
$
|
186,846
|
|
|
$
|
197,822
|
|
|
$
|
208,797
|
|
|
$
|
221,418
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
(10,005
|
)
|
|
|
(10,005
|
)
|
|
|
(10,005
|
)
|
|
|
(10,005
|
)
|
|
Pro forma tangible stockholders’ equity
|
|
|
176,841
|
|
|
|
187,817
|
|
|
|
198,792
|
|
|
|
211,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$
|
7.57
|
|
|
$
|
6.43
|
|
|
$
|
5.59
|
|
|
$
|
4.87
|
|
|
Estimated net proceeds
|
|
|
4.17
|
|
|
|
4.19
|
|
|
|
4.20
|
|
|
|
4.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: capitalization of MHC
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Plus: market value of shares contributed to charitable foundation
|
|
|
0.20
|
|
|
|
0.20
|
|
|
|
0.20
|
|
|
|
0.20
|
|
|
Less: market value of shares contributed to charitable foundation
|
|
|
(0.20
|
)
|
|
|
(0.20
|
)
|
|
|
(0.20
|
)
|
|
|
(0.20
|
)
|
|
Less: cash contribution to charitable foundation
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
Plus: tax benefit of contribution to charitable foundation
|
|
|
0.06
|
|
|
|
0.06
|
|
|
|
0.05
|
|
|
|
0.05
|
|
|
Less: common stock acquired by employee stock ownership plan (2)
|
|
|
(0.39
|
)
|
|
|
(0.39
|
)
|
|
|
(0.39
|
)
|
|
|
(0.39
|
)
|
|
Less: common stock acquired by stock-based benefit plans (3)
|
|
|
(0.20
|
)
|
|
|
(0.20
|
)
|
|
|
(0.20
|
)
|
|
|
(0.20
|
)
|
|
Pro forma stockholders’ equity per share (7)
|
|
$
|
11.19
|
|
|
$
|
10.07
|
|
|
$
|
9.24
|
|
|
$
|
8.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets per share
|
|
|
(0.60
|
)
|
|
|
(0.51
|
)
|
|
|
(0.44
|
)
|
|
|
(0.39
|
)
|
|
Pro forma tangible stockholders’ equity per share
|
|
$
|
10.59
|
|
|
$
|
9.56
|
|
|
$
|
8.80
|
|
|
$
|
8.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering price as percentage of pro forma equity per share
|
|
|
89.37
|
%
|
|
|
99.30
|
%
|
|
|
108.23
|
%
|
|
|
117.37
|
%
|
|
Offering price as percentage of pro forma tangible stockholders’ equity per share
|
|
|
94.43
|
%
|
|
|
104.60
|
%
|
|
|
113.64
|
%
|
|
|
123.00
|
%
|
|
Number of shares outstanding for pro forma book value per share calculations
|
|
|
16,696,428
|
|
|
|
19,642,857
|
|
|
|
22,589,286
|
|
|
|
25,977,679
|
|
(footnotes begin on following page)
|
|
(1)
|
As adjusted to give effect to an increase in the number
of shares, which increase could occur due to a 15% increase in the offering range to reflect demand for the shares or changes
in market conditions following the commencement of the offering.
|
|
|
(2)
|
Assumes that 3.92% of the outstanding shares of common stock of Pioneer Bancorp, Inc. at the completion of the offering will
be purchased by the employee stock ownership plan. For purposes of this table, the funds used to acquire these shares are assumed
to have been borrowed by the employee stock ownership plan from Pioneer Bancorp, Inc. Pioneer Bank intends to make annual contributions
to the employee stock ownership plan in an amount at least equal to the required principal and interest payments on the debt. Pioneer
Bank’s total annual payments on the employee stock ownership plan debt are based upon 20 equal annual installments of principal
and interest. Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 718-40, “Compensation—Stock
Compensation—Employee Stock Ownership Plans” (“ASC 718-40”) requires that an employer record compensation
expense in an amount equal to the fair value of the shares committed to be released to employees. The pro forma adjustments assume
that the employee stock ownership plan shares are allocated in equal annual installments based on the number of loan repayment
installments assumed to be paid by Pioneer Bank, the fair value of the common stock remains equal to the subscription price and
the employee stock ownership plan expense reflects an effective combined federal and state tax rate of 26.0%. The unallocated employee
stock ownership plan shares are reflected as a reduction of stockholders’ equity. No reinvestment is assumed on proceeds
contributed to fund the employee stock ownership plan. The pro forma net income further assumes that 16,363, 19,250, 22,130 and
25,458 shares were committed to be released during the period at the minimum, midpoint, maximum, and adjusted maximum of the offering
range, respectively, and according to ASC 718-40, only the employee stock ownership plan shares committed to be released during
the period were considered outstanding for purposes of net income per share calculations.
|
|
|
(3)
|
Assumes that one or more stock-based benefit plans purchase an aggregate number of shares of common stock equal to 1.96% of
the outstanding shares of common stock of Pioneer Bancorp, Inc. at the completion of the offering. Stockholder approval of the
plans and purchases by the plans may not occur earlier than six months after the completion of the offering. The shares may be
acquired directly from Pioneer Bancorp, Inc. or through open market purchases. Shares in the stock-based benefit plans are assumed
to vest over a period of five years. The funds to be used to purchase the shares will be provided by Pioneer Bancorp, Inc. The
table assumes that (i) the stock-based benefit plans acquire the shares through open market purchases at $10.00 per share,
(ii) 10.0% of the amount contributed to the plans is amortized as an expense during the six months ended December 31, 2018, and
(iii) the plans’ expense reflects an effective combined federal and state tax rate of 26.0%. The issuance of authorized
but unissued shares of common stock to fund these awards would dilute stockholders’ ownership and voting interests by approximately
1.9%.
|
|
|
(4)
|
Assumes that options are granted under one or more stock-based benefit plans to acquire an aggregate number of shares of common
stock equal to 4.90% of the outstanding shares of common stock of Pioneer Bancorp, Inc. at the completion of the offering. Stockholder
approval of the plans may not occur earlier than six months after the completion of the offering. In calculating the pro forma
effect of the stock-based benefit plans, it is assumed that the exercise price of the stock options and the trading price of the
common stock at the date of grant were $10.00 per share, the estimated grant-date fair value determined using the Black-Scholes
option pricing model was $2.92 for each option, the aggregate grant-date fair value of the stock options was amortized to expense
on a straight-line basis over a five-year vesting period of the options, and that 25% of the amortization expense (or the assumed
portion relating to options granted to directors) resulted in a tax benefit using an assumed tax rate of 26.0%. The actual expense
will be determined by the grant-date fair value of the options, which will depend on a number of factors, including the valuation
assumptions used and the option pricing model ultimately adopted. Under the above assumptions, the implementation of the stock-based
benefit plans will result in no additional shares under the treasury stock method for purposes of calculating earnings per share.
There can be no assurance that the actual exercise price of the stock options will be equal to the $10.00 price per share. If a
portion of the shares used to satisfy the exercise of options comes from authorized but unissued shares, our net income per share
and stockholders’ equity per share would decrease. The issuance of authorized but unissued shares of common stock pursuant
to the exercise of options under such plan would dilute stockholders’ ownership and voting interests by approximately 4.7%.
|
|
|
(5)
|
Net income per share computations are determined by taking the number of shares assumed to be sold in the offering and contributed
to the charitable foundation and, according to ASC 718-40, subtracting the employee stock ownership plan shares which have not
been committed for release during the period. See footnote 1 above. The number of shares of common stock actually sold and
the corresponding number of outstanding shares may be more or less than the assumed amounts.
|
|
|
(6)
|
Does not give effect to the non-recurring expense that will be recognized during fiscal 2019 as a result of the contribution
to the charitable foundation. The following table shows the estimated after-tax expense associated with the contribution to the
charitable foundation, as well as pro forma net income and pro forma net income per share assuming the contribution to the charitable
foundation had been expensed during the six months ended December 31, 2018.
|
|
|
|
For the Six Months Ended December 31, 2018
Based upon the Sale at $10.00 Per Share of:
|
|
|
|
|
7,179,465
Shares
|
|
|
8,446,429
Shares
|
|
|
9,713,393
Shares
|
|
|
11,170,402
Shares
|
|
|
|
|
(In thousands, except per share amounts)
|
|
|
After-tax expense of stock and cash contribution to charitable foundation
|
|
$
|
(2,656
|
)
|
|
$
|
(3,092
|
)
|
|
$
|
(3,528
|
)
|
|
$
|
(4,030
|
)
|
|
Pro forma net income, adjusted for foundation contribution
|
|
|
6,553
|
|
|
|
6,113
|
|
|
|
5,675
|
|
|
|
5,169
|
|
|
Pro forma net income per share
|
|
|
0.41
|
|
|
|
0.32
|
|
|
|
0.26
|
|
|
|
0.21
|
|
The pro forma data assume that we will realize 100%
of the income tax benefit as a result of the contribution to the charitable foundation based on a 26.0% combined federal and state
tax rate. The realization of the tax benefit is generally limited annually to 10% of our annual taxable income. However, for federal
and state tax purposes, we can carry forward any unused portion of the deduction for five years following the year in which the
contribution is made.
|
|
(7)
|
The retained earnings of Pioneer Bank will be substantially restricted after the offering. See “Our Dividend Policy,”
and “Supervision and Regulation—New York Banking Laws and Supervision—Dividends.”
|
|
|
|
At or for the Year Ended June 30, 2018
Based upon the Sale at $10.00 Per Share of:
|
|
|
|
|
7,179,465
Shares
|
|
|
8,446,429
Shares
|
|
|
9,713,393
Shares
|
|
|
11,170,402
Shares (1)
|
|
|
|
|
(Dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross proceeds of stock offering
|
|
$
|
71,795
|
|
|
$
|
84,464
|
|
|
$
|
97,134
|
|
|
$
|
111,704
|
|
|
Plus: market value of shares issued to Pioneer Bancorp, MHC
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Plus: market value of shares contributed to charitable foundation
|
|
|
3,339
|
|
|
|
3,929
|
|
|
|
4,518
|
|
|
|
5,196
|
|
|
Pro forma market capitalization
|
|
$
|
75,134
|
|
|
$
|
88,393
|
|
|
$
|
101,652
|
|
|
$
|
116,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross proceeds of stock offering
|
|
$
|
71,795
|
|
|
$
|
84,464
|
|
|
$
|
97,134
|
|
|
$
|
111,704
|
|
|
Less: expenses
|
|
|
2,108
|
|
|
|
2,223
|
|
|
|
2,338
|
|
|
|
2,471
|
|
|
Estimated net proceeds
|
|
|
69,687
|
|
|
|
82,241
|
|
|
|
94,796
|
|
|
|
109,233
|
|
|
Less: cash contribution to charitable foundation
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
Less: common stock purchased by employee stock ownership plan
|
|
|
(6,545
|
)
|
|
|
(7,700
|
)
|
|
|
(8,855
|
)
|
|
|
(10,183
|
)
|
|
Less: common stock purchased by stock-based benefit plans
|
|
|
(3,273
|
)
|
|
|
(3,850
|
)
|
|
|
(4,428
|
)
|
|
|
(5,092
|
)
|
|
Estimated net proceeds, as adjusted
|
|
|
59,619
|
|
|
|
70,441
|
|
|
|
81,263
|
|
|
|
93,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$
|
11,499
|
|
|
$
|
11,499
|
|
|
$
|
11,499
|
|
|
$
|
11,499
|
|
|
Pro forma income on net proceeds
|
|
|
1,107
|
|
|
|
1,308
|
|
|
|
1,509
|
|
|
|
1,741
|
|
|
Pro forma capitalization of Pioneer Bancorp, MHC
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
|
(2
|
)
|
|
Pro forma employee stock ownership plan adjustment (2)
|
|
|
(242
|
)
|
|
|
(285
|
)
|
|
|
(328
|
)
|
|
|
(377
|
)
|
|
Pro forma stock award adjustment (3)
|
|
|
(484
|
)
|
|
|
(570
|
)
|
|
|
(655
|
)
|
|
|
(754
|
)
|
|
Pro forma stock option plan adjustment (4)
|
|
|
(447
|
)
|
|
|
(526
|
)
|
|
|
(604
|
)
|
|
|
(695
|
)
|
|
Pro forma net income (5)(6)
|
|
$
|
11,431
|
|
|
$
|
11,424
|
|
|
$
|
11,419
|
|
|
$
|
11,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$
|
0.72
|
|
|
$
|
0.61
|
|
|
$
|
0.53
|
|
|
$
|
0.46
|
|
|
Pro forma income on net proceeds
|
|
|
0.07
|
|
|
|
0.07
|
|
|
|
0.07
|
|
|
|
0.07
|
|
|
Pro forma capitalization of Pioneer Bancorp, MHC
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Pro forma employee stock ownership plan adjustment (2)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
Pro forma stock award adjustment (3)
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
Pro forma stock option plan adjustment (4)
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
Pro forma net income per share (5)(6)
|
|
$
|
0.71
|
|
|
$
|
0.60
|
|
|
$
|
0.52
|
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock price as a multiple of pro forma earnings per share
|
|
|
14.08
|
x
|
|
|
16.67
|
x
|
|
|
19.23
|
x
|
|
|
22.22
|
x
|
|
Shares used for calculating pro forma earnings per share
|
|
|
16,074,653
|
|
|
|
18,911,357
|
|
|
|
21,748,061
|
|
|
|
25,010,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$
|
118,063
|
|
|
$
|
118,063
|
|
|
$
|
118,063
|
|
|
$
|
118,063
|
|
|
Estimated net proceeds
|
|
|
69,687
|
|
|
|
82,241
|
|
|
|
94,796
|
|
|
|
109,233
|
|
|
Less: capitalization of Pioneer Bancorp, MHC
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
|
(100
|
)
|
|
Plus: market value of shares contributed to charitable foundation
|
|
|
3,339
|
|
|
|
3,929
|
|
|
|
4,518
|
|
|
|
5,196
|
|
|
Less: expense of contribution to charitable foundation
|
|
|
(3,339
|
)
|
|
|
(3,929
|
)
|
|
|
(4,518
|
)
|
|
|
(5,196
|
)
|
|
Less: cash contribution to charitable foundation
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
|
(250
|
)
|
|
Plus: tax benefit of contribution to charitable foundation
|
|
|
933
|
|
|
|
1,087
|
|
|
|
1,240
|
|
|
|
1,416
|
|
|
Less: common stock acquired by employee stock ownership plan (2)
|
|
|
(6,545
|
)
|
|
|
(7,700
|
)
|
|
|
(8,855
|
)
|
|
|
(10,183
|
)
|
|
Less: common stock acquired by stock-based benefit plans (3)
|
|
|
(3,273
|
)
|
|
|
(3,850
|
)
|
|
|
(4,428
|
)
|
|
|
(5,092
|
)
|
|
Pro forma stockholders’ equity (7)
|
|
$
|
178,515
|
|
|
$
|
189,491
|
|
|
$
|
200,466
|
|
|
$
|
213,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
(10,167
|
)
|
|
|
(10,167
|
)
|
|
|
(10,167
|
)
|
|
|
(10,167
|
)
|
|
Pro forma tangible stockholders’ equity
|
|
|
168,348
|
|
|
|
179,324
|
|
|
|
190,299
|
|
|
|
202,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$
|
7.07
|
|
|
$
|
6.01
|
|
|
$
|
5.23
|
|
|
$
|
4.55
|
|
|
Estimated net proceeds
|
|
|
4.17
|
|
|
|
4.19
|
|
|
|
4.20
|
|
|
|
4.20
|
|
|
Less: capitalization of Pioneer Bancorp, MHC
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
—
|
|
|
|
—
|
|
|
Plus: market value of shares contributed to charitable foundation
|
|
|
0.20
|
|
|
|
0.20
|
|
|
|
0.20
|
|
|
|
0.20
|
|
|
Less: expense of contribution to charitable foundation
|
|
|
(0.20
|
)
|
|
|
(0.20
|
)
|
|
|
(0.20
|
)
|
|
|
(0.20
|
)
|
|
Less: cash contribution to charitable foundation
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
Plus: tax benefit of contribution to charitable foundation
|
|
|
0.06
|
|
|
|
0.06
|
|
|
|
0.05
|
|
|
|
0.05
|
|
|
Less: common stock acquired by employee stock ownership plan (2)
|
|
|
(0.39
|
)
|
|
|
(0.39
|
)
|
|
|
(0.39
|
)
|
|
|
(0.39
|
)
|
|
Less: common stock acquired by stock-based benefit plans (3)
|
|
|
(0.20
|
)
|
|
|
(0.20
|
)
|
|
|
(0.20
|
)
|
|
|
(0.20
|
)
|
|
Pro forma stockholders’ equity per share (7)
|
|
$
|
10.69
|
|
|
$
|
9.65
|
|
|
$
|
8.88
|
|
|
$
|
8.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
(0.61
|
)
|
|
|
(0.52
|
)
|
|
|
(0.45
|
)
|
|
|
(0.39
|
)
|
|
Pro forma tangible stockholders’ equity per share
|
|
$
|
10.08
|
|
|
$
|
9.13
|
|
|
$
|
8.43
|
|
|
$
|
7.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering price as percentage of pro forma stockholders’ equity per share
|
|
|
93.55
|
%
|
|
|
103.63
|
%
|
|
|
112.61
|
%
|
|
|
121.95
|
%
|
|
Offering price as percentage of pro forma tangible stockholders’ equity per share
|
|
|
99.21
|
%
|
|
|
109.53
|
%
|
|
|
118.62
|
%
|
|
|
128.04
|
%
|
|
Number of shares outstanding for pro forma book value per share calculations
|
|
|
16,696,428
|
|
|
|
19,642,857
|
|
|
|
22,589,286
|
|
|
|
25,977,679
|
|
(footnotes begin on following page)
|
|
(1)
|
As adjusted to give effect to an increase in the number
of shares, which increase could occur due to a 15% increase in the offering range to reflect demand for the shares or changes
in market conditions following the commencement of the offering.
|
|
|
(2)
|
Assumes that 3.92% of the outstanding shares of common stock of Pioneer Bancorp, Inc. at the completion of the offering will
be purchased by the employee stock ownership plan. For purposes of this table, the funds used to acquire these shares are assumed
to have been borrowed by the employee stock ownership plan from Pioneer Bancorp, Inc. Pioneer Bank intends to make annual contributions
to the employee stock ownership plan in an amount at least equal to the required principal and interest payments on the debt. Pioneer
Bank’s total annual payments on the employee stock ownership plan debt are based upon 20 equal annual installments of principal
and interest. ASC 718-40requires that an employer record compensation expense in an amount equal to the fair value of the shares
committed to be released to employees. The pro forma adjustments assume that the employee stock ownership plan shares are allocated
in equal annual installments based on the number of loan repayment installments assumed to be paid by Pioneer Bank, the fair value
of the common stock remains equal to the offering price and the employee stock ownership plan expense reflects an effective combined
federal and state tax rate of 26.0%. The unallocated employee stock ownership plan shares are reflected as a reduction of stockholders’
equity. No reinvestment is assumed on proceeds contributed to fund the employee stock ownership plan. The pro forma net income
further assumes that 32,275, 38,500, 44,275 and 50,916 shares were committed to be released during the year at the minimum, midpoint,
maximum, and adjusted maximum of the offering range, respectively, and according to ASC 718-40, only the employee stock ownership
plan shares committed to be released during the period were considered outstanding for purposes of net income per share calculations.
|
|
|
(3)
|
Assumes that one or more stock-based benefit plans purchase an aggregate number of shares of common stock equal to 1.96% of
the outstanding shares of common stock of Pioneer Bancorp, Inc. at the completion of the offering. Stockholder approval of the
plans and purchases by the plans may not occur earlier than six months after the completion of the offering. The shares may be
acquired directly from Pioneer Bancorp, Inc. or through open market purchases. Shares in the stock-based benefit plans are assumed
to vest over a period of five years. The funds to be used to purchase the shares will be provided by Pioneer Bancorp, Inc. The
table assumes that (i) the stock-based benefit plans acquire the shares through open market purchases at $10.00 per share,
(ii) 20% of the amount contributed to the plan is amortized as an expense during the year ended June 30, 2018, and (iii) the
plans’ expense reflects an effective combined federal and state tax rate of 26.0%. The issuance of authorized but unissued
shares of common stock to fund these awards would dilute stockholders’ ownership and voting interests by approximately 1.9%.
|
|
|
(4)
|
Assumes that options are granted under one or more stock-based benefit plans to acquire an aggregate number of shares of common
stock equal to 4.90% of the outstanding shares of common stock of Pioneer Bancorp, Inc. at the completion of the offering. Stockholder
approval of the plans may not occur earlier than six months after the completion of the offering. In calculating the pro forma
effect of the stock-based benefit plans, it is assumed that the exercise price of the stock options and the trading price of the
common stock at the date of grant were $10.00 per share, the estimated grant-date fair value determined using the Black-Scholes
option pricing model was $2.92 for each option, the aggregate grant-date fair value of the stock options was amortized to expense
on a straight-line basis over a five-year vesting period of the options, and that 25% of the amortization expense (or the assumed
portion relating to options granted to directors) resulted in a tax benefit using an assumed combined federal and state tax rate
of 26.0%. The actual expense will be determined by the grant-date fair value of the options, which will depend on a number of factors,
including the valuation assumptions used and the option pricing model ultimately adopted. Under the above assumptions, the implementation
of the stock-based benefit plans will result in no additional shares under the treasury stock method for purposes of calculating
earnings per share. There can be no assurance that the actual exercise price of the stock options will be equal to the $10.00 price
per share. If a portion of the shares used to satisfy the exercise of options comes from authorized but unissued shares, our net
income per share and stockholders’ equity per share would decrease. The issuance of authorized but unissued shares of common
stock pursuant to the exercise of options under such plan would dilute stockholders’ ownership and voting interests by approximately
4.7%.
|
|
|
(5)
|
Net income per share computations are determined by taking the number of shares assumed to be sold in the offering and contributed
to the charitable foundation and, according to ASC 718-40, subtracting the employee stock ownership plan shares which have not
been committed for release during the year. See footnote 1 above. The number of shares of common stock actually sold and the
corresponding number of outstanding shares may be more or less than the assumed amounts.
|
|
|
(6)
|
Does not give effect to the non-recurring expense that would be recognized during fiscal 2019 as a result of the contribution
to the charitable foundation. The following table shows the estimated after-tax expense associated with the contribution to the
charitable foundation, as well as pro forma net income and pro forma net income per share assuming the contribution to the charitable
foundation had been expensed during the year ended June 30, 2018.
|
|
|
|
For the Year Ended June 30, 2018 Based upon the Sale at $10.00 Per Share of:
|
|
|
|
|
7,179,465
Shares
|
|
|
8,446,429
Shares
|
|
|
9,713,393
Shares
|
|
|
11,170,402
Shares
|
|
|
|
|
(In thousands, except per share amounts)
|
|
|
After-tax expense of stock and cash contribution to charitable foundation
|
|
$
|
(2,656
|
)
|
|
$
|
(3,092
|
)
|
|
$
|
(3,528
|
)
|
|
$
|
(4,030
|
)
|
|
Pro forma net income, adjusted for foundation contribution
|
|
|
8,775
|
|
|
|
8,332
|
|
|
|
7,891
|
|
|
|
7,382
|
|
|
Pro forma net income per share
|
|
|
0.55
|
|
|
|
0.44
|
|
|
|
0.36
|
|
|
|
0.30
|
|
The pro forma data assume that
we will realize 100% of the income tax benefit as a result of the contribution to the charitable foundation based on a combined
federal and state tax rate of 26.0%. The realization of the tax benefit is generally limited annually to 10% of our annual taxable
income. However, for federal and state tax purposes, we can carry forward any unused portion of the deduction for five years following
the year in which the contribution is made.
|
|
(7)
|
The retained earnings of Pioneer Bank will be substantially restricted after the offering. See “Our Dividend Policy,”
and “Supervision and Regulation—New York Banking Laws and Supervision—Dividends.”
|
COMPARISON OF VALUATION AND PRO FORMA
INFORMATION
WITH AND WITHOUT THE CHARITABLE FOUNDATION
As reflected in the table below, if the
charitable foundation is not funded in connection with the reorganization and offering, RP Financial estimates that our pro forma
valuation would be greater and, as a result, a greater number of shares of common stock would be issued in the offering. At the
minimum, midpoint, maximum, and adjusted maximum of the valuation range, our pro forma valuation is $167.0 million, $196.4 million,
$225.9 million and $259.8 million, respectively, with the charitable foundation, as compared to $172.1 million, $202.5 million,
$232.9 million and $267.8 million, respectively, without the charitable foundation. There is no assurance that if the charitable
foundation were not formed, the appraisal prepared at that time would conclude that our pro forma market value would be the same
as that estimated in the table below. Any appraisal prepared at that time would be based on the facts and circumstances existing
at that time, including, among other things, market and economic conditions.
For comparative purposes only, set forth
below are certain pricing ratios, financial data and ratios at and for the six months ended December 31, 2018 at the minimum, midpoint,
maximum, and adjusted maximum of the offering range, assuming the offering was completed at the beginning of the period, with and
without the charitable foundation.
|
|
|
Minimum
of Offering Range
|
|
|
Midpoint
of Offering Range
|
|
|
Maximum
of Offering Range
|
|
|
Adjusted
Maximum of
Offering
Range
|
|
|
|
|
With
Foundation
|
|
|
Without
Foundation
|
|
|
With
Foundation
|
|
|
Without
Foundation
|
|
|
With
Foundation
|
|
|
Without
Foundation
|
|
|
With
Foundation
|
|
|
Without
Foundation
|
|
|
|
|
(Dollars in thousands,
except per share amounts)
|
|
|
|
|
|
|
|
Estimated
offering amount
|
|
$
|
71,795
|
|
|
$
|
77,456
|
|
|
$
|
84,464
|
|
|
$
|
91,125
|
|
|
$
|
97,134
|
|
|
$
|
104,794
|
|
|
$
|
111,704
|
|
|
$
|
120,513
|
|
|
Pro
forma market capitalization
|
|
|
75,134
|
|
|
|
77,456
|
|
|
|
88,393
|
|
|
|
91,125
|
|
|
|
101,652
|
|
|
|
104,794
|
|
|
|
116,900
|
|
|
|
120,513
|
|
|
Estimated full
value
|
|
|
166,964
|
|
|
|
172,125
|
|
|
|
196,429
|
|
|
|
202,500
|
|
|
|
225,893
|
|
|
|
232,875
|
|
|
|
259,777
|
|
|
|
267,806
|
|
|
Total
assets
|
|
|
1,347,419
|
|
|
|
1,352,039
|
|
|
|
1,358,395
|
|
|
|
1,363,798
|
|
|
|
1,369,370
|
|
|
|
1,375,556
|
|
|
|
1,381,991
|
|
|
|
1,389,077
|
|
|
Total
liabilities
|
|
|
1,160,573
|
|
|
|
1,160,573
|
|
|
|
1,160,573
|
|
|
|
1,160,573
|
|
|
|
1,160,573
|
|
|
|
1,160,573
|
|
|
|
1,160,573
|
|
|
|
1,160,573
|
|
|
Pro
forma stockholders’ equity
|
|
|
186,846
|
|
|
|
191,466
|
|
|
|
197,822
|
|
|
|
203,225
|
|
|
|
208,797
|
|
|
|
214,983
|
|
|
|
221,418
|
|
|
|
228,504
|
|
|
Pro
forma net income (1)
|
|
|
9,209
|
|
|
|
9,243
|
|
|
|
9,206
|
|
|
|
9,245
|
|
|
|
9,203
|
|
|
|
9,247
|
|
|
|
9,200
|
|
|
|
9,250
|
|
|
Pro forma stockholders’
equity per share
|
|
|
11.19
|
|
|
|
11.11
|
|
|
|
10.07
|
|
|
|
10.04
|
|
|
|
9.24
|
|
|
|
9.23
|
|
|
|
8.52
|
|
|
|
8.53
|
|
|
Pro forma net income
per share
|
|
|
0.57
|
|
|
|
0.56
|
|
|
|
0.48
|
|
|
|
0.47
|
|
|
|
0.42
|
|
|
|
0.41
|
|
|
|
0.36
|
|
|
|
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro
forma pricing ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering price
as a percentage of pro forma stockholders’ equity per share
|
|
|
89.37
|
%
|
|
|
90.01
|
%
|
|
|
99.30
|
%
|
|
|
99.60
|
%
|
|
|
108.23
|
%
|
|
|
108.34
|
%
|
|
|
117.37
|
%
|
|
|
117.23
|
%
|
|
Offering price
to pro forma net income per share
|
|
|
8.77
|
x
|
|
|
8.93
|
x
|
|
|
10.42
|
x
|
|
|
10.64
|
x
|
|
|
11.90
|
x
|
|
|
12.20
|
x
|
|
|
13.89
|
x
|
|
|
13.89
|
x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro
forma financial ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return
on assets (annualized)
|
|
|
1.37
|
%
|
|
|
1.37
|
%
|
|
|
1.36
|
%
|
|
|
1.36
|
%
|
|
|
1.34
|
%
|
|
|
1.34
|
%
|
|
|
1.33
|
%
|
|
|
1.33
|
%
|
|
Return
on equity (annualized)
|
|
|
9.86
|
%
|
|
|
9.66
|
%
|
|
|
9.31
|
%
|
|
|
9.10
|
%
|
|
|
8.82
|
%
|
|
|
8.60
|
%
|
|
|
8.31
|
%
|
|
|
8.10
|
%
|
|
Equity
to assets
|
|
|
13.87
|
%
|
|
|
14.16
|
%
|
|
|
14.56
|
%
|
|
|
14.90
|
%
|
|
|
15.25
|
%
|
|
|
15.63
|
%
|
|
|
16.02
|
%
|
|
|
16.45
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shares issued
|
|
|
16,696,428
|
|
|
|
17,212,500
|
|
|
|
19,642,857
|
|
|
|
20,250,000
|
|
|
|
22,589,286
|
|
|
|
23,287,500
|
|
|
|
25,977,679
|
|
|
|
26,780,625
|
|
(footnotes on following page)
|
|
(1)
|
The following table shows the estimated after-tax expense
associated with the contribution to the charitable foundation, as well as pro forma net income, pro forma net income per share,
pro forma return on assets and pro forma return on stockholders’ equity assuming the contribution to the charitable foundation
was expensed during the six months ended December 31, 2018.
|
|
|
|
Minimum of
Offering Range
|
|
|
Midpoint of
Offering Range
|
|
|
Maximum of
Offering Range
|
|
|
Adjusted
Maximum of
Offering Range
|
|
|
|
|
(Dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before-tax expense of stock and cash contribution to foundation
|
|
$
|
(3,589
|
)
|
|
$
|
(4,179
|
)
|
|
$
|
(4,768
|
)
|
|
$
|
(5,446
|
)
|
|
After-tax expense of stock and cash contribution to foundation
|
|
$
|
(2,656
|
)
|
|
$
|
(3,092
|
)
|
|
$
|
(3,528
|
)
|
|
$
|
(4,030
|
)
|
|
Pro forma net income
|
|
$
|
6,554
|
|
|
$
|
6,114
|
|
|
$
|
5,676
|
|
|
$
|
5,170
|
|
|
Pro forma net income per share
|
|
$
|
0.41
|
|
|
$
|
0.32
|
|
|
$
|
0.26
|
|
|
$
|
0.21
|
|
|
Pro forma tax benefit
|
|
$
|
933
|
|
|
$
|
1,087
|
|
|
$
|
1,240
|
|
|
$
|
1,416
|
|
|
Offering price to pro forma net income per share
|
|
|
6.10
|
|
|
|
7.81
|
|
|
|
9.62
|
|
|
|
11.90
|
|
|
Pro forma return on assets (annualized)
|
|
|
0.97
|
%
|
|
|
0.90
|
%
|
|
|
0.83
|
%
|
|
|
0.75
|
%
|
|
Pro forma return on equity (annualized)
|
|
|
7.02
|
%
|
|
|
6.18
|
%
|
|
|
5.44
|
%
|
|
|
4.67
|
%
|
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This discussion and analysis reflects our
consolidated financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial
condition and results of operations. The information in this section has been derived in part from the consolidated financial statements
that appear beginning on page F-1 of this prospectus and other consolidated financial statements that are not included herein.
Please read the information in this section in conjunction with the business and financial information regarding Pioneer Bank and
the consolidated financial statements that appear starting on page F-1 of this prospectus.
Overview
Net Interest Income.
Our primary
source of income is net interest income. Net interest income is the difference between interest income, which is the income we
earn on our loans and investments, and interest expense, which is the interest we pay on our deposits and borrowings.
Provision for Loan Losses.
The allowance for loan losses is a valuation allowance for probable incurred credit losses. The allowance for loan losses is increased
through charges to the provision for loan losses. Loans are charged against the allowance when management believes that the collectability
of the principal loan amount is not probable. Recoveries on loans previously charged-off, if any, are credited to the allowance
for loan losses when realized.
Non-interest Income.
Our primary
sources of non-interest income are banking fees and service charges, insurance, employee benefits and wealth management services
income. Our non-interest income also includes net gain or losses on sales and calls of securities, net gains in cash surrender
value of bank owned life insurance, net gain or loss on disposal of assets, other gains and losses, and miscellaneous income.
Non-Interest Expenses.
Our
non-interest expenses consist of salaries and employee benefits, net occupancy and equipment, data processing, federal deposit
insurance premiums and other general and administrative expenses.
Salaries and employee benefits consist primarily
of salaries and wages paid to our employees, payroll taxes, and expenses for worker’s compensation and disability insurance,
health insurance, retirement plans and other employee benefits, as well as commissions and other incentives.
Occupancy and equipment expenses, which
are the fixed and variable costs of buildings and equipment, consist primarily of depreciation charges, rental expenses, furniture
and equipment expenses, maintenance, real estate taxes and costs of utilities. Depreciation of premises and equipment is computed
using a straight-line method based on the estimated useful lives of the related assets or the expected lease terms, if shorter.
Data processing expenses are fees we pay
to third parties for use of their software and for processing customer information, deposits and loans.
Advertising includes most marketing expenses
including multi-media advertising (public and in-store), promotional events and materials, civic and sales focused memberships,
and community support.
Federal deposit insurance premiums are payments
we make to the Federal Deposit Insurance Corporation for insurance of our deposit accounts.
Other expenses include expenses for professional
services, office supplies, postage, telephone, insurance and other miscellaneous operating expenses.
Income Tax Expense.
Our income
tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.
Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between the carrying amounts
and the tax basis of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred
tax assets to the amounts expected to be realized.
Business Strategy
Our business strategy is to operate as a
well-capitalized and profitable community bank dedicated to providing personal service to our individual and business customers.
We believe that we have a competitive advantage in the markets we serve because of our 130-year history in the community, our knowledge
of the local marketplace and our long-standing reputation for providing superior, relationship-based customer service. We believe
we can distinguish ourselves by maintaining the culture of a local community bank, but offering the products of a comprehensive
financial services provider by promoting and continuing to expand our insurance, consulting and wealth management businesses. The
following are the key elements of our business strategy:
Continue our emphasis on commercial
lending.
Over the last five and a half years, we have increased our commercial loan portfolio, which consists of commercial
real estate, commercial and industrial and commercial construction loans, consistent with safe and sound underwriting practices.
This has had the benefit of increasing the yield on our loan portfolio and reducing the average term to repricing of our loans.
At December 31, 2018, our commercial loan portfolio totaled $658.5 million, or 63.3% of total loans, compared with $389.1 million,
or 61.0% of total loans, at June 30, 2014. We view the growth of commercial lending as a means of increasing our interest income
and establishing relationships with local businesses, which offer a recurring and potentially broader source of fee income through
commercial deposits, commercial insurance, and our employee benefits products and consulting. We also generally require that commercial
and industrial loan borrowers establish a commercial deposit account with us, which assists our efforts to grow core deposits and
cross-sell our other products and services. The additional capital raised in the offering will enable us to increase our originations
of commercial real estate, commercial and industrial and commercial construction loans in our primary market area, and originate
loans with larger balances that we intend to retain in our portfolio.
Diversify our products and services
in order to increase non-interest income.
We continue to seek ways of increasing our non-interest income by growing our
financial services businesses. We initially entered into the wealth management services business by establishing Pioneer Financial
Services, Inc. as a wholly-owned subsidiary of Pioneer Bank (which operates under the name Pioneer Wealth Management). We substantially
grew this business with the acquisition of substantially all of the operating assets of Ward Financial Management, LTD in 2018.
At December 31, 2018, Pioneer Financial Services, Inc. had $481.5 million of assets under management. We also sell commercial and
personal insurance products and provide employee benefits products and services through our wholly-owned subsidiary, Anchor Agency,
Inc., which we acquired in 2016. We expanded our employee benefits products and services business through our acquisition in 2017
of substantially all of the operating assets of Capital Region Strategic Employee Benefits Services, LLC, an employee benefits
and consulting firm. The growth of our financial services businesses has contributed to the increase in non-interest income to
$3.3 million for the six months ended December 31, 2018 compared to $2.4 million for the six months ended December 31, 2017 and
to $5.1 million for fiscal 2018 compared to $3.7 million for fiscal 2017. We believe that there will be opportunities to cross-sell
these products to our deposit and borrower customers which may further increase our non-interest income, and also to cross-sell
our banking services and products to customers and clients of Pioneer Financial Services, Inc. and Anchor Agency, Inc. We intend
to consider future acquisition opportunities to expand our wealth management activities, including the amount of the assets that
we have under management, insurance or other complementary financial services businesses, although we do not currently have any
agreements regarding any specific acquisition.
Increase our Share of Lower-Cost Core
Deposits
.
We continue to emphasize offering core deposits (demand deposit accounts, savings accounts and money market accounts)
to businesses, municipalities and individuals located in our market area. Core deposits represent our best opportunity to develop
customer relationships that enable us to cross-sell the products and services of our complementary subsidiaries. We attract and
retain transaction accounts by offering competitive products and rates and providing quality customer service. Our core deposits
increased $403.7 million to $990.9 million at December 31, 2018 from $587.1 million at June 30, 2014. At December 31, 2018, core
deposits comprised 88.9% of our total deposits. Core deposits are our least costly source of funds which improves our interest
rate spread and also contributes non-interest income from account related services.
Strategically Grow our Balance Sheet
.
We believe there is a large customer base in our market that prefers doing business with local institutions and may be dissatisfied
with the service they receive from the larger regional banks. By offering personalized customer service, along with our extensive
knowledge of our local markets and employees who have strong relationships with our customers which leads to referrals and repeat
business, we believe we can leverage these strengths to attract and retain customers. We have recently undergone a significant
rebranding effort and updated our branch layout, website and other technology infrastructure that prioritizes the customer experience
and moves away from the traditional single branch channel. We also believe we can capitalize on commercial deposit and personal
banking relationships derived from an increase in commercial real estate and commercial business lending. Based on the foregoing,
our attractive market area and strategic investment in technology to enhance the customer experience, we believe we are well-positioned
to increase our balance sheet, particularly loans and deposits.
Continue to Emphasize Operating Efficiencies
and Cost Controls
.
Despite significant growth of our loan portfolio, product offerings and financial services businesses
in recent years, we have remained focused on expense control while increasing our net income. We remain disciplined in our approach
to non-interest expenses by identifying cost savings opportunities such as renegotiating key third-party contracts and reducing
other operating expenses. Our efficiency ratio was 60.0% (annualized) during the six months ended December 31, 2018, compared to
79.4% during the year ended June 30, 2014. While we expect that our non-interest expenses will increase when we become a public
company, we intend to continue to diligently monitor and control expenses as we focus our efforts on continued growth. In order
to support our growth in a cost-effective way, we plan to continue to invest prudently in technology to help improve our operational
infrastructure.
Maintain Disciplined Underwriting
.
We emphasize a disciplined credit culture based on intimate knowledge of the market, close ties to our customers, sound underwriting
standards and experienced loan officers. We are committed to actively monitoring and managing all segments of our loan portfolio
in an effort to proactively identify and mitigate credit risks within the portfolio. At December 31, 2018, non-performing assets
totaled $11.8 million, which represented 0.92% of total assets. At December 31, 2018, there were $5.5 million of non-performing
commercial real estate loans and $137,000 of non-performing commercial and industrial loans.
Anticipated Increase in Non-interest Expense
Following the completion of the reorganization
and stock offering, our non-interest expense is expected to increase because of the increased costs associated with operating as
a public company, and the increased compensation expenses associated with the purchase of shares of common stock by our employee
stock ownership plan and the possible implementation of one or more stock-based benefit plans, if approved by our stockholders,
no earlier than six months after the completion of the reorganization and stock offering. For further information, see “Summary—Our
Officers, Trustees and Employees Will Receive Additional Benefits and Compensation After the Reorganization and Offering;”
“Risk Factors—Risks Related to the Offering—Our stock-based benefit plans will increase our costs, which will
reduce our income;” and “Management—Benefits to be Considered Following Completion of the Stock Offering.”
Summary of Critical Accounting Policies
The discussion and analysis of the financial
condition and results of operations are based on our financial statements, which are prepared in conformity with U.S. GAAP. The
preparation of these financial statements requires management to make estimates and assumptions affecting the reported amounts
of assets and liabilities, disclosure of contingent assets and liabilities, and the reported amounts of income and expenses. We
consider the accounting policies discussed below to be critical accounting policies, which are presented in the Notes to the consolidated
financial statements. The estimates and assumptions that we use are based on historical experience and various other factors and
are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions
or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and
our results of operations.
The JOBS Act which was enacted in 2012,
contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an “emerging
growth company” we may delay adoption of new or revised accounting pronouncements applicable to public companies until such
pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition
period. Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting
standards.
The following represent our critical accounting
policies:
Allowance for Loan Losses.
The
allowance for loan losses is the amount estimated by management as necessary to absorb credit losses incurred in the loan portfolio
that are both probable and reasonably estimable at the relevant balance sheet date. The amount of the allowance is based on significant
estimates, and the ultimate losses may vary from such estimates as more information becomes available or conditions change. The
methodology for determining the allowance for loan losses is considered a critical accounting policy by management due to the high
degree of judgment involved, the subjectivity of the assumptions used and the potential for changes in the economic environment
that could result in changes to the amount of the recorded allowance for loan losses.
As a substantial percentage of our loan
portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans are critical in determining
the amount of the allowance required for specific loans. Assumptions are instrumental in determining the value of properties. Overly
optimistic assumptions or negative changes to assumptions could significantly affect the valuation of a property securing a loan
and the related allowance determined. Management carefully reviews the assumptions supporting such appraisals to determine that
the resulting values reasonably reflect amounts realizable on the related loans.
Management performs an evaluation of the
adequacy of the allowance for loan losses at least quarterly. We consider a variety of factors in establishing this estimate including,
but not limited to, current economic conditions, delinquency statistics, geographic concentrations, the adequacy of the underlying
collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation
is inherently subjective as it requires material estimates by management that may be susceptible to significant change based on
changes in economic and real estate market conditions.
The evaluation has specific and general
components. The specific component relates to loans that are deemed to be impaired and classified as special mention, substandard,
doubtful, or loss. For such loans that are also classified as impaired, an allowance is generally established when the collateral
value of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and
is based on historical loss experience adjusted for qualitative factors.
Actual loan losses may be significantly
more than the allowance we have established which could have a material negative effect on our financial results. See Note 1 to
the Notes to the consolidated financial statements for a complete discussion of the allowance for loan losses.
Income Taxes.
Income tax expense
is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax
assets and liabilities are the expected future tax amounts for temporary differences between carrying amounts and the tax basis
of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the
amount expected to be realized. We recognize interest and/or penalties related to income tax matters in other expense. A tax position
is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination,
with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is more than 50%
likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit
is recorded. Management determines the need for a deferred tax valuation allowance based upon the realizability of tax benefits
from the reversal of temporary differences creating the deferred tax assets, as well as the amounts of available open tax carrybacks,
if any. At December 31, 2018, no valuation allowance was required.
We exercise significant judgment in evaluating
the amount and timing of recognition of the resulting tax assets and liabilities. These judgments require us to make projections
of future taxable income. The judgments and estimates we make in determining our deferred tax assets are inherently subjective
and are reviewed on a regular basis as regulatory or business factors change. Any reduction in estimated future taxable income
may require us to record a valuation allowance against our deferred tax assets. A valuation allowance that results in additional
income tax expense in the period in which it is recognized would negatively affect earnings. See Note 12 to the Notes to our consolidated
financial statements for a complete discussion of income taxes.
Fair Value Measurements.
The
fair value of a financial instrument is the exchange price that would be received for an asset or paid to transfer a liability
(exit price) in the principal or most advantageous market for the particular asset or liability in an orderly transaction between
market participants on the measurement date. We estimate the fair value of a financial instrument and any related asset impairment
using a variety of valuation methods. Where financial instruments are actively traded and have quoted market prices, quoted market
prices as of the measurement date are used for fair value. When the financial instruments are not actively traded, other observable
market inputs, such as quoted prices of securities with similar characteristics, quoted prices in markets that are not active or
other inputs that are observable or can be corroborated by observable market data, may be used, if available, to determine fair
value. When observable market prices do not exist, we estimate fair value. These estimates are subjective in nature and imprecision
in estimating these factors can impact the amount of revenue or loss recorded. A more detailed description of the fair values measured
at each level of the fair value hierarchy and the methodology we utilize can be found in Note 14 to the Notes to the consolidated
financial statements.
Investment Securities.
Available
for sale and held to maturity securities are reviewed by management on a quarterly basis, and more frequently when economic or
market conditions warrant, for possible other-than-temporary impairment. In determining other-than-temporary impairment, management
considers many factors, including the length of time and the extent to which the fair value has been less than cost, the financial
condition and near-term prospectus of the issuer, whether the market decline was affected by macroeconomic conditions and whether
the bank has the intent to sell the debt security or more likely than not will be required to sell the debt security before its
anticipated recovery. A decline in value that is considered to be other-than-temporary is recorded as a loss within non-interest
income in the statement of income. The assessment of whether other-than-temporary impairment exists involves a high degree of subjectivity
and judgment and is based on the information available to management at a point in time. In order to determine other-than-temporary
impairment for mortgage-backed securities, asset-backed securities and collateralized mortgage obligations, we compare the present
value of the remaining cash flows as estimated at the preceding evaluation date to the current expected remaining cash flows. Other-than-temporary
impairment is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows.
Pension Obligations.
We
maintain a non-contributory defined benefit pension plan covering substantially all of our full-time employees. The plan provides
for defined benefits based on years of service and final average salary. For further detail on our pension obligations, including
the significant assumptions used by management, see Note 11 to the Notes to the consolidated financial statements.
Average Balances and Yields
.
The following tables set forth average balances, average yields and costs, and certain other information for the periods indicated.
No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average
balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect
of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense, as applicable.
|
|
|
For
the Six Months Ended December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
|
|
|
Average
Yield/Cost
(4)
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
|
|
|
Average
Yield/Cost
(4)
|
|
|
|
|
(Dollars in thousands)
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
1,022,324
|
|
|
$
|
24,461
|
|
|
|
4.80
|
%
|
|
$
|
956,389
|
|
|
$
|
21,150
|
|
|
|
4.43
|
%
|
|
Securities
|
|
|
112,174
|
|
|
|
1,269
|
|
|
|
2.26
|
%
|
|
|
78,028
|
|
|
|
574
|
|
|
|
1.46
|
%
|
|
Interest-earning deposits
|
|
|
58,104
|
|
|
|
572
|
|
|
|
1.96
|
%
|
|
|
78,298
|
|
|
|
522
|
|
|
|
1.33
|
%
|
|
Other
|
|
|
1,116
|
|
|
|
30
|
|
|
|
5.40
|
%
|
|
|
804
|
|
|
|
36
|
|
|
|
9.08
|
%
|
|
Total interest-earning assets
|
|
|
1,193,718
|
|
|
|
26,332
|
|
|
|
4.42
|
%
|
|
|
1,113,519
|
|
|
|
22,282
|
|
|
|
4.01
|
%
|
|
Non-interest-earning assets
|
|
|
112,071
|
|
|
|
|
|
|
|
|
|
|
|
102,815
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,305,789
|
|
|
|
|
|
|
|
|
|
|
$
|
1,216,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
$
|
104,775
|
|
|
$
|
165
|
|
|
|
0.31
|
%
|
|
$
|
96,524
|
|
|
$
|
98
|
|
|
|
0.20
|
%
|
|
Savings deposits
|
|
|
244,304
|
|
|
|
63
|
|
|
|
0.05
|
%
|
|
|
240,869
|
|
|
|
62
|
|
|
|
0.05
|
%
|
|
Money market deposits
|
|
|
331,041
|
|
|
|
780
|
|
|
|
0.47
|
%
|
|
|
322,645
|
|
|
|
568
|
|
|
|
0.35
|
%
|
|
Certificates of deposit
|
|
|
127,002
|
|
|
|
895
|
|
|
|
1.40
|
%
|
|
|
129,460
|
|
|
|
714
|
|
|
|
1.10
|
%
|
|
Total interest-bearing deposits
|
|
|
807,122
|
|
|
|
1,903
|
|
|
|
0.47
|
%
|
|
|
789,498
|
|
|
|
1,442
|
|
|
|
0.36
|
%
|
|
Borrowings
|
|
|
5,163
|
|
|
|
69
|
|
|
|
2.67
|
%
|
|
|
190
|
|
|
|
1
|
|
|
|
1.05
|
%
|
|
Other
|
|
|
7,904
|
|
|
|
81
|
|
|
|
2.04
|
%
|
|
|
3,837
|
|
|
|
38
|
|
|
|
1.97
|
%
|
|
Total interest-bearing liabilities
|
|
|
820,189
|
|
|
|
2,053
|
|
|
|
0.49
|
%
|
|
|
793,525
|
|
|
|
1,481
|
|
|
|
0.37
|
%
|
|
Non-interest-bearing liabilities
|
|
|
362,746
|
|
|
|
|
|
|
|
|
|
|
|
315,885
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,182,935
|
|
|
|
|
|
|
|
|
|
|
|
1,109,410
|
|
|
|
|
|
|
|
|
|
|
Total net worth
|
|
|
122,852
|
|
|
|
|
|
|
|
|
|
|
|
106,924
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and net worth
|
|
$
|
1,305,787
|
|
|
|
|
|
|
|
|
|
|
$
|
1,216,334
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
|
|
|
$
|
24,279
|
|
|
|
|
|
|
|
|
|
|
$
|
20,801
|
|
|
|
|
|
|
Net interest rate spread (1)
|
|
|
|
|
|
|
|
|
|
|
3.93
|
%
|
|
|
|
|
|
|
|
|
|
|
3.64
|
%
|
|
Net interest-earning assets (2)
|
|
$
|
373,529
|
|
|
|
|
|
|
|
|
|
|
$
|
319,994
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (3)
|
|
|
|
|
|
|
|
|
|
|
4.07
|
%
|
|
|
|
|
|
|
|
|
|
|
3.74
|
%
|
|
Average interest-earning assets to interest-bearing liabilities
|
|
|
145.54
|
%
|
|
|
|
|
|
|
|
|
|
|
140.33
|
%
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted
average cost of interest-bearing liabilities.
|
|
|
(2)
|
Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
|
|
|
(3)
|
Net interest margin represents net interest income divided by average total interest-earning assets.
|
|
|
|
For the Years Ended June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
|
|
|
Average
Yield/Cost
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
|
|
|
Average
Yield/Cost
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
|
|
|
Average
Yield/Cost
|
|
|
|
|
(Dollars in thousands)
|
|
|
Interest-earning
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
969,624
|
|
|
$
|
43,649
|
|
|
|
4.50
|
%
|
|
$
|
869,816
|
|
|
$
|
36,174
|
|
|
|
4.16
|
%
|
|
$
|
740,794
|
|
|
$
|
30,782
|
|
|
|
4.16
|
%
|
|
Securities
|
|
|
82,514
|
|
|
|
1,367
|
|
|
|
1.66
|
%
|
|
|
100,455
|
|
|
|
1,225
|
|
|
|
1.22
|
%
|
|
|
110,667
|
|
|
|
1,234
|
|
|
|
1.11
|
%
|
|
Interest-earning deposits
|
|
|
91,941
|
|
|
|
1,408
|
|
|
|
1.53
|
%
|
|
|
14,230
|
|
|
|
117
|
|
|
|
0.82
|
%
|
|
|
16,913
|
|
|
|
69
|
|
|
|
0.41
|
%
|
|
Other
|
|
|
816
|
|
|
|
62
|
|
|
|
7.60
|
%
|
|
|
1,953
|
|
|
|
105
|
|
|
|
5.38
|
%
|
|
|
1,944
|
|
|
|
76
|
|
|
|
3.91
|
%
|
|
Total interest-earning
assets
|
|
|
1,144,895
|
|
|
|
46,486
|
|
|
|
4.06
|
%
|
|
|
986,454
|
|
|
|
37,621
|
|
|
|
3.81
|
%
|
|
|
870,328
|
|
|
|
32,161
|
|
|
|
3.69
|
%
|
|
Non-interest-earning
assets
|
|
|
102,942
|
|
|
|
|
|
|
|
|
|
|
|
95,973
|
|
|
|
|
|
|
|
|
|
|
|
78,089
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
1,247,837
|
|
|
|
|
|
|
|
|
|
|
$
|
1,082,427
|
|
|
|
|
|
|
|
|
|
|
$
|
948,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
$
|
106,309
|
|
|
|
249
|
|
|
|
0.23
|
%
|
|
$
|
56,208
|
|
|
|
79
|
|
|
|
0.14
|
%
|
|
$
|
43,626
|
|
|
|
31
|
|
|
|
0.07
|
%
|
|
Savings deposits
|
|
|
241,357
|
|
|
|
124
|
|
|
|
0.05
|
%
|
|
|
233,843
|
|
|
|
120
|
|
|
|
0.05
|
%
|
|
|
219,157
|
|
|
|
112
|
|
|
|
0.05
|
%
|
|
Money market deposits
|
|
|
328,242
|
|
|
|
1,231
|
|
|
|
0.38
|
%
|
|
|
262,754
|
|
|
|
800
|
|
|
|
0.30
|
%
|
|
|
214,301
|
|
|
|
470
|
|
|
|
0.22
|
%
|
|
Certificates of deposit
|
|
|
129,495
|
|
|
|
1,491
|
|
|
|
1.15
|
%
|
|
|
126,988
|
|
|
|
1,156
|
|
|
|
0.91
|
%
|
|
|
117,513
|
|
|
|
821
|
|
|
|
0.70
|
%
|
|
Total interest-bearing
deposits
|
|
|
805,403
|
|
|
|
3,095
|
|
|
|
0.38
|
%
|
|
|
679,793
|
|
|
|
2,155
|
|
|
|
0.32
|
%
|
|
|
594,597
|
|
|
|
1,434
|
|
|
|
0.24
|
%
|
|
Borrowings
|
|
|
151
|
|
|
|
2
|
|
|
|
1.32
|
%
|
|
|
24,666
|
|
|
|
189
|
|
|
|
0.77
|
%
|
|
|
27,872
|
|
|
|
148
|
|
|
|
0.53
|
%
|
|
Other
|
|
|
4,623
|
|
|
|
89
|
|
|
|
1.93
|
%
|
|
|
3,722
|
|
|
|
67
|
|
|
|
1.80
|
%
|
|
|
3,425
|
|
|
|
66
|
|
|
|
1.93
|
%
|
|
Total interest-bearing
liabilities
|
|
|
810,177
|
|
|
|
3,186
|
|
|
|
0.39
|
%
|
|
|
708,181
|
|
|
|
2,411
|
|
|
|
0.34
|
%
|
|
|
625,894
|
|
|
|
1,648
|
|
|
|
0.26
|
%
|
|
Non-interest-bearing
liabilities
|
|
|
328,261
|
|
|
|
|
|
|
|
|
|
|
|
277,600
|
|
|
|
|
|
|
|
|
|
|
|
226,077
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,138,438
|
|
|
|
|
|
|
|
|
|
|
|
985,781
|
|
|
|
|
|
|
|
|
|
|
|
851,971
|
|
|
|
|
|
|
|
|
|
|
Total
net worth
|
|
|
109,399
|
|
|
|
|
|
|
|
|
|
|
|
96,646
|
|
|
|
|
|
|
|
|
|
|
|
96,446
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and net worth
|
|
$
|
1,247,837
|
|
|
|
|
|
|
|
|
|
|
$
|
1,082,427
|
|
|
|
|
|
|
|
|
|
|
$
|
948,417
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
|
|
|
|
$
|
43,300
|
|
|
|
|
|
|
|
|
|
|
$
|
35,120
|
|
|
|
|
|
|
|
|
|
|
$
|
30,513
|
|
|
|
|
|
|
Net interest rate spread (1)
|
|
|
|
|
|
|
|
|
|
|
3.67
|
%
|
|
|
|
|
|
|
|
|
|
|
3.47
|
%
|
|
|
|
|
|
|
|
|
|
|
3.43
|
%
|
|
Net
interest-earning assets (2)
|
|
$
|
334,718
|
|
|
|
|
|
|
|
|
|
|
$
|
278,273
|
|
|
|
|
|
|
|
|
|
|
$
|
244,434
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (3)
|
|
|
|
|
|
|
|
|
|
|
3.78
|
%
|
|
|
|
|
|
|
|
|
|
|
3.57
|
%
|
|
|
|
|
|
|
|
|
|
|
3.51
|
%
|
|
Average interest-earning assets
to interest-bearing liabilities
|
|
|
141.31
|
%
|
|
|
|
|
|
|
|
|
|
|
139.29
|
%
|
|
|
|
|
|
|
|
|
|
|
139.05
|
%
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted
average cost of interest-bearing liabilities.
|
|
|
(2)
|
Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
|
|
|
(3)
|
Net interest margin represents net interest income divided by average total interest-earning assets.
|
Rate/Volume Analysis
The following table presents the effects
of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable
to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in
volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior two columns. For purposes
of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based
on the changes due to rate and the changes due to volume.
|
|
|
Six Months Ended December 31,
2018 vs. 2017
|
|
|
Year Ended June 30,
2018 vs. 2017
|
|
|
Year Ended June 30,
2017 vs. 2016
|
|
|
|
|
Increase (Decrease) Due to
|
|
|
Total
Increase
|
|
|
Increase (Decrease) Due to
|
|
|
Total
Increase
|
|
|
Increase (Decrease) Due to
|
|
|
Total
Increase
|
|
|
|
|
Volume
|
|
|
Rate
|
|
|
(Decrease)
|
|
|
Volume
|
|
|
Rate
|
|
|
(Decrease)
|
|
|
Volume
|
|
|
Rate
|
|
|
(Decrease)
|
|
|
|
|
(In thousands)
|
|
|
Interest-earning
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
1,503
|
|
|
$
|
1,808
|
|
|
$
|
3,311
|
|
|
$
|
4,350
|
|
|
$
|
3,125
|
|
|
$
|
7,475
|
|
|
$
|
5,366
|
|
|
$
|
26
|
|
|
$
|
5,392
|
|
|
Securities
|
|
|
311
|
|
|
|
384
|
|
|
|
695
|
|
|
|
(245
|
)
|
|
|
387
|
|
|
|
142
|
|
|
|
(119
|
)
|
|
|
110
|
|
|
|
(9
|
)
|
|
Interest-earning deposits
|
|
|
(157
|
)
|
|
|
207
|
|
|
|
50
|
|
|
|
1,115
|
|
|
|
176
|
|
|
|
1,291
|
|
|
|
(12
|
)
|
|
|
60
|
|
|
|
48
|
|
|
Other
|
|
|
12
|
|
|
|
(18
|
)
|
|
|
(6
|
)
|
|
|
(76
|
)
|
|
|
33
|
|
|
|
(43
|
)
|
|
|
—
|
|
|
|
29
|
|
|
|
29
|
|
|
Total
interest-earning assets
|
|
|
1,669
|
|
|
|
2,381
|
|
|
|
4,050
|
|
|
|
5,144
|
|
|
|
3,721
|
|
|
|
8,865
|
|
|
|
5,235
|
|
|
|
225
|
|
|
|
5,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
|
9
|
|
|
|
58
|
|
|
|
67
|
|
|
|
97
|
|
|
|
73
|
|
|
|
170
|
|
|
|
11
|
|
|
|
37
|
|
|
|
48
|
|
|
Savings deposits
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
4
|
|
|
|
—
|
|
|
|
4
|
|
|
|
8
|
|
|
|
—
|
|
|
|
8
|
|
|
Money market deposits
|
|
|
15
|
|
|
|
197
|
|
|
|
212
|
|
|
|
223
|
|
|
|
208
|
|
|
|
431
|
|
|
|
121
|
|
|
|
209
|
|
|
|
330
|
|
|
Certificates of
deposit
|
|
|
(14
|
)
|
|
|
195
|
|
|
|
181
|
|
|
|
23
|
|
|
|
312
|
|
|
|
335
|
|
|
|
70
|
|
|
|
265
|
|
|
|
335
|
|
|
Total interest-bearing
deposits
|
|
|
11
|
|
|
|
450
|
|
|
|
461
|
|
|
|
347
|
|
|
|
593
|
|
|
|
940
|
|
|
|
210
|
|
|
|
511
|
|
|
|
721
|
|
|
Borrowings
|
|
|
64
|
|
|
|
4
|
|
|
|
68
|
|
|
|
(267
|
)
|
|
|
80
|
|
|
|
(187
|
)
|
|
|
(19
|
)
|
|
|
60
|
|
|
|
41
|
|
|
Other
|
|
|
40
|
|
|
|
3
|
|
|
|
43
|
|
|
|
17
|
|
|
|
5
|
|
|
|
22
|
|
|
|
6
|
|
|
|
(5
|
)
|
|
|
1
|
|
|
Total
interest-bearing liabilities
|
|
|
115
|
|
|
|
457
|
|
|
|
572
|
|
|
|
97
|
|
|
|
678
|
|
|
|
775
|
|
|
|
197
|
|
|
|
566
|
|
|
|
763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in net interest income
|
|
$
|
1,554
|
|
|
$
|
1,924
|
|
|
$
|
3,478
|
|
|
$
|
5,047
|
|
|
$
|
3,043
|
|
|
$
|
8,090
|
|
|
$
|
5,038
|
|
|
$
|
(341
|
)
|
|
$
|
4,697
|
|
Comparison of Financial Condition at December 31, 2018 and
June 30, 2018
Total Assets.
Total assets
increased $2.8 million, or 0.2%, to $1.29 billion at December 31, 2018 from $1.28 billion at June 30, 2018. The increase was primarily
due to increases of $43.0 million, or 4.4%, in net loans and $19.1 million, or 21.7%, in available for sale securities, offset
by a $63.8 million, or 53.1%, decrease in cash and cash equivalents.
Cash and Cash Equivalents.
Total cash and cash equivalents decreased $63.8 million, or 53.1%, to $56.5 million at December 31, 2018 from $120.3 million at
June 30, 2018. This decrease primarily reflected the use of excess cash to fund loan commitments and the purchase of new investment
securities.
Securities Available for Sale.
Total securities available for sale increased $19.1 million, or 21.7%, to $107.1 million at December 31, 2018 from $88.1 million
at June 30, 2018. The increase was primarily due to an increase of $24.9 million in U.S. government and agency obligations, partially
offset by a decrease of $4.6 million in municipal obligations.
Securities Held to Maturity.
Total securities held to maturity decreased $1.0 million, or 19.3%, to $4.3 million at December 31, 2018 from $5.3 million at June
30, 2018. The decrease was primarily due to maturities and paydowns of municipal obligations.
Net Loans.
Net loans increased
$43.0 million, or 4.4%, to $1.0 billion at December 31, 2018 from $985.9 million at June 30, 2018. The increase was primarily due
to an increase in one- to four-family residential mortgage loans of $30.1 million, or 12.1%, to $279.8 million at December 31,
2018 from $249.6 million at June 30, 2018 resulting primarily from purchases from an unaffiliated mortgage banking company, and
an increase in commercial construction loans of $11.2 million, or 13.2%, to $95.8 million at December 31, 2018 from $84.6 million
at June 30, 2018. In addition, consumer loans increased $7.2 million, or 48.2%, to $22.2 million at December 31, 2018 from $15.0
million at June 30, 2018. These increases were partially offset by a decrease in commercial and industrial loans of $10.9 million,
or 5.6%, to $183.3 million at December 31, 2018 from $194.2 million at June 30, 2018. The increase in one- to four- family residential
mortgage loans reflected management’s desire to better balance the overall loan portfolio between commercial and non-commercial
lending. Commercial construction loans increased reflecting the timing of funding certain projects. The increase in consumer loans
reflected an increase in personal loans to the owners of certain commercial businesses. The decrease in commercial and industrial
loans was due to the receipt of certain paydowns in the portfolio based on the time of the year.
Deposits.
Total deposits decreased
$35.3 million, or 3.1%, to $1.11 billion at December 31, 2018 from $1.15 billion at June 30, 2018. The decrease in deposits reflected
a decrease in money market accounts of $38.0 million, or 11.4%, to $296.9 million at December 31, 2018 from $334.9 million at June
30, 2018, a decrease in certificates of deposit of $5.0 million, or 3.9%, to $124.1 million at December 31, 2018 from $129.1 million
at June 30, 2018 and a decrease in interest-bearing demand accounts of $3.5 million, or 3.6%, to $93.7 million at December 31,
2018 from $97.2 million at June 30, 2018. These decreases were offset by an increase in non-interest-bearing demand accounts of
$11.2 million, or 3.3%, to $356.3 million at December 31, 2018 from $345.1 million at June 30, 2018. The decrease in deposits was
primarily due to the expected end of a shorter term large money market deposit relationship and seasonality. The increase in non-interest-bearing
deposits reflected the results of our business strategy of requiring a commercial deposit relationship from borrowers in connection
with the origination of commercial and industrial loans.
Borrowings.
Federal Home Loan
Bank of New York borrowings increased to $30.0 million at December 31, 2018 from none at June 30, 2018. The increase was due to
new short-term borrowings taken to offset the expected seasonal decrease in municipal deposits.
Total Net Worth.
Total net
worth increased $8.3 million, or 7.1%, to $126.4 million at December 31, 2018 from $118.1 million at June 30, 2018. The increase
was due to net income of $9.2 million for the six months ended December 31, 2018, offset in part by an increase of $912,000 in
accumulated other comprehensive loss on our available for sale securities.
Comparison of Operating Results for the Six Months Ended
December 31, 2018 and December 31, 2017
General.
Net income increased
by $5.3 million, or 134.3%, to $9.2 million for the six months ended December 31, 2018 from $3.9 million for the six months ended
December 31, 2017. The increase was primarily due to a $3.5 million increase in net interest income, a $587,000 increase in non-interest
income and a $2.1 million decrease in income tax expense, partially offset by a $581,000 increase in non-interest expense and a
$260,000 increase in the provision for loan losses.
Interest and Dividend Income.
Interest and dividend income increased $4.1 million, or 18.2%, to $26.3 million for the six months ended December 31, 2018, from
$22.3 million for the six months ended December 31, 2017 due to increases in interest income on loans and securities. The increase
primarily reflected a 41 basis points increase in the average yield to 4.42% on interest-earning assets for the six months ended
December 31, 2018, from 4.01% for the six months ended December 31, 2017, and to a lesser degree an $80.2 million increase in the
average balance of interest-earning assets for the six months ended December 31, 2018 as compared to the prior year period.
Interest income on loans increased $3.3
million, or 15.7%, to $24.5 million for the six months ended December 31, 2018 from $21.2 million for the six months ended December
31, 2017. The increase in interest income on loans was primarily due to a 37 basis points increase in the average yield on loans
to 4.80% for the six months ended December 31, 2018 from 4.43% for the six months ended December 31, 2017, combined with a $65.9
million increase in the average balance of loans to $1.0 billion for the six months ended December 31, 2018 from $956.4 million
for the six months ended December 31, 2017. The increase in the average yield was due to our originating and purchasing new loans
at higher market rates of interest and the upward adjustment of the interest rates on our existing adjustable-rate loans as a result
of the rising interest rate environment, while the increase in the average balance of loans was due to our continued efforts to
increase our loan portfolio.
Interest income on securities increased
$695,000 to $1.3 million for the six months ended December 31, 2018 from $574,000 for the six months ended December 31, 2017. The
increase in interest income on securities was due to a 80 basis points increase in the average yield to 2.26% for the six months
ended December 31, 2018 from 1.46% for the six months ended December 31, 2017, and a $34.2 million increase in the average balance
of securities to $112.2 million for the six months ended December 31, 2018 from $78.0 million for the six months ended December
31, 2017. The increase in both the average yield and average balance of securities was primarily due to increased market rates
of interest and investing excess cash in interest-earning assets with higher yields.
Interest Expense.
Interest
expense increased $572,000, or 38.6%, to $2.1 million for the six months ended December 31, 2018 from $1.5 million for the six
months ended December 31, 2017 due to increases in interest expense on deposits and borrowings. The increase primarily reflected
a 12 basis points increase in the average cost of interest-bearing liabilities to 0.49% for the six months ended December 31, 2018
from 0.37% for the six months ended December 31, 2017, and a $26.7 million increase in the average balance of interest-bearing
liabilities.
Interest expense on interest-bearing deposits
increased $461,000, or 32.0%, to $1.9 million for the six months ended December 31, 2018 from $1.4 million for the six months ended
December 31, 2017. The increase in interest expense on interest-bearing deposits was primarily due to an 11 basis points increase
in the average cost on interest-bearing deposits to 0.47% for the six months ended December 31, 2018 from 0.36% for the same period
in the prior year, along with a $17.6 million increase in the average balance of deposits to $807.1 million for the six months
ended December 31, 2018 from $789.5 million for the six months ended December 31, 2017. The increase in the average balance of
deposits was due to our focus on increasing core deposits obtained from our business and municipal customers. The increase in the
average cost of deposits was due to the increased level of competition from other financial service providers operating in our
market.
Interest expense on Federal Home Loan Bank
borrowings increased $68,000, to $69,000 for the six months ended December 31, 2018 compared to the prior year period primarily
due to a $5.0 million increase in the average balance of Federal Home Loan Bank of New York advances to $5.2 million for the six
months ended December 31, 2018 from $190,000 for the six months ended December 31, 2017, and a 162 basis points increase in the
average cost of Federal Home Loan Bank of New York advances to 2.67% for the six months ended December 31, 2018 from 1.05% for
the six months ended December 31, 2017. Toward the end of the 2018 period, we increased the amount of Federal Home Loan Bank of
New York borrowings in order to increase our short-term liquidity due to a loss of seasonal municipal deposits.
Net Interest Income.
Net interest
income increased $3.5 million, or 16.7%, to $24.3 million for the six months ended December 31, 2018 compared to $20.8 million
for the six months ended December 31, 2017. The increase reflected a 29 basis points increase in the net interest rate spread to
3.93% for the six months ended December 31, 2018 from 3.64% for six months ended December 31, 2017, combined with a $53.5 million
increase in the average balance of net interest-earning assets to $373.5 million for the six months ended December 31, 2018 from
$320.0 million for the six months ended December 31, 2017. The net interest margin increased 33 basis points to 4.07% for the six
months ended December 31, 2018 from 3.74% for the six months ended December 31, 2017.
Provision for Loan Losses.
We recorded a provision for loan losses of $1.2 million for the six months ended December 31, 2018 compared to $950,000 for the
six months ended December 31, 2017. The increase in the provision reflected management’s assessment of the loss inherent
in our loan portfolio, the growth of the commercial construction and consumer loan portfolios, and increases in charge-offs and
non-performing assets. Net charge-offs increased to $1.1 million for the six months ended December 31, 2018, compared to $233,000
for the six months ended December 31, 2017. Net charge-offs for the six months ended December 31, 2018, included partial charge-offs
of two borrower relationships totaling $1.0 million consisting of commercial and industrial loans. Non-performing assets increased
to $11.8 million, or 0.92% of total assets, at December 31, 2018, compared to $9.6 million, or 0.75% of total assets, at June 30,
2018. The allowance for loan losses was $13.6 million, or 1.31% of loans outstanding, at December 31, 2018 and $12.5 million, or
1.28% of loans outstanding, at December 31, 2017.
Non-Interest Income.
Non-interest
income increased $587,000, or 9.8%, to $6.6 million for the six months ended December 31, 2018 from $6.0 million for the six months
ended December 31, 2017. The increase was primarily due to the $897,000 increase in income attributable to our insurance and wealth
management services and a $409,000 increase in bank fees and service charges, partially offset by a $430,000 increase in the loss
on the disposal of assets and a decrease of $125,000 in net gain on securities transactions. The increase in income attributable
to our insurance and wealth management reflected the acquisition in May 2018 of the assets of Ward Financial Management, LTD during
the six months ended December 31, 2018. Our assets under management increased to $481.5 million at December 31, 2018 from $227.0
million at December 31, 2017. Bank fees and service charges increased primarily due to commercial loan fees. The increase in the
loss on the disposal of assets was primarily the result of the sale of a branch location during the six months ended December 31,
2018. Net gain on securities sales decreased during the six months ended December 31, 2018 as we had no sales during such period.
Non-Interest Expense.
Non-interest
expense increased $581,000, or 3.2%, to $18.5 million for the six months ended December 31, 2018 from $17.9 million for the six
months ended December 31, 2017. The $581,000 increase was caused primarily by a $454,000 increase in salaries and employee benefits
expense, a $136,000 increase in occupancy and equipment costs, and a $136,000 increase in advertising and marketing expenses, partially
offset by a $140,000 decrease in data processing costs. Salaries and employee benefits expense and occupancy and equipment costs
increased during the six months ended December 31, 2018 as compared to the same prior year period due to annual salary increases,
additional personnel acquired in the Ward Financial Management, LTD acquisition, and regular maintenance expenses for our branches.
Advertising and marketing expenses increased due to sponsorships with community organizations during the six months ended December
31, 2018. Data processing costs decreased during the six months ended December 31, 2018 as compared to the same period in the prior
year due to a reduction in costs associated with a new data processing contract.
Income Tax Expense.
Income
tax expense decreased $2.1 million, or 52.3%, to $1.9 million for the six months ended December 31, 2018 from $4.0 million for
the six months ended December 31, 2017. The decrease resulted from the lower effective federal corporate tax rate under the Tax
Cuts and Jobs Act, which was enacted on December 22, 2017, and reduced the federal corporate income tax rate from 35% to 21%, effective
January 1, 2018. Our effective tax rate was 17.0% for the six months ended December 31, 2018 compared to 50.2% for the six months
ended December 31, 2017. Income tax expense for the six months ended December 31, 2018 also reflected a $580,000 tax benefit related
to the final evaluation of our net deferred tax asset in connection with the rate reduction resulting from the Tax Cuts and Jobs
Act. The income tax expense decrease was partially offset by an increase in our pre-tax income to $11.1 million for the six months
ended December 31, 2018 compared to $7.9 million for the six months ended December 31, 2017. In addition, income tax expense for
the six months ended December 31, 2017 included a $1.2 million charge related to the revaluation of our net deferred tax asset
following the enactment of the Tax Cuts and Jobs Act.
Comparison of Financial Condition at June 30, 2018 and June
30, 2017
Total Assets.
Total assets
increased $150.0 million, or 13.2%, to $1.3 billion at June 30, 2018 from $1.1 billion at June 30, 2017. The increase was primarily
due to increases of $80.0 million, or 198.8%, in cash and cash equivalents, $53.1 million, or 5.7%, in net loans and $6.1 million,
or 7.4%, in available for sale securities.
Cash and Cash Equivalents.
Total
cash and cash equivalents increased $80.0 million, or 198.8%, to $120.3 million at June 30, 2018 from $40.3 million at June 30,
2017. This increase resulted from an increased growth in deposits, which exceeded our funding needs for new lending.
Securities Available for Sale.
Total securities available for sale increased $6.1 million, or 7.4%, to $88.1 million at June 30, 2018 from $82.0 million at June
30, 2017. The increase was primarily due to an increase of $15.6 million in U.S. government and agency obligations, partially offset
by a decrease of $9.1 million in municipal obligations.
Securities Held to Maturity.
Total securities held to maturity increased $3.1 million to $5.3 million at June 30, 2018 from $2.2 million at June 30, 2017. The
increase was primarily due to purchases of municipal obligations.
Net Loans.
Net loans increased
$53.1 million, or 5.7%, to $985.9 million at June 30, 2018 from $932.8 million at June 30, 2017. The increase was due to a $46.9
million, or 23.1%, increase in one- to four-family residential mortgage loans to $249.6 million at June 30, 2018 from $202.7 million
at June 30, 2017 resulting primarily from loans purchased from an unaffiliated mortgage banking company, an increase in commercial
construction loans of $16.6 million, or 24.5%, to $84.6 million at June 30, 2018 from $67.9 million at June 30, 2017 and an increase
in commercial and industrial loans of $14.3 million, or 7.9%, to $194.2 million at June 30, 2018 from $179.9 million at June 30,
2017. These increases were partially offset by a decrease in commercial real estate loans of $23.2 million, or 5.8%, to $375.9
million at June 30, 2018 from $399.1 million at June 30, 2017. The increase in one- to four- family residential mortgage loans
reflected management’s desire to better balance the overall loan portfolio between commercial and non-commercial lending.
Commercial construction loans increased due to the timing of funding certain projects. Commercial and industrial loans increased
due to the establishment of new relationships. The decrease in commercial real estate loans was due to large paydowns in the portfolio
which were greater than new originations.
Deposits.
Total deposits increased
$140.2 million, or 13.9%, to $1.2 billion at June 30, 2018 from $1.0 billion at June 30, 2017. The increase in deposits reflected
an increase in non-interest-bearing demand accounts of $69.7 million, or 25.3%, to $345.0 million at June 30, 2018 from $275.4
million at June 30, 2017, an increase in money market accounts of $35.9 million, or 12.0%, to $334.9 million at June 30, 2018 from
$298.9 million at June 30, 2017 and an increase in interest-bearing demand accounts of $32.8 million, or 50.9%, to $97.2 million
at June 30, 2018 from $64.4 million at June 30, 2017. The increase in deposits reflected strong overall business growth due to
the onboarding of new municipal customers and our business strategy of requiring a commercial deposit relationship from borrowers
in connection with the origination of commercial and industrial loans.
Borrowings.
Federal Home Loan
Bank of New York borrowings decreased to zero at June 30, 2018 from $5.0 million at June 30, 2017, as we repaid shorter term borrowings
with funds generated from deposits.
Total Net Worth.
Total net
worth increased $14.1 million, or 13.5%, to $118.1 million at June 30, 2018 from $104.0 million at June 30, 2017. The increase
was due to the combined effect of net income of $11.5 million for the year ended June 30, 2018 and a decrease in accumulated other
comprehensive loss of $2.6 million for the year ended June 30, 2018. Included in changes in net worth for the year ended June 30,
2018 was a $1.9 million reclassification from accumulated other comprehensive loss to undivided profits for stranded tax effects
resulting from the Tax Cuts and Jobs Act.
Comparison of Operating Results for the Years Ended June
30, 2018 and June 30, 2017
General.
Net income increased
by $5.9 million, or 104.2%, to $11.5 million for the year ended June 30, 2018 from $5.6 million for the year ended June 30, 2017.
The increase was primarily due to an $8.1 million increase in net interest income, a $1.9 million increase in non-interest income
and a $425,000 decrease in the provision for loan losses, partially offset by a $3.6 million increase in income tax expense and
a $958,000 increase in non-interest expense.
Interest and Dividend Income.
Interest and dividend income increased $8.9 million, or 23.6%, to $46.5 million for the year ended June 30, 2018, from $37.6 million
for the year ended June 30, 2017 primarily due to increases in interest income on loans and securities. The increase reflected
a $158.4 million increase in the average balance of interest-earning assets and a 25 basis points increase in the average yield
on interest-earning assets to 4.06% for the year ended June 30, 2018, from 3.81% for the year ended June 30, 2017.
Interest income on loans increased $7.5
million, or 20.7%, to $43.6 million for the year ended June 30, 2018 from $36.2 million for the year ended June 30, 2017. Interest
income on loans increased primarily due to a $99.8 million increase in the average balance of loans to $969.6 million for the year
ended June 30, 2018 from $869.8 million for the year ended June 30, 2017, and to a lesser degree due to a 34 basis points increase
in the average yield on loans to 4.50% for the year ended June 30, 2018 from 4.16% for the year ended June 30, 2017. The increase
in average balance of loans was due to our continued effort to increase our loan portfolio, while the increase in the average yield
on loans was due to both our originating new loans combined with the upward adjustment of interest rates on our existing adjustable-rate
loans in a rising interest rate environment.
Interest income on securities increased
$142,000, or 11.6%, to $1.4 million for the year ended June 30, 2018 from $1.2 million for the year ended June 30, 2017. Interest
income on securities increased due to a 44 basis points increase in the average yield on securities to 1.66% for the year ended
June 30, 2018 from 1.22% for the year ended June 30, 2017, which was partially offset by a $17.9 million decrease in the average
balance of securities to $82.5 million for the year ended June 30, 2018 from $100.5 million for the year ended June 30, 2017. The
average yield on securities increased due to the increase in market interest rates during the year ended June 30, 2018 compared
to the prior year. The decrease in the average balance of securities was primarily due to securities paydowns and maturities.
Interest Expense.
Interest
expense increased $775,000, or 32.1%, to $3.2 million for the year ended June 30, 2018 from $2.4 million for the year ended June
30, 2017 as a result of an increase in interest expense on deposits. The increase primarily reflected a five basis points increase
in the average cost of interest-bearing liabilities to 0.39% for the year ended June 30, 2018 from 0.34% for the year ended June
30, 2017, as well as a $102.0 million increase in the average balance of interest-bearing liabilities.
Interest expense on interest-bearing deposits
increased $940,000, or 43.6%, to $3.1 million for the year ended June 30, 2018 from $2.2 million for the year ended June 30, 2017.
Interest expense on interest-bearing deposits increased primarily due to a $125.6 million increase in the average balance of deposits
to $805.4 million for the year ended June 30, 2018 from $679.8 million for the year ended June 30, 2017, as well as a six basis
points increase in the average cost on interest-bearing deposits to 0.38% for the year ended June 30, 2018 from 0.32% for the prior
year. The increase in the average balance of deposits reflected the results of our focus on growing core deposits with our business
and municipal customers. The increase in the average cost of deposits was due to the increased level of competition from other
financial service providers operating in our market.
Interest expense on Federal Home Loan Bank
of New York borrowings decreased $187,000 to $2,000 for the year ended June 30, 2018 compared to the prior year primarily due to
a $24.5 million decrease in the average balance of Federal Home Loan Bank of New York borrowings to $151,000 for the year ended
June 30, 2018 from $24.7 million for the year ended June 30, 2017, which was partially offset by a 55 basis points increase in
the average cost of Federal Home Loan Bank of New York borrowings to 1.32% for the year ended June 30, 2018 from 0.77% for the
year ended June 30, 2017. We repaid our short-term borrowings due to the substantial growth in deposits.
Net Interest Income.
Net interest
income increased $8.1 million, or 23.0%, to $43.3 million for the year ended June 30, 2018 compared to $35.2 million for the year
ended June 30, 2017. The increase reflected a $56.4 million increase in the average balance of net interest-earning assets to $334.7
million for the year ended June 30, 2018 from $278.3 million for the year ended June 30, 2017, combined with a 20 basis points
increase in the net interest rate spread to 3.67% for the year ended June 30, 2018 from 3.47% for the year ended June 30, 2017.
The net interest margin increased 21 basis points to 3.78% for the year ended June 30, 2018 from 3.57% for the year ended June
30, 2017.
Provision for Loan Losses.
We recorded a provision for loan losses of $2.0 million for the year ended June 30, 2018 compared to $2.4 million for the year
ended June 30, 2017. The decrease in the provision reflected management’s assessment of the losses inherent in the loan portfolio,
and the slowing of loan growth in fiscal 2018 as compared to fiscal 2017, offset in part by an increase in non-performing assets.
Non-performing assets increased to $9.6 million, or 0.75% of total assets, at June 30, 2018, compared to $7.9 million, or 0.70%
of total assets, at June 30, 2017. The decrease also reflected a decrease in the level of net charge offs to $280,000 during fiscal
2018 compared to $369,000 during fiscal 2017. The allowance for loan losses was $13.5 million, or 1.35% of net loans outstanding,
at June 30, 2018 and $11.8 million, or 1.25% of net loans outstanding, at June 30, 2017.
Non-Interest Income.
Non-interest
income increased $1.9 million, or 17.5%, to $12.8 million for the year ended June 30, 2018 from $10.9 million for the year ended
June 30, 2017. The increase was primarily due to the $1.4 million increase in income attributable to our insurance and wealth management
services, a $661,000 decrease in the loss on the disposal of assets and a $293,000 increase in the net gain on securities sales,
which was partially offset by a decrease of $542,000 in bank fees and service charges. The increase in income attributable to our
insurance and wealth management reflected the acquisition of the assets of Capital Region Strategic Employee Benefits Services,
LLC in July 2017. The decrease in the loss on the disposal of assets was primarily the result of the relocation of our corporate
headquarters, and the closing and relocation of two branch locations in fiscal 2017. The increase in the net gain on securities
sales during fiscal 2018 was the result of the sale of certain securities received as consideration in repayment of a loan. Bank
fees and service charges decreased in fiscal 2018 as compared to fiscal 2017 due to a decrease in commercial loan fees.
Non-Interest Expense.
Non-interest
expense increased $958,000, or 2.7%, to $36.3 million for the year ended June 30, 2018 from $35.4 million for the year ended June
30, 2017. The $958,000 increase was primarily the result of a $390,000 increase in occupancy and equipment costs, a $219,000 increase
in salaries and employee benefits expense and a $209,000 increase in deposit insurance premiums as a result of our deposit growth,
partially offset by a $286,000 decrease in data processing costs. Occupancy and equipment costs increased during fiscal 2018 as
compared to fiscal 2017 due to regular maintenance expenses of our branches. Salaries and employee benefit expense increased during
fiscal 2018 as compared to fiscal 2017 due to annual salary increases, partially offset by a decrease in pension expense. Data
processing costs decreased during fiscal 2018 as compared to fiscal 2017 due to a reduction in costs associated with a new data
processing contract.
Income Tax Expense.
Income
tax expense increased $3.6 million, or 132.4% to $6.3 million for the year ended June 30, 2018 from $2.7 million for the year ended
June 30, 2017. The increase was due primarily to a $9.5 million increase in pre-tax income and a $1.2 million charge related to
the revaluation of our net deferred tax asset following the enactment of the Tax Cuts and Jobs Act, partially offset by a reduction
of the top corporate federal income tax rate from 35% to 21%, effective January 1, 2018. During the year ended June 30, 2018, we
revised our estimated annual effective tax rate to reflect the change in the federal statutory rate effective January 1, 2018 using
a blended rate for the annual period. As a result, the blended federal statutory rate for the 2018 fiscal year was 28.0%
compared to 34.0% for the 2017 fiscal year.
Management of Market Risk
General
.
Our most significant
form of market risk is interest rate risk because, as a financial institution, the majority of our assets and liabilities are sensitive
to changes in interest rates. Therefore, a principal part of our operations is to manage interest rate risk and limit the exposure
of our financial condition and results of operations to changes in market interest rates. Our asset/liability management committee
is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk
that is appropriate, given our business strategy, operating environment, capital, liquidity and performance objectives, and for
managing this risk consistent with the policy and guidelines approved by our board of trustees. We currently use a third-party
modeling program, prepared on a quarterly basis, and consult with a third-party to evaluate our sensitivity to changing interest
rates, given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing this
risk consistent with the guidelines approved by our board of trustees.
We manage our interest rate risk in order
to minimize the exposure of our earnings and capital to changes in interest rates. We have implemented the following strategies
to manage our interest rate risk:
|
|
·
|
increase our commercial loan portfolio with shorter term, higher yielding loan products;
|
|
|
·
|
invest in shorter term repricing and/or maturing securities whenever market conditions allow;
|
|
|
·
|
extend the terms of our lower costing Federal Home Loan Bank of New York borrowings; and
|
|
|
·
|
increase our total transaction deposit accounts.
|
We look at two types of simulations impacted
by changes in interest rates, which are (1) net interest income and (2) changes in the economic value of equity.
Net Interest Income.
We analyze
our sensitivity to changes in interest rates through a net interest income model. Net interest income is the difference between
the interest income we earn on our interest-earning assets, such as loans and securities, and the interest we pay on our interest-bearing
liabilities, such as deposits and borrowings. We estimate what our net interest income would be for a 12-month period. We then
calculate what the net interest income would be for the same period under the assumptions that the United States Treasury yield
curve increases or decreases instantaneously by +200, +400 and -200 basis point increments, with changes in interest rates representing
immediate and permanent, parallel shifts in the yield curve. A basis point equals one-hundredth of one percent, and 100 basis points
equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the “Change
in Interest Rates” column below.
The table below sets forth, as of December
31, 2018, the calculation of the estimated changes in our net interest income that would result from the designated immediate changes
in the United States Treasury yield curve.
Change in Interest Rates
(basis points) (1)
|
|
Net Interest Income
Year 1 Forecast
|
|
|
Year 1 Change
from Level
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
+400
|
|
$
|
63,020
|
|
|
|
21.8
|
%
|
|
+200
|
|
|
57,927
|
|
|
|
12.0
|
%
|
|
Level
|
|
|
51,732
|
|
|
|
—
|
|
|
-200
|
|
|
42,751
|
|
|
|
(17.4
|
)%
|
|
|
(1)
|
Assumes an immediate uniform change in interest rates at all maturities.
|
The table above indicates that at December
31, 2018, in the event of an instantaneous parallel 200 basis points increase in interest rates, we would experience a 12.0% increase
in net interest income, and in the event of an instantaneous 200 basis points decrease in interest rates, we would experience a
17.4% decrease in net interest income.
Economic Value of Equity Analysis.
We also analyze the sensitivity of our financial condition to changes in interest rates through
our economic value of equity model. This analysis measures the difference between predicted changes in the fair value of our assets
and predicted changes in the present value of our liabilities assuming various changes in current interest rates. The table below
represents an analysis of our interest rate risk (excluding the effect of our pension plan) as measured by the estimated changes
in our economic value of equity (“EVE”), resulting from an instantaneous and sustained parallel shift in the yield
curve (+200 and +400 basis points and -200 basis points) at December 31, 2018.
|
|
|
|
|
|
|
|
|
|
|
|
EVE as a Percentage of Present
Value of Assets (3)
|
|
Change in Interest
Rates
(basis
|
|
Estimated
|
|
|
Estimated Increase (Decrease) in
EVE
|
|
|
EVE
|
|
|
Increase
(Decrease)
|
|
|
points) (1)
|
|
EVE (2)
|
|
|
Amount
|
|
|
Percent
|
|
|
Ratio (4)
|
|
|
(basis points)
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
+400
|
|
$
|
166,131
|
|
|
$
|
(23,306
|
)
|
|
|
(12.3
|
)%
|
|
|
13.79
|
%
|
|
|
(72
|
)
|
|
+200
|
|
|
176,626
|
|
|
|
(12,811
|
)
|
|
|
(6.8
|
)%
|
|
|
14.12
|
%
|
|
|
(40
|
)
|
|
—
|
|
|
189,437
|
|
|
|
—
|
|
|
|
—
|
%
|
|
|
14.52
|
%
|
|
|
—
|
|
|
-200
|
|
|
198,997
|
|
|
|
9,560
|
|
|
|
5.0
|
%
|
|
|
14.70
|
%
|
|
|
18
|
|
|
|
(1)
|
Assumes an immediate uniform change in interest rates at all maturities.
|
|
|
(2)
|
EVE is the discounted present value of expected cash flows from assets, liabilities and off-balance sheet contracts.
|
|
|
(3)
|
Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
|
|
|
(4)
|
EVE Ratio represents EVE divided by the present value of assets.
|
The table above indicates that at December
31, 2018, in the event of a 200 basis points decrease in interest rates, we would experience a 5.0% increase in our economic value
of equity. In the event of a 200 basis points increase in interest rates, we would experience a decrease of 6.8% in economic value
of equity.
The preceding
simulation analyses do not represent a forecast of actual results and should not be relied upon as being indicative of expected
operating results. These hypothetical estimates are based upon numerous assumptions, which are subject to change, including: the
nature and timing of interest rate levels including the yield curve shape, prepayments on loans and securities, deposit decay rates,
pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows, and others. Also, as market
conditions vary, prepayment/refinancing levels, the varying impact of interest rate changes on caps and floors embedded in adjustable-rate
loans, early withdrawal of deposits, changes in product preferences, and other internal/external variables will likely deviate
from those assumed.
Liquidity and Capital Resources
Liquidity.
Liquidity describes
our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet
the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources
of funds are deposits, principal and interest payments on loans and securities, and proceeds from calls, maturities and sales of
securities. We also have the ability to borrow from the Federal Home Loan Bank of New York. At December 31, 2018, we had the ability
to borrow up to $394.5 million, of which $30.0 million was outstanding and $173.0 million was utilized as collateral for letters
of credit issued to secure municipal deposits. At December 31, 2018, we had a $20.0 million unsecured line of credit with a correspondent
bank with no outstanding balance.
The board of trustees is responsible for
establishing and monitoring our liquidity targets and strategies in order to ensure that sufficient liquidity exists for meeting
the borrowing needs and deposit withdrawals of our customers as well as unanticipated contingencies. We believe that we had enough
sources of liquidity to satisfy our short and long-term liquidity needs as of December 31, 2018.
While maturities and scheduled amortization
of loans and securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general
interest rates, economic conditions, and competition. Our most liquid assets are cash and cash equivalents. The levels of these
assets are dependent on our operating, financing, lending and investing activities during any period. At December 31, 2018, cash
and cash equivalents totaled $56.5 million. Securities classified as available-for-sale, which provide additional sources of liquidity,
totaled $107.1 million at December 31, 2018.
We are committed to maintaining a strong
liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet
our current funding commitments. Certificates of deposit due within one year of December 31, 2018 totaled $62.3 million, or 5.6%,
of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds, including other
deposits and Federal Home Loan Bank of New York advances. Depending on market conditions, we may be required to pay higher rates
on such deposits or borrowings than we currently pay. We believe, however, based on past experience that a significant portion
of such deposits will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.
Capital Resources.
We are
subject to various regulatory capital requirements administered by NYSDFS and the Federal Deposit Insurance Corporation. At December
31, 2018, we exceeded all applicable regulatory capital requirements, and were considered “well capitalized” under
regulatory guidelines. See “Historical and Pro Forma Regulatory Capital Compliance” and Note 15 in the Notes to the
consolidated financial statements.
The net offering proceeds will significantly
increase our liquidity and capital resources. Over time, the initial level of liquidity will be reduced as net offering proceeds
are used for general corporate purposes, including funding loans. Our financial condition and results of operations will be enhanced
by the net offering proceeds, resulting in increased net interest-earning assets and net interest income. However, due to the increase
in equity resulting from the net offering proceeds, as well as other factors associated with the offering, our return on equity
will be lower immediately following the offering. See “Risk Factors—Our return on equity may be low following the offering
and this could negatively affect the trading price of our shares of common stock.”
Off-Balance Sheet Arrangements and Aggregate Contractual
Obligations
Off-Balance Sheet Arrangements.
We
are a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of
our customers. The financial instruments include commitments to originate loans, unused lines of credit and standby letters of
credit, which involve elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance
sheets. Our exposure to credit loss is represented by the contractual amount of the instruments. We use the same credit policies
in making commitments as we do for on-balance sheet instruments.
At December 31, 2018, we had $284.9 million
of commitments to originate loans, comprised of $232.8 million of commitments under commercial loans and lines of credit (including
$84.0 million of unadvanced portions of commercial construction loans), $43.1 million of commitments under home equity loans and
lines of credit and $9.0 million of unfunded commitments under consumer lines of credit. In addition, at December 31, 2018, we
had $31.8 million in standby letters of credit outstanding. See Note 13 in the Notes to the consolidated financial statements for
further information.
Contractual Obligations.
In
the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing
services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.
Recent Accounting Pronouncements
Please refer to Note 1 in the Notes to the
consolidated financial statements that appear starting on page F-1 of this prospectus for a description of recent accounting pronouncements
that may affect our financial condition and results of operations.
Impact of Inflation and Changing Prices
The financial statements and related data
presented herein have been prepared in accordance with U.S. GAAP, which requires the measurement of financial position and operating
results in terms of historical dollars without considering changes in the relative purchasing power of money over time due to inflation.
The primary impact of inflation on our operations is reflected in increased operating costs. Unlike most industrial companies,
virtually all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally
have a more significant impact on a financial institution’s performance than inflation. Interest rates do not necessarily
move in the same direction or to the same extent as the prices of goods and services.
BUSINESS OF PIONEER BANCORP, MHC
Pioneer Bancorp, MHC will be formed as a
New York-chartered mutual holding company in connection with the reorganization of Pioneer Bank into the “two-tier”
mutual holding company form of organization. As a mutual holding company, Pioneer Bancorp, MHC will be a non-stock company. Pioneer
Bancorp, MHC’s principal assets will be the common stock of Pioneer Bancorp, Inc. it receives in the reorganization and offering
and $100,000 in cash for its initial capitalization. Presently, it is expected that the only business activity of Pioneer Bancorp,
MHC will be to own a majority of Pioneer Bancorp, Inc.’s common stock. Pioneer Bancorp, MHC will be authorized, however,
to engage in any other business activities that are permissible for mutual holding companies under New York law, including investing
in loans and securities. Pioneer Bancorp, MHC will be subject to comprehensive regulation and examination by the NYSDFS and the
Federal Reserve Board.
BUSINESS OF PIONEER BANCORP, INC.
Pioneer Bancorp, Inc. is a Maryland corporation
that was formed in March 2019 and has not engaged in any business to date, other than organizational activities. Upon completion
of the reorganization and offering, Pioneer Bancorp, Inc. will own all of the issued and outstanding capital stock of Pioneer Bank.
Pioneer Bancorp, Inc. intends to contribute at least 50% of the net offering proceeds to Pioneer Bank and retain the remainder
of the net offering proceeds. Pioneer Bancorp, Inc. intends to use and invest those retained proceeds as discussed under “How
We Intend to Use the Proceeds from the Offering.” Pioneer Bancorp, Inc.’s executive offices are located at 652 Albany-Shaker
Road, Albany, New York 12211
, and its telephone number is
(518) 730-3999.
After the reorganization and the offering
are completed, Pioneer Bancorp, Inc., as the holding company of Pioneer Bank, will be authorized to pursue other business activities
permitted by applicable laws and regulations, which may include the acquisition of banking and financial services companies. We
currently have no agreements to acquire other financial institutions or financial services companies, although we may determine
to do so in the future.
Following the reorganization and offering,
our cash flow will depend on earnings from the investment of the net offering proceeds and from any dividends we receive from Pioneer
Bank. Pioneer Bank is subject to regulatory limitations on the amount of dividends that it may pay. Initially, Pioneer Bancorp,
Inc. will not own or lease any property, but instead will pay a fee to Pioneer Bank for the use of its premises, furniture and
equipment. Presently, we intend to employ as officers of Pioneer Bancorp, Inc. only persons who are officers of Pioneer Bank. We
will use, however, the support staff of Pioneer Bank from time to time. We will pay a fee to Pioneer Bank for the time devoted
to Pioneer Bancorp, Inc. by employees of Pioneer Bank; however, these individuals will not be separately compensated by Pioneer
Bancorp, Inc. Pioneer Bancorp, Inc. may hire additional employees, as appropriate, to the extent it expands its business in the
future.
BUSINESS OF PIONEER BANK
General
Founded in 1889, Pioneer Bank is a New York-chartered
savings bank that operates 22 retail banking offices in Albany, Rensselaer, Saratoga, Greene, Schenectady and Warren Counties in
New York. We consider these six counties, Schoharie County and the surrounding areas, as our primary market area for our business
operations. We attract deposits from the general public and municipalities and use those funds along with advances from the Federal
Home Loan Bank of New York and funds generated from operations to originate commercial real estate loans, commercial and industrial
loans, commercial construction loans and home equity loans and lines of credit and, to a lesser extent, consumer loans. We purchase
certain one- to four-family residential real estate loans through our relationship with a mortgage banking company. We also invest
in securities, which have historically consisted primarily of U.S. Government and agency obligations, municipal obligations and
Federal Home Loan Bank of New York stock. We offer a variety of deposit accounts, including demand accounts, savings accounts,
money market accounts and certificate of deposit accounts. Municipal deposit banking services are provided through a limited purpose
commercial bank subsidiary, Pioneer Commercial Bank. Pioneer Bank also sells commercial and consumer insurance products and employee
benefit products and services through Anchor Agency, Inc., its insurance agency subsidiary, and provides wealth management services
through its subsidiary, Pioneer Financial Services, Inc.
At December 31, 2018, we had consolidated
total assets of $1.3 billion, total deposits of $1.1 billion and net worth of $126.4 million. Pioneer Bank is subject to comprehensive
regulation and examination by the NYSDFS and the Federal Deposit Insurance Corporation. Our website address is
www.pioneerbanking.com
.
Information on this website is not and should not be considered a part of this prospectus.
Market Area
Our primary market area encompasses Albany,
Greene, Rensselaer, Saratoga, Schenectady, Schoharie and Warren Counties, which are located in the Capital Region of New York and
include the cities of Albany, the capital of New York, Schenectady and Troy. Our offices are located in these counties and surrounding
areas, with the exception of Schoharie County. The Capital Region has a diversified economy and representative industries include
educational services, technology and health care, along with a strong state government workforce. Large employers in the Capital
Region include General Electric, GlobalFoundries, the Golub Corporation, St. Peter’s Health Partners, Albany Medical Center,
the Colleges of Nanoscale Science and Engineering and the Rensselaer Polytechnic Institute.
The total population in our primary market
area in 2019 is approximately 1.0 million, as estimated by Claritas Pop-Facts Advanced, which provides demographic data based on
U.S. Census and other data sources. Of the seven counties in our market area, Saratoga County has the highest level of median household
income, estimated at $83,671 in 2019 and projected to grow nearly 9.8% through 2024, and Schoharie County has the lowest median
household income, estimated at $54,853 in 2019 and projected to grow 4.1% through 2024, compared to the 2019 estimated median household
income of $64,894 and $60,336 for New York and the United States as a whole, respectively.
We believe that we have developed products
and services that will meet the financial needs of our current and future customer base; however, we plan, and believe it is necessary,
to expand the range of products and services that we offer to be more competitive in our market area. Our marketing strategies
focus on the strength of our knowledge of local consumer and small business markets, as well as expanding relationships with current
customers and reaching out to develop new, profitable business relationships.
Competition
We face significant competition for deposits
and loans. Our most direct competition for deposits has historically come from the numerous financial institutions operating in
our market area (including other community banks and credit unions), many of which are significantly larger than we are and have
greater resources. We also face competition for investors’ funds from other sources such as brokerage firms, money market
funds and mutual funds, as well as securities, such as Treasury bills, offered by the Federal Government. Based on FDIC and National
Credit Union Administration (“NCUA”) data, at June 30, 2018 (the latest date for which information is available), we
had 1.80% of the FDIC and NCUA-insured deposit market share in Albany County among the 34 institutions with offices in the county,
16.40% of the FDIC and NCUA-insured deposit market share in Rensselaer County among the 21 institutions with offices in the county,
3.15% of the FDIC and NCUA-insured deposit market share in Saratoga County among the 25 institutions with offices in the county,
1.85% of the FDIC and NCUA-insured deposit market share in Greene County among the eight institutions with offices in the county,
4.70% of the FDIC and NCUA-insured deposit market share in Schenectady County among the 21 institutions with offices in the county
and 0.77% of the FDIC and NCUA-insured deposit market share in Warren County among the 15 institutions with offices in the county.
In all six counties, either New York City money center banks (e.g. JP Morgan Chase and Bank of America) or large regional banks
(e.g., Key Bank, Citizens Bank, M&T Bank and TD Bank) have a large presence.
Our competition for loans comes primarily
from the competitors referenced above and from other financial service providers, such as mortgage companies and mortgage brokers.
Competition for loans also comes from the increasing number of non-depository financial service companies participating in the
mortgage market, such as insurance companies, securities companies, financial technology companies, specialty finance firms and
technology companies.
We expect competition to remain intense
in the future as a result of legislative, regulatory and technological changes and the continuing trend of consolidation in the
financial services industry. Technological advances, for example, have lowered barriers to entry, allowed banks to expand their
geographic reach by providing services over the internet and made it possible for non-depository institutions, including financial
technology companies, to offer products and services that traditionally have been provided by banks. Competition for deposits and
the origination of loans could limit our growth in the future.
Lending Activities
General.
Our principal lending
activity has been originating commercial real estate loans (including multi-family real estate loans), commercial and industrial
loans, commercial construction loans and home equity loans and lines of credit. Beginning in January 2016, we entered into a strategic
partnership with a mortgage banking company to outsource our residential mortgage loan originations, underwriting and closing processes.
Through this partnership, we refer our customers to the mortgage banking company and then we decide whether we want to purchase
the one- to four-family residential real estate loans originated by the mortgage banking company for our portfolio.
Our commercial lending efforts focus on
the small-to-medium sized business market, targeting borrowers with outstanding loan balances of between $2.5 million to $8.0 million.
We will focus primarily on commercial real estate loans, commercial and industrial loans and commercial construction loans in our
market area. As part of the commercial lending strategy, we will continue to use our commercial relationships to increase our commercial
transactional deposit accounts.
Loan Portfolio Composition.
The following table sets forth the composition of our loan portfolio by type of loan
at the dates indicated.
|
|
|
|
|
|
At June 30,
|
|
|
|
|
At December 31, 2018
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
real estate
|
|
$
|
379,458
|
|
|
|
36.5
|
%
|
|
$
|
375,852
|
|
|
|
37.7
|
%
|
|
$
|
399,074
|
|
|
|
42.3
|
%
|
|
$
|
293,445
|
|
|
|
36.8
|
%
|
|
$
|
268,369
|
|
|
|
39.1
|
%
|
|
$
|
260,022
|
|
|
|
40.8
|
%
|
|
Commercial and industrial
|
|
|
183,318
|
|
|
|
17.6
|
%
|
|
|
194,183
|
|
|
|
19.5
|
%
|
|
|
179,908
|
|
|
|
19.1
|
%
|
|
|
123,470
|
|
|
|
15.5
|
%
|
|
|
102,588
|
|
|
|
14.9
|
%
|
|
|
88,654
|
|
|
|
13.9
|
%
|
|
Commercial construction
(1)
|
|
|
95,769
|
|
|
|
9.2
|
%
|
|
|
84,569
|
|
|
|
8.5
|
%
|
|
|
67,928
|
|
|
|
7.2
|
%
|
|
|
96,223
|
|
|
|
12.1
|
%
|
|
|
55,912
|
|
|
|
8.1
|
%
|
|
|
40,423
|
|
|
|
6.3
|
%
|
|
One- to four-family residential
real estate
|
|
|
279,784
|
|
|
|
26.9
|
%
|
|
|
249,635
|
|
|
|
25.0
|
%
|
|
|
202,733
|
|
|
|
21.5
|
%
|
|
|
197,670
|
|
|
|
24.8
|
%
|
|
|
173,421
|
|
|
|
25.2
|
%
|
|
|
163,334
|
|
|
|
25.6
|
%
|
|
Home equity loans and
lines of credit
|
|
|
79,693
|
|
|
|
7.7
|
%
|
|
|
78,286
|
|
|
|
7.8
|
%
|
|
|
76,132
|
|
|
|
8.1
|
%
|
|
|
69,423
|
|
|
|
8.7
|
%
|
|
|
69,215
|
|
|
|
10.1
|
%
|
|
|
66,801
|
|
|
|
10.5
|
%
|
|
Consumer
|
|
|
22,190
|
|
|
|
2.1
|
%
|
|
|
14,977
|
|
|
|
1.5
|
%
|
|
|
18,042
|
|
|
|
1.9
|
%
|
|
|
17,878
|
|
|
|
2.2
|
%
|
|
|
17,562
|
|
|
|
2.6
|
%
|
|
|
18,409
|
|
|
|
2.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable
|
|
|
1,040,212
|
|
|
|
100.0
|
%
|
|
|
997,502
|
|
|
|
100.0
|
%
|
|
|
943,817
|
|
|
|
100.0
|
%
|
|
|
798,109
|
|
|
|
100.00
|
%
|
|
|
687,067
|
|
|
|
100.0
|
%
|
|
|
637,643
|
|
|
|
100.0
|
%
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred loan costs
|
|
|
2,308
|
|
|
|
|
|
|
|
1,910
|
|
|
|
|
|
|
|
765
|
|
|
|
|
|
|
|
695
|
|
|
|
|
|
|
|
740
|
|
|
|
|
|
|
|
594
|
|
|
|
|
|
|
Allowance
for losses
|
|
|
(13,600
|
)
|
|
|
|
|
|
|
(13,510
|
)
|
|
|
|
|
|
|
(11,820
|
)
|
|
|
|
|
|
|
(9,794
|
)
|
|
|
|
|
|
|
(9,011
|
)
|
|
|
|
|
|
|
(9,103
|
)
|
|
|
|
|
|
Total
loans receivable, net
|
|
$
|
1,028,920
|
|
|
|
|
|
|
$
|
985,902
|
|
|
|
|
|
|
$
|
932,762
|
|
|
|
|
|
|
$
|
789,010
|
|
|
|
|
|
|
$
|
678,796
|
|
|
|
|
|
|
$
|
629,134
|
|
|
|
|
|
|
|
(1)
|
Represents amounts disbursed at December 31, 2018 and June 30, 2018, 2017, 2016, 2015 and 2014. The undrawn amounts of the
commercial construction loans totaled $84.0 million, $68.3 million, $76.8 million, $49.1 million, $21.5 million and $28.7 million
at December 31, 2018 and June 30, 2018, 2017, 2016, 2015 and 2014, respectively.
|
Contractual Maturities.
The
following tables set forth the contractual maturities of our total loan portfolio at June 30, 2018. Demand loans, loans having
no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. The table presents
contractual maturities and does not reflect repricing or the effect of prepayments. Actual maturities may differ.
|
June 30, 2018
|
|
Commercial
Real Estate
|
|
|
Commercial
and Industrial
|
|
|
Commercial
Construction
(1)
|
|
|
One- to Four-
Family
Residential
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts due in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One year or less
|
|
$
|
33,001
|
|
|
$
|
109,554
|
|
|
$
|
7,996
|
|
|
$
|
330
|
|
|
More than one to five years
|
|
|
115,694
|
|
|
|
58,546
|
|
|
|
40,887
|
|
|
|
2,657
|
|
|
More than five years
|
|
|
227,157
|
|
|
|
26,083
|
|
|
|
35,686
|
|
|
|
246,648
|
|
|
Total
|
|
$
|
375,852
|
|
|
$
|
194,183
|
|
|
$
|
84,569
|
|
|
$
|
249,635
|
|
|
|
(1)
|
Includes commercial construction loans that convert to commercial real estate loans upon completion of the construction phase.
|
|
June 30, 2018
|
|
Home Equity
Loans and Lines
of Credit
|
|
|
Consumer
|
|
|
Total
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts due in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One year or less
|
|
$
|
122
|
|
|
$
|
12,505
|
|
|
$
|
163,508
|
|
|
More than one to five years
|
|
|
2,447
|
|
|
|
1,964
|
|
|
|
222,196
|
|
|
More than five years
|
|
|
75,717
|
|
|
|
508
|
|
|
|
611,798
|
|
|
Total
|
|
$
|
78,286
|
|
|
$
|
14,977
|
|
|
$
|
997,502
|
|
The following table sets forth our fixed
and adjustable-rate loans at June 30, 2018 that are contractually due after June 30, 2019.
|
|
|
Due After June 30, 2019
|
|
|
|
|
Fixed
|
|
|
Adjustable
|
|
|
Total
|
|
|
|
|
(In thousands)
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
$
|
78,694
|
|
|
$
|
264,157
|
|
|
$
|
342,851
|
|
|
Commercial and industrial
|
|
|
50,864
|
|
|
|
33,765
|
|
|
|
84,629
|
|
|
Commercial construction
|
|
|
4,636
|
|
|
|
71,937
|
|
|
|
76,573
|
|
|
One- to four-family residential real estate
|
|
|
224,241
|
|
|
|
25,064
|
|
|
|
249,305
|
|
|
Home equity loans and lines of credit
|
|
|
46,302
|
|
|
|
31,862
|
|
|
|
78,164
|
|
|
Consumer
|
|
|
1,738
|
|
|
|
734
|
|
|
|
2,472
|
|
|
Total loans
|
|
$
|
406,475
|
|
|
$
|
427,519
|
|
|
$
|
833,994
|
|
Commercial Real Estate Loans
.
At December 31, 2018, we had $379.5 million in commercial real estate loans, representing 36.5% of our total loan portfolio. Our
commercial real estate loans are secured primarily by office buildings, industrial facilities, retail facilities, multi-family
properties and other commercial properties, substantially all of which are located in our primary market area. At December 31,
2018, multi-family residential real estate loans, which are described below, totaled $62.9 million. Excluding multi-family loans,
$96.3 million of our commercial real estate portfolio was owner-occupied real estate and $220.2 million was secured by income producing,
or non-owner-occupied real estate.
We generally originate commercial real estate
loans with maximum terms of 10 years based on a 20-year amortization schedule, and loan-to-value ratios of up to 80% (or 75% for
non-owner occupied) of the appraised value of the property. Our typical commercial real estate loan has an adjustable rate which
generally adjusts every five years that is indexed to the five-year Federal Home Loan Bank of New York amortizing advance indications,
plus a margin, subject to an interest rate floor. All of our commercial real estate loans are subject to our underwriting procedures
and guidelines, including requiring borrowers to generally have cash infusions of at least 10% of the loan amount or project cost
and that properties with a loan in excess of $500,000 are subject to biennial inspections to verify if appropriate maintenance
is being performed. At December 31, 2018, our largest commercial real estate loan totaled $9.5 million and was secured by an office
building located in our primary market area. At December 31, 2018, this loan was performing in accordance with its original terms.
We consider a number of factors in originating
commercial real estate loans. We evaluate the qualifications and financial condition of the borrower (including credit history),
profitability and expertise, as well as the value and condition of the mortgaged property securing the loan. When evaluating the
qualifications of the borrower, we consider the financial resources of the borrower, the borrower’s experience in owning
or managing similar property and the borrower’s payment history with us and other financial institutions. In evaluating the
property securing the loan, the factors we consider include the net operating income of the mortgaged property before debt service
and depreciation, the debt service coverage ratio (the ratio of net operating income to debt service) to ensure that it is at least
120% of the monthly debt service and the ratio of the loan amount to the appraised value of the mortgaged property. Our commercial
real estate loans are generally appraised by outside independent appraisers approved by the board of trustees. Personal guarantees
are often obtained from commercial real estate borrowers. The borrower’s financial information on such loans is monitored
on an ongoing basis by requiring periodic financial statement updates.
Loans secured by commercial real estate
generally are larger than one- to four-family residential loans and involve greater credit risk. Commercial real estate loans often
involve large loan balances to a single borrower or a group of related borrowers. Repayment of these loans depends to a large degree
on the results of operations and management of the properties securing the loans or the businesses conducted on such property and
may be affected to a greater extent by adverse conditions in the real estate market or the economy in general. As a result, the
nature of these loans makes them more difficult for management to monitor and evaluate.
At December 31, 2018, multi-family real
estate loans, which we consider a sub-category of commercial real estate loans, totaled $62.9 million, or 16.6% of our commercial
real estate loan portfolio. Our multi-family real estate loans are generally secured by properties consisting of five to 100 rental
units within our market area. We originate a variety of adjustable-rate multi-family residential real estate loans with terms and
amortization periods generally of up to 25 years (or 30 years if the age of the collateral is less than 10 years old), which may
include balloon payments. Interest rates and payments on our adjustable-rate loans adjust generally every five years and generally
are indexed to the comparable Federal Home Loan Bank of New York amortizing advance indications, plus a margin. At December 31,
2018, our largest multi-family residential real estate loan had an outstanding balance of $7.6 million and is secured by an apartment
complex located in our primary market area. At December 31, 2018, this loan was performing according to its original terms.
In underwriting multi-family residential
real estate loans, we consider several factors, which include a debt service coverage ratio of at least 120%, the age and condition
of the collateral, the financial resources and income level of the borrower and the borrower’s experience in owning or managing
similar properties. Multi-family residential real estate loans have loan-to-value ratios of up to 80% of the appraised value of
the property securing the loans. The borrower’s financial information on such loans is monitored on an ongoing basis by requiring
periodic financial statement updates.
If we foreclose on a multi-family real estate
loan, the marketing and liquidation period to convert the real estate to cash can be a lengthy process with substantial holding
costs. In addition, vacancies, deferred maintenance, repairs and market stigma can result in prospective buyers expecting sale
price concessions to offset their real or perceived economic losses for the time it takes them to return the property to profitability.
Commercial and Industrial Loans.
We
originate commercial loans and variable lines of credit to a variety of small and medium sized businesses in our market area. These
loans are generally secured by accounts receivable, inventory or other business assets, and we may support this collateral with
liens on real property. At December 31, 2018, commercial and industrial loans totaled $183.3 million, or 17.6% of our total loan
portfolio. Customers for these loans include professional businesses, family-owned businesses and not for profit businesses. As
part of our relationship-driven focus, we generally require our commercial borrowers to maintain a deposit account with us, which
improves our interest rate spread, margin and overall profitability.
Commercial lending products include revolving
lines of credit and term loans. Our commercial lines of credit are typically made with adjustable interest rates, indexed to either
LIBOR or
The Wall Street Journal
Prime Rate, plus a margin, and we can demand repayment of the borrowed amount due at any
time. Term loans are generally made with fixed interest rates, indexed to the comparable Federal Home Loan Bank of New York amortizing
advance indications, plus a margin, and are for terms up to 10 years. We focus our efforts on experienced, growing small- to medium-sized,
privately-held companies with solid operating history and projected cash flow that operate in our market area. At December 31,
2018, our largest commercial and industrial loan had an outstanding balance of $15.7 million secured by receivables and other business
assets. At December 31, 2018, this loan was performing according to its original terms.
When making commercial and industrial loans,
we consider the financial statements of the borrower, our lending history with the borrower, the debt service capabilities of the
borrower, the projected cash flows of the business and the value of the collateral, accounts receivable, inventory and equipment.
Depending on the collateral used to secure the loans, commercial and industrial loans are made in amounts of up to 75% of the value
of the collateral securing the loan. We generally do not make unsecured commercial and industrial loans. Personal guarantees are
often obtained from commercial and industrial borrowers.
Commercial and industrial loans generally
have greater credit risk than residential real estate loans. Unlike residential real estate loans, which generally are made on
the basis of the borrower’s ability to make repayment from his or her employment or other income, and which are secured by
real property whose value tends to be more easily ascertainable, commercial and industrial loans generally are made on the basis
of the borrower’s ability to repay the loan from the cash flow of the borrower’s business. As a result, the availability
of funds for the repayment of commercial and industrial loans may depend substantially on the success of the business itself. Further,
any collateral securing the loans may depreciate over time, may be difficult to appraise and may fluctuate in value. We try to
minimize these risks through our underwriting standards.
Commercial Construction Loans.
We originate loans primarily to established local developers to finance the construction of commercial and multi-family properties
or to acquire land for development of commercial and multi-family properties and to fund infrastructure improvements. We also provide
construction loans primarily to local developers for the construction of one- to four-family residential developments. We also
originate rehabilitation loans, enabling a borrower to partially or totally refurbish an existing structure, which are structured
as construction loans and monitored in the same manner. At December 31, 2018, commercial construction loans totaled $95.8 million,
or 9.2% of our total loan portfolio. Most of these loans are secured by properties located in our primary market area. We also
had undrawn amounts on the commercial construction loans totaling $84.0 million at December 31, 2018.
Our commercial construction loans are generally
interest-only loans that provide for the payment of interest during the construction phase, which is usually up to 12 to 24 months.
The interest rate is generally a variable rate based on an index rate, typically
The Wall Street Journal
Prime Rate or LIBOR,
plus a margin. At the end of the construction phase, the loan generally converts to a permanent commercial real estate mortgage
loan, but in some cases it may be payable in full. However, our construction loans for the construction of one- to four-family
residential developments do not convert to permanent residential real estate loans. Loans can be made with a maximum loan-to-value
ratio of 75% of the appraised market value upon completion of the project.
Before making a commitment to fund a commercial
construction loan, we require an appraisal of the property by an independent licensed appraiser. The construction phase is carefully
monitored to minimize our risk. All construction projects must be completed in accordance with approved plans and approved by the
municipality in which they are located. Loan proceeds are disbursed periodically in increments as construction progresses and as
inspections by our approved inspectors warrant.
At December 31, 2018, our largest construction
loan was a multi-family construction project located in our primary market area and had an outstanding balance of $7.2 million.
At December 31, 2018, this loan was performing according to its original terms.
One- to Four-Family Residential Real
Estate Lending
.
At December 31, 2018, $279.8 million, or 26.9%, of our total loan portfolio consisted of one- to four-family
residential real estate loans. In January 2016, we entered into a strategic partnership with an unaffiliated mortgage banking company
to outsource our residential mortgage loan originations, underwriting and closing processes. As a result, we no longer process
this type of loan in-house, and instead residential mortgage loans are processed through the mortgage banking company. Pioneer
Bank has no ownership interest in this company or any common employees or directors. The mortgage banking company’s staff
receives the loan referral from us and then handles the underwriting, processing and closing of the loan. One- to four-family residential
real estate loans are funded by the mortgage banking company with an option for Pioneer Bank to purchase the loan upon funding.
Through our relationship with the mortgage banking company, we can assist applicants in obtaining financing from the mortgage banking
company, but we are not required to commit to purchase or portfolio any loan originated by the mortgage banking company. The decision
whether to acquire each loan is made at the time the borrower’s application is submitted to the mortgage banking company
and must generally comply with general guidelines that we have approved; however our goal is to purchase loans so long as they
meet our underwriting standards. We may also purchase one- to four-family residential real estate loans from the mortgage banking
company from customers who were not referred to the mortgage banking company.
For each purchased loan, we generally pay
a fixed aggregate fee to the mortgage banking company of 1.75% of the loan balance. This fixed aggregate fee is paid by us regardless
of whether the loan was originated by the mortgage banking company directly or due to our customer referral. We receive no fee
for referring a customer to the mortgage banking company. For the six months ended December 31, 2018, we purchased for our portfolio
$44.0 million of loans originated through the mortgage banking company. For the year ended June 30, 2018, we purchased for our
portfolio $71.9 million of loans originated through the mortgage banking company. As part of purchasing the loans, we typically
acquire the servicing rights to the loans in order to best assist the customer relationship. The purchased loans are acquired from
the mortgage banking company without recourse or any right against the mortgage banking company to require a loan to be repurchased
from us. The fixed aggregate fee we pay to acquire the loan and servicing rights are deferred as part of the loan balance and amortized
over the contractual life of the loan under the interest method.
We purchase for our portfolio both fixed-rate
single-family mortgage loans, as well as adjustable-rate single-family loans, with maturities up to 30 years. At December 31, 2018,
our one- to four-family residential real estate loans consisted of $232.4 million of fixed-rate loans and $47.4 million of adjustable-rate
loans. Most of these one- to four-family residential properties are located in our primary market area and many are underwritten
according to Fannie Mae guidelines. We refer to loans that conform to the Fannie Mae guidelines as “conforming loans.”
We also purchase for our portfolio loans above the maximum conforming loan limits as established by the Office of Federal Housing
Enterprise Oversight, which at December 31, 2018 was $484,350 for single-family homes in our market area. Loans that exceed that
limit are considered “jumbo loans.” At December 31, 2018, we had $51.1 million in jumbo loans.
Our purchased loans generally adhere to
the following guidelines: (1) the loan is an owner-occupied one- to four- family residential real estate loan; (2) the loan does
not provide for negative amortization of principal, such as “Option Arm” loans, where the borrower can pay less than
the interest owed on the loan, resulting in an increased principal balance during the life of the loan; (3) the loan is not an
“interest only” mortgage loan; (4) the maximum loan term is 30 years; (5) the loan has a loan-to-value ratio up to
a maximum of 90%, provided, however, that the loan-to-value ratio may exceed 90% as long as the borrower obtains private mortgage
insurance; and (6) the borrower has a maximum debt-to-income ratio of 45%. We may, at our discretion, decide not to purchase a
loan based on the income level of the borrower, the appraisal or any other information that is obtained in originating the loan.
We do not purchase any “subprime loans” (loans that are made with low down-payments to borrowers with weakened credit
histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable
repayment capacity as evidenced by low credit scores or high debt-burden ratios) or Alt-A loans (defined as loans having less than
full documentation).
Our purchased adjustable-rate residential
real estate loans have interest rates that are fixed for an initial period ranging from one to 10 years. After the initial fixed
period, the interest rate on adjustable-rate residential real estate loans is generally reset every year based upon a contractual
spread or margin above the average yield on U.S. Treasury securities or LIBOR, adjusted to a constant maturity of one year, as
published weekly by the Federal Reserve Board, subject to periodic and lifetime limitations on interest rate changes. All of our
adjustable-rate residential real estate loans with initial fixed-rate periods of one, five, seven or 10 years have initial and
periodic caps of 2% on interest rate changes, with a current cap of 5% over the life of the loan.
Home Equity Loans and Lines of Credit.
We offer home equity loans and home equity lines of credit, both of which are secured by either first mortgages or second mortgages
on owner occupied, one- to four-family residences. At December 31, 2018, outstanding home equity loans and equity lines of credit
totaled $79.7 million, or 7.7% of total loans outstanding. At December 31, 2018, the unadvanced portion of home equity
lines of credit totaled $37.9 million.
The underwriting standards used for home
equity loans and home equity lines of credit include a title review, the recordation of a lien, a determination of the applicant’s
ability to satisfy existing debt obligations and payments on the proposed loan, and the value of the collateral securing the loan.
The loan-to-value ratio for our home equity loans and our lines of credit is generally limited to 80% when combined with the first
security lien, if applicable. Home equity loans are offered with fixed rates of interest and with terms of up to 20 years. Our
home equity lines of credit generally have 25-year terms and adjustable rates of interest, subject to a contractual floor, which
are indexed to
The Wall Street Journal
Prime Rate.
Home equity loans and lines of credit secured
by junior mortgages have greater risk than one- to four-family residential mortgage loans secured by first mortgages. At December
31, 2018, $29.2 million of our home equity loans and lines of credit were in a junior lien position, nearly all of which were second
mortgages. We face the risk that the collateral will be insufficient to compensate us for loan losses and costs of foreclosure,
after repayment of the senior mortgages, if applicable. When customers default on their loans, we attempt to foreclose on the property
and resell the property as soon as possible to minimize foreclosure and carrying costs. However, the value of the collateral may
not be sufficient to compensate us for the amount of the unpaid loan and we may be unsuccessful in recovering the remaining balance
from those customers.
Consumer Loans
.
We offer a
limited range of consumer loans, principally to customers residing in our primary market area with other relationships with us
and with acceptable credit ratings. Our consumer loans primarily consist of personal loans to the owners of certain commercial
businesses who have commercial loans with us, and to a lesser extent, loans on automobiles and overdraft accounts. At December
31, 2018, consumer loans were $22.2 million, or 2.1% of our total loan portfolio.
Consumer loans may entail greater risk than
residential real estate loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate
rapidly, such as motor vehicles. Repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment
for the outstanding loan and a small remaining deficiency often does not warrant further substantial collection efforts against
the borrower. Consumer loan collections depend on the borrower’s continuing financial stability, and therefore are likely
to be adversely affected by various factors, including job loss, divorce, illness or personal bankruptcy. Furthermore, the application
of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be
recovered on such loans.
Originations, Purchases, Participations and Sales of Loans
Lending activities are conducted by our
loan personnel operating at our main and branch office locations. We also obtain referrals from existing or past customers and
from accountants, real estate brokers, builders and attorneys. All loans that we originate or purchase are underwritten pursuant
to our policies and procedures, which incorporate Fannie Mae underwriting guidelines to the extent applicable for residential loans.
We originate both adjustable-rate and fixed-rate loans. Our ability to originate fixed or adjustable-rate loans depends upon the
relative customer demand for such loans, which is affected by current market interest rates as well as anticipated future market
interest rates. Our loan origination and purchase activity may be adversely affected by a rising interest rate environment, which
typically results in decreased loan demand.
We generally do not purchase whole loans
from third parties other than the one- to four-family residential real estate loans described above. However, we sell participations
in loans to other financial institutions in which we generally act as the lead lender. Through our loan participations, we and
the other participating lenders generally share ratably in cash flows and any gains or losses that may result from a borrower’s
noncompliance with the contractual terms of the loan. We primarily participate in commercial real estate loans (including multi-family
real estate loans), commercial and industrial loans and commercial construction loans. From time to time, we may purchase participation
interests in loans where we are not the lead lender. We underwrite our participation interest in the loans that we purchase according
to our own underwriting criteria and procedures. At December 31, 2018, the outstanding balances of our loan participations where
we are not the lead lender totaled $64.7 million, of which $26.5 million were commercial or multi-family real estate loans, $23.0
million were commercial and industrial loans and $15.2 million were commercial construction loans.
Loan Approval Procedures and Authority
Pursuant to New York law, the aggregate
amount of loans that Pioneer Bank is permitted to make to any one borrower or a group of related borrowers is generally limited
to 15% of Pioneer Bank’s capital, surplus fund and undivided profits (25% if the amount in excess of 15% is secured by “readily
marketable collateral”). At December 31, 2018, based on the 15% limitation, Pioneer Bank’s loans-to-one-borrower limit
was approximately $20.4 million. On the same date, Pioneer Bank had no borrowers with outstanding balances in excess of this amount.
Our regulatory limit will increase following completion of the offering. At December 31, 2018, our largest loan relationship with
one borrower was for $16.4 million, which was secured by various real estate properties in our primary market area, and the underlying
loan was performing in accordance with its terms on that date.
Our lending is subject to written underwriting
standards and origination procedures. Decisions on residential loan applications are made on the basis of detailed applications
submitted by the prospective borrower, credit histories that we obtain, and property valuations (consistent with our appraisal
policy) prepared by outside independent licensed appraisers approved by our board of trustees as well as internal evaluations,
where permitted by regulations. The loan applications are designed primarily to determine the borrower’s ability to repay
the requested loan, and the more significant items on the application are verified through use of credit reports, bank statements
and tax returns.
Purchases of residential real estate loans
up to $750,000 from the unaffiliated mortgage banking company must be approved by one of the following officers: the President
and Chief Executive Officer, Chief Lending Officer, Chief Financial Officer, Chief Administrative Officer, Retail Lending Officer
or the Retail Loan Servicing Officer. Purchases of residential real estate loans greater than $750,000 must be approved by our
board loan committee, which is comprised of each member of the board of trustees.
For commercial loans, loans in excess of
the commercial officers’ lending limits require approval from our staff loan committee, which is comprised of the President
and Chief Executive Officer, Chief Financial Officer, Chief Lending Officer, Chief Risk Officer, Commercial Senior Vice Presidents,
Commercial Vice Presidents and Commercial Loan Officers. The staff loan committee can approve individual loans of up to prescribed
limits, depending on the type of the loan. Loans in excess of the Staff Loan Committee’s loan approval authority require
the approval of our board of trustees. Specifically, commercial real estate loans in excess of $6.0 million, commercial lines of
credit in excess of $2.0 million and commercial loans with a new customer relationship in excess of $1.0 million must be approved
by our board of trustees.
Certain loans that involve policy exceptions
must be approved by our board of trustees.
We require title insurance on our mortgage
loans as well as fire and extended coverage casualty insurance in amounts at least equal to the principal amount of the loan or
the value of improvements on the property, depending on the type of loan.
Delinquencies and Asset Quality
Delinquency Procedures.
System-generated
late notices are mailed to a borrower after the late payment “grace period,” which is 15 days in the case of all loans
secured by residential or commercial real estate and 15 days in the case of commercial and industrial and most consumer loans.
A second notice will be mailed to a borrower if the loan remains past due after 30 days, and we attempt to contact the borrower
and develop a plan of repayment. By the 90
th
day of delinquency, we will issue a pre-foreclosure notice that will require
the borrower to bring the loan current within 30 days in order to avoid the beginning of foreclosure proceedings for loans secured
by residential real estate. Commercial real estate, commercial and industrial, commercial construction and consumer loans are managed
on a loan by loan basis. Decisions to send a demand notice are based on conversations with the borrower to address the delinquency
issues. A report of all loans 30 days or more past due is provided to the board of trustees monthly.
Loans Past Due and Non-Performing
Assets
.
Loans are reviewed on a regular basis. Management determines that a loan is impaired or non-performing
when it is probable that at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration
in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral dependent. When
a loan is determined to be impaired, the measurement of the loan in the allowance for loan losses is based on the present value
of expected future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of
the collateral. Non-accrual loans are loans for which collectability is questionable and, therefore, interest on such loans will
no longer be recognized on an accrual basis. All loans that become 90 days or more delinquent are placed on non-accrual status
unless the loan is well secured and in the process of collection. When loans are placed on non-accrual status, unpaid accrued interest
is fully reversed, and further income is recognized only to the extent received on a cash basis or cost recovery method.
When we acquire real estate as a result
of foreclosure, the real estate is classified as real estate owned. The real estate owned is recorded at the lower of carrying
amount or fair market value, less estimated costs to sell. Any excess of the recorded value of the loan over the fair market value
of the property is charged against the allowance for loan losses, or, if the existing allowance is inadequate, charged to expense
in the current period. After acquisition, all costs incurred in maintaining the property are expensed. Costs relating to
the development and improvement of the property, however, are capitalized to the extent of estimated fair value less estimated
costs to sell.
A loan is classified as a troubled debt
restructuring if, for economic or legal reasons related to the borrower’s financial difficulties, we grant a concession to
the borrower that we would not otherwise consider. This usually includes a modification of loan terms, such as a reduction of the
interest rate to below market terms, capitalizing past due interest or extending the maturity date and possibly a partial forgiveness
of the principal amount due. Interest income on restructured loans is accrued after the borrower demonstrates the ability to pay
under the restructured terms through a sustained period of repayment performance, which is generally six consecutive months.
Delinquent Loans
. The following
tables set forth our loan delinquencies, including non-accrual loans, by type and amount at the dates indicated.
|
|
|
|
|
|
At June 30,
|
|
|
|
|
At December 31, 2018
|
|
|
2018
|
|
|
2017
|
|
|
|
|
30-59
Days
Past Due
|
|
|
60-89
Days
Past Due
|
|
|
90 Days
or More
Past Due
|
|
|
30-59
Days
Past Due
|
|
|
60-89
Days
Past Due
|
|
|
90 Days
or More
Past Due
|
|
|
30-59
Days
Past Due
|
|
|
60-89
Days
Past Due
|
|
|
90 Days
or More
Past Due
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
5,487
|
|
|
$
|
634
|
|
|
$
|
21
|
|
|
$
|
2,416
|
|
|
$
|
476
|
|
|
$
|
2,135
|
|
|
$
|
2,599
|
|
|
Commercial and industrial
|
|
|
—
|
|
|
|
—
|
|
|
|
136
|
|
|
|
1,346
|
|
|
|
—
|
|
|
|
705
|
|
|
|
61
|
|
|
|
—
|
|
|
|
7
|
|
|
Commercial construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
205
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
One- to four-family residential
real estate
|
|
|
824
|
|
|
|
56
|
|
|
|
4,645
|
|
|
|
715
|
|
|
|
685
|
|
|
|
5,066
|
|
|
|
1,080
|
|
|
|
399
|
|
|
|
3,908
|
|
|
Home equity loans and
lines of credit
|
|
|
379
|
|
|
|
235
|
|
|
|
1,446
|
|
|
|
205
|
|
|
|
305
|
|
|
|
1,300
|
|
|
|
462
|
|
|
|
58
|
|
|
|
1,028
|
|
|
Consumer
|
|
|
9
|
|
|
|
—
|
|
|
|
27
|
|
|
|
7
|
|
|
|
1
|
|
|
|
24
|
|
|
|
101
|
|
|
|
100
|
|
|
|
354
|
|
|
Total
|
|
$
|
1,217
|
|
|
$
|
291
|
|
|
$
|
11,741
|
|
|
$
|
3,112
|
|
|
$
|
1,012
|
|
|
$
|
9,511
|
|
|
$
|
2,180
|
|
|
$
|
2,692
|
|
|
$
|
7,896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
30-59
Days
Past Due
|
|
|
60-89
Days
Past Due
|
|
|
90 Days
or More
Past Due
|
|
|
30-59
Days
Past Due
|
|
|
60-89
Days
Past Due
|
|
|
90 Days
or More
Past Due
|
|
|
30-59
Days
Past Due
|
|
|
60-89
Days
Past Due
|
|
|
90 Days
or More
Past Due
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
$
|
256
|
|
|
$
|
535
|
|
|
$
|
1,480
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,593
|
|
|
$
|
130
|
|
|
$
|
108
|
|
|
$
|
993
|
|
|
Commercial and industrial
|
|
|
—
|
|
|
|
5
|
|
|
|
59
|
|
|
|
—
|
|
|
|
62
|
|
|
|
25
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,057
|
|
|
Commercial construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
44
|
|
|
One- to four-family residential
real estate
|
|
|
1,188
|
|
|
|
7
|
|
|
|
3,270
|
|
|
|
1,233
|
|
|
|
41
|
|
|
|
3,188
|
|
|
|
353
|
|
|
|
557
|
|
|
|
2,869
|
|
|
Home equity loans and
lines of credit
|
|
|
205
|
|
|
|
212
|
|
|
|
1,192
|
|
|
|
191
|
|
|
|
184
|
|
|
|
1,016
|
|
|
|
508
|
|
|
|
80
|
|
|
|
531
|
|
|
Consumer
|
|
|
314
|
|
|
|
144
|
|
|
|
300
|
|
|
|
127
|
|
|
|
139
|
|
|
|
441
|
|
|
|
224
|
|
|
|
186
|
|
|
|
468
|
|
|
Total
|
|
$
|
1,963
|
|
|
$
|
903
|
|
|
$
|
6,301
|
|
|
$
|
1,551
|
|
|
$
|
426
|
|
|
$
|
6,263
|
|
|
$
|
1,215
|
|
|
$
|
931
|
|
|
$
|
5,962
|
|
Non-Performing Assets.
The table below sets forth the amounts and categories of our non-performing assets at the
dates indicated. Non-accrual loans include non-accruing troubled debt restructurings of $210,000, $235,000, $2.1 million, $768,000,
$836,000 and $1.6 million as of December 31, 2018 and as of June 30, 2018, 2017, 2016, 2015 and 2014, respectively.
|
|
|
At
December 31,
|
|
|
At June 30,
|
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-accrual loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
real estate
|
|
$
|
2,233
|
|
|
$
|
2,236
|
|
|
$
|
2,375
|
|
|
$
|
1,386
|
|
|
$
|
1,304
|
|
|
$
|
932
|
|
|
Commercial and industrial
|
|
|
96
|
|
|
|
705
|
|
|
|
3
|
|
|
|
59
|
|
|
|
25
|
|
|
|
1,057
|
|
|
Commercial construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
44
|
|
|
One- to four-family
residential real estate
|
|
|
4,645
|
|
|
|
3,834
|
|
|
|
3,325
|
|
|
|
2,874
|
|
|
|
2,912
|
|
|
|
2,621
|
|
|
Home equity loans and
lines of credit
|
|
|
1,433
|
|
|
|
970
|
|
|
|
899
|
|
|
|
955
|
|
|
|
678
|
|
|
|
479
|
|
|
Consumer
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
non-accrual loans
|
|
|
8,407
|
|
|
|
7,745
|
|
|
|
6,602
|
|
|
|
5,274
|
|
|
|
4,919
|
|
|
|
5,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accruing loans past
due 90 days or more:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
3,254
|
|
|
|
180
|
|
|
|
225
|
|
|
|
95
|
|
|
|
289
|
|
|
|
61
|
|
|
Commercial and industrial
|
|
|
40
|
|
|
|
—
|
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
One- to four-family
residential real estate
|
|
|
—
|
|
|
|
1,232
|
|
|
|
583
|
|
|
|
395
|
|
|
|
276
|
|
|
|
248
|
|
|
Home equity loans and
lines of credit
|
|
|
13
|
|
|
|
330
|
|
|
|
129
|
|
|
|
237
|
|
|
|
339
|
|
|
|
52
|
|
|
Consumer
|
|
|
27
|
|
|
|
24
|
|
|
|
354
|
|
|
|
300
|
|
|
|
441
|
|
|
|
468
|
|
|
Total
accruing loans past due 90 days or more
|
|
|
3,334
|
|
|
|
1,766
|
|
|
|
1,295
|
|
|
|
1,027
|
|
|
|
1,345
|
|
|
|
829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate owned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
391
|
|
|
|
347
|
|
|
Commercial and industrial
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
One- to four-family
residential real estate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
177
|
|
|
|
—
|
|
|
Home equity loans and
lines of credit
|
|
|
55
|
|
|
|
72
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Consumer
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
real estate owned
|
|
|
55
|
|
|
|
72
|
|
|
|
—
|
|
|
|
—
|
|
|
|
568
|
|
|
|
347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
non-performing assets
|
|
$
|
11,796
|
|
|
$
|
9,583
|
|
|
$
|
7,897
|
|
|
$
|
6,301
|
|
|
$
|
6,832
|
|
|
$
|
6,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accruing troubled
debt restructured loans
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,418
|
|
|
$
|
1,518
|
|
|
$
|
1,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing
loans to total loans
|
|
|
1.13
|
%
|
|
|
0.95
|
%
|
|
|
0.84
|
%
|
|
|
0.79
|
%
|
|
|
0.91
|
%
|
|
|
0.94
|
%
|
|
Total non-performing
assets to total assets
|
|
|
0.92
|
%
|
|
|
0.75
|
%
|
|
|
0.70
|
%
|
|
|
0.63
|
%
|
|
|
0.78
|
%
|
|
|
0.77
|
%
|
For the six months ended December 31, 2018,
gross interest income that would have been recorded had our non-accruing loans been current in accordance with their original terms
was $231,000. Interest income recognized on such loans for the six months ended December 31, 2018 was 2,000.
For the year ended June 30, 2018, gross
interest income that would have been recorded had our non-accruing loans been current in accordance with their original terms was
$332,000. Interest income recognized on such loans for the year ended June 30, 2018 was 23,000.
During the six months ended December 31,
2018, accruing loans past due 90 days or more increased primarily with respect to one commercial real estate loan totaling $3.2
million. The $3.2 million commercial real estate loan became non-accruing subsequent to December 31, 2018.
Classified Assets
.
Federal
regulations provide for the classification of loans and other assets, such as debt and equity securities considered to be of lesser
quality, as “substandard,” “doubtful” or “loss.” An asset is considered “substandard”
if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.
“Substandard” assets include those characterized by the “distinct possibility” that the insured institution
will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all
of the weaknesses inherent in those classified “substandard,” with the added characteristic that the weaknesses present
make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly
questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and
of such little value that their continuance as assets without the establishment of a specific loss allowance is not warranted.
Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned
categories but possess weaknesses are designated as “special mention.”
When an insured institution classifies problem
assets as either substandard or doubtful, it may establish general allowances in an amount deemed prudent by management to cover
probable accrued losses. General allowances represent loss allowances which have been established to cover probable accrued losses
associated with lending activities, but which, unlike specific allowances, have not been allocated to particular problem assets.
When an insured institution classifies problem assets as “loss,” it is required either to establish a specific allowance
for losses equal to 100% of that portion of the asset so classified or to charge-off such amount. An institution’s determination
as to the classification of its assets and the amount of its valuation allowances is subject to review by the regulatory authorities,
which may require the establishment of additional general or specific loss allowances.
The following table sets forth our amounts
of classified loans and loans designated as special mention as of December 31, 2018 and as of June 30, 2018, 2017 and 2016. The
classified loans total at December 31, 2018 includes $8.4 million of non-performing loans.
|
|
|
At
December 31,
|
|
|
At June 30,
|
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Classification of Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Substandard
|
|
$
|
9,720
|
|
|
$
|
10,016
|
|
|
$
|
8,764
|
|
|
$
|
10,077
|
|
|
Doubtful
|
|
|
—
|
|
|
|
659
|
|
|
|
412
|
|
|
|
488
|
|
|
Loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total Classified Loans
|
|
$
|
9,720
|
|
|
$
|
10,675
|
|
|
$
|
9,176
|
|
|
$
|
10,565
|
|
|
Special Mention
|
|
$
|
8,617
|
|
|
$
|
3,330
|
|
|
$
|
7,320
|
|
|
$
|
2,551
|
|
At December 31, 2018, we had one borrower
relationship identified as special mention with an aggregate principal balance totaling $4.7 million consisting of four commercial
and industrial loans and one commercial real estate loan and another borrower relationship identified as special mention with an
aggregate principal balance of $1.6 million consisting of one commercial construction loan and one commercial real estate loan.
Allowance for Loan Losses
The allowance for loan losses is maintained
at a level which, in management’s judgment, is adequate to absorb probable credit losses inherent in the loan portfolio.
The amount of the allowance is based on management’s evaluation of the collectability of the loan portfolio, including the
nature of the portfolio, credit concentrations, trends in historical loss experience, specific impaired loans, and economic conditions.
Allowances for loans that are individually classified as impaired are generally determined based on collateral values or the present
value of estimated cash flows. Because of uncertainties associated with national and regional economic conditions, collateral values,
and future cash flows on impaired loans, it is reasonably possible that management’s estimate of probable credit losses inherent
in the loan portfolio and the related allowance may change materially in the near-term. The allowance is increased by a provision
for loan losses, which is charged to expense and reduced by full and partial charge-offs, net of recoveries. Changes in the allowance
relating to impaired loans are charged or credited to the provision for loan losses. Management’s periodic evaluation of
the adequacy of the allowance is based on various factors, including, but not limited to, historical loss experience, current economic
conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial
strength of the borrower, results of internal loan reviews and other qualitative and quantitative factors which could affect potential
credit losses.
In addition, the NYSDFS and the Federal
Deposit Insurance Corporation periodically review our allowance for loan losses and as a result of such reviews, we may have to
adjust our allowance for loan losses or recognize further loan charge-offs.
The following table sets forth activity
in our allowance for loan losses for the periods indicated.
|
|
|
At or for the
Six Months Ended
December 31,
|
|
|
At or for the Years Ended June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance at beginning of
period
|
|
$
|
13,510
|
|
|
$
|
11,820
|
|
|
$
|
11,820
|
|
|
$
|
9,794
|
|
|
$
|
9,011
|
|
|
$
|
9,103
|
|
|
$
|
8,588
|
|
|
Provision for loan losses
|
|
|
1,210
|
|
|
|
950
|
|
|
|
1,970
|
|
|
|
2,395
|
|
|
|
1,180
|
|
|
|
962
|
|
|
|
890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge offs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
—
|
|
|
|
121
|
|
|
|
121
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
Commercial and industrial
|
|
|
1,046
|
|
|
|
53
|
|
|
|
53
|
|
|
|
38
|
|
|
|
169
|
|
|
|
757
|
|
|
|
153
|
|
|
Commercial construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
One- to four-family residential real estate
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
148
|
|
|
|
118
|
|
|
|
169
|
|
|
|
84
|
|
|
Home equity loans and lines of credit
|
|
|
—
|
|
|
|
—
|
|
|
|
17
|
|
|
|
104
|
|
|
|
57
|
|
|
|
70
|
|
|
|
46
|
|
|
Consumer
|
|
|
90
|
|
|
|
87
|
|
|
|
152
|
|
|
|
165
|
|
|
|
160
|
|
|
|
139
|
|
|
|
194
|
|
|
Total
charge-offs
|
|
|
1,136
|
|
|
|
262
|
|
|
|
343
|
|
|
|
455
|
|
|
|
504
|
|
|
|
1,135
|
|
|
|
481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoveries:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10
|
|
|
|
7
|
|
|
|
13
|
|
|
Commercial and industrial
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5
|
|
|
|
5
|
|
|
|
—
|
|
|
|
7
|
|
|
Commercial construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
One- to four-family residential real estate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
Home equity loans and lines of credit
|
|
|
—
|
|
|
|
2
|
|
|
|
3
|
|
|
|
15
|
|
|
|
14
|
|
|
|
2
|
|
|
|
3
|
|
|
Consumer
|
|
|
16
|
|
|
|
27
|
|
|
|
60
|
|
|
|
66
|
|
|
|
78
|
|
|
|
72
|
|
|
|
81
|
|
|
Total
recoveries
|
|
|
16
|
|
|
|
29
|
|
|
|
63
|
|
|
|
86
|
|
|
|
107
|
|
|
|
81
|
|
|
|
106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
charge-offs
|
|
|
1,120
|
|
|
|
233
|
|
|
|
280
|
|
|
|
369
|
|
|
|
397
|
|
|
|
1,054
|
|
|
|
375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance at end
of period
|
|
$
|
13,600
|
|
|
$
|
12,537
|
|
|
$
|
13,510
|
|
|
$
|
11,820
|
|
|
$
|
9,974
|
|
|
$
|
9,011
|
|
|
$
|
9,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance to non-performing
loans
|
|
|
115.83
|
%
|
|
|
160.05
|
%
|
|
|
142.05
|
%
|
|
|
149.68
|
%
|
|
|
155.44
|
%
|
|
|
143.85
|
%
|
|
|
152.68
|
%
|
|
Allowance to total loans
outstanding at the end of the period
|
|
|
1.31
|
%
|
|
|
1.28
|
%
|
|
|
1.35
|
%
|
|
|
1.25
|
%
|
|
|
1.23
|
%
|
|
|
1.31
|
%
|
|
|
1.43
|
%
|
|
Net charge-offs to average
loans outstanding during the period
|
|
|
0.22
|
%
(1)
|
|
|
0.05
|
%
(1)
|
|
|
0.03
|
%
|
|
|
0.04
|
%
|
|
|
0.05
|
%
|
|
|
0.16
|
%
|
|
|
0.06
|
%
|
During the six months ended December 31,
2018, our total charge-offs of $1.1 million were primarily related to partial charge-offs of two commercial and industrial loan
relationships totaling $1.0 million secured by accounts receivable and business assets. At June 30, 2018, the allowance for loan
losses included specific reserves totaling $1.0 million for these two impaired commercial and industrial loan relationships.
Allocation of Allowance for Loan Losses.
The following tables set forth the allowance for loan losses allocated by loan category and the percent of the allowance
in each category to the total allocated allowance at the dates indicated. The allowance for loan losses allocated to each category
is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb
losses in other categories.
|
|
|
|
|
|
At June 30,
|
|
|
|
|
At December 31, 2018
|
|
|
2018
|
|
|
2017
|
|
|
|
|
Allowance
for Loan
Losses
|
|
|
Percent of
Allowance
in Category
to Total
Allocated
Allowance
|
|
|
Percent of
Loans in
Each
Category to
Total Loans
|
|
|
Allowance
for Loan
Losses
|
|
|
Percent of
Allowance
in Category
to Total
Allocated
Allowance
|
|
|
Percent of
Loans in
Each
Category to
Total Loans
|
|
|
Allowance
for Loan
Losses
|
|
|
Percent of
Allowance
in Category
to Total
Allocated
Allowance
|
|
|
Percent of
Loans in
Each
Category to
Total Loans
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
$
|
5,574
|
|
|
|
41.0
|
%
|
|
|
36.5
|
%
|
|
$
|
5,254
|
|
|
|
38.9
|
%
|
|
|
37.7
|
%
|
|
$
|
5,978
|
|
|
|
50.6
|
%
|
|
|
42.3
|
%
|
|
Commercial and industrial
|
|
|
3,192
|
|
|
|
23.5
|
%
|
|
|
17.6
|
%
|
|
|
3,977
|
|
|
|
29.5
|
%
|
|
|
19.5
|
%
|
|
|
2,565
|
|
|
|
21.7
|
%
|
|
|
19.1
|
%
|
|
Commercial construction
|
|
|
1,296
|
|
|
|
9.5
|
%
|
|
|
9.2
|
%
|
|
|
1,183
|
|
|
|
8.8
|
%
|
|
|
8.5
|
%
|
|
|
963
|
|
|
|
8.1
|
%
|
|
|
7.2
|
%
|
|
One- to four-family residential
real estate
|
|
|
2,459
|
|
|
|
18.1
|
%
|
|
|
26.9
|
%
|
|
|
2,166
|
|
|
|
16.0
|
%
|
|
|
25.0
|
%
|
|
|
1,427
|
|
|
|
12.1
|
%
|
|
|
21.5
|
%
|
|
Home equity loans and
lines of credit
|
|
|
800
|
|
|
|
5.9
|
%
|
|
|
7.7
|
%
|
|
|
770
|
|
|
|
5.7
|
%
|
|
|
7.8
|
%
|
|
|
740
|
|
|
|
6.3
|
%
|
|
|
8.1
|
%
|
|
Consumer
|
|
|
279
|
|
|
|
2.1
|
%
|
|
|
2.1
|
%
|
|
|
160
|
|
|
|
1.2
|
%
|
|
|
1.5
|
%
|
|
|
147
|
|
|
|
1.2
|
%
|
|
|
1.9
|
%
|
|
Total
|
|
$
|
13,600
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
$
|
13,510
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
$
|
11,820
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
Allowance
for Loan
Losses
|
|
|
Percent of
Allowance
in Category
to Total
Allocated
Allowance
|
|
|
Percent of
Loans in
Category to
Total Loans
|
|
|
Allowance
for Loan
Losses
|
|
|
Percent of
Allowance
in Category
to Total
Allocated
Allowance
|
|
|
Percent of
Loans in
Category to
Total Loans
|
|
|
Allowance
for Loan
Losses
|
|
|
Percent of
Allowance
in Category
to Total
Allocated
Allowance
|
|
|
Percent of
Loans in
Category to
Total Loans
|
|
|
|
|
(Dollars in thousands)
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
$
|
4,468
|
|
|
|
45.6
|
%
|
|
|
36.8
|
%
|
|
$
|
4,379
|
|
|
|
48.6
|
%
|
|
|
39.1
|
%
|
|
$
|
4,397
|
|
|
|
48.3
|
%
|
|
|
40.8
|
%
|
|
Commercial and industrial
|
|
|
1,795
|
|
|
|
18.3
|
%
|
|
|
15.5
|
%
|
|
|
1,601
|
|
|
|
17.8
|
%
|
|
|
14.9
|
%
|
|
|
2,106
|
|
|
|
23.1
|
%
|
|
|
13.9
|
%
|
|
Commercial construction
|
|
|
1,374
|
|
|
|
14.0
|
%
|
|
|
12.1
|
%
|
|
|
856
|
|
|
|
9.5
|
%
|
|
|
8.1
|
%
|
|
|
657
|
|
|
|
7.2
|
%
|
|
|
6.3
|
%
|
|
One- to four-family residential
real estate
|
|
|
1,390
|
|
|
|
14.2
|
%
|
|
|
24.8
|
%
|
|
|
1,445
|
|
|
|
16.0
|
%
|
|
|
25.2
|
%
|
|
|
1,258
|
|
|
|
13.8
|
%
|
|
|
25.6
|
%
|
|
Home equity loans and
lines of credit
|
|
|
625
|
|
|
|
6.4
|
%
|
|
|
8.7
|
%
|
|
|
608
|
|
|
|
6.7
|
%
|
|
|
10.1
|
%
|
|
|
554
|
|
|
|
6.1
|
%
|
|
|
10.5
|
%
|
|
Consumer
|
|
|
142
|
|
|
|
1.5
|
%
|
|
|
2.2
|
%
|
|
|
122
|
|
|
|
1.4
|
%
|
|
|
2.6
|
%
|
|
|
131
|
|
|
|
1.4
|
%
|
|
|
2.9
|
%
|
|
Total
|
|
$
|
9,794
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
$
|
9,011
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
$
|
9,103
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Investment Activities
General
. Our board of trustees
is responsible for approving and overseeing our investment policy. The investment policy is reviewed at least annually by the board
of trustees. This policy dictates that investment decisions be made based on the safety of the investment, liquidity requirements,
potential returns and consistency with our interest rate risk management strategy. Authorized officers, as selected by the board
of trustees, oversee our investing activities and strategies. The authorized officers include our President and Chief Executive
Officer, Chief Financial Officer/Treasurer and Vice President, Controller.
Our current investment policy authorizes
us to invest in various types of investment securities and liquid assets, including U.S. Treasury obligations, securities of various
government-sponsored enterprises, residential mortgage-backed securities and collateralized mortgage obligations, municipal securities,
deposits at the Federal Home Loan Bank of New York, corporate debt securities (limited to no more than 5% of total assets and no
more than 15% of our capital in any single issuer), common or preferred stock of a company trading on the Standard & Poor’s
500 Composite Index or if the company has $5.0 billion or greater in capitalization (limited to no more than 15% of our capital)
and common stock of a company with over $2.0 billion, but less than $5.0 billion, in capitalization (limited to less than 10% of
our investment portfolio). We do not engage in any investment hedging activities or trading activities, nor do we purchase any
high-risk mortgage derivative products, corporate junk bonds, and certain types of structured notes.
Debt and equity securities investment accounting
guidance requires that, at the time of purchase, we designate a security as held to maturity, available for sale, or trading, depending
on our ability and intent.
U.S. Governmental Securities.
We
maintain these investments, to the extent appropriate, for liquidity purposes, at zero risk weighting for capital purposes and
as collateral for borrowings. At December 31, 2018, U.S. Government securities consisted primarily of U.S. Treasury securities.
Collateralized Mortgage Obligations.
We
invest in fixed rate collateralized mortgage obligations (“CMOs”) issued by Ginnie Mae, Freddie Mac or Fannie Mae.
A CMO is a type of mortgage-backed security that creates separate pools of pass-through rates for different classes of bondholders
with varying maturities, called tranches. The repayments from the pool of pass-through securities are used to retire the bonds
in the order specified by the bonds’ prospectus.
Ginnie Mae is a government agency within
the Department of Housing and Urban Development and is intended to help finance government-assisted housing programs. Ginnie Mae
securities are backed by loans insured by the Federal Housing Administration, or guaranteed by the Veterans Administration. The
timely payment of principal and interest on Ginnie Mae securities is guaranteed by Ginnie Mae and backed by the full faith and
credit of the U.S. Government. Freddie Mac is a private corporation chartered by the U.S. Government. Freddie Mac issues participation
certificates backed principally by conventional mortgage loans. Freddie Mac guarantees the timely payment of interest and the ultimate
return of principal on participation certificates. Fannie Mae is a private corporation chartered by the U.S. government with a
mandate to establish a secondary market for mortgage loans. Fannie Mae guarantees the timely payment of principal and interest
on Fannie Mae securities.
Mortgage-Backed Securities.
We
invest in mortgage-backed securities insured or guaranteed by Ginnie Mae, Freddie Mac or Fannie Mae. We have not purchased privately-issued
mortgage-backed securities. We invest in mortgage-backed securities to achieve positive interest rate spreads with minimal administrative
expense, and to lower our credit risk as a result of the guarantees provided by Ginnie Mae, Freddie Mac or Fannie Mae.
Investments in mortgage-backed securities
involve a risk that actual payments will be greater or less than the prepayment rate estimated at the time of purchase, which may
require adjustments to the amortization of any premium or acceleration of any discount relating to such interests, thereby affecting
the net yield on our securities. We periodically review current prepayment speeds to determine whether prepayment estimates require
modification that could cause amortization or accretion adjustments. There is also reinvestment risk associated with the cash flows
from such securities or in the event such securities are redeemed by the issuer. In addition, the market value of such securities
may be adversely affected by changes in interest rates.
Municipal Securities.
We
invest in fixed-rate investment grade bonds issued primarily by municipalities in the State of New York.
Equity Securities.
Equity
securities are comprised of both common and preferred stock of companies in the financial, energy, health care, information technology,
consumer cyclicals, industrials, materials and utility sectors.
The following tables set forth the amortized
cost and estimated fair value of our securities portfolio (excluding Federal Home Loan Bank of New York common stock) at the dates
indicated.
|
|
|
At December 31,
|
|
|
At June 30,
|
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government
and agency obligations
|
|
$
|
83,538
|
|
|
$
|
83,420
|
|
|
$
|
58,743
|
|
|
$
|
58,558
|
|
|
$
|
42,967
|
|
|
$
|
42,919
|
|
|
$
|
61,915
|
|
|
$
|
62,172
|
|
|
Mortgage-backed securities
|
|
|
126
|
|
|
|
129
|
|
|
|
146
|
|
|
|
150
|
|
|
|
194
|
|
|
|
200
|
|
|
|
249
|
|
|
|
258
|
|
|
Asset-backed securities
|
|
|
102
|
|
|
|
144
|
|
|
|
115
|
|
|
|
162
|
|
|
|
140
|
|
|
|
261
|
|
|
|
172
|
|
|
|
292
|
|
|
Collateralized mortgage obligations
|
|
|
599
|
|
|
|
962
|
|
|
|
692
|
|
|
|
1,079
|
|
|
|
934
|
|
|
|
1,469
|
|
|
|
1,229
|
|
|
|
1,662
|
|
|
Municipal obligations
|
|
|
14,644
|
|
|
|
14,668
|
|
|
|
19,264
|
|
|
|
19,263
|
|
|
|
28,350
|
|
|
|
28,366
|
|
|
|
27,119
|
|
|
|
27,147
|
|
|
Preferred stocks
|
|
|
6,007
|
|
|
|
4,640
|
|
|
|
6,007
|
|
|
|
5,749
|
|
|
|
6,019
|
|
|
|
5,963
|
|
|
|
6,840
|
|
|
|
7,002
|
|
|
Common
stocks
|
|
|
2,809
|
|
|
|
3,181
|
|
|
|
2,541
|
|
|
|
3,102
|
|
|
|
2,762
|
|
|
|
2,797
|
|
|
|
2,478
|
|
|
|
2,418
|
|
|
Total
|
|
$
|
107,825
|
|
|
$
|
107,144
|
|
|
$
|
87,508
|
|
|
$
|
88,063
|
|
|
$
|
81,366
|
|
|
$
|
81,975
|
|
|
$
|
100,002
|
|
|
$
|
100,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
At June 30,
|
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal
obligations
|
|
$
|
4,275
|
|
|
$
|
4,292
|
|
|
$
|
5,297
|
|
|
$
|
5,326
|
|
|
$
|
2,213
|
|
|
$
|
2,259
|
|
|
$
|
3,811
|
|
|
$
|
3,811
|
|
|
Total
|
|
$
|
4,275
|
|
|
$
|
4,292
|
|
|
$
|
5,297
|
|
|
$
|
5,326
|
|
|
$
|
2,213
|
|
|
$
|
2,259
|
|
|
$
|
3,811
|
|
|
$
|
3,811
|
|
Portfolio Maturities and Yields.
The
composition and maturities of the investment securities portfolio at December 31, 2018 are summarized in the following table. Maturities
are based on the final contractual payment dates, and do not reflect the effect of scheduled principal repayments, prepayments,
or early redemptions that may occur. Equity securities are included in the one year or less category because they have no stated
maturity.
|
|
|
One Year or Less
|
|
|
More than One Year
through Five Years
|
|
|
More than Five Years
through Ten Years
|
|
|
More than Ten Years
|
|
|
Total
|
|
|
|
|
Amortized
Cost
|
|
|
Weighted
Average
Yield
|
|
|
Amortized
Cost
|
|
|
Weighted
Average
Yield
|
|
|
Amortized
Cost
|
|
|
Weighted
Average
Yield
|
|
|
Amortized
Cost
|
|
|
Weighted
Average
Yield
|
|
|
Amortized
Cost
|
|
|
Fair
Value
|
|
|
Weighted
Average
Yield
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government
and agency obligations
|
|
$
|
57,759
|
|
|
|
2.11
|
%
|
|
$
|
25,779
|
|
|
|
2.58
|
%
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
83,538
|
|
|
$
|
83,420
|
|
|
|
2.26
|
%
|
|
Mortgage-backed securities
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
2.60
|
%
|
|
|
52
|
|
|
|
2.90
|
%
|
|
|
73
|
|
|
|
2.99
|
%
|
|
|
126
|
|
|
|
129
|
|
|
|
2.95
|
%
|
|
Asset-backed securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
102
|
|
|
|
2.90
|
%
|
|
|
102
|
|
|
|
144
|
|
|
|
2.90
|
%
|
|
Collateralized mortgage
obligations
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
|
2.64
|
%
|
|
|
591
|
|
|
|
4.03
|
%
|
|
|
599
|
|
|
|
962
|
|
|
|
4.05
|
%
|
|
Municipal obligations
|
|
|
14,644
|
|
|
|
2.47
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,644
|
|
|
|
14,668
|
|
|
|
2.47
|
%
|
|
Preferred stocks
|
|
|
6,007
|
|
|
|
5.32
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,007
|
|
|
|
4,640
|
|
|
|
5.32
|
%
|
|
Common
stocks
|
|
|
2,809
|
|
|
|
3.13
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,809
|
|
|
|
3,181
|
|
|
|
3.13
|
%
|
|
Total
|
|
$
|
81,219
|
|
|
|
|
|
|
$
|
25,780
|
|
|
|
|
|
|
$
|
60
|
|
|
|
|
|
|
$
|
766
|
|
|
|
|
|
|
$
|
107,825
|
|
|
$
|
107,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Year or Less
|
|
|
More than One Year
through Five Years
|
|
|
More than Five Years
through Ten Years
|
|
|
More than Ten Years
|
|
|
Total
|
|
|
|
|
Amortized
Cost
|
|
|
Weighted
Average
Yield
|
|
|
Amortized
Cost
|
|
|
Weighted
Average
Yield
|
|
|
Amortized
Cost
|
|
|
Weighted
Average
Yield
|
|
|
Amortized
Cost
|
|
|
Weighted
Average
Yield
|
|
|
Amortized
Cost
|
|
|
Fair
Value
|
|
|
Weighted
Average
Yield
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal
obligations
|
|
$
|
4,100
|
|
|
|
3.28
|
%
|
|
$
|
50
|
|
|
|
2.54
|
%
|
|
$
|
125
|
|
|
|
5.49
|
%
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
4,275
|
|
|
$
|
4,275
|
|
|
|
3.34
|
%
|
|
Total
|
|
$
|
4,100
|
|
|
|
3.28
|
%
|
|
$
|
50
|
|
|
|
2.54
|
%
|
|
$
|
125
|
|
|
|
5.49
|
%
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
4,275
|
|
|
$
|
4,275
|
|
|
|
3.34
|
%
|
Sources of Funds
General.
Deposits have traditionally
been our primary source of funds for our lending and investment activities. We also use borrowings, primarily Federal Home Loan
Bank of New York advances, to supplement cash flows, as needed. In addition, funds are derived from scheduled loan payments, investment
maturities, loan sales, loan prepayments, retained earnings and income on earning assets. While scheduled loan payments and income
on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing
interest rates, market conditions and levels of competition.
Deposit Accounts.
The substantial
majority of our deposits are from depositors who reside in our primary market area. We access deposit customers by offering a broad
selection of deposit instruments for individuals businesses and municipalities. We generally request commercial business borrowers
to maintain their primary deposit accounts with us. At December 31, 2018, we had no brokered deposits, but our policy permits us
to access such funds if additional liquidity is necessary.
We also offer deposit accounts to municipalities.
Through our limited purpose subsidiary, Pioneer Commercial Bank, we held $216.5 million in municipal deposits, which represented
19.4% of our deposits at December 31, 2018. We have developed a program for the retention and management of municipal deposits.
These deposits are from local government entities such as towns, cities, school districts and other municipalities. We generally
solicit their operating and savings accounts and not time-based deposits. Municipal deposit accounts are collateralized by Federal
Home Loan Bank of New York letters of credit and by eligible government and government agency securities and municipal obligations.
We believe that municipal deposits provide a low cost and stable source of funds and we intend to continue to solicit these types
of funds.
Deposit account terms vary according to
the minimum balance required, the time period that funds must remain on deposit, and the interest rate, among other factors. In
determining the terms of our deposit accounts, we consider the rates offered by our competition, our liquidity needs, profitability,
and customer preferences and concerns. We generally review our deposit pricing on a monthly basis and continually review our deposit
mix. Our deposit pricing strategy has generally been to offer competitive rates, but generally not the highest rates offered in
the market, and to periodically offer special rates to attract deposits of a specific type or with a specific term.
The flow of deposits is influenced significantly
by general economic conditions, changes in money market and other prevailing interest rates and competition. The variety of deposit
accounts offered allows us to be competitive in obtaining funds and responding to changes in consumer demand. Based on experience,
we believe that our deposits are relatively stable. However, the ability to attract and maintain deposits and the rates paid on
these deposits, has been and will continue to be significantly affected by market conditions.
The following table sets forth the distribution of total deposits by account type at the dates indicated.
|
|
|
|
|
|
At June 30,
|
|
|
|
|
At December 31, 2018
|
|
|
2018
|
|
|
2017
|
|
|
|
|
Amount
|
|
|
Percent
|
|
|
Average
Rate
|
|
|
Amount
|
|
|
Percent
|
|
|
Average
Rate
|
|
|
Amount
|
|
|
Percent
|
|
|
Average
Rate
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing
demand accounts
|
|
$
|
356,291
|
|
|
|
32.0
|
%
|
|
|
—
|
|
|
$
|
345,048
|
|
|
|
30.0
|
%
|
|
|
—
|
|
|
$
|
275,374
|
|
|
|
27.3
|
%
|
|
|
—
|
|
|
Demand accounts
|
|
|
93,735
|
|
|
|
8.4
|
%
|
|
|
0.37
|
%
|
|
|
97,191
|
|
|
|
8.4
|
%
|
|
|
0.31
|
%
|
|
|
64,422
|
|
|
|
6.4
|
%
|
|
|
0.15
|
%
|
|
Savings accounts
|
|
|
243,970
|
|
|
|
21.9
|
%
|
|
|
0.05
|
%
|
|
|
244,050
|
|
|
|
21.2
|
%
|
|
|
0.05
|
%
|
|
|
243,621
|
|
|
|
24.1
|
%
|
|
|
0.05
|
%
|
|
Money market accounts
|
|
|
296,873
|
|
|
|
26.6
|
%
|
|
|
0.49
|
%
|
|
|
334,884
|
|
|
|
29.1
|
%
|
|
|
0.43
|
%
|
|
|
298,945
|
|
|
|
29.6
|
%
|
|
|
0.33
|
%
|
|
Certificates of deposit
|
|
|
124,090
|
|
|
|
11.1
|
%
|
|
|
1.53
|
%
|
|
|
129,089
|
|
|
|
11.2
|
%
|
|
|
1.29
|
%
|
|
|
127,664
|
|
|
|
12.6
|
%
|
|
|
1.04
|
%
|
|
Total
|
|
$
|
1,114,959
|
|
|
|
100.0
|
%
|
|
|
0.34
|
%
|
|
$
|
1,150,262
|
|
|
|
100.0
|
%
|
|
|
0.31
|
%
|
|
$
|
1,010,026
|
|
|
|
100.0
|
%
|
|
|
0.25
|
%
|
|
|
|
At June 30,
|
|
|
|
|
2016
|
|
|
|
|
Amount
|
|
|
Percent
|
|
|
Average
Rate
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing demand accounts
|
|
$
|
241,243
|
|
|
|
27.9
|
%
|
|
|
—
|
|
|
Demand accounts
|
|
|
47,024
|
|
|
|
5.4
|
%
|
|
|
0.14
|
%
|
|
Savings accounts
|
|
|
228,354
|
|
|
|
26.4
|
%
|
|
|
0.05
|
%
|
|
Money market accounts
|
|
|
224,927
|
|
|
|
26.0
|
%
|
|
|
0.25
|
%
|
|
Certificates of deposit
|
|
|
122,640
|
|
|
|
14.2
|
%
|
|
|
0.82
|
%
|
|
Total
|
|
$
|
864,188
|
|
|
|
100.00
|
%
|
|
|
0.20
|
%
|
As of December 31, 2018, the aggregate amount
of all our certificates of deposit in amounts greater than or equal to $100,000 was approximately $53.9 million. The following
table sets forth the maturity of these certificates as of December 31, 2018.
|
|
|
At
December 31, 2018
|
|
|
|
|
(In thousands)
|
|
|
Maturity Period:
|
|
|
|
|
|
Three months or less
|
|
$
|
7,303
|
|
|
Over three through six months
|
|
|
5,605
|
|
|
Over six through twelve months
|
|
|
10,155
|
|
|
Over twelve months
|
|
|
30,833
|
|
|
Total
|
|
$
|
53,896
|
|
Borrowings.
Our borrowings
consist of advances from the Federal Home Loan Bank of New York. At December 31, 2018, we had the ability to borrow approximately
$394.5 million under our credit facilities with the Federal Home Loan Bank of New York, of which $30.0 million was advanced. Borrowings
from the Federal Home Loan Bank of New York are secured by our investment in the common stock of the Federal Home Loan Bank of
New York as well as by a blanket pledge of our mortgage portfolio not otherwise pledged.
The following table sets forth information
concerning balances and interest rates on our borrowings at and for the periods shown:
|
|
|
At or For the Six Months
Ended December 31,
|
|
|
At or For the Year
Ended June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance outstanding at end of period
|
|
$
|
30,000
|
|
|
$
|
5,000
|
|
|
$
|
—
|
|
|
$
|
5,000
|
|
|
$
|
17,000
|
|
|
Weighted average interest rate at the end of period
|
|
|
2.64
|
%
|
|
|
1.53
|
%
|
|
|
—
|
|
|
|
1.13
|
%
|
|
|
0.59
|
%
|
|
Maximum amount of borrowings outstanding at any month end during the period
|
|
$
|
30,000
|
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
|
$
|
57,000
|
|
|
$
|
41,771
|
|
|
Average balance outstanding during the period
|
|
$
|
5,163
|
|
|
$
|
190
|
|
|
$
|
151
|
|
|
$
|
24,666
|
|
|
$
|
27,872
|
|
|
Weighted average interest rate during the period
|
|
|
2.67
|
%
|
|
|
1.05
|
%
|
|
|
1.32
|
%
|
|
|
0.77
|
%
|
|
|
0.53
|
%
|
Properties
As of December 31, 2018, the net book value
of our office properties was $35.0 million. The following table sets forth information regarding our offices.
|
Location
|
|
Leased or
Owned
|
|
Year Acquired
or Leased
|
|
Net Book Value of
Real Property
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Main Office:
|
|
|
|
|
|
|
|
|
652 Albany Shaker Road, Albany, NY 12211
|
|
Owned
(1)
|
|
2016
|
|
$
|
16,271
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Properties:
|
|
|
|
|
|
|
|
|
|
21 Second Street, Troy, NY 12180
|
|
Leased
|
|
2016
|
|
|
68
|
|
|
531 Troy-Schenectady Road, Latham, NY 12110
|
|
Owned
|
|
2008
|
|
|
1,989
|
|
|
2000 Second Avenue, Watervliet, NY 12189
|
|
Leased
|
|
2017
|
|
|
149
|
|
|
1828 Altamont Avenue, Schenectady, NY 12305
|
|
Owned
|
|
2012
|
|
|
1,953
|
|
|
1208 Route 146, Clifton Park, NY 12065
|
|
Leased
|
|
1995
|
|
|
15
|
|
|
10 Kendall Way, Malta, NY 12020
|
|
Owned
|
|
2016
|
|
|
1,424
|
|
|
78 Main Avenue, Wynantskill, NY 12198
|
|
Owned
|
|
2014
|
|
|
1,908
|
|
|
712 Hoosick Street, Brunswick, NY 12180
|
|
Owned
|
|
2015
|
|
|
1,734
|
|
|
329 Glenmont Road, Glenmont, NY 12077
|
|
Leased
|
|
2014
|
|
|
240
|
|
|
142 Saratoga Avenue, Waterford, NY 12188
|
|
Owned
|
|
2015
|
|
|
1,277
|
|
|
1761 Central Avenue, Albany, NY 12205
|
|
Leased
|
|
2018
|
|
|
—
|
|
|
602 North Greenbush Road, Rensselaer, NY 12144
|
|
Leased
|
|
2017
|
|
|
300
|
|
|
90 State Street, Albany, NY 12207
|
|
Leased
|
|
2013
|
|
|
254
|
|
|
1881-1883 Western Avenue, Albany, NY 12203
|
|
Owned
|
|
2018
|
|
|
4,953
|
|
|
184 Delaware Avenue, Delmar, NY 12054
|
|
Owned
|
|
2010
|
|
|
965
|
|
|
843 Route 146, Clifton Park, NY 12065
|
|
Leased
|
|
2012
|
|
|
221
|
|
|
426 State Street, Schenectady, NY 12305
|
|
Leased
|
|
2014
|
|
|
255
|
|
|
440 Main Street, Cairo, NY 12413
|
|
Owned
|
|
2016
|
|
|
365
|
|
|
11565 NY-32, Greenville, NY 12083
|
|
Leased
|
|
2016
|
|
|
42
|
|
|
739 Upper Glen Street, Queensbury, NY 12804
|
|
Leased
|
|
2017
|
|
|
79
|
|
|
100 Mohawk Street, Cohoes, NY 12047
|
|
Owned
|
|
2017
|
|
|
556
|
|
|
|
(1)
|
The property is subject to a ground lease.
|
We believe that the current facilities are
adequate to meet our present and foreseeable needs, subject to possible future expansion.
Subsidiaries
Pioneer Commercial Bank.
Pioneer
Commercial Bank is a New York-chartered limited-purpose commercial bank wholly owned by Pioneer Bank. Pioneer Bank incorporated
Pioneer Commercial Bank in October 2004 in order to be able to accept municipal deposits. New York State prohibits a savings bank
from soliciting and servicing public funds (deposits of counties, cities, towns, school districts, etc.). The limited-purpose commercial
bank subsidiary has enabled us to establish banking relationships with municipalities and other public entities throughout our
market area. At December 31, 2018, Pioneer Commercial Bank had $239.2 million in assets, consisting primarily of cash and municipal
obligations. Pioneer Commercial Bank is subject to comprehensive regulation by the NYSDFS, as its chartering authority, and by
the Federal Deposit Insurance Corporation. All disclosures in this prospectus relating to Pioneer Bank’s consolidated investments
and deposits include the investments and deposits that are held by Pioneer Commercial Bank.
Anchor Agency, Inc.
In 2016,
Pioneer Bank acquired Anchor Agency, Inc., a New York corporation and wholly-owned subsidiary of Pioneer Bank, which is a full-service
insurance agency offering personal and commercial insurance, including homeowners, automobile and comprehensive business insurance.
Anchor Agency, Inc. works with major national insurance companies as well as specialty markets. Anchor Agency, Inc. also offers
employee benefits products and consulting services under the name Pioneer Benefits Consulting, including group health, dental,
disability and life insurance products and defined contribution and defined benefit administration and human resource management
services. Anchor Agency, Inc. operates from Pioneer Bank’s headquarters in Albany, New York. Expansion into the insurance
and employee benefit services business has enabled Pioneer Bank to evolve from a traditional depository institution into a full-service
financial services organization. All disclosures in this prospectus relating to Pioneer Bank are consolidated to include the activities
of Anchor Agency, Inc.
Pioneer Financial Services, Inc.
Pioneer Financial Services, Inc., a New York corporation and wholly owned subsidiary of Pioneer Bank, provides wealth management
services to Pioneer Bank’s customers in partnership with LPL Financial, a registered broker dealer.
It
had $481.5 million of assets under management at December 31, 2018.
Pioneer Financial Services, Inc. operates from
Pioneer Bank’s headquarters in Albany, New York under the name Pioneer Wealth Management, and has licensed representatives
available in our branch offices.
Wealth management services provided by
Pioneer Financial Services, Inc.
to customers include investment
advice, retirement income planning, estate planning, business succession and employer retirement planning.
All disclosures
in this prospectus relating to Pioneer Bank are consolidated to include the activities of Pioneer Financial Services, Inc.
Legal Proceedings
We are not involved in any pending legal
proceedings as a defendant other than routine legal proceedings in the ordinary course of business. At December 31, 2018, we were
not involved in any legal proceedings the outcome of which would be material to our financial condition or results of operations.
Expense and Tax Allocation
Pioneer Bank will enter into an agreement
with Pioneer Bancorp, Inc. and Pioneer Bancorp, MHC to provide them with certain administrative support services for compensation
at not less than the fair market value of the services provided. In addition, Pioneer Bank and Pioneer Bancorp, Inc. will enter
into an agreement for allocating and reimbursing the payment of their consolidated tax liability.
Personnel
As of December 31, 2018, we had 250 full-time
employees and 17 part-time employees. Our employees are not represented by any collective bargaining group. Management believes
that we have good working relations with our employees.
SUPERVISION AND REGULATION
General
As a New York-chartered savings bank, Pioneer
Bank is subject to comprehensive regulation by the NYSDFS, as its chartering authority, and by the Federal Deposit Insurance Corporation.
Pioneer Bank is a member of the Federal Home Loan Bank of New York and its deposits are insured up to applicable limits by the
Federal Deposit Insurance Corporation. Pioneer Bank is required to file reports with, and is periodically examined by, the Federal
Deposit Insurance Corporation and the NYSDFS concerning its activities and financial condition and must obtain regulatory approvals
before entering into certain transactions, including mergers with or acquisitions of other financial institutions. This regulatory
structure is intended primarily for the protection of the insurance fund and depositors. The regulatory structure also gives the
regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies,
including policies regarding classifying assets and establishing an adequate allowance for loan losses for regulatory purposes.
As a New York-chartered mutual holding company,
Pioneer Bancorp, MHC will be regulated and subject to examination by the NYSDFS and the Federal Reserve Board. As a bank holding
company, Pioneer Bancorp, Inc. also will be required to comply with the rules and regulations of the Federal Reserve Board and
the NYSDFS. It will be required to file certain reports with the Federal Reserve Board and will be subject to examination by and
the enforcement authority of the Federal Reserve Board and the NYSDFS. Pioneer Bancorp, Inc. also will be subject to the rules
and regulations of the Securities and Exchange Commission under the federal securities laws.
Set forth below is a brief description of
material regulatory requirements that are or will be applicable to Pioneer Bank, Pioneer Bancorp, Inc. and Pioneer Bancorp, MHC.
The description is limited to certain material aspects of certain statutes and regulations that are addressed, and is not intended
to be a complete list or description of such statutes and regulations and their effects on Pioneer Bank, Pioneer Bancorp, Inc.
and Pioneer Bancorp, MHC.
New York Banking Laws and Supervision
Supervision and Enforcement Authority
.
Pioneer Bank, as a New York savings bank, is regulated and supervised by the NYSDFS. The NYSDFS is required to regularly examine
each state-chartered bank. The approval of the NYSDFS is required to establish or close branches, to merge with another bank, to
issue stock and to undertake many other activities. Any New York savings bank that does not operate according to the regulations,
policies and directives of the NYSDFS may be subject to sanctions for non-compliance, including seizure of the property and business
of the savings bank and suspension or revocation of its charter. The NYSDFS may, under certain circumstances, suspend or remove
officers or trustees who have violated the law, conducted the savings bank’s business in an unsafe or unsound manner or contrary
to the depositors’ interests, or have been negligent in the performance of their duties. In addition, upon finding that a
savings bank has engaged in an unfair or deceptive act or practice, the NYSDFS may issue an order to cease and desist and impose
a fine on the savings bank. The NYSDFS also has the authority to appoint a receiver or conservator if it determines that the savings
bank is conducting its business in an unsafe or unauthorized manner, and under certain other circumstances. New York consumer protection
and civil rights statutes applicable to Pioneer Bank permit private individual and class action law suits, and provide for the
rescission of consumer transactions, including loans, and the recovery of statutory and punitive damage and attorney’s fees
in the case of certain violations of those statutes.
The powers that New York-chartered savings
banks can exercise under these laws include the following:
Lending Activities.
A New
York-chartered savings bank may make a wide variety of mortgage loans including fixed-rate loans, adjustable-rate loans, participation
loans, construction and development loans, condominium and co-operative loans, second mortgage loans and other types of loans that
may be made according to applicable regulations. Commercial loans may be made to corporations and other commercial enterprises
with or without security. Consumer and personal loans may also be made with or without security.
Investment Activities.
In
general, Pioneer Bank may invest in certain types of debt securities (including certain corporate debt securities, and obligations
of federal, state, and local governments and agencies thereof), certain types of corporate equity securities, and certain other
assets. However, this investment authority is subject to restrictions under federal law. See “—Federal Bank Regulation—Investment
Activities” for such federal restrictions.
Dividends.
Under New York
banking law, Pioneer Bank may declare and pay dividends from its net profits, unless there is an impairment of capital. Additionally,
the approval of the NYSDFS is required if the total of all dividends declared in a calendar year would exceed the total of its
net profits for that year combined with its retained net profits of the preceding two years, subject to certain adjustments provided
for under applicable law.
Loans to Trustees and Executive Officers.
Under applicable New York Banking Law, Pioneer Bank may not make a loan or other extension of credit directly or indirectly to
any of its trustees or executive officers, except that Pioneer Bank may make a loan to an executive officer to become an owner
of real property so long as the loan is secured by either (1) a first mortgage or cooperative apartment unit loan, which the property
or apartment is to be occupied by the executive officer’s primary residence and is specifically approved in writing by the
board of trustees; or (2) a deposit maintained by the executive officer with Pioneer Bank. Following the conversion of Pioneer
Bank from mutual to stock form as part of the reorganization, the aforementioned lending restrictions would not apply to executive
officers and directors of Pioneer Bank, as a stock savings bank, so long as the Superintendent of the NYSDFS deems the restrictions
inapplicable.
NYSDFS cybersecurity rule.
Effective
March 1, 2017, the NYSDFS requires New York chartered banks
to establish and maintain a cybersecurity
program designed to protect consumers and ensure the safety and soundness of the bank. Specifically, NYSDFS requires regulated
financial institutions to establish a cybersecurity program; adopt a written cybersecurity policy; designate a Chief Information
Security Officer responsible for implementing, overseeing and enforcing its new program and policy; and have policies and procedures
designed to ensure the security of information systems and nonpublic information accessible to, or held by, third-parties, along
with a variety of other requirements to protect the confidentiality, integrity and availability of information systems.
Federal Bank Regulation
Recent Regulatory
Reform
.
On May 24, 2018, The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 (the “Regulatory
Relief Act”) was enacted, which repeals or modifies certain provisions of the Dodd-Frank Act and eases regulations on all
but the largest banks. The Regulatory Relief Act’s provisions include, among other things: (i) exempting banks with less
than $10 billion in assets from the ability-to-repay requirements for certain qualified residential mortgage loans held in portfolio;
(ii) not requiring appraisals for certain transactions valued at less than $400,000 in rural areas; (iii) exempting banks that
originate fewer than 500 open-end and 500 closed-end mortgages from HMDA’s expanded data disclosures; (iv) clarifying that,
subject to various conditions, reciprocal deposits of another depository institution obtained using a deposit broker through a
deposit placement network for purposes of obtaining maximum deposit insurance would not be considered brokered deposits subject
to the Federal Deposit Insurance Corporation’s brokered-deposit regulations; (v) raising eligibility for the 18-month exam
cycle from $1 billion to banks with $3 billion in assets; (vi) allowing qualifying federal savings banks to elect to operate with
the same powers available to a national bank; and (vii) simplifying capital calculations by requiring regulators to establish for
institutions under $10 billion in assets a community bank leverage ratio (tangible equity to average consolidated assets) at a
percentage not less than 8% and not greater than 10% that such institutions may elect to replace the generally applicable leverage
and risk-based capital requirements and the capital ratio for determining well-capitalized status.
Supervision and Enforcement Authority
.
Pioneer Bank is subject to extensive regulation, examination and supervision by the Federal Deposit Insurance Corporation as
the insurer of its deposits. This regulatory structure is intended primarily for the protection of the insurance fund and depositors.
Pioneer Bank must file reports with the
Federal Deposit Insurance Corporation concerning its activities and financial condition in addition to obtaining regulatory approvals
before entering into certain transactions such as mergers with, or acquisitions of, other financial institutions. There are periodic
examinations by the Federal Deposit Insurance Corporation to evaluate Pioneer Bank’s safety and soundness and compliance
with various regulatory requirements.
The regulatory structure also gives the
Federal Deposit Insurance Corporation extensive discretion in connection with its supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and the establishment of an adequate allowance for loan
losses for regulatory purposes. The enforcement authority includes, among other things, the ability to assess civil money penalties,
issue cease and desist orders and remove trustees and officers. In general, these enforcement actions may be initiated in response
to violations of laws and regulations, breaches of fiduciary duty and unsafe or unsound practices. The Federal Deposit Insurance
Corporation may also appoint itself as conservator or receiver for an insured bank under specified circumstances, including: (i) insolvency;
(ii) substantial dissipation of assets or earnings through violations of law or unsafe or unsound practices; (iii) existence
of an unsafe or unsound condition to transact business; (iv) insufficient capital; or (v) the incurrence of losses that will
deplete substantially all of the institution’s capital with no reasonable prospect of replenishment without federal assistance.
Capital Requirements.
Under
Federal Deposit Insurance Corporation regulations, Pioneer Bank is subject to a comprehensive capital framework for U.S. banking
organizations that was established in July 2013 (the Basel III capital rules), subject to phase-in periods for certain components
and other provisions.
The capital standards require the maintenance
of common equity Tier 1 capital, Tier 1 capital and total capital to risk-weighted assets of at least 4.5%, 6% and 8%, respectively,
and a leverage ratio of at least 4% Tier 1 capital. Common equity Tier 1 capital is generally defined as common stockholders’
equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and Additional Tier 1 capital. Additional
Tier 1 capital generally includes certain noncumulative perpetual preferred stock and related surplus and minority interests in
equity accounts of consolidated subsidiaries. Total capital includes Tier 1 capital (common equity Tier 1 capital plus Additional
Tier 1 capital) and Tier 2 capital. Tier 2 capital is comprised of capital instruments and related surplus meeting specified requirements,
and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate
preferred stock and subordinated debt. Also included in Tier 2 capital is the allowance for loan and lease losses limited to a
maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment
of Accumulated Other Comprehensive Income (“AOCI”), up to 45% of net unrealized gains on available-for-sale equity
securities with readily determinable fair market values. Institutions that have not exercised the AOCI opt-out have AOCI incorporated
into common equity Tier 1 capital (including unrealized gains and losses on available-for-sale-securities). Pioneer Bank exercised
the opt-out election regarding the treatment of AOCI. Calculation of all types of regulatory capital is subject to deductions and
adjustments specified in the regulations.
In determining the amount of risk-weighted
assets for purposes of calculating risk-based capital ratios, a bank’s assets, including certain off-balance sheet assets
(e.g., recourse obligations, direct credit substitutes, residual interests), are multiplied by a risk weight factor assigned by
the regulations based on perceived risks inherent in the type of asset. Higher levels of capital are required for asset categories
believed to present greater risk. For example, a risk weight of 0% is assigned to cash and U.S. government securities, a risk weight
of 50% is generally assigned to prudently underwritten first lien one- to four-family residential mortgages, a risk weight of 100%
is assigned to commercial and consumer loans, a risk weight of 150% is assigned to certain past due loans and a risk weight of
between 0% to 600% is assigned to permissible equity interests, depending on certain specified factors.
In addition to establishing the minimum
regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management
if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital
to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements. The capital conservation
buffer requirement began being phased in as of January 1, 2016 and was fully implemented at 2.5% on January 1, 2019.
The federal banking agencies, including
the Federal Deposit Insurance Corporation, have proposed a rule pursuant to the Regulatory Relief Act to establish for institutions
with assets of less than $10 billion a “community bank leverage ratio” (the ratio of a bank’s tangible equity
capital to average total consolidated assets) of 9% that such institutions may elect to utilize in lieu of the generally applicable
leverage and risk-based capital requirements under Basel III. A “qualifying community bank” with capital exceeding
9% will be considered compliant with all applicable regulatory capital and leverage requirements, including the requirement to
be “well capitalized.” The new community bank leverage ratio is subject to notice and comment by the public and has
not been finalized. Until the proposed rule is finalized, the Basel III risk-based and leverage ratios remain in effect.
The Federal Deposit Insurance Corporation
also has authority to establish individual minimum capital requirements in appropriate cases upon determination that an institution’s
capital level is, or is likely to become, inadequate in light of the particular circumstances. At December 31, 2018, Pioneer Bank
exceeded each of its capital requirements.
Standards for Safety and Soundness.
As required by statute, the federal banking agencies have adopted final regulations and Interagency Guidelines Establishing
Standards for Safety and Soundness. The guidelines set forth the safety and soundness standards the federal banking agencies use
to identify and address problems at insured depository institutions before capital becomes impaired. The guidelines address internal
controls and information systems, internal audit systems, credit underwriting, loan documentation, interest rate exposure, asset
growth, asset quality, earnings and compensation, fees and benefits. The agencies have also established standards for safeguarding
customer information. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed
by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with
the standard.
Investment Activities.
All
state-chartered savings banks insured by the Federal Deposit Insurance Corporation are generally limited in their investment activities
to principal and equity investments of the type and in the amount authorized for national banks, notwithstanding state law, subject
to certain exceptions. For example, state-chartered banks may, with Federal Deposit Insurance Corporation approval, continue to
exercise state authority to invest in common or preferred stocks listed on a national securities exchange or the Nasdaq Market
and to invest in the shares of an investment company registered under the Investment Company Act of 1940. The maximum permissible
investment is 100% of Tier 1 Capital, as specified by the Federal Deposit Insurance Corporation’s regulations, or the maximum
amount permitted by New York law, whichever is less.
In addition, the Federal Deposit Insurance
Corporation is authorized to permit state-chartered banks and savings banks to engage in state-authorized activities or investments
not permissible for national banks (other than non-subsidiary equity investments) if they meet all applicable capital requirements
and it is determined that such activities or investments do not pose a significant risk to the Deposit Insurance Fund. The Federal
Deposit Insurance Corporation has adopted procedures for institutions seeking approval to engage in such activities or investments.
In addition, a nonmember bank may control a subsidiary that engages in activities as principal that would only be permitted for
a national bank to conduct in a “financial subsidiary” if a bank meets specified conditions and deducts its investment
in the subsidiary for regulatory capital purposes.
Interstate Banking and Branching.
Federal law permits well capitalized and well managed bank holding companies to acquire banks in any state, subject to
Federal Reserve Board approval, certain concentration limits and other specified conditions. Interstate mergers of banks are also
authorized, subject to regulatory approval and other specified conditions. In addition, banks may establish de novo branches on
an interstate basis provided that interstate branching is authorized by the law of the host state for the banks chartered by that
state.
Prompt Corrective Regulatory Action.
Federal law requires, among other things, that federal bank regulatory authorities take “prompt corrective action”
with respect to banks that do not meet minimum capital requirements. For these purposes, the law establishes five capital categories:
well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.
The Federal Deposit Insurance Corporation
has adopted regulations to implement the prompt corrective action legislation. An institution is considered “well capitalized”
if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, a leverage
ratio of 5.0% or greater and a common equity Tier 1 ratio of 6.5% or greater. An institution is “adequately capitalized”
if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage
ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater. An institution is “undercapitalized”
if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio
of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%. An institution is “significantly undercapitalized”
if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-based capital ratio of less than 4.0%, a leverage ratio
of less than 3.0% or a common equity Tier 1 ratio of less than 3.0%. An institution is “critically undercapitalized”
if it has a ratio of tangible equity (as defined in the regulations) to total assets equal to or less than 2.0%. At December 31,
2018, Pioneer Bank was classified as a “well capitalized” institution.
At each successive lower capital category,
an insured depository institution is subject to more restrictions and prohibitions, including restrictions on growth, interest
rates paid on deposits, payment of dividends, and acceptance of brokered deposits. Furthermore, if an insured depository institution
is classified in one of the undercapitalized categories, it is required to submit a capital restoration plan to the appropriate
federal banking agency, and the holding company must guarantee the performance of that plan. Based upon its capital levels, a bank
that is classified as well-capitalized, adequately capitalized, or undercapitalized may be treated as though it were in the next
lower capital category if the appropriate federal banking agency, after notice and opportunity for hearing, determines that an
unsafe or unsound condition, or an unsafe or unsound practice, warrants such treatment. An undercapitalized bank’s compliance
with a capital restoration plan is required to be guaranteed by any company that controls the undercapitalized institution in an
amount equal to the lesser of 5.0% of the institution’s total assets when deemed undercapitalized or the amount necessary
to achieve the status of adequately capitalized. If an “undercapitalized” bank fails to submit an acceptable plan,
it is treated as if it is “significantly undercapitalized.” “Significantly undercapitalized” banks must
comply with one or more of a number of additional restrictions, including an order by the Federal Deposit Insurance Corporation
to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets, cease receipt of deposits
from correspondent banks or dismiss directors or officers, and restrictions on interest rates paid on deposits, compensation of
executive officers and capital distributions by the parent holding company. “Critically undercapitalized” institutions
are subject to additional measures including, subject to a narrow exception, the appointment of a receiver or conservator within
270 days after it is determined to be critically undercapitalized.
As noted above, the Regulatory Relief Act
has eliminated the Basel III requirements for banks with less than $10.0 billion in assets who elect to follow the community bank
leverage ratio once the rule is finalized. The Federal Deposit Insurance Corporation’s proposed rule provides that a bank
will be well-capitalized with a community bank leverage ratio of 9% or greater, adequately capitalized with a community bank leverage
ratio of 7.5% or greater, undercapitalized if a bank’s community bank leverage ratio is less than 7.5% and greater than or
equal to 6% and significantly undercapitalized if a bank’s community bank leverage ratio is less than 6%. The definition
of critically undercapitalized is unchanged from the current regulations.
Transaction with Affiliates and Regulation
W of the Federal Reserve Regulations.
Transactions between banks and their affiliates are governed by federal law. Generally,
Section 23A of the Federal Reserve Act and the Federal Reserve Board’s Regulation W limit the extent to which a bank or its
subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10.0% of the bank’s
capital stock and surplus, and with all transactions with all affiliates to an amount equal to 20.0% of the bank’s capital
stock and surplus. Section 23B applies to “covered transactions” as well as to certain other transactions and requires
that all such transactions be on terms substantially the same, or at least as favorable, to the institution or subsidiary as those
provided to a non-affiliate. The term “covered transaction” includes making loans to, purchasing assets from, and issuing
guarantees to, an affiliate, and other similar transactions. Section 23B transactions also include the bank’s providing services
and selling assets to an affiliate. In addition, loans or other extensions of credit by a bank to an affiliate are required to
be collateralized according to the requirements set forth in Section 23A of the Federal Reserve Act.
Sections 22(g) and (h) of the Federal
Reserve Act place restrictions on loans to a bank’s insiders, i.e., executive officers, directors and principal stockholders.
Under Section 22(h) of the Federal Reserve Act, loans to a director, an executive officer and to a greater than 10.0% stockholder
of a financial institution, and certain affiliated interests of these persons, together with all other outstanding loans to such
persons and affiliated interests, may not exceed specified limits. Section 22(h) of the Federal Reserve Act also requires
that loans to directors, executive officers and principal stockholders be made on terms substantially the same as offered in comparable
transactions to other persons and also requires prior board approval for certain loans. In addition, the aggregate amount of extensions
of credit by a financial institution to insiders cannot exceed the institution’s unimpaired capital and surplus. Section 22(g)
of the Federal Reserve Act places additional restrictions on loans to executive officers.
Federal Insurance of Deposit Accounts.
Pioneer Bank is a member of the Deposit Insurance Fund, which is administered by the Federal Deposit Insurance Corporation.
Deposit accounts in Pioneer Bank are insured up to a maximum of $250,000 for each separately insured depositor. Insurance of deposits
may be terminated by the Federal Deposit Insurance Corporation upon a finding that the institution has engaged in unsafe or unsound
practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule order
or regulatory condition imposed in writing. We do not know of any practice, condition or violation that might lead to termination
of Pioneer Bank’s deposit insurance.
Privacy Regulations.
Federal
Deposit Insurance Corporation regulations generally require that Pioneer Bank disclose its privacy policy, including identifying
with whom it shares a customer’s “non-public personal information,” to customers at the time of establishing
the customer relationship and annually thereafter. In addition, Pioneer Bank is required to provide its customers with the ability
to “opt-out” of having their personal information shared with unaffiliated third parties and to not disclose account
numbers or access codes to non-affiliated third parties for marketing purposes.
Community Reinvestment Act.
Under
the Community Reinvestment Act, or CRA, as implemented by Federal Deposit Insurance Corporation, a state non-member bank has a
continuing and affirmative obligation, consistent with its safe and sound operation, to help meet the credit needs of its entire
community, including low- and moderate-income neighborhoods. The CRA does not establish specific lending requirements or programs
for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that
it believes are best suited to its particular community, consistent with the CRA. The CRA requires the Federal Deposit Insurance
Corporation, in connection with its examination of each state non-member bank, to assess the institution’s record of meeting
the credit needs of its community and to take such record into account in its evaluation of certain applications by such institution,
including applications to acquire branches and other financial institutions. The CRA requires the Federal Deposit Insurance Corporation
to provide a written evaluation of an institution’s CRA performance utilizing a four-tiered descriptive rating system. Pioneer
Bank’s latest Federal Deposit Insurance Corporation CRA rating in October 2017 was “Satisfactory.”
New York has its own statutory counterpart
to the CRA, which is applicable to Pioneer Bank. New York law requires the NYSDFS to consider a bank’s record of performance
under New York law in considering any application by the bank to establish a branch or other deposit-taking facility, to relocate
an office or to merge or consolidate with or acquire the assets and assume the liabilities of any other banking institution. Pioneer
Bank’s most recent rating under New York law was “Outstanding.”
Consumer Protection and Fair Lending
Regulations.
Pioneer Bank is subject to a variety of federal and New York statutes and regulations that are intended to
protect consumers and prohibit discrimination in the granting of credit. These statutes and regulations provide for a range of
sanctions for non-compliance with their terms, including imposition of administrative fines and remedial orders, and referral to
the Attorney General for prosecution of a civil action for actual and punitive damages and injunctive relief. Certain of these
statutes,
including Section 5 of the Federal Trade Commission Act, which
prohibits unfair and deceptive acts and practices against consumers,
authorize private individual and class action lawsuits
and the award of actual, statutory and punitive damages and attorneys’ fees for certain types of violations.
New
York’s Attorney General has vigorously enforced fair lending and other consumer protection laws. Federal laws also prohibit
unfair, deceptive or abusive acts or practices against consumers, which can be enforced by the Consumer Financial Protection Bureau,
the Federal Deposit Insurance Corporation and state Attorneys General.
Federal Reserve System
Federal Reserve Board regulations require
depository institutions to maintain non-interest-earning reserves against their transaction accounts (primarily NOW and regular
checking accounts). The regulations generally require that reserves be maintained against aggregate transaction accounts as follows:
for that portion of transaction accounts aggregating $124.2 million or less (which may be adjusted by the Federal Reserve Board)
the reserve requirement is 3.0% and the amounts greater than $124.2 million require a 10.0% reserve (which may be adjusted annually
by the Federal Reserve Board to between 8.0% and 14.0%). The first $16.3 million of otherwise reservable balances (which may be
adjusted by the Federal Reserve Board) are exempted from the reserve requirements. Pioneer Bank is in compliance with these requirements.
Federal Home Loan Bank System
Pioneer Bank is a member of the Federal
Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks. The Federal Home Loan Banks provide a central credit
facility primarily for member institutions. Pioneer Bank, as a member of the Federal Home Loan Bank of New York, is required to
acquire and hold shares of capital stock in the Federal Home Loan Bank of New York. Pioneer Bank was in compliance with this requirement
at December 31, 2018.
Holding Company Regulation
Federal Holding Company Regulation
.
Upon completion of the reorganization, Pioneer Bancorp, MHC and Pioneer Bancorp, Inc. will be bank holding companies and will be
registered with the Federal Reserve Board and be subject to regulations, examination, supervision and reporting requirements applicable
to bank holding companies. In addition, the Federal Reserve Board will have enforcement authority over Pioneer Bancorp, MHC and
Pioneer Bancorp, Inc. and their non-savings bank subsidiaries. Among other things, this authority permits the Federal Reserve Board
to restrict or prohibit activities that are determined to be a serious risk to the subsidiary savings bank.
A bank holding company is generally prohibited
from engaging in non-banking activities, or acquiring direct or indirect control of more than 5% of the voting securities of any
company engaged in non-banking activities. One of the principal exceptions to this prohibition is for activities the Federal Reserve
Board determines to be so closely related to banking or managing or controlling banks as to be a proper incident thereto. Some
of the principal activities that the Federal Reserve Board has determined by regulation to be so closely related to banking are:
(1) making or servicing loans; (2) performing certain data processing services; (3) providing discount brokerage services;
(4) acting as fiduciary, investment or financial advisor; (5) leasing personal or real property; (6) making investments in corporations
or projects designed primarily to promote community welfare; and (7) acquiring a savings and loan association whose direct and
indirect activities are limited to those permitted for bank holding companies.
The Gramm-Leach-Bliley Act of 1999 authorizes
a bank holding company that meets specified conditions, including that its depository institution subsidiaries are “well
capitalized” and “well managed,” to opt to become a “financial holding company.” A “financial
holding company” may engage in a broader array of financial activities than permitted a typical bank holding company. Such
activities can include insurance underwriting and investment banking. Pioneer Bancorp, Inc. will elect “financial holding
company” status in connection with the reorganization.
Capital.
The Federal Reserve
Board must establish for all bank and savings and loan holding companies minimum consolidated capital requirements that are as
stringent as those required for their insured depository subsidiaries. Pursuant to the Regulatory Relief Act, bank holding companies
with less than $3.0 billion in consolidated assets generally are not subject to the capital requirements unless otherwise advised
by the Federal Reserve Board.
Dividends and Stock Repurchases.
A bank holding company is generally required to give the Federal Reserve Board prior written notice of any purchase or redemption
of then outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration
paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company’s consolidated
net worth. The Federal Reserve Board may disapprove such a purchase or redemption if it determines that the proposal would constitute
an unsafe and unsound practice, or would violate any law, regulation, Federal Reserve Board order or directive, or any condition
imposed by, or written agreement with, the Federal Reserve Board. There is an exception to this approval requirement for well-capitalized
bank holding companies that meet certain other conditions.
The Federal Reserve Board has issued a policy
statement regarding capital distributions, including dividends, by bank holding companies. In general, the policy provides that
dividends should be paid only from current earnings and only if the prospective rate of earnings retention by the bank holding
company appears consistent with the organization’s capital needs, asset quality and overall financial condition. The policy
also requires that a bank holding company serve as a source of financial strength to its subsidiary banks by standing ready to
use available resources to provide adequate capital funds to those banks during periods of financial stress or adversity, and by
maintaining the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary
banks where necessary. Additionally, under the prompt corrective action laws, the ability of a bank holding company to pay dividends
may be restricted if a subsidiary bank becomes undercapitalized. These regulatory policies could affect the ability of Pioneer
Bancorp, Inc. to pay dividends or otherwise engage in capital distributions.
Waivers of Dividends by Pioneer Bancorp,
MHC
. Pioneer Bancorp, Inc. may pay dividends on its common stock to public stockholders. If it does, it is also required
to pay the same dividends per share to Pioneer Bancorp, MHC, unless Pioneer Bancorp, MHC elects to waive the receipt of dividends.
Pioneer Bancorp, MHC must receive the prior approval of the Federal Reserve Board before it may waive the receipt of any dividends
from Pioneer Bancorp, Inc., and current Federal Reserve Board policy prohibits any mutual holding company that is regulated as
a bank holding company, such as Pioneer Bancorp, MHC, from waiving the receipt of dividends paid by its subsidiary holding company.
Moreover, the Federal Reserve Board has issued an interim final rule applicable to federally-chartered mutual holding companies,
stating that it will not object to dividend waivers under certain circumstances, provided (1) the mutual holding company’s
members have approved the dividend waivers by a majority of eligible votes, (2) each officer or trustee of the mutual holding company
and mid-tier stock holding company, and any tax-qualified or non-tax qualified stock benefit plan in which such individual participates
that holds any shares of stock to which the waiver would apply waives the right to receive any dividends declared,
or
the
dividend waivers are approved by a majority of the entire board of trustees of the mutual holding company with any officer or trustee
of the mutual holding company having any direct or indirect ownership interest in the common stock of the subsidiary mid-tier holding
company abstaining from the board vote, and (3) any dividends waived by the mutual holding company are considered in determining
an appropriate exchange ratio in the event of a conversion of the mutual holding company to stock form.
Because of the foregoing Federal Reserve
Board restrictions on the ability of a mutual holding company, such as Pioneer Bancorp, MHC, to waive the receipt of dividends
declared by its subsidiary mid-tier stock holding company, it is unlikely that Pioneer Bancorp, MHC will waive the receipt of any
dividends declared by Pioneer Bancorp, Inc. Moreover, since Pioneer Bancorp, Inc. will sell only a minority of its shares to the
public and will contribute the remaining shares to Pioneer Bancorp, MHC, Pioneer Bancorp, Inc. will raise significantly less capital
than would have been the case if it sold all its shares to the public. As a result, paying dividends to Pioneer Bancorp, MHC —
an entity that will not be paying for the shares of Pioneer Bancorp, Inc. common stock it receives in connection with the offering,
may be inequitable to public stockholders and not in their best financial interests. Therefore, unless Federal Reserve Board regulations
and policy change by allowing Pioneer Bancorp, MHC to waive the receipt of dividends declared by Pioneer Bancorp, Inc. without
diluting minority stockholders, it is unlikely that Pioneer Bancorp, Inc. will pay any dividends.
Possible Conversion of Pioneer Bancorp,
MHC to Stock Form.
In the future, Pioneer Bancorp, MHC may convert from the mutual to capital stock form of ownership,
in a transaction commonly referred to as a “second-step conversion.” Any second-step conversion of Pioneer Bancorp,
MHC would require the approval of the NYSDFS and the Federal Reserve Board. See “Summary—Possible Conversion of Pioneer
Bancorp, MHC to Stock Form.”
Acquisition.
Federal laws
and regulations provide that no company may acquire control of a bank holding company, such as Pioneer Bancorp, Inc., without the
prior non-objection or approval of the Federal Reserve Board. Control, as defined under the applicable regulations, means the power,
directly or indirectly, to direct the management or policies of the company or to vote 25% or more of any class of voting securities
of the company. Acquisition of 10% or more of any class of a bank holding company’s voting securities constitutes a rebuttable
presumption of control under certain circumstances, including where, as will be the case with Pioneer Bancorp, Inc., the issuer
has registered securities under Section 12 of the Securities Exchange Act of 1934. Any company that acquires such control becomes
a “bank holding company” subject to registration, examination and regulation by the Federal Reserve Board.
New York Holding Company Regulation.
Upon completion of the reorganization, Pioneer Bancorp, MHC and Pioneer Bancorp, Inc. will be subject to regulation under
New York banking law. Among other requirements, Pioneer Bancorp, MHC and Pioneer Bancorp, Inc. must receive the approval of the
NYSDFS before acquiring 10% or more of the voting stock of another banking institution, or to otherwise acquire a banking institution
by merger or purchase.
Federal Securities Laws
Pioneer Bancorp, Inc.’s common stock
will be registered with the Securities and Exchange Commission after the offering. Pioneer Bancorp, Inc. will be subject to the
information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.
The registration under the Securities Act
of 1933 of shares of common stock issued in the offering does not cover the resale of those shares. Shares of common stock purchased
by persons who are not affiliates of Pioneer Bancorp, Inc. may be resold without registration. Shares purchased by an affiliate
of Pioneer Bancorp, Inc. will be subject to the resale restrictions of Rule 144 under the Securities Act of 1933. If Pioneer Bancorp,
Inc. meets the current public information requirements of Rule 144 under the Securities Act of 1933, each affiliate that complies
with the other conditions of Rule 144, including those that require the affiliate’s sale to be aggregated with those of other
persons, would be able to sell in the public market, without registration, a number of shares not to exceed, in any three-month
period, the greater of 1% of the outstanding shares of Pioneer Bancorp, Inc., or the average weekly volume of trading in the shares
during the preceding four calendar weeks.
Emerging Growth Company Status.
Under
the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), a company with total annual gross revenues of less
than $1.07 billion during its most recently completed fiscal year qualifies as an “emerging growth company.” Pioneer
Bancorp, Inc. qualifies as an emerging growth company under the JOBS Act.
An “emerging growth company”
may choose not to hold stockholder votes to approve annual executive compensation (more frequently referred to as “say-on-pay”
votes) or executive compensation payable in connection with a merger (more frequently referred to as “say-on-golden parachute”
votes). An emerging growth company also is not subject to the requirement that its auditors attest to the effectiveness of the
company’s internal control over financial reporting, and can provide scaled disclosure regarding executive compensation.
Finally, an emerging growth company may elect to comply with new or amended accounting pronouncements in the same manner as a private
company, but must make such election when the company is first required to file a registration statement. Such an election is irrevocable
during the period a company is an emerging growth company. Pioneer Bancorp, Inc. has elected to comply with new or amended accounting
pronouncements in the same manner as a private company.
A company
loses emerging growth company status on the earlier of: (1) the last day of the fiscal year of the company during which it had
total annual gross revenues of $1.07 billion or more; (2) the last day of the fiscal year of the issuer following the fifth anniversary
of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under
the Securities Act of 1933; (3) the date on which such company has, during the previous three-year period, issued more than $1.0
billion in non-convertible debt; or (4) the date on which such company is deemed to be a “large accelerated filer”
under Securities and Exchange Commission regulations (generally, a “large accelerated filer” is defined as a corporation
with at least $700 million of voting and non-voting equity held by non-affiliates).
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 is intended
to improve corporate responsibility, provide for enhanced penalties for accounting and auditing improprieties at publicly traded
companies and protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws.
Upon completion of the reorganization, Pioneer Bancorp, Inc. will have in place policies, procedures and systems designed to comply
with these regulations, and Pioneer Bancorp, Inc. will review and document such policies, procedures and systems to ensure continued
compliance with these regulations.
TAXATION
Federal Taxation
General.
Pioneer Bancorp,
Inc. and Pioneer Bank are subject to federal income taxation in the same general manner as other corporations, with some exceptions
discussed below. The following discussion of federal taxation is intended only to summarize material federal income tax matters
and is not a comprehensive description of the tax rules applicable to Pioneer Bancorp, Inc. and Pioneer Bank.
Method of Accounting.
For
federal income tax purposes, Pioneer Bank currently reports its income and expenses on the accrual method of accounting and uses
a tax year ending December 31 for filing its federal income tax returns.
Net Operating Loss Carryovers.
Effective
with the passage of the Tax Cuts and Jobs Act, net operating loss carrybacks are no longer permitted, and net operating losses
are allowed to be carried forward indefinitely. Net operating loss carryforwards arising from tax years beginning after January
1, 2018 are limited to offset a maximum of 80% of a future year’s taxable income. See Note 10 in the Notes to consolidated
financial statements that appear starting on page F-1 of this prospectus for additional information.
Capital Loss Carryovers.
Generally,
a financial institution may carry back capital losses to the preceding three taxable years and forward to the succeeding five taxable
years. Any capital loss carryback or carryover is treated as a short-term capital loss for the year to which it is carried. As
such, it is grouped with any other capital losses for the year to which carried and is used to offset any capital gains. Any loss
remaining after the five year carryover period that has not been deducted is no longer deductible. At December 31, 2018, Pioneer
Bank had no capital loss carryovers.
Corporate Dividends.
We may
generally exclude from our income 100% of dividends received from Pioneer Bank as a member of the same affiliated group of corporations.
Audit of Tax Returns.
Pioneer
Bank’s federal income tax returns and New York State income tax returns have not been audited in the last three years.
State Taxation
In March 2014, tax legislation was enacted
that changed the manner in which financial institutions and their affiliates are taxed in New York State. Taxable income is apportioned
to New York State based on the location of the taxpayer’s customers, with special rules for income from certain financial
transactions. The location of the taxpayer’s offices and branches are not relevant to the determination of income apportioned
to New York State. The statutory tax rate is currently 6.5%. An alternative tax on apportioned capital, capped at $5.0 million
for a tax year, is imposed to the extent that it exceeds the tax on apportioned income. The New York State alternative tax rate
is 0.05% for 2019, 0.025% for 2020 and completely phased out as of January 1, 2021. Qualified community banks and thrift institutions
that maintain a qualified loan portfolio are entitled to a specially computed modification that reduces the income taxable to New
York State.
MANAGEMENT
Our Directors
The board of directors of Pioneer Bancorp,
Inc. initially consist of six members. It is expected that prior to the closing of the reorganization, at least one additional
non-employee director will be appointed to the board of directors of Pioneer Bancorp, Inc. and Pioneer Bank. The new director will
not be appointed as a trustee of Pioneer Bancorp, MHC to ensure that he or she is considered an “unaffiliated director”
under New York Banking Law. Directors will serve three-year staggered terms so that approximately one-third of the directors will
be elected at each annual meeting of stockholders. Because Pioneer Bancorp, MHC will own a majority of our outstanding common stock,
we will be a “controlled company” within the meaning of the Nasdaq corporate governance guidelines. As a “controlled
company,” we will be exempt from certain requirements, including that a majority of our board of directors be independent
under those standards, and that executive compensation and director nominations be overseen by independent directors. However,
at the present time, each of our directors, other than Mr. Amell, our President and Chief Executive Officer, would be considered
independent under the Nasdaq Stock Market corporate governance listing standards. See “—Board Independence.”
|
Name (1)
|
|
Position(s)
|
|
Age (2)
|
|
Director
Since
|
|
Current Term
Expires
|
|
Thomas L. Amell
|
|
Director and President and Chief Executive Officer
|
|
51
|
|
2012
|
|
2021
|
|
Eileen C. Bagnoli
|
|
Director
|
|
69
|
|
2010
|
|
2019
|
|
Donald E. Fane
|
|
Director
|
|
58
|
|
2006
|
|
2021
|
|
Dr. James K. Reed
|
|
Director
|
|
69
|
|
2017
|
|
2020
|
|
Edward Reinfurt
|
|
Director
|
|
65
|
|
2006
|
|
2020
|
|
Madeline Taylor
|
|
Chairman of the Board
|
|
72
|
|
2003
|
|
2019
|
|
|
(1)
|
The mailing address for each individual is 652 Albany-Shaker Road, Albany, NY 12211.
|
|
|
(2)
|
As of December 31, 2018.
|
The business experience for the past five
years of each or our directors is set forth below. Each individual’s biography also contains information regarding his experience,
qualifications, attributes or skills that caused the board of directors to determine that he should serve as a director. Unless
otherwise indicated, each individual has held his position for the past five years.
Thomas L. Amell
has served as President
and Chief Executive Officer of Pioneer Bank since June 2013. Mr. Amell’s banking career spans 30 years working in different
areas of banking, including retail and commercial sales management and executive leadership. Before joining Pioneer Bank, Mr. Amell
served as President – Commercial Services of State Employees Federal Credit Union. Mr. Amell is actively involved in various
organizations, currently serving as Chairman of the Independent Bankers Association of New York State, a member of the board of
the New York Bankers Association, a member of the 50 Group, the Chairman of the CEG and a member of the Siena College Board of
Trustees. He has also received many awards during his career, including Albany Business Review’s “40 Under 40,”
the AMA of New York Capital Region Chapter’s “Marketer of Excellence,” Hudson Valley Community College’s
“Otto V. Guenther Career Achievement Award,” the Big Brothers’/Big Sisters’ “Spirits of September
Honoree” and 2015 Champion for Children Award from Northern Rivers. Mr. Amell’s extensive knowledge of the banking
industry and strong leadership skills provides the board with invaluable insight and guidance into the business and regulatory
requirements of today’s banking environment.
Eileen C. Bagnoli
has served in various
capacities with Pioneer Bank since 1972 until her retirement with Pioneer Bank in June 2013 after a 41-year career. During her
tenure, Ms. Bagnoli held positions at Pioneer Bank in retail branch management, marketing, human resources and operations, and
served as Chief Executive Officer from June 2010 until June 2013 and as Executive Vice President and Chief Operating Officer from
2003 until June 2010. Ms. Bagnoli was actively involved in the New York Bankers Association as well as the Independent Bankers
Association of New York State. She served as a director and past board chair of the Commission on Economic Opportunity and the
New York State Higher Education Services Corporation Board and additionally served for over 22 years on the board of the Helping
Hands School. In 2008, she was honored for her distinguished career with the "Women of Excellence" award by the Albany-Colonie
Regional Chamber of Commerce and in 2010 was the recipient of the Capital District Business Review's Women in Business Outstanding
Executive award. Ms. Bagnoli currently serves on the board of WMHT Educational Telecommunications. Ms. Bagnoli’s extensive
experience in the local banking industry and involvement in business and civic organizations in the communities in which we serve
affords the board valuable insight regarding our business and operations.
Donald E. Fane
is the President of Callanan Industries, Inc., a leading supplier of asphaltic concrete, aggregates, ready mix concrete and construction
services in New York State. Prior to being named President in 2014, Mr. Fane held the position of Executive Vice President at Callanan.
He also serves as President of Clemente Latham Concrete. Mr. Fane is involved in and serves on various local boards including Hudson
Valley Community College and the Lansingburgh Boys & Girls Club. He formerly served on the board of Seton Health Foundation, the
Historic Troy 20/20 Group and the Troy Savings Bank Music Hall. He is the former Commissioner of the Spiegleltown Fire Company.
In 1999, Mr. Fane was bestowed with the "Uncle Sam Citizen of the Year" Award, in 2003 the Troy Police Benevolent Association's
"Gold Shield Award" and in 2006 the Rensselaer County Boy Scout's “Good Scout Award.” Mr. Fane’s career
as a business executive provides the board with knowledge of the challenges facing business in our market area. Further, Mr. Fane,
both through his business and as an active member of the community, is knowledgeable of our local customer environment.
Dr. James K.
Reed
is President and Chief Executive Officer of St. Peter’s Health Partners. Dr. Reed became President and Chief Executive
Officer upon the merger of Northeast Health, Seton Health and St. Peter’s Health Care Services. As President and Chief Executive
Officer, Dr. Reed oversees the management and growth of the region’s largest and most comprehensive not-for-profit network
of high-quality, advanced medical care, primary care, rehabilitation and senior services. Dr. Reed has also held a number of high
level finance positions, including Director of Corporate Finance at International Paper Company, and Director of Acquisitions and
Divestitures at Union Pacific Corporation. He then went on to become the Chief Medical Officer of Northeast Health, before becoming
President and Chief Executive Officer of St. Peter’s Health Partners. Dr. Reed is also a board officer of the Medical Liability
Mutual Insurance Company (MLMIC), board and Executive Committee member of the CEG, and board member of HealthNow New York Inc.,
and Capital Region Chamber of Commerce. Dr. Reed has a proven record of success in managing large and complex organizations and
has a special understanding of the health care and technology sectors.
Edward Reinfurt
was the Director
of the Empire State Development Division of Science, Technology and Innovation (NYSTAR), retiring from this position in February
2014. Prior to his appointment at NYSTAR, Mr. Reinfurt was Vice President of The Business Council of New York State for 27 years.
He also served in the capacity of Director of Government Affairs for both the Carrier Corporation and Associated Industries of
New York State. During his career, Mr. Reinfurt has spent considerable time on a wide variety of public policy issues. He was a
member of the New York State Department of Health's Committee on Public Health Priorities, the Governor's Task Force to Restructure
Employment, Health and Social Services, and the Accountability Team of the Labor and Education Department's joint committee reviewing
the New York State's Workforce Development System. Mr. Reinfurt also served as past chair and board member of Northeast Health,
Inc. and currently serves as Vice Chairman of "Kids Count" in Watervliet. Mr. Reinfurt’s strong government affairs
experience and leadership skills are an invaluable asset to the board of directors.
Madeline Taylor
is a consultant to the Association Management Division of Capital Hill Management Services where she is involved in Business
Development and Client Relations. Prior to this, Ms. Taylor spent 17 years with the Albany-Colonie Regional Chamber of Commerce
where she served in various executive level positions, the last seven years of which were as President and Chief Executive Officer
of the Chamber. During her tenure as Chamber President, Ms. Taylor was credited with spearheading the "Tech Valley" initiative
of the Capital Region and became a founding member of the Tech Valley Chamber Coalition. Ms. Taylor has served on the boards of
the New York State Economic Development Council, the Empire State Certified Development Corporation, the Albany Academy for Girls,
Albany Memorial and Samaritan Hospitals and as a member of the President's Council of Russell Sage College. Ms. Taylor was also
appointed by former New York Governor George Pataki to serve on the Board of the Harriman Campus Development Corp. Ms. Taylor has
been the recipient of several awards, including being named one of the "100 Women of Excellence" by the Women's Business
Council of the Albany-Colonie Chamber, the Marketer of the Year by the American Marketing Association, Distinguished Leadership
Award by the National Association for Community Leadership and was featured as a "Woman in the News" by the Women's Press
Club of New York State. Ms. Taylor’s business and public policy experience, community service and strong knowledge of the
business climate of the New York Capital Region brings extensive insight into the customers who live in our market area and economic
developments affecting our market area.
Executive Officers Who Are Not Directors
The following sets forth information regarding
our executive officers who are not directors. Age information is as of December 31, 2018. The executive officers of Pioneer Bancorp,
Inc. and Pioneer Bank are elected annually.
Joseph A. Fleming
, age 55, has served
as our Executive Vice President and Chief Lending Officer since December 2004. Prior to the appointment, Mr. Fleming served in
various banking positions at Pioneer Bank since 2002.
Susan M. Hollister
, age 53, has served
as our Executive Vice President and Chief Human Resources Officer since August 5, 2016. Prior to joining Pioneer Bank, Ms. Hollister
served as Senior Human Resources Manager for First Niagara Bank in the Eastern New York region from 1993 until August 2016.
Patrick J. Hughes
, age 46, has served
as our Executive Vice President and Chief Financial Officer since November 2016. Prior to joining Pioneer Bank, Mr. Hughes spent
20 years with UHY Advisors/UHY LLP, a professional services firm, and from 2006 until November 2016 he served at the firm as a
Managing Director and Partner.
Laura A. Mazzara
, age 56, has served
as our Executive Vice President and Chief Risk Officer since December 2008 after having previously served in various positions
at Pioneer Bank since 1987.
Jesse Tomczak
, age 46, has served
as our Executive Vice President and Chief Customer Experience Officer since October 2013. Mr. Tomczak previously served as Director
of Business Development at State Employees Federal Credit Union.
Frank C. Sarratori
, age 54, has served
as our Executive Vice President and Chief Administrative Officer, General Counsel and Corporate Secretary since 2013. Prior to
2013, Mr. Sarratori served as Chief Compliance Officer, Corporate Secretary and General Counsel since his date of hire in 2004.
Mr. Sarratori currently serves as a trustee of Pioneer Bank.
Board Independence
The board of directors has determined that
each of our directors, except Mr. Amell, is “independent” as defined in, and for purposes of satisfying the listing
standards of, the Nasdaq Stock Market. Mr. Amell is not considered independent because he is an executive officer of Pioneer Bancorp,
Inc. and Pioneer Bank.
In determining the independence of our directors,
there were no relationships between Pioneer Bank and our directors and officers which are not required to be reported under “Transactions
With Certain Related Persons” below.
Transactions With Certain Related Persons
Federal law generally prohibits publicly
traded companies from making loans to their executive officers and directors, but it contains a specific exemption from the prohibition
for loans made by federally insured financial institutions, such as Pioneer Bank, to their executive officers and directors in
compliance with federal banking regulations. At December 31, 2018, all of our loans to directors and executive officers were made
in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable loans with persons not related to Pioneer Bank, and did not involve more than the normal
risk of collectability or present other unfavorable features. These loans were performing according to their original terms at
December 31, 2018, and were made in compliance with federal banking regulations.
Committees of the Board of Directors
We conduct business through meetings of
our board of directors and its committees. The board of directors of Pioneer Bancorp, Inc. has established standing committees,
including a Compensation Committee, an Audit Committee and a Governance and Nominating Committee. Each of these committees operates
under a written charter, which governs its composition, responsibilities and operations. Pioneer Bank also has standing committees
of its board of directors.
The table below sets forth the directors
of each of the listed standing committees. Each member of each committee meets the Nasdaq and the Securities and Exchange Commission
independence requirements for such committee. The board of directors has determined that Director Reed will qualify as an “audit
committee financial expert” as such term is defined by the rules and regulations of the Securities and Exchange Commission.
|
Audit Committee
|
|
Compensation Committee
|
|
Governance and Nominating
Committee
|
|
Eileen C. Bagnoli
|
|
Eileen C. Bagnoli
|
|
Donald E. Fane
|
|
Dr. James K. Reed
|
|
Edward Reinfurt
|
|
Dr. James K. Reed
|
|
Edward Reinfurt
|
|
Madeline Taylor
|
|
Edward Reinfurt
|
|
Madeline Taylor
|
|
|
|
|
Executive Compensation – Summary Compensation Table
The table below summarizes the total compensation
paid to or earned by our President and Chief Executive Officer and our two other most highly compensated executive officers for
the year ended June 30, 2018. Each individual listed in the table below is referred to as a “Named Executive Officer.”
|
|
|
Year Ended June 30, 2018
|
|
|
Name and principal position
|
|
Salary
|
|
|
Non-equity
incentive plan
compensation (1)
|
|
|
All other
compensation (2)
|
|
|
Total
|
|
Thomas
L. Amell
President and Chief Executive Officer
|
|
$
|
460,746
|
|
|
$
|
167,000
|
|
|
$
|
41,827
|
|
|
$
|
669,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank
C. Sarratori
Executive Vice President, Chief Administrative Officer, General Counsel and Corporate Secretary
|
|
|
238,833
|
|
|
|
57,846
|
|
|
|
10,383
|
|
|
|
307,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jesse
Tomczak
Executive Vice President and Chief Customer Experiences Officer
|
|
|
201,543
|
|
|
|
40,196
|
|
|
|
7,053
|
|
|
|
248,792
|
|
|
|
(1)
|
Payments were payable pursuant to the Pioneer Bank Targeted Incentive Plan.
|
|
|
(2)
|
Consists of the following payments:
|
|
Officer
|
|
Perquisites
|
|
|
401(k) Plan
|
|
|
Total
|
|
|
Thomas L. Amell
|
|
$
|
34,462
|
(a)
|
|
$
|
7,365
|
|
|
$
|
41,827
|
|
|
Frank C. Sarratori
|
|
|
—
|
(b)
|
|
|
10,383
|
|
|
|
10,383
|
|
|
Jesse Tomczak
|
|
|
—
|
(b)
|
|
|
7,053
|
|
|
|
7,053
|
|
|
|
(a)
|
Includes the value of the executive’s use of a bank-owned automobile and club membership dues.
|
|
|
(b)
|
Did not exceed $10,000.
|
Agreements and Benefit Plans
Employment Agreement with Thomas L.
Amell
.
Pioneer Bank intends to enter into a new employment agreement with Mr. Amell in connection with the reorganization
and stock offering that will have a term that initially ends on December 31, 2021. The initial term of the agreement will extend
automatically for one additional year on January 1 of each year beginning January 1, 2020 unless either Pioneer Bank or Mr. Amell
give notice no later than 30 days before the anniversary date that the term will not be renewed. At least 30 days prior to each
anniversary date of the employment agreement, disinterested members of the board of directors Pioneer Bank will conduct a comprehensive
performance evaluation and review of Mr. Amell’s performance for purposes of determining whether to take action to not renew
the employment agreement.
The employment agreement specifies Mr. Amell’s
base salary, which initially will be $651,182. The Compensation Committee may increase, but not decrease, Mr. Amell’s base
salary. In addition to the base salary, the agreements provide that Mr. Amell will be eligible to participate in any bonus plan
or arrangement of Pioneer Bank in which senior management is eligible to participate and/or may receive a bonus on a discretionary
basis, as determined by the Compensation Committee. Mr. Amell is also entitled to participate in all employee benefit plans, arrangements
and perquisites offered to employees and officers of Pioneer Bank and the reimbursement of reasonable travel and other business
expenses incurred in the performance of his duties with Pioneer Bank, including memberships in organizations as the executives
and the board mutually agree are necessary and appropriate.
Pioneer Bank may terminate the executive’s
employment, and Mr. Amell may resign, at any time with or without good reason. In the event of Mr. Amell’s termination without
cause other than due to death or disability or voluntary resignation for good reason (a “qualifying termination event”),
Pioneer Bank would pay Mr. Amell a cash lump sum payment equal to the base salary he would have earned had he remained employed
for the greater of: (1) the remaining term of the employment agreement; or (2) 12 months (the “benefits period”). In
addition, Mr. Amell would receive non-taxable medical and dental insurance coverage under Pioneer Bank’s group health plan
at the same cost-sharing arrangement in effect as of the date of determination during the benefits period or, if earlier, until
Mr. Amell receives substantially comparable coverage from another employer. A “good reason” condition for purposes
of the employment agreement would include a material reduction in base salary, a material reduction in authority, duties or responsibilities
associated with Mr. Amell’s position with Pioneer Bank, a relocation of Mr. Amell’s principal place of employment by
more than 35 miles from Pioneer Bank’s main office or a material breach of the employment agreement by Pioneer Bank.
In the event of Mr. Amell’s qualifying
termination event during the term occurring on or after
a
change in control of Pioneer Bancorp, Inc. or Pioneer Bank, Mr. Amell would be entitled to (in lieu of the payments and benefits
described in the previous paragraph) a severance payment equal to three times the sum of
his:
(1)
base salary in effect as of the date of his termination or immediately prior to the change in control, whichever is higher; and
(2) the highest annual cash bonus earned for the three most recently completed performance periods prior to the change in control.
Such payment is payable in a lump sum within 30 days following the Mr. Amell’s date of termination. In addition, Pioneer
Bank (or its successor) will continue to provide Mr. Amell with life insurance and non-taxable medical and dental insurance coverage
substantially comparable to the coverage provided to him immediately before his date of termination at no cost to Mr. Amell. Such
continued coverage will cease upon the earlier of:(1) 36 months after the date of termination; or (2) the date on which Mr. Amell
becomes a full-time employee of another employer and receives comparable health and welfare benefits.
The reorganization of Pioneer Bank into
the “two-tier” mutual holding company structure or the conversion of Pioneer Bancorp, MHC from mutual to stock form
and a contemporaneous stock offering of a newly-formed stock holding are not considered change in control events for purposes of
the employment agreement.
The employment agreement would immediately
terminate upon the earlier of Mr. Amell’s voluntary resignation without good reason, death or disability, and Pioneer Bank
would have no obligation to pay any additional severance benefits to Mr. Amell under the employment agreement.
Upon termination of employment (other than
a termination in connection with a change in control), Mr. Amell will be required to adhere to one-year non-competition and non-solicitation
restrictions set forth in his employment agreement.
Change in Control Agreements
.
Pioneer Bank intends to enter into individual change in control agreements with its six other executive officers, including Messrs.
Sarratori and Tomczak. The change in control agreements have terms that initially end on December 31, 2020. Each agreement will
extend automatically for one additional year on January 1 of each year beginning January 1, 2020 so that the remaining term is
two years unless either Pioneer Bank or the executive gives notice no later than 30 days before such anniversary date that an agreement
will not be renewed. At least 30 days prior to each anniversary date of the change in control agreements, disinterested members
of the board of directors of Pioneer Bank will conduct a comprehensive performance evaluation and review of each executive’s
performance for purposes of determining whether to not renew his or her change in control agreement. Notwithstanding the foregoing,
in the event that Pioneer Bancorp, Inc. or Pioneer Bank enters into a transaction that would be considered a change in control
as defined under the agreements, the term of the agreements would extend automatically so that they would expire no less than two
years beyond the effective date of the change in control.
In the event of the executive’s involuntary
termination of employment other than for cause, disability or death, or voluntary resignation for “good reason” on
or after the effective date of a change in control of Pioneer Bancorp, Inc. or Pioneer Bank, each executive would be entitled to
a
severance payment equal to two times the sum
of
the executive’s:
(1) base salary
in effect as of the date of his termination or immediately prior to the change in control, whichever is higher; and (2) the highest
annual cash bonus earned for the three most recently completed performance periods prior to the change in control.
Such
payment is payable in a lump sum within 30 days following the executive’s date of termination. In addition, Pioneer Bank
(or its successor) will continue to provide each executive with life insurance and non-taxable medical and dental insurance coverage
substantially comparable to the coverage provided to him or her immediately before the date of termination at no cost to the executive.
Such continued coverage will cease upon the earlier of: (1) 24 months after the date of termination; or (2) the date on which the
executive becomes a full-time employee of another employer and receives comparable health and welfare benefits.
A “good reason” condition for
purposes of each change in control agreement would include a material reduction in base salary, a material reduction in authority,
duties or responsibilities associated with the executive’s position with Pioneer Bank, a relocation of the executive’s
principal place of employment by more than 35 miles from Pioneer Bank’s main office or a material breach of the change in
control agreement by Pioneer Bank.
The reorganization of Pioneer Bank into
the “two-tier” mutual holding company structure or the conversion of Pioneer Bancorp, MHC from mutual to stock form
and a contemporaneous stock offering of a newly-formed stock holding are not considered change in control events for purposes of
the change in control agreements.
Targeted Incentive Plan (TIP).
Pioneer
Bank adopted the TIP for its executive officers who are approved annually by the board of trustees. The named executive officers
are participants in the TIP. The TIP is designed to provide participants with incentives and motivation to increase Pioneer Bank’s
profitability and growth while maintaining its safety and soundness. The TIP provides annual incentive awards to participants based
on overall bank-wide, department and/or individual performance goals established annually, which is determined by using performance
history, peer data, market data and the compensation committee’s judgment based on previous experience and projected market
conditions.
Each participant can achieve annual incentive
awards based on a percentage of base salary, depending on performance goals at certain percentages of achievement, ranging from
90% to 115% for the Chief Executive Officer and 90% to 110% for the other executive officers. Each performance goal established
is weighted. The annual performance period under the TIP is a 12-month period ending on December 31 (the “plan year”).
For the 2018 plan year, the performance goals established were based on: (1) current year return on assets; (2) three-year return
on assets; (3) core deposit growth; and (4) three-year return on assets compared to a peer group of all federally insured savings
banks having assets from $300 million to $1.0 billion. The performance goals were equally weighted for each participant, except
for the CEO, whose performance goals were weighted 15%, 40%, 15% and 30%, respectively, to be more focused on the long-term performance
of Pioneer Bank. Furthermore, any annual incentive award payable under the TIP was contingent upon Pioneer Bank obtaining minimum
performance goals related to net income and safety soundness and the participant having satisfactory job performance during the
plan year. Each named officer’s annual incentive award opportunities for the 2018 plan year, as a percentage of base salary,
was 40%.
Each participant’s annual incentive
award is payable in a cash lump sum as soon as practicable following the completion of the plan year, provided, however, that such
payment will be made no later than two and one-half months following the end of the plan year. A participant must be actively employed
on the last day of the plan year in order to receive the annual incentive award. Based on the foregoing, Messrs. Amell, Sarratori
and Tomczak earned $167,000, $57,846 and $40,196, respectively, under the TIP for the 2018 plan year.
Board of Trustees and Executive Employees
Deferred Compensation Plan.
Pioneer Bank maintains the Pioneer Bank Board of Trustees and Executive Employees Deferred
Compensation Plan for trustees and certain executives of the Bank who are designated to participate in the plan by the board. Mr.
Sarratori is the only named executive officer participating in the plan. Participants may make an election on a deferral election
form (the “election form”) to defer a portion the participants’ compensation up to 100%. Amounts deferred are
credited to a bookkeeping account established in the name of each participant. The participant’s account balance accrues
earnings, as if the balance was invested in one or more investment funds as selected by the employer, in multiples of 1%. Participants
are always 100% vested in their deferral accounts. Participants must elect on the participation agreements the form and timing
of distribution at the time the participant makes the deferral election. If the participant fails to properly elect the time and
form of distribution, the participant’s account will be designated as a separate account and will be paid in a lump sum.
Unless the participant has elected for his or her account balance to be payable while employed with Pioneer Bank, the participant’s
account balance is generally distributed upon the earlier of death, disability or termination of employment.
Tax-Qualified Retirement Plans
Pension Plan.
Pioneer Bank
maintains The Retirement Plan of Pioneer Savings Bank, a tax-qualified non-contributory defined benefit plan (the “pension
plan”) for employees of Pioneer Bank excluding union employees and leased employees. Employees of Pioneer Bank enter the
plan on the next January 1 or July 1 after having both completed one year of service and attained age 21. Contributions to the
pension plan are made to satisfy the actuarially determined minimum funding requirements according to the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”). A participant becomes 100% vested in his or her accrued benefit under the
pension plan after five years of service with Pioneer Bank.
Upon attainment of normal retirement date
(age 65 for participants who entered the plan before October 1, 1988, or the later of age 65 or the fifth anniversary of participation
in the plan for participants who entered the plan on or after October 1, 1988), the participant is entitled to a normal retirement
benefit, which is an monthly benefit equal to 1/12 of the product of 2% of the participant’s average annual earnings, multiplied
by the participant’s full and factional years of service (up to a maximum of 30 years) earned before January 1, 2010, plus
the product of 1.5% of the participant’s average annual earnings multiplied by the participant’s full and fractional
years of service earned after December 31, 2009 (up to a maximum of 30 years reduced by years of service earned prior to January
1, 2010) payable for the life of the participant. Alternative forms of payments include the actuarial equivalent of the normal
retirement benefit paid in the form of a lifetime benefit, with a guaranteed minimum of 10 or 15 years, a 50%, 75% or 100% survivor
lifetime benefit for the participant and his or her joint annuitant, and an annuity with the option to elect the form of survivor
benefit which meets the requirements of Internal Revenue Code Section 401(a)(9).
If the participant has attained his or her
early retirement date (the date on which the participant has completed 30 years of service or attainment of age 60 with 20 years
of service) and elects the normal retirement benefit to commence prior to the normal retirement date, the participant would receive
an early retirement benefit equal to the participant’s accrued pension benefit, reduced by 0.4166% for each of the first
60 months before the normal retirement date and 0.2083% for each additional month before the normal retirement date.
If a participant terminates employment prior
to the normal retirement date and early retirement date, the participant would be entitled to the participant’s vested accrued
benefit, determined as of the date of termination of employment, payable as of the participant’s normal retirement date;
provided, however, that if the participant has completed 20 years of service for the normal retirement benefit, the participant
may elect to begin benefit payments as of the first day of any month following the month in which the participant would have been
eligible for early retirement if the participant had continued employment adjusted by the same factors as the early retirement
benefit.
401(k) Plan.
Pioneer Bank
maintains the Pioneer Bank 401(k) Plan, which is a qualified, tax-exempt profit-sharing plan with a salary deferral feature under
Section 401(k) of the Internal Revenue Code (the “401(k) Plan”). All employees except for union employees, leased employees,
and employees who are not classified as salaried or commission-paid employees, are eligible to participate in the plan upon reaching
age 21 and working for at least three months with respect to making elective salary deferrals and receiving all other employer
contributions. Employees are permitted to make elective salary deferrals in an amount up to $19,000 (as indexed annually). Eligible
employees who have not made a salary deferral election automatically have withheld 6% of their salary deferred as a pre-tax contribution
which will be invested in accordance with the plan’s investment policies. Eligible employees may designate their salary deferrals
as either pre-tax or after-tax Roth deferrals.
An employee may also contribute rollover
contributions to the plan from another eligible retirement plan. Employees who have attained age 50 before the end of a plan year
are also eligible to make catch-up contributions during the year in an amount not to exceed $6,000 (as indexed annually). All employee
elective salary deferrals, catch-up contributions and “rollover” contributions are fully and immediately vested.
In addition, Pioneer Bank currently makes
an employer matching contribution for the amount a participant contributes as salary deferrals up to 100% of the amount contributed
for the first 1% of the participant’s plan compensation plus 50% of the amount contributed between 1% and 6% of the participant’s
plan compensation. Pioneer Back may also make discretionary qualified non-elective contributions. Pioneer Bank may also make a
discretionary pro-rata employer contribution each plan year.
Employer matching contributions and employer
discretionary pro-rata contributions are subject to a six-year vesting schedule, such that the participant vests in the first 20%
of his or her account attributable to employer matching and profit-sharing contributions after two years of service and an additional
20% each year thereafter until fully vested after six years. The qualified non-elective contributions are fully and immediately
vested. Generally, a participant is not entitled to an in-service distribution of his or her account balance until the participant
attains age 59-1/2. In addition, the 401(k) Plan permits loans to participants within the limits set forth in the Internal Revenue
Code and according to loan procedures established by Pioneer Bank. Participants are entitled to benefit payments upon termination
of employment, disability or death. Participants may elect that benefits be distributed in the form of a lump sum or in equal annual
installments paid over a set of number of years. Pioneer Bank has established an employer stock fund in the 401(k) Plan so that
participants can acquire an interest in the common stock of Pioneer Bancorp, Inc. through their accounts in the 401(k) Plan.
Employee Stock Ownership Plan.
Pioneer Bank expects to adopt an employee stock ownership plan for eligible employees, effective as of January 1, 2019, in connection
with the stock offering. Eligible employees, which include the named executive officers, who have attained age 21 and have completed
one year of service on or before the closing date of the offering, will begin participation in the employee stock ownership plan,
retroactively, as of January 1, 2019, the plan’s effective date. All employees except for union employees, leased employees,
nonresident aliens and employees compensated on an hourly basis or commission basis are eligible to participate in the employee
stock ownership plan. Employees who do not satisfy the eligibility requirements on the closing date of the offering will become
eligible to enter the plan on the first entry date commencing on or after both reaching age 21 and completing one year of service.
The employee stock ownership plan trustee
is expected to purchase, on behalf of the employee stock ownership plan, 3.92% of the outstanding shares of common stock of Pioneer
Bancorp, Inc. at the completion of the offering. We expect that the employee stock ownership plan will fund its stock purchase
with a loan from Pioneer Bancorp, Inc. equal to the aggregate purchase price of the common stock. The loan will be repaid principally
through Pioneer Bank’s contributions to the employee stock ownership plan and dividends payable on common stock held by the
employee stock ownership plan over the anticipated 20-year term of the loan. The interest rate on the employee stock ownership
plan loan is expected to be an adjustable-rate equal to the prime rate, as published in
The Wall Street Journal
, on the
closing date of the offering. Thereafter the interest rate will adjust annually and will be based on the prime rate as of the first
business day of the calendar year, retroactive to January 1 of such year.
The trustee will hold the shares purchased
by the employee stock ownership plan in an unallocated suspense account. Shares will be released from the suspense account on a
pro-rata basis as the employee stock ownership plan repays the loan. The trustee will allocate the shares released among participants
on the basis of each participant’s proportional share of compensation relative to all participants. Participants will vest
20% per each year of credited service and will become 100% vested in their benefit after five years of credited service. Participants
who were employed by Pioneer Bank immediately before the offering will receive credit for vesting purposes for years of service
before adoption of the employee stock ownership plan. Participants also will become fully vested upon normal retirement, death
or disability, a change in control, or termination of the employee stock ownership plan. Generally, participants will receive distributions
from the employee stock ownership plan after severance from employment. The employee stock ownership plan reallocates any unvested
shares forfeited upon termination of employment among the remaining participants.
The employee stock ownership plan permits
participants to direct the trustee as to how to vote the shares of common stock allocated to their accounts. The plan provides
that the trustee will vote unallocated shares and allocated shares for which participants do not provide instructions on any matter
in the same ratio as those shares for which participants provide instructions, subject to fulfillment of the trustee’s fiduciary
responsibilities.
Under applicable accounting requirements,
Pioneer Bank will record a compensation expense for the employee stock ownership plan at the fair market value of the shares as
they are committed to be released from the unallocated suspense account to participants’ accounts. The compensation expense
resulting from the release of the common stock from the suspense account and allocation to plan participants will result in a corresponding
reduction in Pioneer Bancorp, Inc.’s earnings.
Trustees’ Compensation
The following table sets forth for the year
ended June 30, 2018 certain information as to the total remuneration paid by Pioneer Bank to trustees other than Mr. Amell who
receives no compensation for being a trustee.
|
|
|
Year Ended June 30, 2018
|
|
|
Name
|
|
Fees earned or paid
in cash ($)
|
|
|
All Other
Compensation ($)
|
|
|
Total ($)
|
|
|
Eileen C. Bagnoli
|
|
56,000
|
|
|
|
|
|
56,000
|
|
|
John L. Buono (1)
|
|
|
56,000
|
|
|
|
—
|
|
|
|
56,000
|
|
|
Craig A. Duncan (2)
|
|
|
37,500
|
|
|
|
—
|
|
|
|
37,500
|
|
|
Donald E. Fane
|
|
|
56,000
|
|
|
|
—
|
|
|
|
56,000
|
|
|
Dr. James K. Reed
|
|
|
56,000
|
|
|
|
—
|
|
|
|
56,000
|
|
|
Edward Reinfurt
|
|
|
56,000
|
|
|
|
—
|
|
|
|
56,000
|
|
|
Madeline D. Taylor
|
|
|
56,000
|
|
|
|
—
|
|
|
|
56,000
|
|
|
|
(1)
|
Mr. Buono retired as of January 1, 2019
|
|
|
(2)
|
Mr. Duncan retired as of January 1, 2018.
|
Trustee Fees
During the year ended December 31, 2017,
trustees received a fee of $4,250 for each trustee meeting attended and a fee of $400 for each loan committee meeting attended.
During the year ended December 31, 2018, the trustees received a fee of $4,350 for each trustee meeting attended and a fee of $400
for each loan committee meeting attended.
Each person who will also serve as a director
of Pioneer Bancorp, Inc. or Pioneer Bancorp, MHC will also serve as a director of Pioneer Bank and will initially earn director
fees only in his or her capacity as a board or committee member of Pioneer Bank. Upon completion of the reorganization, additional
director fees may be paid for Pioneer Bancorp, Inc. director meetings, although no such determination has been made at this time.
Trustee Plans
Dr. Reed is a participant in the Board of
Trustees and Executive Employees Deferred Compensation Plan. Please see the description of the plan set forth under “Agreements
and Benefit Plans” for further details.
Benefits to be Considered Following Completion of the Stock
Offering
Following the stock offering, we intend
to implement one or more stock-based benefit plans that will provide for grants of stock options and restricted common stock awards.
According to applicable regulations, if implemented within the first year after the offering, we anticipate that the plan will
authorize a number of stock options and a number of shares of restricted stock, not to exceed 4.90% and 1.96%, respectively, of
the outstanding shares of common stock of Pioneer Bancorp, Inc. at the completion of the offering, including shares issued to Pioneer
Bancorp, MHC and shares contributed to the charitable foundation. These limitations will not apply if the plan is implemented more
than one year after the consummation date of the reorganization.
The stock-based benefit plans will not be
implemented sooner than six months after the offering and, if implemented within one year after the stock offering, the plans must
be approved by a majority of the votes eligible to be cast by our stockholders, as well as a majority of the votes eligible to
be cast by our stockholders other than Pioneer Bancorp, MHC. If stock-based benefit plans are established more than one year after
the offering is completed, they must be approved by a majority of votes cast by our stockholders, as well as a majority of votes
cast by our stockholders other than Pioneer Bancorp, MHC.
Certain additional restrictions would apply
to our stock-based benefit plans if implemented within one year after completion of the offering, including:
|
|
·
|
non-employee directors in the aggregate may not receive more than 30% of the options and shares of restricted common stock
authorized under the plans;
|
|
|
·
|
no non-employee director may receive more than 5% of the options and restricted stock awards authorized under the plans;
|
|
|
·
|
no individual may receive more than 25% of the options and restricted stock awards authorized under the plans;
|
|
|
·
|
the options and shares of restricted common stock may not vest more rapidly than 20% per year, beginning on the first anniversary
of stockholder approval of the plans; and
|
|
|
·
|
accelerated vesting is not permitted except for death, disability or upon a change in control of Pioneer Bancorp, Inc. or Pioneer
Bank.
|
We have not yet determined whether we will
present stock-based benefit plans for stockholder approval within one year or more than one year following the completion of the
offering. If applicable regulations or policies regarding stock-based benefit plans change, including any regulations or policies
restricting the size of awards and vesting of benefits as described above, the restrictions described above may not be applicable.
We may obtain the shares needed for our
stock-based benefit plans by issuing additional shares of common stock from authorized but unissued shares or by repurchasing our
common stock.
These restrictions do not apply to plans adopted after one
year following the completion of the stock offering.
The actual value of the shares of restricted
common stock awarded under stock-based benefit plans would be based on the price of Pioneer Bancorp, Inc.’s common stock
at the time the shares are awarded. The following table presents the total value of all shares of restricted common stock to be
available for award and issuance under the stock-based benefit plans, assuming receipt of stockholder approval and that the shares
are awarded when market prices range from $8.00 per share to $14.00 per share.
|
Share Price
|
|
|
327,250 Shares
Awarded at Minimum
of Offering Range
|
|
|
385,000 Shares
Awarded at Midpoint of
Offering Range
|
|
|
442,750 Shares
Awarded at Maximum
of Offering Range
|
|
|
509,163 Shares
Awarded at Adjusted
Maximum of Offering
Range
|
|
|
|
|
|
|
|
|
$
|
8.00
|
|
|
$
|
2,618,000
|
|
|
$
|
3,080,000
|
|
|
$
|
3,542,000
|
|
|
$
|
4,073,300
|
|
|
$
|
10.00
|
|
|
$
|
3,272,500
|
|
|
$
|
3,850,000
|
|
|
$
|
4,427,500
|
|
|
$
|
5,091,625
|
|
|
$
|
12.00
|
|
|
$
|
3,927,000
|
|
|
$
|
4,620,000
|
|
|
$
|
5,313,000
|
|
|
$
|
6,109,950
|
|
|
$
|
14.00
|
|
|
$
|
4,581,500
|
|
|
$
|
5,390,000
|
|
|
$
|
6,198,500
|
|
|
$
|
7,128,275
|
|
The grant-date fair value of the options
granted under the stock-based benefit plans would be based in part on the trading price of Pioneer Bancorp, Inc. common stock at
the time the options are granted. The value will also depend on the various assumptions used in the option pricing model ultimately
adopted. The following table presents the total estimated value of the options to be available for grant under the stock-based
benefit plans, assuming receipt of stockholder approval, using a Black-Scholes option pricing model, and assuming the market price
and exercise price for the stock options are equal and the range of market prices for the shares is $8.00 per share to $14.00 per
share. The Black-Scholes option pricing model provides an estimate only of the fair value of the options, and the actual value
of the options may differ significantly from the value set forth in this table.
Market/Exercise
Price
|
|
|
Grant Date Fair
Value Per Option
|
|
|
818,125 Options at
Minimum of
Offering Range
|
|
|
962,500 Options at
Midpoint of
Offering Range
|
|
|
1,106,875 Options
at Maximum of
Offering Range
|
|
|
1,272,906 Options
at Adjusted
Maximum of
Offering Range
|
|
|
|
|
|
|
|
|
$
|
8.00
|
|
|
$
|
2.34
|
|
|
$
|
1,914,413
|
|
|
$
|
2,252,250
|
|
|
$
|
2,590,088
|
|
|
$
|
2,978,601
|
|
|
$
|
10.00
|
|
|
$
|
2.92
|
|
|
$
|
2,388,925
|
|
|
$
|
2,810,500
|
|
|
$
|
3,232,075
|
|
|
$
|
3,716,886
|
|
|
$
|
12.00
|
|
|
$
|
3.50
|
|
|
$
|
2,863,438
|
|
|
$
|
3,368,750
|
|
|
$
|
3,874,063
|
|
|
$
|
4,455,172
|
|
|
$
|
14.00
|
|
|
$
|
4.09
|
|
|
$
|
3,346,131
|
|
|
$
|
3,936,625
|
|
|
$
|
4,527,119
|
|
|
$
|
5,206,187
|
|
The tables presented above are provided
for informational purposes only. There can be no assurance that our stock price will not trade below the offering price of $10.00
per share.
SUBSCRIPTIONS BY TRUSTEES AND EXECUTIVE
OFFICERS
The table below sets forth, for each of
Pioneer Bank’s trustees and executive officers, including their associates, and for all of these individuals as a group,
the proposed purchases of subscription shares. In the event of an oversubscription by eligible account holders, trustees and executive
officers may not be able to purchase the amount of shares listed below. If the individual maximum purchase limitation is increased,
persons subscribing for the maximum amount may increase their purchase order. See “The Reorganization and Offering—Additional
Limitations on Common Stock Purchases.” Trustees and officers will purchase shares of common stock at the same $10.00 purchase
price per share and on the same terms as other purchasers in the offering. This table excludes shares of common stock to be purchased
by the employee stock ownership plan, as well as any stock awards or stock option grants that may be made no earlier than six months
after the completion of the offering. Federal and state regulations prohibit our trustees and officers from selling the shares
they purchase in the offering for one year after the closing of the offering. Subscriptions by management through our 401(k) plan
are included in the proposed purchases set forth below and will be counted as part of the maximum number of shares such individuals
may subscribe for in the offering and as part of the maximum number of shares trustees and officers may purchase in the offering.
|
Name of Beneficial Owner
|
|
Number of
Shares
|
|
|
Aggregate
Purchase
Price
|
|
|
Directors/Trustees:
|
|
|
|
|
|
|
|
|
|
Thomas L. Amell
|
|
|
30,000
|
|
|
$
|
300,000
|
|
|
Eileen C. Bagnoli
|
|
|
5,000
|
|
|
|
50,000
|
|
|
Donald E. Fane
|
|
|
30,000
|
|
|
|
300,000
|
|
|
Dr. James K. Reed
|
|
|
15,000
|
|
|
|
150,000
|
|
|
Edward Reinfurt
|
|
|
15,000
|
|
|
|
150,000
|
|
|
Frank C. Sarratori
|
|
|
30,000
|
|
|
|
300,000
|
|
|
Madeline Taylor
|
|
|
5,000
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officers:
|
|
|
|
|
|
|
|
|
|
Joseph A. Fleming
|
|
|
30,000
|
|
|
|
300,000
|
|
|
Susan M. Hollister
|
|
|
15,000
|
|
|
|
150,000
|
|
|
Patrick J. Hughes
|
|
|
15,000
|
|
|
|
150,000
|
|
|
Laura A. Mazzara
|
|
|
15,000
|
|
|
|
150,000
|
|
|
Jesse Tomczak
|
|
|
10,000
|
|
|
|
100,000
|
|
|
Total for Trustees and Executive Officers
|
|
|
215,000
|
(1)
|
|
$
|
2,150,000
|
|
|
|
(1)
|
At the minimum and adjusted maximum of the offering range, trustees and executive officers would beneficially own 1.3% and
0.8% of our outstanding shares of common stock, respectively.
|
THE REORGANIZATION AND OFFERING
Pioneer Bank’s board of trustees have
unanimously approved the plan of reorganization and minority stock issuance, which we refer to as the plan of reorganization. We
have filed applications and notices with each of NYSDFS and the Federal Deposit Insurance Corporation, as well as a holding company
application with the Federal Reserve Board and a change in control application with the NYSDFS, regarding our reorganization into
a two-tier mutual holding company structure and to authorize Pioneer Bancorp, Inc. to own 100% of the common stock of Pioneer Bank,
and to issue and sell Pioneer Bancorp, Inc. common stock in a minority stock offering. These regulatory agencies have granted Pioneer
Bancorp, Inc. conditional approval to commence the offering. However, the final approval of the NYSDFS and the Federal Reserve
Board and the final non-objection of the Federal Deposit Insurance Corporation is required before we can consummate the reorganization
and the offering. Any approval by the NYSDFS or the Federal Reserve Board or non-objection of the Federal Deposit Insurance Corporation
does not constitute a recommendation or endorsement of the plan of reorganization.
General
The board of trustees of Pioneer Bank unanimously
approved the plan of reorganization on January 15, 2019. Pursuant to the plan of reorganization, Pioneer Bank will reorganize into
the “two-tier” mutual holding company form of organization whereby Pioneer Bancorp, Inc. will become the mid-tier stock
holding company of Pioneer Bank and Pioneer Bancorp, MHC will become the top-tier mutual holding company. Pioneer Bank intends
to fund its charitable foundation, Pioneer Bank Charitable Foundation, with 2.0% of the outstanding shares of Pioneer Bancorp,
Inc. common stock at the completion of the offering, including shares issued to Pioneer Bancorp, MHC, and $250,000 in cash. After
the completion of the offering, purchasers in the offering and the charitable foundation will own 45% of the common stock of Pioneer
Bancorp, Inc. and Pioneer Bancorp, MHC will own the remaining 55% of the outstanding shares of Pioneer Bancorp, Inc.
Pursuant to the plan of reorganization,
we will offer shares of common stock for sale in the subscription offering to our eligible account holders, our tax-qualified employee
benefit plans, including our employee stock ownership plan and 401(k) plan, to our supplemental eligible account holders and to
our other depositors. If shares remain available for sale, we may offer common stock for sale in a community offering to members
of the general public, with a preference given to natural persons residing in Albany, Greene, Rensselaer, Saratoga, Schenectady
and Warren Counties in New York.
We also may offer for sale shares of common
stock not purchased in the subscription or community offerings through a syndicated community offering for which Sandler O’Neill
& Partners, L.P. will be sole manager. See “—Syndicated Offering.” We have the right to accept or reject,
in whole or in part, any orders to purchase shares of the common stock received in the community offering. The community offering
may begin concurrently with, during or promptly after the subscription offering and must be completed within 45 days after the
completion of the subscription offering unless otherwise extended with the permission of the NYSDFS, the Federal Deposit Insurance
Corporation and the Federal Reserve Board. See “—Community Offering.”
We intend to retain between $28.0 million
and $38.3 million of the net proceeds of the offering (or $44.2 million at the adjusted maximum of the offering range) and to invest
between $34.8 million and $47.4 million of the net proceeds in Pioneer Bank (or $54.6 million at the adjusted maximum of the offering
range). The offering will be consummated only upon the issuance of at least the minimum number of shares of our common stock offered
pursuant to the plan of reorganization.
We determined the number of shares of common
stock to be offered in the offering based upon an independent valuation of the estimated pro forma market value of Pioneer Bancorp,
Inc. All shares of common stock to be sold in the offering will be sold at $10.00 per share. Investors will not be charged a commission
to purchase shares of common stock. The independent valuation will be updated and the final number of shares of common stock to
be issued in the offering will be determined at the completion of the offering. See “—Stock Pricing and Number of Shares
to be Issued” for more information as to the determination of the estimated pro forma market value of the common stock.
The following is a brief summary of the
plan of reorganization and is qualified in its entirety by reference to the plan of reorganization, which should be consulted for
further information about the reorganization and offering. A copy of the plan of reorganization is available for inspection at
each office of Pioneer Bank. The plan of reorganization is also filed as an exhibit to Pioneer Bank’s Form 86-AC application,
of which this prospectus is a part, copies of which may be obtained from the NYSDFS. A copy of the plan of reorganization is also
filed as an exhibit to Pioneer Bank’s notice to convert from mutual to stock form, of which this prospectus is a part, copies
of which may be obtained from the Federal Deposit Insurance Corporation, and as an exhibit to Pioneer Bank’s holding company
application, of which this prospectus is a part, copies of which may be obtained from the Federal Reserve Board. The plan of reorganization
is also filed as an exhibit to the registration statement we have filed with the Securities and Exchange Commission, of which this
prospectus is a part, copies of which may be obtained from the Securities and Exchange Commission or online at the Securities and
Exchange Commission’s website,
www.sec.gov
. See “Where You Can Find Additional Information.” A copy of
the plan of reorganization is also included as an appendix to the proxy statement for Pioneer Bank’s special meeting of depositors.
Reasons for the Reorganization
The primary purpose of the reorganization
is to establish a holding company and to convert Pioneer Bank to the stock form of ownership in order to compete and grow more
effectively in the financial services marketplace. The stock form of ownership is the corporate form used by commercial banks,
most major businesses and a large number of savings institutions.
The reorganization will permit us to issue
and sell capital stock, which is a source of capital not available to mutual savings institutions. This will enable customers,
employees, management and directors to have an equity ownership interest in our company. Management believes that this will enhance
the long-term growth and performance of Pioneer Bank and Pioneer Bancorp, Inc. by enabling us to attract and retain qualified employees
who have a direct interest in our financial success. It may also generate greater customer interest in the overall performance
of Pioneer Bank. The reorganization also will give us greater flexibility to structure and finance the expansion of our operations
and increase our capital to support future growth and profitability, including the potential acquisition of other financial service
businesses, financial institution and branch offices, and to diversify into other financial services. The reorganization and the
capital raised in the offering are expected to increase our lending capacity by providing us with additional capital to support
new loans and higher lending limits, support the growth of our banking franchise, provide an additional cushion against unforeseen
risk and expand our asset base. Lastly, the reorganization will enable us to better manage our capital by providing broader investment
opportunities through the holding company structure and by enabling us to repurchase our common stock as market conditions permit.
Although the reorganization and offering will create a stock savings institution and stock holding company, only a minority of
the common stock will be offered for sale in the offering. As a result, our mutual form of ownership and our ability to provide
community-oriented financial services will be preserved through the mutual holding company structure.
Our board of trustees believes that the
advantages of the mutual holding company structure outweigh the potential disadvantages of the mutual holding company structure
to minority stockholders, including the inability of stockholders other than Pioneer Bancorp, MHC to own a majority of the common
stock of Pioneer Bancorp, Inc. A majority of our voting stock will be owned by Pioneer Bancorp, MHC, which will be controlled by
its board of trustees. While this structure will permit management to focus on our long-term business strategy for growth and capital
redeployment without undue pressure from stockholders, it will also serve to perpetuate our existing management and directors.
Pioneer Bancorp, MHC will be able to elect all the members of Pioneer Bancorp, Inc.’s board of directors, and will be able
to control the outcome of nearly all matters presented to our stockholders for resolution by vote. No assurance can be given that
Pioneer Bancorp, MHC will not take action adverse to the interests of stockholders other than Pioneer Bancorp, MHC. For example,
Pioneer Bancorp, MHC could prevent the sale of control of Pioneer Bancorp, Inc., or defeat a candidate for the board of directors
of Pioneer Bancorp, Inc. or other proposals put forth by stockholders.
Since we will not be offering all of our
common stock for sale in the offering, the reorganization will result in less capital raised in comparison to a standard mutual-to-stock
conversion. We are not undertaking a standard mutual-to-stock conversion at this time since we do not believe we could effectively
deploy that amount of additional capital on a short-term or near-term basis. The reorganization, however, will allow us to raise
additional capital in the future because a majority of our common stock will be available for sale in the event of a conversion
of Pioneer Bancorp, MHC to stock form. Our board of directors has determined that offering 43% of our outstanding shares of common
stock for sale in the offering allows for an efficient use of net proceeds for Pioneer Bancorp, Inc. and Pioneer Bank over the
next several years.
The reorganization does not preclude the
future conversion of Pioneer Bancorp, MHC from the mutual to stock form of organization. No assurance can be given when, if ever,
Pioneer Bancorp, MHC will convert to stock form or what conditions the Federal Reserve Board or other regulatory agencies may impose
on such a transaction if and when conducted. See “Summary—Possible Conversion of Pioneer Bancorp, MHC to Stock Form.”
Approvals Required
The affirmative vote of (i) 75% of the total
votes cast by depositors of Pioneer Bank; and (ii) a majority of total votes eligible to be cast by depositors of Pioneer Bank
at a special meeting of depositors, either in person or by proxy, is required to approve the plan of reorganization. In addition,
an affirmative vote of a majority of total votes eligible to be cast by depositors is required to approve the funding of the charitable
foundation. A special meeting of depositors to consider and vote upon the plan of reorganization has been called for [special meeting
date]. The reorganization also must be approved by the NYSDFS and the Federal Deposit Insurance Corporation must issue its intent
not to object to the reorganization. Additionally, the Federal Reserve Board must approve the offering and our holding company
application. We cannot consummate the reorganization without obtaining these approvals and non-objections.
Effects of Reorganization on Depositors and Borrowers
Continuity.
While the reorganization
is being accomplished, our normal business of accepting deposits and making loans will continue without interruption. Pioneer Bank
will continue to be subject to regulation by NYSDFS and the Federal Deposit Insurance Corporation. After the reorganization, we
will continue to offer existing services to depositors, borrowers and other customers. The trustees serving Pioneer Bank at the
time of the reorganization will be the directors of Pioneer Bank and of Pioneer Bancorp, Inc. and the trustees of Pioneer Bancorp,
MHC after the reorganization, except that pursuant to New York law, one trustee of Pioneer Bancorp, MHC cannot also serve on the
board of directors of Pioneer Bancorp, Inc. and Pioneer Bank to ensure that one director of Pioneer Bancorp, Inc. and Pioneer Bank
is considered an “unaffiliated director” under New York law. The officers of Pioneer Bank at the time of the reorganization
will retain their positions after the reorganization.
Effect on Deposit Accounts.
Pursuant to the plan of reorganization, each depositor of Pioneer Bank at the time of the reorganization will automatically continue
as a depositor after the reorganization, and the deposit balance, interest rate and other terms of such deposit accounts will not
change as a result of the reorganization. Each such account will be insured by the Federal Deposit Insurance Corporation, without
interruption, to the same extent as before the reorganization. Depositors will continue to hold their existing certificates, passbooks
and other evidences of their accounts.
Effect on Loans.
No loan outstanding
from Pioneer Bank will be affected by the reorganization, and the amount, interest rate, maturity and security for each loan will
remain as it was contractually fixed before the reorganization.
Effect on Voting Rights of Depositors.
In Pioneer Bank’s current mutual form, the right to elect members of the board of trustees is vested exclusively in its board
of trustees. After the reorganization, Pioneer Bank will be under the direction of its board of directors who will be elected by
Pioneer Bancorp, Inc., as the sole stockholder of Pioneer Bank, and will have the authority to vote on all matters of Pioneer Bank
requiring stockholder approval. The common stockholders of Pioneer Bancorp, Inc. will have exclusive voting rights with respect
to Pioneer Bancorp, Inc. Currently, eligible depositors of Pioneer Bank have the right to vote on any liquidation, reorganization
or conversion transaction undertaken by Pioneer Bank. After the reorganization, Pioneer Bank depositors will continue to have the
same voting rights in Pioneer Bancorp, MHC as they had in Pioneer Bank before the reorganization, specifically the right to vote
on any liquidation or mutual-to-stock conversion transaction undertaken by Pioneer Bancorp, MHC.
Tax Effects.
We have received
opinions of counsel and our tax advisors with regard to the federal and state income tax consequences of the reorganization to
the effect that the reorganization will not be taxable for federal or state income tax purposes to Pioneer Bank or its depositors.
See “—Material Income Tax Consequences.”
Effect on Liquidation Rights.
Each depositor of Pioneer Bank, in its present form, has a deposit account in Pioneer Bank and
a pro rata ownership interest in the net worth of Pioneer Bank based upon the deposit balance of his or her account. This interest
is tied to the depositor’s account and has no tangible market value separate from the deposit account. This interest may
only be realized in the unlikely event of a complete liquidation of Pioneer Bank. Any depositor who opens a deposit account obtains
a pro rata ownership interest in Pioneer Bank without any additional payment beyond the amount of the deposit. A depositor who
reduces or closes his or her account receives a portion or all, respectively, of the balance in the deposit account but nothing
for his or her ownership interest in the net worth of Pioneer Bank, which is lost to the extent that the balance in the account
is reduced or closed. Consequently, depositors in a mutual savings bank normally have no way of realizing the value of their ownership
interest, which has realizable value only in the unlikely event that the institution is completely liquidated. If this occurs,
the depositors of record at that time, would share pro rata in any residual surplus and reserves of Pioneer Bank after all other
claims of creditors, including claims of depositors to the amounts of their deposits, are paid, subject to the right to garnish
such assets under New York law.
Following
the reorganization, all holders of a deposit account with Pioneer Bank will have a pro rata ownership interest in the net worth
of Pioneer Bancorp, MHC based upon their deposit balances and will have liquidation rights with respect to Pioneer Bancorp, MHC
to the same extent that depositors currently have liquidation rights in Pioneer Bank. In each case, no person who ceases to be
the holder of a deposit account with Pioneer Bank will have any liquidation rights with respect to Pioneer Bancorp, MHC. Borrowers
of Pioneer Bank will not receive any rights in the mutual holding company in connection with any borrowings from Pioneer Bank.
Additionally, as part of our reorganization
into the mutual holding company form of organization, Pioneer Bank will establish a liquidation account for the benefit of the
Eligible Account Holders and Supplemental Eligible Account Holders. In the unlikely event that Pioneer Bank were to liquidate after
the reorganization, each eligible account holder and supplemental eligible account holder, who continues to maintain a deposit
account at Pioneer Bank, would have a claim to a pro-rata interest in the liquidation account after payment of all creditors but
prior to any payment to Pioneer Bancorp, Inc., as the sole stockholder of Pioneer Bank’s capital stock. See “—Liquidation
Rights.”
Stock Pricing and Number of Shares to be
Issued
The plan of reorganization and applicable
regulations require that the aggregate purchase price of the common stock sold in the offering must be based on the appraised pro
forma market value of the common stock, as determined by an independent valuation. We have retained RP Financial to prepare an
independent valuation. For its services in preparing the initial valuation, RP Financial will receive a fee of $95,000, as well
as payment for reimbursable expenses and an additional $10,000 for each updated valuation prepared. We have paid RP Financial no
other fees during the previous three years. We have agreed to indemnify RP Financial and its employees and affiliates against specified
losses, including any losses in connection with claims under the federal securities laws, arising out of its services as independent
appraiser, except where such liability results from RP Financial’s bad faith or negligence.
The independent valuation was prepared by
RP Financial in reliance upon the information contained in this prospectus, including the consolidated financial statements of
Pioneer Bank that appear starting on page F-1 of this prospectus. RP Financial also considered the following factors, among others:
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the present results and financial condition of Pioneer Bank and the projected consolidated results and financial condition
of Pioneer Bancorp, Inc.;
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the economic and demographic conditions in Pioneer Bank’s existing market area;
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certain historical, financial and other information relating to Pioneer Bank;
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a comparative evaluation of the operating and financial characteristics of Pioneer Bank with those of other publicly traded
savings institutions;
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the effect of the offering on Pioneer Bancorp, Inc.’s stockholders’ equity and earnings potential;
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the proposed dividend policy of Pioneer Bancorp, Inc.; and
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the trading market for securities of comparable institutions and general conditions in the market for such securities.
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The independent valuation is also based
on an analysis of a peer group of publicly traded bank holding companies and savings and loan holding companies that RP Financial
considered comparable to Pioneer Bancorp, Inc. under regulatory guidelines applicable to the independent valuation. Under these
guidelines, a minimum of ten peer group companies were selected from the universe of all publicly-traded financial institutions
with relatively comparable resources, strategies and financial and other operating characteristics. Such companies were also required
to be traded on an exchange (such as Nasdaq or the New York Stock Exchange). The peer group companies selected for Pioneer Bancorp,
Inc. also consisted of fully-converted stock institutions that were not subject to an actual or rumored acquisition and that had
been in fully-converted form for at least one year. In addition, RP Financial limited the peer group companies to the following
three selection criteria: (1) institutions located in the Mid-Atlantic with assets between $725 million and $2.5 billion, tangible
equity-to-assets ratios of greater than 7.5% and positive core and reported earnings; (2) institutions located in the Northeast
with assets between $725 million and $2.5 billion, tangible equity-to-assets ratios of greater than 7.5% and positive core and
reported earnings; and (3) institutions located in the Midwest with assets between $725 million and $2.5 billion, tangible equity-to-assets
ratios of greater than 7.5% and positive core and reported earnings.
The independent valuation considered the
pro forma effect of the offering. Consistent with regulatory appraisal guidelines, the appraisal applied three primary methodologies:
(1) the pro forma price-to-book value approach applied to both reported book value and tangible book value; (2) the pro forma price-to-earnings
approach applied to reported and core earnings; and (3) the pro forma price-to-assets approach. The market value ratios applied
in the three methodologies were based on the current market valuations of the peer group companies. RP Financial placed the greatest
emphasis on the price-to-earnings and price-to-book approaches in estimating pro forma market value. RP Financial did not consider
a pro forma price-to-assets approach to be as meaningful in preparing the appraisal, as this approach is more meaningful when a
company has low equity or earnings. The price-to-assets approach is less meaningful for a company like Pioneer Bancorp, Inc., as
Pioneer Bank has equity in excess of regulatory capital requirements and positive reported and core earnings.
In applying each of the valuation methods,
RP Financial considered adjustments to the pro forma market value based on a comparison of Pioneer Bancorp, Inc. with the peer
group. RP Financial made slight upward adjustments for: (1) profitability, growth and viability of earnings; and (2) asset growth.
RP Financial applied a slight downward adjustment for (1) dividends and made no adjustments for: (1) financial condition; (2) marketing
of the issue; (3) management; (4) effect of government regulations and regulatory reform; and (5) liquidity of the shares of common
stock. The slight upward adjustment applied for profitability, growth and viability of earnings took into consideration Pioneer
Bank’s more favorable efficiency ratio and higher pro forma returns as a percent of assets relative to the comparable peer
group measures. The slight upward adjustment applied for asset growth took into consideration Pioneer Bank’s stronger historical
asset growth and greater pro forma leverage capacity resulting from its higher level of equity as a percent of assets. The slight
downward adjustment applied for dividends took into consideration the mutual holding company structure and dividend waiver restrictions
in place for mutual holding companies under Federal Reserve Board regulations and policy that impact the ability of Pioneer Bancorp,
Inc. to pay dividends to minority stockholders, in comparison to the fully-converted peer group companies.
Included in RP Financial’s independent
valuation were certain assumptions as to the pro forma earnings of Pioneer Bancorp, Inc. after the offering used in determining
the appraised value. These assumptions included estimated expenses, an assumed after-tax rate of return of 1.86% at December 31,
2018 on the net offering proceeds and purchases in the open market of common stock by the stock-based benefit plan at the $10.00
per share purchase price. See “Pro Forma Data” for additional information concerning assumptions included in the independent
valuation and used in preparing pro forma data. The use of different assumptions may yield different results.
The independent valuation states that as
of February 8, 2019, the estimated pro forma market value of Pioneer Bancorp, Inc. was $196.4 million (inclusive of the shares
to be contributed to Pioneer Bank Charitable Foundation). Based on applicable regulations and on a minority offering percentage
of 43% established by Pioneer Bank’s board of trustees, this market value forms the midpoint of a range with a minimum of
$167.0 million and a maximum of $225.9 million. The number of shares offered will be equal to the aggregate offering price of the
shares divided by the $10.00 price per share. Based on the valuation range and the $10.00 offering price per share, the minimum
of the offering range is 7,179,465 shares, the midpoint of the offering range is 8,446,429 shares and the maximum of the offering
range is 9,713,393 shares.
Following commencement of the subscription
offering, the maximum of the valuation range may be increased by up to 15%, or up to $259.8 million, without resoliciting subscribers,
which will result in a corresponding increase of up to 15% in the maximum of the offering range, up to 11,170,402 shares, to reflect
changes in the market and financial conditions or demand for the shares. We will not decrease the minimum of the valuation range
and the minimum of the offering range without a resolicitation of subscribers. The offering price of $10.00 per share will remain
fixed. See “—Additional Limitations on Common Stock Purchases” as to the method of distribution of additional
shares to be issued upon an increase in the offering range to up to 11,170,402 shares.
The board of trustees of Pioneer Bank reviewed
the independent valuation and, in particular, considered the following:
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Pioneer Bank’s financial condition and results of operations;
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a comparison of financial performance ratios of Pioneer Bank to those of other financial institutions of similar size; and
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market conditions generally and in particular for financial institutions.
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All of these factors are set forth in the
independent valuation. The board of trustees also reviewed the methodology and the assumptions used by RP Financial to prepare
the independent valuation and believes that such assumptions were reasonable. The offering range may be amended with the approval
of the NYSDFS and the Federal Reserve Board as a result of subsequent developments in the financial condition of Pioneer Bank or
market conditions generally. If the independent valuation is updated to amend the pro forma market value of Pioneer Bancorp, Inc.
to less than $167.0 million or to more than $259.8 million, the appraisal will be filed with the Securities and Exchange Commission
by a post-effective amendment to Pioneer Bancorp, Inc.’s registration statement.
The characteristics of publicly-traded shares of a mutual holding
company subsidiary differ from those of publicly-traded shares of fully converted stock holding companies (those in which all shares
are held by public stockholders) in several ways, including that: (1) publicly-traded shares of a mutual holding company subsidiary
tend to have less liquidity because they represent less than 50% of the outstanding shares of the company; (2) the holders of publicly-traded
shares of a mutual holding company subsidiary cannot exercise voting control; (3) publicly-traded shares of a mutual holding company
subsidiary are affected by the possibility of a conversion of the mutual holding company to stock form; and (4) the publicly-traded
shares of a mutual holding company subsidiary are adversely affected by regulatory restrictions on the ability of the mutual holding
company to waive the receipt of dividends declared by its subsidiary, thereby precluding or limiting the subsidiary’s ability
to pay dividends to public stockholders. To account for the unique characteristics of publicly-traded shares of a mutual holding
company, RP Financial included in its appraisal the pricing ratios of Pioneer Bancorp, Inc. on both a non-fully converted basis
and a fully converted basis and compared each to the pricing ratios of the peer group. The decision to also provide Pioneer Bancorp,
Inc.’s pricing ratios on a fully converted basis is meant to: (1) facilitate the comparison of the peer group, which consists
of fully converted companies, to Pioneer Bancorp, Inc.; and (2) establish the pro forma market value range of 100% of the shares
of Pioneer Bancorp, Inc., which forms the basis for determining the offering range. Tables presenting select pricing ratios of Pioneer Bancorp, Inc. on both a non-fully converted
basis and a fully converted basis and comparing such ratios to similar ratios for the peer group follow.
The following table presents a summary of
selected pricing ratios for the peer group companies and for Pioneer Bancorp, Inc. on a non-fully converted basis (
i.e.
,
the table assumes that 43% of Pioneer Bancorp, Inc.’s outstanding shares of common stock is sold in the offering, as opposed
to 100% of its outstanding shares of common stock). These figures are from the appraisal report prepared by RP Financial, LC. Compared
to the average pricing ratios of the peer group, and based upon the information in the following table, Pioneer Bancorp, Inc.’s
pro forma pricing ratios at the midpoint of the offering range indicated a discount of 20.2% on a non-fully converted price-to-earnings
basis and a discount of 19.4% on a non-fully converted price-to-book value basis, and a discount of 19.1% on a non-fully converted
price-to-tangible book value basis.
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Non-Fully Converted Pro
Forma Price-to-Earnings
Multiple
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Non-Fully Converted Pro
Forma Price-to-Book Value
Ratio
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Non-Fully Converted Pro
Forma Price-to-Tangible
Book Value Ratio
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Pioneer Bancorp, Inc.
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Adjusted Maximum
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15.54
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x
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117.37
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%
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123.00
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%
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Maximum
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13.51
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108.23
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113.64
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Midpoint
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11.74
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99.30
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104.60
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Minimum
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9.98
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89.37
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94.43
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Fully Converted Pro
Forma Price-to-Earnings
Multiple
(1)
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Fully Converted Pro
Forma Price-to-Book Value
Ratio
(1)
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Fully Converted Pro
Forma Price-to-Tangible
Book Value Ratio
(1)
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Valuation of peer group companies as of February 8, 2019
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Averages
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14.72
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x
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123.16
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%
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129.23
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%
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Medians
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14.63
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117.29
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125.03
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(1)
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Information for the peer group companies is based upon actual earnings for the twelve months ended September 30, 2018 (or for
the latest available date) and information for Pioneer Bancorp, Inc. is based upon actual earnings for the twelve months ended
December 31, 2018. These ratios are different from the ratios in “Pro Forma Data.”
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The following table presents a summary of
selected pricing ratios for the peer group companies and the resulting pricing ratios for Pioneer Bancorp, Inc. on a fully converted
equivalent basis. Compared to the average fully converted pricing ratios of the peer group, Pioneer Bancorp, Inc.’s pro forma
fully converted pricing ratios at the midpoint of the offering range indicated a discount of 21.67% on a fully converted price-to-earnings
basis, a discount of 45.54% on a fully converted price-to-book value basis, and a discount of 46.27% on a fully converted price-to-tangible
book value basis.
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Fully Converted Pro
Forma Price-to-Earnings
Multiple
(1)
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Fully Converted Pro
Forma Price-to-Book Value
Ratio
(1)
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Fully Converted Pro
Forma Price-to-Tangible
Book Value Ratio
(1)
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Pioneer Bancorp, Inc.
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Adjusted Maximum
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15.20
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x
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75.36
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%
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77.64
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%
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Maximum
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13.23
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71.07
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73.42
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Midpoint
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11.53
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67.07
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69.44
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Minimum
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9.83
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62.62
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65.06
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Valuation of peer group companies as of February 8, 2019
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|
|
Averages
|
|
|
14.72
|
x
|
|
|
123.16
|
%
|
|
|
129.23
|
%
|
|
Medians
|
|
|
14.63
|
|
|
|
117.29
|
|
|
|
125.03
|
|
|
|
(1)
|
Information for the peer group companies is based upon
actual earnings for the twelve months ended September 30, 2018 (or for the latest available date) and information for Pioneer
Bancorp, Inc. is based upon actual earnings for the twelve months ended December 31, 2018. These ratios are different from the
ratios in “Pro Forma Data.”
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The fully converted pro forma calculations
for Pioneer Bancorp, Inc. include the following assumptions:
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·
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8% of the shares sold in a full conversion offering are purchased by an employee stock ownership plan, with the expense to
be amortized over 20 years;
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·
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4% of the shares sold in a full conversion offering are purchased by a stock-based benefit plan, with the expense to be amortized
over five years; and
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·
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options equal to 10% of the shares sold in a full conversion offering are granted under a stock-based benefit plan, with option
expense of $2.92 per option, and with the expense to be amortized over five years.
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The independent valuation is not intended,
and must not be construed, as a recommendation of any kind as to the advisability of purchasing our shares of common stock. RP
Financial did not independently verify our consolidated financial statements that appear starting on page F-1 of this prospectus
and other information that we provided to them, nor did RP Financial independently value our assets or liabilities. The independent
valuation considers Pioneer Bank as a going concern and should not be considered as an indication of the liquidation value of Pioneer
Bank. Moreover, because the valuation is necessarily based upon estimates and projections of a number of matters, all of which
may change from time to time, no assurance can be given that persons purchasing our common stock in the offering will thereafter
be able to sell their shares at prices at or above the $10.00 price per share.
If the update to the independent valuation
at the conclusion of the offering results in an increase in the maximum of the valuation range to more than $259.8 million and
a corresponding increase in the offering range to more than 11,170,402 shares, or a decrease in the minimum of the valuation range
to less than $167.0 million and a corresponding decrease in the offering range to less than 7,179,465 shares, then we will promptly
return with interest at [interest rate]% per annum all funds previously delivered to us to purchase shares of common stock in the
subscription and community offerings and cancel deposit account withdrawal authorizations and, after receiving the approval of
the NYSDFS, we may terminate the plan of reorganization. Alternatively, we may establish a new offering range, extend the offering
period and commence a resolicitation of purchasers or take other actions as permitted by the NYSDFS to complete the offering. If
we extend the offering and conduct a resolicitation due to a change in the independent valuation, we will notify subscribers of
the extension of time and of the rights of subscribers to place a new stock order for a specified period of time. Any single offering
extension will not exceed 60 days and aggregate extensions may not conclude beyond ____________, 2021, which is two years after
the date on which the NYSDFS approved the plan of reorganization.
An increase in the number of shares to be
issued in the offering would decrease both a subscriber’s ownership interest and Pioneer Bancorp, Inc.’s pro forma
earnings and stockholders’ equity on a per share basis while increasing stockholders’ equity on an aggregate basis.
A decrease in the number of shares to be issued in the offering would increase both a subscriber’s ownership interest and
Pioneer Bancorp, Inc.’s pro forma earnings and stockholders’ equity on a per share basis, while decreasing stockholders’
equity on an aggregate basis.
A copy of the independent valuation report
of RP Financial, together with the detailed memorandum setting forth the method and assumptions used in the appraisal report, is
filed as an exhibit to each of the documents specified under “Where You Can Find Additional Information.”
Subscription Offering and Subscription Rights
According to the plan of reorganization,
rights to subscribe for shares of common stock in the subscription offering have been granted in the following descending order
of priority. The filling of all subscriptions that we receive will depend on the availability of common stock after satisfaction
of all subscriptions of all persons having prior rights in the subscription offering and on the purchase and ownership limitations
set forth in the plan of reorganization and as described below under “—Additional Limitations on Common Stock Purchases.”
Priority 1: Eligible Account Holders
.
Subject to the maximum purchase limitations, each depositor of Pioneer Bank with aggregate deposit account balances of $100.00
or more (a “Qualifying Deposit”) at the close of business on December 31, 2017 (an “Eligible Account Holder”)
will receive, without payment, nontransferable subscription rights to purchase up to the greater of the following:
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·
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$150,000 (15,000 shares) of our common stock,
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·
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0.10% of the total number of shares of common stock issued in the offering, or
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·
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15 times the product of the number of subscription shares offered multiplied by a fraction of which the numerator is the aggregate
Qualifying Deposit account balances of the Eligible Account Holder and the denominator is the aggregate Qualifying Deposit account
balances of all Eligible Account Holders.
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The balance of qualifying deposits of all
Eligible Account Holders was approximately $_________ million. See “—Additional Limitations on Common Stock Purchases.”
If there are not sufficient shares available to satisfy all subscriptions, shares will first be allocated so as to permit each
Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100
shares or the number of shares for which he or she subscribed. Thereafter, any remaining unallocated shares will be allocated to
each remaining Eligible Account Holder whose subscription remains unfilled in same the proportion that the amount of his or her
Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions
remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Eligible Account Holders, the excess
shall be reallocated among those Eligible Account Holders whose subscriptions are not fully satisfied until all available shares
have been allocated.
If there is an oversubscription, failure
to list an account could result in fewer shares being allocated than if all accounts had been disclosed. If there is an oversubscription,
the subscription rights of Eligible Account Holders who are also trustees or officers of Pioneer Bank or who are associates of
such persons will be subordinated to the subscription rights of other Eligible Account Holders to the extent attributable to their
increased deposits in the 12 months preceding December 31, 2017.
To ensure proper allocation of our shares
of common stock, each Eligible Account Holder must list on his or her stock order form all deposit accounts in which he or she
has an ownership interest on December 31, 2017. Failure to list an account, or providing incorrect information, could result in
the loss of all or part of a subscriber’s stock allocation.
Priority 2: Tax-Qualified Plans
.
Our tax-qualified employee plans, specifically Pioneer Bank’s employee stock ownership plan and 401(k) plan, will receive,
without payment, nontransferable subscription rights to purchase in the aggregate up to 4.90% of the outstanding shares of common
stock of Pioneer Bancorp, Inc. issued and outstanding following the completion of the offering, which includes shares issued to
Pioneer Bancorp, MHC and contributed to the charitable foundation. The employee stock ownership plan intends to purchase 3.92%
of the outstanding shares of common stock of Pioneer Bancorp, Inc. following the completion of the offering. If the offering is
oversubscribed, subscriptions for shares by the tax-qualified employee plans may be satisfied, in whole or in part, through open
market purchases by the tax-qualified employee plans after the completion of the offering.
Priority
3: Supplemental Eligible Account Holders
.
To the extent there are sufficient
shares of common stock remaining after satisfaction of subscriptions by Eligible Account Holders and by tax-qualified plans, each
depositor of Pioneer Bank (other than trustees and officers of Pioneer Bank) with a Qualifying Deposit at the close of business
on [supplemental date], who is not an Eligible Account Holder (a “Supplemental Eligible Account Holder”) will receive,
without payment, nontransferable subscription rights to purchase, subject to the overall purchase limitations, up to the greater
of:
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·
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$150,000 (15,000 shares) of our common stock,
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·
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0.10% of the total number of shares of common stock issued in the offering, or
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·
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15 times the product of the number of subscription shares offered multiplied by a fraction of which the numerator is the aggregate
Qualifying Deposit account balances of the Supplemental Eligible Account Holder and the denominator is the aggregate Qualifying
Deposit account balances of all Supplemental Eligible Account Holders.
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The balance of qualifying deposits of all
Supplemental Eligible Account Holders was approximately $______ million. See “—Additional Limitations on Common Stock
Purchases.” If there are not sufficient shares available to satisfy all subscriptions, shares will first be allocated so
as to permit each Supplemental Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation
equal to the lesser of 100 shares or the number of shares for which he or she subscribed. Thereafter, any remaining unallocated
shares will be allocated to each remaining Supplemental Eligible Account Holder whose subscription remains unfilled in same the
proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing
Supplemental Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed
for by any one or more Supplemental Eligible Account Holders, the excess shall be reallocated among those Supplemental Eligible
Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.
To ensure proper allocation of our shares
of common stock, each Supplemental Eligible Account Holder must list on his or her stock order form all deposit accounts in which
he or she has an ownership interest on [supplemental date]. If there is an oversubscription, failure to list an account could result
in fewer shares being allocated than if all accounts had been disclosed.
Priority 4: Other Depositors.
To the extent that there are sufficient shares of common stock remaining after satisfaction of subscriptions by Eligible Account
Holders, the tax-qualified employee plans and Supplemental Eligible Account Holders, and subject to the maximum purchase limitations,
each depositor of Pioneer Bank who is not an eligible account holder, or supplemental eligible account holder, as of the close
of business on [voting record date], will receive nontransferable subscription rights to purchase up to $150,000 (15,000 shares)
of common stock (an “Other Depositor”).
If there is an oversubscription in this
category, the available shares of common stock will be allocated proportionately based on the size of such Other Depositors’
orders.
To ensure proper allocation of stock, each
other depositor must list on his or her stock order form all deposit accounts in which he or she had an ownership interest on [voting
record date]. Failure to list an account, or providing incorrect information, could result in the loss of all or part of a subscriber’s
stock allocation in the event the offering is oversubscribed.
Expiration Date
. The subscription
offering will expire at 5:00 p.m., Eastern Time, on [expiration date], unless extended by us for up to 45 days or such additional
periods with the approval of the NYSDFS, the Federal Deposit Insurance Corporation and the Federal Reserve Board. Subscription
rights will expire whether or not each eligible depositor can be located. We may decide to extend the expiration date of the subscription
offering for any reason, whether or not subscriptions have been received for shares at the minimum, midpoint, maximum or adjusted
maximum of the offering range. Subscription rights which have not been exercised before the expiration date will become void.
We will not execute orders until at least
the minimum number of shares of common stock has been sold in the offering. If at least 7,179,465 shares have not been sold in
the offering by [extension date #1] and the NYSDFS, the Federal Deposit Insurance Corporation and the Federal Reserve Board, have
not consented to an extension, all funds delivered to us to purchase shares of common stock in the offering will be returned promptly,
with interest at [interest rate]% per annum for funds received in the subscription and community offerings, and all deposit account
withdrawal authorizations will be canceled. If an extension beyond [extension date #1] is necessary and granted by the NYSDFS,
the Federal Deposit Insurance Corporation and the Federal Reserve Board, we will resolicit purchasers in the offering as described
under “—Procedure for Purchasing Shares in Subscription and Community Offerings—Expiration Date.”
Community Offering
To the extent that shares of common stock
remain available for purchase after satisfaction of all subscriptions by Eligible Account Holders, by our tax-qualified employee
stock benefit plans, by Supplemental Eligible Account Holders and Other Depositors, we will offer shares pursuant to the plan of
reorganization to members of the general public in a community offering. Shares will be offered in the community offering with
the following preferences:
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1.
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Natural persons residing in Albany, Greene, Rensselaer, Saratoga, Schenectady and Warren Counties in New York; and
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2.
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Other members of the general public.
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Subscribers in the community offering may
purchase up to $150,000 (15,000 shares) of common stock, subject to the overall purchase limitations. See “—Additional
Limitations on Common Stock Purchases.”
The opportunity to purchase shares of common stock in the community offering category
is subject to our right, in our sole discretion and reasonably consistent with achieving a reasonably wide distribution of the
common stock, to accept or reject any such orders in whole or in part either at the time of receipt of an order or as soon as practicable
following the expiration date of the offering.
If we do not have sufficient shares of common
stock available to fill the orders of natural persons residing in Albany, Greene, Rensselaer, Saratoga, Schenectady and Warren
Counties in New York, we will allocate the available shares among those persons in a manner that permits each of them, to the extent
possible, to purchase the lesser of 100 shares or the number of shares subscribed for by such person. Thereafter, unallocated shares
will be allocated among natural persons residing in that geographical area whose orders remain unsatisfied on an equal number of
shares basis per order. In connection with the allocation process, orders received for shares of common stock in the community
offering will first be filled up to a maximum of 2% of the shares sold in the offering, and thereafter any remaining shares will
be allocated on an equal number of shares basis per order until all shares have been allocated.
The term “residing” or “resident”
as used in this prospectus with respect to Albany, Greene, Rensselaer, Saratoga, Schenectady and Warren Counties in New York means
any person who occupies a dwelling within the local community, has a present intent to remain within the local community for a
period of time, and manifests the genuineness of that intent by establishing an ongoing physical presence within the local community
together with an indication that such presence within the local community is something other than merely transitory in nature.
We may utilize deposit or loan records or other evidence provided to us to determine whether a person is a resident. In all cases,
however, the determination shall be in our sole discretion.
Expiration Date.
The community
offering may begin concurrently with, during or promptly after the subscription offering, and is currently expected to terminate
at the same time as the subscription offering, and must terminate no more than 45 days following the subscription offering, unless
extended with the approval of the NYSDFS, the Federal Deposit Insurance Corporation and the Federal Reserve Board. We may decide
to extend the community offering for any reason and are not required to give purchasers notice of any such extension unless such
period extends beyond [extension date #1], in which event we will resolicit purchasers.
Syndicated Community Offering
If feasible, our board of trustees may decide
to offer for sale shares of common stock not subscribed for or purchased in the subscription and community offerings in a syndicated
offering, subject to such terms, conditions and procedures as we may determine, subject to any approvals required from the NYSDFS,
the Federal Deposit Insurance Corporation and the Federal Reserve Board, in a manner that will achieve a wide distribution of our
shares of common stock.
If a syndicated offering is held, Sandler
O’Neill & Partners, L.P. will serve as sole manager. If shares of common stock are sold in a syndicated offering, we
will pay a fee of 5.0% of the aggregate purchase price of the shares of common stock sold in the syndicated offering to Sandler
O’Neill & Partners, L.P. and any other broker-dealers included in the syndicated offering. The shares of common stock
will be sold at the same price per share ($10.00 per share) that the shares are sold in the subscription offering and the community
offering.
If there is a syndicated offering, it is
currently expected that investors would follow the same general procedures applicable to purchasing shares in the subscription
and community offerings (the use of order forms and the submission of funds directly to Pioneer Bancorp, Inc. for the payment of
the purchase price of the shares ordered) except that payment must be in immediately available funds (bank checks, money orders,
deposit account withdrawals from accounts at Pioneer Bank or wire transfers). See “—Procedure for Purchasing Shares
in Subscription and Community Offerings.”
If for any reason we cannot undertake a
syndicated offering of shares of common stock not purchased in the subscription and community offerings, or if there are an insignificant
number of shares remaining unsold after such offerings, we will try to make other arrangements for the sale of unsubscribed shares.
The NYSDFS, the Federal Deposit Insurance Corporation, the Federal Reserve Board and the Financial Industry Regulatory Authority
must approve any such arrangements.
Additional Limitations on Common Stock Purchases
The plan of reorganization includes the
following additional limitations on the number of shares of common stock that may be purchased in the offering:
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·
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The aggregate amount of outstanding common stock of Pioneer Bancorp, Inc. owned or controlled by persons other than Pioneer
Bancorp, MHC at the close of the reorganization and the offering must be less than 49% of Pioneer Bancorp, Inc.’s total outstanding
common stock.
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·
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No individual, or group of individuals exercising subscription rights through a single qualifying deposit account held jointly,
may purchase more than $150,000 (15,000 shares) in the offering. Except for the employee stock ownership plan and the 401(k) plan,
as described above, no person or entity, together with associates or persons acting in concert with such person or entity, may
purchase more than $300,000 (30,000 shares) of common stock in all categories of the offering combined, except that Pioneer Bancorp,
Inc may, in its sole discretion, and without further notice to or solicitation of subscribers or other prospective purchasers,
increase such maximum purchase limitation to 9.9% of the number of shares sold in the offering, provided that the total number
of shares purchased by persons, their associates and those persons with whom they are acting in concert, to the extent such purchases
exceed 5% of the shares sold in the offering, may not exceed, in the aggregate, 10% (or such higher percentage as may be determined
by our board of trustees with the approval of our banking regulators) of the total number of the shares sold in the offering;
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·
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The aggregate amount of common stock acquired in the stock offering by our tax-qualified employee benefit plans, including
our employee stock ownership plan and 401(k) plan may not exceed 4.9% of the outstanding shares of common stock of Pioneer Bancorp,
Inc. upon the completion of the stock offering, and may not exceed 4.9% of the stockholders’ equity of Pioneer Bancorp, Inc.
at the conclusion of the stock offering.
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·
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No person may purchase fewer than 25 shares of common stock, to the extent those shares are available for purchase;
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·
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The aggregate amount of common stock acquired in the stock offering by officers, directors and trustees of Pioneer Bancorp,
Inc. and Pioneer Bank and their associates, excluding any shares acquired through a tax-qualified employee plan, may not exceed
25% of the outstanding shares of common stock of Pioneer Bancorp, Inc. held by persons other than Pioneer Bancorp, MHC upon the
completion of the stock offering, and may not exceed 25% of the stockholders’ equity of Pioneer Bancorp, Inc. at the conclusion
of the stock offering;
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·
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Notwithstanding any other provision of the plan of reorganization, no person will be entitled to purchase any common stock
to the extent such purchase would be illegal under any federal law or state law or regulation or would violate regulations or policies
of the Financial Industry Regulatory Authority. Pioneer Bancorp, Inc. and/or its agents may ask for an acceptable legal opinion
from any purchaser as to the legality of such purchase and may refuse to honor any purchase order if such opinion is not timely
furnished; and
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·
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The board of directors of Pioneer Bancorp, Inc. has the right in its sole discretion to reject any order submitted by a person
whose representations our board of directors believes to be false or who it otherwise believes, either alone or acting in concert
with others, is violating, circumventing, or intends to violate, evade or circumvent the terms and conditions of the plan.
|
Depending upon market or financial conditions,
our board of trustees, with regulatory approval and without further approval of the depositors of Pioneer Bank, may decrease or
increase the purchase limitations. If a purchase limitation is increased, subscribers in the subscription offering who ordered
the maximum amount will be given the opportunity to increase their orders up to the then applicable limit. The effect of this type
of resolicitation will be an increase in the number of shares of common stock owned by persons who choose to increase their orders.
The term “associate” of a person
means:
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1.
|
any corporation or organization (other than Pioneer Bank, Pioneer Bancorp, Inc., Pioneer Bancorp, MHC or a majority-owned subsidiary
of any of these entities) of which the person is a senior officer, partner or, directly or indirectly, 10% beneficial stockholder;
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2.
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any trust or other estate in which the person has a substantial beneficial interest or serves as a trustee or in a similar
fiduciary capacity; or
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3.
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any relative or spouse of such person, or any relative of such spouse, who either has the same home as the person or who is
a director, trustee or officer of Pioneer Bank, Pioneer Bancorp, MHC or Pioneer Bancorp, Inc.
|
The term “acting in concert”
means persons seeking to combine or pool their 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. 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 us and may be based on any evidence upon which we choose to rely, including, without limitation, joint
account relationships or the fact that such persons have filed joint Schedules 13D with the Securities and Exchange Commission
with respect to other companies; provided, however, that the determination of whether a group is acting in concert remains subject
to review by the NYSDFS, the Federal Deposit Insurance Corporation and the Federal Reserve Board. Persons with the same address,
whether or not related, and persons exercising subscription rights through qualifying deposit accounts registered to the same address
will be deemed to be acting in concert unless we determine otherwise. Our directors and trustees are not treated as associates
of each other solely because of their membership on the boards of directors or trustees.
Common stock purchased in the offering will
be freely transferable except for shares purchased by directors and certain officers of Pioneer Bancorp, Inc. or Pioneer Bank and
except as described below. Any purchases made by any associate of Pioneer Bancorp, Inc. or Pioneer Bank for the explicit purpose
of meeting the minimum number of shares of common stock required to be sold in order to complete the offering shall be made for
investment purposes only and not with a view toward redistribution. In addition, under Financial Industry Regulatory Authority
guidelines, members of the Financial Industry Regulatory Authority and their associates are subject to certain restrictions on
transfer of securities purchased according to subscription rights and to certain reporting requirements upon purchase of these
securities. For a further discussion of limitations on purchases of our shares of common stock at the time of offering and thereafter,
see “—Certain Restrictions on Purchase or Transfer of Our Shares After the Offering” and “Restrictions
on Acquisition of Pioneer Bancorp, Inc.”
Plan of Distribution; Selling Agent and Underwriting Compensation
Subscription and Community Offerings.
To assist in the marketing of our shares of common stock in the subscription and community offerings, we have retained Sandler
O’Neill & Partners, L.P., which is a broker-dealer registered with the Financial Industry Regulatory Authority. Sandler
O’Neill & Partners, L.P. will assist us on a best efforts basis in the subscription and community offerings by:
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·
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consulting as to the securities marketing
implications of the plan of reorganization, including the percentage of common stock to be sold in the offering;
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·
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reviewing with the boards the financial
impact of the offering on us, based upon the independent appraiser’s appraisal of the common stock;
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reviewing all offering documents, including
the prospectus, stock order forms and related marketing materials;
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·
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assisting us in the design and implementation
of a marketing strategy for the offering;
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·
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assisting our management in scheduling
and preparing for discussions and meetings with potential investors and/or other broker-dealers in connection with the offering;
and
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·
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providing such other general advice and
assistance as may be requested to promote the successful completion of the offering.
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For these services, Sandler O’Neill
& Partners, L.P. will receive a fee of 1.0% of the aggregate dollar amount of all shares of common stock sold in the subscription
and community offerings. No fee will be payable to Sandler O’Neill & Partners, L.P. with respect to shares purchased
by directors, trustees, officers, employees or their immediate families and their personal trusts, shares purchased by our employee
benefit plans or trusts established for the benefit of our directors, officers and employees, and shares issued to the charitable
foundation.
Syndicated Community Offering.
If
shares of common stock are sold in a syndicated community offering, we will pay a fee of 5.0% of the aggregate purchase price of
the shares of common stock sold in the syndicated community offering to Sandler O’Neill & Partners, L.P. and any other
broker-dealers included in the syndicated community offering.
Expenses.
Sandler O’Neill
& Partners, L.P. also will be reimbursed for reasonable out-of-pocket accountable expenses in an amount not to exceed $10,000.
Sandler O’Neill & Partners, L.P. will reimburse any amounts paid or advanced by us in excess of their actual reasonable
out-of-pocket accountable expenses. If the plan of reorganization is terminated or if Sandler O’Neill & Partners, L.P.’s
engagement is terminated according to the provisions of the agency agreement, Sandler O’Neill & Partners, L.P. will only
receive reimbursement of its reasonable out-of-pocket expenses. We have separately agreed to pay Sandler O’Neill & Partners,
L.P. up to $85,000 in fees and expenses for serving as records agent, as described below.
Records Management
We have also engaged Sandler O’Neill
& Partners, L.P. as records agent in connection with the subscription and community offerings. In its role as records agent,
Sandler O’Neill & Partners, L.P., will assist us in the offering by:
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consolidating
deposit accounts and depositor vote calculation;
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assisting in designing and preparing stock order forms and depositor
proxy forms;
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organizing and supervising our Stock Information Center;
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·
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coordinating proxy solicitation and vote tabulation; and
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·
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providing subscription services.
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Sandler O’Neill & Partners, L.P.
will receive fees of $50,000 for these services, $10,000 of which was paid at the time of Sandler’s engagement and the remaining
balance of which will be paid upon closing of the offering. Sandler O’Neill & Partners, L.P. also will be reimbursed
for reasonable out-of-pocket accountable expenses in an amount not to exceed $35,000.
Indemnity
We will indemnify Sandler O’Neill
& Partners, L.P. against liabilities and expenses, including legal fees, incurred in connection with certain claims or litigation
arising out of or based upon untrue statements or omissions contained in the offering materials for the common stock, including
liabilities under the Securities Act of 1933, as well as certain other claims and litigation arising out of Sandler O’Neill
& Partners, L.P.’s engagement with respect to the offering.
Sandler O’Neill & Partners, L.P.
has not prepared any report or opinion constituting a recommendation or advice to us or to persons who subscribe for common stock,
nor have they prepared an opinion as to the fairness to us of the purchase price or the terms of the common stock to be sold in
the offering. Sandler O’Neill & Partners, L.P. does not express any opinion as to the prices at which common stock to
be issued may trade.
Solicitation of Offers by Officers and Directors
Some of our directors and executive officers
may participate in the solicitation of offers to purchase common stock in the subscription and community offerings. These persons
will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with the solicitation, which out-of-pocket
expenses, if any, are expected to be insignificant. Other regular employees of Pioneer Bank may assist in the offering, but only
in ministerial capacities, and may provide clerical work in effecting a sales transaction. No offers or sales may be made by tellers
or at the teller counters. Investment-related questions of prospective purchasers will be directed to executive officers or registered
representatives of Sandler O’Neill & Partners, L.P. Our other employees have been instructed not to solicit offers to
purchase shares of common stock or provide advice regarding the purchase of common stock. We will rely on Rule 3a4-1 under the
Securities Exchange Act of 1934, and sales of common stock will be conducted within the requirements of Rule 3a4-1, so as to permit
officers, directors and employees to participate in the sale of common stock. None of our officers, directors or employees will
be compensated in connection with their participation in the offering.
Procedure for Purchasing Shares in Subscription and Community
Offerings
Expiration Date
.
The
subscription and community offerings will expire at 5:00 p.m., Eastern Time, on [expiration date], unless we extend one or both
for up to 45 days, with the approval of the NYSDFS, the Federal Deposit Insurance Corporation and the Federal Reserve Board. This
extension may be approved by us, in our sole discretion, without notice to purchasers in the offering. Any extension of the subscription
and/or community offering beyond [extension date #1] would require the NYSDFS’s, the Federal Deposit Insurance Corporation’s
and the Federal Reserve Board’s approval. If the offering is so extended, all subscribers will be notified and given an opportunity
to confirm, change or cancel their orders. If you do not respond to this notice, we will promptly return your funds with interest
at [interest rate]% per annum or cancel your deposit account withdrawal authorization. If the offering range is decreased below
the minimum of the offering range or is increased above the adjusted maximum of the offering range, all subscribers’ stock
orders will be cancelled, their deposit account withdrawal authorizations will be cancelled, and funds submitted to us will be
returned promptly, with interest at [interest rate]% per annum for funds received in the subscription and community offerings.
We will then resolicit the subscribers, giving them an opportunity to place a new stock order for a period of time.
We reserve the right in our sole discretion
to terminate the offering at any time and for any reason (subject to any required regulatory approvals), in which case we will
cancel any deposit account withdrawal authorizations and promptly return all funds submitted, with interest at [interest rate]%
per annum from the date of receipt as described above.
Use of Order Forms in the Subscription
and Community Offerings
.
In order to purchase shares of common stock in the subscription and community offerings,
you must properly complete an original stock order form and remit full payment. We are not required to accept orders submitted
on photocopied or facsimiled order forms. All order forms must be received (not postmarked) before 5:00 p.m., Eastern Time, on
[expiration date]. We are not required to accept order forms that are not received by that time, are not signed or are otherwise
executed defectively or are received without full payment or without appropriate deposit account withdrawal instructions. We are
not required to notify subscribers of incomplete or improperly executed order forms, and we have the right to waive or permit the
correction of incomplete or improperly executed order forms. We do not represent, however, that we will do so and we have no affirmative
duty to notify any prospective subscriber of any such defects. You may submit your order form and payment by mail using the stock
order return envelope provided, or by overnight delivery to our Stock Information Center, which will be located at 652 Albany-Shaker
Road, Albany, NY 12211. You may also hand-deliver stock order forms to the Stock Information Center. Hand-delivered stock order
forms will only be accepted at this location. We will not accept stock order forms at our other banking offices. Please do not
mail stock order forms to Pioneer Bank’s other offices.
Once tendered, an order form cannot be modified
or revoked without our consent. We reserve the absolute right, in our sole discretion and reasonably consistent with achieving
a reasonably wide distribution of the common stock, to reject orders received in the community offering, in whole or in part, at
the time of receipt or at any time before completion of the offering. If you are ordering shares in the subscription offering,
you must represent that you are purchasing shares for your own account and that you have no agreement or understanding with any
person for the sale or transfer of the shares. We have the right to reject any order submitted in the offering by a person who
we believe is making false representations or who we otherwise believe, either alone or acting in concert with others, is violating,
evading, circumventing, or intends to violate, evade or circumvent the terms and conditions of the plan of reorganization. Our
interpretation of the terms and conditions of the plan of reorganization and of the acceptability of the order forms will be final.
By signing the order form, you will be acknowledging
that the common stock is not a deposit or savings account and is not federally insured or otherwise guaranteed by Pioneer Bank,
the Federal Deposit Insurance Corporation or any other government agency, and that you received a copy of this prospectus. However,
signing the order form will not result in waiving your rights under the Securities Act of 1933 or the Securities Exchange Act of
1934.
Payment for Shares
.
Payment for all shares of common stock must accompany all completed order forms for the purchase to be valid. Payment for shares
in the subscription and community offerings may be made by:
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personal check, bank check or money order, made payable to Pioneer Bancorp, Inc.; or
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authorization of withdrawal of available funds from your Pioneer Bank deposit accounts.
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Appropriate means for designating withdrawals
from deposit accounts at Pioneer Bank are provided on the order form. The funds designated must be available in the account(s)
at the time the order form is received. A hold will be placed on these funds, making them unavailable to the depositor. Funds authorized
for withdrawal will continue to earn interest within the account at the contractual rate until the offering is completed, at which
time the designated withdrawal will be made. Interest penalties for early withdrawal applicable to certificate accounts will not
apply to withdrawals authorized for the purchase of shares of common stock; however, if a withdrawal results in a certificate account
with a balance less than the applicable minimum balance requirement, the certificate will be canceled at the time of withdrawal
without penalty and the remaining balance will earn interest at the current passbook rate after the withdrawal. In the case of
payments made by personal check, these funds must be available in the account(s). Checks and money orders received in the subscription
and community offerings will be immediately cashed and placed in a segregated account at Pioneer Bank and will earn interest at
[interest rate]% per annum from the date payment is processed until the offering is completed or terminated.
You may not remit cash, Pioneer Bank line
of credit checks or any type of third-party checks (including those payable to you and endorsed over to Pioneer Bancorp, Inc.).
You may not designate on your stock order form direct withdrawal from a retirement account held at Pioneer Bank. See “—Using
Individual Retirement Account Funds.” Subject to NYSDFS, Federal Deposit Insurance Corporation and Federal Reserve Board
approvals, if we resolicit large purchasers, as described above in “—Additional Limitations on Common Stock Purchases,”
such purchasers who wish to increase their purchases will not be able to use personal checks to pay for the additional shares,
but instead must pay for the additional shares using immediately available funds. We may accept wire transfers at our sole discretion.
Once we receive your executed stock order
form, it may not be modified, amended or rescinded without our consent, unless the offering is not completed by [extension date
#1]. If the subscription and community offerings are extended past [extension date #1], all subscribers will be notified and given
an opportunity to confirm, change or cancel their orders. If you do not respond to this notice, we will promptly return your funds
with interest at [interest rate]% per annum or cancel your deposit account withdrawal authorization. We may resolicit purchasers
for a specified period of time.
NYSDFS and federal regulations prohibit
Pioneer Bank from lending funds or extending credit to any persons to purchase shares of common stock in the offering.
We shall have the right, in our sole discretion,
to permit institutional investors to submit irrevocable orders together with the legally binding commitment for payment and to
thereafter pay for the shares of common stock for which they subscribe in the community offering at any time before 48 hours before
the completion of the offering. This payment may be made by wire transfer.
If our employee stock ownership plan purchases
shares in the offering, it will not be required to pay for such shares until completion of the offering, provided that there is
a loan commitment from an unrelated financial institution or Pioneer Bancorp, Inc. to lend to the employee stock ownership plan
the necessary amount to fund the purchase. In addition, if our 401(k) plan purchases shares in the offering on behalf of participants,
it will not be required to pay for such shares until completion of the offering.
Using Individual Retirement Account
Funds.
If you are interested in using funds in your individual retirement account or other retirement account to purchase
shares of common stock, you must do so through a self-directed retirement account. By regulation, Pioneer Bank’s retirement
accounts are not self-directed, so they cannot be invested in our shares of common stock. Therefore, if you wish to use funds that
are currently in a retirement account held at Pioneer Bank, you may not designate on the order form that you wish funds to be withdrawn
from the account for the purchase of common stock. The funds you wish to use for the purchase of common stock will instead have
to be transferred to an independent trustee or custodian, such as a brokerage firm, offering self-directed retirement accounts.
The purchase must be made through that account. If you do not have such an account, you will need to establish one before placing
a stock order. A one-time and/or annual administrative fee may be payable to the independent trustee or custodian. There will be
no early withdrawal or Internal Revenue Service interest penalties for these transfers. Individuals interested in using funds in
an individual retirement account or any other retirement account, whether held at Pioneer Bank or elsewhere, to purchase shares
of common stock should contact our Stock Information Center for guidance as soon as possible, preferably at least two weeks before
the [expiration date] offering deadline. Processing such transactions takes additional time, and whether such funds can be used
may depend on limitations imposed by the institutions where such funds are currently held. We cannot guarantee that you will be
able to use such funds.
Delivery of Shares of Common Stock
.
All shares of common stock sold will be issued in book entry form. Stock certificates will not be issued. A statement reflecting
ownership of shares of common stock issued in the subscription and community offerings will be mailed by our transfer agent to
the persons entitled thereto at the registration address noted by them on their stock order forms as soon as practicable following
consummation of the offering. We expect trading in the stock to begin on the day of completion of the offering or the next business
day.
Until a statement reflecting ownership of shares of common stock is available and delivered to purchasers, purchasers might
not be able to sell the shares of common stock that they ordered, even though the shares of common stock will have begun trading.
Your ability to sell the shares of common stock before receiving your statement will depend on arrangements you may make with
a brokerage firm.
Other Restrictions
.
Notwithstanding any other provision of the plan of reorganization, no person is entitled to purchase any shares of common stock
to the extent the purchase would be illegal under any federal or state law or regulation, including state “blue sky”
regulations, or would violate regulations or policies of the Financial Industry Regulatory Authority, particularly those regarding
free riding and withholding. We may ask for an acceptable legal opinion from any purchaser as to the legality of his or her purchase
and we may refuse to honor any purchase order if an opinion is not timely furnished. In addition, we are not required to offer
shares of common stock to any person who resides in a foreign country, or in a state of the United States with respect to which
any of the following apply:
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a small number of persons otherwise eligible to subscribe for shares under the plan of reorganization reside in such state;
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the offer or sale of shares of common stock to such persons would require us or our employees to register, under the securities
laws of such state, as a broker or dealer or to register or otherwise qualify our securities for sale in such state; or
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such registration or qualification would be impracticable for reasons of cost or otherwise.
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Restrictions on Transfer of Subscription Rights and Shares
Applicable banking regulations prohibit
any person with subscription rights, including Eligible Account Holders, Supplemental Eligible Account Holders and Other Depositors,
from transferring or entering into any agreement or understanding to transfer the legal or beneficial ownership of the subscription
rights issued under the plan of reorganization or the shares of common stock to be issued upon their exercise. These rights may
be exercised only by the person to whom they are granted and only for his or her account. When registering your stock purchase
on the order form, you cannot add the name(s) of others for joint stock registration unless they are also named on the qualifying
deposit account. Doing so may jeopardize your subscription rights. Each person exercising subscription rights will be required
to certify that he or she is purchasing shares solely for his or her own account and that he or she has no agreement or understanding
regarding the sale or transfer of such shares. The regulations also prohibit any person from offering or making an announcement
of an offer or intent to make an offer to purchase subscription rights or shares of common stock to be issued upon their exercise
before completion of the offering.
We will pursue any and all legal and
equitable remedies if we become aware of the transfer of subscription rights, and we will not honor orders that we believe involve
the transfer of subscription rights.
Stock Information Center
Our banking office personnel may not, by
law, assist with investment-related questions about the offering. If you have any questions regarding the offering, please call
our Stock Information Center. The telephone number is [sic number]. The Stock Information Center is open Monday through Friday
between 10:00 a.m. and 4:00 p.m., Eastern Time. The Stock Information Center will be closed on weekends and bank holidays.
Liquidation Rights
In the
unlikely event of a complete liquidation of Pioneer Bank before the reorganization, all claims of creditors of Pioneer Bank, including
those of depositors (to the extent of their deposit balances), would be paid first. To the extent there are remaining assets, a
depositor may have a claim to receive a pro rata share of the remaining assets in the same proportion as the amount of such depositor’s
deposit accounts bears to the total amount of all deposit accounts at Pioneer Bank at the time of liquidation, subject to the right
of the State of New York to garnish such assets. After the reorganization, each depositor who had liquidation rights with respect
to Pioneer Bank as of the date of the reorganization will continue to have such rights solely with respect to Pioneer Bancorp,
MHC for so long as he or she remains a depositor of Pioneer Bank, and all persons who become holders of a deposit account with
Pioneer Bank after the consummation of the reorganization will have liquidation rights to the same extent as all other depositors,
but solely with respect to Pioneer Bancorp, MHC. Moreover, in the event of a complete liquidation after the reorganization, each
depositor also would have a claim as a creditor of Pioneer Bank. However, except as described below, this claim would be solely
in the amount of the balance in the deposit account, plus accrued interest. A depositor would not have an interest in the value
of the assets of Pioneer Bank above that amount.
The plan
of reorganization provides for the establishment, upon the completion of the reorganization, of a special “liquidation account”
for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders in an amount equal to the total equity of
Pioneer Bank at the date of its latest balance sheet contained in this prospectus. The purpose of the liquidation account is to
provide Eligible Account Holders and Supplemental Eligible Account Holders who maintain their deposit accounts with Pioneer Bank
after the reorganization with a liquidation interest in the unlikely event of a complete liquidation of Pioneer Bank after the
reorganization. Each Eligible Account Holder and Supplemental Account Holder that continues to maintain his or her deposit account
in Pioneer Bank, would be entitled, on a complete liquidation of Pioneer Bank after the reorganization, to an interest in the liquidation
account after payment to all creditors of Pioneer Bank but prior to any payment to the stockholders of Pioneer Bancorp, Inc. Each
Eligible Account Holder and Supplemental Eligible Account Holder would have an initial interest in the liquidation account for
each deposit account,
including savings accounts, transaction accounts such as negotiable
order of withdrawal accounts, money market deposit accounts, and certificates of deposit,
with a balance of $100 or more
held in Pioneer Bank on December 31, 2017 and _____, 20__, respectively. Each Eligible Account Holder and Supplemental Account
Holder would have a pro rata interest in the liquidation account equal to the proportion that the aggregate balance of such deposit
account holders accounts on December 31, 2017 and _____, 20__, respectively, bears to the balance of all deposit accounts of Eligible
Account Holders and Supplemental Eligible Account Holders on such date.
If, however,
on any June 30 annual closing date commencing on or after the effective date of the reorganization, the amount in any such deposit
account is less than the amount in the deposit account on December 31, 2017 or ______, 20__, respectively, or any other annual
closing date, then the interest in the liquidation account relating to such deposit account would be reduced from time to time
by the proportion of any such reduction, and such interest will cease to exist if such deposit account is closed. In addition,
no interest in the liquidation account would ever be increased despite any subsequent increase in the related deposit account.
Payment pursuant to liquidation rights of Eligible Account Holders and Supplemental Eligible Account Holders would be separate
and apart from the payment of any insured deposit accounts to such depositor. Any assets remaining after the above liquidation
rights of Eligible Account Holders and Supplemental Eligible Account Holders are satisfied would be distributed to Pioneer Bancorp,
Inc., as the sole stockholder of Pioneer Bank.
Neither
Pioneer Bank nor Pioneer Bancorp, Inc. will be required to set aside funds for the purpose of establishing the liquidation account,
and the creation and maintenance of the liquidation account will not operate to restrict the use or application of any of the equity
accounts of Pioneer Bank, except that Pioneer Bank will not declare or pay a cash dividend on, or repurchase any of, its capital
stock if the effect would cause its equity to be reduced below the amount required for the liquidation account.
Material Income Tax Consequences
Consummation of the reorganization is subject
to the prior receipt of an opinion of counsel or tax advisor with respect to federal and state income taxation that the reorganization
will not be a taxable transaction to Pioneer Bank, Pioneer Bancorp, Inc., Eligible Account Holders, Supplemental Eligible Account
Holders and Other Depositors. Unlike private letter rulings, opinions of counsel or tax advisors are not binding on the Internal
Revenue Service or any state taxing authority, and such authorities may disagree with such opinions. If there is such disagreement,
there can be no assurance that Pioneer Bank or Pioneer Bancorp, Inc. would prevail in a judicial proceeding.
Pioneer Bancorp, MHC, Pioneer Bancorp, Inc.
and Pioneer Bank have received an opinion of counsel, Luse Gorman, PC, regarding all of the material federal income tax consequences
of the reorganization, which includes the following:
1. The
merger of Pioneer Bank (in mutual form) into Pioneer Bank (in stock form) will represent a mere change in identity, form, or place
of organization of one corporation and will qualify as a reorganization under Internal Revenue Code Section 368(a)(1)(F) (the “F
Reorganization”).
2. The
holding period of Pioneer Bank (in stock form) in the assets received from Pioneer Bank (in mutual form) will include the period
during which such assets were held by Pioneer Bank (in mutual form).
3. The
basis of Pioneer Bank (in stock form) in the assets received from Pioneer Bank (in mutual form) will be the same as the basis of
such assets in the hands of Pioneer Bank (in mutual form) immediately before the reorganization.
4. Pioneer
Bank depositors will recognize no gain or loss upon the constructive receipt of solely the common stock of Pioneer Bank (in stock
form) in exchange for their ownership interests in Pioneer Bank (in mutual form).
5. Pioneer
Bank (in stock form) will succeed to and take into account the earnings and profits or deficit in earnings and profits of Pioneer
Bank (in mutual form), as of the date of the reorganization, pursuant to Internal Revenue Code Section 381.
6. For
purposes of Internal Revenue Code Section 381, Pioneer Bank (in stock form) will be treated the same as Pioneer Bank (in mutual
form), and therefore, Pioneer Bank’s tax year will not end merely as a result of the conversion of Pioneer Bank to stock
form, and Pioneer Bank (in stock form) will not be required to obtain a new employee identification number.
7. No
gain or loss shall be recognized by depositors of Pioneer Bank on the issuance to them of withdrawable deposit accounts in Pioneer
Bank (in stock form) plus liquidation rights with respect to Pioneer Bancorp, MHC, in exchange for their deposit accounts in Pioneer
Bank (in mutual form). In addition, Eligible Account Holders and Supplemental Eligible Account Holders will not recognize gain
or loss upon receipt of an interest in a liquidation account in Pioneer Bank in exchange for their ownership interests in Pioneer
Bank.
8. Gain
realized, if any, by the Eligible Account Holders, Supplemental Eligible Account Holders and Other Depositors on the distribution
to them of nontransferable subscription rights to purchase shares of common stock will be recognized but only in an amount not
in excess of the fair market value of such subscription rights. It is more likely than not that the fair market value of the subscription
rights to purchase common stock is zero. Accordingly, no gain or loss will be recognized by Eligible Account Holders or Supplemental
Eligible Account Holders because they have nontransferable subscription rights to purchase shares of common stock of Pioneer Bancorp,
Inc. Eligible Account Holders, Supplemental Eligible Account Holders and Other Depositors will not realize any taxable income as
a result of the exercise by them of the nontransferable subscription rights.
9. The
basis of the deposit accounts in Pioneer Bank (in stock form) to be received by depositors of Pioneer Bank will be the same as
the basis of their deposit accounts in Pioneer Bank (in mutual form) surrendered in exchange therefor. The basis of the interests
in the liquidation rights in Pioneer Bancorp, MHC to be received by the depositors of Pioneer Bank shall be zero. The basis of
Eligible Account Holders and Supplemental Eligible Account Holders’ interests in the liquidation account will be zero, which
is the cost of such interests to such persons.
10. The
exchange of the common stock of Pioneer Bank (in stock form) constructively received by depositors in exchange for ownership interests
in Pioneer Bancorp, MHC will constitute a tax-free exchange of property solely for “stock” pursuant to Section 351
of the Code.
11. Depositors
will recognize no gain or loss upon the transfer of the common stock of Pioneer Bank (in stock form) which they constructively
received in the F Reorganization to Pioneer Bancorp, MHC solely in exchange for ownership interests in Pioneer Bancorp, MHC.
12. Depositors’
basis in Pioneer Bancorp, MHC ownership interests received in the transaction (which basis is zero) will be the same as the basis
of the property transferred in exchange therefor.
13. Pioneer
Bancorp, MHC will recognize no gain or loss upon the receipt of property from depositors in exchange for ownership interests in
Pioneer Bancorp, MHC.
14. Pioneer
Bancorp, MHC’s basis in the property received from depositors (which basis is zero) will be the same as the basis of such
property in the hands of the depositors immediately before the F Reorganization.
15. Pioneer
Bancorp, MHC’s holding period for the property received from depositors will include the period during which such property
was held by such persons.
16. Pioneer
Bancorp, MHC and the persons who purchased common stock of Pioneer Bancorp, Inc. in the Subscription and Community Offering will
recognize no gain or loss upon the transfer of the stock of Pioneer Bank (in stock form) and cash, respectively, to Pioneer Bancorp,
Inc. in exchange for stock in Pioneer Bancorp, Inc., pursuant to Internal Revenue Code Section 351(a) (the “Secondary 351
Transaction”).
17. Pioneer
Bancorp, Inc. will recognize no gain or loss on its receipt of the stock of Pioneer Bank (in stock form) and cash in exchange for
Pioneer Bancorp, Inc. common stock.
18. Pioneer
Bancorp, MHC’s basis in the Pioneer Bancorp, Inc. common stock received in the Secondary 351 Transaction will be the same
as its basis in the Pioneer Bank (in stock form) stock transferred.
19. Pioneer
Bancorp, MHC’s holding period in the Pioneer Bancorp, Inc. common stock received will include the period during which it
held the Pioneer Bank (in stock form) common stock, provided that such property was a capital asset on the date of the exchange.
20. Pioneer
Bancorp, Inc.’s basis in the Pioneer Bank (in stock form) stock received from Pioneer Bancorp, MHC will be the same as the
basis of such property in the hands of Pioneer Bancorp, MHC.
21. Pioneer
Bancorp, Inc.’s holding period for the Pioneer Bank (in stock form) stock received from Pioneer Bancorp, MHC will include
the period during which such property was held by Pioneer Bancorp, MHC.
22. It
is more likely than not that the basis of the Pioneer Bancorp, Inc. common stock to its stockholders will be the purchase price
thereof. The holding period of the common stock purchased pursuant to the exercise of subscription rights will commence on the
date on which the right to acquire such stock was exercised.
We believe that that the tax opinions summarized
above address all material federal income tax consequences that are generally applicable to Pioneer Bancorp, Inc., Pioneer Bancorp,
MHC, Pioneer Bank and persons receiving subscription rights. The tax opinions as to items 8 and 22 above are based on the position
that subscription rights to be received by Eligible Account Holders, Supplemental Eligible Account Holders and Other Depositors
do not have any economic value at the time of distribution or the time the subscription rights are exercised. In this regard, Luse
Gorman, PC noted that the subscription rights will be granted at no cost to the recipients, are legally non-transferable and of
short duration, and will provide the recipient with the right only to purchase shares of common stock at the same price to be paid
by members of the general public in any community offering. The firm also noted that the Internal Revenue Service has not in the
past concluded that subscription rights have value. In addition, in the view of RP Financial (which is acting as independent appraiser
of the value of the shares of Pioneer Bancorp, Inc. common stock in connection with the reorganization), the subscription rights
do not have any value for the reasons set forth above. RP Financial’s view is not binding on the Internal Revenue Service.
Based on the foregoing, Luse Gorman, PC believes that it is more likely than not that the nontransferable subscription rights to
purchase shares of common stock have no value. However, the issue of whether or not the nontransferable subscription rights have
value is based on all the facts and circumstances. If the subscription rights are deemed to have an ascertainable value, receipt
of these rights could result in taxable gain, in an amount equal to the ascertainable value, to those Eligible Account Holders,
Supplemental Eligible Account Holders and Other Depositors who exercise the subscription rights, and we could recognize gain on
a distribution of such rights. Eligible Account Holders, Supplemental Eligible Account Holders and Other Depositors are encouraged
to consult with their own tax advisors as to the tax consequences if subscription rights are deemed to have an ascertainable value.
The opinion of Luse Gorman, PC, unlike a
letter ruling issued by the Internal Revenue Service, is not binding on the Internal Revenue Service and the conclusions expressed
therein may be challenged at a future date. The Internal Revenue Service has issued favorable rulings for transactions substantially
similar to the proposed reorganization and offering, but any such ruling may not be cited as precedent by any taxpayer other than
the taxpayer to whom the ruling is addressed. We do not plan to apply for a letter ruling concerning the transactions described
herein.
An opinion regarding the New York State
income tax consequences of the reorganization, consistent with the federal tax opinion, has been issued by Bonadio & Co., LLP.
The federal and state tax opinions have
been filed with the Securities and Exchange Commission as exhibits to Pioneer Bancorp, Inc.’s registration statement.
Certain Restrictions on Purchase or Transfer of Our Shares
After the Offering
All shares of common stock purchased in
the offering by a director, trustee or officer of Pioneer Bancorp, Inc. or Pioneer Bank, as well as their associates, generally
may not be sold for a period of one year following the closing of the offering, except upon death or judicial declaration of incompetency
of the individual. Each statement of ownership for restricted shares will bear a legend giving notice of this restriction on transfer,
and instructions will be issued to Pioneer Bancorp, Inc.’s transfer agent to the effect that any transfer within this time
period of any record ownership of the shares other than as provided above is a violation of the restriction. Any shares of common
stock issued at a later date as a stock dividend, stock split, or otherwise, with respect to the restricted stock will be similarly
restricted. The directors and executive officers of Pioneer Bancorp, Inc. also will be restricted by the insider trading rules
under the Securities Exchange Act of 1934.
Purchases of shares of our common stock
by any of our directors, trustees, certain officers and their associates during the three-year period following the closing of
the offering may be made only through a broker or dealer registered with the Securities and Exchange Commission, except with the
prior written approval of the NYSDFS, the Federal Deposit Insurance Corporation and the Federal Reserve Board. This restriction
does not apply, however, to purchases of our common stock by our stock option plan or any of our tax-qualified employee stock benefit
plans or non-tax-qualified employee stock benefit plans, including any restricted stock plans.
NYSDFS regulations prohibit Pioneer Bancorp,
Inc. from repurchasing its shares of common stock during the first year following the offering and from repurchasing more than
5% of its outstanding shares of common stock in each of the second and third years following the offering, unless, in each case,
Pioneer Bancorp, Inc. receives the prior approval of the NYSDFS. Additionally, federal regulations prohibit Pioneer Bancorp, Inc.
from repurchasing its shares of common stock during the first year following the reorganization unless compelling business reasons
exist for such repurchases, or to fund management recognition plans that have been ratified by stockholders (with regulatory approval)
or tax-qualified employee stock benefit plans. In addition, the repurchase of shares of common stock is subject to Federal Reserve
Board policy related to repurchases of shares by bank holding companies.
PIONEER BANK CHARITABLE FOUNDATION
General
In furtherance of our commitment to the
communities in our market area, the plan of reorganization provides that we will fund our existing charitable foundation, Pioneer
Bank Charitable Foundation, a non-stock, nonprofit New York corporation in connection with the reorganization and offering. The
charitable foundation will be funded with cash and shares of our common stock, as further described below. By further enhancing
our visibility and reputation in the communities within our market area, we believe the charitable foundation will enhance the
long-term value of Pioneer Bank’s community banking franchise. The reorganization and offering presents us with a unique
opportunity to provide a substantial and continuing benefit to our community through the charitable foundation.
Purpose of the Charitable Foundation
In connection with the reorganization and
offering, Pioneer Bank intends to contribute to the charitable foundation 2.0% of the outstanding shares of common stock of Pioneer
Bancorp, Inc. as of the completion of the offering (including shares of common stock issued to Pioneer Bancorp, MHC) and up to
$250,000 in cash. At the minimum, midpoint, maximum and adjusted maximum of the offering range, we will contribute to the charitable
foundation 333,928, 392,857, 451,786 and 519,554 shares of common stock, respectively.
The purpose of the charitable foundation
is to provide financial support to charitable organizations in our market area and to enable the communities that we serve to share
in our long-term growth. The charitable foundation will be dedicated completely to community activities and the promotion of charitable
causes, and may be able to support such activities in ways that are not presently available to us. It will also support our ongoing
obligations to the community under the Community Reinvestment Act. Pioneer Bank received a “Satisfactory” rating in
its most recent Community Reinvestment Act examination.
Funding the charitable foundation with shares
of our common stock is also intended to allow our communities to share in our potential growth and success after the offering is
completed because the charitable foundation will benefit directly from any increases in the value of our common stock. In addition,
the charitable foundation will maintain close ties with Pioneer Bank, thereby forming a partnership within the communities in which
Pioneer Bank operates.
Structure of the Charitable Foundation
The charitable foundation is incorporated
under New York law as a non-stock, nonprofit corporation. The certificate of incorporation of the charitable foundation provides
that the corporation is organized exclusively for charitable purposes as set forth in Section 501(c)(3) of the Internal Revenue
Code. The articles of incorporation further provides that no part of the net earnings of the charitable foundation will inure to
the benefit of, or be distributable to, its members, directors or officers or to private individuals.
The charitable foundation is governed by
a board of directors, initially consisting of Mr. Amell, Mr. Sarratori, Mr. Hughes, Mr. Fleming, Mr. Tomczak, Ms. Hollister, Ms.
Mazzara and two other individuals who are not officers, directors or trustees and who have experience with local charitable organizations
and grant making. For five years after the reorganization and offering, one seat on the charitable foundation’s board of
directors will be reserved for a person from our local community who has experience with local community charitable organizations
and grant making and who is not an officer, director or employee of Pioneer Bank, and at least one seat on the charitable foundation’s
board of directors will be reserved for a Pioneer Bank director.
The board of directors of the charitable
foundation is responsible for establishing its grant and donation policies, consistent with the purposes for which it was established.
As directors of a nonprofit corporation, the directors of the charitable foundation will at all times be bound by their fiduciary
duty to advance the charitable foundation’s charitable goals, to protect its assets and to act in a manner consistent with
the charitable purposes for which the charitable foundation is established. The directors also will be responsible for directing
the activities of the charitable foundation, including the management and voting of the shares of our common stock held by the
charitable foundation. However, as required by applicable regulations, all shares of our common stock held by the charitable foundation
must be voted in the same ratio as all other shares of our common stock on all proposals considered by our stockholders.
The charitable foundation’s place
of business will be located at our administrative offices. The board of directors of the charitable foundation will appoint such
officers and employees as may be necessary to manage its operations. To the extent applicable, we will comply with the affiliates
restrictions set forth in Sections 23A and 23B of the Federal Reserve Act and applicable NYSDFS regulations governing transactions
between Pioneer Bank and the charitable foundation.
The charitable foundation will receive working
capital from the initial cash contribution and:
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(1)
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any dividends that may be paid on our shares of common stock in the future;
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(2)
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within the limits of applicable federal and state laws, loans collateralized by the shares of common stock owned by the charitable
foundation; and
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(3)
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the proceeds of the sale of any of the shares of common stock owned by the charitable foundation in the open market from time
to time.
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As a private foundation under Section 501(c)(3)
of the Internal Revenue Code, the charitable foundation will be required to distribute annually in grants or donations a minimum
of 5% of the average fair market value of its net investment assets.
Tax Considerations
The charitable foundation has qualified
as a Section 501(c)(3) exempt organization under the Internal Revenue Code and is classified as a private foundation. The charitable
foundation has filed an application for tax exempt status, which was approved by the Internal Revenue Service on _______, 2019.
We have not received a tax opinion as to whether the charitable foundation’s tax exempt status will be affected by the regulatory
requirement that all shares of our common stock held by it must be voted in the same ratio as all other outstanding shares of our
common stock on all proposals considered by our stockholders.
We believe our contribution of shares of
our common stock to the charitable foundation should not constitute an act of self-dealing and that we should be entitled to a
deduction in the amount of the fair market value of the stock at the time of the contribution less the nominal amount the charitable
foundation is required to pay us for such stock. We are permitted to deduct for charitable purposes only an amount equal to 10%
of our annual taxable income in any one year. We are permitted under the Internal Revenue Code to carry the excess contribution
over the five-year period following the contribution to the charitable foundation. We estimate that the entire contribution will
be deductible over the six-year period (
i.e.
, the year in which the contribution is made and the succeeding five-year period).
However, we cannot assure that all of our contribution will be tax deductible. In such event, our contribution to the charitable
foundation would be expensed without a tax benefit, resulting in a reduction in earnings in the year in which the Internal Revenue
Service makes such a determination. Furthermore, even if the contribution is deductible, we may not have sufficient earnings to
be able to use the deduction in full. Any decision to make additional contributions to the charitable foundation in the future
would be based on an assessment of, among other factors, our financial condition at that time, the interests of our stockholders
and depositors, and the financial condition and operations of the foundation.
As a private foundation, earnings and gains,
if any, from the sale of common stock or other assets are exempt from federal and state income taxation. However, investment income,
such as interest, dividends and capital gains, is generally taxed at a rate of 1%. The charitable foundation will be required to
file an annual return with the Internal Revenue Service within four and one-half months after the close of its fiscal year. The
charitable foundation will be required to make its annual return available for public inspection. The annual return for a private
foundation includes, among other things, an itemized list of all grants made or approved, showing the amount of each grant, the
recipient, any relationship between a grant recipient and the foundation’s managers and a concise statement of the purpose
of each grant. The charitable foundation will also be required to file an annual report with the Office of the New York Attorney
General.
Regulatory Requirements Imposed on the Charitable Foundation
Federal Reserve Board regulations require
that, before our board of trustees approved the plan of reorganization, Mr. Amell, as a member of the board of trustees who also
serves on the charitable foundation’s board, could not participate in our board’s discussions concerning contributions
to the charitable foundation, and could not vote on the matter. Our board of trustees complied with this regulation in approving
the plan of reorganization.
The NYSDFS and the Federal Reserve Board
will generally not object if a well-capitalized savings bank contributes to a charitable foundation an aggregate amount of 8% or
less of the shares or proceeds issued in an offering. Pioneer Bank qualifies as a well-capitalized savings bank for purposes of
this limitation, and the contribution to the charitable foundation will not exceed this limitation.
Federal Reserve Board regulations impose
the following additional requirements on the funding of the charitable foundation in connection with the reorganization and offering:
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the charitable foundation’s primary purpose must be to serve and make grants in our local community;
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the Federal Reserve Board may examine the charitable foundation at the foundation’s expense;
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the charitable foundation must comply with all supervisory directives imposed by the Federal Reserve Board;
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the charitable foundation must provide annually to the Federal Reserve Board a copy of the annual report that the charitable
foundation submits to the Internal Revenue Service;
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the charitable foundation must operate according to written policies adopted by its board of directors, including a conflict
of interest policy;
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the charitable foundation may not engage in self-dealing and must comply with all laws necessary to maintain its tax-exempt
status under the Internal Revenue Code; and
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the charitable foundation must vote its shares of our common stock in the same ratio as all of the other shares voted on each
proposal considered by our stockholders.
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RESTRICTIONS ON ACQUISITION OF PIONEER
BANCORP, INC.
Although the board of directors of Pioneer
Bancorp, Inc. is not aware of any effort that might be made to obtain control of Pioneer Bancorp, Inc. after the reorganization,
the board of directors believes that it is appropriate to include certain provisions in Pioneer Bancorp, Inc.’s articles
of incorporation and bylaws to protect the interests of Pioneer Bancorp, Inc. and its stockholders from takeovers which our board
of directors might conclude are not in the best interests of Pioneer Bancorp, Inc., its stockholders or Pioneer Bank.
The following discussion is a general summary
of the material provisions of Pioneer Bancorp, Inc.’s articles of incorporation and bylaws, Pioneer Bank’s stock organization
certificate, Maryland corporation law and certain other regulatory provisions that may be deemed to have an “anti-takeover”
effect. The following description of certain of these provisions is necessarily general and, with respect to provisions contained
in Pioneer Bancorp, Inc.’s articles of incorporation and bylaws, reference should be made in each case to the document in
question, each of which is part of Pioneer Bank’s applications filed with the NYSDFS and the Federal Deposit Insurance Corporation,
Pioneer Bancorp, Inc.’s registration statement filed with the Securities and Exchange Commission and Pioneer Bancorp, Inc.’s
bank holding company application filed with the Federal Reserve Board. See “Where You Can Find Additional Information.”
Pioneer Bancorp, Inc.’s Articles of Incorporation
and Bylaws
Pioneer Bancorp, Inc.’s articles of
incorporation and bylaws contain a number of provisions relating to corporate governance and rights of stockholders that might
discourage future takeover attempts. As a result, stockholders who may desire to participate in such transactions may not have
an opportunity to do so. In addition, these provisions will also render the removal of Pioneer Bancorp, Inc.’s board of directors
or management more difficult.
Directors
.
The board
of directors will be divided into three classes. The members of each class will be elected for a term of three years and only one
class of directors will be elected annually. Therefore, it would take at least two annual elections to replace a majority of our
directors. The bylaws establish qualifications for board members, including:
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a prohibition on service as a director by a person who is a director, trustee, officer, employee or a 10% stockholder of a
competitor of Pioneer Bank or any other subsidiary of Pioneer Bancorp, Inc.;
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a prohibition on service as a director by a person (1) who has been convicted of a crime involving dishonesty or breach of
trust that is punishable by imprisonment for a term exceeding one year under state or federal law, (2) who is currently charged
in an information, indictment or other complaint with the commission of or participation in a crime described in clause (1), or
(3) who has been the subject of a supervisory or enforcement action by a financial or securities regulatory agency that resulted
in a cease and desist, consent or other formal order or an agreement or other written statement which is subject to public disclosure
by such agency within the past ten years;
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a prohibition on any director who does not confirm in writing that he or she is not party to any agreement or understanding
with respect to how he or she would act or vote on any issue or question before the board of directors or that would otherwise
impact his or her ability to discharge his or her fiduciary duties as a director;
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a prohibition on any director who does not agree in writing to comply with all Pioneer Bancorp, Inc. policies applicable to
directors, in addition to written confirmation that such director is qualified to serve; and
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a prohibition on service by nominees or representatives (as defined in applicable Federal Reserve Board regulations) of another
person who would not be eligible for service or of an entity the partners or controlling persons of which would not be eligible
for service.
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No person who is 75 years of age or more
is eligible for initial election as director, and no director may continue to serve as a director beyond the year in which he or
she reaches age 75. Further, the bylaws impose notice and information requirements in connection with the nomination by stockholders
of candidates for election to the board of directors or the submission of proposals by stockholders of business to be acted upon
at an annual meeting of stockholders. Such notice and information requirements are applicable to all stockholder business proposals
and nominations, and are in addition to any requirements under the federal securities laws.
Evaluation of Offers.
The
articles of incorporation of Pioneer Bancorp, Inc. provide that its board of directors, when evaluating a transaction that would
or may involve a change in control of Pioneer Bancorp, Inc. (whether by purchases of its securities, merger, consolidation, share
exchange, dissolution, liquidation, sale of all or substantially all of its assets, proxy solicitation or otherwise), may, in connection
with the exercise of its business judgment in determining what is in the best interests of Pioneer Bancorp, Inc. and its stockholders
and in making any recommendation to the stockholders, give due consideration to all relevant factors, including, but not limited
to:
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the economic effect, both immediate and long-term, upon Pioneer Bancorp, Inc.’s stockholders, including stockholders,
if any, who do not participate in the transaction;
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the social and economic effect on the present and future employees, creditors and customers of, and others dealing with, Pioneer
Bancorp, Inc. and its subsidiaries and on the communities in which Pioneer Bancorp, Inc. and its subsidiaries operate or are located;
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whether the proposal is acceptable based on the historical, current or projected future operating results or financial condition
of Pioneer Bancorp, Inc.;
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whether a more favorable price could be obtained for Pioneer Bancorp, Inc.’s stock or other securities in the future;
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the reputation and business practices of the other entity to be involved in the transaction, including its management and affiliates,
and how they would affect the employees of Pioneer Bancorp, Inc. and its subsidiaries;
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the future value of the stock or any other securities of Pioneer Bancorp, Inc. or the other entity to be involved in the proposed
transaction;
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any antitrust or other legal and regulatory issues that are raised by the proposal;
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the business and historical, current or expected future financial condition or operating results of the other entity to be
involved in the transaction, including, but not limited to, debt service and other existing financial obligations, financial obligations
to be incurred in connection with the proposed transaction, and other likely financial obligations of the other entity to be involved
in the proposed transaction; and
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the ability of Pioneer Bancorp, Inc. to fulfill its objectives as a financial institution holding company and on the ability
of its subsidiary financial institution(s) to fulfill the objectives of a federally insured financial institution under applicable
statutes and regulations.
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If the board of directors determines that
any proposed transaction should be rejected, it may take any lawful action to defeat such transaction.
Restrictions on Calling Special Meetings.
The bylaws provide that special meetings of stockholders can be called by only the Chairperson of the Board or a majority of the
total number of directors that Pioneer Bancorp, Inc. would have if there were no vacancies on the board of directors, or the Secretary
upon the written request of stockholders entitled to cast at least a majority of all votes entitled to vote at the meeting.
Prohibition of Cumulative Voting.
The articles of incorporation prohibit cumulative voting for the election of directors.
Limitation of Voting
Rights.
The articles of incorporation provide that in no event will any person, other than Pioneer Bancorp, MHC, who beneficially
owns more than 10% of the then-outstanding shares of common stock, be entitled or permitted to vote any of the shares of common
stock held in excess of the 10% limit. The 10% limit shall not apply if, before the stockholder acquires shares in excess of the
10% limit, the acquisition is approved by a majority of the directors who are not affiliated with the holder and who were members
of the board of directors before the time of the acquisition (or who were chosen to fill any vacancy of an otherwise unaffiliated
director by a majority of the unaffiliated directors).
Restrictions on Removing Directors
from Office.
The articles of incorporation provide that directors may be removed only for cause, and only by the affirmative
vote of the holders of at least two-thirds of the voting power of all of our then-outstanding capital stock entitled to vote generally
in the election of directors (after giving effect to the limitation on voting rights discussed above in
“—Limitation
of Voting Rights”
), voting together as a single class.
Stockholder Nominations and Proposals.
The bylaws provide that any stockholder desiring to make a nomination for the election of directors or a proposal for new
business at an annual meeting of stockholders must submit written notice to Pioneer Bancorp, Inc. at least 90 days prior and not
earlier than 120 days before the anniversary date of the proxy statement relating to the previous year’s annual meeting.
However, if less than 90 days’ prior public disclosure of the date of the meeting is given to stockholders and the date of
the annual meeting is advanced by more than 30 days, or delayed by more than 30 days from the anniversary date of the preceding
year’s annual meeting, then stockholders must submit written notice to Pioneer Bancorp, Inc. no later than 10 days following
the day on which public disclosure of the date of the meeting is first made. Stockholder submissions regarding nominations or business
proposals must contain certain information, as set forth in the bylaws.
Authorized but Unissued Shares
.
After the reorganization, Pioneer Bancorp, Inc. will have authorized but unissued shares of common and preferred stock. See “Description
of Capital Stock of Pioneer Bancorp, Inc.” The articles of incorporation authorize 75,000,000 shares of common stock and
5,000,000 shares of serial preferred stock. Pioneer Bancorp, Inc. is authorized to issue preferred stock from time to time in one
or more series, subject to applicable provisions of law, and the board of directors is authorized to fix the preferences, reorganization
and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption
of such shares. In addition, the articles of incorporation provide that a majority of the total number of directors that Pioneer
Bancorp, Inc. would have if there were no vacancies on the board of directors may, without action by the stockholders, amend the
articles of incorporation to increase or decrease the aggregate number of shares of stock of any class or series that Pioneer Bancorp,
Inc. has the authority to issue. If there is a proposed merger, tender offer or other attempt to gain control of Pioneer Bancorp,
Inc. that the board of directors does not approve, it would be possible for the board of directors to authorize the issuance of
a series of preferred stock with rights and preferences that would impede the completion of the transaction. An effect of the possible
issuance of preferred stock therefore may be to deter a future attempt to gain control of Pioneer Bancorp, Inc. The board of directors
has no present plan or understanding to issue any preferred stock.
Amendments to Articles of Incorporation
and Bylaws.
Except as provided under “—
Authorized but Unissued Shares
,” above, regarding the
amendment of the articles of incorporation by the board of directors to increase or decrease the number of shares authorized for
issuance, or as otherwise allowed by law, any amendment to the articles of incorporation must be approved by our board of directors
and also by two-thirds of the outstanding shares of our voting stock (or a majority of the outstanding shares of our voting stock
if the amendment is approved by two-thirds of our board of directors); provided, however, that approval by at least 80% of the
outstanding voting stock is generally required to amend the following provisions:
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The limitation on voting rights of persons who directly or indirectly beneficially own more than 10% of the outstanding shares
of common stock;
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The management of Pioneer Bancorp, Inc. by the board of directors and division of the board of directors into three staggered
classes;
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The ability of the board of directors to fill vacancies on the board;
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The prohibition of cumulative voting;
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The requirement that at least two-thirds of the voting power of the stockholders must vote to remove directors, and such removal
may only be for cause;
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The ability of the board of directors to amend and repeal the bylaws and the required stockholder vote to amend or repeal the
bylaws;
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The ability of the board of directors to evaluate a variety of factors in evaluating offers to purchase or otherwise acquire
Pioneer Bancorp, Inc.;
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The authority of the board of directors to provide for the issuance of preferred stock;
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The validity and effectiveness of any action lawfully authorized by the affirmative vote of the holders of a majority of the
total number of outstanding shares of common stock;
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The number of stockholders constituting a quorum or required for stockholder consent;
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The provision regarding stockholder proposals and nominations;
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The indemnification of current and former directors and officers, as well as employees and other agents, by Pioneer Bancorp,
Inc.;
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The limitation of liability of officers and directors to Pioneer Bancorp, Inc. for money damages; and
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The provision of the articles of incorporation requiring approval of at least 80% of the outstanding voting stock to amend
the provisions of the articles of incorporation set forth in (1) through (13) of this list and the provisions related to amendment
of the articles of incorporation and bylaws.
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The articles of incorporation also provide
that the bylaws may be amended by the affirmative vote of a majority of the total number of directors that Pioneer Bancorp, Inc.
would have if there were no vacancies on the board of directors or by the stockholders by the affirmative vote of at least 80%
of the votes entitled to be cast in the election of directors (after giving effect to the limitation on voting rights discussed
above in
“—Limitation of Voting Rights”
).
Maryland Corporate Law
Business Combinations.
Under
Maryland law, “business combinations” between a Maryland corporation and an interested stockholder or an affiliate
of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes
an interested stockholder. These business combinations include a merger, consolidation, statutory share exchange or, in circumstances
specified in the statute, certain transfers of assets, certain stock issuances and transfers, liquidation plans and reclassifications
involving interested stockholders and their affiliates or issuance or reclassification of equity securities. Maryland law defines
an interested stockholder as: (1) any person who beneficially owns 10% or more of the voting power of a corporation’s voting
stock after the date on which the corporation had 100 or more beneficial owners of its stock; or (2) an affiliate or associate
of the corporation at any time after the date on which the corporation had 100 or more beneficial owners of its stock who, within
the two-year period before the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding
voting stock of the corporation. A person is not an interested stockholder under the statute if the board of directors approved
in advance the transaction by which the person otherwise would have become an interested stockholder. However, in approving a transaction,
the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms
and conditions determined by the board.
After the five-year prohibition, any business
combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors
of the corporation and approved by the affirmative vote of at least: (1) 80% of the votes entitled to be cast by holders of outstanding
shares of voting stock of the corporation; and (2) two-thirds of the votes entitled to be cast by holders of voting stock of the
corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is
to be effected or held by an affiliate or associate of the interested stockholder. These super-majority vote requirements do not
apply if the corporation’s common stockholders receive a minimum price, as defined under Maryland law, for their shares in
the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.
Control Share Acquisitions.
The Maryland General Corporation Law provides that “control shares” of a Maryland corporation acquired in a “control
share acquisition” have no voting rights except to the extent approved by a vote of two-thirds of the shares entitled to
be voted on the matter, excluding shares of stock owned by the acquiror or by officers or directors who are employees of the corporation.
“Control shares” are voting shares of stock which, if aggregated with all other such shares of stock previously acquired
by the acquiror, or in respect of which the acquiror is able to exercise or direct the exercise of voting power except solely by
virtue of a revocable proxy, would entitle the acquiror to exercise voting power in electing directors within one of the following
ranges of voting power:
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one-tenth or more but less than one-third;
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one-third or more but less than a majority; or
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a majority of all voting power.
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Control shares do not include shares the
acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A “control share
acquisition” means the acquisition of control shares, subject to certain exceptions for shares acquired through descent or
distribution, in satisfaction of a pledge or in a merger, consolidation or share exchange to which the corporation is a party.
The control share acquisition statute applies to any Maryland corporation with 100 or more beneficial owners of its stock other
than a close corporation or an investment company.
A person who has made or proposes to make
a control share acquisition, upon satisfaction of certain conditions (including an undertaking to pay expenses and delivery of
an “acquiring person statement”), may compel the corporation’s board of directors to call a special meeting of
stockholders to be held within 50 days of demand to consider the voting rights of the shares. If no request for a meeting is made,
the corporation may itself present the question at any stockholders’ meeting. If voting rights are not approved at the meeting
or if the acquiring person does not deliver an acquiring person statement within 10 days following a control share acquisition
then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares (except for those
which voting rights have previously been approved) for fair value, determined without regard to the absence of voting rights for
the control shares, at the date of the last control share acquisition or of any meeting of stockholders at which the voting rights
of such shares are considered and not approved. Moreover, if voting rights for control shares are approved at a stockholders’
meeting and the acquiror becomes entitled to exercise or direct the exercise of a majority or more of all voting power, other stockholders
may exercise appraisal rights. The fair value of the shares as determined for purposes of such appraisal rights may not be less
than the highest price per share paid by the acquiror in the control share acquisition. The foregoing provisions may be modified
by a Maryland corporation’s articles of incorporation or bylaws. Although Pioneer Bancorp, Inc.’s bylaws provide that
the Maryland Control Share Acquisition law will be inapplicable to acquisitions of the Company’s common stock, this bylaw
provision may be repealed, in whole or in part, at any time by a majority vote of the whole board of directors whether before or
after a control share acquisition and may be applied to any prior or subsequent control share acquisition.
Reorganization Regulations
NYSDFS regulations provide that, before
the completion of the reorganization, no person shall make any offer, or any announcement of an offer, to purchase or acquire Pioneer
Bancorp, Inc. stock in excess of the maximum purchase limitations contained in the plan of reorganization. The NYSDFS has defined
“person” to include any corporation, partnership, trust, unincorporated association, any other entity or natural person.
In addition, Federal Reserve Board regulations provide that, except with the prior approval of the Federal Reserve Board, no person
for a period of three years following the date the completion of the stock offering may directly or indirectly acquire or offer
to acquire the beneficial ownership of more than 10% of any class of capital stock of Pioneer Bancorp, Inc.
Change in Control Regulations
Under the Change in Bank
Control Act, no person, or group of persons acting in concert, may acquire control of a bank holding company such as Pioneer Bancorp,
Inc. unless the Federal Reserve Board has been given 60 days’ prior written notice and not disapproved the proposed acquisition.
The Federal Reserve Board considers several factors in evaluating a notice, including the financial and managerial resources of
the acquirer and competitive effects. Control, as defined under the applicable regulations, means the power, directly or indirectly,
to direct the management or policies of the company or to vote 25% or more of any class of voting securities of the company. Acquisition
of more than 10% of any class of a bank holding company’s voting securities constitutes a rebuttable presumption of control
under certain circumstances, including where, as will be the case with Pioneer Bancorp, Inc., the issuer has registered securities
under Section 12 of the Securities Exchange Act of 1934.
In addition, federal regulations
provide that no company may acquire control (as defined in the Bank Holding Company Act) of a bank holding company without the
prior approval of the Federal Reserve Board. Any company that acquires such control becomes a “bank holding company”
subject to registration, examination and regulation by the Federal Reserve Board.
DESCRIPTION OF CAPITAL STOCK OF PIONEER
BANCORP, INC.
General
Pioneer Bancorp, Inc. is authorized to issue
75,000,000 shares of common stock, par value of $0.01 per share, and 5,000,000 shares of preferred stock, par value $0.01 per share.
Pioneer Bancorp, Inc. currently expects to issue up to 22,589,286 shares of common stock (which number includes 451,786 shares
expected to be contributed to the charitable foundation and 12,424,107 shares to be issued to Pioneer Bancorp, MHC) in the reorganization
and offering. It will not issue shares of preferred stock in the reorganization and offering. Each share of common stock will have
the same relative rights as, and will be identical in all respects to, each other share of common stock. Upon payment of the subscription
price for the common stock according to the plan of reorganization all of the shares of common stock will be duly authorized, fully
paid and non-assessable.
The shares of common stock will represent
non-withdrawable capital, will not be an account of an insurable type, and will not be insured by the Federal Deposit Insurance
Corporation or any other government agency.
Common Stock
Dividends.
Pioneer Bancorp,
Inc. may pay dividends on its common stock if, after giving effect to such distribution, (1) it would be able to pay its indebtedness
as the indebtedness comes due in the usual course of business and (2) its total assets exceed the sum of its liabilities and the
amount needed, if it were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution
of any holders of capital stock who have a preference upon dissolution. The holders of common stock will be entitled to receive
and share equally in dividends as may be declared by our board of directors out of funds legally available therefor. If Pioneer
Bancorp, Inc. issues shares of preferred stock, the holders thereof may have a priority over the holders of the common stock with
respect to dividends.
Voting Rights.
Upon consummation
of the reorganization, the holders of common stock will have exclusive voting rights in Pioneer Bancorp, Inc. They will elect its
board of directors and act on other matters required to be presented to them under Maryland law or otherwise presented to them
by the board of directors. Generally, each holder of common stock will be entitled to one vote per share and will not have any
right to cumulate votes in the election of directors. Any person, other than Pioneer Bancorp, MHC, who beneficially owns more than
10% of the then-outstanding shares of common stock, however, will not be entitled or permitted to vote any shares of common stock
held in excess of the 10% limit absent certain exceptions discussed under “Restrictions on Acquisition of Pioneer Bancorp,
Inc.” If Pioneer Bancorp, Inc. issues shares of preferred stock, holders of the preferred stock may also possess voting rights.
Amendments to the articles of incorporation generally require, in addition to majority approval by the board of directors, a two-thirds
approval of the outstanding shares eligible to vote, and certain amendments require the approval of 80% of the outstanding shares
eligible to vote.
As a New York-chartered stock savings bank,
corporate powers and control of Pioneer Bank will be vested in its board of directors, who elect the officers of Pioneer Bank and
who fill any vacancies on the board of directors. Voting rights in Pioneer Bank will be vested exclusively in the sole owner of
the shares of capital stock of Pioneer Bank, which will be Pioneer Bancorp, Inc., and voted at the direction of Pioneer Bancorp,
Inc.’s board of directors. Consequently, the holders of the common stock of Pioneer Bancorp, Inc. will not have direct control
of Pioneer Bank.
Liquidation.
Upon any liquidation,
dissolution or winding up of Pioneer Bank, Pioneer Bancorp, Inc., as the holder of 100% of Pioneer Bank’s capital stock,
would be entitled to receive all assets of Pioneer Bank available for distribution, after payment or provision for payment of all
debts and liabilities of Pioneer Bank, including all deposit accounts and accrued interest thereon, and after distribution of the
balance in the liquidation account to Eligible Account Holders and Supplemental Eligible Account Holders. Upon any liquidation,
dissolution or winding up of Pioneer Bancorp, Inc., the holders of its common stock would be entitled to receive, after payment
or provision for payment of all its debts and liabilities, all of the assets of Pioneer Bancorp, Inc. available for distribution.
If preferred stock is issued, the holders thereof may have a priority over the holders of the common stock upon any liquidation
or dissolution.
Preemptive Rights; Redemption.
Holders of the common stock of Pioneer Bancorp, Inc. will not be entitled to preemptive rights with respect to any shares that
may be issued, unless such preemptive rights are approved by the board of directors. The common stock is not subject to redemption.
Dissenters’
Rights of Appraisal.
Pioneer Bancorp, Inc.’s articles of incorporation provide that Pioneer Bancorp, Inc.’s
stockholders will not be entitled to dissenters’ rights of appraisal with respect to a merger or consolidation of Pioneer
Bancorp, Inc. with another corporation unless the board of directors determines by a resolution approved by a majority of directors
then in office that dissenters’ rights shall apply to all or any classes of stock.
Preferred Stock
Pioneer Bancorp, Inc.
will not issue any of its authorized shares of preferred stock as part of the offering or the reorganization. Preferred stock may
be issued with preferences and designations as our board of directors may from time to time determine. The board of directors may,
without stockholder approval, issue shares of preferred stock with voting, dividend, liquidation and reorganization rights that
could dilute the voting strength of the holders of the common stock and may assist management in impeding an unfriendly takeover
or attempted change in control.
TRANSFER AGENT
The transfer agent and registrar for our
common stock is________________________,______________.
EXPERTS
The consolidated financial statements that
appear starting on page F-1 of this prospectus of Pioneer Bank and Subsidiaries at June 30, 2018 and 2017 and for the years then
ended have been included in this prospectus and in the registration statement of which this prospectus is a part, in reliance on
the report of Bonadio & Co., LLP, independent registered public accounting firm, which is included herein, upon the authority
of said firm as experts in accounting and auditing.
RP Financial, LC. has consented to the publication
herein of the summary of its report setting forth its opinion as to the estimated pro forma market value of the shares of common
stock upon completion of the reorganization and offering and its letter with respect to subscription rights.
LEGAL MATTERS
Luse Gorman, PC, Washington, D.C., counsel
to Pioneer Bancorp, Inc. and Pioneer Bank, has issued to Pioneer Bancorp, Inc. its opinion regarding the legality of the common
stock and the federal income tax consequences of the reorganization and offering. Bonadio & Co., LLP has provided its opinion
to us regarding the New York income tax consequences of the reorganization and offering. Certain legal matters will be passed upon
for Sandler O’Neill & Partners, L.P. by Silver, Freedman, Taff & Tiernan LLP, Washington, D.C.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
Pioneer Bancorp, Inc. has filed with the
Securities and Exchange Commission a registration statement under the Securities Act of 1933 with respect to the shares of common
stock offered hereby. As permitted by the rules and regulations of the Securities and Exchange Commission, this prospectus does
not contain all the information set forth in the registration statement. Such information, including the appraisal report which
is an exhibit to the registration statement, can be examined without charge at the public reference facilities of the Securities
and Exchange Commission located at 100 F Street, N.E., Washington, D.C. 20549, and copies of such material can be obtained from
the Securities and Exchange Commission at prescribed rates. The Securities and Exchange Commission’s telephone number is
1-800-SEC-0330. In addition, the Securities and Exchange Commission maintains a web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange
Commission, including Pioneer Bancorp, Inc. The statements contained in this prospectus as to the contents of any contract or other
document filed as an exhibit to the registration statement are, of necessity, brief descriptions of the material terms of, and
should be read in conjunction with, such contract or document.
Pioneer Bank has filed with the NYSDFS a
Form 86-AC application with respect to the reorganization and offering. This prospectus omits certain information contained in
such application. The Form 86-AC reorganization application may be inspected, without charge, at the offices of the NYSDFS, One
State Street, New York, New York 10004. The plan of reorganization is available, upon request, at each of Pioneer Bank’s
offices.
Pioneer Bank has filed with the Federal
Deposit Insurance Corporation a notice with respect to the reorganization and offering. This prospectus omits certain information
contained in such notice. The notice may be inspected, without charge, at the offices of the Regional Director of the Federal Deposit
Insurance Corporation, 350 Fifth Avenue, Suite 1200, New York, NY 10118-0110.
Pioneer Bancorp, Inc. has filed an application
to become a bank holding company with the Federal Reserve Board. This prospectus omits certain information contained in the application.
The application may be inspected, without charge, at the offices of the Board of Governors of the Federal Reserve System, 20th
Street and Constitution Avenue, NW, Washington, DC 20551 and at the Federal Reserve Bank of New York, 33 Liberty Street, New York,
New York 10045.
In connection with the offering, Pioneer Bancorp, Inc. will register its common stock under Section 12(b) of the
Securities Exchange Act of 1934 and, upon such registration, Pioneer Bancorp, Inc. and the holders of its common stock will become
subject to the proxy solicitation rules, reporting requirements and restrictions on common stock purchases and sales by directors,
officers and greater than 10% stockholders, the annual and periodic reporting and certain other requirements of the Securities
Exchange Act of 1934. Under the plan of reorganization, Pioneer Bancorp, Inc. has undertaken that it will not terminate such registration
for a period of at least three years following the reorganization and offering.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
OF PIONEER SAVINGS BANK
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
|
|
|
|
Consolidated Statements of Financial Condition at December 31, 2018 (unaudited), June 30, 2018 and 2017
|
F-3
|
|
|
|
|
Consolidated Statements of Income for the six months ended December 31, 2018 and 2017 (unaudited) and the years ended June 30, 2018 and 2017
|
F-4
|
|
|
|
|
Consolidated Statements of Comprehensive Income for the six months ended December 31, 2018 and 2017 (unaudited) and the years ended June 30, 2018 and 2017
|
F-5
|
|
|
|
|
Consolidated Statements of Changes in Net Worth for the six months ended December 31, 2018 (unaudited) and the years ended June 30, 2018 and 2017
|
F-6
|
|
|
|
|
Consolidated Statements of Cash Flows for the six months ended December 31, 2018 and 2017 (unaudited) and the years ended June 30, 2018 and 2017
|
F-7
|
|
|
|
|
Notes to consolidated financial statements
|
F-9
|
This prospectus does not include separate
financial statements for Pioneer Bancorp, Inc. because it has not engaged in any significant activities, has no significant assets,
and has no contingent liabilities, revenues or expenses.
All financial statement schedules are omitted
because the required information either is inapplicable or is included in the financial statements or related notes.
|
432
North Franklin Street, #60
Syracuse,
New York 13204
p
(315) 476-4004
f
(315) 254-2384
www.bonadio.com
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Examining Committee and Board of Trustees
of Pioneer Savings Bank and Subsidiaries:
Opinion
on the Consolidated Financial Statements
We
have audited the accompanying consolidated statements of condition of Pioneer Savings Bank and Subsidiaries (the Company) as
of June 30, 2018 and 2017, and the related consolidated statements of income, comprehensive income, changes in net worth, and
cash flows for each of the years in the two-year period ended June 30, 2018, and the related notes (collectively referred to
as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Company as of June 30, 2018 and 2017, and the results of their operations and their cash flows for
each of the years in the two- year period ended June 30, 2018, in conformity with accounting principles generally accepted in
the United States of America.
We
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB),
the Company’s internal control over financial reporting as of June 30, 2018, based on criteria established in
Internal
Control—Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO),
and our report dated September 27, 2018, expressed an unqualified opinion.
Basis
for Opinion
These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or
fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
We
have served as the Company’s auditor since 2014.
/s/
Bonadio & Co.,
llp
Syracuse,
New York
September
27, 2018
|
ALBANY •
BATAVIA • BUFFALO • DALLAS • EAST AURORA • NYC • ROCHESTER • RUTLAND, VT • SYRACUSE • UTICA
PIONEER SAVINGS BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(dollars
in thousands)
|
|
|
December 31,
2018
|
|
|
June 30,
2018
|
|
|
June 30,
2017
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
27,999
|
|
|
$
|
23,187
|
|
|
$
|
28,791
|
|
|
Federal funds sold
|
|
|
3,117
|
|
|
|
8,869
|
|
|
|
728
|
|
|
Interest-bearing deposits with banks
|
|
|
25,340
|
|
|
|
88,224
|
|
|
|
10,742
|
|
|
Cash and cash equivalents
|
|
|
56,456
|
|
|
|
120,280
|
|
|
|
40,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale, at fair value
|
|
|
107,144
|
|
|
|
88,063
|
|
|
|
81,975
|
|
|
Securities held to maturity (fair value of $4,292 at December 31, 2018; $5,327 and $2,259 at June 30, 2018 and 2017, respectively
|
|
|
4,275
|
|
|
|
5,297
|
|
|
|
2,213
|
|
|
Federal Home Loan Bank of New York stock
|
|
|
2,233
|
|
|
|
883
|
|
|
|
1,149
|
|
|
Net loans receivable
|
|
|
1,028,920
|
|
|
|
985,902
|
|
|
|
932,762
|
|
|
Accrued interest receivable
|
|
|
4,269
|
|
|
|
3,854
|
|
|
|
3,256
|
|
|
Premises and equipment, net
|
|
|
42,010
|
|
|
|
42,902
|
|
|
|
37,384
|
|
|
Bank-owned life insurance
|
|
|
17,779
|
|
|
|
17,715
|
|
|
|
17,601
|
|
|
Goodwill
|
|
|
7,292
|
|
|
|
7,292
|
|
|
|
5,242
|
|
|
Other intangible assets, net
|
|
|
2,713
|
|
|
|
2,874
|
|
|
|
498
|
|
|
Other assets
|
|
|
13,876
|
|
|
|
9,066
|
|
|
|
11,798
|
|
|
Total assets
|
|
$
|
1,286,967
|
|
|
$
|
1,284,128
|
|
|
$
|
1,134,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Net Worth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
1,114,959
|
|
|
$
|
1,150,262
|
|
|
$
|
1,010,026
|
|
|
Mortgagors’ escrow deposits
|
|
|
4,795
|
|
|
|
5,382
|
|
|
|
4,905
|
|
|
Borrowings from Federal Home Loan Bank of New York
|
|
|
30,000
|
|
|
|
—
|
|
|
|
5,000
|
|
|
Other liabilities
|
|
|
10,819
|
|
|
|
10,421
|
|
|
|
10,196
|
|
|
Total liabilities
|
|
|
1,160,573
|
|
|
|
1,166,065
|
|
|
|
1,030,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net worth:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Surplus
|
|
|
10,658
|
|
|
|
10,658
|
|
|
|
10,658
|
|
|
Undivided profits
|
|
|
125,637
|
|
|
|
116,394
|
|
|
|
103,022
|
|
|
Accumulated other comprehensive loss
|
|
|
(9,901
|
)
|
|
|
(8,989
|
)
|
|
|
(9,668
|
)
|
|
Total net worth
|
|
|
126,394
|
|
|
|
118,063
|
|
|
|
104,012
|
|
|
Total liabilities and net worth
|
|
$
|
1,286,967
|
|
|
$
|
1,284,128
|
|
|
$
|
1,134,139
|
|
See accompanying notes to consolidated financial
statements.
PIONEER SAVINGS BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands)
|
|
|
For the Six Months Ended
December 31,
|
|
|
For the Years Ended
June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
24,461
|
|
|
$
|
21,150
|
|
|
$
|
43,649
|
|
|
$
|
36,175
|
|
|
Securities
|
|
|
1,269
|
|
|
|
574
|
|
|
|
1,367
|
|
|
|
1,225
|
|
|
Interest-bearing deposits with banks and other
|
|
|
602
|
|
|
|
558
|
|
|
|
1,470
|
|
|
|
221
|
|
|
Total interest and dividend income
|
|
|
26,332
|
|
|
|
22,282
|
|
|
|
46,486
|
|
|
|
37,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
1,946
|
|
|
|
1,480
|
|
|
|
3,167
|
|
|
|
2,223
|
|
|
Borrowings
|
|
|
107
|
|
|
|
1
|
|
|
|
19
|
|
|
|
188
|
|
|
Total interest expense
|
|
|
2,053
|
|
|
|
1,481
|
|
|
|
3,186
|
|
|
|
2,411
|
|
|
Net interest income
|
|
|
24,279
|
|
|
|
20,801
|
|
|
|
43,300
|
|
|
|
35,210
|
|
|
Provision for loan losses
|
|
|
1,210
|
|
|
|
950
|
|
|
|
1,970
|
|
|
|
2,395
|
|
|
Net interest income after provision for loan losses
|
|
|
23,069
|
|
|
|
19,851
|
|
|
|
41,330
|
|
|
|
32,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank fees and service charges
|
|
|
3,737
|
|
|
|
3,328
|
|
|
|
6,527
|
|
|
|
7,069
|
|
|
Insurance and wealth management services
|
|
|
3,282
|
|
|
|
2,385
|
|
|
|
5,090
|
|
|
|
3,681
|
|
|
Net gain on securities transactions
|
|
|
—
|
|
|
|
125
|
|
|
|
812
|
|
|
|
519
|
|
|
Net loss on disposal of assets
|
|
|
(531
|
)
|
|
|
(101
|
)
|
|
|
(128
|
)
|
|
|
(789
|
)
|
|
Bank-owned life insurance
|
|
|
64
|
|
|
|
72
|
|
|
|
114
|
|
|
|
75
|
|
|
Other
|
|
|
17
|
|
|
|
174
|
|
|
|
389
|
|
|
|
342
|
|
|
Total noninterest income
|
|
|
6,569
|
|
|
|
5,983
|
|
|
|
12,804
|
|
|
|
10,897
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
10,991
|
|
|
|
10,537
|
|
|
|
21,621
|
|
|
|
21,402
|
|
|
Net occupancy and equipment
|
|
|
2,933
|
|
|
|
2,797
|
|
|
|
5,528
|
|
|
|
5,138
|
|
|
Data processing
|
|
|
1,448
|
|
|
|
1,588
|
|
|
|
2,921
|
|
|
|
3,207
|
|
|
Advertising and marketing
|
|
|
438
|
|
|
|
302
|
|
|
|
732
|
|
|
|
669
|
|
|
FDIC insurance premiums
|
|
|
355
|
|
|
|
403
|
|
|
|
841
|
|
|
|
632
|
|
|
Other
|
|
|
2,342
|
|
|
|
2,299
|
|
|
|
4,682
|
|
|
|
4,318
|
|
|
Total noninterest expense
|
|
|
18,507
|
|
|
|
17,926
|
|
|
|
36,325
|
|
|
|
35,366
|
|
|
Income before income taxes
|
|
|
11,131
|
|
|
|
7,908
|
|
|
|
17,809
|
|
|
|
8,346
|
|
|
Income tax expense
|
|
|
1,888
|
|
|
|
3,963
|
|
|
|
6,310
|
|
|
|
2,715
|
|
|
Net income
|
|
$
|
9,243
|
|
|
$
|
3,945
|
|
|
$
|
11,499
|
|
|
$
|
5,631
|
|
See accompanying notes to consolidated financial
statements.
PIONEER SAVINGS BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in thousands)
|
|
|
For the Six Months Ended
December 31,
|
|
|
For the Years Ended
June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
9,243
|
|
|
$
|
3,945
|
|
|
$
|
11,499
|
|
|
$
|
5,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains/losses on securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized holding (losses) gains arising during the period
|
|
|
(1,236
|
)
|
|
|
210
|
|
|
|
758
|
|
|
|
178
|
|
|
Reclassification adjustment for gains included in net income
|
|
|
—
|
|
|
|
(125
|
)
|
|
|
(812
|
)
|
|
|
(519
|
)
|
|
|
|
|
(1,236
|
)
|
|
|
85
|
|
|
|
(54
|
)
|
|
|
(341
|
)
|
|
Tax effect
|
|
|
(324
|
)
|
|
|
41
|
|
|
|
4
|
|
|
|
(136
|
)
|
|
|
|
|
(912
|
)
|
|
|
44
|
|
|
|
(58
|
)
|
|
|
(205
|
)
|
|
Defined benefit plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in funded status of defined benefit plans
|
|
|
—
|
|
|
|
—
|
|
|
|
2,075
|
|
|
|
5,799
|
|
|
Reclassification adjustment for amortization of net prior service cost
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
Reclassification adjustment for amortization of net actuarial loss
|
|
|
—
|
|
|
|
—
|
|
|
|
1,458
|
|
|
|
2,262
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,533
|
|
|
|
8,063
|
|
|
Tax effect
|
|
|
—
|
|
|
|
—
|
|
|
|
923
|
|
|
|
3,087
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,610
|
|
|
|
4,976
|
|
|
Total other comprehensive (loss) income
|
|
|
(912
|
)
|
|
|
44
|
|
|
|
2,552
|
|
|
|
4,771
|
|
|
Comprehensive income
|
|
$
|
8,331
|
|
|
$
|
3,989
|
|
|
$
|
14,051
|
|
|
$
|
10,402
|
|
See accompanying notes to consolidated financial
statements.
PIONEER SAVINGS BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN NET WORTH
(dollars in thousands)
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
Total
|
|
|
|
|
|
|
|
Undivided
|
|
|
Comprehensive
|
|
|
Net
|
|
|
|
|
Surplus
|
|
|
Profits
|
|
|
Loss
|
|
|
Worth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of July 1, 2016
|
|
$
|
10,658
|
|
|
$
|
97,391
|
|
|
$
|
(14,439
|
)
|
|
$
|
93,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
5,631
|
|
|
|
-
|
|
|
|
5,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income
|
|
|
-
|
|
|
|
-
|
|
|
|
4,771
|
|
|
|
4,771
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June
30, 2017
|
|
|
10,658
|
|
|
|
103,022
|
|
|
|
(9,668
|
)
|
|
|
104,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
11,499
|
|
|
|
-
|
|
|
|
11,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income
|
|
|
-
|
|
|
|
-
|
|
|
|
2,552
|
|
|
|
2,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification
of certain tax effects related to the Tax Cuts and Jobs Act (1)
|
|
|
-
|
|
|
|
1,873
|
|
|
|
(1,873
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June
30, 2018
|
|
|
10,658
|
|
|
|
116,394
|
|
|
|
(8,989
|
)
|
|
|
118,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
-
|
|
|
|
9,243
|
|
|
|
-
|
|
|
|
9,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
(912
|
)
|
|
|
(912
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of December 31, 2018
|
|
$
|
10,658
|
|
|
$
|
125,637
|
|
|
$
|
(9,901
|
)
|
|
$
|
126,394
|
|
(1) Adoption of Accounting Standard Update 2018-02,
reclassification from accumulated other comprehensive loss to undivided profits for stranded tax effects resulting from Tax Cuts
and Jobs Act.
See accompanying notes to consolidated financial
statements.
PIONEER SAVINGS BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
|
|
|
For the Six Months Ended
December 31,
|
|
|
For the Years Ended
June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
9,243
|
|
|
$
|
3,945
|
|
|
$
|
11,499
|
|
|
$
|
5,631
|
|
|
Adjustments to reconcile net income to net cash providing by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,389
|
|
|
|
1,312
|
|
|
|
2,638
|
|
|
|
1,961
|
|
|
Provision for loan losses
|
|
|
1,210
|
|
|
|
950
|
|
|
|
1,970
|
|
|
|
2,395
|
|
|
Net accretion on securities
|
|
|
(262
|
)
|
|
|
(33
|
)
|
|
|
(125
|
)
|
|
|
(96
|
)
|
|
Earnings on bank-owned life insurance
|
|
|
(64
|
)
|
|
|
(72
|
)
|
|
|
(114
|
)
|
|
|
(75
|
)
|
|
Net loss on sale of loans
|
|
|
—
|
|
|
|
26
|
|
|
|
26
|
|
|
|
—
|
|
|
Proceeds from sale of loans
|
|
|
228
|
|
|
|
2,771
|
|
|
|
2,771
|
|
|
|
—
|
|
|
Net losses on the sale, disposal or write-down of premises and equipment, and other real estate owned
|
|
|
548
|
|
|
|
86
|
|
|
|
114
|
|
|
|
789
|
|
|
Net gains on securities transactions
|
|
|
—
|
|
|
|
(125
|
)
|
|
|
(812
|
)
|
|
|
(519
|
)
|
|
Deferred tax expense (benefit)
|
|
|
437
|
|
|
|
2,309
|
|
|
|
2,078
|
|
|
|
(116
|
)
|
|
Increase in accrued interest receivable
|
|
|
(415
|
)
|
|
|
(380
|
)
|
|
|
(599
|
)
|
|
|
(640
|
)
|
|
(Increase) decrease in other assets
|
|
|
(4,942
|
)
|
|
|
(275
|
)
|
|
|
1,836
|
|
|
|
1,796
|
|
|
Increase in other liabilities
|
|
|
398
|
|
|
|
4,335
|
|
|
|
1,723
|
|
|
|
739
|
|
|
Net cash provided by operating activities
|
|
|
7,770
|
|
|
|
14,849
|
|
|
|
23,005
|
|
|
|
11,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from maturities, paydowns and calls of securities available for sale
|
|
|
25,878
|
|
|
|
39,536
|
|
|
|
66,267
|
|
|
|
53,997
|
|
|
Proceeds from sales of securities available for sale
|
|
|
—
|
|
|
|
398
|
|
|
|
1,134
|
|
|
|
1,588
|
|
|
Purchases of securities available for sale
|
|
|
(45,933
|
)
|
|
|
(30,287
|
)
|
|
|
(72,606
|
)
|
|
|
(36,335
|
)
|
|
Proceeds from maturities and paydowns of securities held to maturity
|
|
|
4,312
|
|
|
|
2,270
|
|
|
|
4,807
|
|
|
|
6,128
|
|
|
Purchases of securities held to maturity
|
|
|
(3,290
|
)
|
|
|
(4,581
|
)
|
|
|
(7,891
|
)
|
|
|
(4,530
|
)
|
|
Net (purchases) redemptions of FHLBNY stock
|
|
|
(1,350
|
)
|
|
|
154
|
|
|
|
265
|
|
|
|
436
|
|
|
Net increase in loans receivable
|
|
|
(44,455
|
)
|
|
|
(42,442
|
)
|
|
|
(58,034
|
)
|
|
|
(146,148
|
)
|
|
Purchases of premises and equipment
|
|
|
(1,264
|
)
|
|
|
(6,932
|
)
|
|
|
(8,015
|
)
|
|
|
(9,366
|
)
|
|
Proceeds from sale of premises and equipment, and other real estate owned
|
|
|
398
|
|
|
|
70
|
|
|
|
70
|
|
|
|
—
|
|
|
Acquisitions
|
|
|
—
|
|
|
|
(1,425
|
)
|
|
|
(4,696
|
)
|
|
|
(5,805
|
)
|
|
Net cash used in investing activities
|
|
|
(65,704
|
)
|
|
|
(43,239
|
)
|
|
|
(78,699
|
)
|
|
|
(140,035
|
)
|
See accompanying notes to consolidated financial
statements.
PIONEER SAVINGS BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS –
(continued)
(dollars in thousands)
|
|
|
For the Six Months Ended
December 31,
|
|
|
For the Years Ended
June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (decrease) increase in deposits
|
|
|
(35,303
|
)
|
|
|
104,005
|
|
|
|
140,236
|
|
|
|
145,838
|
|
|
Net (decrease) increase in mortgagors’ escrow deposits
|
|
|
(587
|
)
|
|
|
(387
|
)
|
|
|
477
|
|
|
|
75
|
|
|
Net increase (decrease) in borrowings from FHLBNY
|
|
|
30,000
|
|
|
|
-
|
|
|
|
(5,000
|
)
|
|
|
(12,000
|
)
|
|
Net cash (used in) provided by financing activities
|
|
|
(5,890
|
)
|
|
|
103,618
|
|
|
|
135,713
|
|
|
|
133,913
|
|
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(63,824
|
)
|
|
|
75,228
|
|
|
|
80,019
|
|
|
|
5,743
|
|
|
Cash and cash equivalents at beginning of period
|
|
|
120,280
|
|
|
|
40,261
|
|
|
|
40,261
|
|
|
|
34,518
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
56,456
|
|
|
$
|
115,489
|
|
|
$
|
120,280
|
|
|
$
|
40,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
2,027
|
|
|
$
|
1,488
|
|
|
$
|
3,190
|
|
|
$
|
2,402
|
|
|
Income taxes
|
|
$
|
3,500
|
|
|
$
|
2,750
|
|
|
$
|
3,250
|
|
|
$
|
1,000
|
|
|
Non-cash investing and financing activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans transferred to other real estate owned
|
|
$
|
-
|
|
|
$
|
55
|
|
|
$
|
72
|
|
|
$
|
-
|
|
See accompanying notes to consolidated financial
statements.
PIONEER SAVINGS BANK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2018 AND 2017 (unaudited) AND JUNE 30, 2018 AND 2017
|
|
1.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Operations and Principles of Consolidation
The accompanying consolidated financial
statements of Pioneer Savings Bank and Subsidiaries (“the Bank”) conform, in all material respects, to accounting
principles generally accepted in the United States of America (“GAAP”) and to general practice within the banking industry.
The Bank provides financial services
through its twenty-two offices in the Capital Region of New York State. Its primary deposit products are checking, savings, money
market, and certificate accounts, and its primary lending products are residential mortgage, home equity, commercial business and
commercial real estate loans. There are no significant concentrations of loans to any one customer or industry. However, the customers’
ability to repay their loans is dependent on the real estate and general economic conditions in the Bank’s market area.
The consolidated financial statements
include the accounts of Pioneer Savings Bank, as well as Pioneer Commercial Bank, Pioneer Financial Services, Inc., and Anchor
Agency, Inc., its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.
The interim financial statements at
December 31, 2018 and for the six months ended December 31, and 2017, respectively, are unaudited and reflect all normal recurring
adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented.
The results of operations for the six months ended December 31, 2018 are not necessarily indicative of the results to be achieved
for the remainder of fiscal 2019 or any other period.
Use of Estimates
The preparation of consolidated financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ substantially from those estimates.
The allowance for loan losses, valuation of securities and other financial instruments, the funded status and expense of employee
benefit plans, and the realizability of deferred tax assets are particularly subject to change.
Cash and Cash Equivalents
Cash and cash equivalents consists
of cash and due from banks, federal funds sold with maturities less than three months, and interest-bearing deposits with banks.
Net cash flows are reported for customer loan and deposit transactions, changes in mortgagor’s escrow deposits, and short-term
borrowings.
|
|
1.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|
Securities Available for Sale and
Securities Held to Maturity
Management determines the appropriate
classification of securities at the time of purchase. If management has the positive intent and ability to hold debt securities
to maturity, they are classified as securities held to maturity and are stated at amortized cost. If securities are purchased for
the purpose of selling them in the near term, they are classified as trading securities and are reported at fair value with unrealized
gains and losses reflected in current earnings. All other debt and marketable equity securities are classified as securities available
for sale and reported at fair value, with net unrealized gains or losses reported, net of income taxes, in accumulated other comprehensive
loss, a component of net worth. At December 31, 2018, and June 30, 2018 and 2017, and during the periods then ended, the Bank
did not hold any securities considered to be trading securities.
Gains or losses on the sale or call
of securities are based on the net proceeds received and the amortized cost of the securities sold or called, using the specific
identification method. Unrealized losses on securities which reflect a decline in value which is other-than-temporary are charged
to income. The cost of securities is adjusted for amortization of premium and accretion of discount, which is calculated on an
effective interest method.
Management evaluates securities for
other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market
conditions warrant such an evaluation. In determining OTTI, management considers many factors, including: (1) the length of
time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of
the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the
intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery.
The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based
on the information available to management at a point in time. In order to determine OTTI for mortgage-backed securities, asset-backed
securities and collateralized mortgage obligations, the Bank compares the present value of the remaining cash flows as estimated
at the preceding evaluation date to the current expected remaining cash flows. OTTI is deemed to have occurred if there has been
an adverse change in the remaining expected future cash flows.
When OTTI occurs, the amount of the
OTTI recognized in earnings depends on whether an entity intends to sell the security or it is more likely than not it will be
required to sell the security before recovery of its amortized cost basis, less any current-period credit loss. If an entity intends
to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, less
any current-period credit loss, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s
amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is
not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less
any current-period loss, the OTTI shall be separated into the amount representing the credit loss and the amount related to all
other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected
to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive
income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized
cost basis of the investment.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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Securities Available for Sale and
Securities Held to Maturity (Continued)
Securities are exposed to various
risks such as interest rate, market and credit risks. Due to the level of risk associated with certain securities, it is at least
reasonably possible that changes in the values of securities will occur in the near term and that such changes could materially
affect the amounts reported in the accompanying consolidated financial statements.
Federal Home Loan Bank of New York
(“FHLBNY”) Stock
The Bank is a member of the FHLB system.
Members are required to own a certain amount of stock based on the level of borrowings and other factors. FHLBNY stock is carried
at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value.
Both cash and stock dividends, if any, are reported as income.
Loans Held for Sale
Management determines the appropriate
classification of mortgage loans at the time of commitment for new loan originations or, for convertible adjustable rate loans,
at the time of conversion to a fixed interest rate. Mortgage loans held for sale are recorded at the lower of aggregate cost or
fair value as determined by outstanding commitments from investors or fair value based upon recent sales for loans with no commitments.
In order to limit the interest rate risk associated with loans held for sale, the Bank may enter into various agreements to sell
loans in the secondary mortgage market at fixed rates.
Gains and losses on the disposition
of loans held for sale are determined based on the difference between the selling price and the carrying value of the loan sold
plus the value of servicing rights, if retained.
At December 31, 2018, and June 30,
2018 and 2017 the Bank had no loans held for sale.
Net Loans Receivable
Loans receivable are reported at the
principal amount outstanding, plus net deferred loan costs and net of the allowance for loan losses. Interest income accrues on
the unpaid principal balance. Interest income on loans is not recognized when considered doubtful of collection by management (generally,
when principal or interest payments are ninety days or more past due). Past due status is based on the contractual terms of the
loan. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is
considered doubtful. Nonaccrual loans and loans past due 90 days or more still on accrual include both smaller balance homogeneous
loans that are collectively evaluated for impairment and individually evaluated impaired loans. A loan is moved to non-accrual
status in accordance with the Bank’s policy, typically after 90 days of non-payment.
All interest accrued but not received
for loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on a cost
recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest
amounts contractually due are brought current and future payments are reasonably assured.
Fees received from loan originations
and certain direct origination costs are deferred and amortized into interest income to provide for a level-yield on the underlying
loans without anticipating prepayments.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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Allowance for Loan Losses
The allowance for loan losses is a
valuation allowance for probable incurred credit losses. The allowance for loan losses is increased through charges to the provision
for loan losses. Loans are charged against the allowance when management believes that the collectability of the principal is not
probable. Recoveries on loans previously charged-off are credited to the allowance for loan losses when realized. The allowance
is an amount that management believes is adequate for probable incurred losses on existing loans.
The allowance consists of specific
and general components. The specific component relates to loans that are individually classified as impaired.
A loan is impaired when, based on
current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual
terms of the loan agreement. Loans, for which the terms have been modified, and for which the borrower is experiencing financial
difficulties, are considered troubled debt restructurings and classified as impaired.
Factors considered by management in
determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest
payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired.
Management determines the significance of payment delays and payment shortfalls on case-by-case basis, taking into consideration
all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the
borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.
Commercial business,
commercial real estate, commercial construction, and certain residential real estate loans are individually evaluated for
impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present
value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is
expected solely from the collateral. Large groups of smaller balance homogeneous loans, such as consumer and residential real
estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment
disclosures unless classified as a troubled debt restructuring.
Troubled debt restructurings are separately
identified for impairment disclosures and are measured at the present value of estimated future cash flows using the loan’s
effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported,
net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Bank determines the amount
of an allowance in accordance with the accounting policy for the allowance for loan losses.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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Allowance for Loan Losses (Continued)
The general component covers non-impaired
loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by
portfolio segment and is based on the actual loss history experienced by the Bank over the most recent one, three, five or ten
year periods, whichever is highest. This actual loss experience is supplemented with other economic factors based on the risks
present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies
and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes
in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability,
and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions;
and effects of changes in credit concentrations. The following portfolio segments have been identified: Commercial, Residential
Mortgage, Home Equity Loans and Lines, and Consumer. Commercial loan classes include commercial and industrial, commercial real
estate, and commercial construction.
The risk characteristics of each of
the identified portfolio segments and classes are as follows:
Commercial
– Commercial
and industrial loans are commercial loans other than those secured by real estate. Commercial and industrial loans are generally
of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the
borrower’s business. As a result, the availability of funds for the repayment of commercial loans may depend substantially
on the success of the business itself. Furthermore, any collateral securing such loans may depreciate over time, may be difficult
to appraise and may fluctuate in value.
Commercial real estate loans are secured
by multi-family and nonresidential real estate and generally have larger balances and involve a greater degree of risk than residential
real estate loans. Commercial real estate loans depend on the global cash flow analysis of the borrower and the net operating income
of the property, the borrower’s expertise, credit history and profitability, and the value of the underlying property. Of
primary concern in commercial real estate lending is the borrower’s creditworthiness and the cash flow from the property.
Payments on loans secured by income properties often depend on successful operation and management of the properties. As a result,
repayment of such loans may be subject, to a greater extent than residential real estate loans, to adverse conditions in the real
estate market or the economy. Commercial real estate is also subject to adverse market conditions that cause a decrease in market
value or lease rates, obsolescence in location or function and market conditions associated with oversupply in a specific region.
Construction financing is generally
considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate. Risk of loss
on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of
construction and the estimated cost of construction. During the construction phase, a number of factors could result in delays
and cost overruns. If the estimate of construction costs proves to be inaccurate, additional funds may be required to be advanced
in excess of the amount originally committed to permit completion of the building. If the estimate of value proves to be inaccurate,
the value of the building may be insufficient to assure full repayment if liquidation is required. If foreclosure is required on
a building before or at completion due to a default, there can be no assurance that all of the unpaid balance of, and accrued interest
on, the loan as well as related foreclosure and holding costs will be recovered.
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1.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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Allowance for Loan Losses
(Continued)
Residential Mortgages
–
Residential mortgage loans are generally made on the basis of the borrower’s ability to make repayment from his or her employment
or other income, and which are secured by real property whose value tends to be more easily ascertainable. Repayment of residential
mortgage loans is subject to adverse employment conditions in the local economy leading to increased default rate and decreased
market values from oversupply in a geographic area. In general, residential mortgage loans depend on the borrower’s continuing
financial stability and, therefore, are likely to be adversely affected by various factors, including job loss, divorce, illness
or personal bankruptcy. Furthermore, the application of various federal and state laws, including federal and state bankruptcy
and insolvency laws, may limit the amount that can be recovered on such loans.
Home Equity Loans and Lines
– Home equity loans secured by real estate may entail greater risk than first-lien residential mortgage loans due to a lower
lien position. In general, repayment of home equity loans depend on the borrower’s continuing financial stability and, therefore,
are likely to be adversely affected by various factors, including job loss, divorce, illness or personal bankruptcy. Furthermore,
the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount
that can be recovered on such loans.
Consumer
- Consumer loans,
particularly loans secured by assets that depreciate rapidly, such as motor vehicles, are subject to greater risk. In all cases,
collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan and a small remaining
deficiency often does not warrant further substantial collection efforts against the borrower.
Derivatives
In the normal course of business,
the Bank utilizes interest rate swaps with certain commercial borrowers and third-party counterparties. These transactions are
accounted for as derivatives. The derivatives are entered into in connection with the Bank’s asset and liability management
activities and not for trading purposes.
The derivatives are not designated
as hedges for accounting purposes and therefore all derivatives are recorded at fair value as derivative assets and derivative
liabilities, included in other assets and other liabilities, respectively, in the consolidated statement of condition, with changes
in fair value recognized as non-interest income in the consolidated statement of income.
Premises and Equipment
Premises and equipment are carried
at cost, net of accumulated depreciation and amortization. Depreciation is computed on a straight-line basis over the estimated
useful lives of the assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the term of the related
leases or the estimated useful lives of the assets. Land is carried at cost.
Other Real Estate Owned
Other real estate owned (“OREO”)
is initially recorded at fair value of the asset acquired less an estimate of the costs to sell, establishing a new cost basis.
Fair value of OREO is generally determined through independent appraisals. At the time of foreclosure or when the Bank obtains
legal title to the property, the excess, if any, of the recorded investment in the loan over the fair value of the asset received
is charged to the allowance for loan losses. Subsequent declines in the fair value of such assets, or increases in the estimated
costs to sell the properties and net operating expenses of such assets, are charged directly to other expenses. OREO is included
in other assets on the consolidated statements of condition.
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1.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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Bank-Owned Life Insurance
The Bank is the beneficiary of a policy
that insures the lives of certain current and former officers of the Bank. The Bank has recognized the cash surrender value, or
the amount that can be realized under the insurance policy, as an asset in the consolidated statements of condition. Changes in
the cash surrender value and insurance benefit payments are recorded in noninterest income.
Goodwill and Other Intangible Assets
The excess of the cost of acquired
entities over the fair value of identifiable tangible and intangible assets acquired, less liabilities assumed, is recorded as
goodwill. Goodwill is carried at its acquired value and is reviewed annually for impairment, or when events or changes in circumstances
indicate that carrying amounts may be impaired.
Acquired identifiable intangible assets
that have finite lives are amortized over their useful economic life. Customer relationship intangibles are generally amortized
over fifteen years based upon the projected discounted cash flows of the accounts acquired. Core deposit premium related to the
Bank’s assumption of certain deposit liabilities is being amortized over fifteen years. Acquired identifiable intangible
assets that are amortized are reviewed for impairment when events or changes in circumstances indicate that the carrying amounts
may be impaired.
Advertising
The Bank expenses costs associated
with advertising as they are incurred.
Income Taxes
Income tax expense is the total of
the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities
are the expected future tax amounts for the temporary differences between carrying amounts and tax basis of assets and liabilities,
computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.
The Bank recognizes interest and/or penalties related to income tax matters in other expense.
A tax position is recognized as a
benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a
tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely
of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is
recorded.
Statutory Transfer of Surplus
A quarterly transfer of 10% of net
income may be made to surplus in accordance with New York State Banking Regulations. No transfer is required if net worth as a
percent of deposits exceeds 10% at the end of each quarter. In accordance with State of New York Banking Law, surplus is subject
to certain restrictions, including a prohibition of its use for payment of dividends, except with the approval of the Department
of Financial Services.
Financial Instruments
In the normal course of business,
the Bank is a party to certain financial instruments with off-balance-sheet risk such as commitments to extend credit, unused lines
of credit and standby letters of credit. The face amount for these items represents exposure to loss, before considering customer
collateral, or ability to repay. The Bank’s policy is to record such instruments when funded.
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1.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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Mortgage Servicing Rights
Mortgage servicing rights are recognized
in other assets when loans are sold with servicing retained based on their estimated fair values. The cost allocated to the servicing
right is capitalized as a separate asset and amortized in proportion to, and over the period of, estimated net servicing income.
Capitalized mortgage servicing rights are assessed for impairment based on the fair value of those rights, and any impairment loss
is recognized through a valuation allowance.
Comprehensive Income
Comprehensive income represents the
sum of net income and items of other comprehensive income or loss, which are reported directly in net worth, net of tax. Other
comprehensive income or loss includes the unrealized gain or loss on securities available for sale and changes in the funded status
of the Bank’s defined benefit pension and other post-retirement plans, net of tax.
Cash Reserve Requirement
The Bank may be required to maintain
certain reserves of cash and/or deposits with the Federal Reserve Bank. The Bank had no reserve requirement at December 31, 2018,
and June 30, 2018 and 2017.
Employee Benefits
The Bank has a defined benefit pension
plan covering substantially all of its employees. The benefits are developed from actuarial valuations and are based on the employee’s
years of service and compensation. Actuarial assumptions such as interest rates, expected return on plan assets, turnover, mortality
and rates of future compensation increases have a significant impact on the costs, assets and liabilities of the plan. Pension
expense is the net of service cost, interest cost, return on plan assets and amortization of gains and losses not immediately recognized.
The Bank maintains a defined contribution
401(k) plan covering substantially all employees meeting certain eligibility requirements. Employer 401(k) expense is the amount
of matching contributions. Deferred compensation and supplemental retirement plan expense principally represents investment performance
on the various plan assets.
The Bank also provides post-retirement
medical and life insurance benefits to certain employees and retirees. The cost of post-retirement benefits is recognized on an
accrual basis as employees perform services. Effective October 1, 2006, the post-retirement medical portion of the plan was
frozen. Accordingly, after that date there have been no new plan participants.
Reclassifications
Amounts in the prior year’s
consolidated financial statements are reclassified whenever necessary to conform to the current year’s presentation.
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1.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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Impact of Recent Accounting Pronouncements
In February 2018, the Financial
Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-02, Income Statement-Reporting
Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which provides
guidance concerning the treatment of the so-called stranded effects in accumulated other income (loss) resulting from the reduction
in the federal corporate income tax rate to 21% made by the Tax Cuts and Jobs Act (the “Tax Act”), which was signed
into law on December 22, 2017. ASU 2018-02 amends accounting standards to allow reclassification to retained earnings of the effects
of re-measuring deferred tax liabilities and deferred tax assets relating to items remaining within accumulated other comprehensive
income (loss) as a result of the Tax Act. The amount of the reclassification is the difference between the amount initially charged
or credited directly to other comprehensive income (loss) at the previously enacted U.S. federal corporate income tax rate and
the amount that would have been charged or credited directly to other comprehensive income (loss) by applying the newly enacted
21% rate, but excluding the effect of any valuation allowance previously charged to income from continuing operations. The Bank
has elected to early adopt ASU 2018-02 as of December 31, 2017, it is reflected in the accompanying consolidated financial statements
and resulted in a $1.9 million increase to undivided profits and a corresponding increase to accumulated other comprehensive loss.
In May 2014, the FASB issued ASU
2014-09 to amend its guidance on “Revenue from Contracts with Customers (Topic 606)”. The objective of this ASU
is to align the recognition of revenue with the transfer of promised goods or services provided to customers in an amount that
reflects the consideration which the entity expects to be entitled in exchange for those goods or services. This ASU will
replace most existing revenue recognition guidance under GAAP when it becomes effective. In August 2015, the FASB issued an amendment
(ASU 2015-14) which defers the effective date of this new guidance by one year. More detailed implementation guidance on Topic
606 was issued in March 2016 (ASU 2016-08), April 2016 (ASU 2016-10), May 2016 (ASU 2016-12), December 2016 (ASU 2016-20), February
2017 (ASU 2017-05), and September 2017 (ASU-2017-13) and the effective date and transition requirements for these ASUs are the
same as the effective date and transition requirements of ASU 2014-09. The amendments in ASU 2014-09 are effective for the
Bank for the fiscal year beginning July 1, 2019. A significant amount of the Bank’s revenues are derived from net interest
income on financial assets and liabilities, which are excluded from the scope of the amended guidance. With respect to noninterest
income, the Bank has identified revenue streams within the scope of the guidance and is performing its accounting analysis of the
underlying contracts. The Bank does not presently expect that changes in the timing of revenue recognition will be material to
the amount of annual revenue recognized by the Bank.
In January 2016, the FASB issued
ASU 2016-01 to its guidance on “Financial Instruments (Subtopic 825-10)”. This amendment addresses certain aspects
of recognition, measurement, presentation, and disclosure of financial instruments. These amendments require equity securities
to be measured at fair value with changes in the fair value to be recognized through net income. The amendments also simplify the
impairment assessment of equity investments without readily determinable fair values by requiring assessment for impairment qualitatively
at each reporting period. The amendments in ASU 2016-01 are effective for the Bank for the fiscal year beginning July 1,
2019. The adoption of this guidance is not expected to have a material impact on our consolidated results of operations or
financial position.
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1.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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Impact of Recent Accounting Pronouncements
(Continued)
In February 2016, the FASB issued
ASU 2016-02 to its guidance on “Leases (Topic 842)”. The new leases standard applies a right-of-use (ROU) model that
requires a lessee to record, for all leases with a lease term of more than 12 months, an asset representing its right to use the
underlying asset and a liability to make lease payments. For leases with a term of 12 months or less, a practical expedient is
available whereby a lessee may elect, by class of underlying asset, not to recognize an ROU asset or lease liability. The new leases
standard requires a lessor to classify leases as either sales-type, direct financing or operating, similar to existing U.S. GAAP.
Classification depends on the same five criteria used by lessees plus certain additional factors. The subsequent accounting treatment
for all three lease types is substantially equivalent to existing U.S. GAAP for sales-type leases, direct financing leases, and
operating leases. However, the new standard updates certain aspects of the lessor accounting model to align it with the new lessee
accounting model, as well as with the new revenue standard under Topic 606. Lessees and lessors are required to provide certain
qualitative and quantitative disclosures to enable users of financial statements to assess the amount, timing, and uncertainty
of cash flows arising from leases. The amendments in ASU 2016-02 are effective for the Bank for the fiscal year beginning July
1, 2020. Early adoption is permitted. The adoption of this ASU will result in a gross up of the Consolidated Statements of Condition
for right-of-use assets and associated lease liabilities for operating leases in which the Bank is the lessee. In July 2018, the
FASB issued ASU No. 2018-10, Codification Improvements to Topic 842 - Leases to address certain narrow aspects of the guidance
issued in ASU No. 2016-02. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which amends
FASB Accounting Standards Codification (ASC), Leases (Topic 842), to (1) add an optional transition method that would permit entities
to apply the new requirements by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the
year of adoption, and (2) provide a practical expedient for lessors regarding the separation of the lease and non-lease components
of a contract. In December 2018, the FASB issued ASU No. 2018-20, Narrow-Scope Improvements for Lessors, which addresses issues
related to (1) sales tax and similar taxes collected from lessees, (2) certain lessor costs, and (3) recognition of variable payments
for contracts with lease and non-lease components. The Bank is evaluating the significance and other effects of adoption on the
consolidated financial statements and related disclosures. The Bank is performing its accounting analysis of its branch building
and other leases underlying contracts. The Bank is currently evaluating the potential impact on adoption of this ASU on our consolidated
financial statements.
In June 2016, the FASB issued ASU
2016-13 to its guidance on “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments”. ASU 2016-13 requires credit losses on most financial assets measured at amortized cost and certain other instruments
to be measured using an expected credit loss model (referred to as the current expected credit loss (CECL) model). Under this model,
entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but
not expected extensions or modifications unless reasonable expectation of a troubled debt restructuring exists) from the date of
initial recognition of that instrument. The ASU also replaces the current accounting model for purchased credit impaired loans
and debt securities. The allowance for credit losses for purchased financial assets with a more-than insignificant amount of credit
deterioration since origination (“PCD assets”), should be determined in a similar manner to other financial assets
measured on an amortized cost basis. However, upon initial recognition, the allowance for credit losses is added to the purchase
price (“gross up approach”) to determine the initial amortized cost basis. The subsequent accounting for PCD financial
assets is the same expected loss model described above. Further, the ASU made certain targeted amendments to the existing impairment
model for available-for-sale (AFS) debt securities.
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1.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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Impact of Recent Accounting
Pronouncements (Continued)
For an AFS debt security for which
there is neither the intent nor a more-likely-than-not requirement to sell, an entity will record credit losses as an allowance
rather than a write-down of the amortized cost basis. The amendments in this ASU are effective for the Bank for the fiscal year
beginning July 1, 2021. All entities may adopt the amendments in this ASU earlier as of the fiscal years beginning after December
15, 2018, including interim periods within those fiscal years. An entity will apply the amendments in this Update through a cumulative-effect
adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is,
a modified-retrospective approach). In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial
Instruments-Credit Losses, which aligns the implementation date for nonpublic entities’ annual financial statements with
the implementation date for their interim financial statements and clarifies the scope of the guidance in the amendments in ASU
2016-13. The Bank is currently evaluating the potential impact on our consolidated results of operations or financial position.
The initial adjustment will not be reported in earnings and therefore will not have any material impact on our consolidated results
of operations, but it is expected that it will have an impact on our consolidated financial position at the date of adoption of
this ASU. At this time, we have not calculated the estimated impact that this ASU will have on our allowance for loan losses, however,
we anticipate it will have a significant impact on the methodology process we utilize to calculate the allowance. Alternative methodologies
are currently being considered. Data requirements and integrity are being reviewed and enhancements incorporated into standard
processes. The Bank is currently evaluating the potential impact on adoption of this ASU on our consolidated financial statements.
In August 2016, the FASB issued
ASU 2016-15 which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows.
The amendments are intended to reduce diversity in practice. The amendment covers the following cash flows: Cash payments for debt
prepayment or extinguishment costs will be classified in financing activities. Upon settlement of zero-coupon bonds and bonds with
insignificant cash coupons, the portion of the payment attributable to imputed interest will be classified as an operating activity,
while the portion of the payment attributable to principal will be classified as a financing activity. Cash paid by an acquirer
that is not soon after a business combination for the settlement of a contingent consideration liability will be separated between
financing activities and operating activities. Cash payments up to the amount of the contingent consideration liability recognized
at the acquisition date will be classified in financing activities; any excess will be classified in operating activities. Cash
paid soon after the business combination will be classified in investing activities. Cash proceeds received from the settlement
of insurance claims will be classified on the basis of the related insurance coverage (that is, the nature of the loss). Cash proceeds
from lump-sum settlements will be classified based on the nature of each loss included in the settlement. Cash proceeds received
from the settlement of corporate-owned life insurance (COLI) and bank-owned life insurance (BOLI) policies will be classified as
cash inflows from investing activities. Cash payments for premiums on COLI and BOLI may be classified as cash outflows for investing,
operating, or a combination of both. A transferor’s beneficial interest obtained in a securitization of financial assets
will be disclosed as a noncash activity, and cash received from beneficial interests will be classified in investing activities.
Distributions received from equity method investees will be classified using either a cumulative earnings approach or a look- through
approach as an accounting policy election. The ASU contains additional guidance clarifying when an entity should separate cash
receipts and cash payments and classify them into more than one class of cash flows (including when reasonable judgment is required
to estimate and allocate cash flows) versus when an entity should classify the aggregate amount into one class of cash flows on
the basis of predominance. The amendments in this ASU are effective for the Bank for the fiscal year beginning July 1, 2019.
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1.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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Impact of Recent Accounting Pronouncements
(Continued)
Early adoption is permitted. If
an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal
year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period.
The adoption of this guidance is not expected to have a material impact on our consolidated results of operations or financial
position.
In November 2016, the FASB issued
ASU 2016-18 to its guidance on “Statement of Cash Flows (Topic 230) Restricted Cash” addresses diversity in practice
from entities classifying and presenting transfers between cash and restricted cash as operating, investing or financing activities
or as a combination of those activities in the statement of cash flows. The ASU requires entities to show the changes in the total
cash, cash equivalents, restricted cash and restricted cash equivalents in the Statement of Cash Flows. As a result, transfers
between such categories will no longer be presented in the Statement of Cash Flows. The amendments in this ASU are effective for
the Bank for the fiscal year beginning July 1, 2019. Early adoption is permitted provided all amendments are adopted in the
same period. The adoption of this guidance is not expected to have a material impact on our consolidated results of operations
or financial position.
In March 2017, the FASB issued
ASU 2017-07 to its guidance on “Compensation - Retirement Benefits (Topic 715)” to improve the presentation of net
periodic pension cost and net periodic postretirement benefit cost. ASU 2017-07 requires that an employer report the service
cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees
during the period. The other components of net benefit cost are required to be presented in the income statement separately from
the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items
are used to present the other components of net benefit cost, that line item or items must be appropriately described. If
a separate line item or items are not used, the line item or items used in the income statement to present the other components
of net benefit cost must be disclosed. The amendments in this ASU are effective for the Bank for the fiscal year beginning
July 1, 2019. Early adoption is permitted as of the beginning of an annual period for which financial statements (interim
or annual) have not been issued or made available for issuance. That is, early adoption should be within the first interim
period if an employer issues interim financial statements. Disclosures of the nature of and reason for the change in accounting
principle are required in the first interim and annual periods of adoption. The amendments in this ASU should be applied
retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net
periodic postretirement benefit costs in the income statement and prospectively, on and after the effective date, for the capitalization
of the service cost component of net period pension cost and net periodic postretirement benefit in assets. The Bank is currently
evaluating the potential impact on adoption of this ASU on our consolidated financial statements.
In March 2017, the FASB issued
ASU 2017-08 to its guidance on “Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20) related to premium
amortization on purchased callable debt securities. The amendments in this Update shorten the amortization period for certain callable
debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date.
The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to
maturity. The amendments in this ASU are effective for the Bank for the fiscal year beginning July 1, 2020. Early adoption is permitted,
including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should
be reflected as of the beginning of the fiscal year that includes that interim period.
|
|
1.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|
Impact of Recent Accounting Pronouncements
(Continued)
An entity should apply the amendments
in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the
beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosure about a change
in accounting principle. The adoption of this guidance is not expected to have a material impact on our consolidated results of
operations or financial position.
In August 2018, the FASB issued
ASU 2018-13 to its guidance on “Fair Value Measurement (Topic 820)”. This update modifies the disclosure requirements
on fair value measurements. The following disclosure requirements were removed from Topic 820: (1) the amount of and reasons for
transfers between Level 1 and Level 2 of the fair value hierarchy; (2) the policy for timing of transfers between levels; (3) the
valuation processes for Level 3 fair value measurements; and (4) for nonpublic entities, the changes in unrealized gains and losses
for the period included in earnings for recurring Level 3 fair value measurements held at the end of the reporting period. The
following disclosure requirements were modified in Topic 820: (1) in lieu of a rollforward for Level 3 fair value measurements,
a nonpublic entity is required to disclose transfers into and out of Level 3 of the fair value hierarchy and purchases and issues
of Level 3 assets and liabilities; (2) for investments in certain entities that calculate net asset value, an entity is required
to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse
only if the investee has communicated the timing to the entity or announced the timing publicly; and (3) the amendments clarify
that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting
date. The following disclosure requirements were added to Topic 820; however, the disclosures are not required for nonpublic entities:
(1) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair
value measurements held at the end of the reporting period; and (2) the range and weighted average of significant unobservable
inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative
information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative
information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level
3 fair value measurements. In addition, the amendments eliminate at a minimum from the phrase “an entity shall disclose at
a minimum” to promote the appropriate exercise of discretion by entities when considering fair value measurement disclosures
and to clarify that materiality is an appropriate consideration of entities and their auditors when evaluating disclosure requirements.
The amendments in ASU No. 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of
significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty
should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption.
All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted.
An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU No. 2018-13 and delay adoption of
the additional disclosures until their effective date. The adoption of this guidance is not expected to have a material impact
on our consolidated results of operations or financial position.
|
|
1.
|
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
|
Impact of Recent Accounting Pronouncements
(Continued)
In August 2018, the FASB has issued
ASU No. 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure
Framework—Changes to the Disclosure Requirements for Defined Benefit Plans”, that applies to all employers that sponsor
defined benefit pension or other postretirement plans. The amendments modify the disclosure requirements for employers that sponsor
defined benefit pension or other postretirement plans. The following disclosure requirements were removed from Subtopic 715-20:
(1) the amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost
over the next fiscal year; (2) the amount and timing of plan assets expected to be returned to the employer; (3) the disclosures
related to the June 2001 amendments to the Japanese Welfare Pension Insurance Law; related party disclosures about the amount of
future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related
parties and the plan; (4) for nonpublic entities, the reconciliation of the opening balances to the closing balances of plan assets
measured on a recurring basis in Level 3 of the fair value hierarchy. However, nonpublic entities will be required to disclose
separately the amounts of transfers into and out of Level 3 of the fair value hierarchy and purchases of Level 3 plan assets; and
(5) for public entities, the effects of a one-percentage-point change in assumed health care cost trend rates on the (a) aggregate
of the service and interest cost components of net periodic benefit costs and (b) benefit obligation for postretirement health
care benefits. The following disclosure requirements were added to Subtopic 715-20: (1) the weighted-average interest crediting
rates for cash balance plans and other plans with promised interest crediting rates; and (2) an explanation of the reasons for
significant gains and losses related to changes in the benefit obligation for the period. The amendments also clarify the disclosure
requirements in paragraph 715-20-50-3, which state that the following information for defined benefit pension plans should be disclosed:
(1) the projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets; and (2)
the accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets. ASU No. 2018-14
is effective for fiscal years ending after December 15, 2020, for public business entities and for fiscal years ending after December
15, 2021, for all other entities. Early adoption is permitted for all entities. The adoption of this guidance is not expected to
have a material impact on our consolidated results of operations or financial position.
On May 29, 2018 and July 1, 2017
respectively, the Bank acquired substantially all of the operating assets of Ward Financial Management, LTD, a financial services
agency that offers a full line of financial services, for total cash consideration of $3.4 million and the Capital Region Strategic
Employee Benefits Services, LLC, an insurance agency that offers a full line of employee benefits products and services, for total
cash consideration of $1.3 million. As part of the acquisitions $1.2 million is being held in escrow with payment contingent on
the retention of commission revenue, as well as, to secure the seller’s indemnification obligations. The acquisitions were
made to expand the Banks’ insurance and wealth management services activities. The results of operations have been included
in the consolidated statement of income from the respective date of each acquisition. The estimated fair values of the assets
acquired as of the acquisition dates included goodwill of $2.0 million and other intangible assets of $2.7 million. The goodwill
from the acquisitions is expected to be deductible for tax purposes.
On
July 1, 2016, the Bank purchased 100% of the outstanding common stock of Anchor Agency, Inc. (Anchor Agency), a C-Corporation,
an agency that offers a full line of commercial and consumer insurance products.
|
|
2.
|
ACQUISITIONS
(Continued)
|
The total cash consideration was approximately
$4.7 million, of which $1.0 million is being held in escrow with payments contingent on the retention of commission revenue, as
well as, secure the seller’s indemnification obligations. Escrow payments of $500 thousand under the agreement will be made
annually over two years, less any indemnification claims pending. The Bank acquired Anchor Agency to expand service offerings to
include insurance agency activities. The results of operations of Anchor Agency have been included in the consolidated statement
of income from the date of acquisition. The estimated fair values of the assets acquired and liabilities assumed as of the acquisition
date included goodwill of $5.2 million, other assets of $400 thousand, and other liabilities assumed of $900 thousand. The goodwill
is not deductible for tax purposes.
On August 5, 2016, the Bank purchased
two Berkshire Bank branches in Cairo and Greenville, New York, with deposits of $18.0 million and $12.0 million, respectively.
The Bank paid a deposit premium of 2%, or approximately $562 thousand based on the average deposit balance over the 30 days prior
to the closing. In addition, the Bank purchased approximately $1.1 million of performing consumer loans, as well as, the Cairo
branch and assumed the remaining lease obligation under the Greenville branch. The total consideration was approximately $2.3 million.
The Bank believes that the acquisition of the branches will provide the Bank with the opportunity to further expand its banking
operations into Greene County in New York.
|
|
3.
|
SECURITIES AVAILABLE FOR SALE AND
HELD TO MATURITY
|
The amortized cost and estimated fair
value of securities are as follows (dollars in thousands):
|
|
|
December 31, 2018
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and agency obligations
|
|
$
|
83,538
|
|
|
$
|
26
|
|
|
$
|
(144
|
)
|
|
$
|
83,420
|
|
|
Mortgage-backed securities – residential
|
|
|
126
|
|
|
|
3
|
|
|
|
-
|
|
|
|
129
|
|
|
Asset-backed securities
|
|
|
102
|
|
|
|
43
|
|
|
|
(1
|
)
|
|
|
144
|
|
|
Collateralized mortgage obligations - residential
|
|
|
599
|
|
|
|
397
|
|
|
|
(34
|
)
|
|
|
962
|
|
|
Municipal obligations
|
|
|
14,644
|
|
|
|
25
|
|
|
|
(1
|
)
|
|
|
14,668
|
|
|
Total debt securities
|
|
|
99,009
|
|
|
|
494
|
|
|
|
(180
|
)
|
|
|
99,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stocks
|
|
|
6,007
|
|
|
|
25
|
|
|
|
(1,392
|
)
|
|
|
4,640
|
|
|
Common stocks
|
|
|
2,809
|
|
|
|
666
|
|
|
|
(294
|
)
|
|
|
3,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale securities
|
|
$
|
107,825
|
|
|
$
|
1,185
|
|
|
$
|
(1,866
|
)
|
|
$
|
107,144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal obligations
|
|
$
|
4,275
|
|
|
$
|
17
|
|
|
$
|
-
|
|
|
$
|
4,292
|
|
|
|
3.
|
SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY (Continued)
|
|
|
|
June 30, 2018
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and agency obligations
|
|
$
|
58,743
|
|
|
$
|
-
|
|
|
$
|
(185
|
)
|
|
$
|
58,558
|
|
|
Mortgage-backed securities residential
|
|
|
146
|
|
|
|
4
|
|
|
|
-
|
|
|
|
150
|
|
|
Asset-backed securities
|
|
|
115
|
|
|
|
49
|
|
|
|
(2
|
)
|
|
|
162
|
|
|
Collateralized mortgage obligations – residential
|
|
|
692
|
|
|
|
415
|
|
|
|
(28
|
)
|
|
|
1,079
|
|
|
Municipal obligations
|
|
|
19,264
|
|
|
|
3
|
|
|
|
(4
|
)
|
|
|
19,263
|
|
|
Total debt securities
|
|
|
78,960
|
|
|
|
471
|
|
|
|
(219
|
)
|
|
|
79,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stocks
|
|
|
6,007
|
|
|
|
24
|
|
|
|
(282
|
)
|
|
|
5,749
|
|
|
Common stocks
|
|
|
2,541
|
|
|
|
727
|
|
|
|
(166
|
)
|
|
|
3,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale securities
|
|
$
|
87,508
|
|
|
$
|
1,222
|
|
|
$
|
(667
|
)
|
|
$
|
88,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal obligations
|
|
$
|
5,297
|
|
|
$
|
29
|
|
|
$
|
-
|
|
|
$
|
5,326
|
|
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
|
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and agency obligations
|
|
$
|
42,967
|
|
|
$
|
-
|
|
|
$
|
(48
|
)
|
|
$
|
42,919
|
|
|
Mortgage-backed securities residential
|
|
|
194
|
|
|
|
6
|
|
|
|
-
|
|
|
|
200
|
|
|
Asset-backed securities
|
|
|
140
|
|
|
|
122
|
|
|
|
(1
|
)
|
|
|
261
|
|
|
Collateralized mortgage obligations - residential
|
|
|
934
|
|
|
|
551
|
|
|
|
(16
|
)
|
|
|
1,469
|
|
|
Municipal obligations
|
|
|
28,350
|
|
|
|
21
|
|
|
|
(5
|
)
|
|
|
28,366
|
|
|
Total debt securities
|
|
|
72,585
|
|
|
|
700
|
|
|
|
(70
|
)
|
|
|
73,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stocks
|
|
|
6,019
|
|
|
|
161
|
|
|
|
(217
|
)
|
|
|
5,963
|
|
|
Common stocks
|
|
|
2,762
|
|
|
|
340
|
|
|
|
(305
|
)
|
|
|
2,797
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total available for sale securities
|
|
$
|
81,366
|
|
|
$
|
1,201
|
|
|
$
|
(592
|
)
|
|
$
|
81,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal obligations
|
|
$
|
2,213
|
|
|
$
|
46
|
|
|
$
|
-
|
|
|
$
|
2,259
|
|
|
|
3.
|
SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY (Continued)
|
The estimated fair value and gross
unrealized losses aggregated by security category and length of time such securities have been in a continuous unrealized loss
position, is summarized as follows (dollars in thousands):
|
|
|
December 31, 2018
|
|
|
|
|
(unaudited)
|
|
|
|
|
Less than 12 Months
|
|
|
12 Months or Longer
|
|
|
Total
|
|
|
|
|
Estimated
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
Unrealized
|
|
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and agency obligations
|
|
$
|
58,572
|
|
|
$
|
(97
|
)
|
|
$
|
13,945
|
|
|
$
|
(47
|
)
|
|
$
|
72,517
|
|
|
$
|
(144
|
)
|
|
Mortgage-backed securities-residential
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Asset-backed securities
|
|
|
-
|
|
|
|
-
|
|
|
|
5
|
|
|
|
(1
|
)
|
|
|
5
|
|
|
|
(1
|
)
|
|
Collateralized mortgage obligations - residential
|
|
|
34
|
|
|
|
(15
|
)
|
|
|
170
|
|
|
|
(19
|
)
|
|
|
204
|
|
|
|
(34
|
)
|
|
Municipal obligations
|
|
|
-
|
|
|
|
-
|
|
|
|
939
|
|
|
|
(1
|
)
|
|
|
939
|
|
|
|
(1
|
)
|
|
Preferred stocks
|
|
|
-
|
|
|
|
-
|
|
|
|
4,613
|
|
|
|
(1,392
|
)
|
|
|
4,613
|
|
|
|
(1,392
|
)
|
|
Common stocks
|
|
|
102
|
|
|
|
(13
|
)
|
|
|
647
|
|
|
|
(281
|
)
|
|
|
749
|
|
|
|
(294
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
58,708
|
|
|
$
|
(125
|
)
|
|
$
|
20,319
|
|
|
$
|
(1,741
|
)
|
|
$
|
79,027
|
|
|
$
|
(1,866
|
)
|
|
|
|
June 30, 2018
|
|
|
|
|
Less than 12 Months
|
|
|
12 Months or Longer
|
|
|
Total
|
|
|
|
|
Estimated
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
Unrealized
|
|
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and agency obligations
|
|
$
|
52,569
|
|
|
$
|
(175
|
)
|
|
$
|
5,989
|
|
|
$
|
(10
|
)
|
|
$
|
58,558
|
|
|
$
|
(185
|
)
|
|
Mortgage-backed securities-residential
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
Asset-backed securities
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
|
(2
|
)
|
|
|
4
|
|
|
|
(2
|
)
|
|
Collateralized mortgage obligations - residential
|
|
|
34
|
|
|
|
(11
|
)
|
|
|
175
|
|
|
|
(17
|
)
|
|
|
209
|
|
|
|
(28
|
)
|
|
Municipal obligations
|
|
|
7,504
|
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
7,504
|
|
|
|
(4
|
)
|
|
Preferred stocks
|
|
|
-
|
|
|
|
-
|
|
|
|
5,723
|
|
|
|
(282
|
)
|
|
|
5,723
|
|
|
|
(282
|
)
|
|
Common stocks
|
|
|
-
|
|
|
|
-
|
|
|
|
747
|
|
|
|
(166
|
)
|
|
|
747
|
|
|
|
(166
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
60,109
|
|
|
$
|
(190
|
)
|
|
$
|
12,638
|
|
|
$
|
(477
|
)
|
|
$
|
72,747
|
|
|
$
|
(667
|
)
|
|
|
3.
|
SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY (Continued)
|
|
|
June 30, 2017
|
|
|
|
|
Less than 12 Months
|
|
|
12 Months or Longer
|
|
|
Total
|
|
|
|
|
Estimated
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
Unrealized
|
|
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and agency obligations
|
|
$
|
38,919
|
|
|
$
|
(48
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
38,919
|
|
|
$
|
(48
|
)
|
|
Asset-backed securities
|
|
|
5
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
5
|
|
|
|
(1
|
)
|
|
Collateralized mortgage obligations – residential
|
|
|
-
|
|
|
|
-
|
|
|
|
298
|
|
|
|
(16
|
)
|
|
|
298
|
|
|
|
(16
|
)
|
|
Municipal obligations
|
|
|
8,994
|
|
|
|
(5
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
8,994
|
|
|
|
(5
|
)
|
|
Preferred stocks
|
|
|
2,133
|
|
|
|
(72
|
)
|
|
|
3,656
|
|
|
|
(145
|
)
|
|
|
5,789
|
|
|
|
(217
|
)
|
|
Common stocks
|
|
|
259
|
|
|
|
(12
|
)
|
|
|
785
|
|
|
|
(293
|
)
|
|
|
1,044
|
|
|
|
(305
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
50,310
|
|
|
$
|
(138
|
)
|
|
$
|
4,739
|
|
|
$
|
(454
|
)
|
|
$
|
55,049
|
|
|
$
|
(592
|
)
|
The above tables represent securities
at December 31, 2018, and June 30, 2018 and 2017, where the current fair value is less than the related amortized cost. There
were 59, 53 and 62 securities with unrealized losses at December 31, 2018, and June 30, 2018 and 2017, respectively. Unrealized
losses on debt securities are primarily related to increases in credit spreads since the securities were purchased. Unrealized
losses on agency-backed and certain private-label mortgage-backed securities, asset-backed securities and collateralized mortgage
obligation securities are not considered other than temporary based upon analysis completed by management considering credit rating
of the instrument, length of time each security has spent in an unrealized loss position and the strength of the underlying collateral.
Unrealized losses on common stocks relate to declines in specific industry groups and in particular the energy, healthcare and
materials sectors. Unrealized losses on two auction rate securities, consisting of U.S. Bancorp and Bank of America preferred stock,
are not considered to be other-than-temporary based upon management’s evaluation of the underlying operating results and
financial strength of the issuers. The U.S. Bancorp auction rate security is investment grade, whereas the Bank of America, remains
non-investment grade as of December 31, 2018 and June 30, 2018. The Bank of America security had a cost basis of $2.2 million and
an estimated fair value of $1.8 million, as of December 31, 2018. The Bank of America security had a cost basis of $2.2 million
and an estimated fair value of $2.1 million, as of June 30, 2018. Management does not have the intent to sell, nor do they
believe that they will be required to sell the above mentioned securities in an unrealized loss position before recovery of the
amortized cost basis. In management’s opinion, the market conditions are temporary in nature and provide the basis for the
Bank’s belief that the declines are not other-than-temporary.
|
|
3.
|
SECURITIES AVAILABLE FOR SALE AND
HELD TO MATURITY (Continued)
|
During the years ended December 31,
2018, and June 30, 2018 and 2017, management reviewed all private-label mortgage-backed securities, asset-backed securities and
collateralized mortgage obligations which were rated less than investment grade for impairment, resulting in no additional impairment
charges during the six months ended December 31, 2018, and in fiscal 2018 and 2017. During the six months ended December 31, 2018,
64 securities with an amortized cost of $0.6 million and remaining par value of $2.1 million were evaluated. In fiscal 2018, 64
securities with an amortized cost of $0.7 million and remaining par value of $2.2 million were evaluated. In fiscal 2017, 68 securities
with an amortized cost of $0.9 million and remaining par value of $2.5 million were evaluated.
The table below presents a rollforward
of the credit losses recognized in earnings (dollars in thousands):
|
Balance, July 1, 2016
|
|
$
|
4,493
|
|
|
|
|
|
|
|
|
Reductions for amounts realized for securities sold
|
|
|
(2,062
|
)
|
|
|
|
|
|
|
|
Balance, June 30, 2017
|
|
|
2,431
|
|
|
|
|
|
|
|
|
Reductions for amounts realized for securities sold
|
|
|
(925
|
)
|
|
|
|
|
|
|
|
Balance, June 30, 2018
|
|
$
|
1,506
|
|
|
|
|
|
|
|
|
Reductions for amounts realized for securities sold
|
|
|
-
|
|
|
|
|
|
|
|
|
Balance, December 31, 2018
|
|
$
|
1,506
|
|
The fair value of debt securities
and carrying amount, if different, by contractual maturity were as follows (dollars in thousands). Securities not due at a single
maturity date are shown separately.
|
|
|
December 31, 2018
|
|
|
|
|
(unaudited)
|
|
|
|
|
Amortized
|
|
|
Estimated
|
|
|
|
|
Cost
|
|
|
Fair Value
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
Due in one year or less
|
|
$
|
72,403
|
|
|
$
|
72,307
|
|
|
Due from one to five years
|
|
|
25,780
|
|
|
|
25,781
|
|
|
Mortgage-backed securities residential
|
|
|
126
|
|
|
|
129
|
|
|
Asset-backed securities
|
|
|
102
|
|
|
|
144
|
|
|
Collateralized-mortgage obligations residential
|
|
|
599
|
|
|
|
962
|
|
|
|
|
$
|
99,010
|
|
|
$
|
99,323
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity:
|
|
|
|
|
|
|
|
|
|
Due in one year or less
|
|
$
|
4,100
|
|
|
$
|
4,117
|
|
|
Due from one to five years
|
|
|
50
|
|
|
|
50
|
|
|
Due from five to ten
|
|
|
125
|
|
|
|
125
|
|
|
|
|
$
|
4,275
|
|
|
$
|
4,292
|
|
|
|
3.
|
SECURITIES AVAILABLE
FOR SALE AND HELD TO MATURITY (Continued)
|
|
|
|
June 30, 2018
|
|
|
|
|
Amortized
|
|
|
Estimated
|
|
|
|
|
Cost
|
|
|
Fair Value
|
|
|
Securities available for sale:
|
|
|
|
|
|
|
|
|
|
Due in one year or less
|
|
$
|
51,217
|
|
|
$
|
51,101
|
|
|
Due from one to five years
|
|
|
26,790
|
|
|
|
26,720
|
|
|
Mortgage-backed securities residential
|
|
|
146
|
|
|
|
150
|
|
|
Asset-backed securities
|
|
|
115
|
|
|
|
162
|
|
|
Collateralized-mortgage obligations residential
|
|
|
692
|
|
|
|
1,079
|
|
|
|
|
$
|
78,960
|
|
|
$
|
79,212
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities held to maturity:
|
|
|
|
|
|
|
|
|
|
Due in one year or less
|
|
$
|
5,091
|
|
|
$
|
5,120
|
|
|
Due from one to five years
|
|
|
66
|
|
|
|
66
|
|
|
Due from five to ten
|
|
|
140
|
|
|
|
140
|
|
|
|
|
$
|
5,297
|
|
|
$
|
5,326
|
|
During the six months ended December
31, 2018, there were no sales of securities available for sale. During the six months ended December 31, 2017, the Bank received
$398,000 in proceeds from the sale of securities available for sale, realizing gross gains of $234,000 and gross losses of $109,000.
During the year ended June 30, 2018, the Bank received $1.1 million in proceeds from the sale of securities available for sale,
realizing gross gains of $921,000 and gross losses of $109,000. During the year ended June 30, 2017, the Bank received $1.6 million
in proceeds from the sale of securities available for sale, realizing gross gains of $519,000 and gross losses of 0.
During the six months ended December
31, 2018 and 2017, and the years ended June 30, 2018 and 2017, there were no sales of securities held to maturity.
At December, 31, 2018, and June 30,
2018 and 2017, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount
greater than 10% of net worth. As of December 31, 2018, and June 30, 2018 and 2017, the carrying value of available for sale securities
pledged to secure FHLBNY advances and municipal deposits was $98.1 million, $77.9 million and $71.4 million, respectively.
A summary of net loans receivable
is as follows (dollars in thousands):
|
|
|
December 31,
2018
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
$
|
658,545
|
|
|
$
|
654,604
|
|
|
$
|
646,910
|
|
|
Residential mortgages
|
|
|
279,784
|
|
|
|
249,635
|
|
|
|
202,733
|
|
|
Home equity loans and lines
|
|
|
79,693
|
|
|
|
78,286
|
|
|
|
76,132
|
|
|
Consumer
|
|
|
22,190
|
|
|
|
14,977
|
|
|
|
18,042
|
|
|
|
|
|
1,040,212
|
|
|
|
997,502
|
|
|
|
943,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred loan costs
|
|
|
2,308
|
|
|
|
1,910
|
|
|
|
765
|
|
|
Allowance for loan losses
|
|
|
(13,600
|
)
|
|
|
(13,510
|
)
|
|
|
(11,820
|
)
|
|
Net Loans Receivable
|
|
$
|
1,028,920
|
|
|
$
|
985,902
|
|
|
$
|
932,762
|
|
|
|
4.
|
NET LOANS RECEIVABLE (Continued)
|
The following table presents the activity
in the allowance for loan losses by portfolio segment (dollars in thousands):
|
|
|
For the Six Months Ended December 31, 2018
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
Mortgages
|
|
|
Home Equity
|
|
|
Consumer
|
|
|
Total
|
|
|
Allowance for loan losses at beginning of period
|
|
$
|
10,414
|
|
|
$
|
2,166
|
|
|
$
|
770
|
|
|
$
|
160
|
|
|
$
|
13,510
|
|
|
Provisions charged to operations
|
|
|
694
|
|
|
|
293
|
|
|
|
30
|
|
|
|
193
|
|
|
|
1,210
|
|
|
Loans charged off
|
|
|
(1,046
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(90
|
)
|
|
|
(1,136
|
)
|
|
Recoveries on loans charged off
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16
|
|
|
|
16
|
|
|
Allowance for loan losses at end of period
|
|
$
|
10,062
|
|
|
$
|
2,459
|
|
|
$
|
800
|
|
|
$
|
279
|
|
|
$
|
13,600
|
|
|
|
|
For the Year Ended June 30, 2018
|
|
|
|
|
Commercial
|
|
|
Residential
Mortgages
|
|
|
Home Equity
|
|
|
Consumer
|
|
|
Total
|
|
|
Allowance for loan losses at beginning of year
|
|
$
|
9,506
|
|
|
$
|
1,427
|
|
|
$
|
740
|
|
|
$
|
147
|
|
|
$
|
11,820
|
|
|
Provisions charged to operations
|
|
|
1,082
|
|
|
|
739
|
|
|
|
44
|
|
|
|
105
|
|
|
|
1,970
|
|
|
Loans charged off
|
|
|
(174
|
)
|
|
|
-
|
|
|
|
(17
|
)
|
|
|
(152
|
)
|
|
|
(343
|
)
|
|
Recoveries on loans charged off
|
|
|
-
|
|
|
|
-
|
|
|
|
3
|
|
|
|
60
|
|
|
|
63
|
|
|
Allowance for loan losses at end of year
|
|
$
|
10,414
|
|
|
$
|
2,166
|
|
|
$
|
770
|
|
|
$
|
160
|
|
|
$
|
13,510
|
|
|
|
|
For the Year Ended June 30, 2017
|
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
Mortgages
|
|
|
Home Equity
|
|
|
Consumer
|
|
|
Total
|
|
|
Allowance for loan losses at beginning of year
|
|
$
|
7,637
|
|
|
$
|
1,390
|
|
|
$
|
625
|
|
|
$
|
142
|
|
|
$
|
9,794
|
|
|
Provisions charged to operations
|
|
|
1,902
|
|
|
|
185
|
|
|
|
204
|
|
|
|
104
|
|
|
|
2,395
|
|
|
Loans charged off
|
|
|
(38
|
)
|
|
|
(148
|
)
|
|
|
(104
|
)
|
|
|
(165
|
)
|
|
|
(455
|
)
|
|
Recoveries on loans charged off
|
|
|
5
|
|
|
|
-
|
|
|
|
15
|
|
|
|
66
|
|
|
|
86
|
|
|
Allowance for loan losses at end of year
|
|
$
|
9,506
|
|
|
$
|
1,427
|
|
|
$
|
740
|
|
|
$
|
147
|
|
|
$
|
11,820
|
|
|
|
4.
|
NET LOANS RECEIVABLE (Continued)
|
The following table presents the balance
in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method (dollars
in thousands):
|
|
|
December 31, 2018
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
Mortgages
|
|
|
Home Equity
|
|
|
Consumer
|
|
|
Total
|
|
|
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related to loans individually evaluated for impairment
|
|
$
|
527
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
527
|
|
|
Related to loans collectively evaluated for impairment
|
|
|
9,535
|
|
|
|
2,459
|
|
|
|
800
|
|
|
|
279
|
|
|
|
13,073
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
10,062
|
|
|
$
|
2,459
|
|
|
$
|
800
|
|
|
$
|
279
|
|
|
$
|
13,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
3,642
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,642
|
|
|
Loans collectively evaluated for impairment
|
|
|
654,903
|
|
|
|
279,784
|
|
|
|
79,693
|
|
|
|
22,190
|
|
|
|
1,036,570
|
|
|
Ending balance
|
|
$
|
658,545
|
|
|
$
|
279,784
|
|
|
$
|
79,693
|
|
|
$
|
22,190
|
|
|
$
|
1,040,212
|
|
|
|
|
June 30, 2018
|
|
|
|
|
Commercial
|
|
|
Residential
Mortgages
|
|
|
Home Equity
|
|
|
Consumer
|
|
|
Total
|
|
|
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related to loans individually evaluated for impairment
|
|
$
|
1,329
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,329
|
|
|
Related to loans collectively evaluated for impairment
|
|
|
9,085
|
|
|
|
2,166
|
|
|
|
770
|
|
|
|
160
|
|
|
|
12,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
10,414
|
|
|
$
|
2,166
|
|
|
$
|
770
|
|
|
$
|
160
|
|
|
$
|
13,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
4,753
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
4,753
|
|
|
Loans collectively evaluated for impairment
|
|
|
649,851
|
|
|
|
249,635
|
|
|
|
78,286
|
|
|
|
14,977
|
|
|
|
992,749
|
|
|
Ending balance
|
|
$
|
654,604
|
|
|
$
|
249,635
|
|
|
$
|
78,286
|
|
|
$
|
14,977
|
|
|
$
|
997,502
|
|
|
|
4.
|
NET LOANS RECEIVABLE (Continued)
|
|
|
|
June 30, 2017
|
|
|
|
|
Commercial
|
|
|
Residential
Mortgages
|
|
|
Home Equity
|
|
|
Consumer
|
|
|
Total
|
|
|
Allowance for loan losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related to loans individually evaluated for impairment
|
|
$
|
403
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
403
|
|
|
Related to loans collectively evaluated for impairment
|
|
|
9,103
|
|
|
|
1,427
|
|
|
|
740
|
|
|
|
147
|
|
|
|
11,417
|
|
|
Ending balance
|
|
$
|
9,506
|
|
|
$
|
1,427
|
|
|
$
|
740
|
|
|
$
|
147
|
|
|
$
|
11,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated for impairment
|
|
$
|
3,827
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,827
|
|
|
Loans collectively evaluated for impairment
|
|
|
643,083
|
|
|
|
202,733
|
|
|
|
76,132
|
|
|
|
18,042
|
|
|
|
939,990
|
|
|
Ending balance
|
|
$
|
646,910
|
|
|
$
|
202,733
|
|
|
$
|
76,132
|
|
|
$
|
18,042
|
|
|
$
|
943,817
|
|
The following table presents information related
to impaired loans by class as of (dollars in thousands):
|
|
|
December 31, 2018
|
|
|
|
|
(unaudited)
|
|
|
|
|
Unpaid
|
|
|
|
|
|
Allowance for
|
|
|
Average
|
|
|
Interest
|
|
|
|
|
Principal
|
|
|
Recorded
|
|
|
Loan Losses
|
|
|
Recorded
|
|
|
Income
|
|
|
|
|
Balance
|
|
|
Investment
|
|
|
Allocated
|
|
|
Investment
|
|
|
Recognized
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
$
|
2,409
|
|
|
$
|
2,203
|
|
|
$
|
-
|
|
|
$
|
2,421
|
|
|
$
|
-
|
|
|
Commercial and industrial
|
|
|
59
|
|
|
|
51
|
|
|
|
-
|
|
|
|
64
|
|
|
|
-
|
|
|
Subtotal
|
|
|
2,468
|
|
|
|
2,254
|
|
|
|
-
|
|
|
|
2,485
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Commercial and industrial
|
|
|
2,432
|
|
|
|
1,388
|
|
|
|
527
|
|
|
|
2,466
|
|
|
|
96
|
|
|
Subtotal
|
|
|
2,432
|
|
|
|
1,388
|
|
|
|
527
|
|
|
|
2,466
|
|
|
|
96
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,900
|
|
|
$
|
3,642
|
|
|
$
|
527
|
|
|
$
|
4,951
|
|
|
$
|
96
|
|
|
|
4.
|
NET LOANS RECEIVABLE (Continued)
|
|
|
|
June 30, 2018
|
|
|
|
|
Unpaid
|
|
|
|
|
|
Allowance for
|
|
|
Average
|
|
|
Interest
|
|
|
|
|
Principal
|
|
|
Recorded
|
|
|
Loan Losses
|
|
|
Recorded
|
|
|
Income
|
|
|
|
|
Balance
|
|
|
Investment
|
|
|
Allocated
|
|
|
Investment
|
|
|
Recognized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
$
|
2,419
|
|
|
$
|
2,227
|
|
|
$
|
-
|
|
|
$
|
2,439
|
|
|
$
|
-
|
|
|
Commercial and industrial
|
|
|
62
|
|
|
|
55
|
|
|
|
-
|
|
|
|
66
|
|
|
|
1
|
|
|
Subtotal
|
|
|
2,481
|
|
|
|
2,282
|
|
|
|
-
|
|
|
|
2,505
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Commercial and industrial
|
|
|
2,473
|
|
|
|
2,471
|
|
|
|
1,329
|
|
|
|
2,498
|
|
|
|
95
|
|
|
Subtotal
|
|
|
2,473
|
|
|
|
2,471
|
|
|
|
1,329
|
|
|
|
2,498
|
|
|
|
95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,954
|
|
|
$
|
4,753
|
|
|
$
|
1,329
|
|
|
$
|
5,003
|
|
|
$
|
96
|
|
|
|
|
June 30, 2017
|
|
|
|
|
Unpaid
|
|
|
|
|
|
Allowance for
|
|
|
Average
|
|
|
Interest
|
|
|
|
|
Principal
|
|
|
Recorded
|
|
|
Loan Losses
|
|
|
Recorded
|
|
|
Income
|
|
|
|
|
Balance
|
|
|
Investment
|
|
|
Allocated
|
|
|
Investment
|
|
|
Recognized
|
|
|
With no related allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
$
|
701
|
|
|
$
|
520
|
|
|
$
|
-
|
|
|
$
|
737
|
|
|
$
|
15
|
|
|
Commercial and industrial
|
|
|
17
|
|
|
|
12
|
|
|
|
-
|
|
|
|
15
|
|
|
|
-
|
|
|
Subtotal
|
|
|
718
|
|
|
|
532
|
|
|
|
-
|
|
|
|
752
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With an allowance recorded:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
|
1,907
|
|
|
|
1,781
|
|
|
|
370
|
|
|
|
1,911
|
|
|
|
17
|
|
|
Commercial and industrial
|
|
|
1,513
|
|
|
|
1,514
|
|
|
|
33
|
|
|
|
1,602
|
|
|
|
97
|
|
|
Subtotal
|
|
|
3,420
|
|
|
|
3,295
|
|
|
|
403
|
|
|
|
3,513
|
|
|
|
114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,138
|
|
|
$
|
3,827
|
|
|
$
|
403
|
|
|
$
|
4,265
|
|
|
$
|
129
|
|
Interest income on nonaccrual loans
is recognized using the cost recovery method. Interest income on impaired loans that were on nonaccrual status and cash-basis interest
income for the six months ended December 31, 2018 and 2017, and the years ended June 30, 2018 and 2017 was nominal.
|
|
4.
|
NET LOANS RECEIVABLE (Continued)
|
The recorded investment in loans excludes
accrued interest receivable and deferred loan fees, net due to immateriality.
At various times, certain loan modifications
are executed which are considered to be troubled debt restructurings. Substantially all of these modifications include one or a
combination of the following: extension of the maturity date at a stated rate of interest lower than the current market rate for
new debt with similar risk; temporary reduction in the interest rate; change in scheduled payment amount including interest only;
or extensions of additional credit for payment of delinquent real estate taxes or other costs.
There were no troubled debt restructurings
during the six months ended December 31, 2018 and 2017, and the years ended June 30, 2018 and 2017.
Loans subject to a troubled debt restructuring
are evaluated as impaired loans for the purpose of determining the specific component of allowance for loan losses.
The
following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans
(dollars in thousands):
|
|
|
December 31
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
|
|
Nonaccrual
|
|
|
Past Due
90 Days
Still on
Accrual
|
|
|
Nonaccrual
|
|
|
Past Due
90 Days
Still on
Accrual
|
|
|
Nonaccrual
|
|
|
Past Due
90 Days
Still on
Accrual
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
$
|
2,233
|
|
|
$
|
3,254
|
|
|
$
|
2,236
|
|
|
$
|
180
|
|
|
$
|
2,375
|
|
|
$
|
225
|
|
|
Commercial and industrial
|
|
|
97
|
|
|
|
40
|
|
|
|
705
|
|
|
|
-
|
|
|
|
3
|
|
|
|
4
|
|
|
Residential mortgages
|
|
|
4,644
|
|
|
|
-
|
|
|
|
3,834
|
|
|
|
1,232
|
|
|
|
3,325
|
|
|
|
583
|
|
|
Home equity loans and lines
|
|
|
1,433
|
|
|
|
13
|
|
|
|
970
|
|
|
|
330
|
|
|
|
899
|
|
|
|
129
|
|
|
Consumer
|
|
|
-
|
|
|
|
27
|
|
|
|
-
|
|
|
|
24
|
|
|
|
-
|
|
|
|
354
|
|
|
|
|
$
|
8,407
|
|
|
$
|
3,334
|
|
|
$
|
7,745
|
|
|
$
|
1,766
|
|
|
$
|
6,602
|
|
|
$
|
1,295
|
|
Nonaccrual loans and loans past due
90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually
evaluated impaired loans. Included in loans past due ninety days or more still on accrual are $320,000 of government guaranteed
student loans as of June 30, 2017 (none as of June 30, 2018 and December 31, 2018).
|
|
4.
|
NET LOANS RECEIVABLE (Continued)
|
The following table presents the aging
of the recorded investment in loans by class of loans as of (dollars in thousands):
|
|
|
December 31, 2018
|
|
|
|
|
(unaudited)
|
|
|
|
|
30 - 89
|
|
|
Greater Than
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Days
|
|
|
89 Days
|
|
|
Total
|
|
|
Loans Not
|
|
|
|
|
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Total
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
$
|
5
|
|
|
$
|
5,487
|
|
|
$
|
5,492
|
|
|
$
|
373,966
|
|
|
$
|
379,458
|
|
|
Commercial and
industrial
|
|
|
-
|
|
|
|
136
|
|
|
|
136
|
|
|
|
183,182
|
|
|
|
183,318
|
|
|
Construction
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
95,769
|
|
|
|
95,769
|
|
|
Residential
|
|
|
880
|
|
|
|
4,645
|
|
|
|
5,525
|
|
|
|
274,259
|
|
|
|
279,784
|
|
|
Home equity
|
|
|
614
|
|
|
|
1,446
|
|
|
|
2,060
|
|
|
|
77,633
|
|
|
|
79,693
|
|
|
Consumer
|
|
|
9
|
|
|
|
27
|
|
|
|
36
|
|
|
|
22,154
|
|
|
|
22,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,508
|
|
|
$
|
11,741
|
|
|
$
|
13,249
|
|
|
$
|
1,026,963
|
|
|
$
|
1,040,212
|
|
|
|
|
June 30, 2018
|
|
|
|
|
30 - 89
|
|
|
Greater Than
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Days
|
|
|
89 Days
|
|
|
Total
|
|
|
Loans Not
|
|
|
|
|
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Total
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
$
|
655
|
|
|
$
|
2,416
|
|
|
$
|
3,071
|
|
|
$
|
372,781
|
|
|
$
|
375,852
|
|
|
Commercial and
industrial
|
|
|
1,346
|
|
|
|
705
|
|
|
|
2,051
|
|
|
|
192,132
|
|
|
|
194,183
|
|
|
Construction
|
|
|
205
|
|
|
|
-
|
|
|
|
205
|
|
|
|
84,364
|
|
|
|
84,569
|
|
|
Residential
|
|
|
1,400
|
|
|
|
5,066
|
|
|
|
6,466
|
|
|
|
243,169
|
|
|
|
249,635
|
|
|
Home equity
|
|
|
510
|
|
|
|
1,300
|
|
|
|
1,810
|
|
|
|
76,476
|
|
|
|
78,286
|
|
|
Consumer
|
|
|
8
|
|
|
|
24
|
|
|
|
32
|
|
|
|
14,945
|
|
|
|
14,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,124
|
|
|
$
|
9,511
|
|
|
$
|
13,635
|
|
|
$
|
983,867
|
|
|
$
|
997,502
|
|
|
|
|
June 30, 2017
|
|
|
|
|
30 - 89
|
|
|
Greater Than
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Days
|
|
|
89 Days
|
|
|
Total
|
|
|
Loans Not
|
|
|
|
|
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Past Due
|
|
|
Total
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
$
|
2,611
|
|
|
$
|
2,599
|
|
|
$
|
5,210
|
|
|
$
|
393,864
|
|
|
$
|
399,074
|
|
|
Commercial and
industrial
|
|
|
61
|
|
|
|
7
|
|
|
|
68
|
|
|
|
179,840
|
|
|
|
179,908
|
|
|
Construction
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
67,928
|
|
|
|
67,928
|
|
|
Residential
|
|
|
1,479
|
|
|
|
3,908
|
|
|
|
5,387
|
|
|
|
197,346
|
|
|
|
202,733
|
|
|
Home equity
|
|
|
520
|
|
|
|
1,029
|
|
|
|
1,549
|
|
|
|
74,583
|
|
|
|
76,132
|
|
|
Consumer
|
|
|
201
|
|
|
|
354
|
|
|
|
555
|
|
|
|
17,487
|
|
|
|
18,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,872
|
|
|
$
|
7,897
|
|
|
$
|
12,769
|
|
|
$
|
931,048
|
|
|
$
|
943,817
|
|
|
|
4.
|
NET LOANS RECEIVABLE (Continued)
|
The Bank categorizes commercial loans
into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial
information, historical payment experience, credit documentation, public information, and current economic trends, among other
factors. The Bank analyzes commercial loans individually by classifying the loans as to credit risk. The Bank uses the following
definitions for risk ratings:
Special Mention
– Loans
classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these
potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position
at some future date.
Substandard
– Loans classified
as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged,
if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized
by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful
– Loans classified
as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses
make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and
improbable.
Commercial loans not meeting the criteria
above are considered to be pass rated loans.
The following table presents commercial
loans summarized by class of loans and the risk category (dollars in thousands):
|
|
|
December 31, 2018
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Special
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
|
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
$
|
374,473
|
|
|
$
|
2,775
|
|
|
$
|
2,210
|
|
|
$
|
-
|
|
|
Commercial and industrial
|
|
|
177,461
|
|
|
|
4,465
|
|
|
|
1,392
|
|
|
|
-
|
|
|
Construction
|
|
|
94,392
|
|
|
|
1,377
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
646,326
|
|
|
$
|
8,617
|
|
|
$
|
3,602
|
|
|
$
|
-
|
|
|
|
|
June 30, 2018
|
|
|
|
|
|
|
Special
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
|
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
$
|
371,782
|
|
|
$
|
1,836
|
|
|
$
|
2,235
|
|
|
$
|
-
|
|
|
Commercial and industrial
|
|
|
190,638
|
|
|
|
1,494
|
|
|
|
1,391
|
|
|
|
659
|
|
|
Construction
|
|
|
84,569
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
646,989
|
|
|
$
|
3,330
|
|
|
$
|
3,626
|
|
|
$
|
659
|
|
|
|
4.
|
NET LOANS RECEIVABLE (Continued)
|
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
Special
|
|
|
|
|
|
|
|
|
|
|
Pass
|
|
|
Mention
|
|
|
Substandard
|
|
|
Doubtful
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
$
|
394,820
|
|
|
$
|
1,880
|
|
|
$
|
1,963
|
|
|
$
|
412
|
|
|
Commercial and industrial
|
|
|
172,956
|
|
|
|
5,440
|
|
|
|
1,511
|
|
|
|
-
|
|
|
Construction
|
|
|
67,928
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
635,704
|
|
|
$
|
7,320
|
|
|
$
|
3,474
|
|
|
$
|
412
|
|
The Bank considers the performance
of the loan portfolio and its impact on the allowance for loan losses. For residential and consumer loan classes, the Bank also
evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity.
As of December 31, 2018, and June
30, 2018 and 2017, the Bank had pledged $394.5 million, $264.5 million and $207.5 million respectively, of residential mortgage,
home equity and commercial loans as collateral for FHLBNY borrowings and stand-by letters of credit.
At December 31, 2018, and June 30,
2018 and 2017, loans to executive officers, trustees, or to associates of such persons, as well as activity in such loans for the
years then ended were immaterial as a percentage of total loans receivable.
During the year ended June 30, 2018,
the Bank sold its portfolio of guaranteed student loans (consumer loans) totaling $2.8 million and realized a net loss on this
sale of $26,000.
The Bank retains the servicing rights
on certain mortgage loans sold, and may release the servicing rights on others. Total residential mortgage loans serviced by the
Bank for unrelated third parties were approximately $31.3, $33.2 and $36.9 million at December 31, 2018, and June 30, 2018
and 2017, respectively. At December 31, 2018, and June 30, 2018 and 2017, the unamortized balance of mortgage servicing rights
on loans sold with servicing retained was approximately $263,000, $279,000 and $310,000, respectively. The estimated fair value
of these mortgage servicing rights was in excess of their carrying value at December 31, 2018, and June 30, 2018 and 2017,
and therefore no valuation reserve was necessary. At December 31, 2018, and June 30, 2018 and 2017, the Bank held escrow funds
in trust on loans serviced for others of $562,000, $674,000 and $721,000, respectively.
In the normal course of servicing
our commercial customers, the Bank acts as an interest rate swap counterparty for certain commercial borrowers. The Bank manages
its exposure to such interest rate swaps by entering into corresponding and offsetting interest rate swaps with third parties that
match the terms of the interest rate swap with the commercial borrowers. These positions directly offset each other and the Bank’s
exposure is the fair value of the derivatives due to potential changes in credit risk of our commercial borrowers and third parties.
|
|
5.
|
DERIVATIVES (continued)
|
The notional amount of the interest
rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional
amount and the other terms of the individual interest rate swap agreements. At December 31, 2018, the Bank held derivatives not
designated as hedging instruments, comprised of back-to-back interest rate swaps, with a total notional amount of $376.2 million,
consisting of $188.1 million of interest rate swaps with commercial borrowers and $188.1 million of offsetting interest rate swaps
with third-party counterparties on substantially the same terms. At June 30, 2018, the Bank held derivatives not designated as
hedging instruments, comprised of back-to-back interest rate swaps, with a total notional amount of $289.2 million, consisting
of $144.6 million of interest rate swaps with commercial borrowers and $144.6 million of offsetting interest rate swaps with third-party
counterparties on substantially the same terms. At June 30, 2017, the Bank held derivatives not designated as hedging instruments,
comprised of back-to-back interest rate swaps, with a total notional amount of $252.2 million, consisting of $126.1 million of
interest rate swaps with commercial borrowers and $126.1 million of offsetting interest rate swaps with third-party counterparties
on substantially the same terms.
The fair value of derivatives are
classified as other assets and other liabilities on the consolidated statement of condition. The estimated fair value of derivatives
not designated as hedging instruments are as follows (dollars in thousands):
|
|
|
December 31, 2018
|
|
|
|
|
(unaudited)
|
|
|
|
|
Derivative
Assets
|
|
|
Derivative
Liabilities
|
|
|
|
|
|
|
|
|
|
|
Gross interest rate swaps
|
|
$
|
5,518
|
|
|
$
|
5,518
|
|
|
Less: master netting arrangements
|
|
|
(1,291
|
)
|
|
|
(1,291
|
)
|
|
Less: cash collateral applied
|
|
|
(108
|
)
|
|
|
(1,400
|
)
|
|
Net amount
|
|
$
|
4,119
|
|
|
$
|
2,827
|
|
|
|
|
June 30, 2018
|
|
|
|
|
Derivative
Assets
|
|
|
Derivative
Liabilities
|
|
|
|
|
|
|
|
|
|
|
Gross interest rate swaps
|
|
$
|
4,471
|
|
|
$
|
4,471
|
|
|
Less: master netting arrangements
|
|
|
(304
|
)
|
|
|
(304
|
)
|
|
Less: cash collateral applied
|
|
|
(2,642
|
)
|
|
|
(400
|
)
|
|
Net amount
|
|
$
|
1,525
|
|
|
$
|
3,767
|
|
|
|
|
June 30, 2017
|
|
|
|
|
Derivative
Assets
|
|
|
Derivative
Liabilities
|
|
|
|
|
|
|
|
|
|
|
Gross interest rate swaps
|
|
$
|
3,133
|
|
|
$
|
3,133
|
|
|
Less: master netting arrangements
|
|
|
(1,047
|
)
|
|
|
(1,047
|
)
|
|
Net amount
|
|
$
|
2,086
|
|
|
$
|
2,086
|
|
|
|
5.
|
DERIVATIVES (continued)
|
Under terms of the agreements with
the third-party counterparties, the Bank provides cash collateral to the counterparty for the initial trade. Subsequent to the
trade, the margin is exchanged in either direction, based upon the estimated fair value of the underlying contracts. At December
31, 2018, the Bank had received $108 thousand and deposited $1.4 million as collateral for swap agreements with third-party counterparties.
At June 30, 2018, the Bank had received $2.6 million and deposited $400 thousand as collateral for swap agreements with third-party
counterparties. At June 30, 2017, the Bank had deposited $2.7 million as collateral for swap agreements with third-party counterparties.
|
|
6.
|
PREMISES AND EQUIPMENT
|
Premises and equipment consists of
the following (dollars in thousands):
|
|
|
December
31,
2018
|
|
|
June
30,
2018
|
|
|
June
30,
2017
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
$
|
6,678
|
|
|
$
|
7,031
|
|
|
$
|
5,681
|
|
|
Leaseholds and land improvements
|
|
|
2,240
|
|
|
|
2,227
|
|
|
|
1,687
|
|
|
Buildings
|
|
|
29,332
|
|
|
|
29,908
|
|
|
|
24,869
|
|
|
Furniture, fixtures, and equipment
|
|
|
13,748
|
|
|
|
13,214
|
|
|
|
10,955
|
|
|
Construction in progress
|
|
|
1,161
|
|
|
|
909
|
|
|
|
2,746
|
|
|
|
|
|
53,159
|
|
|
|
53,289
|
|
|
|
45,938
|
|
|
Less accumulated depreciation and amortization
|
|
|
(11,149
|
)
|
|
|
(10,387
|
)
|
|
|
(8,554
|
)
|
|
|
|
$
|
42,010
|
|
|
$
|
42,902
|
|
|
$
|
37,384
|
|
Depreciation and amortization included
in occupancy and equipment expense amounted to $1,228,000 and $1,190,000 for the six months ended December 31, 2018 and 2017, respectively,
and $2,369,000 and $1,896,000 for the years ended June 30, 2018 and 2017, respectively.
|
|
7.
|
GOODWILL AND OTHER INTANGIBLE ASSETS
|
Changes in goodwill were as follows
(dollars in thousands):
|
Balance, July 1, 2016
|
|
$
|
-
|
|
|
Acquired
|
|
|
5,242
|
|
|
Balance, June 30, 2017
|
|
|
5,242
|
|
|
Acquired
|
|
|
2,050
|
|
|
Balance, June 30, 2018
|
|
|
7,292
|
|
|
Acquired
|
|
|
-
|
|
|
Balance, December 31, 2018
|
|
$
|
7,292
|
|
|
|
7.
|
GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
|
Acquired other intangible assets were
as follows (dollars in thousands):
|
|
|
December
31,
2018
|
|
|
June
30,
2018
|
|
|
June
30,
2017
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Customer relationship intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross carrying amount
|
|
$
|
2,645
|
|
|
$
|
2,645
|
|
|
$
|
-
|
|
|
Less: accumulated amortization
|
|
|
(333
|
)
|
|
|
(203
|
)
|
|
|
-
|
|
|
Net carrying amount
|
|
|
2,312
|
|
|
|
2,442
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core deposit intangibles:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross carrying amount
|
|
$
|
562
|
|
|
$
|
562
|
|
|
$
|
562
|
|
|
Less: accumulated amortization
|
|
|
(161
|
)
|
|
|
(130
|
)
|
|
|
(64
|
)
|
|
Net carrying amount
|
|
|
401
|
|
|
|
432
|
|
|
|
498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross carrying amount
|
|
$
|
3,207
|
|
|
$
|
3,207
|
|
|
$
|
562
|
|
|
Less: accumulated amortization
|
|
|
(494
|
)
|
|
|
(333
|
)
|
|
|
(64
|
)
|
|
Net carrying amount
|
|
$
|
2,713
|
|
|
$
|
2,874
|
|
|
$
|
498
|
|
Estimated amortization expense
for the next five years is as follows (dollars in thousands):
|
Year ending June 30,
|
|
|
|
|
2019
|
|
$
|
380
|
|
|
2020
|
|
|
354
|
|
|
2021
|
|
|
327
|
|
|
2022
|
|
|
300
|
|
|
2023
|
|
|
274
|
|
Aggregate amortization expense
was $161,000 and $122,000 for the six months ended December 31, 2018 and 2017 respectively, and $269,000 and $64,000 for the years
ended June 30, 2018 and 2017, respectively.
There were no impairment losses
on goodwill or intangible assets for the six months ended December 31, 2018, and the years ended June 30, 2018 and 2017.
Deposit account balances are summarized
as follows (dollars in thousands):
|
|
|
December 31,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Non-interest bearing demand accounts
|
|
$
|
356,291
|
|
|
$
|
345,048
|
|
|
$
|
275,374
|
|
|
Interest-bearing accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand accounts
|
|
|
93,735
|
|
|
|
97,191
|
|
|
|
64,422
|
|
|
Savings accounts
|
|
|
243,970
|
|
|
|
244,050
|
|
|
|
243,621
|
|
|
Money market accounts
|
|
|
296,873
|
|
|
|
334,884
|
|
|
|
298,945
|
|
|
Time deposits
|
|
|
124,090
|
|
|
|
129,089
|
|
|
|
127,664
|
|
|
Total interest bearing accounts
|
|
|
758,668
|
|
|
|
805,214
|
|
|
|
734,652
|
|
|
Total deposits
|
|
$
|
1,114,959
|
|
|
$
|
1,150,262
|
|
|
$
|
1,010,026
|
|
Overdrawn demand deposit balances
of $275,000, $260,000 and $198,000 were reclassified as loan balances as of December 31, 2018, and June 30, 2018 and 2017,
respectively.
Time deposits outstanding that had
balances of $250,000 and over amounted to approximately $26.7 million, $27.1 million and $20.3 million at December 31, 2018, and
June 30, 2018 and 2017, respectively.
Scheduled maturities of time deposits
for the next five years are as follows (dollars in thousands):
|
Year ending June 30,
|
|
|
|
|
2019
|
|
$
|
67,995
|
|
|
2020
|
|
|
24,989
|
|
|
2021
|
|
|
17,980
|
|
|
2022
|
|
|
12,034
|
|
|
2023
|
|
|
6,091
|
|
|
|
|
|
|
|
|
|
|
$
|
129,089
|
|
Deposits
of related parties amounted to $5.2 million, $5.2 million and $6.3 million at December 31, 2018, June 30, 2018 and 2017, respectively.
Outstanding borrowings are summarized
as follows (dollars in thousands):
|
|
|
December 31,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
FHLB Advances
|
|
$
|
30,000
|
|
|
$
|
-
|
|
|
$
|
5,000
|
|
Advances from the FHLBNY are as follows
(dollars in thousands):
|
|
|
December 31,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Maturities January 2019, fixed rates from 2.63% to 2.65%, averaging 2.64% at December 31, 2018. Maturity July 2017, fixed rate of 1.13% at June 30, 2017
|
|
$
|
30,000
|
|
|
$
|
-
|
|
|
$
|
5,000
|
|
The Bank has the ability to borrow
(Non-Repo Advances) in an amount up to 30% of its total assets from the FHLBNY. All borrowings from the FHLBNY are collateralized
by FHLBNY stock, certain qualifying loans, and certain available for sale securities. In addition, overall credit exposure, including
Non-Repo Advances, cannot exceed 50% of total assets. FHLBNY borrowings have prepayment penalties.
At December 31, 2018, the Bank pledged
approximately $491.6 million of residential mortgage, home equity and commercial loans as collateral for borrowing and stand-by
letters of credit at the FHLBNY. At December 31, 2018, the maximum amount of funding available from the FHLBNY was $394.5 million,
of which $30.0 million was utilized for borrowings and $173.0 million was utilized for irrevocable stand-by letters of credit issued
to secure municipal deposits.
At June 30, 2018, the Bank pledged
approximately $308.4 million of residential mortgage, home equity and commercial loans as collateral for borrowing and stand-by
letters of credit at the FHLBNY. At June 30, 2018, the maximum amount of funding available from the FHLBNY was $264.5 million,
of which none was utilized for borrowings and $164.7 million was utilized for irrevocable stand-by letters of credit issued to
secure municipal deposits.
At June 30, 2017, the Bank pledged
approximately $243.2 million of residential mortgage, home equity and commercial loans as collateral for borrowing and stand-by
letters of credit at the FHLBNY. At June 30, 2017, the maximum amount of funding available from the FHLBNY was $207.5 million,
of which $5.0 million was utilized for borrowings and $74.0 million was utilized for irrevocable stand-by letters of credit issued
to secure municipal deposits.
|
|
10.
|
OTHER COMPREHENSIVE INCOME
|
Reclassifications
out of accumulated other comprehensive loss were as follows (dollars in thousands):
Details About Accumulated Other
Comprehensive Loss Components
|
|
Amount Reclassified from Accumulated
Other Comprehensive Loss
|
|
|
Affected Line Item in the
Statement Where Net Income is
Presented
|
|
|
|
Six months
ended
|
|
|
Years ended June 30,
|
|
|
|
|
|
|
December
31, 2018
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains/losses on securities (before tax):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains included in net income
|
|
$
|
-
|
|
|
$
|
812
|
|
|
$
|
519
|
|
|
Net gain on securities transactions
|
|
Tax Expense
|
|
|
-
|
|
|
|
(212
|
)
|
|
|
(208
|
)
|
|
Income tax expense
|
|
Net of Tax
|
|
|
-
|
|
|
|
600
|
|
|
|
311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of defined benefit plan items (before tax):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net prior service cost
|
|
|
-
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
|
Net actuarial loss
|
|
|
-
|
|
|
|
(1,458
|
)
|
|
|
(2,262
|
)
|
|
|
|
|
|
|
-
|
|
|
|
(1,458
|
)
|
|
|
(2,264
|
)
|
|
Salaries and employee benefits
|
|
Tax benefit
|
|
|
-
|
|
|
|
381
|
|
|
|
867
|
|
|
Income tax expense
|
|
Net of tax
|
|
|
-
|
|
|
|
(1,077
|
)
|
|
|
(1,397
|
)
|
|
|
|
Total reclassification for the year, net of tax
|
|
$
|
-
|
|
|
$
|
(477
|
)
|
|
$
|
(1,086
|
)
|
|
|
|
|
10.
|
OTHER COMPREHENSIVE INCOME (continued)
|
The
balances and changes in the components of accumulated other comprehensive income (loss), net of tax are as follows (dollars in
thousands):
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
Unrealized
|
|
|
|
|
|
Other
|
|
|
|
|
Gains/Losses
|
|
|
Defined
|
|
|
Comprehensive
|
|
|
|
|
on Securities
|
|
|
Benefit Plans
|
|
|
Loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income(loss) as of July 1, 2016
|
|
$
|
569
|
|
|
$
|
(15,008
|
)
|
|
$
|
(14,439
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income before reclassifications
|
|
|
107
|
|
|
|
3,578
|
|
|
|
3,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
|
(311
|
)
|
|
|
1,397
|
|
|
|
1,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss) as of June 30, 2017
|
|
|
365
|
|
|
|
(10,033
|
)
|
|
|
(9,668
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
|
645
|
|
|
|
(443
|
)
|
|
|
202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
|
(600
|
)
|
|
|
1,077
|
|
|
|
477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss) as of June 30, 2018
|
|
|
410
|
|
|
|
(9,399
|
)
|
|
|
(8,989
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
|
(912
|
)
|
|
|
-
|
|
|
|
(912
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss) as of December 31, 2018
|
|
$
|
502
|
|
|
$
|
(9,399
|
)
|
|
$
|
(9,901
|
)
|
|
|
10.
|
OTHER COMPREHENSIVE INCOME (continued)
|
The amounts of income tax expense
(benefit) allocated to each component of other comprehensive income (loss) were as follows (dollars in thousands):
|
|
|
For the Six Months Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains/losses on securities:
|
|
|
|
|
|
|
|
|
|
Unrealized holdings (losses) gains arising during the period
|
|
$
|
(324
|
)
|
|
$
|
74
|
|
|
Reclassification adjustment for gains included in net income
|
|
|
-
|
|
|
|
(33
|
)
|
|
|
|
|
(324
|
)
|
|
|
41
|
|
|
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
Change in funded status
|
|
|
-
|
|
|
|
-
|
|
|
Reclassification adjustment for accretion of net prior service cost
|
|
|
-
|
|
|
|
-
|
|
|
Reclassification adjustment for amortization of net actuarial loss
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
$
|
(324
|
)
|
|
$
|
41
|
|
|
|
|
For the Years Ended June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Unrealized gains/losses on securities:
|
|
|
|
|
|
|
|
|
|
Unrealized holdings (losses) gains arising during the period
|
|
$
|
217
|
|
|
$
|
71
|
|
|
Reclassification adjustment for gains included in net income
|
|
|
(213
|
)
|
|
|
(207
|
)
|
|
|
|
|
4
|
|
|
|
(136
|
)
|
|
Defined benefit plans:
|
|
|
|
|
|
|
|
|
|
Change in funded status
|
|
|
542
|
|
|
|
2,220
|
|
|
Reclassification adjustment for accretion of net prior service cost
|
|
|
-
|
|
|
|
1
|
|
|
Reclassification adjustment for amortization of net actuarial loss
|
|
|
381
|
|
|
|
866
|
|
|
|
|
|
923
|
|
|
|
3,087
|
|
|
|
|
$
|
927
|
|
|
$
|
2,951
|
|
The
above tables are inclusive of the change in federal corporate income rate as a result of the Tax Cuts and Jobs Act and the adoption
of Accounting Standard Update 2018-02.
|
|
11.
|
EMPLOYEE BENEFIT PLANS
|
The Bank maintains a noncontributory
defined benefit pension plan and a defined benefit post-retirement plan. Plan assets and obligations that determine the funded
status are measured as of the end of the fiscal year.
Amounts recognized in the consolidated
statement of condition related to the Bank’s plans are as follows as of June 30 (dollars in thousands):
|
|
|
2018
|
|
|
2017
|
|
|
Other assets
|
|
|
|
|
|
|
|
|
|
Pension asset
|
|
$
|
2,821
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
|
|
|
|
|
|
|
|
Unfunded pension liability
|
|
$
|
-
|
|
|
$
|
1,256
|
|
|
Accumulated post-retirement benefit obligation
|
|
|
1,570
|
|
|
|
1,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,570
|
|
|
$
|
3,019
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss (gain), net of taxes
|
|
|
|
|
|
|
|
|
|
Pension plan
|
|
$
|
9,424
|
|
|
$
|
9,905
|
|
|
Post-retirement benefit plan
|
|
|
(25
|
)
|
|
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
9,399
|
|
|
$
|
10,033
|
|
Pension Plan
The Bank maintains a noncontributory
defined benefit pension plan covering substantially all of its full-time employees twenty-one years of age or older, with at least
one year of service. Through December 31, 2009, pensions were paid as an annuity using a pension formula of 2.0% of the
average of the five highest consecutive years of total compensation over the last ten years multiplied by credited service
up to thirty years. Effective January 1, 2010, the plan was amended and service rendered thereafter is paid using a pension
formula of 1.5%. Amounts contributed to the plan are determined annually on the basis of (a) the maximum amount allowable
under Internal Revenue Service regulations and (b) the amount certified by a consulting actuary as necessary to avoid an accumulated
funding deficiency as defined by the Employee Retirement Income Security Act of 1974 (“ERISA”).
|
|
11.
|
EMPLOYEE BENEFIT PLANS (Continued)
|
Pension Plan (Continued)
The following table sets forth information
on the Bank’s defined benefit pension plan as of June 30 (dollars in thousands):
|
|
|
2018
|
|
|
2017
|
|
|
Change in projected benefit obligation:
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation at beginning of year
|
|
$
|
47,974
|
|
|
$
|
49,504
|
|
|
Service cost
|
|
|
1,313
|
|
|
|
1,357
|
|
|
Interest cost
|
|
|
1,857
|
|
|
|
1,741
|
|
|
Assumption changes
|
|
|
(2,727
|
)
|
|
|
(3,011
|
)
|
|
Actuarial loss (gain)
|
|
|
1,046
|
|
|
|
(420
|
)
|
|
Benefits paid
|
|
|
(1,326
|
)
|
|
|
(1,197
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Projected benefit obligation at end of year
|
|
|
48,137
|
|
|
|
47,974
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of plan assets:
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year
|
|
$
|
46,718
|
|
|
$
|
41,660
|
|
|
Actual return on plan assets
|
|
|
3,639
|
|
|
|
5,286
|
|
|
Employer contributions
|
|
|
2,000
|
|
|
|
1,000
|
|
|
Expenses
|
|
|
(73
|
)
|
|
|
(31
|
)
|
|
Benefits paid
|
|
|
(1,326
|
)
|
|
|
(1,197
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
|
50,958
|
|
|
|
46,718
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded (unfunded) status of plan at end of year
|
|
$
|
2,821
|
|
|
$
|
(1,256
|
)
|
Net periodic pension cost included
in the Bank’s consolidated statements of income included the following components (dollars in thousands):
|
|
|
For
the Six Months Ended
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
619
|
|
|
$
|
656
|
|
|
Interest cost
|
|
|
967
|
|
|
|
928
|
|
|
Expected return on plan assets
|
|
|
(1,776
|
)
|
|
|
(1,706
|
)
|
|
Amortization of net actuarial loss
|
|
|
435
|
|
|
|
729
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
$
|
245
|
|
|
$
|
607
|
|
|
|
|
For the Years Ended June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
1,313
|
|
|
$
|
1,357
|
|
|
Interest cost
|
|
|
1,857
|
|
|
|
1,741
|
|
|
Expected return on plan assets
|
|
|
(3,413
|
)
|
|
|
(3,113
|
)
|
|
Amortization of net actuarial loss
|
|
|
1,458
|
|
|
|
2,244
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
$
|
1,215
|
|
|
$
|
2,229
|
|
|
|
11.
|
EMPLOYEE BENEFIT PLANS (Continued)
|
Pension Plan (Continued)
Amounts recognized in accumulated
other comprehensive loss, before tax effect consist of net actuarial losses of $12,759,000 and $16,051,000 at June 30, 2018 and
2017, respectively.
The estimated net actuarial loss that will
be amortized from accumulated other comprehensive loss into net periodic benefit cost during the year ending June 30, 2019,
is $917,000.
The actuarial assumptions used in
determining the present value of the projected benefit obligations and net periodic pension cost as of and for the years ended
June 30 were as follows:
|
|
|
2018
|
|
|
2017
|
|
|
Weighted average assumptions – benefit obligations
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
4.12
|
%
|
|
|
3.87
|
%
|
|
Annual rate of compensation increase
|
|
|
3.00
|
%
|
|
|
3.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average assumptions – net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
Discount rate
|
|
|
3.85
|
%
|
|
|
3.60
|
%
|
|
Annual rate of compensation increase
|
|
|
3.00
|
%
|
|
|
3.00
|
%
|
|
Expected long-term rate of return on plan assets
|
|
|
7.35
|
%
|
|
|
7.60
|
%
|
Accumulated Benefit Obligation
The accumulated benefit obligation
(the actuarial present value of benefits, vested and nonvested, earned by employees based on current and past compensation levels)
for the Bank’s defined benefit pension plan totaled $44,058,000 and $43,951,000 as of June 30, 2018 and 2017, respectively.
Investment Policies and Strategies
Plan assets are invested in various
investment funds under a group annuity contract with MassMutual, and are held in trust by State Street Bank. MassMutual does not
provide any investment advice, nor do they have any discretion as to the selection of the investment options for plan assets, consequently
the Employer, as the Plan Sponsor, determines the appropriate strategic asset allocation versus plan liabilities.
Currently, the Plan asset allocation
targets 65% of assets to equity securities, and 35% to fixed income through a combination of short-term and long-term bond funds.
The overall long-term investment objectives are to maintain plan assets at a level that will sufficiently cover long-term obligations
and to generate a return on plan assets that will meet or exceed the rate at which long-term obligations will grow. The Strategy
is designed to provide long-term growth of assets with the objective of achieving an investment return in excess of the costs of
funding active lives, deferred vested, and all longer-term obligations. In addition, the plan’s assets are rebalanced quarterly
to the target percentages for each investment option no later than the 10
th
business day following the end of each calendar
quarter.
|
|
11.
|
EMPLOYEE BENEFIT PLANS (Continued)
|
Pension Plan (Continued)
Determination of Long-Term Rate-of-Return
The long-term rate-of-return-on-assets
assumption was set based on historical returns earned by equities and fixed-income securities, adjusted to reflect expectations
of future returns as applied to the plan’s target allocation of asset classes. Equities and fixed-income securities were
assumed to earn real rates of return in the ranges of 5-9% and 1-4%, respectively. The long-term inflation rate was estimated to
be 3%. When these overall return expectations are applied to the plan’s target allocation, the result is an expected long-term
rate of return of 6% to 10%.
Contributions
For the fiscal year ending June 30,
2019, the Bank is not required to make a cash contribution to the plan, but may elect to do so.
Estimated Future Benefit Payments
The benefit payments expected to be
paid over the next ten years are as follows (dollars in thousands):
|
Fiscal year ending June 30,
|
|
|
|
|
2019
|
|
$
|
1,411
|
|
|
2020
|
|
|
1,468
|
|
|
2021
|
|
|
1,537
|
|
|
2022
|
|
|
1,605
|
|
|
2023
|
|
|
1,652
|
|
|
Years 2024 – 2028
|
|
|
9,866
|
|
The Bank’s pension plan asset
allocation at June 30, 2018 and 2017, target allocation for 2018, and expected long-term rate of return by asset category are as
follows:
|
|
|
|
|
|
Percentage of
|
|
|
Weighted-
|
|
|
|
Target
|
|
|
Plan Assets at
|
|
|
Average Expected
|
|
|
|
Allocation
|
|
|
Year End
|
|
|
Long-Term Rate
|
|
Asset Category
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
of Return
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
|
65.0%
|
|
|
|
66.0
|
%
|
|
|
65.8
|
%
|
|
5.00 – 9.00%
|
|
Fixed income securities
|
|
|
35.0%
|
|
|
|
34.0
|
%
|
|
|
34.2
|
%
|
|
1.00 – 4.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
Fair Value of Plan Assets
Fair value is the exchange price that
would be received for an asset in the principal or most advantageous market for the asset in an orderly transaction between market
participants on the measurement date.
|
|
11.
|
EMPLOYEE BENEFIT PLANS (Continued)
|
Pension Plan (Continued)
The Bank used the following methods
and significant assumptions to estimate the fair value of each type of plan asset:
Equity, Debt, Investment Funds
and Other Securities
The fair values for securities are
determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are
calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar
securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Discounted
cash flows are calculated using spread to swap and LIBOR curves that are updated to incorporate loss severities, volatility, credit
spread and optionality. During times when trading is more liquid, broker quotes are used (if available) to validate the model.
Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated
into the calculations.
The fair values of the plan assets
at June 30, by asset category, are as follows (dollars in thousands):
|
|
|
|
|
|
June 30, 2018
|
|
|
|
|
|
|
|
Fair Value Measurements
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Significant
|
|
|
Significant
|
|
|
|
|
|
|
|
Active Markets for
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
Carrying
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
|
Value
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separate investment accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premier Short-Duration Bond (Barings)
|
|
$
|
2,307
|
|
|
$
|
-
|
|
|
$
|
2,307
|
|
|
$
|
-
|
|
|
Long Duration Bond (Barings)
|
|
|
7,410
|
|
|
|
-
|
|
|
|
7,410
|
|
|
|
-
|
|
|
Premier Diversified Bond (Barings)
|
|
|
5,059
|
|
|
|
-
|
|
|
|
5,059
|
|
|
|
-
|
|
|
Premier High Yield (Barings)
|
|
|
2,555
|
|
|
|
-
|
|
|
|
2,555
|
|
|
|
-
|
|
|
Washington Mutual Invs (American)
|
|
|
4,658
|
|
|
|
-
|
|
|
|
4,658
|
|
|
|
-
|
|
|
Select Focused Value (Harris)
|
|
|
2,602
|
|
|
|
-
|
|
|
|
2,602
|
|
|
|
-
|
|
|
MM S&P 500 Index (Northern Trust)
|
|
|
2,609
|
|
|
|
-
|
|
|
|
2,609
|
|
|
|
-
|
|
|
Select Blue Chip Growth (T.Rowe Price)
|
|
|
4,787
|
|
|
|
-
|
|
|
|
4,787
|
|
|
|
-
|
|
|
Special Mid Cap Value (Wells Fargo)
|
|
|
1,782
|
|
|
|
-
|
|
|
|
1,782
|
|
|
|
-
|
|
|
Select Mid Cap Gr II (TRP/Frontier)
|
|
|
1,803
|
|
|
|
-
|
|
|
|
1,803
|
|
|
|
-
|
|
|
Premier Oppenheimer Fds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sm Cp Opp II
|
|
|
3,285
|
|
|
|
-
|
|
|
|
3,285
|
|
|
|
-
|
|
|
International Value (MFS)
|
|
|
2,041
|
|
|
|
-
|
|
|
|
2,041
|
|
|
|
-
|
|
|
EuroPacific Growth (American)
|
|
|
2,473
|
|
|
|
-
|
|
|
|
2,473
|
|
|
|
-
|
|
|
International Growth (OFI)
|
|
|
1,991
|
|
|
|
-
|
|
|
|
1,991
|
|
|
|
-
|
|
|
New World (American)
|
|
|
2,442
|
|
|
|
-
|
|
|
|
2,442
|
|
|
|
-
|
|
|
Real Estate (OFI)
|
|
|
1,613
|
|
|
|
-
|
|
|
|
1,613
|
|
|
|
-
|
|
|
Commodity Rl Rtn Strat (PIMCO)
|
|
|
1,541
|
|
|
|
-
|
|
|
|
1,541
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total plan assets
|
|
$
|
50,958
|
|
|
$
|
-
|
|
|
$
|
50,958
|
|
|
$
|
-
|
|
|
|
11.
|
EMPLOYEE BENEFIT PLANS (Continued)
|
Pension Plan (Continued)
|
|
|
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
Fair Value Measurements
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Significant
|
|
|
Significant
|
|
|
|
|
|
|
|
Active Markets for Observable
|
|
|
Unobservable
|
|
|
|
|
Carrying
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
|
Value
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separate investment accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premier Short-Duration Bond (Barings)
|
|
$
|
2,043
|
|
|
$
|
-
|
|
|
$
|
2,043
|
|
|
$
|
-
|
|
|
Long Duration Bond (Barings)
|
|
|
7,044
|
|
|
|
-
|
|
|
|
7,044
|
|
|
|
-
|
|
|
Premier Diversified Bond (Barings)
|
|
|
4,592
|
|
|
|
-
|
|
|
|
4,592
|
|
|
|
-
|
|
|
Premier High Yield (Barings)
|
|
|
2,309
|
|
|
|
-
|
|
|
|
2,309
|
|
|
|
-
|
|
|
Washington Mutual Invs (American)
|
|
|
4,166
|
|
|
|
-
|
|
|
|
4,166
|
|
|
|
-
|
|
|
Select Focused Value (Harris)
|
|
|
2,348
|
|
|
|
-
|
|
|
|
2,348
|
|
|
|
-
|
|
|
MM S&P 500 Index (Northern Trust)
|
|
|
2,330
|
|
|
|
-
|
|
|
|
2,330
|
|
|
|
-
|
|
|
Select Blue Chip Growth (T.Rowe Price)
|
|
|
4,397
|
|
|
|
-
|
|
|
|
4,397
|
|
|
|
-
|
|
|
Special Mid Cap Value (Wells Fargo)
|
|
|
1,609
|
|
|
|
-
|
|
|
|
1,609
|
|
|
|
-
|
|
|
Select Mid Cap Gr II (TRP/Frontier)
|
|
|
1,686
|
|
|
|
-
|
|
|
|
1,686
|
|
|
|
-
|
|
|
Premier Oppenheimer Fds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sm Cp Opp II
|
|
|
2,822
|
|
|
|
-
|
|
|
|
2,822
|
|
|
|
-
|
|
|
International Value (MFS)
|
|
|
1,959
|
|
|
|
-
|
|
|
|
1,959
|
|
|
|
-
|
|
|
EuroPacific Growth (American)
|
|
|
2,430
|
|
|
|
-
|
|
|
|
2,430
|
|
|
|
-
|
|
|
International Growth (OFI)
|
|
|
1,948
|
|
|
|
-
|
|
|
|
1,948
|
|
|
|
-
|
|
|
New World (American)
|
|
|
2,385
|
|
|
|
-
|
|
|
|
2,385
|
|
|
|
-
|
|
|
Real Estate (OFI)
|
|
|
1,352
|
|
|
|
-
|
|
|
|
1,352
|
|
|
|
-
|
|
|
Commodity Rl Rtn Strat (PIMCO)
|
|
|
1,298
|
|
|
|
-
|
|
|
|
1,298
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total plan assets
|
|
$
|
46,718
|
|
|
$
|
-
|
|
|
$
|
46,718
|
|
|
$
|
-
|
|
There were no significant transfers
between Level 1 and Level 2 during the years ended June 30, 2018 and 2017 due to changes in the Plan’s Investment Policies
and Strategies.
|
|
11.
|
EMPLOYEE BENEFIT PLANS (Continued)
|
Post-Retirement Healthcare Plan
The Bank offers a defined benefit
post-retirement plan which provides medical and life insurance benefits to employees meeting certain requirements. Effective October 1,
2006, the plan was amended so that there have been no new plan participants for medical benefits. The cost of post-retirement plan
benefits is recognized on an accrual basis as employees perform services. Active employees are eligible for retiree medical coverage
upon reaching age sixty with twenty-five or more years of service. Employees with a minimum of thirty years of service are eligible
for individual and spousal coverage. Retirees are eligible to participate in any bank-sponsored health insurance programs. The
Bank’s contributions for retiree medical are limited to a monthly premium of $210 for individual coverage and $420 for employee
and spousal coverage. The Bank’s funding policy is to pay insurance premiums as they come due.
The following table sets forth the
plan’s funded status and amounts recognized in the Bank’s consolidated financial statements at June 30 (dollars
in thousands):
|
|
|
2018
|
|
|
2017
|
|
|
Change in accumulated post-retirement benefit obligation:
|
|
|
|
|
|
|
|
|
|
Accumulated benefit obligation at beginning of year
|
|
$
|
1,763
|
|
|
$
|
1,922
|
|
|
Service cost
|
|
|
35
|
|
|
|
47
|
|
|
Interest cost
|
|
|
61
|
|
|
|
65
|
|
|
Actuarial gain
|
|
|
(171
|
)
|
|
|
(94
|
)
|
|
Effect of changes in assumptions
|
|
|
(71
|
)
|
|
|
(132
|
)
|
|
Benefits paid
|
|
|
(47
|
)
|
|
|
(45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated benefit obligation at end of year
|
|
|
1,570
|
|
|
|
1,763
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year
|
|
|
-
|
|
|
|
-
|
|
|
Actual return on plan assets
|
|
|
-
|
|
|
|
-
|
|
|
Employer contributions
|
|
|
47
|
|
|
|
45
|
|
|
Benefits paid
|
|
|
(47
|
)
|
|
|
(45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Unfunded status at end of year
|
|
$
|
1,570
|
|
|
$
|
1,763
|
|
|
|
11.
|
EMPLOYEE BENEFIT PLANS (Continued)
|
Post-Retirement Healthcare
Plan (Continued)
Net periodic post-retirement benefit
cost included in the Bank’s consolidated statements of income included the following components (dollars in thousands):
|
|
|
For the Six Months Ended
|
|
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
Service cost
|
|
$
|
14
|
|
|
$
|
17
|
|
|
Interest cost
|
|
|
33
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic pension cost
|
|
$
|
47
|
|
|
$
|
48
|
|
|
|
|
For the Years Ended June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
35
|
|
|
$
|
47
|
|
|
Interest cost
|
|
|
61
|
|
|
|
65
|
|
|
Amortization of prior service cost
|
|
|
-
|
|
|
|
2
|
|
|
Recognized actuarial loss
|
|
|
-
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic post-retirement benefit cost
|
|
$
|
96
|
|
|
$
|
132
|
|
Amounts recognized in accumulated other comprehensive
(gain) loss, before tax effect, at June 30, consist of (dollars in thousands):
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Net actuarial (gain) loss
|
|
$
|
(34
|
)
|
|
$
|
207
|
|
The estimated net actuarial gain for
the post-retirement plan that will be amortized from accumulated other comprehensive loss into net periodic benefit costs during
the year ending June 30, 2019, is $0.
The discount rates used in determining
the accumulated post-retirement benefit obligation were 4.11% and 3.87% at June 30, 2018 and 2017, respectively.
For measurement purposes, the medical
care cost trend rate has no effect on the Bank’s cost since the insurance premiums are a fixed amount (capped). However,
increasing or decreasing the benefit cost cap for plan participants could have a significant impact on the accumulated benefit
obligation and employer cost.
|
|
11.
|
EMPLOYEE BENEFIT PLANS (Continued)
|
Post-Retirement Healthcare
Plan (Continued)
The projected benefit payments under
the plan over the next ten years are as follows (dollars in thousands):
|
Fiscal year ending June 30,
|
|
|
|
|
2019
|
|
$
|
50
|
|
|
2020
|
|
|
52
|
|
|
2021
|
|
|
52
|
|
|
2022
|
|
|
53
|
|
|
2023
|
|
|
58
|
|
|
Years 2024 – 2028
|
|
|
356
|
|
401(k) Plan
The Bank maintains a defined contribution
401(k) plan covering substantially all employees meeting certain eligibility requirements. Participants may contribute from 0.5%
to 20% of their compensation; and the Bank matches 100% on the first 1% of employee contributions and 50% on the next 5% after
the employee has completed one year of service. The 401(k) plan contribution expense was approximately $195,000, $159,000, $365,000
and $322,000 for the six months ended December 31, 2018 and 2017, and for the years ended June 30, 2018 and 2017, respectively.
Supplemental Retirement and Deferred
Compensation Plans
The Bank had a Targeted Benefit Supplemental
Retirement Plan for executives. At December 31, 2018, and June 30, 2018 and 2017, the Bank had an accrued benefit liability
of $433,000, $525,000 and $559,000, respectively. Effective June 2010, the plan was terminated and there have been no additional
contributions. There were no provisions for the six months ended December 31, 2018 and 2017, and the years ended June 30,
2018 and 2017. Changes in the accrued benefit liability equal the changes in the fair values of designated assets, less participant
payments.
The Bank has a Deferred Compensation
Plan for trustees and certain of its officers. Under the plan, participants can elect to defer all, or portion of their trustee
fees, or salaries and/or bonuses, and invest those funds in various investment funds under a group annuity contact with Mass Mutual.
At December 31, 2018, and June 30, 2018 and 2017, the Bank had an accrued benefit liability of $547,000, $596,000 and $569,000,
respectively. Changes in the accrued benefit liability equal the changes in the fair values of the invested assets, additional
deferrals, less participant payments, if any.
The components of income tax expense
were as follows (dollars in thousands):
|
|
|
For the Six Months Ended
|
|
|
For the Years Ended
|
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Current tax expense
|
|
$
|
1,452
|
|
|
$
|
2,203
|
|
|
$
|
4,232
|
|
|
$
|
2,831
|
|
|
Deferred tax expense (benefit)
|
|
|
436
|
|
|
|
1,760
|
|
|
|
2,078
|
|
|
|
(116
|
)
|
|
Total income tax expense
|
|
$
|
1,888
|
|
|
$
|
3,963
|
|
|
$
|
6,310
|
|
|
$
|
2,715
|
|
Income tax expense differs from the
amount expected based on the federal income tax statutory rate due to the following (dollars in thousands):
|
|
|
December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
Amount
|
|
|
Rate
|
|
|
Amount
|
|
|
Rate
|
|
|
|
|
(unaudited)
|
|
|
Income before tax at the federal tax rate
|
|
$
|
2,338
|
|
|
|
21.0
|
%
|
|
$
|
2,689
|
|
|
|
34.0
|
%
|
|
State expense, net of federal benefit
|
|
|
219
|
|
|
|
2.0
|
%
|
|
|
211
|
|
|
|
2.7
|
%
|
|
Federal tax rate change
|
|
|
(580
|
)
|
|
|
-5.2
|
%
|
|
|
1,200
|
|
|
|
15.2
|
%
|
|
Tax-exempt income
|
|
|
(285
|
)
|
|
|
-2.6
|
%
|
|
|
(119
|
)
|
|
|
-1.5
|
%
|
|
Bank-owned life insurance
|
|
|
(64
|
)
|
|
|
-0.6
|
%
|
|
|
(47
|
)
|
|
|
-0.6
|
%
|
|
Other, net
|
|
|
260
|
|
|
|
2.4
|
%
|
|
|
29
|
|
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense
|
|
$
|
1,888
|
|
|
|
17.0
|
%
|
|
$
|
3,963
|
|
|
|
50.2
|
%
|
|
|
|
June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
Amount
|
|
|
Rate
|
|
|
Amount
|
|
|
Rate
|
|
|
Income before tax at the federal tax rate
|
|
$
|
4,987
|
|
|
|
28.0
|
%
|
|
$
|
2,838
|
|
|
|
34.0
|
%
|
|
State expense, net of federal benefit
|
|
|
548
|
|
|
|
3.1
|
%
|
|
|
131
|
|
|
|
1.6
|
%
|
|
Federal tax rate change
|
|
|
1,200
|
|
|
|
6.7
|
%
|
|
|
-
|
|
|
|
0.0
|
%
|
|
Tax-exempt income
|
|
|
(230
|
)
|
|
|
-1.3
|
%
|
|
|
(265
|
)
|
|
|
-3.2
|
%
|
|
Bank-owned life insurance
|
|
|
(32
|
)
|
|
|
-0.2
|
%
|
|
|
(25
|
)
|
|
|
-0.3
|
%
|
|
Other, net
|
|
|
(163
|
)
|
|
|
-0.9
|
%
|
|
|
36
|
|
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense
|
|
$
|
6,310
|
|
|
|
35.4
|
%
|
|
$
|
2,715
|
|
|
|
32.5
|
%
|
|
|
12.
|
INCOME TAXES (Continued)
|
The tax effects that give rise to
significant portions of the deferred tax assets and deferred tax liabilities are presented below (dollars in thousands):
|
|
|
December 31,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses
|
|
$
|
4,073
|
|
|
$
|
4,001
|
|
|
$
|
5,175
|
|
|
Net operating loss carryforward
|
|
|
-
|
|
|
|
-
|
|
|
|
61
|
|
|
OTTI – securities
|
|
|
414
|
|
|
|
414
|
|
|
|
985
|
|
|
Post-retirement benefit obligations
|
|
|
446
|
|
|
|
438
|
|
|
|
624
|
|
|
Deferred compensation
|
|
|
296
|
|
|
|
303
|
|
|
|
438
|
|
|
Unfunded defined benefit and postretirement benefit plan liabilities
|
|
|
3,326
|
|
|
|
3,326
|
|
|
|
6,225
|
|
|
Other
|
|
|
206
|
|
|
|
436
|
|
|
|
507
|
|
|
Total deferred tax assets
|
|
|
8,761
|
|
|
|
8,918
|
|
|
|
14,015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
(2,174
|
)
|
|
|
(1,278
|
)
|
|
|
(1,163
|
)
|
|
Net deferred loan origination costs
|
|
|
(575
|
)
|
|
|
(581
|
)
|
|
|
(863
|
)
|
|
Prepaid pension
|
|
|
(4,217
|
)
|
|
|
(4,284
|
)
|
|
|
(5,992
|
)
|
|
Prepaid expenses
|
|
|
(139
|
)
|
|
|
(130
|
)
|
|
|
(148
|
)
|
|
Unrealized gains on securities available for sale
|
|
|
178
|
|
|
|
(145
|
)
|
|
|
(243
|
)
|
|
Other
|
|
|
(128
|
)
|
|
|
(100
|
)
|
|
|
(200
|
)
|
|
Total deferred tax liabilities
|
|
|
(7,055
|
)
|
|
|
(6,518
|
)
|
|
|
(8,609
|
)
|
|
Net deferred tax asset at end of year
|
|
$
|
1,706
|
|
|
$
|
2,400
|
|
|
$
|
5,406
|
|
Net deferred tax assets are included
in other assets in the consolidated statement of condition.
Management determines the need for
a deferred tax valuation allowance based upon the realizability of tax benefits from the reversal of temporary differences creating
the deferred tax assets, as well as the amount of available open tax carrybacks, if any. As of December 31, 2018, and June 30,
2018, and 2017, no valuation allowance was required.
On December 22, 2017, the Tax Cuts
and Jobs Act (the “Tax Act”) was signed into law. The Tax Act reduces the corporate federal tax rate from a maximum
35% to a flat 21% rate, effective January 1, 2018. As a result of the reduction in the corporate tax rate under the Tax Act, the
Bank revalued its deferred tax assets and liabilities at December 31, 2017. The re-measurements resulted in a discrete tax expense
of $1.2 million that was recognized during the year ended June 30, 2018 and a discrete tax benefit of $580,000 that was recognized
during the six months ended December 31, 2018.
For the six months ended December
31, 2018 and 2017, and the years ending June 30, 2018 and 2017, there were no amounts accrued and/or paid for interest and penalties.
As a thrift institution, the Bank
is subject to special provisions in the Federal income tax laws regarding its allowable bad debt deduction and related tax basis
bad debt reserves. Deferred income tax liabilities are to be recognized with respect to any base-year reserves which are to become
taxable (or “recaptured”) in the foreseeable future.
|
|
12.
|
INCOME TAXES (Continued)
|
Under current income tax laws, the
base-year reserves would be subject to recapture if the Company pays a cash dividend in excess of earnings and profits or liquidates.
The Bank does not expect to take any actions in the foreseeable future that would require the recapture of any base-year reserves.
A deferred tax liability has not been
recognized with respect to the Federal base-year reserve of $9.3 million at December 31, 2018, and June 30, 2018 and 2017, because
the Bank does not expect that this amount will become taxable in the foreseeable future. The unrecognized deferred tax liability
with respect to the Federal base-year reserve was $2.4 million, $2.4 million and $3.2 million at December 31, 2018, and June 30,
2018 and 2017, respectively. It is more likely than not that this liability will never be incurred because, as noted above, the
Bank does not expect to take any action in the future that would result in this liability being incurred.
The Bank is subject to routine audits
of its tax returns by the Internal Revenue Service and New York State Department of Taxation and Finance. The Bank is no longer
subject to examination by either taxing authority for years before calendar 2015.
|
|
13.
|
COMMITMENTS AND CONTINGENT LIABILITIES
|
Off-Balance-Sheet Financing and
Concentrations of Credit
The Bank is a party to certain financial
instruments with off-balance-sheet risk to meet the financing needs of its customers. These financial instruments include the Bank’s
commitments to extend credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized
on the consolidated statement of condition. The contract amounts of those instruments reflect the extent of involvement the Bank
has in particular classes of financial instruments.
The Bank’s exposure to credit
loss in the event of nonperformance by the other party to the commitments to extend credit is represented by the contractual notional
amounts of those instruments which are presented in the tables below (dollars in thousands). The Bank uses the same credit policies
in making commitments as it does for on-balance-sheet instruments.
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Fixed
|
|
|
Variable
|
|
|
|
|
|
|
|
Rate
|
|
|
Rate
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial instruments whose contract amounts represent credit risk (including unused lines of credit and unadvanced loan funds):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments to extend credit
|
|
$
|
10,735
|
|
|
$
|
274,150
|
|
|
$
|
284,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Standby letters of credit
|
|
|
-
|
|
|
|
31,813
|
|
|
|
31,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,735
|
|
|
$
|
305,963
|
|
|
$
|
316,698
|
|
|
|
13.
|
COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
|
|
|
|
June 30, 2018
|
|
|
|
|
Fixed
|
|
|
Variable
|
|
|
|
|
|
|
|
Rate
|
|
|
Rate
|
|
|
Total
|
|
|
Financial instruments whose contract amounts represent credit risk (including unused lines of credit and unadvanced loan funds):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments to extend credit
|
|
$
|
16,144
|
|
|
$
|
252,250
|
|
|
$
|
268,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Standby letters of credit
|
|
|
-
|
|
|
|
25,507
|
|
|
|
25,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
16,144
|
|
|
$
|
277,757
|
|
|
$
|
293,901
|
|
|
|
|
June 30, 2017
|
|
|
|
|
Fixed
|
|
|
Variable
|
|
|
|
|
|
|
|
Rate
|
|
|
Rate
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial instruments whose contract amounts represent credit risk (including unused lines of credit and unadvanced loan funds):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments to extend credit
|
|
$
|
9,857
|
|
|
$
|
219,136
|
|
|
$
|
228,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Standby letters of credit
|
|
|
-
|
|
|
|
25,961
|
|
|
|
25,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
9,857
|
|
|
$
|
245,097
|
|
|
$
|
254,954
|
|
Commitments to extend credit are agreements
to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have
fixed expiration dates or other termination clauses and require payment of a fee. Since certain commitments are expected to expire
without being fully drawn, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates
each customer’s credit worthiness on a case-by-case basis. The amount of collateral, if any, required by the Bank for the
extension of credit is based on management’s credit evaluation of the customer.
Commitments to extend credit may be
written on a fixed rate basis thus exposing the Bank to interest rate risk, given the possibility that market rates may change
between commitment and actual extension of credit.
Standby letters of credit are conditional
commitments issued by the Bank to guarantee payment on behalf of a customer or to guarantee the performance of a customer to a
third party. The credit risk involved in issuing these instruments is essentially the same as that involved in extending loans
to customers. Since a portion of these instruments will expire unused, the total amounts do not necessarily represent future cash
requirements. Each customer is evaluated individually for creditworthiness under the same underwriting standards used for commitments
to extend credit and on-balance-sheet instruments. Bank policies governing loan collateral apply to standby letters of credit at
the time of credit extension.
|
|
13.
|
COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
|
Certain residential mortgage loans
are written on an adjustable basis and include interest rate caps which limit annual and lifetime increases in interest rates.
Generally, adjustable rate mortgages have an annual rate increase cap of 2% and lifetime rate increase cap of 5% to 6% above the
initial loan rate. These caps expose the Bank to interest rate risk should market rates increase above these limits. At December 31,
2018, approximately $47.5 million of adjustable rate residential mortgage loans had interest rate caps. At June 30, 2018, approximately $28.0 million of adjustable rate residential mortgage loans had
interest rate caps. In addition, certain adjustable rate residential mortgage loans have a conversion option whereby the borrower
may elect to convert the loan to a fixed rate during a designated time period. At December 31, 2018, approximately $4.6 million
of the adjustable rate mortgage loans had conversion options. At June 30, 2018, approximately $4.9 million of the adjustable
rate mortgage loans had conversion options.
The Bank periodically sells residential
mortgage loans to FNMA and to the State of New York Mortgage Agency. At December 31, 2018 and June 30, 2018, the Bank had
no loans held for sale. In addition, the Bank has no loan commitments with borrowers at December 31, 2018 and June 30, 2018 with
rate lock agreements which are intended to be held for sale, if closed. The Bank generally determines whether or not a loan is
held for sale at the time that loan commitments are entered into or at the time a convertible adjustable rate mortgage loan converts
to a fixed interest rate. In order to reduce the interest rate risk associated with the portfolio of loans held for sale, as well
as loan commitments with locked interest rates which are intended to be held for sale if closed, the Bank enters into agreements
to sell loans in the secondary market. At December 31, 2018 and June 30, 2018, the Bank had no commitments to sell loans to
unrelated investors.
Concentrations of Credit
The Bank primarily grants loans to
customers located in the New York State counties of Albany, Greene, Rensselaer, Schenectady, Saratoga, and Warren. Although the
Bank has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent
upon the real estate and construction-related sectors of the economy.
|
|
13.
|
COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
|
Leases
The Bank leases certain branches and
equipment under various noncancelable operating leases. The future minimum payments by year and in the aggregate, under all significant
noncancelable operating leases with initial or remaining terms of one year or more, are as follows (dollars in thousands):
|
Year ending June 30,
|
|
|
|
|
2019
|
|
$
|
655
|
|
|
2020
|
|
|
532
|
|
|
2021
|
|
|
384
|
|
|
2022
|
|
|
336
|
|
|
2023
|
|
|
346
|
|
|
Thereafter
|
|
|
1,414
|
|
|
|
|
|
|
|
|
|
|
$
|
3,667
|
|
Total rent expense was approximately
$401,000, $407,000, $798,000 and $845,000 for the six months ended December 31, 2018 and 2017, and the years ended June 30,
2018 and 2017, respectively.
Contingent Liabilities
In the ordinary course of business
there are various legal proceedings pending against the Bank. Management believes that the aggregate exposure, if any, arising
from such litigation would not have a material adverse effect on the Bank’s consolidated financial statements.
Fair value is the exchange price that
would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs
that may be used to measure fair values:
Level 1:
Quoted prices (unadjusted)
for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2:
Significant other
observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that
are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3:
Significant unobservable
inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing
an asset or liability.
The fair values of securities are
determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is
a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for
the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level
2 inputs).
The fair value of interest rate swaps
are based on valuation models using observable market data as of the measurement date (Level 2). The fair value of derivatives
are classified as a component of other assets and other liabilities on the consolidated statements of condition.
|
|
14.
|
FAIR VALUE (Continued)
|
The fair value of impaired loans with specific
allocations of the allowance for loan losses is generally based on recent real estate appraisals. These appraisals may utilize
a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are
routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data
available. Such adjustments result in a Level 3 classification of the inputs for determining fair value.
Nonrecurring adjustments to certain
commercial and residential real estate properties classified as OREO are measured at fair value, less costs to sell. Fair values
are based on recent real estate appraisals. These appraisals may use a single valuation approach or a combination of approaches
including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent
appraisers to adjust for differences between the comparable sales and income data available. Such adjustments result in a Level
3 classification of the inputs for determining fair value.
The impact of unobservable inputs
on the Bank’s consolidated financial statements is not material.
Assets and Liabilities Measured
on a Recurring Basis
Assets and liabilities measured at
fair value on a recurring basis are summarized below (dollars in thousands):
|
|
|
Fair Value Measurements at
|
|
|
|
|
December 31, 2018 Using
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
Active Markets for
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and agency obligations
|
|
$
|
83,420
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Mortgage-backed securities - residential
|
|
|
-
|
|
|
|
129
|
|
|
|
-
|
|
|
Asset-backed securities
|
|
|
-
|
|
|
|
144
|
|
|
|
-
|
|
|
Collateralized mortgage obligations – residential
|
|
|
-
|
|
|
|
962
|
|
|
|
-
|
|
|
Municipal obligations
|
|
|
-
|
|
|
|
14,668
|
|
|
|
-
|
|
|
Total debt securities
|
|
|
83,420
|
|
|
|
15,903
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stocks
|
|
|
1,774
|
|
|
|
2,866
|
|
|
|
-
|
|
|
Common stocks
|
|
|
3,181
|
|
|
|
-
|
|
|
|
-
|
|
|
Total available for sale securities
|
|
|
88,375
|
|
|
|
18,769
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets
|
|
|
-
|
|
|
|
4,119
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
88,375
|
|
|
$
|
22,888
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
$
|
-
|
|
|
$
|
2,827
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
-
|
|
|
$
|
2,827
|
|
|
$
|
-
|
|
|
|
14.
|
FAIR VALUE (Continued)
|
|
|
|
Fair Value Measurements at
|
|
|
|
|
June 30, 2018 Using
|
|
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
Active Markets for
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and agency obligations
|
|
$
|
58,558
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Mortgage-backed securities - residential
|
|
|
-
|
|
|
|
150
|
|
|
|
-
|
|
|
Asset-backed securities
|
|
|
-
|
|
|
|
162
|
|
|
|
-
|
|
|
Collateralized mortgage obligations – residential
|
|
|
-
|
|
|
|
1,079
|
|
|
|
-
|
|
|
Municipal obligations
|
|
|
-
|
|
|
|
19,263
|
|
|
|
-
|
|
|
Total debt securities
|
|
|
58,558
|
|
|
|
20,654
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stocks
|
|
|
2,171
|
|
|
|
3,578
|
|
|
|
-
|
|
|
Common stocks
|
|
|
3,102
|
|
|
|
-
|
|
|
|
-
|
|
|
Total available for sale securities
|
|
|
63,831
|
|
|
|
24,232
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets
|
|
|
-
|
|
|
|
1,525
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
63,831
|
|
|
$
|
25,757
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
$
|
-
|
|
|
$
|
3,767
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
-
|
|
|
$
|
3,767
|
|
|
$
|
-
|
|
|
|
14.
|
FAIR VALUE (Continued)
|
|
|
|
Fair Value Measurements at
|
|
|
|
|
June 30, 2017 Using
|
|
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
Active Markets for
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available for sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government and agency obligations
|
|
$
|
42,919
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Mortgage-backed securities - residential
|
|
|
-
|
|
|
|
200
|
|
|
|
-
|
|
|
Asset-backed securities
|
|
|
-
|
|
|
|
261
|
|
|
|
-
|
|
|
Collateralized mortgage obligations –
residential
|
|
|
-
|
|
|
|
1,469
|
|
|
|
-
|
|
|
Municipal obligations
|
|
|
-
|
|
|
|
28,366
|
|
|
|
-
|
|
|
Total debt securities
|
|
|
42,919
|
|
|
|
30,296
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stocks
|
|
|
2,307
|
|
|
|
3,656
|
|
|
|
-
|
|
|
Common stocks
|
|
|
2,797
|
|
|
|
-
|
|
|
|
-
|
|
|
Total available for sale securities
|
|
|
48,023
|
|
|
|
33,952
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets
|
|
|
-
|
|
|
|
2,086
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
48,023
|
|
|
$
|
36,038
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
$
|
-
|
|
|
$
|
2,086
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
-
|
|
|
$
|
2,086
|
|
|
$
|
-
|
|
|
|
14.
|
FAIR VALUE (Continued)
|
Assets and Liabilities Measured
on a Non-Recurring Basis
Assets and liabilities measured
at fair value on a non-recurring basis are summarized below (dollars in thousands):
|
|
|
Fair Value Measurements Using
|
|
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
Active Markets for
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
|
|
(unaudited)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
862
|
|
|
OREO
|
|
|
-
|
|
|
|
-
|
|
|
|
56
|
|
|
|
|
June 30, 2018
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,142
|
|
|
OREO
|
|
|
-
|
|
|
|
-
|
|
|
|
72
|
|
|
|
|
June 30, 2017
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,900
|
|
Impaired loans, which are assets measured
at fair value on a non-recurring basis, using the fair value of collateral for collateral dependent loans, had a carrying amount
of $1.4 million with a valuation allowance of $0.5 million resulting in an estimated fair value of $0.9 million as of December
31, 2018. Impaired loans, which are assets measured at fair value on a non-recurring basis, using the fair value of collateral
for collateral dependent loans, had a carrying amount of $2.5 million with a valuation allowance of $1.3 million resulting in an
estimated fair value of $1.1 million as of June 30, 2018. Impaired loans, which are assets measured at fair value on a non-recurring
basis, using the fair value of collateral for collateral dependent loans, had a carrying amount of $3.3 million with a valuation
allowance of $0.4 million resulting in an estimated fair value of $2.9 million as of June 30, 2017.
OREO measured at fair value less costs
to sell, had a carrying amount of $56,000 at December 31, 2018, net of a valuation allowance of $14,000, resulting in a write-down
of $14,000 for the six months ended December 31, 2018. OREO measured at fair value less costs to sell, had a carrying amount of
$72,000 at June 30, 2018. There were no write-downs for the year ended June 30, 2018. The Bank had no OREO at June 30, 2017.
|
|
14.
|
FAIR VALUE (Continued)
|
The carrying and estimated fair values
of financial assets and liabilities as of December 31, 2018 were as follows (dollars in thousands):
|
|
|
2018
|
|
|
|
|
(unaudited)
|
|
|
|
|
Carrying
|
|
|
Estimated
|
|
|
|
|
Amount
|
|
|
Fair
Value
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
56,456
|
|
|
$
|
56,456
|
|
|
Securities available
for sale
|
|
|
107,144
|
|
|
|
107,144
|
|
|
Securities held
to maturity
|
|
|
4,275
|
|
|
|
4,292
|
|
|
Loans, net
|
|
|
1,028,920
|
|
|
|
1,031,520
|
|
|
FHLBNY stock
|
|
|
2,233
|
|
|
|
2,233
|
|
|
Accrued interest
receivable
|
|
|
4,269
|
|
|
|
4,269
|
|
|
Derivatives
|
|
|
4,119
|
|
|
|
4,119
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
|
Savings, money
market, and demand accounts
|
|
$
|
990,869
|
|
|
$
|
990,869
|
|
|
Time deposits
|
|
|
124,090
|
|
|
|
123,796
|
|
|
Mortgagors’
escrow deposits
|
|
|
4,795
|
|
|
|
4,795
|
|
|
FHLB advances
|
|
|
30,000
|
|
|
|
30,000
|
|
|
Accrued interest
payable
|
|
|
11
|
|
|
|
11
|
|
|
Derivatives
|
|
|
2,827
|
|
|
|
2,827
|
|
The carrying and estimated fair
values of financial assets and liabilities as of June 30 were as follows (dollars in thousands):
|
|
|
2018
|
|
|
2017
|
|
|
|
|
Carrying
|
|
|
Estimated
|
|
|
Carrying
|
|
|
Estimated
|
|
|
|
|
Amount
|
|
|
Fair Value
|
|
|
Amount
|
|
|
Fair Value
|
|
|
Financial assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
120,280
|
|
|
$
|
120,280
|
|
|
$
|
40,261
|
|
|
$
|
40,261
|
|
|
Securities available for sale
|
|
|
88,063
|
|
|
|
88,063
|
|
|
|
81,975
|
|
|
|
81,975
|
|
|
Securities held to maturity
|
|
|
5,297
|
|
|
|
5,327
|
|
|
|
2,213
|
|
|
|
2,259
|
|
|
Loans, net
|
|
|
985,902
|
|
|
|
988,857
|
|
|
|
932,763
|
|
|
|
947,156
|
|
|
FHLBNY stock
|
|
|
883
|
|
|
|
883
|
|
|
|
1,149
|
|
|
|
1,149
|
|
|
Accrued interest receivable
|
|
|
3,854
|
|
|
|
3,854
|
|
|
|
3,256
|
|
|
|
3,256
|
|
|
Derivatives
|
|
|
1,525
|
|
|
|
1,525
|
|
|
|
2,086
|
|
|
|
2,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings, money market, and demand accounts
|
|
$
|
1,021,173
|
|
|
$
|
1,021,173
|
|
|
$
|
882,362
|
|
|
$
|
882,362
|
|
|
Time deposits
|
|
|
129,089
|
|
|
|
128,810
|
|
|
|
127,664
|
|
|
|
127,336
|
|
|
Mortgagors’ escrow deposits
|
|
|
5,382
|
|
|
|
5,382
|
|
|
|
4,905
|
|
|
|
4,905
|
|
|
FHLB advances
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
Accrued interest payable
|
|
|
11
|
|
|
|
11
|
|
|
|
15
|
|
|
|
15
|
|
|
Derivatives
|
|
|
3,767
|
|
|
|
3,767
|
|
|
|
2,086
|
|
|
|
2,086
|
|
|
|
14.
|
FAIR VALUE (Continued)
|
Short-Term Financial Instruments
The fair value of certain financial
instruments are estimated to approximate their carrying amounts because the remaining term to maturity or period to repricing of
the financial instrument is less than ninety days. Such financial instruments include cash and cash equivalents, accrued interest
receivable and payable, and mortgagor’s escrow deposits.
Securities
Fair values of securities available
for sale and securities held to maturity are determined as outlined earlier in this footnote.
FHLBNY Stock
The fair value of FHLB stock approximates
its carrying value due to transferability restrictions.
Loans
Fair values are estimated for portfolios
of loans with similar financial characteristics. Loans are segregated by type, including residential real estate, commercial real
estate, and consumer loans and whether the interest rates are fixed and/or variable.
The estimated fair values of performing
loans is calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that
reflect the credit and interest rate risk inherent in the respective loan portfolio.
Estimated fair values for nonperforming
loans are based on estimated cash flows discounted using a rate commensurate with the credit risk involved. Assumptions regarding
credit risk, cash flows, and discount rates are judgmentally determined using available market information and specific borrower
information.
Derivatives
Fair values of derivative assets and
liabilities are determined as outlined earlier in this footnote.
Deposits
The estimated fair value of deposits
with no stated maturity, such as savings, money market and demand deposits, is regarded to be the amount payable on demand. The
estimated fair value of time deposits is based on the discounted value of contractual cash flows. The discount rate is estimated
using market rates for time deposits with similar maturities. The fair value estimates for deposits do not include the benefit
that results from the low-cost funding provided by the deposits as compared to the cost of borrowing funds in the market.
Borrowings
The estimated fair value of FHLB advances,
if any, is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered
for borrowings with similar remaining maturities.
The fair values of commitments to
extend credit, unused lines of credit, and standby letters of credit are not considered material.
The Bank and Pioneer Commercial Bank
are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could
have a direct material effect on the Bank’s consolidated financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, banks must meet specific capital guidelines that involve quantitative measures
of the bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices.
Capital amounts and classifications are also subject to qualitative judgements by the regulators about components, risk weightings,
and other factors.
Quantitative measures established
by regulation to ensure capital adequacy require the Bank and Pioneer Commercial Bank to maintain minimum capital amounts and ratios
(set forth in the table below) of Tier 1 capital (as defined in the regulations) to average assets (as defined), and common equity
Tier 1, Tier 1 and total capital (as defined) to risk-weighted assets (as defined). Basel III transitional rules became effective
for the Bank and Pioneer Commercial Bank on January 1, 2015 with all of the requirements being phased in over a multi-year schedule,
and fully phased in by January 1, 2019. Under Basel III rules, banks must hold a capital conservation buffer above the adequately
capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0% for 2015 to 2.5% for 2019. The
required capital conservation buffer is 1.875% for 2018 and 1.25% for 2017.
As of June 30, 2018 and 2017,
the Bank and Pioneer Commercial Bank met all capital adequacy requirements to which they were subject. Further, the most recent
FDIC notification categorized the Bank and Pioneer Commercial Bank as well capitalized institutions under the prompt corrective
action regulations. There have been no conditions or events since the notification that management believes have changed the Bank’s
or Pioneer Commercial Bank’s capital classification.
|
|
15.
|
REGULATORY CAPITAL (Continued)
|
The actual capital amounts and ratios
for the Bank and Pioneer Commercial Bank, are presented in the following table (dollars in thousands):
|
|
|
Actual
|
|
|
For
Capital
Adequacy Purposes
|
|
|
For
Capital
Adequacy Purposes
with
Capital Buffer
|
|
|
To
be Well
Capitalized Under
Prompt
Corrective Action
|
|
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Pioneer Savings Bank:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
|
|
(unaudited)
|
|
|
Tier 1 (leverage) capital
|
|
$
|
126,257
|
|
|
|
9.70
|
%
|
|
$
|
52,092
|
|
|
|
4.00
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
65,155
|
|
|
|
5.00
|
%
|
|
Risk-based capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Tier 1
|
|
$
|
126,257
|
|
|
|
12.04
|
%
|
|
$
|
47,198
|
|
|
|
4.50
|
%
|
|
$
|
66,864
|
|
|
|
6.375
|
%
|
|
$
|
68,176
|
|
|
|
6.50
|
%
|
|
Tier 1
|
|
$
|
126,257
|
|
|
|
12.04
|
%
|
|
$
|
62,931
|
|
|
|
6.00
|
%
|
|
$
|
82,597
|
|
|
|
7.875
|
%
|
|
$
|
83,908
|
|
|
|
8.00
|
%
|
|
Total
|
|
$
|
139,353
|
|
|
|
13.29
|
%
|
|
$
|
83,908
|
|
|
|
8.00
|
%
|
|
$
|
103,574
|
|
|
|
9.875
|
%
|
|
$
|
104,885
|
|
|
|
10.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
|
Tier 1 (leverage) capital
|
|
$
|
116,675
|
|
|
|
9.17
|
%
|
|
$
|
50.896
|
|
|
|
4.00
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
63,619
|
|
|
|
5.00
|
%
|
|
Risk-based capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Tier 1
|
|
$
|
116,675
|
|
|
|
11.59
|
%
|
|
$
|
45,298
|
|
|
|
4.50
|
%
|
|
$
|
64,173
|
|
|
|
6.375
|
%
|
|
$
|
65,431
|
|
|
|
6.50
|
%
|
|
Tier 1
|
|
$
|
116,675
|
|
|
|
11.59
|
%
|
|
$
|
60,398
|
|
|
|
6.00
|
%
|
|
$
|
79,272
|
|
|
|
7.875
|
%
|
|
$
|
80,531
|
|
|
|
8.00
|
%
|
|
Total
|
|
$
|
129,494
|
|
|
|
12.86
|
%
|
|
$
|
80,531
|
|
|
|
8.00
|
%
|
|
$
|
99,405
|
|
|
|
9.875
|
%
|
|
$
|
100,663
|
|
|
|
10.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
|
Tier 1 (leverage) capital
|
|
$
|
107,972
|
|
|
|
9.60
|
%
|
|
$
|
44,977
|
|
|
|
4.00
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
56,221
|
|
|
|
5.00
|
%
|
|
Risk-based capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Tier 1
|
|
$
|
107,972
|
|
|
|
11.18
|
%
|
|
$
|
43,463
|
|
|
|
4.50
|
%
|
|
$
|
55,536
|
|
|
|
6.375
|
%
|
|
$
|
62,780
|
|
|
|
6.50
|
%
|
|
Tier 1
|
|
$
|
107,972
|
|
|
|
11.18
|
%
|
|
$
|
57,951
|
|
|
|
6.00
|
%
|
|
$
|
70,024
|
|
|
|
7.875
|
%
|
|
$
|
77,268
|
|
|
|
8.00
|
%
|
|
Total
|
|
$
|
119,848
|
|
|
|
12.41
|
%
|
|
$
|
77,268
|
|
|
|
8.00
|
%
|
|
$
|
89,341
|
|
|
|
9.875
|
%
|
|
$
|
99,585
|
|
|
|
10.00
|
%
|
|
|
15.
|
REGULATORY CAPITAL (Continued)
|
|
|
|
Actual
|
|
|
For
Capital
Adequacy Purposes
|
|
|
For
Capital
Adequacy Purposes
with
Capital Buffer
|
|
|
To
be Well
Capitalized Under
Prompt
Corrective Action
|
|
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Pioneer Commercial Bank:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
|
|
(unaudited)
|
|
|
Tier 1 (leverage) capital
|
|
$
|
21,731
|
|
|
|
7.85
|
%
|
|
$
|
11,072
|
|
|
|
4.00
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
13,840
|
|
|
|
5.00
|
%
|
|
Risk-based capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Tier 1
|
|
$
|
21,731
|
|
|
|
47.55
|
%
|
|
$
|
2,056
|
|
|
|
4.50
|
%
|
|
$
|
2,913
|
|
|
|
6.375
|
%
|
|
$
|
2,970
|
|
|
|
6.50
|
%
|
|
Tier 1
|
|
$
|
21,731
|
|
|
|
47.55
|
%
|
|
$
|
2,742
|
|
|
|
6.00
|
%
|
|
$
|
3,599
|
|
|
|
7.875
|
%
|
|
$
|
3,656
|
|
|
|
8.00
|
%
|
|
Total
|
|
$
|
21,731
|
|
|
|
47.55
|
%
|
|
$
|
3,656
|
|
|
|
8.00
|
%
|
|
$
|
4,513
|
|
|
|
9.875
|
%
|
|
$
|
4,570
|
|
|
|
10.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2018
|
|
|
Tier 1 (leverage) capital
|
|
$
|
18,200
|
|
|
|
6.99
|
%
|
|
$
|
10,410
|
|
|
|
4.00
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
13,013
|
|
|
|
5.00
|
%
|
|
Risk-based capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Tier 1
|
|
$
|
18,200
|
|
|
|
39.61
|
%
|
|
$
|
2,068
|
|
|
|
4.50
|
%
|
|
$
|
2,929
|
|
|
|
6.375
|
%
|
|
$
|
2,987
|
|
|
|
6.50
|
%
|
|
Tier 1
|
|
$
|
18,200
|
|
|
|
39.61
|
%
|
|
$
|
2,757
|
|
|
|
6.00
|
%
|
|
$
|
3,618
|
|
|
|
7.875
|
%
|
|
$
|
3,676
|
|
|
|
8.00
|
%
|
|
Total
|
|
$
|
18,200
|
|
|
|
39.61
|
%
|
|
$
|
3,676
|
|
|
|
8.00
|
%
|
|
$
|
4,537
|
|
|
|
9.875
|
%
|
|
$
|
4,595
|
|
|
|
10.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
|
Tier 1 (leverage) capital
|
|
$
|
11,998
|
|
|
|
7.31
|
%
|
|
$
|
6,563
|
|
|
|
4.00
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
8,203
|
|
|
|
5.00
|
%
|
|
Risk-based capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Tier 1
|
|
$
|
11,998
|
|
|
|
37.28
|
%
|
|
$
|
1,448
|
|
|
|
4.50
|
%
|
|
$
|
1,851
|
|
|
|
6.375
|
%
|
|
$
|
2,092
|
|
|
|
6.50
|
%
|
|
Tier 1
|
|
$
|
11,998
|
|
|
|
37.28
|
%
|
|
$
|
1,931
|
|
|
|
6.00
|
%
|
|
$
|
2,333
|
|
|
|
7.875
|
%
|
|
$
|
2,575
|
|
|
|
8.00
|
%
|
|
Total
|
|
$
|
11,998
|
|
|
|
37.28
|
%
|
|
$
|
2,575
|
|
|
|
8.00
|
%
|
|
$
|
2,977
|
|
|
|
9.875
|
%
|
|
$
|
3,219
|
|
|
|
10.00
|
%
|
|
|
16.
|
PLAN OF REORGANIZATION
|
On January 15,
2019, the Board of Trustees of the Bank adopted a Plan of Mutual Holding Company Reorganization and Minority Stock Issuance (the
“Plan”). The Plan is subject to the approval of the Board of Governors of the Federal Reserve System and the New York
State Department of Financial Services and the non-objection of the Federal Deposit Insurance Corporation. In addition, the Plan
must be approved by the affirmative vote of: (i) a majority of the total votes eligible to be cast by depositors and (ii) 75% of
the votes cast by depositors of the Bank at a special meeting of depositors. Pursuant to the Plan, the Bank proposes to reorganize
into the “two-tier” mutual holding company form of ownership. In connection with the reorganization, a new New York
chartered mutual holding company named Pioneer Bancorp, MHC will be organized and will become the mutual holding company for Pioneer
Bancorp, Inc. Pioneer Bancorp, Inc., a new Maryland mid-tier stock holding company, has been organized and will become the bank
holding company for the Bank once it has converted to stock form. Pursuant to the Plan, Pioneer Bancorp, Inc. will determine the
total offering value and number of shares of common stock based upon an independent appraiser’s valuation. The stock will
be priced at $10.00 per share. Pioneer Bancorp, Inc. will offer 43% of its outstanding common stock to the Bank’s eligible
depositors, the ESOP and certain other persons. In addition, the Bank’s Board of Trustees will adopt an employee stock ownership
plan (“ESOP”), which is permitted to subscribe for up to 3.92% of the common stock to be outstanding following the
completion of the reorganization and the offering. The Bank also intends to form a charitable foundation, Pioneer Bank Charitable Foundation, and
fund it with 2% of the shares to be outstanding following completion of the reorganization and the offering and $250,000 in cash.
Pioneer Bancorp, MHC will own 55% of the common stock of Pioneer Bancorp, Inc. outstanding upon completion of the reorganization
and stock offering.
|
|
16.
|
PLAN OF REORGANIZATION (Continued)
|
The costs of the reorganization
and the issuing of the common stock will be deferred and deducted from the sales proceeds of the offering. If the reorganization
and offering is unsuccessful, all deferred costs will be charged to operations. As of December 31, 2018, $172,000 of reorganization
costs had been incurred.
No person has been authorized to give any information or
to make any representation other than as contained in this prospectus and, if given or made, such other information or representation
must not be relied upon as having been authorized by Pioneer Bancorp, Inc. or Pioneer Bank. This prospectus does not constitute
an offer to sell or a solicitation of an offer to buy any of the securities offered hereby to any person in any jurisdiction in
which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to
do so, or to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction. Neither the delivery of
this prospectus nor any sale hereunder shall under any circumstances imply that there has been no change in the affairs of Pioneer
Bancorp, Inc. or Pioneer Bank since any of the dates as of which information is furnished herein or since the date hereof.
Pioneer
Bancorp, Inc.
(Proposed
Holding Company for Pioneer Bank)
Up to 9,713,393 Shares
(Subject to increase to up to 11,170,402
Shares)
COMMON
STOCK
PROSPECTUS
Sandler
O’Neill + Partners, L.P.
[prospectus date]
These securities are not deposits or
accounts and are not insured or guaranteed.
Until _________________, 2019, all dealers that effect transactions
in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition
to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments
or subscriptions.
|
|
PART II:
|
INFORMATION NOT REQUIRED IN PROSPECTUS
|
|
|
Item 13.
|
Other Expenses of Issuance and Distribution
|
|
|
|
Estimated Amount
|
|
|
|
|
|
|
|
Registrant’s Legal Fees and Expenses
|
|
$
|
600,000
|
|
|
Registrant’s Accounting Fees and Expenses
|
|
|
60,000
|
|
|
Marketing Agent Fees and Expenses
(1)
|
|
|
1,003,708
|
|
|
Records Management Fees and Expenses
|
|
|
85,000
|
|
|
Appraisal Fees and Expenses
|
|
|
107,500
|
|
|
Printing, Postage, Mailing and EDGAR Fees
|
|
|
270,000
|
|
|
Filing Fees (NASDAQ, FINRA, NYSDFS and SEC)
|
|
|
183,589
|
|
|
Transfer Agent Fees and Expenses
|
|
|
15,000
|
|
|
Business Plan Fees and Expenses
|
|
|
60,000
|
|
|
State Tax Opinion Fee
|
|
|
15,000
|
|
|
Other
|
|
|
70,911
|
|
|
Total
|
|
$
|
2,470,708
|
|
|
|
(1)
|
Estimated at the adjusted maximum of the offering range, assuming 100% of the shares are sold in the
subscription offering.
|
|
|
Item 14.
|
Indemnification of Directors and Officers
|
Article 10 of the Articles
of Incorporation of Pioneer Bancorp, Inc. (the “Corporation”) sets forth the circumstances under which directors, officers,
employees and agents of the Corporation may be insured or indemnified against liability which they may incur in their capacities
as such:
ARTICLE 10.
Indemnification, etc. of Directors and Officers.
A. Indemnification.
The Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation or at its
request any other entity, to the fullest extent required or permitted by the Maryland General Corporation Law (the “MGCL”)
now or hereafter in force, including the advancement of expenses under the procedures and to the fullest extent permitted by law,
and (2) other employees and agents to such extent as shall be authorized by the Board of Directors and permitted by law; provided,
however, that, except as provided in Section B of this Article 10 with respect to proceedings to enforce rights to indemnification,
the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee
only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.
B. Procedure.
If a claim under Section A of this Article 10 is not paid in full by the Corporation within sixty (60) days after a written
claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense
of prosecuting or defending such suit. It shall be a defense to any action for advancement of expenses that the Corporation has
not received both (i) an undertaking as required by law to repay such advances if it shall ultimately be determined that the standard
of conduct has not been met and (ii) a written affirmation by the indemnitee of his or her good faith belief that the standard
of conduct necessary for indemnification by the Corporation has been met. In (i) any suit brought by the indemnitee to enforce
a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses)
it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of
an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not
met the applicable standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a determination before the commencement of such suit
that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct, or, in the case of such a suit brought by the indemnitee, be a defense
to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that
the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article 10 or otherwise, shall
be on the Corporation.
C. Non-Exclusivity.
The rights to indemnification and to the advancement of expenses conferred in this Article 10 shall not be exclusive of any
other right that any Person may have or hereafter acquire under any statute, these Articles, the Corporation’s Bylaws, any
agreement, any vote of stockholders or the Board of Directors, or otherwise.
D. Insurance.
The Corporation may maintain insurance, at its expense, to insure itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such Person against such expense, liability or loss under the
MGCL.
E. Miscellaneous.
The Corporation shall not be liable for any payment under this Article 10 in connection with a claim made by any indemnitee
to the extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the
amounts otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections
A and B of this Article 10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director
or officer and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.
F. Limitations
Imposed by Federal Law.
Notwithstanding any other provision set forth in this Article 10, in no event shall any payments made
by the Corporation pursuant to this Article 10 exceed the amount permissible under applicable federal law, including, without limitation,
Section 18(k) of the Federal Deposit Insurance Act and the regulations promulgated thereunder.
Any repeal or modification
of this Article 10 by the stockholders of the Corporation or the Board of Directors shall not in any way diminish any rights to
indemnification or advancement of expenses of such director or officer or the obligations of the Corporation arising hereunder
with respect to events occurring, or claims made, while this Article 10 is in force.
|
|
Item 15.
|
Recent Sales of Unregistered Securities
|
Not Applicable.
|
|
Item 16.
|
Exhibits and Financial Statement Schedules
|
The exhibits and financial
statement schedules filed as part of this registration statement are:
(a)
List
of Exhibits
|
1.1
|
Engagement Letter between Pioneer Bank and Sandler O’Neill & Partners, L.P.
|
|
1.2
|
Form of Agency Agreement between Pioneer Bancorp, MHC, Pioneer Bancorp, Inc., Pioneer Bank and Sandler O’Neill & Partners, L.P.*
|
|
2
|
Plan of Reorganization and Minority Stock Issuance of Pioneer Bank
|
|
3.1
|
Articles of Incorporation of Pioneer Bancorp, Inc.
|
|
3.2
|
Bylaws of Pioneer Bancorp, Inc.
|
|
4
|
Form of Common Stock Certificate of Pioneer Bancorp, Inc.
|
|
5
|
Opinion of Luse Gorman, PC regarding legality of securities being registered
|
|
8.1
|
Form of Federal Income Tax Opinion of Luse Gorman, PC
|
|
|
*
|
To be filed by amendment.
|
|
|
(b)
|
Financial Statement Schedules
|
No financial statement
schedules are filed because the required information is inapplicable or is included in the consolidated financial statements and
related notes.
The undersigned Registrant
hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That,
for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities:
The undersigned registrant
undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser
by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered
to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant
to Rule 424 (§230.424 of this chapter);
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred
to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(5) That,
for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement
as of the time it was declared effective.
(6) That,
for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide offering thereof.
(7) The
undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each
purchaser.
(8) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Albany, State of New York on March 5, 2019.
|
|
PIONEER
BANCORP, INC.
|
|
|
|
|
|
|
By:
|
/s/
Thomas L. Amell
|
|
|
|
Thomas L. Amell
|
|
|
|
President and Chief
Executive Officer
|
|
|
|
(Duly Authorized
Representative)
|
POWER OF ATTORNEY
We, the undersigned directors
and officers of Pioneer Bancorp, Inc. (the “Corporation”) hereby severally constitute and appoint Thomas L. Amell as
our true and lawful attorney and agent, to do any and all things in our names in the capacities indicated below which said individual
may deem necessary or advisable to enable the Corporation to comply with the Securities Act of 1933, as amended, and any rules,
regulations and requirements of the Securities and Exchange Commission, in connection with the registration statement on Form S-1
relating to the offering of the Corporation’s common stock, including specifically, but not limited to, power and authority
to sign for us in our names in the capacities indicated below the registration statement and any and all amendments (including
post-effective amendments) thereto; and we hereby approve, ratify and confirm all that said individual shall do or cause to be
done by virtue thereof.
Pursuant to the requirements
of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the
dates indicated.
|
Signatures
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/
Thomas
L. Amell
|
|
|
|
|
|
Thomas
L. Amell
|
|
President
and Chief Executive Officer
(Principal
Executive Officer)
|
|
March 5, 2019
|
|
/s/
Patrick
J. Hughes
|
|
|
|
|
|
Patrick
J. Hughes
|
|
Executive
Vice President and Chief Financial Officer
(Principal
Financial and Accounting Officer)
|
|
March 5, 2019
|
|
/s/
Madeline
Taylor
|
|
|
|
|
|
Madeline
Taylor
|
|
Chairman of the
Board
|
|
March 5, 2019
|
|
|
|
|
|
|
|
/s/
Eileen
C. Bagnoli
|
|
|
|
|
|
Eileen
C. Bagnoli
|
|
Director
|
|
March 5, 2019
|
|
|
|
|
|
|
|
/s/
Donald
E. Fane
|
|
|
|
|
|
Donald
E. Fane
|
|
Director
|
|
March 5, 2019
|
|
|
|
|
|
|
|
/s/
Dr.
James K. Reed
|
|
|
|
|
|
Dr.
James K. Reed
|
|
Director
|
|
March 5, 2019
|
|
|
|
|
|
|
|
/s/
Edward Reinfurt
|
|
|
|
|
|
Edward
Reinfurt
|
|
Director
|
|
March 5, 2019
|
As filed with the Securities and Exchange
Commission on March 12, 2019
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
REGISTRATION
STATEMENT ON FORM S-1
Pioneer Bancorp,
Inc.
Pioneer
Bank 401(k) Plan
Albany,
New York
EXHIBIT INDEX
|
1.1
|
Engagement Letter between Pioneer Bank and Sandler O’Neill &
Partners, L.P.
|
|
1.2
|
Form of Agency Agreement between Pioneer Bancorp, MHC, Pioneer
Bancorp, Inc., Pioneer Bank and Sandler O’Neill & Partners, L.P.*
|
|
2
|
Plan of Reorganization and Minority Stock Issuance of Pioneer Bank
|
|
3.1
|
Articles of Incorporation of Pioneer Bancorp, Inc.
|
|
3.2
|
Bylaws of Pioneer Bancorp, Inc.
|
|
4
|
Form of Common Stock Certificate of Pioneer Bancorp, Inc.
|
|
5
|
Opinion of Luse Gorman, PC regarding legality of securities being
registered
|
|
8.1
|
Form of Federal Income Tax Opinion of Luse Gorman, PC
|
|
8.2
|
Form of State Income Tax Opinion of Bonadio & Co., LLP
|
|
10.1
|
Form of Employment Agreement between Pioneer Bank and Thomas L.
Amell
|
|
10.2
|
Form of Change in Control Agreement between Pioneer Bank and certain
executive officers
|
|
10.3
|
Pioneer Bank Targeted Incentive Plan
|
|
10.4
|
Pioneer Bank Board of Trustees and Executive Employees Deferred
Compensation Plan
|
|
21
|
Subsidiaries of Pioneer Bancorp, Inc.
|
|
23.1
|
Consent of Luse Gorman, PC (contained in Opinions included as Exhibits
5
and
8.1
)
|
|
23.2
|
Consent of RP Financial, LC.
|
|
23.3
|
Consent of Bonadio & Co., LLP
|
|
24
|
Power of Attorney (set forth on signature page)
|
|
99.1
|
Appraisal Agreement between Pioneer Bank and RP Financial, LC.
|
|
99.2
|
Letter of RP Financial, LC. with respect to value of Subscription
Rights
|
|
99.3
|
Appraisal Report of RP Financial, LC.
|
|
99.4
|
Marketing Materials*
|
|
99.5
|
Stock Order and Certification Form*
|
|
99.6
|
Letter of RP Financial, LC. with respect to Liquidation Account
|
|
|
*
|
To be filed by amendment.
|
Exhibit 1.1
|
INVESTMENT BANKING GROUP
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January 10,
2019
Board of Trustees
Pioneer Savings Bank
652 Albany Shaker Road
Albany, NY 12211
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Attention:
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Mr. Thomas L. Amell
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President and Chief Executive Officer
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Ladies and Gentlemen:
We understand that
Pioneer Savings Bank (the “Bank”) has determined to adopt a Plan of Reorganization and Stock Issuance (the “Plan”)
pursuant to which the Bank will be reorganized into mutual holding company form (the “Reorganization”) and certain
shares of the common stock (the “Common Stock”) of a newly organized mid-tier stock holding company (the “Holding
Company”) will be offered and sold to the Bank’s eligible depositors and certain tax-qualified employee benefit plans
in a subscription offering and, to the extent shares remain available, to members of the Bank’s community in a community
offering and, under certain circumstances, to the general public in a syndicated community offering (collectively, the “Offering”).
The Holding Company and the Bank are sometimes collectively referred to herein as the “Company.” Sandler O’Neill
& Partners, L.P. (“Sandler O’Neill”) is pleased to act as records management agent (“Records Management
Agent”) for the Bank in connection with the vote of the Bank’s depositors on the Plan and the offer and sale of shares
of the common stock in the Offering. This letter is to confirm the terms and conditions of our engagement.
SERVICES AND FEES
In our role as Records
Management Agent, we anticipate that our services will include the services outlined below, each as may be necessary and as the
Company may reasonably request:
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I.
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Consolidation of Deposit Accounts for Voting and Offering
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II.
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Coordinate Vote Solicitation and Special Meeting Services
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III.
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Design and Preparation of Stock Order Forms for the Offering
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IV.
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Organization and Supervision of the Stock Information Center
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Each of these services
is further described in Appendix A to this agreement.
For its services hereunder,
the Company agrees to pay Sandler O’Neill a fee of $50,000. This fee is based upon the requirements of current regulations
and the Plan as currently contemplated. The Company will inform Sandler O’Neill within a reasonable period of time of any
changes in the Plan or regulations that require changes in Sandler O’Neill’s services.
All fees under this
agreement shall be due and payable in cash, as follows: (a) $10,000 due and payable upon execution of this agreement; and (b) the
balance due and payable on the day of closing of the Offering.
COSTS AND EXPENSES
It is understood that
all expenses associated with the operation of the Stock Information Center will be borne by the Company. In addition to any fees
that may be payable to Sandler O’Neill hereunder, the Company also agrees to reimburse Sandler O’Neill, 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, travel, lodging, food, telephone, postage, communications
and other similar expenses, up to a maximum of $35,000;
provided, however
, that Sandler O’Neill shall document such
expenses to the reasonable satisfaction of the Company. The provisions of this paragraph are not intended to apply to or in any
way impair the indemnification provisions of this agreement.
RELIANCE ON INFORMATION PROVIDED; CONFIDENTIALITY
The Company will furnish
Sandler O’Neill with such information as Sandler O’Neill reasonably believes appropriate to its assignment (all such
information so furnished being the “Records”). The Company recognizes and confirms that Sandler O’Neill (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.
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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,
legal process or order of any court or governmental or regulatory authority, Sandler O’Neill 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 Sandler O’Neill may disclose such information
to its employees, agents and advisors who are assisting or advising Sandler O’Neill in performing its services hereunder
and who 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 Sandler O’Neill in breach of the confidentiality obligations contained herein, (b) was available to Sandler
O’Neill on a non-confidential basis prior to its disclosure to Sandler O’Neill by the Company, (c) becomes available
to Sandler O’Neill on a non-confidential basis from a person other than the Company who is not otherwise known to Sandler
O’Neill to be bound not to disclose such information pursuant to a contractual, legal or fiduciary obligation owed to the
Company, or (d) is independently developed by Sandler O’Neill without use of or reference to the Confidential Information
disclosed hereunder.
LIMITATIONS
Sandler O’Neill,
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; (d) will not be obliged to take any legal action hereunder which might in its reasonable 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.
Anything in this agreement to the contrary notwithstanding, in no event shall Sandler O’Neill be liable for special, indirect
or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if Sandler O’Neill
has been advised of the likelihood of such loss or damage and regardless of the form of action.
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INDEMNIFICATION
The
Company agrees to indemnify and hold Sandler O’Neill and its affiliates and their respective partners, directors, officers,
employees, agents and controlling persons (Sandler O’Neill 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,
related to or arising out of any actual or proposed
transaction resulting hereunder or the engagement of Sandler O’Neill pursuant to, or the performance by Sandler O’Neill
of the services contemplated by, this letter
, and will reimburse any Indemnified
Party for all expenses (including reasonable counsel 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. The Company will not be liable under the foregoing indemnification provision
to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court of competent jurisdiction
to have resulted primarily from Sandler O’Neill’s willful misconduct, bad faith or gross negligence.
The Company agrees
to notify Sandler O’Neill promptly of the assertion against it or any other person of any claim or the commencement of any
action or proceeding relating to any service contemplated by this agreement.
The
Company will not, without Sandler O’Neill’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 Company 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 Company shall provide for the assumption of its obligations under this section by the purchaser or transferee of such assets
or another party reasonably satisfactory to Sandler O’Neill.
REPRESENTATIONS
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 the Bank.
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MISCELLANEOUS
The following addresses
shall be sufficient for written notices to each other:
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If to you:
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Pioneer Savings Bank
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652 Albany Shaker Road
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Albany, NY 12211
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Attention: Mr. Thomas L. Amell
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If to us:
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Sandler O’Neill & Partners, L.P.
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1251 Avenue of the Americas, 6
th
Floor
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New York, New York 10020
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Attention: General Counsel
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The agreement and the
appendix hereto constitute the entire agreement between the parties with respect to the subject matter hereof and can be altered
only by written consent signed by the parties. This agreement is governed by the laws of the State of New York.
It is understood that
the provisions relating to the payment of fees and expenses and those contained under the captions “Limitations”, “Indemnification”
and “Representations” will survive any termination of this agreement.
[
Signature page to follow
.]
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Please confirm that
the foregoing correctly sets forth our agreement by signing and returning to Sandler O’Neill the duplicate copy of this letter
enclosed herewith.
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Very truly yours,
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SANDLER O’NEILL & PARTNERS, L.P.
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By:
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Sandler O’Neill & Partners Corp.,
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the sole general partner
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By:
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/s/ Derek Szot
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Derek Szot
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Authorized Signatory
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Accepted and agreed to as of
the date first above written:
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Pioneer Savings Bank
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By:
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/s/ Thomas L. Amell
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Thomas L. Amell
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President and Chief Executive Officer
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APPENDIX A
OUTLINE OF RECORDS MANAGEMENT AGENT SERVICES
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I.
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Consolidation of Deposit Accounts for Voting and Offering
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1.
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Consolidate files in accordance with regulatory guidelines
and create central file.
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2.
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Our EDP format will be provided to your IT representatives.
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II.
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Coordinate Vote Solicitation and Special Meeting Services
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2.
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Prepare deposit account holder data for Information Statement
mailing
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3.
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Coordinate with Bank and other advisors in designing
and executing vote campaign.
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4.
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If required, delete voting record date accounts closed
prior to special meeting.
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5.
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Act as or support inspector of election, it being understood
that Sandler O’Neill will not act as inspector of election in the case of a contested election.
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III.
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Design and Preparation of Stock Order Forms for the Offering
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1.
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Assist in designing stock order forms for ordering stock.
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2.
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Prepare deposit account holder data for stock order forms.
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IV.
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Organization and Supervision of Stock Information Center
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1.
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Advising on the physical organization of the Stock Information
Center, including materials requirements.
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2.
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Assist in the training of all Bank personnel and temporary
employees who will be staffing the Stock Information Center.
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3.
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Establish reporting procedures.
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4.
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On-site supervision of the Stock Information Center during
the offering period.
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1.
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Produce list of depositors by state (Blue Sky report).
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2.
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Production of subscription rights and research books.
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3.
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Stock order form processing.
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4.
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Acknowledgment letter to confirm receipt of stock order.
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5.
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Daily reports and analysis.
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6.
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Proration calculation and share allocation in the event
of an oversubscription.
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7.
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Produce charter shareholder list.
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8.
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Interface with Transfer Agent for DRS Statement issuance
to shareholders.
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9.
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Refund and interest calculations.
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10.
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Confirmation letter to confirm purchase of stock.
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11.
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Notification of full/partial rejection of orders.
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12.
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Production of 1099/Debit tape.
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INVESTMENT BANKING GROUP
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January 10, 2019
Board of Trustees
Pioneer Savings Bank
652 Albany Shaker Road
Albany, NY 12211
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Attention:
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Mr. Thomas L. Amell
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President and Chief Executive Officer
Ladies and Gentlemen:
We understand that the
Board of Trustees of Pioneer Savings Bank (the “Bank”) is considering the adoption of a Plan of Reorganization and
Stock Issuance (the “Plan”) pursuant to which the Bank will be reorganized into mutual holding company form (the “Reorganization”)
and certain shares of the common stock (the “Shares”) of a newly organized mid-tier stock holding company (the “Holding
Company”) will be offered and sold in a public offering. The Holding Company and the Bank are sometimes collectively referred
to herein as the “Company.” Sandler O’Neill & Partners, L.P. (“Sandler O’Neill”) is pleased
to assist the Company with the Offering and this letter is to confirm the terms and conditions of our engagement.
Under the terms of the
Plan and applicable regulations, the Shares will be offered first to eligible depositors of the Bank and the Company’s tax-qualified
employee stock benefit plans (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 Sandler O’Neill on a best efforts basis (“Syndicated Offering” and together with the Subscription
and Community Offering and Syndicated Offering, the “Offering”). Sandler O’Neill may, in consultation with the
Company, form a syndicate of registered dealers to assist in any Syndicated Offering.
Services
Sandler O’Neill will
work with the Company and its management, counsel, accountants and other advisors in preparing for and completing the Offering
and anticipate that our services will include the following:
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1.
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Consulting as to the marketing implications of any aspect
of the Plan, including the percentage of the Holding Company’s common stock to be offered in the Offering;
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2.
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Reviewing with the Board the financial impact of the Offering on the Company, based upon the independent
appraiser’s appraisal of the Holding Company’s common stock;
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3.
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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);
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4.
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Assisting in the design and implementation of a marketing strategy for the Offering;
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5.
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Assisting Company management in scheduling and preparing for meetings with potential investors
and/or other broker-dealers in connection with the Offering; and
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6.
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Providing such other general advice and assistance as may be reasonably necessary to promote the
successful completion of the Offering.
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Sandler O’Neill will
act as exclusive marketing agent for the Company in the Subscription and Community Offering and will serve as sole book-running
manager of the Syndicated Offering. It is understood that neither Sandler O’Neill nor any other broker/dealer shall be obligated
to take or purchase any Shares in the Offering.
Fees
If the Offering is consummated,
the Company agrees to pay Sandler O’Neill for its marketing agent services a fee of 1.0% of the aggregate Actual Purchase
Price of all Shares sold in the Subscription and Community 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 director, officer
or employee of the Company or members of their immediate families (whether directly or through a personal trust), as to which no
fee shall be payable, and (iii) shares issued to the Company’s charitable foundation established in connection with the Reorganization.
With respect to any Shares
sold in the Syndicated Offering, the Company agrees to pay Sandler O’Neill and any other participating broker/dealers an
aggregate fee of 5.0% of the aggregate Actual Purchase Price of all Shares sold in the Syndicated Offering.
For purposes of this letter,
the term “Actual Purchase Price” shall mean the price at which the Shares are sold in the Offering. All fees payable
hereunder shall be payable in immediately available funds by wire transfer at the time of the closing of the Offering. If (a) Sandler
O’Neill’s engagement hereunder is terminated for any of the reasons provided for under the second paragraph of the
section of this letter captioned “Definitive Agreement,” or (b) the Offering is terminated by the Company, no fees
shall be payable by the Company to Sandler O’Neill hereunder.
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COSTS
AND Expenses
In addition to any fees
that may be payable to Sandler O’Neill hereunder and the expenses to be borne by the Company pursuant to the following paragraph,
the Company agrees to reimburse Sandler O’Neill, 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, up to a maximum of $10,000;
provided, however
, that Sandler O’Neill shall document such expenses to the reasonable satisfaction of the Company;
provided
,
further
, that the Company shall not be responsible for the legal fees and expenses of counsel for Sandler
O’Neill. The provisions of this paragraph are not intended to apply to or in any way impair the indemnification provisions
of this letter.
As is customary, the Company
will bear all other expenses incurred in connection with the Offering, including, without limitation, (i) the cost of obtaining
all securities and bank regulatory approvals, including any required FINRA filing fees; (ii) the cost of printing and distributing
the offering materials; (iii) the costs of blue sky qualification (including fees and expenses of blue sky counsel) of the Shares
in the various states; (iv) listing fees; (v) all fees and disbursements of the Company’s counsel, accountants, transfer
agent and other advisors; and (vi) the establishment and operational expenses for the Stock Information Center (e.g., postage,
telephones, supplies, temporary employees, etc.). In the event Sandler O’Neill incurs any such fees and expenses on behalf
of the Company, the Company will reimburse Sandler O’Neill for such fees and expenses whether or not the Offering is consummated.
Due
Diligence Review
Sandler O’Neill’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 Sandler O’Neill 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 Sandler O’Neill all information that Sandler O’Neill reasonably requests, and will allow
Sandler O’Neill the opportunity to discuss with the management of the Company the financial condition, business and operations
of the Company. The Company acknowledges that Sandler O’Neill will rely upon the accuracy and completeness of all information
received from the Company and its directors, officers, employees, agents, independent accountants and counsel.
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Blue
Sky Matters
Sandler O’Neill 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 will cause such counsel to prepare a Blue Sky Memorandum related to the Subscription and Community Offering
and, if applicable, the Syndicated Offering, including Sandler O’Neill’s participation therein, and shall furnish Sandler
O’Neill a copy thereof addressed to Sandler O’Neill or upon which such counsel shall state Sandler O’Neill 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,
legal process or order of any court or governmental or regulatory authority, Sandler O’Neill 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 Sandler O’Neill may disclose such information
to its employees, agents and advisors who are assisting or advising Sandler O’Neill in performing its services hereunder
and who 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 Sandler O’Neill in breach of the confidentiality obligations contained herein, (b) was available to Sandler
O’Neill on a non-confidential basis prior to its disclosure to Sandler O’Neill by the Company, (c) becomes available
to Sandler O’Neill on a non-confidential basis from a person other than the Company who is not otherwise known to Sandler
O’Neill to be bound not to disclose such information pursuant to a contractual, legal or fiduciary obligation owed to the
Company, or (d) is independently developed by Sandler O’Neill without use of or reference to the Confidential Information
disclosed hereunder.
The Company hereby acknowledges
and agrees that the financial models and presentations used by Sandler O’Neill in performing its services hereunder have
been developed by and are proprietary to Sandler O’Neill 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
Sandler O’Neill.
REPRESENTATIONS
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 the Bank.
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Indemnification
The Bank agrees to, and
shall cause the Holding Company to, indemnify and hold Sandler O’Neill 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 (Sandler O'Neill 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 the Holding Company or the Bank
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 the Holding Company or the Bank contained in any agency agreement, or any failure of the Holding Company or the
Bank to perform its obligations thereunder or (iii) related to or arising out of the Offering or the engagement of Sandler O’Neill
pursuant to, or the performance by Sandler O’Neill 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 to Sandler
O’Neill (a) 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 Sandler O’Neill expressly for use therein, or (b) under clause (iii)
of this paragraph to the extent that any such loss, claim, damage, liability or expense is primarily attributable to the gross
negligence, willful misconduct or bad faith of Sandler O’Neill. 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 Sandler O’Neill.
The Bank further agrees that neither Sandler O’Neill nor any of its controlling persons, affiliates, partners, directors,
officers, employees or consultants shall have any liability to the Holding Company or the Bank or any person asserting claims on
behalf of or in right of the Holding Company or the Bank for any losses, claims, damages, liabilities or expenses arising out of
or relating to this agreement or the services to be rendered by Sandler O’Neill hereunder, unless it is finally judicially
determined that such losses, claims, damages, liabilities or expenses resulted directly from the gross negligence or willful misconduct
of Sandler O’Neill.
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Page 6
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The Bank agrees to, and
shall cause the Holding Company to, notify Sandler O’Neill 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. The Bank will
not, and will cause the Holding Company not to, without Sandler O’Neill’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 Holding Company or the Bank 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 Bank shall provide, and shall cause the Holding Company 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 Sandler O’Neill.
Definitive
Agreement
Sandler O’Neill and
the Company agree that (a) except as set forth in clause (b) below, the foregoing represents the general intention of the Company
and Sandler O’Neill with respect to the services to be provided by Sandler O’Neill in connection with the Offering,
which will serve as a basis for Sandler O’Neill commencing activities, and (b) the only legal and binding obligations of
the Company and Sandler O’Neill with respect to the Offering (such obligations to survive any termination of this agreement)
shall be (1) the Company’s obligation to reimburse costs and expenses pursuant to the section captioned “Costs and
Expenses,” (2) those set forth under the captions “Confidentiality”, “Representations” and “Indemnification,”
and (3) 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. Such Agency Agreement and Underwriting Agreement shall be in form and content satisfactory
to Sandler O’Neill and the Company and their respective counsel and shall contain standard indemnification and contribution
provisions consistent herewith.
Sandler O’Neill’s
execution of such Agency Agreement shall also be subject to (i) Sandler O’Neill’s satisfaction with its investigation
of the Company’s business, financial condition and results of operations, (ii) preparation of offering materials that are
satisfactory to Sandler O’Neill and its counsel, (iii) compliance with all relevant legal and regulatory requirements to
the reasonable satisfaction of Sandler O’Neill and its counsel, (iv) agreement that the price established by the independent
appraiser is reasonable, and (v) market conditions at the time of the proposed Offering. Sandler O’Neill may terminate this
agreement if such Agency Agreement is not entered into prior January 10, 2020.
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MISCELLANEOUS
This Agreement constitutes
the entire agreement between the parties with respect to the subject matter hereof and can be altered only 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.
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Page 8
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Please confirm that the
foregoing correctly sets forth our agreement by signing and returning to Sandler O’Neill the duplicate copy of this letter
enclosed herewith.
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Very truly yours,
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SANDLER O’NEILL & PARTNERS, L.P.
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By: Sandler O’Neill & Partners Corp.,
the sole general partner
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By:
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/s/ Derek Szot
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Derek Szot
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Authorized Signatory
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Accepted and agreed to as of
the date first above written:
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Pioneer Savings Bank
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By:
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/s/ Thomas L. Amell
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Thomas L. Amell
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President and Chief Executive Officer
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Exhibit 2
PIONEER SAVINGS BANK
PLAN OF MUTUAL HOLDING COMPANY REORGANIZATION
AND MINORITY STOCK ISSUANCE
TABLE OF CONTENTS
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Page
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1.
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Introduction
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3
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2.
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Definitions
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4
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3.
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The Reorganization
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11
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4.
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Conditions to Implementation of the Reorganization and Stock Offering
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13
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5.
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Special Meeting of Depositors
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14
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6.
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Liquidation Rights
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15
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7.
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Conversion of MHC to Stock Form
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15
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8.
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Timing of the Reorganization and Sale of Capital Stock
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16
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9.
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Number of Shares to be Offered
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16
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10.
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Independent Valuation and Purchase Price of Shares
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16
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11.
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Method of Offering Shares and Rights to Purchase Stock
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17
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12.
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Additional Limitations on Purchases of Common Stock
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21
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13.
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Payment for Common Stock
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24
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14.
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Manner of Exercising Subscription Rights Through Order Forms
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25
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15.
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Undelivered, Defective or Late Order Form; Insufficient Payment
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26
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16.
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Completion of the Stock Offering
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26
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17.
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Market for Common Stock
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26
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18.
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Stock Purchases by Management Persons After the Stock Offering
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26
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19.
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Resales of Stock by Directors and Officers
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27
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20.
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Restriction on Financing Stock Purchases
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27
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21.
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Stock Benefit Plans
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27
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22.
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Post-Reorganization Filing and Market Making
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28
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23.
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Liquidation Account
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28
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24.
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Payment of Dividends and Repurchase of Stock
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29
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25.
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Contribution to the Foundation
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29
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26.
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Reorganization and Stock Offering Expenses
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30
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27.
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Employment and Other Severance Agreements
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30
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28.
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Residents of Foreign Countries and Certain States
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31
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29.
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Interpretation
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31
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30.
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Amendment or Termination of the Plan
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31
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Exhibits
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Exhibit A
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Charter and Bylaws of the Stock Bank
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Exhibit B
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Charter and Bylaws of the Holding Company
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Exhibit C
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Charter and Bylaws of the MHC
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This Plan of Mutual
Holding Company Reorganization and Minority Stock Issuance dated January 15, 2019 (the “
Plan
”) provides for
the reorganization of the Bank, a New York-chartered mutual savings bank, into the mutual holding company structure (the “
Reorganization
”),
in accordance with the laws of the State of New York and the regulations of the New York State Department of Financial Services
(the “
Department
”), regulations of the Board of Governors of the Federal Reserve System (the “Federal
Reserve”), regulations of the Federal Deposit Insurance Corporation (the “
FDIC
”) and other applicable
laws and regulations. The mutual holding company (the “
MHC
”) will be a mutually owned corporation organized
under the laws of New York. As part of the Reorganization and the Plan, the Bank will convert to a New York-chartered stock savings
bank (the “
Stock Bank
”), and a stock holding company (the “
Holding Company
”) will be established
as a Maryland
-
chartered corporation and will be a majority-owned subsidiary of the MHC so long as the MHC remains in existence.
Concurrently with the Reorganization, the Holding Company intends to offer for sale up to 49.0% of its Common Stock in the Stock
Offering, which will be made on a priority basis to Depositors and the Tax-Qualified Employee Plans, with any remaining shares
offered for sale to the public in a Community Offering, a Syndicated Community Offering, or a Firm Commitment Offering, or a combination
thereof. The Reorganization and the Stock Offering will be conducted in accordance with applicable New York laws and regulations
of the Department, regulations of the Federal Reserve and FDIC, the Securities Act and the regulations of the SEC thereunder, and
other applicable regulatory requirements.
The primary purpose
of the Reorganization is to establish the Holding Company as a capital stock corporation, which will enable the Bank to compete
more effectively with other financial services providers. The Holding Company will be authorized to issue Capital Stock to support
the growth of the Bank, which is a source of capital not available to mutual savings banks. The Holding Company will not offer
all its Common Stock for sale to Depositors and the public in the Stock Offering. However, the Holding Company will have flexibility
to raise additional capital as needed and as market conditions permit, since a majority of the Holding Company’s Common Stock
(the common stock held by the MHC) will remain available for sale in the future. Formation of the Holding Company as a subsidiary
of the MHC will also provide the Bank with greater flexibility to structure and finance the expansion of its operations, including
the potential acquisition of other financial institutions. Although the Reorganization and Stock Offering will create the Stock
Bank and the Holding Company, the MHC will be required to own at least 51% of the Holding Company’s Common Stock and, therefore,
the mutual holding company structure will preserve the Bank’s mutual form of ownership and its ability to remain an independent
community bank for so long as the MHC remains in existence.
In furtherance of the
Bank’s commitment to its community, this Plan provides for a contribution of Common Stock and/or cash, subject to regulatory
limitations, to the Foundation. The funding of the Foundation is intended to enhance the Bank’s existing community reinvestment
activities in a manner that will allow the Bank’s local communities to share in the growth and profitability of the Holding
Company and the Bank over the long term and will foster the health, education and welfare of children and young adults through
community development and donations to support such efforts.
This Plan has been
approved by the Board of Trustees of the Bank. This Plan must be approved by at least: (i) 75% of the aggregate dollar amount of
deposits of the Voting Depositors represented at the Special Meeting either in person or by valid proxy; and (ii) a majority of
the total number of votes eligible to be cast in person or by valid proxy by Voting Depositors. In addition, the contribution of
Common Stock to the Foundation in connection with the Offering must be approved by at least a majority of the total number of votes
eligible to be cast by Voting Depositors. Each Voting Depositor will be entitled to cast one vote for each $100 of deposits in
the Bank on the Voting Record Date. No Voting Depositor may cast more than 1,000 votes at the Special Meeting. The Department must
approve this Plan and the transactions contemplated hereby before it is presented to Voting Depositors for their approval. In addition,
the Holding Company will make any and all filings in a timely manner with the FDIC, the Federal Reserve and the SEC to obtain any
requisite regulatory approvals or non-objections to complete the Reorganization.
As used in this Plan,
the terms set forth below have the following meanings:
Account Holder:
Any Person holding a Deposit Account at the Bank.
Acting in Concert:
The term 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 (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 or company which acts in concert with another Person or company (“other party”)
will also be deemed to be Acting in Concert with any Person or company who is also Acting in Concert with that other party, except
that any Tax-Qualified Employee 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.
The determination of whether a Person is Acting in Concert with another Person shall be made solely by the Board of Directors of
the Holding Company or Officers delegated by such Board of Directors and may be based on any evidence upon which such Board or
such delegate 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 and the Bank, and trustees of the MHC shall not be deemed to be Acting
in Concert solely as a result of their membership on any of the boards of such entities.
Affiliate:
Any
Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control
with another Person.
Associate:
The
term “Associate,” when used to indicate a relationship with any Person, means: (i) any corporation or organization
(other than the Bank, the Holding Company, the MHC or a majority-owned subsidiary of any thereof) of which such 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) any 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 except that for the purposes of this Plan relating to subscriptions in the Stock
Offering and the sale of Common Stock following the Reorganization, a Person who has a substantial beneficial interest in any Non-Tax-Qualified
Employee Plan or any Tax-Qualified Employee Plan, or who is a trustee or fiduciary of such plan, is not an associate of such plan,
and except that for purposes of aggregating total shares that may be held by Officers, Trustees and Directors, the term “Associate”
does not include any Tax-Qualified Employee Plan; and (iii) any Person who is related by blood or marriage to such Person and who
(A) lives in the same home as such Person or (B) is a director or Officer of the Bank, the Holding Company, the MHC or a subsidiary
of the Bank, the Holding Company or the MHC.
BHCA:
The Bank
Holding Company Act of 1956, as amended.
Bank:
Pioneer
Savings Bank either in its pre-Reorganization mutual form or post-Reorganization stock form, as indicated by the context.
Bank Regulators:
The Department and other bank regulatory agencies, including the FDIC and the Federal Reserve, as applicable, responsible for reviewing
and approving the Reorganization and Stock Offering, including all steps necessary to complete the Reorganization and Stock Offering.
Capital Stock:
Any and all authorized capital stock of the Bank or of the Holding Company.
Common Stock:
The common stock issuable by the Holding Company in connection with the Reorganization and Stock Offering, including securities
convertible into Common Stock, pursuant to its articles of incorporation.
Community:
Albany,
Greene, Rensselaer, Saratoga, Schenectady and Warren Counties in New York.
Community Offering:
The offering to certain members of the general public of any shares of Common Stock unsubscribed for in the Subscription Offering.
The Community Offering may occur concurrently with the Subscription Offering and/or any Syndicated Community Offering.
Control:
(including
the terms “controlling,” “controlled by,” and “under common control with”) means the direct
or indirect power to direct or cause the direction of the management or policies of a Person, whether through the ownership of
voting securities, by contract or otherwise as described in Section 143-b of the New York Banking Law.
Conversion Transaction:
The conversion of the MHC from the mutual to stock form of organization, as described more specifically in Section 7 of this Plan.
Department:
The New York State Department of Financial Services.
Deposit Account(s):
Any withdrawable account, including, without limitation, savings, time, demand, NOW account, money market, certificate and passbook
accounts.
Depositor:
Any
Person that has a Deposit Account with the Bank.
Effective Date:
The date on which, after all necessary approvals to complete the Reorganization and the Stock Offering will have been obtained,
the Reorganization and the Stock Offering is completed.
Eligible Account
Holder:
Any Person holding a Qualifying Deposit on the Eligibility Record Date for purposes of determining subscription rights.
Eligibility Record
Date:
December 31, 2017, the date for determining the Depositors that qualify as Eligible Account Holders.
Employee Plans:
The Tax-Qualified and Non-Tax Qualified Employee Plans of the Bank and/or the Company.
ESOP:
The Stock
Bank’s employee stock ownership plan.
Estimated Valuation
Range:
The range of the estimated pro forma market value of the total number of shares of Common Stock to be issued by the
Holding Company to the MHC and to Minority Stockholders, as determined by the Independent Appraiser before the commencement of
the Subscription Offering and as it may be amended from time to time thereafter.
Exchange Act:
The Securities Exchange Act of 1934, as amended.
Federal Reserve:
The Board of Governors of the Federal Reserve System.
FDIC:
The Federal
Deposit Insurance Corporation.
FDIC Notice:
The Notice of Mutual Holding Company Reorganization and Minority Stock Offering submitted by the Bank to the FDIC, to notify the
FDIC of the Reorganization and the Stock Offering.
Firm Commitment
Offering:
The offering, at the sole discretion of the Holding Company, of shares of Common Stock not subscribed for in the
Subscription Offering and any Community Offering or Syndicated Community Offering, to members of the general public through one
or more underwriters. A Firm Commitment Offering may occur following the Subscription Offering and any Community Offering or Syndicated
Community Offering.
Foundation:
Pioneer
Bank Charitable Foundation, a charitable foundation that qualifies as an exempt organization under Code Section 501(c)(3) that
will receive Holding Company Common Stock and/or cash in connection with the Stock Offering.
Foundation Shares:
Shares of the Common Stock issued to the Foundation in connection with the Stock Offering.
Holding Company:
The Maryland
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chartered corporation that will be majority-owned by the MHC upon completion of the Reorganization and Stock
Offering and will own all the outstanding common stock of the Stock Bank.
Holding Company
Application:
The Holding Company Application, on such form as may be prescribed by the Federal Reserve, which will be filed
with the Federal Reserve in connection with the Reorganization and the formation of the MHC and the Holding Company.
Independent Appraiser:
The independent appraiser retained by the Bank to prepare an appraisal of the pro forma market value of the Bank and the Holding
Company.
Liquidation Account:
The liquidation account established pursuant to this Plan.
Management Person:
Any Officer, director or trustee of the Bank or the Holding Company, or any Officer or trustee of the MHC or any Affiliate of the
Bank, the Holding Company or MHC, and any Person Acting in Concert with any such Officer, director or trustee.
Market Maker:
A dealer (
i.e.
, any person who engages directly or indirectly as agent, broker, or principal in the business of offering,
buying, selling or otherwise dealing or trading in securities issued by another person) who, with respect to a particular security,
(i) regularly publishes
bona fide
competitive bid and offer quotations on request, and (ii) is ready, willing and able to
effect transactions in reasonable quantities at the dealer’s quoted prices with other brokers or dealers.
MHC:
The mutual
holding company created in the Reorganization. The MHC will become the mutual holding company of the Holding Company and the Bank
upon completion of the Reorganization.
Minority Ownership
Interest:
The shares of Common Stock owned by Persons, other than the MHC, expressed as a percentage of the total shares of
Common Stock outstanding.
Minority Stock Offering:
One or more offering(s) of Common Stock to Persons other than the MHC, provided that upon completion of each Minority Stock Offering,
no more than 49.0% of the outstanding Common Stock, in the aggregate, is owned by Persons other than the MHC.
Minority Stockholder:
An owner of the Common Stock, other than the MHC.
Notice:
The
Notice of Mutual Holding Company Reorganization, submitted by the Bank to the Department, to notify the Department of the Reorganization
and the Stock Offering.
Offering Range:
The aggregate purchase price of the Common Stock to be sold in the Stock Offering based on the Independent Valuation expressed
as a range, which may vary within 15% above or 15% below the midpoint of such range, with a possible adjustment by up to 15% above
the maximum of such range. The Offering Range will be based on the Estimated Valuation Range, but will represent a Minority Ownership
Interest equal to no more than 49.0% of the outstanding Common Stock.
Officer:
An
executive officer of the MHC, the Holding Company or the Bank, including the Chief Executive Officer, President, Executive Vice
Presidents, Senior Vice Presidents in charge of principal business functions, Secretary, Treasurer and any other person performing
similar policy making functions.
Order Form:
Any form (together with any attached cover letter and/or certifications or acknowledgements), sent by the Bank to any Person containing
among other things a description of the alternatives available to such Person under the Plan and by which any such Person may make
elections regarding purchases of Common Stock in the Subscription and Community Offerings.
Other Depositor:
Any Person who has a Qualifying Deposit at the Bank at the close of business on the Voting Record Date who is not an Eligible
Account Holder or Supplemental Eligible Account Holder, or Tax-Qualified Employee Plan.
Person:
An individual,
corporation, partnership, association, joint-stock company, limited liability company, trust, unincorporated organization, or a
government or political subdivision of a government.
Plan:
This Plan
of Mutual Holding Reorganization and Minority Stock Issuance.
Qualifying Deposit:
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 $100, or (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 $100.
Regulations:
The rules and regulations of the Bank Regulators, including the Department’s rules and regulations regarding mutual holding
companies and any applicable rules and regulations of the Federal Reserve and the FDIC.
Reorganization:
The reorganization of the Bank into the “two-tier” mutual holding company structure pursuant to this Plan by establishing
the MHC, the Holding Company and the Stock Bank.
Resident:
The
terms “resident,” “residence,” “reside,” “resided” or “residing,” when
used in this Plan with respect to any Person, means any Person who occupies a dwelling within the Community, has an intent to remain
within the Community for a period of time, and manifests the genuineness of that intent by establishing an ongoing physical presence
within the Community together with an indication that the nature of such presence within the Community is something other than
merely transitory. If a Person is a corporation or other business entity, the principal place of business or headquarters must
be in the Community. If the Person is a personal benefit plan, the circumstances of the beneficiary will apply with respect to
this definition. In the case of all other benefit plans, the circumstances of the trustee will be examined for purposes of this
definition. The Bank may utilize deposit or loan records or such other evidence provided to it to determine whether a Person is
a Resident. In all cases, however, such a determination will be in the sole discretion of the Bank.
SEC:
The United
States Securities and Exchange Commission.
Securities Act:
The Securities Act of 1933, as amended.
Special Meeting:
The Special Meeting of Depositors called to vote on this Plan.
Stock Bank:
The New York-chartered stock savings bank established as part of the Reorganization, which will be the successor to the Bank and
which will be wholly-owned by the Holding Company.
Stock Offering:
The offering of Common Stock for sale to Persons, other than the MHC, pursuant to this Plan in the Subscription Offering and, to
the extent shares remain available for sale, in the Community Offering, the Syndicated Community Offering or the Firm Commitment
Offering, as the case may be.
Subscription Offering:
The offering of Common Stock for subscription and purchase pursuant to Section 11 of this Plan.
Subsidiary:
A company that is controlled by another company, either directly or indirectly through one or more subsidiaries.
Superintendent:
The Superintendent of the New York State Department of Financial Services.
Supplemental Eligible
Account Holder:
A Person holding a Qualifying Deposit as of the close of business on the Supplemental Eligibility Record Date,
who is not an Eligible Account Holder, a Tax-Qualified Employee Plan or an Officer or trustee of the Bank.
Supplemental Eligibility
Record Date:
The date for determining the Depositors that qualify as Supplemental Eligible Account Holders. The Supplemental
Eligibility Record Date will be the last day of the calendar quarter preceding the Department’s approval of the Reorganization.
Syndicated Community
Offering:
The offering of Common Stock through a syndicate of broker-dealers, which may occur either following or contemporaneously
with the Community Offering.
Tax-Qualified Employee
Plan:
Any defined benefit plan or defined contribution plan (including any employee stock ownership plan, stock bonus plan,
profit-sharing plan, or other plan) of the Bank, the Holding Company, the MHC or any of their Affiliates, which, with its related
trusts, meets the requirements to be qualified under Section 401 of the Internal Revenue Code. The term “Non-Tax-Qualified
Employee Plan” means any stock benefit plan that is not so qualified under Section 401 of the Internal Revenue Code.
Voting Depositor:
A Depositor as of the close of business on the Voting Record Date who is entitled to vote at the Special Meeting.
Voting Record Date:
The date established by the Bank for determining the Depositors entitled to vote on the Plan.
Voting Stock:
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(1)
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Voting Stock means common stock or preferred stock, or similar interests if the shares by statute,
charter or in any manner, entitle the holder:
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(i)
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To vote for or to select directors of the Bank or the Holding Company; and
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(ii)
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To vote on or to direct the conduct of the operations or other significant policies of the Bank
or the Holding Company.
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(2)
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Notwithstanding anything in paragraph (1) above, preferred stock is not “Voting Stock”
if:
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(i)
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Voting rights associated with the preferred stock are limited solely to the type customarily provided
by statute with regard to matters that would significantly and adversely affect the rights or preferences of the preferred stock,
such as the issuance of additional amounts or classes of senior securities, the modification of the terms of the preferred stock,
the dissolution of the Bank, or the payment of dividends by the Bank when preferred dividends are in arrears;
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(ii)
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The preferred stock represents an essentially passive investment or financing device and does not
otherwise provide the holder with Control over the issuer; and
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(iii)
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The preferred stock does not at the time entitle the holder, by statute, charter, or otherwise,
to select or to vote for the selection of directors of the Bank or the Holding Company.
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(3)
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Notwithstanding anything in paragraphs (1) and (2) above, “Voting Stock” will be deemed
to include preferred stock and other securities that, upon transfer or otherwise, are convertible into Voting Stock or exercisable
to acquire Voting Stock where the holder of the stock, convertible security or right to acquire Voting Stock has the preponderant
economic risk in the underlying Voting Stock. Securities immediately convertible into Voting Stock at the option of the holder
without payment of additional consideration will be deemed to constitute the Voting Stock into which they are convertible; other
convertible securities and rights to acquire Voting Stock will not be deemed to vest the holder with the preponderant economic
risk in the underlying Voting Stock if the holder has paid less than 50% of the consideration required to directly acquire the
Voting Stock and has no other economic interest in the underlying Voting Stock.
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A.
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Organization of the MHC, the Holding Company and the Stock Bank
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As part of the Reorganization,
the Bank will convert its charter to stock form and become the Stock Bank, and will establish the Holding Company as a Maryland
corporation and the MHC as a New York corporation. The Reorganization will be effected as follows or in any other manner approved
by the Bank Regulators that is consistent with the purposes of this Plan and applicable laws and regulations:
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(i)
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the Bank will organize a New York-chartered interim stock savings bank as a wholly-owned subsidiary
(“
Interim One
”);
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(ii)
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Interim One will organize a New York-chartered interim stock savings bank as a wholly-owned subsidiary
(“
Interim Two
”);
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(iii)
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Interim One will organize the Holding Company as a wholly-owned subsidiary;
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(iv)
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the Bank will exchange its mutual savings bank organization certificate for a New York stock savings
bank organization certificate and thereby become the Stock Bank, and Interim One will become the wholly-owned subsidiary of the
Stock Bank;
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(v)
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the shares of common stock of Interim One held by the Stock Bank will be cancelled and Interim
One will exchange its organization certificate for a New York mutual holding company organization certificate to become the MHC;
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(vi)
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concurrently with steps (iv) and (v), Interim Two will merge with and into the Stock Bank with
the Stock Bank as the resulting entity and a subsidiary of the MHC, whereby all stock of the Stock Bank will be issued to the MHC
in exchange for liquidation interests in the MHC; and
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(vii)
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the MHC will contribute the capital stock of the Stock Bank to the Holding Company, and the Stock
Bank will become a wholly-owned subsidiary of the Holding Company.
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Contemporaneously with
the Reorganization, the Holding Company will offer for sale in the Stock Offering shares of Common Stock representing up to 49.0%
of the pro forma market value of the Holding Company and the Bank.
Upon consummation of
the Reorganization, the Stock Bank will be deemed to be a continuation of the Bank, and all property of the Bank, including its
right, title and interest in and to all property of whatever kind and nature, all interest and assets previously existing or pertaining
to the Bank, or which would inure to the Bank immediately by operation of law and without the necessity of any conveyance or transfer
and without any further act or deed, will vest in the Stock Bank, except for up to $100,000. The Stock Bank will have, hold, and
enjoy the same rights and to the same extent as those rights were possessed, held, and enjoyed by the Bank. The Stock Bank will
continue to have, succeed to, and be responsible for all the rights, assets, liabilities, deposits and obligations of the Bank
(other than assets expressly transferred to or retained by the MHC or the Holding Company), and will maintain its headquarters
and operations at the Bank’s present locations. The Stock Bank may distribute additional capital to the Holding Company following
the Reorganization, subject to the applicable requirements set forth in the Regulations governing capital distributions.
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B.
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Effect on Deposit Accounts and Borrowings
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Each Deposit Account
in the Bank on the Effective Date will remain a Deposit Account in the Stock Bank in the same amount and upon the same terms and
conditions, and will continue to be federally insured up to the legal maximum by the FDIC in the same manner as the Deposit Account
existed in the Bank immediately before the Reorganization. Upon consummation of the Reorganization, all loans and other borrowings
from the Bank will retain the same status with the Stock Bank after the Reorganization as they had with the Bank immediately before
the Reorganization.
Upon the completion
of the Reorganization, the Stock Bank will be authorized to exercise any and all powers, rights and privileges of, and will be
subject to all limitations applicable to, capital stock savings banks under New York law. A copy of the proposed charter and bylaws
of the Stock Bank is attached hereto as
Exhibit A
and are made a part of this Plan. The Reorganization will not reduce the
amount of retained earnings (other than the assets of the Bank retained by or distributed to the Holding Company or the MHC), undivided
profits, and general loss reserves that the Bank had before the Reorganization. The retained earnings and general loss reserves
will be accounted for by the MHC, the Holding Company and the Stock Bank on a consolidated basis in accordance with generally accepted
accounting principles.
The initial members
of the Board of Directors of the Stock Bank will be the members of the Board of Trustees of the Bank serving immediately before
the consummation of the Reorganization. Thereafter, the Holding Company, as the sole stockholder of the Stock Bank, will elect
approximately one-third of the Stock Bank’s Board of Directors annually. The current management of the Bank will continue
as the management of the Stock Bank following the Reorganization. The Stock Bank will be a wholly-owned subsidiary of the Holding
Company. The Holding Company will be owned by its stockholders. The stockholders of the Holding Company will consist of the MHC
and the Persons who purchase Common Stock in the Stock Offering and any subsequent Minority Stock Offering.
The Holding Company
will be authorized to exercise any and all powers, rights and privileges, and will be subject to all limitations applicable to
bank holding companies and mutual holding companies under applicable law and regulations. The initial members of the Board of Directors
of the Holding Company will be the members of the Board of Trustees of the Bank serving immediately before the consummation of
the Reorganization. Thereafter, the voting stockholders of the Holding Company will elect approximately one-third of the Holding
Company’s directors annually. A copy of the proposed articles of incorporation and bylaws of the Holding Company is attached
as
Exhibit B
and are made part of this Plan.
The Holding Company
will have the power to issue shares of Capital Stock to persons other than the MHC. However, so long as the MHC is in existence,
the MHC will be required to own at least 51% of the Voting Stock of the Holding Company. The Holding Company will be authorized
to undertake one or more Minority Stock Offerings, provided that upon completion of each Minority Stock Offering, no more than
49.0% of the Holding Company’s outstanding Common Stock, in the aggregate, is owned by Persons other than the MHC. The Holding
Company intends to offer for sale up to 49.0% of its Common Stock in the Stock Offering.
As a mutual corporation,
the MHC will have no stockholders. The trustees of the MHC will have exclusive voting authority as to all matters relating to the
MHC other than any conversion of the MHC to stock form. As provided in this Plan, any liquidation rights of Depositors that existed
under New York law prior to the Reorganization will continue in the MHC following the Reorganization, and such rights will be exercisable
so long as a Depositor maintains a Deposit Account with the Stock Bank. The rights and powers of the MHC, including any rights
of Depositors exercisable through the MHC, will be defined by the MHC’s organization certificate and bylaws (a copy of which
is attached to this Plan as
Exhibit C
and are made a part hereof) and by the statutory and regulatory provisions applicable
to bank holding companies and mutual holding companies.
The Bank will apply
to the Department, the FDIC and the Federal Reserve to have the MHC receive or retain (as the case may be) up to $100,000 in connection
with the Reorganization. All assets, rights, obligations and liabilities of whatever nature of the Bank not expressly retained
by the MHC will be deemed transferred to the Stock Bank.
The New York Banking
Law requires that the Board of Directors of a subsidiary savings bank of a mutual holding company include at least one director
who is not an officer, employee or trustee of the mutual holding company or an officer or employee of the stock subsidiary bank,
who will represent the interests of minority stockholders of the subsidiary bank. Accordingly, the initial members of the Board
of Trustees of the MHC will consist of all but one member of the existing Board of Trustees of the Bank. Thereafter, approximately
one-third of the trustees of the MHC will be elected annually by the members of the Board of Trustees of the MHC.
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4.
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Conditions to Implementation of the Reorganization and Stock Offering
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Completion of the Reorganization
and Stock Offering is subject to the following conditions:
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A.
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Approval of the Plan by a majority of the Board of Trustees of the Bank.
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B.
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The filing of the Notice, including the Plan and the proposed organization certificates of the
MHC and the Stock Bank with the Superintendent, and either the Superintendent will approve or disapprove the Plan within 60 days
of submission of the Plan together with such information as the Superintendent requires.
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C.
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Written approval by the Superintendent of the Plan, with such approval endorsed on the organization
certificate that is filed with the Office of the Albany County Clerk.
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D.
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The filing of a Holding Company Application with the Federal Reserve pursuant to the BHCA for the
Holding Company and MHC to become bank holding companies by owning or acquiring 100% of the common stock of the Stock Bank in the
case of the Holding Company, and at least 51.0% of the Common Stock of the Holding Company in the case of the MHC, and the approval
of such Holding Company Application by the Federal Reserve.
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E.
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The filing of the FDIC Notice with the FDIC, and the approval or non-objection of the FDIC Notice
by the FDIC. In addition, the FDIC must approve any merger or transfer of assets and liabilities involving the Bank or an interim
savings bank in connection with the Reorganization.
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F.
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Submission of the Plan to the Voting Depositors at the Special Meeting for approval pursuant to
a proxy statement and form of proxy cleared in advance by the Bank Regulators, and such Plan is approved by: (i) a majority of
the total votes eligible to be cast by the Voting Depositors either in person or by valid proxy; and (ii) 75% of the aggregate
dollar amount of deposits of Voting Depositors represented at the Special Meeting either in person or by valid proxy.
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G.
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Receipt by the Bank of an opinion of the Bank’s counsel as to the federal income tax consequences
of the Reorganization to the MHC, the Holding Company and the Bank.
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H.
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Receipt by the Bank of an opinion of the Bank’s counsel or independent public accountant
as to the New York income tax consequences of the Reorganization to the MHC, the Holding Company and the Bank.
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5.
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Special Meeting of Depositors
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After the approval
of the Plan by the Bank Regulators, the Bank will schedule the Special Meeting. Promptly after receipt of regulatory approval of
the Plan and at least 20 days, but not more than 45 days, before the Special Meeting, the Bank will distribute proxy solicitation
materials to all Voting Depositors. The proxy solicitation materials will include a proxy statement and other documents authorized
for use by the Bank Regulators. The Bank will make available a copy of the Plan to Voting Depositors upon request. The affirmative
vote of at least (i) a majority of the total votes eligible to be cast by the Voting Depositors; and (ii) 75% of the aggregate
dollar amount of deposits of the Voting Depositors represented at the Special Meeting either in person or by valid proxy is required
for approval of the Plan. Voting may be in person or by proxy. Proxy voting may be via telephone and/or Internet. Each Voting Depositor
will be entitled to cast one vote for each $100 of deposits in the Bank on the Voting Record Date. No Voting Depositor may cast
more than 1,000 votes at the Special Meeting. The Bank will notify the Bank Regulators promptly of the actions of the Voting Depositors
and will certify to the Superintendent the result of the vote taken at the Special Meeting.
Following the Reorganization,
each Eligible Account Holder and each Supplemental Eligible Account Holder will have an interest in the Liquidation Account established
pursuant to this Plan so long as such Person remains a Depositor of the Stock Bank after the Reorganization. In addition, all Persons
who become Depositors with the Stock Bank after the completion of the Reorganization will have liquidation rights with respect
to the MHC to the same extent that Depositors had liquidation rights in the Bank prior to the completion of the Reorganization.
In each case, no Person who ceases to be the holder of a Deposit Account with the Bank will have any liquidation rights with respect
to the MHC. Borrowers of the Bank will not receive liquidation rights in the MHC in connection with any borrowings from the Bank.
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7.
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Conversion of MHC to Stock Form
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Following the completion
of the Reorganization and Stock Offering, the MHC may elect to undertake a Conversion Transaction in accordance with applicable
laws. The Board of Trustees of the Bank has no current intention to conduct a Conversion Transaction, and there can be no assurance
when, if ever, a Conversion Transaction would occur.
In a Conversion Transaction,
it is expected that the MHC would merge with and into the Holding Company with the Holding Company as the resulting entity, followed
by the merger of the Holding Company with and into a new stock holding company, with the new stock holding company as the resulting
entity. Depositors of the Stock Bank would receive the right to subscribe for shares of common stock of the new stock holding company,
which shares would represent the ownership interest of the MHC in the Holding Company immediately before the Conversion Transaction.
The additional shares of common stock of the new stock holding company issued in the Conversion Transaction would be sold at their
aggregate pro forma market value as determined by an independent appraisal.
Any Conversion Transaction
must be fair and equitable to Minority Stockholders. In any Conversion Transaction, the Minority Stockholders shall be entitled,
without additional consideration, to maintain the same percentage ownership interest in the new stock holding company after the
Conversion Transaction as their percentage ownership interest in the Holding Company immediately before the Conversion Transaction
(
i.e.
, the “Minority Ownership Interest”), subject to adjustment, if any, required by the Bank Regulators to
reflect assets of the MHC, including any dividends paid to the MHC.
At the sole discretion
of the Boards of Directors of the MHC and the Holding Company, a Conversion Transaction may be effected in any other manner necessary
to qualify the Conversion Transaction as a tax-free reorganization under applicable federal and state tax laws, provided such Conversion
Transaction does not diminish the rights and ownership interests of Minority Stockholders other than as set forth in this Plan.
If a Conversion Transaction does not occur, the MHC will always own a majority of the Voting Stock of the Holding Company.
A Conversion Transaction
would require the prior approval of the Department and the Federal Reserve, and would also require the approval of Depositors of
the Stock Bank and the stockholders of the Holding Company, including the MHC. Federal regulations require that in any Conversion
Transaction the Depositors of the Stock Bank will be accorded the same stock purchase priorities as if the MHC were a mutual savings
bank converting to stock form.
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8.
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Timing of the Reorganization and Sale of Capital Stock
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The Bank intends to
consummate the Reorganization and Stock Offering as soon as feasible following the receipt of all approvals referred to in Section
4 of this Plan. Subject to the approval of the Bank Regulators, the Holding Company intends to commence the Stock Offering concurrently
with the proxy solicitation of Depositors. The Holding Company may close the Stock Offering before the Special Meeting, provided
that the offer and sale of the Common Stock will be conditioned upon approval of the Plan by the Voting Depositors at the Special
Meeting. Subject to Bank Regulator approval, the Bank’s proxy solicitation materials may permit certain Depositors to return
to the Bank, by a reasonable date certain, a postage paid card or other written communication requesting receipt of the prospectus
if the prospectus is not mailed concurrently with the proxy solicitation materials. The Stock Offering will be conducted in compliance
with the Regulations and the securities offering regulations of the SEC.
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9.
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Number of Shares to be Offered
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The total number of
shares (or range thereof) of Common Stock to be issued and offered for sale pursuant to the Plan will be determined initially by
the Board of Trustees of the Bank and the Board of Directors of the Holding Company in conjunction with the determination of the
Independent Appraiser. The number of shares to be issued and offered may be adjusted before the completion of the Stock Offering.
The total number of shares of Common Stock that may be issued to persons other than the MHC at the close of the Stock Offering
may not exceed 49% of the Holding Company’s issued and outstanding shares of Common Stock.
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10.
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Independent Valuation and Purchase Price of Shares
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All shares of Common
Stock sold in the Stock Offering will be sold at a uniform purchase price per share determined prior to the commencement of the
Stock Offering and may be no more than $40 per share and no less than $5 per share. The purchase price per share and number of
shares to be outstanding will be determined by the Board of Directors of the Holding Company based on the estimated consolidated
pro forma market value of the Holding Company and the Bank as determined for such purposes by the Independent Appraiser. The aggregate
purchase price for the Common Stock will be consistent with the pro forma market value of the Holding Company and the Bank.
The Holding Company
intends to offer for sale and issue up to 49.0% of its Common Stock in the Stock Offering, and the Board of Trustees of the Bank
and Board of Directors of the Holding Company will fix the percentage of shares to be offered for sale prior to the commencement
of the Stock Offering. The number of shares of Common Stock to be issued and the ownership interest of the MHC may be increased
or decreased by the Holding Company, taking into consideration any change in the independent valuation and other factors, at the
discretion of the Board of Trustees of the Bank and the Board of Directors of the Holding Company.
Before the commencement
of the Stock Offering, an Estimated Valuation Range will be established, which range may vary within 15% above to 15% below the
midpoint of such range, and up to 15% greater than the maximum of such range, as determined by the Board of Directors of the Holding
Company at the time of the Stock Offering and consistent with applicable requirements set forth in the Regulations. In the event
the aggregate purchase price of the Common Stock is below the minimum of the Estimated Value Range, or materially above the maximum
of the Estimated Value Range, a resolicitation of subscribers may be required,
provided
that up to 15% increase above the
maximum of the Estimated Value Range will be deemed not material and thus will not require a resolicitation. Any such resolicitation
will be effected in such manner and within such time as the Bank and Holding Company establish, provided that all required regulatory
approvals are obtained.
Notwithstanding the
foregoing, no sale of Common Stock may be consummated unless, before such consummation, the Independent Appraiser confirms to the
Holding Company, the Bank and to the Bank Regulators that, to the best knowledge of the Independent Appraiser, nothing of a material
nature has occurred that, taking into account all relevant factors, would cause the Independent Appraiser to conclude that the
aggregate value of the Common Stock sold in the Stock Offering is incompatible with its estimate of the aggregate consolidated
pro forma market value of the Holding Company and the Bank. If such confirmation is not received, the Holding Company may cancel
the Stock Offering, extend the Stock Offering and establish a new price range and/or estimated price range, extend, reopen or hold
a new Stock Offering or take such other action as the Bank Regulators may permit.
The estimated market
value of the Holding Company and the Bank will be determined by an Independent Appraiser based on such appropriate factors that
are consistent with the applicable Regulations. The Common Stock to be issued in the Stock Offering will be fully paid and nonassessable.
If there is a Community
Offering, Syndicated Community Offering or Firm Commitment Offering of shares of Common Stock not subscribed for in the Subscription
Offering, the price per share at which the Common Stock is sold in such Community Offering, Syndicated Community Offering or Firm
Commitment Offering will be equal to the purchase price per share at which the Common Stock is sold to persons in the Subscription
Offering. Shares sold in the Community Offering, Syndicated Community Offering or Firm Commitment Offering will be subject to the
same limitations as shares sold in the Subscription Offering.
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11.
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Method of Offering Shares and Rights to Purchase Stock
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In descending order
of priority, the opportunity to purchase Common Stock in the Subscription Offering will be given to: (1) Eligible Account Holders;
(2) Tax-Qualified Employee Plans; (3) Supplemental Eligible Account Holders; and (4) Other Depositors. Any shares of Common Stock
that are not subscribed for in the Subscription Offering may at the discretion of the Bank and the Holding Company be offered for
sale in the Community Offering, the Syndicated Community Offering or the Firm Commitment Offering. The minimum purchase by any
Person will be 25 shares. The Holding Company will determine in its sole discretion whether each prospective purchaser is a Resident,
Associate, or Acting in Concert as defined in the Plan, and will interpret all other provisions of the Plan in its sole discretion.
All such determinations may be based on whatever evidence the Holding Company chooses to use in making any such determination.
In addition to the
priorities set forth below, the Board of Trustees of the Bank may establish other priorities for the purchase of Common Stock,
subject to the approval of the Bank Regulators. The priorities for the purchase of shares in the Stock Offering are as follows:
Priority 1: Eligible
Account Holders.
Each Eligible Account Holder will receive non-transferable subscription rights to subscribe for shares of
Common Stock offered in the Stock Offering in an amount equal to the greater of $150,000, one-tenth of one percent (0.1%) of the
total shares offered in the Stock Offering, or 15 times the product (rounded down to the nearest whole number) obtained by multiplying
the total number of shares of Common Stock to be issued in the Stock Offering by a fraction, of which the numerator is the Qualifying
Deposit of the Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Eligible Account Holders,
in each case on the Eligibility Record Date and subject to the provisions of Section 12;
provided,
that the Holding Company
may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, increase
such maximum purchase limitation to 5% of the maximum number of shares offered in the Stock Offering or decrease such maximum purchase
limitation to 0.1% of the maximum number of shares offered in the Stock Offering, subject to the overall purchase limitations set
forth in Section 12. If there are insufficient shares available to satisfy all subscriptions of Eligible Account Holders,
shares will be allocated to Eligible Account Holders to permit each such subscribing Eligible Account Holder to purchase a number
of shares sufficient to make his total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter,
unallocated shares will be allocated pro rata to remaining subscribing Eligible Account Holders whose subscriptions remain unfilled
in the same proportion that each such subscriber’s Qualifying Deposit bears to the total amount of Qualifying Deposits of
all subscribing Eligible Account Holders whose subscriptions remain unfilled. If the amount so allocated exceeds the amount subscribed
for by any one or more Eligible Account Holders, the excess will be reallocated (one or more times as necessary) among those Eligible
Account Holders whose subscriptions are still not fully satisfied on the same principle until all available shares have been allocated.
To ensure proper allocation of stock, each Eligible Account Holder must list on his subscription Order Form all accounts in which
he had an ownership interest as of the Eligibility Record Date. Officers and trustees of the Bank, and their Associates, may qualify
as Eligible Account Holders. However, if an officer or trustee of the Bank, or his or her Associate, receives subscription rights
based on increased deposits at the Bank in the year before the Eligibility Record Date, subscription rights based upon these increased
deposits are subordinate to the subscription rights of other Eligible Account Holders.
Priority 2: Tax-Qualified
Employee Plans.
The Tax-Qualified Employee Plans will be given the opportunity to purchase, in the aggregate, up to 4.9% of
the outstanding shares of Common Stock of the Holding Company at the conclusion of the Stock Offering. In the event of an oversubscription
in the Stock Offering, subscriptions for shares by the Tax-Qualified Employee Plans may be satisfied, in whole or in part, out
of authorized but unissued shares of the Holding Company subject to the maximum purchase limitations applicable to such plans as
set forth herein, or may be satisfied, in whole or in part, through open market purchases by the Tax-Qualified Employee Plans after
the closing of the Stock Offering. If the final valuation exceeds the maximum of the Offering Range, up to 4.9% of the outstanding
shares of Common Stock of the Holding Company at the conclusion of the Stock Offering may be sold to the Tax-Qualified Employee
Plans notwithstanding any oversubscription by Eligible Account Holders, subject to FDIC non-objection.
Priority 3: Supplemental
Eligible Account Holders.
To the extent there are sufficient shares remaining after satisfaction of subscriptions by Eligible
Account Holders, and the Tax-Qualified Employee Plans, each Supplemental Eligible Account Holder will receive non-transferable
subscription rights to subscribe for shares of Common Stock offered in the Stock Offering in an amount equal to the greater of
$150,000, one-tenth of one percent (0.1%) of the total shares offered in the Stock Offering, or 15 times the product (rounded down
to the nearest whole number) obtained by multiplying the total number of shares of Common Stock to be issued in the Stock Offering
by a fraction, of which the numerator is the Qualifying Deposit of the Supplemental Eligible Account Holder and the denominator
is the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders, in each case on the Supplemental Eligibility
Record Date and subject to the provisions of Section 12;
provided
that the Bank may, in its sole discretion and without
further notice to or solicitation of subscribers or other prospective purchasers, increase such maximum purchase limitation to
5% of the maximum number of shares offered in the Stock Offering, or decrease such maximum purchase limitation to 0.1% of the maximum
number of shares offered in the Stock Offering, subject to the overall purchase limitations set forth in Section 12. If Supplemental
Eligible Account Holders subscribe for a number of shares which, when added to the shares subscribed for by Eligible Account Holders
and the Tax-Qualified Employee Plans, exceeds the total shares offered in the Stock Offering, the subscriptions of Supplemental
Eligible Account Holders will be allocated among subscribing Supplemental Eligible Account Holders to permit each subscribing Supplemental
Eligible Account Holder to purchase a number of shares sufficient to make his total allocation equal to the lesser of 100 shares
or the number of shares subscribed for. Thereafter, unallocated shares will be allocated to each subscribing Supplemental Eligible
Account Holder whose subscription remains unfilled in the same proportion that such subscriber’s Qualifying Deposits on the
Supplemental Eligibility Record Date bears to the total amount of Qualifying Deposits of all subscribing Supplemental Eligible
Account Holders whose subscriptions remain unfilled. If the amount so allocated exceeds the amount subscribed for by any one or
more Supplemental Eligible Account Holders, the excess will be reallocated (one or more times as necessary) among those Supplemental
Eligible Account Holders whose subscriptions are still not fully satisfied on the same principle until all available shares have
been allocated. Trustees and Officers do not qualify as Supplemental Eligible Account Holders.
Priority 4: Other
Depositors
. To the extent that there are sufficient shares remaining after satisfaction of subscriptions by Eligible Account
Holders, the Tax-Qualified Employee Plans and Supplemental Eligible Account Holders, each Other Depositor shall receive non-transferable
subscription rights to subscribe for shares of Common Stock offered in the Stock Offering in an amount equal to $150,000,
provided
that the Bank may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers,
increase such maximum purchase limitation to 5% of the maximum number of shares offered in the Stock Offering, or decrease such
maximum purchase limitation to 0.1% of the maximum number of shares offered in the Stock Offering, subject to the overall purchase
limitations set forth in Section 12. In the event Other Depositors subscribe for a number of shares which, when added to the
shares subscribed for by the Eligible Account Holders, Tax-Qualified Employee Plans and Supplemental Eligible Account Holders,
exceeds the total number of shares offered in the Stock Offering, the subscriptions of such Other Depositors will be allocated
among subscribing Other Depositors on a pro rata basis based on the size of such Other Depositors’ orders.
Any shares of Common
Stock not subscribed for in the Subscription Offering may be offered for sale in the Community Offering. This will involve an offering
of all unsubscribed shares directly to the general public with a preference to those natural persons residing in the Community.
The Community Offering, if any, will be for a period of not more than 45 days, unless extended by the Holding Company and the Bank,
and will begin concurrently with, during or promptly after the Subscription Offering. The Holding Company and the Bank may use
one or more investment banking firms on a best efforts basis to sell the unsubscribed shares in the Subscription and Community
Offering. The Holding Company and the Bank may pay a commission or other fee to such investment banking firm(s) for shares sold
by such firm(s) in the Subscription and Community Offerings and may reimburse such firm(s) for expenses incurred in connection
with the sale. No Person may purchase more than $150,000 of Common Stock in the Community Offering, subject to the overall purchase
limitations set forth in Section 12. If orders for shares of Common Stock in the Community Offering exceed the number of shares
available for sale, then shares will be allocated (to the extent shares remain available) first, to cover orders of natural persons
residing in the Community, and, then, to the extent any shares remain available, to cover orders of other members of the general
public on a basis that will promote a widespread distribution of the Common Stock. If orders for shares of Common Stock in each
of these categories exceed the number of shares available for sale within such category, then orders will first be filled up to
a maximum of 2% of the shares sold in the Stock Offering, and thereafter remaining shares will be allocated on an equal number
of shares basis per order.
The Bank and the Holding
Company, in their sole discretion, may reject orders, in whole or in part, received from any Person in the Community Offering.
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C.
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Syndicated Community Offering or Firm Commitment Offering
|
If feasible, any shares
of Common Stock not sold in the Subscription Offering or in the Community Offering, if any, may be offered for sale to the general
public by a selling group of broker-dealers in a Syndicated Community Offering, subject to terms, conditions and procedures, including
the timing of the offering, as may be determined by the Bank and the Holding Company, subject to the right of the Holding Company,
in its sole discretion, to accept or reject in whole or in part all orders in the Syndicated Community Offering. It is expected
that the Syndicated Community Offering would begin as soon as practicable after termination of the Subscription Offering and the
Community Offering, if any. The Syndicated Community Offering will be completed within 45 days after the termination of the Subscription
Offering, unless such period is extended as provided herein. No Person may purchase more than $150,000 of Common Stock in the Syndicated
Community Offering, subject to the overall purchase limitations set forth in Section 12.
Alternatively, if feasible,
the Board of Trustees may determine to offer any shares of Common Stock sold in the Subscription Offering and any Community Offering
for sale in a Firm Commitment Offering subject to such terms, conditions and procedures as may be determined by the Bank and the
Holding Company, subject to the right of the Holding Company, in its sole discretion, to accept or reject in whole or in part any
orders in the Firm Commitment Offering. Provided the Subscription Offering has begun, the Holding Company may begin the Firm Commitment
Offering at any time. Any Firm Commitment Offering will be completed within 45 days after the termination of the Subscription Offering,
unless such period is extended as provided herein. No Person may purchase more than $150,000 of Common Stock in the Firm Commitment
Offering, subject to the overall purchase limitations set forth in Section 12.
If, for any reason,
a Syndicated Community Offering or a Firm Commitment Offering for the shares of Common Stock not sold in the Subscription Offering
or any Community Offering cannot be effected and any shares remain unsold after the Subscription Offering and the Community Offering,
if any, the Board of Directors of the Holding Company and the Board of Trustees of the Bank will seek to make other arrangements
for the sale of unsubscribed shares aggregating at least the minimum of the Offering Range. Such other arrangements will be subject
to the receipt of any required approvals of the Bank Regulators.
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12.
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Additional Limitations on Purchases of Common Stock
|
Purchases of Common
Stock in the Stock Offering will be subject to the following purchase limitations:
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A.
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The aggregate amount of outstanding Common Stock of the Holding Company owned or controlled by
persons other than MHC at the close of the Stock Offering may not exceed 49% of the Holding Company’s total outstanding Common
Stock.
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B.
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The maximum purchase of Common Stock in the Subscription Offering by a Person or group of Persons
through a single Deposit Account is $150,000. No Person by himself, with an Associate or group of Persons Acting in Concert, may
purchase more than $300,000 of the Common Stock offered in the Stock Offering except that: (i) the Holding Company may, in its
sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, increase such maximum
purchase limitation to 9.9% of the number of shares sold in the Stock Offering, provided that the total number of shares purchased
by Persons, their Associates and those Persons with whom they are Acting in Concert, to the extent such purchases exceed 5% of
the shares sold in the Stock Offering, may not exceed, in the aggregate, 10% (or such higher percentage as may be determined by
the Board of Trustees of the Bank with the approval of the Bank Regulators) of the total number of the shares sold in the Stock
Offering; (ii) the Tax-Qualified Employee Plans may purchase, in the aggregate, up to 4.9% of the outstanding shares of Common
Stock of the Holding Company at the conclusion of the Stock Offering; and (iii) for purposes of this subsection 12.B, shares to
be held by any Tax-Qualified Employee Plan and attributable to a Person will not be aggregated with other shares purchased directly
by or otherwise attributable to such Person.
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C.
|
The aggregate amount of Common Stock acquired in the Stock Offering, plus all prior issuances by
the Holding Company, by any one or more Tax-Qualified Employee Plans, exclusive of any shares of Common Stock acquired by such
plans in the secondary market, may not exceed 4.9% of the outstanding shares of Common Stock of the Holding Company or 4.9% of
the stockholders’ equity of the Holding Company at the conclusion of the Stock Offering.
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D.
|
The aggregate amount of Common Stock acquired in the Stock Offering, plus all prior issuances by
the Holding Company, by any one or more Tax-Qualified Employee Plans and any one or more Non-Tax-Qualified Employee Plans, exclusive
of any shares of Common Stock acquired by such plans in the secondary market, may not exceed 4.9% of the outstanding shares of
Common Stock of the Holding Company or 4.9% of the stockholders’ equity of the Holding Company at the conclusion of the Stock
Offering, provided, however, if the Holding Company’s tangible capital ratio equals at least 10% at the time of implementation
of such plans, the Tax-Qualified and Non-Tax Qualified Employee Plans may purchase in the aggregate up to 5.88% of the outstanding
shares of Common Stock or stockholders’ equity of the Holding Company at the conclusion of the Stock Offering.
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E.
|
The aggregate amount of Common Stock acquired in the Stock Offering, plus all prior issuances by
the Holding Company, by any one or more restricted stock plans, exclusive of any shares of Common Stock acquired by such plans
in the secondary market, may not exceed 1.47% of the outstanding shares of Holding Company Common Stock or 1.47% of the Holding
Company’s stockholders’ equity at the conclusion of the Stock Offering; provided, however, if the Holding Company tangible
capital ratio equals at least 10% at the time of implementation of the plans, any restricted stock plans may purchase in the aggregate
up to 1.96% of the outstanding shares of Common Stock or stockholders’ equity of the Holding Company at the conclusion of
the Stock Offering.
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F.
|
The aggregate amount of Common Stock acquired in the Stock Offering, plus all prior issuances by
the Holding Company, by one or more stock option plans, exclusive of any Common Stock acquired by such plans in the secondary market,
may not exceed 4.9% of the outstanding shares of Holding Company Common Stock or stockholders’ equity of the Holding Company
at the conclusion of the Stock Offering.
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G.
|
The aggregate amount of Common Stock acquired in the Stock Offering, plus all prior issuances by
the Holding Company, by all stock option plans and restricted stock plans or acquired by all Management Persons and their Associates
in the secondary market, may not exceed 25% (or such higher percentage as may be set by the Board of Directors with the approval
of the Bank Regulators) of the outstanding shares of Common Stock or 25% of the stockholders’ equity of the Holding Company
held by persons other than the MHC at the conclusion of the Stock Offering. In calculating the number of shares held by Management
Persons and their Associates under this paragraph, shares held by any Tax-Qualified Employee Plan or Non-Tax-Qualified Employee
Plan that are attributable to such persons will not be counted.
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H.
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The amount of common stock that may be encompassed under all stock option plans and restricted
stock plans of the Holding Company may not exceed, in the aggregate, 25% of the outstanding shares of Common Stock of the Holding
Company held by persons other than the MHC at the conclusion of the Stock Offering.
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I.
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Notwithstanding any other provision of this Plan, no Person will be entitled to purchase any Common
Stock to the extent such purchase would be illegal under any federal law or state law or regulation or would violate regulations
or policies of the Financial Industry Regulatory Authority, particularly those regarding free riding and withholding. The Holding
Company and/or its agents may ask for an acceptable legal opinion from any purchaser as to the legality of such purchase and may
refuse to honor any purchase order if such opinion is not timely furnished.
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J.
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The Board of Directors of the Holding Company has the right in its sole discretion to reject any
order submitted by a Person whose representations the Board of Directors of the Holding Company believes to be false or who it
otherwise believes, either alone or Acting in Concert with others, is violating, circumventing, or intends to violate, evade or
circumvent the terms and conditions of this Plan.
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K.
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A minimum of 25 shares of Common Stock must be purchased by each Person purchasing shares in the
Stock Offering to the extent those shares are available; provided, however, that in the event the minimum number of shares of Common
Stock purchased times the price per share exceeds $500, then such minimum purchase requirement will be reduced to such number of
shares which when multiplied by the price per share will not exceed $500, as determined by the Board.
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Subscription rights
afforded by this Plan and by Bank Regulator requirements, are non-transferable. No Person may transfer, offer to transfer, or enter
into any agreement or understanding to transfer, the legal or beneficial ownership of any subscription rights under this Plan.
No Person may transfer, offer to transfer or enter into an agreement or understanding to transfer legal or beneficial ownership
of any shares of Common Stock except pursuant to this Plan.
Each Person purchasing
Common Stock in the Stock Offering will be deemed to confirm that such purchase does not conflict with the purchase limitations
in the Plan. All questions concerning whether any Persons are Associates or a group Acting in Concert or whether any purchase conflicts
with the purchase limitations in this Plan or otherwise violates any provisions of this Plan shall be determined by the Bank in
its sole discretion. Such determination shall be conclusive, final and binding on all Persons, and the Bank may take any remedial
action including, without limitation, rejecting the purchase or referring the matter to the Bank Regulators for action, as the
Bank may in its sole discretion consider appropriate.
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13.
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Payment for Common Stock
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All payments for Common
Stock subscribed for or ordered in the Stock Offering must be delivered in full to the Bank or an agent of the Bank, together with
a properly completed and executed Order Form, or purchase order in the case of the Syndicated Community Offering, on or before
the expiration date specified on the Order Form or purchase order, as the case may be, unless such date is extended by the Bank;
provided,
that if the Employee Plans subscribe for shares of Common Stock during the Subscription Offering, such plans may
pay for such shares upon consummation of the Stock Offering. The Holding Company or the Bank may make scheduled discretionary contributions
to the ESOP provided such contributions from the Bank, if any, do not cause the Bank to fail to meet its regulatory capital requirements.
Payment for Common
Stock must be made by either a personal check, a bank draft or a money order or, if a purchaser has a Deposit Account, the purchaser’s
authorization of withdrawal from the purchaser’s Deposit Account in an amount equal to the purchase price of such shares.
Such authorized withdrawal, whether from a savings passbook or certificate account, will be without any premature withdrawal penalty.
If the authorized withdrawal is from a certificate account, and the remaining balance does not meet the applicable minimum balance
requirements, the certificate will be canceled at the time of withdrawal, without penalty, and the remaining balance will earn
interest at the Bank’s passbook rate. Funds for which a withdrawal is authorized will remain in the purchaser’s Deposit
Account but may not be used by the purchaser until the Common Stock has been sold or the 45-day period (or such longer period as
may be approved by the Bank Regulators) following the Stock Offering has expired, whichever occurs first. Thereafter, the withdrawal
will be given effect only to the extent necessary to satisfy the subscription (to the extent it can be filled) at the purchase
price per share set forth in the Order Form. Interest will continue to be earned on any amounts authorized for withdrawal until
such withdrawal is given effect.
Subscription funds
received before the completion of the Stock Offering will be held in a segregated deposit account at the Bank or, in the Bank’s
discretion, at another federally insured depository institution. The Bank will pay interest on subscription funds made by personal
check, bank draft or money order at a rate no less than the Bank’s passbook rate. Such interest will be paid from the date
payment is received by the Bank until consummation or termination of the Stock Offering. If, for any reason, the Stock Offering
is not consummated, all payments made by subscribers in the Stock Offering will be refunded to them with interest. In case of amounts
authorized for withdrawal from Deposit Accounts, such amounts will be refunded by canceling the authorization for withdrawal.
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14.
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Manner of Exercising Subscription Rights Through Order Forms
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As soon as practicable
after the prospectus prepared by the Holding Company has been declared effective by the SEC, and the Bank Regulators have approved
the Reorganization and Stock Offering, copies of the prospectus and Order Forms will be distributed to all Eligible Account Holders,
Supplemental Eligible Account Holders, Other Depositors and the Tax-Qualified Employee Plans at their last known addresses appearing
on the records of the Bank to subscribe for shares of Common Stock in the Subscription Offering and will be made available for
use by those other persons to whom a prospectus is delivered.
Each Order Form will
be preceded or accompanied by the prospectus describing the Holding Company, the Bank, the Common Stock and the Subscription and
Community Offerings. Each Order Form will contain, among other things, the following:
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A.
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A specified date by which all Order Forms must be received by the Bank, which date will be not
less than 20, nor more than 45 days, following the date on which the Order Forms are mailed by the Bank, and which date will constitute
the termination of the Subscription Offering;
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B.
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The purchase price per share for shares of Common Stock to be sold in the Subscription and Community
Offerings;
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C.
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A description of the minimum and maximum number of shares of Common Stock that may be subscribed
for pursuant to the exercise of Subscription Rights or otherwise purchased in the Community Offering;
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D.
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Instructions as to how the recipient of the Order Form must indicate thereon the number of shares
of Common Stock for which such Person elects to subscribe and the available alternative methods of payment therefor;
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E.
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An acknowledgment that the recipient of the Order Form has received a final copy of the prospectus
before the execution of the Order Form;
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F.
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A statement indicating the consequences of failing to properly complete and return the Order Form,
including a statement to the effect that all subscription rights are nontransferable, will be void at the end of the Subscription
Offering, and can only be exercised by delivering to the Bank within the subscription period such properly completed and executed
Order Form, together with a personal check, bank draft or money order in the full amount of the purchase price as specified in
the Order Form for the shares of Common Stock for which the recipient elects to subscribe in the Subscription Offering (or by authorizing
on the Order Form that the Bank withdraw said amount from the subscriber’s Deposit Account at the Bank);
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G.
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A statement to the effect that the executed Order Form, once received by the Bank, may not be modified
or amended by the subscriber without the consent of the Bank; and
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H.
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Certain legends stating that subscription rights may not be transferred and the shares of the Common
Stock are not deposits and are not insured or guaranteed by the federal government, and a certification stating that the subscriber
is purchasing the shares for his or her own account.
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The Bank and the Holding
Company reserve the right in their sole discretion to accept or reject orders received on photocopied or facsimiled Order Forms.
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15.
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Undelivered, Defective or Late Order Form; Insufficient Payment
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If an Order Form (a)
is not delivered and is returned to the Bank by the United States Postal Service or the Bank is unable to locate the addressee,
(b) is not received back by the Bank or is received by the Bank after the expiration date specified thereon, (c) is defectively
completed or executed, (d) is not accompanied by the full required payment for the shares of Common Stock subscribed for (including
cases in which Deposit Accounts from which withdrawals are authorized are insufficient to cover the amount of the required payment),
or (e) is not mailed pursuant to a “no mail” order placed in effect by the account holder, then, in each case, the
subscription rights of the Person to whom such rights have been granted will lapse as though such Person failed to return the completed
Order Form within the time period specified thereon;
provided,
that the Bank may, but is not required to, waive any immaterial
irregularity on any Order Form or require the submission of a corrected Order Form or the remittance of full payment for subscribed
shares by such date as the Bank may specify. The interpretation by the Bank of terms and conditions of this Plan and of the Order
Forms will be final, subject to the authority of the Bank Regulators.
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16.
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Completion of the Stock Offering
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The Stock Offering
will terminate if not completed within 90 days from the date on which the Department and FDIC approve the Plan, unless the Department
or FDIC approves an extension of the Stock Offering.
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17.
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Market for Common Stock
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Upon completion of
the Stock Offering, the Holding Company will use its best efforts to:
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(i)
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encourage and assist a Market Maker to establish and maintain a market for that class of stock;
and
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(ii)
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list that class of stock on a national or regional securities exchange, or on the Nasdaq quotation
system.
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18.
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Stock Purchases by Management Persons After the Stock Offering
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For a period of three
years after the consummation of the Stock Offering, no Management Person or his or her Associates may purchase, without the prior
written approval of the Bank Regulators, any Common Stock of the Holding Company, except from a broker-dealer registered with the
SEC. The foregoing will not apply to purchases of stock made by and held by any Tax-Qualified or Non-Tax Qualified Employee Plan
even if such stock is attributable to Management Persons or their Associates.
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19.
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Resales of Stock by Directors and Officers
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Common Stock purchased
by Management Persons and their Associates in the Stock Offering may not be resold for a period of at least one year following
the date of purchase, except in the case of death or judicial declaration of incompetency of a Management Person or an Associate.
Each certificate will bear a legend giving appropriate notice of this restriction. Appropriate instructions will be issued to the
Holding Company’s transfer agent with respect to applicable restrictions on transfers of such stock. Any shares of stock
issued as a stock dividend, stock split or otherwise with respect to such restricted stock, will be subject to the same restrictions
as apply to the restricted stock.
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20.
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Restriction on Financing Stock Purchases
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The Holding Company
and the Bank will not loan funds to any Person to purchase Common Stock in the Stock Offering, and will not knowingly offer or
sell any of the Common Stock to any Person whose purchase would be financed by funds loaned to the Person by the Holding Company,
the Bank or any Affiliate.
A. The
Holding Company and the Bank are authorized to implement Tax-Qualified Employee Plans in connection with the Reorganization and
Stock Offering, and this Plan authorizes one or more existing as well as new Tax-Qualified Employee Plans including, without limitation,
the ESOP, to purchase a number of shares equal to up to 4.9% of the Holding Company’s outstanding shares of Common Stock
upon completion of the Stock Offering. Such purchases may be made in the Stock Offering or purchased by the Holding Company thereafter
in the open market.
B. The
Holding Company and the Bank also are authorized to implement stock option plans, restricted stock plans, and other Non-Tax-Qualified
Employee Plans no sooner than six months after the completion of the Reorganization and Stock Offering, and the Holding Company
intends to implement such plans for the benefit of employees, officers and directors of the Stock Bank or Holding Company after
the completion of the Reorganization and Stock Offering, subject to any necessary stockholder approvals. This Plan specifically
authorizes the grant and issuance by the Holding Company, no earlier than six months after the completion of the Stock Offering,
of (i) awards of Common Stock pursuant to one or more stock recognition and award plans (“
Recognition Plans
”)
in an amount equal to up to 1.96% of the Holding Company’s outstanding shares of common stock upon completion of the Stock
Offering (and in a greater amount if the Recognition Plans are implemented more than one year after the completion of the Stock
Offering in accordance with applicable law), and (ii) options to purchase a number of shares of Common Stock pursuant to one or
more stock option plans in an amount equal to up to 4.9% of the outstanding shares of Common Stock of the Holding Company upon
completion of the Stock Offering (and a greater amount if the stock option plans are implemented more than one year after the completion
of the Stock Offering in accordance with applicable law).
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22.
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Post-Reorganization Filing and Market Making
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There may be a limited
market for the Common Stock sold in the Stock Offering, and purchasers must be prepared to hold the Common Stock indefinitely.
Upon completion of the Stock Offering, the Holding Company will register the Common Stock with the SEC pursuant to the Exchange
Act, and will undertake not to deregister the Common Stock for a period of three years thereafter.
At the time of the
Reorganization, the Bank will establish a Liquidation Account in an amount equal to the Bank’s total equity as reflected
in the latest statement of financial condition contained in the final Prospectus used in the Offering. Following the Reorganization,
the Liquidation Account will be maintained by the Bank for the benefit of the Eligible Account Holders and Supplemental Eligible
Account Holders who continue to maintain their Deposit Accounts at the Bank. Each Eligible Account Holder and Supplemental Eligible
Account Holder shall, with respect to his Deposit Account, hold a related inchoate interest in a portion of the Liquidation Account
balance in relation to his or her Deposit Account balance at the Eligibility Record Date or Supplemental Eligibility Record Date,
respectively, or to such balance as it may be subsequently reduced, as hereinafter provided.
In the unlikely event
of a complete liquidation of the Bank (and only in such event), following all liquidation payments to creditors (including those
to Account Holders to the extent of their Deposit Accounts) each Eligible Account Holder and Supplemental Eligible Account Holder
will be entitled to receive a liquidating distribution from the Liquidation Account, in the amount of the then adjusted subaccount
balance for his or her Deposit Account then held, before any liquidation distribution may be made to any holders of the Bank’s
or Holding Company’s capital stock. No merger, consolidation, purchase of bulk assets with assumption of Deposit Accounts
and other liabilities, or similar transactions with an FDIC-insured institution, in which the Bank is not the surviving institution
will be deemed to be a complete liquidation for this purpose. In such transactions, the Liquidation Account will be assumed by
the surviving institution.
The initial subaccount
balance for a Deposit Account held by an Eligible Account Holder and Supplemental Eligible Account Holder will be determined by
multiplying the opening balance in the Liquidation Account by a fraction, the numerator of which is the amount of the Qualifying
Deposits of such Account Holder and the denominator of which is the total amount of all Qualifying Deposits of all Eligible Account
Holders and Supplemental Eligible Account Holders, respectively. For Deposit Accounts in existence at both the Eligibility Record
Date and the Supplemental Eligibility Record Date, separate initial subaccount balances will be determined based on the Qualifying
Deposits in such Deposit Account on each such record date. Such initial subaccount balance will not be increased, but will be subject
to downward adjustment as described below.
If, at the close of
business on the last day of any period for which the Bank or the Holding Company, as the case may be, has prepared audited financial
statements subsequent to the effective date of the Reorganization and Stock Offering, the deposit balance in the Deposit Account
of an Eligible Account Holder or Supplemental Eligible Account Holder is less than the lesser of: (i) the balance in the Deposit
Account at the close of business on the last day of any period for which the Bank or the Holding Company, as the case may be, has
prepared audited financial statements after the Eligibility Record Date or Supplemental Eligibility Record Date; or (ii) the amount
of the Qualifying Deposit in such Deposit Account as of the Eligibility Record Date or Supplemental Eligibility Record Date, the
subaccount balance for such Deposit Account will be adjusted by reducing such subaccount balance in an amount proportionate to
the reduction in such deposit balance. If there is such downward adjustment, the subaccount balance will not be subsequently increased
notwithstanding any subsequent increase in the deposit balance of the related Deposit Account. If any such Deposit Account is closed,
the related subaccount balance will be reduced to zero. The creation and maintenance of the Liquidation Account will not operate
to restrict the use or application of any of the equity accounts of the Bank, except that the Bank will not declare or pay a cash
dividend on, or repurchase any of, its capital stock if the effect thereof would cause its equity to be reduced below the amount
required for the Liquidation Account.
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24.
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Payment of Dividends and Repurchase of Stock
|
The Holding Company
may not declare or pay a cash dividend on its Common Stock if the effect thereof would reduce the regulatory capital of the Holding
Company to a level below any applicable regulatory capital requirement or below the amount required for the Liquidation Account.
Otherwise, the Holding Company may declare dividends or make other capital distributions subject to compliance with any applicable
Regulations. Following completion of the Stock Offering, the Holding Company may repurchase its Common Stock so long as such repurchases
do not reduce the regulatory capital of the Holding Company to a level below any applicable regulatory capital requirements or
below the amount required for the Liquidation Account. The Holding Company will comply with any applicable laws and regulations
in connection with the repurchase of any shares of its Common Stock following completion of the Stock Offering. The MHC may from
time to time purchase Common Stock of the Holding Company, subject to compliance with any applicable Regulations. Subject to any
notice or approval requirements of the Federal Reserve, the MHC may waive its right to receive dividends declared by the Holding
Company.
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25.
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Contribution to the Foundation
|
As part of the Reorganization,
the Holding Company and the Bank intend to donate shares of Common Stock and cash to the Foundation, in such amounts, subject to
regulatory limits, as approved by the Board of Trustees. This contribution to the Foundation is intended to enhance the Bank’s
existing community reinvestment activities, and to share with the communities in which the Bank conducts its business a part of
the Bank’s financial success as a community oriented financial services institution. The contribution of Common Stock to
the Foundation may further this goal as it may enable the community to share in the growth and profitability of the Holding Company
and the Bank over the long term.
The Foundation is dedicated
to the promotion of charitable purposes including community development, grants or donations to support housing assistance, not-for-profit
community groups and other types of organizations or civic-minded projects. The Foundation will annually distribute total grants
to assist charitable organizations or to fund projects within its local community of not less than 5% of the average fair market
value of Foundation assets each year, less certain expenses. In order to serve the purposes for which it was formed and to maintain
its qualification under Code Section 501(c)(3), the Foundation may sell, on an annual basis, a portion of the Foundation Shares.
For a period of five
years following the Reorganization, except for temporary periods resulting from death, resignation, removal or disqualification,
(i) at least one director of the Foundation will be an independent director who is unaffiliated with the Holding Company and the
Bank, who is from the Bank’s local community and who has experience with local community charitable organizations and grant
making, and (ii) at least one director must be a person who is also a member of the Board of Directors of the Bank. The board of
directors of the Foundation will be responsible for establishing the policies of the Foundation, including a conflicts of interest
policy, consistent with the stated purposes of the Foundation.
The contribution to
the Foundation as part of the Reorganization must be approved by a majority of the total number of votes eligible to be cast by
Voting Depositors. The decision to proceed with the formation and/or grant of Common Stock and/or cash to the Foundation will be
at the sole discretion of the Board of Trustees. If the Foundation is not approved by Voting Depositors, the Common Stock that
would have been contributed to the Foundation as part of the Reorganization will be issued to the MHC.
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26.
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Reorganization and Stock Offering Expenses
|
In accordance with
the regulations of the FDIC and the Department, the expenses incurred by the Bank and the Holding Company in effecting the Reorganization
and the Stock Offering will be reasonable.
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27.
|
Employment and Other Severance Agreements
|
Prior to, concurrently
with or following the completion of the Stock Offering, the Bank and/or the Holding Company may enter into or amend existing employment
and/or severance arrangements with one or more executive officers of the Bank and/or the Holding Company. The Bank and/or the Holding
Company also may enter into severance arrangements with one or more executive officers, which provide for the payment of severance
compensation in the event of a change in control of the Bank and/or the Holding Company. The material terms of such employment
and severance arrangements, if implemented, would be described in the prospectus circulated in connection with the Stock Offering
and would be subject to and comply with all applicable Regulations of the Bank Regulators.
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28.
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Residents of Foreign Countries and Certain States
|
The Holding Company
will make reasonable efforts to comply with the securities laws of all States in the United States in which Persons entitled to
subscribe for shares of Common Stock pursuant to this Plan reside. However, no Person will be issued subscription rights or be
permitted to purchase shares of Common Stock in the Subscription Offering if such Person resides in a foreign country or resides
in a state of the United States with respect to which any of the following apply: (A) a small number of Persons otherwise eligible
to subscribe for shares under this Plan reside in such state; (B) the issuance of subscription rights or the offer or sale of shares
of Common Stock to such Persons would require the Holding Company, under the securities laws of such state, to register as a broker,
dealer, salesman or agent or to register or otherwise qualify its securities for sale in such state; or (C) such registration or
qualification would be impracticable for reasons of cost or otherwise.
All interpretations
of this Plan and application of its provisions to particular circumstances by a majority of the Board of Trustees of the Bank will
be final, subject to the authority of the Bank Regulators.
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30.
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Amendment or Termination of the Plan
|
If necessary or desirable,
the terms of the Plan may be substantially amended by a majority vote of the Board of Trustees of the Bank as a result of comments
received from the Bank Regulators, or otherwise, at any time before the solicitation of proxies and submission of the Plan and
proxy materials to a vote of the Voting Depositors. At any time after the solicitation of proxies and submission of the Plan and
proxy materials to a vote of the Voting Depositors, the terms of the Plan that relate to the Reorganization may be amended by a
majority vote of the Board of Trustees of the Bank only with the concurrence of the Bank Regulators. The terms of the Plan relating
to the Stock Offering, including, without limitation, Sections 8 through 29, may be amended by a majority vote of the Board of
Trustees of the Bank as a result of comments received from the Bank Regulators, or for any other reason, at any time before the
approval of the Plan by the Bank Regulators, and at any time thereafter with the concurrence of the Bank Regulators. The Plan may
be terminated by a majority vote of the Board of Trustees of the Bank at any time before the earlier of the approval of the Plan
by the Bank Regulators and the date of the Special Meeting, and may be terminated by a majority vote of the Board of Trustees of
the Bank at any time thereafter with the concurrence of the Bank Regulators. In its discretion, the Board of Trustees of the Bank
may modify or terminate the Plan upon the order of the Bank Regulators without a resolicitation of proxies or another meeting of
the Voting Depositors; however, any material amendment of the terms of the Plan that relate to the Reorganization which occur after
the Special Meeting will require a resolicitation of Voting Depositors. Failure of the Voting Depositors to approve the Plan will
terminate the Plan. This Plan will terminate if the Reorganization and Stock Offering are not completed within 24 months from the
date upon which the Superintendent approves the Plan.
EXHIBIT A
Organizational Certificate and Bylaws
of the Stock Bank
AMENDED AND RESTATED ORGANIZATION CERTIFICATE
OF
PIONEER BANK
Under Section 8007 of the Banking Law
We, the undersigned, Thomas L. Amell, President
and Chief Executive Officer, and Frank C. Sarratori, Secretary, of Pioneer Bank, do hereby certify that:
1. The
name of the corporation is Pioneer Bank. The name under which the corporation was originally formed was Pioneer Savings Bank.
2. The
corporation was chartered by Special Act of the New York Legislature, Chapter 340 of the Laws of 1871, on January 1,
1889.
3. The
Organization Certificate of the corporation, as heretofore amended and restated, is hereby amended and restated, in connection
with the conversion of the corporation from a mutual savings bank to a capital stock savings bank (the “Conversion”),
to reflect (i) the authorization of shares of common stock and preferred stock, (ii) provisions in effect for three (3) years after
the completion of the Conversion that prohibit a person from offering to acquire or acquiring beneficial ownership of more than
10% of any class of equity security of the corporation without prior regulatory approval, that prohibit stockholders from cumulating
their votes for the election of directors of the corporation, and that provide that special meetings of stockholders shall only
be called upon the direction of the Board of Directors of the corporation, (iii) the establishment of a liquidation account in
connection with the Conversion in accordance with the applicable regulations of the Superintendent of Financial Services, and (iv)
a provision with respect to indemnification of directors, officers and employees of the corporation, and, as so amended and restated,
the Organization Certificate of the corporation is hereby amended and restated to read as herein set forth in full:
“ORGANIZATION CERTIFICATE
OF
PIONEER BANK
First
. The name by which the savings bank (the “Savings
Bank”) is to be known is: Pioneer Bank.
Second
. The place where the principal office of the Savings
Bank is to be located is: 652 Albany Shaker Road, Albany, NY 12211.
Third
. The amount of capital stock of the Savings Bank
is to be eleven thousand dollars ($11,000.00), and the number of shares into which such capital stock is to be divided is eleven
thousand (11,000) shares with a par value of $1.00 each.
Fourth
. The shares are to be classified as preferred
and common.
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(a)
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The number and par value of the shares to be included in
each class are as follows:
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(i)
|
Ten thousand (10,000) shares are classified as common stock,
having a par value of one dollar ($1.00) per share; and
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(ii)
|
One thousand (1,000) shares are classified as preferred
stock, having a par value of one dollar ($1.00) per share.
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(b)
|
All of the designations, preferences, privileges and voting
powers of the shares of each class, and the restrictions qualifications thereof are as follows:
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The shares may be issued from time to time as authorized
by the board of directors without the approval of its stockholders, except as otherwise provided in this Section Fourth or to the
extent that such approval is required by governing law, rule, or regulation. The consideration for the issuance of the shares shall
be paid in full before their issuance and shall not be less than the par or stated value. Neither promissory notes nor future services
shall constitute payment or part payment for the issuance of shares of the Savings Bank. The consideration for the shares shall
be cash, tangible or intangible property (to the extent direct investment in such property would be permitted to the Savings Bank),
labor, or services actually performed for the Savings Bank, or any combination of the foregoing. In the absence of actual fraud
in the transaction, the value of such property, labor, or services, as determined by the board of directors of the Savings Bank,
shall be conclusive. Upon payment of such consideration, such shares shall be deemed to be fully paid and nonassessable. In the
case of a stock dividend, that part of the retained earnings of the Savings Bank that is transferred to common stock and paid-in
capital accounts upon the issuance of shares as a stock dividend shall be deemed to be the consideration for their issuance. Accounting
for the stock dividend should comply with the Instructions for Preparation of Consolidated Reports of Condition and Income (Call
Report), as prescribed by Federal law. Holders of the capital stock of the Savings Bank shall not be entitled to preemptive rights
with respect to any shares of the Savings Bank which may be issued.
Except for shares issued in the initial organization of the
Savings Bank or in connection with the conversion of the Savings Bank from the mutual to stock form of capitalization, no shares
of capital stock (including shares issuable upon conversion, exchange, or exercise of other securities) shall be issued, directly
or indirectly, to officers, directors, or controlling persons of the Savings Bank other than as part of a general public offering
or as qualifying shares to a director, unless the issuance or the plan under which they would be issued has been approved by a
majority of the total votes eligible to be cast at a legal meeting.
Nothing contained in this Fourth Section (or in any amendments
hereto) shall entitle the holders of any class or series of capital stock to vote as a separate class or series or to more than
one vote per share, and there shall be no cumulative voting for the election of directors; p
rovided
, that this restriction
on voting separately by class or series shall not apply:
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(i)
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To any provision which would authorize the holders of preferred
stock, voting as a class or series, to elect some members of the board of directors, less than a majority thereof, in the event
of default in the payment of dividends on any class or series of preferred stock;
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(ii)
|
To any provision which would require the holders of preferred
stock, voting as a class or series, to approve the merger or consolidation of the Savings Bank with another corporation or the
sale, lease, or conveyance (other than by mortgage or pledge) of properties or business in exchange for securities of a corporation
other than the Savings Bank if the preferred stock is exchanged for securities of such other corporation; p
rovided,
that
no provision may require such approval for transactions undertaken with the assistance or pursuant to the direction of the New
York State Department of Financial Services (the “Department”) or the Federal Deposit Insurance Corporation; or
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(iii)
|
To any amendment which would adversely change the specific
terms of any class or series of capital stock as set forth in this Fourth Section (or in any amendments hereto), including any
amendment which would create or enlarge any class or series ranking prior thereto in rights and preferences. An amendment which
increases the number of authorized shares of any class or series of capital stock, or substitutes the surviving savings bank in
a merger or consolidation for the Savings Bank, shall not be considered to be such an adverse change.
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Common stock.
Except as provided in this Fourth Section
(or in any amendments hereto) the holders of common stock shall exclusively possess all voting power.
Whenever there shall have been paid, or declared and set aside
for payment, to the holders of the outstanding shares of any class of stock having preference over the common stock as to payment
of dividends, the full amount of dividends and of sinking fund, retirement fund or other retirement payments, if any, to which
such holders are respectively entitled in preference to the common stock, then dividends may be paid on the common stock and on
any class or series of stock entitled to participate therewith as to dividends out of any assets legally available for the payment
of dividends.
In the event of any liquidation, dissolution, or winding up
of the Savings Bank, the holders of the common stock (and the holders of any class or series of stock entitled to participate with
the common stock in the distribution of assets) shall be entitled to receive, in cash or in kind, the assets of the Savings Bank
available for distribution remaining after: (i) payment or provisions for payment of the Savings Bank’s debts and liabilities;
(ii) distributions or provision for distributions in settlement of its liquidation account; and (iii) distributions or provisions
for distributions to holders of any class or series of stock having preference over the common stock in the liquidation, dissolution,
or winding up of the Savings Bank. Each share of common stock shall have the same relative rights as and be identical in all respects
with all the other shares of common stock.
Preferred stock.
The Savings Bank may provide in amendment(s)
to this Organization Certificate for one or more classes of preferred stock, which shall be separately identified. The shares of
any class may be divided into and issued in series, with each series separately designated so as to distinguish the shares thereof
from the shares of all other series and classes. The terms of each series shall be set forth in an amendment to this Organization
Certificate. All shares of the same class shall be identical, except as to the following relative rights and preferences, as to
which there may be variations between different series:
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(i)
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The distinctive serial designation and the number of shares
constituting such series;
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(ii)
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The dividend rate or the amount of dividends to be paid
on the shares of such series, whether dividends shall be cumulative and, if so, from which date(s), the payment date(s) for dividends,
and the participating or other special rights, if any, with respect to dividends;
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(iii)
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The voting powers, full or limited, if any, of shares of
such series;
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(iv)
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Whether the shares of such series shall be redeemable and,
if so, the price(s) at which, and the terms and conditions on which, such shares may be redeemed;
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(v)
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The amount(s) payable upon the shares of such series in
the event of voluntary or involuntary liquidation, dissolution, or winding up of the Savings Bank;
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(vi)
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Whether the shares of such series shall be entitled to
the benefit of a sinking or retirement fund to be applied to the purchase or redemption of such shares, and if so entitled, the
amount of such fund and the manner of its application, including the price(s) at which such shares may be redeemed or purchased
through the application of such fund;
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(vii)
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Whether the shares of such series shall be convertible
into, or exchangeable for, shares of any other class or classes of stock of the Savings Bank and, if so, the conversion price(s)
or the rate(s) of exchange, and the adjustments thereof, if any, at which such conversion or exchange may be made, and any other
terms and conditions of such conversion or exchange;
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(viii)
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The price or other consideration for which the shares of
such series shall be issued; and
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(ix)
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Whether the shares of such series which are redeemed or
converted shall have the status of authorized but unissued shares of serial preferred stock and whether such shares may be reissued
as shares of the same or any other series of serial preferred stock.
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Each share of each series of serial preferred stock shall have
the same relative rights as and be identical in all respects with all the other shares of the same series.
The board of directors shall have authority to divide, by the
adoption of an amendment to this Organization Certificate, any authorized class of preferred stock into series and, within the
limitations set forth in this Fourth Section and the remainder of this Organization Certificate, fix and determine the relative
rights and preferences of the shares of any series so established.
Before the issuance of any preferred shares of a series
established by an amendment to this Organization Certificate adopted by the board of directors, the Savings Bank shall file with
the Department a dated copy of that amendment to this Organization Certificate establishing and designating the series and fixing
and determining the relative rights and preferences thereof.
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(c)
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The number of shares of common stock which are to be reserved
for issuance in exchange for preferred shares or otherwise to replace any capital stock represented by preferred shares is: none.
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Fifth
. The term of existence of the Savings Bank is
to be perpetual.
Sixth
. The number of directors of the Savings Bank is
to be not less than seven (7) nor more than thirty (30).
Seventh
. Notwithstanding anything
contained in the Savings Bank’s Organization Certificate or Bylaws to the contrary, for a period of three (3) years from
the date of completion of the conversion of the Savings Bank from mutual to stock form, the following provisions shall apply:
A. Beneficial
Ownership Limitation
. No person shall directly or indirectly offer to acquire or acquire the beneficial ownership of more than
10% of any class of equity security of the Savings Bank without the prior written approval of the Department and, if applicable,
the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System. This limitation shall not apply
to a transaction in which the Savings Bank forms a holding company without change in the respective beneficial ownership interests
of its stockholders other than pursuant to the exercise of any dissenter and appraisal rights or a conversion to stock form by
Pioneer Bancorp, MHC, the purchase of shares by underwriters in connection with a public offering, or the purchase of less than
25% of a class of stock by a tax-qualified employee stock benefit plan of the Savings Bank.
If shares are acquired in violation
of this Seventh Section, all shares beneficially owned by any person in excess of 10% shall be considered “excess shares”
and shall not be counted as shares entitled to vote and shall not be voted by any person or counted as voting shares in connection
with any matters submitted to the stockholders for a vote.
For the purposes of this Seventh Section, the following
definitions apply:
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(1)
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The term “person” includes an individual, a
group acting in concert, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization
or similar company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of the equity securities
of the Savings Bank.
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(2)
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The term “offer” includes every offer to buy
or otherwise acquire, solicitation of an offer to sell, tender offer for, or request or invitation for tenders of, a security
or interest in a security for value.
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(3)
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The term “acquire” includes every type of acquisition,
whether effected by purchase, exchange, operation of law, or otherwise.
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(4)
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The term “acting in concert” means (a) knowing
participation in a joint activity or conscious parallel action towards a common goal whether or not pursuant to an express agreement,
or (b) 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 arrangements, whether written or otherwise.
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B. Cumulative
Voting Limitation.
Stockholders shall not be permitted to cumulate their votes for election of directors.
C. Call
for Special Meetings
. Special meetings of stockholders relating to changes in control of the Savings Bank or amendments to
its Organization Certificate shall be called only upon direction of the Board of Directors.
Eighth
. Under the banking regulations of the Department,
the Savings Bank shall establish and maintain a liquidation account for the benefit of its eligible account holders as of December
31, 2017 and _______________. If the Savings Bank undergoes a complete liquidation, the Savings Bank shall comply with the regulations
of the Department with respect to the amount and priorities on liquidation of each deposit account holder’s interests in
the liquidation account. An eligible account holder’s interest in the liquidation account does not entitle the eligible
account holder to any voting rights.
Ninth
. The Savings Bank shall indemnify current and
former directors, officers and employees to the fullest extent authorized or permitted by law against fines, judgments, penalties,
settlements and reasonable costs and expenses, including reasonable attorney’s fees, incurred or to be incurred in any pending
or future legal action, suit, proceeding or claim, civil, criminal or administrative, in which a director, officer or employee
is involved or is named as a party, or is threatened to be made a party, and which arises out of, or is related to, their services
on behalf of the Savings Bank, provided such director, officer or employee acted in good faith for purposes which he or she reasonably
believed to be in the best interests of the Savings Bank and, in criminal actions or proceedings, had no reasonable cause to believe
that his/her conduct might be unlawful. Expenses, including attorney fees, reasonably incurred by the indemnitee in defending
a civil, criminal or administrative action, suit or proceeding shall be paid by the Savings Bank to the indemnitee or on his or
her behalf, in advance of the final disposition of such action, suit or proceeding, unless at any time after a request for indemnification
the Savings Bank by a majority vote of the board of directors declines to authorize such advance payment of expenses to the indemnitee
or the advance payment is prohibited by applicable law or regulations, or orders issued by governmental agencies with authority
to issue such orders against the Savings Bank, provided, however, such advances shall be made only upon receipt of an undertaking
from the indemnitee to repay to the Savings Bank the amounts so paid if it is ultimately determined that indemnification for such
expenses is not authorized by this section and applicable laws.
Tenth
. Any proposed amendment to the Restated Organization
Certificate shall, if required under applicable law, be submitted to the Superintendent of Financial Services and, upon the Superintendent’s
written approval thereof, shall be posted in a conspicuous place in the office of the Savings Bank for thirty (30) days. Thereafter,
such proposed amendment may be incorporated into the Restated Organization Certificate by being duly adopted by a majority vote
of the board of directors of the Savings Bank and approved by the affirmative vote of the holders of at least a majority of the
total votes eligible to be cast at a meeting of stockholders of the Savings Bank.
4. This
amendment and restatement to the Organization Certificate was approved by a majority of the entire Board of Trustees of Pioneer
Savings Bank at a meeting held on _______, 2019, and by 75% in amount of deposit liabilities, represented in person or by proxy,
at a special meeting of depositors of Pioneer Savings Bank held on ________, 2019.
[Signature page immediately follows]
IN WITNESS WHEREOF
, we have made,
signed and verified this Certificate as of this _____ day of _____________, 2019.
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Thomas L. Amell
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President and Chief Executive Officer
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Frank C. Sarratori
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Secretary
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STATE OF NEW YORK
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COUNTY OF ALBANY
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Sworn/affirmed before me and witness my
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hand and seal this ____ day of ________,
2019
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Notary Public
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My Commission Expires:
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(NOTARY SEAL)
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PIONEER BANK
STOCK BYLAWS
ARTICLE I. PRINCIPAL OFFICE
The principal office of Pioneer Bank (the
“Bank”) shall be located at 652 Albany-Shaker Road, Albany, NY 12211.
ARTICLE II. STOCKHOLDERS
Section 1. Place of Meetings.
All annual meetings
of stockholders shall be held in the city, town or village in which the principal office of the Bank is located. All special meetings
of stockholders shall be held at the principal office of the Bank or at such other place in the state in which the principal place
of business of the Bank is located as the Board of Directors may determine.
Section 2. Annual Meeting.
A meeting of the stockholders
of the Bank for the election of directors and for the transaction of any other appropriate business of the Bank shall be held within
the first five months after the end of each fiscal year.
Section 3. Special Meetings.
Special meetings of
stockholders, for any purpose or purposes, may be called at any time by the Chairman of the Board of Directors or by majority of
the Whole Board of Directors. The term “Whole Board of Directors” shall mean the number of authorized directorships,
whether or not there are any vacancies in any previously authorized directorships.
Section 4. Conduct of Meetings.
The Chairman of the
Board of Directors shall preside at all meetings, and in his or her absence, a person designated by a majority of the Board of
Directors shall preside at all meetings. The chairman of any meeting of stockholders shall determine the order of business and
the procedures at the meeting, including such regulations of the manner of voting and the conduct of discussion as seem to him
in order.
Section 5. Notice of Meetings.
Written notice stating
the place, day and hour of the meeting, who called the meeting if it is not an annual meeting, and the purpose(s) for which the
meeting is called shall be delivered not fewer than ten (10) nor more than fifty (50) days before the date of the meeting, either
personally or by U.S. mail, by or at the direction of the Chairman of the Board of Directors, the Secretary, or the Board of Directors
calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to
be delivered when deposited in the mail, addressed to the stockholder at their address as it appears in the stock transfer books
or records of the Bank as of the record date prescribed in Section 7 of Article II or at such other address as the stockholders
shall have furnished in writing to the Secretary of the Bank, with postage prepaid. When any stockholders’ meeting, either
annual or special, is adjourned to another time or place, no notice of the adjourned meeting need be given, other than an announcement
at the meeting at which such adjournment is taken giving the time and place to which the meeting is adjourned. However, if, after
an adjournment, the Board of Directors fixes a new record date for the adjourned meeting, notice of the adjourned meeting shall
be given to each stockholder of record as of the new record date.
Section 6. Waiver of Notice.
Notice of any annual
or special meeting need not be given to any stockholder who submits a signed waiver of notice, in person or by proxy, whether before
or after the meeting. The attendance of any stockholder at a meeting, in person or by proxy, without protesting before the conclusion
of the meeting the lack of notice of such meeting, shall constitute a waiver of notice by such stockholder.
Section 7. Fixing the Record Date.
For the purpose of
determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express
consent to or dissent from any proposal without a meeting or stockholders entitled to receive payment for any dividend or allotment
of any rights, or in order to make a determination of stockholders for any proper purpose, the Board of Directors shall fix in
advance a date as the record date for any such determination of stockholders. Such date in any case shall be not more than fifty
(50) days and, in case of a meeting of stockholders, not fewer than ten (10) days, before the date on which the particular action
requiring such determination of stockholders is to be taken. When a determination of stockholders entitled to vote at any meeting
of stockholders has been made as provided in this section, such determination shall apply to any adjournment unless the Board of
Directors fixes a new record date for the adjourned meeting.
Section 8. Voting Lists.
A list of stockholders
as of the record date, certified by the officer responsible for its preparation or by a transfer agent of the Bank, shall be produced
at any meeting of stockholders upon the request thereat or prior thereto of any stockholder. If the right to vote at any meeting
is challenged, the inspectors of election, or person presiding thereat, shall require such list of stockholders to be produced
as evidence of the right of the person challenged to vote at such meeting, and all persons who appear from such list to be stockholders
entitled to vote thereat may vote at such meeting.
Section 9. Quorum.
A majority of the outstanding
shares of the Bank entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders.
The stockholders present at a duly organized meeting in which a quorum was present may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to constitute less than a quorum. If less than a majority of the outstanding
shares is represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further
notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might
have been transacted at the meeting as originally notified. The existence of a quorum at any meeting, or the existence of a duly
organized meeting at which enough stockholders have withdrawn from such meeting to constitute less than a quorum, however, shall
not serve to amend, alter or modify any provisions in the Bank’s Organization Certificate or these Bylaws which require the
vote of more than a majority of the outstanding shares entitled to vote at a duly organized meeting.
Section 10. Proxies.
At all meetings of
stockholders, a stockholder, entitled to vote at such meeting, may vote by proxy executed in writing by the stockholder or by his
or her duly authorized attorney in fact. Proxies solicited on behalf of the management of the Bank shall be voted as directed by
the stockholder or, in the absence of such direction, as determined by the Board of Directors. No proxy shall be valid more than
eleven (11) months from the date of its execution except as otherwise provided in the proxy.
Section 11. Voting of Shares in the Name of Two
or More Persons.
When ownership stands
in the name of two (2) or more persons, in the absence of written directions to the Bank to the contrary, at any meeting of the
stockholders of the Bank any one (1) or more of such stockholders may cast, in person or by proxy, all votes to which such ownership
is entitled. In the event an attempt is made to cast conflicting votes, in person or by proxy, by the several persons in whose
names shares of stock stand, the vote or votes to which those persons are entitled shall be cast as directed by a majority of those
holding such and present in person or by proxy at such meeting.
Section 12. Voting of Shares by Certain Holders.
Shares standing in
the name of another corporation may be voted by any officer, agent or proxy as the bylaws of such corporation may prescribe, or,
in the absence of such provision, as the Board of Directors of such corporation may determine. Shares held by an administrator,
executor, guardian, conservator, committee, or other fiduciary, except a trustee, may be voted by him, either in person or by proxy,
without a transfer of such shares into his or her name. Shares held by a trustee may be voted by him, either in person or by proxy,
but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his or her name as trustee or
into the name of his or her nominee. Shares held by and under the control of a receiver may by voted by such receiver without the
transfer into his or her name, if authority to do so is contained in an appropriate order of the court or other public authority
by which such receiver was appointed.
A stockholder whose
shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee or
nominee of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.
Neither treasury shares
of its own stock held by the Bank nor shares held by another corporation, if a majority of the shares entitled to vote for the
election of directors of such other corporation is beneficially owned by the Bank, shall be voted at any meeting or counted in
determining the total number of outstanding shares at any given time for purposes of any meeting.
Section 13. Cumulative Voting.
Stockholders shall not be entitled to cumulate their
votes for the election of directors.
Section 14. Nominations.
The Board of Directors,
or the Nominating/Corporate Governance Committee of the Board, shall select the nominees for election as directors of the Bank.
Except in the case of a nominee substituted as a result of the death, incapacity, withdrawal or other inability to serve as a nominee,
the Board of Directors or the Nominating/Corporate Governance Committee of the Board shall deliver written nominations to the Secretary
of the Bank at least twenty (20) days before the date of the annual meeting. Provided the Board of Directors, or the Nominating/Corporate
Governance Committee of the Board, makes such nominations, no nominations for directors except those made by the Board of Directors
or such committee shall be voted upon at the annual meeting unless other nominations by stockholders are made in writing and delivered
to the Secretary of the Bank at least thirty (30) days before the date of the annual meeting. Ballots bearing the names of all
persons nominated by the Nominating/Corporate Governance Committee of the Board or the Board of Directors and stockholders shall
be provided for use at the annual meeting.
Section 15. New Business.
Any new business to
be taken up at an annual meeting shall be stated in writing and filed with the Bank at least forty-five (45) days before the date
of the annual meeting, and all business so stated, proposed, and filed shall be considered at the annual meeting, but no other
proposal shall be acted upon at the annual meeting. Any stockholder may make any other proposal at the annual meeting and the same
may be discussed and considered, but unless stated in writing and filed with the Secretary at least forty-five (45) days before
the meeting, such proposal shall be laid over for action at an adjourned, special, or annual meeting of the stockholders taking
place thirty (30) days or more thereafter. This provision shall not prevent the consideration and approval or disapproval at the
annual meeting of reports of officers, directors and committees, but in connection with such reports no new business shall be acted
upon at such annual meeting unless stated and filed as herein provided.
Section 16. Informal Action by Stockholders.
Any action required
to be taken at a meeting of stockholders, or any other action which may be taken at a meeting of the stockholders, may be taken
without a meeting if consent in writing setting forth the action so taken, shall be given by all of the stockholders entitled to
vote with respect to the subject matter.
ARTICLE III. BOARD OF DIRECTORS
Section 1. Responsibilities, Number of Directors.
The business and affairs
of the Bank shall be under the direction of its Board of Directors. The Board of Directors shall consist of not less than seven
(7) nor more than twenty (20) directors, except that the number of directors may be decreased to a number less than seven (7) or
increased to a number greater than twenty (20) if approved by the New York State Department of Financial Services. Within the foregoing
limits, the number of directors shall be determined by resolution of the Board of Directors. The Board of Directors shall be divided
into three classes as nearly equal in number as possible. The members of each class shall be elected for a term of three years
and until their successors are elected and qualified. One class shall be elected by ballot each year at the annual meeting of stockholders.
Section 2. Qualifications.
(a) Each
director shall be at least eighteen (18) years of age and all of the directors shall be citizens of the United States at the time
of their election and during their continuance in office.
(b) No
person shall be eligible for election or appointment to the Board of Directors: (i) if a financial or securities regulatory agency
has, within the past ten years, issued a cease and desist, consent or other formal order, other than a civil money penalty, against
such person, which order is subject to public disclosure by such agency; (ii) if such person has been convicted of a crime involving
dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under state or federal law; or
(iii) if such person is currently charged in any information, indictment, or other complaint with the commission of or participation
in such a crime. No person may serve on the Board of Directors if such person is: (i) at the same time, a director, trustee, officer,
employee or ten percent (10%) or more stockholder of a bank, savings institution, credit union, mortgage banking company, consumer
loan company or similar organization, other than an affiliate of the Bank, that engages in business activities or solicits customers,
whether through a physical presence or electronically, in the same market area as the Bank or any of its affiliates; (ii) does
not agree in writing to comply with all of the Bank’s policies applicable to directors including but not limited to its confidentiality
policy; (iii) does not confirm in writing that he or she is not a party to any agreement, understanding or commitment with respect
to how he or she would act or vote on any issue or question before the Board of Directors or that would otherwise impact his or
her ability to discharge his or her fiduciary duties as a director; (iv) is the representative or agent of, or a member of a group
acting in concert that includes, a person who is ineligible for election or appointment to the Board of Directors under this Section
2 of Article III; or (v) is the nominee or representative, as that term is defined in the regulations of the Board of Governors
of the Federal Reserve System, 12 C.F.R §212.2(n) or any successor provision, of a company of which any of the directors,
partners, trustees, or ten percent (10%) stockholders would not be eligible for election or appointment to the Board of Directors
under this Section 2 of Article III. For purposes of this Section 2 of Article III, a person shall be deemed to be acting in concert
with another person if such person knowingly acts toward a common goal relating to the management, governance or control of the
corporation in parallel with such other person and there are overt actions by, or communications between, such persons reasonably
suggesting that they are coordinating their efforts toward such common goal or if such persons are acting in concert within the
meaning of 12 C.F.R. §303.81 or any successor provision.
(c) The
Board of Directors shall have the power to construe and apply the provisions of this Section 2 of Article III and to make all determinations
necessary or desirable to implement such provisions, including but not limited to determinations as to whether a person is a nominee
or representative of a person, a company or a group, whether a person or company is included in a group, and whether a person is
the representative, agent or nominee of a group acting in concert.
(d) The
qualifications for directors set forth in Section 246 of the New York Banking Law and the restrictions upon directors set forth
in Section 247 of the New York Banking Law shall be inapplicable.
Section 3. Regular Meetings.
An annual meeting of
the Board of Directors for the election of officers shall be held, without notice other than these Bylaws, immediately after, and
at the same place as, the annual meeting of stockholders of the Bank, or at such other time or place within twenty five (25) days
following the annual meeting of stockholders as the Board of Directors may fix by resolution. The Board of Directors shall hold
at least ten (10) regular meetings per year and shall be required to meet at least twice during any three (3) consecutive months
during the calendar year. The Board of Directors may provide, by resolution, the time and place for the holding of regular meetings
of the Board of Directors without notice other than such resolution, provided, however, that unless otherwise provided, the regular
meeting of the Board of Directors shall be held on the third Tuesday of the month in which a board meeting is convened at 9:00
a.m., or at such time as it may designate due to special circumstances.
Section 4. Special
Meetings.
Special meetings of
the Board of Directors may be called at any time by or at the request of the Chairman, if one has been elected, or by the Chief
Executive Officer. Special meetings of the Board of Directors shall also be convened by the Secretary upon the written request
of at least one-third (1/3) of the directors then holding office. The person authorized to call special meetings of the Board of
Directors shall give notice of such meetings in the manner prescribed by these Bylaws and may fix any place, within or without
the Bank’s regular business area, as the place for holding any special meeting of the Board of Directors called by such persons.
No business shall be conducted at a special meeting other than that specified in the notice of meeting.
Section 5. Conduct of Meetings.
Meetings of the Board
of Directors shall be presided over by the Chairman, if a Chairman has been elected by the Board of Directors. If a Chairman has
not been elected by the Board of Directors or the Chairman is absent or otherwise unable to preside over the meeting, the presiding
officer shall be the most recent past Chairman of the Board of Directors. If such person is absent or otherwise unable to preside
over the meeting, the majority of the directors present at the meeting in which a quorum is present shall designate a presiding
person from among the members of the Board of Directors in attendance. The Secretary, or in the absence or disability of the Secretary,
a person appointed by the Chairman (or other presiding person), shall act as a secretary of the meeting. The Chairman (or other
presiding person) shall conduct all meetings of the Board of Directors in accordance with the best interests if the Bank and shall
have the authority and discretion to establish reasonable procedural rules for the conduct of Board of Directors meetings. Any
director may only once per calendar year, unless otherwise authorized by an affirmative vote of at least three quarters (3/4) of
the Whole Board of Directors, participate in a meeting of the Board of Directors or committee thereof by means of a conference
telephone or communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation
by such means shall constitute presence in person at any such meeting.
Section 6. Notice of Meeting; Waiver of Notice.
Except as otherwise
provided herein, at least forty-eight (48) hours’ notice of meetings shall be given to each director and may be given in
writing, in person or by telephone, telegraph, telex, facsimile, e-mail, or other electronic transmission. The purpose of any special
meeting shall be stated in the notice. Such notice shall be deemed given when sent or given to any such mail or courier service
or company providing electronic transmission service. Any director may waive notice of any meeting by filing a signed waiver of
notice with the Secretary of the Bank, whether before or after the meeting. The attendance of a director at a meeting shall constitute
a waiver of notice of such meeting if the director does not protest, prior thereto or at its commencement, the lack of notice to
such director.
Section 7. Quorum and Voting Requirements.
A quorum at any meeting
of the Board of Directors shall consist of not less than a majority of the Whole Board of Directors or such greater number as shall
be required by law, these Bylaws or the Organization Certificate of the Bank. If less than a quorum is present, the majority of
those directors present may adjourn the meeting to another time and place without further notice. At such adjourned meeting at
which a quorum shall be represented, any business may be transacted that might have been transacted at the meeting as originally
noticed. Except as otherwise provided by law, the Organization Certificate of the Bank or these Bylaws, a majority vote of the
directors present at a meeting, if a quorum is present at the time of such vote, shall constitute an act of the Board of Directors.
Section 8. Resignation.
Any director may resign
at any time by sending a written notice of such resignation to the principal office of the Bank addressed to the Chairman, if one
has been elected, or the President. Unless otherwise specified therein, such resignation shall take effect upon receipt thereof.
Section 9. Removal.
Notwithstanding any other provision of the
Organization Certificate of the Bank or these Bylaws, any director may be removed at any time with or without cause, upon the affirmative
vote of the holders of record of not less than eighty percent (80%) of the outstanding shares of capital stock of the Bank entitled
to vote generally in the election of directors at a meeting of the stockholders called for that purpose. A director may also be
removed by the Board of Directors pursuant to the New York Banking Law and in accordance with the procedures contained therein
or upon a director’s unexcused absence from (i) three (3) consecutive regularly scheduled meetings of the Board of Directors
or (ii) five (5) regularly scheduled meetings of the Board of Directors in any fiscal year of the Bank. A director shall be deemed
to have vacated his or her office upon the occurrence of certain events and/or conditions as set forth in the New York Banking
Law.
Section 10. Vacancies.
Subject to the limitations
prescribed by law, the Organization Certificate of the Bank and these Bylaws, all vacancies in the office of the director, including
vacancies created by newly created directorships resulting from an increase in the number of directors, shall be filled by the
stockholders, except that vacancies not exceeding one-third (1/3) of the Whole Board of Directors may be filled by the affirmative
vote of at least three quarters (3/4) of the Whole Board of Directors. No person shall be elected a director unless nominated at
a regular or special meeting, called for that purpose, upon the recommendation of the Board of Directors, or a committee appointed
by the Board of Directors by a vote of at least three quarters (3/4) of the Whole Board of Directors then holding office. Any director
so elected shall serve for the remainder of the full term of the class of directors in which the new directorship was created or
the vacancy occurred and until his or her successor shall be elected and qualified.
Section 11. Compensation.
Reasonable compensation of the directors
of the Bank shall be fixed by the Board of Directors.
Section 12. Emergency Authority.
If there shall occur
an acute emergency resulting from a hostile attack, as defined in Article 7 of the New York State Defense Emergency Act, which
shall be of such severity as to prevent the conduct and management of the affairs and business of the Bank by its directors and
officers as otherwise provided in these Bylaws, any three (3) or more available members of the then incumbent Executive Committee
shall constitute an emergency Board of Directors which shall have the power, subject to limitations prescribed in Article 7 of
the New York State Defense Emergency Act, by a majority of such persons present, to take any and every action which may be necessary
to meet the exigencies of the acute emergency and to enable the Bank to conduct its business during such period, including the
relocation elsewhere of any office of the Bank which shall be unable to function because of the acute emergency. If during the
period of the acute emergency there shall be no Executive Committee, or a minimum of three (3) members of the then incumbent Executive
Committee shall not be available, then and in that event such other available Directors as may be needed to obtain the minimum
of three members shall serve on the emergency Board of Directors.
Section 13. Age Limitation.
No person 75 years
of age shall be eligible for election, reelection, appointment, or reappointment to the Board of Directors of the Bank. No director
shall serve as such beyond the annual meeting of stockholders of the Bank immediately following the director becoming 75.
Section 14. Director Emeritus.
A person who is a member
of the Board of Directors of the Bank and ceases to be a director because of resignation or retirement, may be designated by the
Board of Directors as a Director Emeritus.
A Director Emeritus
shall have such designation at the pleasure of the Board of Directors and shall only have the privileges and entitlements explicitly
provided below. The Director Emeritus may serve for a period of three (3) years from the date of his or her initial designation,
unless sooner removed as provided below. During this tenure, it is anticipated that a Director Emeritus would fulfill the following
duties: (1) act as an ambassador to the Bank in the community by assisting in business development and community affairs; (2) making
himself/herself available to the Chief Executive Officer, executive management and/or the Board of Directors in the capacity of
a consultant on specific business and banking matters when needed; and (3) act as a mentor in meeting with new, incoming directors
nominated to the Board of Directors in the orientation of such appointees. The Director Emeritus’ role is not limited to
these responsibilities and may be called upon by the Chief Executive Officer or the Board of Directors to perform additional duties
as necessary.
A Director Emeritus
will be compensated for three (3) consecutive annual installments of compensation, each to be paid on the anniversary of such appointment
of Emeritus status (January 1
st
of each applicable year). The Director Emeritus shall be entitled to this compensation
for fulfilling the duties and responsibilities set forth above during the Director Emeritus’ tenure. This compensation shall
be set annually by the Board of Directors and may be amended or rescinded at any time by a vote of three quarters (3/4) of the
Whole Board of Directors then in office.
The designation of
Director Emeritus, and its appurtenant privileges and entitlements, may be removed from a Director Emeritus by a vote at a regular
meeting of the Board of Directors of no less than three-quarters of the number of the Whole Board of Directors then in office.
ARTICLE IV. COMMITTEES
Section 1. Enumeration of Committees.
The standing committees
of the Board of Directors shall be an Executive Committee, an Examination and Audit Committee and a Nominating/Corporate Governance
Committee. The Board of Directors, by vote of a majority of the Whole Board of Directors, may from time to time designate additional
committees of the Board of Directors, either temporary or permanent, with such lawfully delegable powers and duties as it thereby
confers not inconsistent with these Bylaws, to serve at the pleasure of the Board of Directors and shall, for these committees
and any others provided for herein, elect a director or directors to serve as the member or members, designating, if it desires,
other directors as alternate members (“Alternate Directors”) who may replace any absent or disqualified member at a
meeting of the committee; provided however, that the Chairman shall be a member of, and shall serve as the chairman of the Executive
Committee and he shall be an ex-officio member of all other committees, except the Examination and Audit Committee and any other
committee on which he is prohibited from being a member, by law, the Organization Certificate or these Bylaws. The Board of Directors,
by a resolution adopted by a majority of the Whole Board of Directors may terminate any committee previously established.
Section 2. The Executive Committee.
The Executive Committee
shall consist of the Chairman of the Board of Directors and at least four (4) additional directors elected annually by the vote
of the majority of the Whole Board of Directors. In the event there shall be a vacancy in the office of Chairman, then and in that
event such other additional director or directors as may be needed to obtain the full complement of five (5) members shall be elected
by the Board of Directors to serve until the vacancy is filled, or until the next annual meeting. Any member of the Executive Committee
may be removed at any time with or without cause by resolution adopted by a majority of the Whole Board of Directors. Regular meetings
of the Executive Committee may be held without notice at such times and places as the Executive Committee may fix from time to
time by resolution. Special meetings of the committee may be called by the Chairman or at any time by any two members of the committee,
upon twenty-four (24) hours’ notice given in accordance with Article III, Section 6. The notice of a special meeting of the
committee, however given, shall state the time when and the place, which shall be within the State of New York, where the meeting
is to be held and the business which is to be presented and no business other than that stated in the notice shall be transacted
at said meeting. The Executive Committee may make rules for the regulation of its meetings and proceedings not inconsistent with
these Bylaws. Three (3) members of the committee, including designees designated to act for an absent member or members of the
committee, shall be necessary for a quorum at any meeting of the committee. Action of the Executive Committee must be authorized
by the affirmative vote of a majority of the members present at a meeting at which a quorum is present. Any action required or
permitted to be taken by the Executive Committee at a meeting may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all the members of the Executive Committee. Except as otherwise provided herein, the Executive
Committee, when the Board of Directors is not in session, shall have and may exercise all of the authority of the Board of Directors,
except to the extent, if any, that such authority may be limited by resolution adopted by a majority of the Whole Board of Directors
or by the laws of the State of New York. In addition, the Executive Committee shall not have the authority of the Board of Directors
with reference to: the submission to stockholders of any action that requires stockholders’ authorization under New York
law; the filling of vacancies in the Board of Directors or in any committee of the Board of Directors; the fixing of compensation
of the directors for serving on the Board of Directors or any committee thereof; the amendment or repeal of any resolution of the
Board of Directors which by its terms shall not be so amendable or repealable; the taking of any action which is expressly required
by New York law to be taken at a meeting of the Board of Directors or by a specified proportion of directors; the amendment or
repeal of the Organization Certificate or Bylaws of the Bank or adoption of new Bylaws of the Bank; recommending to the stockholders
a plan of merger, consolidation, or other business combination; the sale, lease or other disposition of all or substantially all
of the property and assets of the Bank otherwise than in the usual and regular course of its business; a voluntary dissolution
of the Bank; a revocation of any of the foregoing; or the approval of a transaction in which any member of the Executive Committee,
directly or indirectly, has any material beneficial interest.
Section 3. The Nominating/Corporate Governance
Committee.
The Board of Directors,
by resolution adopted by a majority of the Whole Board of Directors, shall appoint a Nominating/Corporate Governance Committee
of the Board of Directors, consisting of not less than three (3) directors. The Nominating/Corporate Governance Committee shall
have authority (a) to review any nominations for election to the Board of Directors made by a stockholder of the Bank and (b) to
recommend to the Whole Board of Directors nominees for election to the Board of Directors (i) to replace those directors whose
terms expire at the annual meeting of stockholders next ensuing and (ii) to fill vacancies resulting from death, resignation, retirement,
disqualification, removal from office or other cause, or resulting from an increase in the authorized number of directors. The
Nominating/Corporate Governance Committee shall meet at least annually.
Section 4. The Examination and Audit Committee.
The Examination and
Audit Committee shall consist of at least three (3) directors, none of whom shall be a salaried officer of the Bank, who shall
be elected to said Committee at the annual meeting of the Board of Directors, or in the case of filling a vacancy (such vacancy,
in every case to be filled by an existing non-salaried director) at any regular or special meeting of the Board of Directors. The
Examination and Audit Committee shall assist the Board of Directors in fulfilling its obligation to oversee the adequacy and appropriateness
of accounting policies, and Bank procedures and controls. In performing its functions, the Examination and Audit Committee shall
utilize the expertise of the Bank’s internal Auditing Department under the direction of the Bank’s internal Auditor.
The Examination and Audit Committee shall meet at least quarterly. The Examination and Audit Committee shall hold formal meetings
with the Bank’s internal auditors on a quarterly basis.
ARTICLE V. OFFICERS
Section 1. Positions.
The Board of Directors shall elect executive officers of the Bank, who will include a Chief Executive Officer, a President, a Treasurer,
a Secretary and any other officer with a designation of “Chief” in his or her title (hereinafter, referred to as “Executive
Officers”). The Chief Executive Officer may appoint all other non-executive officers of the Bank (hereinafter, referred to
as the “Other Non-Executive Officers”). Any two (2) or more offices may be held by the same person, except for the
offices of Chief Executive Officer and Secretary and President and Secretary. The Executive Officers shall have such authority
and perform such duties as the Board of Directors may from time to time authorize or determine. The Other Non-Executive Officers
shall have such authority and perform such duties as the Chief Executive Officer may from time to time authorize or determine.
In absence of such action by the Board of Directors or the Chief Executive Officer, such officers shall have such powers and duties
as generally pertain to their respective offices.
Section 2. Election
and Term of Office.
The Executive Officers of the Bank shall be elected annually at the first meeting of the Board of Directors
held after each annual meeting of the stockholders. If the election of officers is not held at such meeting, such election must
be held within twenty-five (25) calendar days of such meeting. Each Executive Officer shall hold office until a successor has been
duly elected and qualified or until the Executive Officer’s death, resignation, or removal in the manner hereinafter provided.
Election or appointment of an officer, employee, or agent shall not of itself create contractual rights. Each Other Non-Executive
Officer shall hold office until his or her death, resignation or removal in the manner hereinafter provided. The Board of Directors
may authorize the Bank to enter into an employment contract with any Executive Officer or Other Non-Executive Officer in accordance
with applicable law, but no such contract shall impair the right of the Board of Directors to remove any officer at any time in
accordance with Section 3 of this Article V.
Section 3. Removal.
Any Executive Officer may be removed by the Board of Directors and any Other Executive may be removed by the Board of Directors
or the Chief Executive Officer at any time with or without cause, but such removal, other than for cause, shall be without prejudice
to the contractual rights, if any, of the person so removed.
Section 4. Vacancies.
A vacancy in the office of Chief Executive Officer because of death, resignation, removal, disqualification or otherwise would
be filled (1) by the Chief Operating Officer or if the Chief Operating Officer is not able to serve, the highest priority officer
from among those designated in order of priority, as set forth in the Bank’s Emergency Preparedness Resolutions approved
annually by the Board of Directors (“Emergency Preparedness Resolutions”); or (2) by the Board of Directors. Such appointed
officer shall perform the duties of the Chief Executive Officer until such time as the Chief Executive Officer may return to his
or her duties or a new Chief Executive Officer is elected by the Board of Directors.
A vacancy in the office
of the Treasurer because of death, resignation, removal, disqualification or otherwise would be filled (1) by the Bank’s
most senior accounting officer; or (2) by the Board of Directors. Such appointed officer shall perform the duties of the Treasurer
until such time as the Treasurer may return to his or her duties or a new Treasurer is elected by the Board of Directors.
A vacancy in any other
office because of death, resignation, removal, disqualification, or otherwise may be filled in accordance with the Emergency Preparedness
Resolutions or by the Board of Directors for the unexpired portion of the term.
Section 5. Remuneration.
The remuneration of the Executive Officers shall be fixed from time to time by the Board of Directors or a designated committee
of the Board of Directors, and may be increased or diminished by the Board of Directors or such designated committee, but such
reduction shall be without prejudice to the contractual rights, if any, of such affected Executive Officer.
ARTICLE VI. SECURITIES AND INVESTMENTS
Section 1. Loan and Investments.
The Board of Directors
shall from time to time determine and direct to what extent the funds and property of the Bank shall be invested, and, subject
to all applicable provisions of law, the kind and character of the investments which are to be made and how the same shall be handled
and dealt with. No loans shall be contracted on behalf of the Bank and no evidence of indebtedness shall be issued in its name
unless authorized by the Board of Directors. Such authority may be general or confined to specific instances.
Section 2. Care and Custody of Securities.
All stocks, bonds and
other securities, including bonds and mortgages, not directed by the Board of Directors to be held in bearer form, or in the name
of a nominee, shall be in the name of the Bank and, to the extent that the form of the several securities may permit or as may
be permitted or required by law, shall be registered or recorded in the name of the Bank. All securities including bonds and mortgages
held by the Bank shall be kept in such manner and at such places as the Board of Directors, having due regard for the safety and
protection thereof, may direct, and all or any part thereof may be lodged or deposited for safekeeping with such other institutions
as the Board of Directors may from time to time approve.
Section 3. Transfers of Securities, Etc.
Transfers and assignments
of stocks, bonds and other securities standing, issued or registered in the name of the Bank may be signed by an officer or officers,
or person or persons, as the Board of Directors may from time to time authorize or designate.
Officer or officers,
or employee or employees, as the Board of Directors may from time to time authorize or designate, shall execute any and all instruments
for the proper transaction of the business of the Bank relating to its mortgage investments, including extensions, modifications,
alterations, and amendments and assignments.
ARTICLE VII. DEPOSITORIES, CHECKS AND
DRAFTS
Section 1. Depositories and Withdrawals.
The Board of Directors
may from time to time designate banks, trust companies or similar institutions to be depositories of funds of the Bank and may
by resolution designate the officer of officers, or employee or employees, who shall be authorized to sign the checks, drafts,
vouchers or orders of the Bank upon which such depositories shall be authorized to pay out the moneys so deposited.
Section 2. Depositor’s Withdrawals.
The Board of Directors
shall designate those officers and employees who shall be authorized to sign or countersign checks drawn upon the general deposit
accounts of the Bank issued in payment of depositor withdrawals. The Board of Directors may also adopt such other means of payment
of depositor withdrawals as to it may seem proper and expedient.
ARTICLE VIII. CERTIFICATE FOR SHARES
AND THEIR TRANSFER
Section 1. Certificates for Shares.
Certificates representing
shares of capital stock of the Bank shall be in such form as shall be determined by the Board of Directors. Such certificates shall
be signed by the Chairman of the Board of Directors and signed by the secretary or assistant secretary, and sealed with the corporate
seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles if the certificate is countersigned
by a transfer agent or registered by a registrar, other than the Bank itself or one of its employees. Each certificate for shares
of capital stock shall be consequently numbered or otherwise identified. The name and address of the person to whom the shares
are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Bank. All certificates
surrendered to the Bank for transfer shall be canceled and no new certificate shall be issued until the former certificate for
a like number of shares has been surrendered and canceled, except that in case of a lost or destroyed certificate, a new certificate
may be issued upon such terms and indemnity to the Bank as the Board of Directors may prescribe.
Section 2. Transfer of Shares.
Transfer of shares
of capital stock of the Bank shall be made only on its stock transfer books. Authority for such transfer shall be given only by
the holder of record or by his or her legal representative, who shall furnish proper evidence of such authority, or by his or her
attorney authorized by a duly executed power of attorney and filed with the Bank. Such transfer shall be made only on surrender
for cancellation of the certificate for such shares. The person in whose name shares of capital stock stand on the books of the
Bank shall be deemed by the Bank to be the owner for all purposes.
ARTICLE IX. FISCAL YEAR; ANNUAL AUDIT
The fiscal year of
the Bank shall commence on the first day of July and end on the last day of June in each year. The Bank shall be subject to an
annual audit as of the end of its fiscal year by independent public accountants appointed by and responsible to the Board of Directors.
The appointment of such accountants shall be subject to annual ratification by the stockholders.
ARTICLE X. DIVIDENDS
Subject to the terms
of the Bank’s Organization Certificate and applicable law, the Board of Directors may, from time to time, declare, and the
Bank may pay, dividends on its outstanding shares of capital stock.
ARTICLE XI. CORPORATE SEAL
The Board of Directors shall provide a Bank
seal in such form deemed appropriate by the Board of Directors.
ARTICLE XII. SURETY BONDS
Section 1. Surety Bonds and Premiums Thereon.
The Bank shall procure
from a responsible surety company approved by the Board of Directors and shall keep continuously in force and effect a Banker’s
Blanket Bond of insurance or a fidelity bond of similar type and character covering all of the officers and employees of the Bank
in such amount as the Board of Directors may fix. The Board of Directors may also require that individual officers or employees
shall furnish separate bonds conditioned for the faithful performance of their several duties. It shall be obligatory upon the
officers and employees to furnish to the Bank and to the surety company involved any and all information necessary or appropriate
to the procurement of any bond or bonds herein provided for. The Bank may dismiss any officer or employee who shall fail when asked
or who shall refuse to give any and all proper and relevant information required by the designated surety company or as to whom
such surety company shall decline to give a bond or whom the surety company shall decline to include in a general bond.
All expenses connected with such bond or
bonds and all premiums thereon shall be borne by the Bank.
ARTICLE XIII. INDEMNIFICATION OF DIRECTORS,
OFFICERS AND EMPLOYEES
The Bank shall indemnify
current and former directors, officers and employees to the fullest extent authorized or permitted by law against fines, judgments,
penalties, settlements and reasonable costs and expenses, including reasonable attorney’s fees, incurred or to be incurred
in any pending or future legal action, suit, proceeding or claim, civil, criminal or administrative, in which a director, officer
or employee is involved or is named as a party, or is threatened to be made a party, and which arises out of, or is related to,
their services on behalf of the Bank, provided such director, officer or employee acted in good faith for purposes which he or
she reasonably believed to be in the best interest of the Bank and, in criminal actions or proceedings, had no reasonable cause
to believe that his/her conduct might be unlawful. Expenses, including attorney fees, reasonably incurred by the indemnitee in
defending a civil, criminal or administrative action, suit or proceeding shall be paid by the Bank to the indemnitee or on his
or her behalf, in advance of the final disposition of such action, suit or proceeding, unless at any time after a request for indemnification
the Bank by a majority vote of the Board of Directors declines to authorize such advance payment of expenses to the indemnitee
or the advance payment is prohibited by applicable law or regulations, or orders issued by governmental agencies with authority
to issue such orders against the Bank, provided, however, such advances shall be made only upon receipt of an undertaking from
the indemnitee to repay to the Bank the amounts so paid if it is ultimately determined that indemnification for such expenses is
not authorized by this Article XIII and applicable laws.
ARTICLE XIV. AMENDMENTS
Any proposed amendment
to the Bylaws shall, if required under applicable law, be submitted to the Superintendent of Financial Services (the “Superintendent”)
and, upon the Superintendent’s written approval thereof, shall be posted in a conspicuous place in the office of the Bank
for thirty (30) days. Thereafter, such proposed amendment may be incorporated into the Bylaws by being duly adopted by a majority
vote of the Board of Directors of the Bank and approved by the affirmative vote of the holders of at least a majority of the total
votes eligible to be cast at a meeting of stockholders of the Bank.
EXHIBIT B
Articles of Incorporation and Bylaws
of the Holding Company
ARTICLES OF INCORPORATION
OF
PIONEER BANCORP, INC.
The
undersigned, __________________, whose address is ___________________________________, being at least
eighteen (18) years of age, does hereby form a corporation under the general laws of the State of Maryland having the
following Articles of Incorporation (the “Articles”):
ARTICLE 1. Name.
The name of the corporation is Pioneer Bancorp, Inc. (herein, the “Corporation”).
ARTICLE 2. Principal
Office.
The street address of the principal office of the Corporation in the State of Maryland is c/o CSC-Lawyers Incorporating
Service Company, 7 St. Paul Street, Suite 1660, Baltimore, Maryland 21202.
ARTICLE 3. Purpose.
The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be organized
under the general laws of the State of Maryland as now or hereafter in force.
ARTICLE 4. Resident
Agent.
The name and address of the registered agent of the Corporation in the State of Maryland is CSC-Lawyers Incorporating
Service Company, 7 St. Paul Street, Suite 1660, Baltimore, Maryland 21202. Said resident agent is a Maryland corporation.
ARTICLE 5. Capital Stock
A. Authorized
Capital Stock.
The total number of shares of capital stock of all classes that the Corporation has authority to issue is eighty
million (80,000,000) shares, consisting of:
1. Five
million (5,000,000) shares of preferred stock, par value one cent ($0.01) per share (the “Preferred Stock”); and
2. Seventy-five
million (75,000,000) shares of common stock, par value one cent ($0.01) per share (the “Common Stock”).
The aggregate par value of all the authorized
shares of capital stock is eight hundred thousand dollars ($800,000). Except to the extent required by governing law, rule or regulation,
the shares of capital stock may be issued from time to time by the Board of Directors without further approval of the stockholders
of the Corporation. The Corporation shall have the authority to purchase its capital stock out of funds lawfully available therefor,
which funds shall include, without limitation, the Corporation’s unreserved and unrestricted capital surplus. The Board of
Directors, pursuant to a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number), 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. For the purposes of these Articles, the
term “Whole Board” shall mean the total number of directors that the Corporation would have if there were no vacancies
on the Board of Directors at the time any such resolution is presented to the Board of Directors for adoption.
B. Common
Stock.
Except as provided under the terms of any series of the Preferred Stock and as limited by Section D of this Article
5, the exclusive voting power shall be vested in the Common Stock. Except as otherwise provided for in these Articles, each holder
of the Common Stock shall be entitled to one (1) vote for each share of Common Stock standing in the holder’s name on the
books of the Corporation. Subject to any rights and preferences of any series of Preferred Stock, holders of the Common Stock shall
be entitled to such dividends as may be declared by the Board of Directors out of funds lawfully available therefor. Upon the liquidation,
dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of the Common Stock shall
be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders ratably in proportion
to the number of shares held by them, respectively, after: (i) payment or provision for payment of the Corporation’s debts
and liabilities; and (ii) distributions or provisions for distributions to holders of any class or series of stock having a preference
over the Common Stock in the liquidation, dissolution or winding up of the Corporation.
C. Preferred
Stock.
The Board of Directors is hereby expressly authorized, subject to any limitations prescribed by law, to provide for
the issuance of shares of the Preferred Stock in series, to establish from time to time the number of shares to be included in
each such series, and to fix the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the shares of each such series. The number of authorized shares of the
Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the Common Stock, without a vote of the holders of the Preferred Stock, or of any series thereof,
unless a vote of any such holders is required by law or pursuant to the terms of the Preferred Stock. The power of the stockholders
to increase or decrease the authorized shares of the Preferred Stock shall not limit any of the powers of the Board of Directors
provided under these Articles.
D. Restrictions
on Voting Rights of the Corporation’s Equity Securities.
1. Notwithstanding
any other provision of these Articles, in no event shall the record owner (or if more than one record owner, all such record owners
taken as a group) 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 in excess of ten percent (10%)
of the then-outstanding shares of Common Stock (the “Limit”), 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 particular record owner by virtue of the provisions
hereof in respect of Common Stock beneficially owned by such Person owning shares in excess of the Limit (a “Holder in Excess”)
shall be a number equal to the total number of votes that a single record owner of all Common Stock owned by such Holder in Excess
would be entitled to cast after giving effect to the provisions hereof, multiplied by a fraction, the numerator of which is the
number of shares of such class or series that are both (i) beneficially owned by such Holder in Excess and (ii) owned of record
by such particular record owner, and the denominator of which is the total number of shares of Common Stock beneficially owned
by such Holder in Excess. The provisions of this Section D of this Article 5 shall not be applicable to any mutual holding company
parent of the Corporation. The provisions of this Section D of this Article 5 also shall not be applicable if, before the Holder
in Excess acquired beneficial ownership of such shares in excess of the Limit, such acquisition was approved by a majority of the
“Unaffiliated Directors.” For this purpose, the term “Unaffiliated Director” means any member of the Board
of Directors who is unaffiliated with the Holder in Excess and was a member of the Board of Directors before the time that the
Holder in Excess became such, and any director who is thereafter chosen to fill any vacancy on the Board of Directors and who is
elected and who, in either event, is unaffiliated with the Holder in Excess 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 serving on the Board of Directors.
2. The
following definitions shall apply to this Section D of this Article 5:
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(a)
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An “affiliate” of a specified Person shall
mean a Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified.
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(b)
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“Beneficial ownership” shall be determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934 (or any successor rule or
statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall be no successor rule or statutory provision thereto,
pursuant to said Rule 13d-3 as in effect on the filing date of these Articles; provided, however, that a Person shall, in any
event, also be deemed the “beneficial owner” of any Common Stock:
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(1)
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that such Person or any of its affiliates beneficially
owns, directly or indirectly; or
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(2)
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that such Person or any of its affiliates has (i) the right
to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement
or understanding (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of an agreement, contract,
or other arrangement with the Corporation to effect any transaction of the type described in clause (i) or (ii) of the first sentence
of Article 9 hereof) or upon the exercise of conversion rights, exchange rights, warrants, or options or otherwise, or (ii) 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
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(3)
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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 (i) 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 (ii) neither any employee stock ownership or similar plan of the
Corporation or any subsidiary of the Corporation nor any trustee with respect thereto (or any affiliate of such trustee) shall,
solely by reason of such capacity of such trustee, be deemed, for any purposes hereof, to beneficially own any Common Stock held
under any such plan. For purposes 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 subsection 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 Common Stock
then outstanding and shall not include any 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)
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A “Person” shall mean any individual, firm,
corporation, or other entity.
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(d)
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The Board of Directors shall have the power to construe
and apply the provisions of this Section D and to make all determinations necessary or desirable to implement such provisions
including, but not limited to, matters with respect to (i) the number of shares of Common Stock beneficially owned by any Person,
(ii) whether a Person is an affiliate of another, (iii) whether a Person has an agreement, arrangement, or understanding with
another as to the matters referred to in the definition of beneficial ownership, (iv) the application of any other definition
or operative provision of this Section D to the given facts, or (v) any other matter relating to the applicability or effect of
this Section D.
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3. The
Board of Directors shall have the right to demand that any Person reasonably believed by the Board of Directors to be a Holder
in Excess (or holder of record of Common Stock beneficially owned by any Holder in Excess) supply the Corporation with complete
information as to (i) the record owner(s) of all shares beneficially owned by such Holder in Excess, and (ii) any other factual
matter relating to the applicability or effect of this section as may reasonably be requested of such Holder in Excess. The Board
of Directors shall further have the right to receive from any Holder in Excess reimbursement for all expenses incurred by the Board
in connection with its investigation of any matters relating to the applicability or effect of this section on such Holder in Excess,
to the extent such investigation is deemed appropriate by the Board of Directors as a result of the Holder in Excess refusing to
supply the Corporation with the information described in the previous sentence.
4. Any
constructions, applications, or determinations made by the Board of Directors pursuant to this Section D 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.
5. If
any provision (or portion thereof) of this Section D shall be found to be invalid, prohibited or unenforceable for any reason,
the remaining provisions (or portions thereof) of this Section D 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 D remain,
to the fullest extent permitted by law, applicable and enforceable as to all stockholders, including Holders in Excess, notwithstanding
any such finding.
E. Majority
Vote for Certain Actions.
With respect to those actions as to which any provision of the Maryland General Corporation Law (the
“MGCL”) requires stockholder authorization 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, any 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.
F. Quorum.
Except as otherwise provided by law or expressly provided in these Articles, 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 Article 5, Section D) 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
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.
ARTICLE 6. Preemptive Rights and Appraisal Rights.
A. Preemptive
Rights.
Except for preemptive rights approved by the Board of Directors pursuant to a resolution approved by a majority of
the directors then in office, no holder of the capital stock of the Corporation or series of stock or of options, warrants or other
rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right
to purchase or subscribe for any unissued capital stock of any class or series, or any unissued bonds, certificates of indebtedness,
debentures or other securities convertible into or exchangeable for capital stock of any class or series or carrying any right
to purchase stock of any class or series.
B. Appraisal
Rights.
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.
ARTICLE 7. Directors.
The following provisions are made a part of these Articles for the management of the business and the conduct of the affairs
of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors
and stockholders:
A. Management
of the Corporation.
The business and affairs of the Corporation shall be managed under the direction of the Board of Directors.
All powers of the Corporation may be exercised by or under the authority of the Board of Directors, except as conferred on or as
reserved to the stockholders by law or by these Articles or the Bylaws of the Corporation; 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. Number,
Class and Terms of Directors; No Cumulative Voting.
The number of directors constituting the Board of Directors of the Corporation
shall initially be _____ (__), which number may be increased or decreased in the manner provided in the Bylaws of the Corporation;
provided, however, that such number shall never be less than the minimum number of directors required by the MGCL now or hereafter
in force. The directors, other than those who may be elected by the holders of any series of Preferred Stock, shall be divided
into three (3) classes, with the term of office of the first class (“Class I”) to expire at the conclusion of the first
annual meeting of stockholders, the term of office of the second class (“Class II”) to expire at the conclusion of
the annual meeting of stockholders one year thereafter and the term of office of the third class (“Class III”) to expire
at the conclusion of the annual meeting of stockholders two years thereafter, with each director to hold office until his or her
successor shall have been duly elected and qualified. At each annual meeting of stockholders, 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 or for such shorter period of time as the Board of Directors may determine, with each director to hold office
until his or her term expires and until his or her successor shall have been duly elected and qualified.
The names of the individuals who will serve
as the initial directors of the Corporation until their successors are elected and qualify are as follows:
Term to Expire in 2019:
Term to Expire in 2020
:
Term to Expire in 2021
:
Stockholders shall
not be permitted to cumulate their votes in the election of directors. A plurality of all the votes cast at a meeting at which
a quorum is present is sufficient to elect a director.
C. Vacancies.
Any vacancies in the Board of Directors may be filled in the manner provided in the Bylaws of the Corporation.
D. Removal.
Subject to the rights of the holders of any series of Preferred Stock then outstanding, 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
two-thirds (2/3) of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (after giving effect to the provisions of Article 5 hereof) voting together as a single
class.
E. Stockholder
Proposals and Nominations of Directors.
Advance notice of stockholder nominations for the election of directors and of business
to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in
the Bylaws of the Corporation. Stockholder proposals to be presented in connection with a special meeting of stockholders shall
be presented by the Corporation only to the extent required by Section 2-502 of the MGCL and the Bylaws of the Corporation.
ARTICLE 8. Bylaws.
The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment
or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the Whole Board.
The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation. In addition to any vote of the
holders of any class or series of stock of the Corporation required by law or by these Articles, the affirmative vote of the holders
of at least eighty percent (80%) of the voting power of all of the then-outstanding shares of the capital stock of the Corporation
entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5 hereof), voting together
as a single class, shall be required for the adoption, amendment or repeal of any provisions of the Bylaws of the Corporation by
the stockholders.
ARTICLE 9. Evaluation
of Certain Offers.
The Board of Directors, when evaluating (i) any offer of another Person (as defined below) to (A) make a
tender or exchange offer for any equity security of the Corporation, (B) merge or consolidate the Corporation with another corporation
or entity, or (C) purchase or otherwise acquire all or substantially all of the properties and assets of the Corporation or (ii)
any other 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,
share exchange, dissolution, liquidation, sale of all or substantially all of the assets of the Corporation, proxy solicitation
or otherwise), may, in connection with the exercise of its business judgment in determining what is in the best interests of the
Corporation and its stockholders and in making any recommendation to the Corporation’s stockholders, give due consideration
to all relevant factors, including, but not limited to: (A) the economic effect, both immediate and long-term, upon the Corporation’s
stockholders, including stockholders, if any, who do not participate in the transaction; (B) the social and economic effect on
the present and future employees, creditors 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; (C) whether the proposal is acceptable
based on the historical, current or projected future operating results or financial condition of the Corporation; (D) whether a
more favorable price could be obtained for the Corporation’s stock or other securities in the future; (E) the reputation
and business practices of the other entity to be involved in the transaction and its management and affiliates as they would affect
the employees of the Corporation and its subsidiaries; (F) the future value of the stock or any other securities of the Corporation
or the other entity to be involved in the proposed transaction; (G) any anti-trust or other legal and regulatory issues that are
raised by the proposal; (H) the business and historical, current or expected future financial condition or operating results of
the other entity to be involved in the transaction, including, but not limited to, debt service and other existing financial obligations,
financial obligations to be incurred in connection with the proposed transaction, and other likely financial obligations of the
other entity to be involved in the proposed transaction; and (I) the ability of the Corporation to fulfill its objectives as a
financial institution holding company and on the ability of its subsidiary financial institution(s) to fulfill the objectives of
a federally insured financial institution under applicable statutes and regulations. If the Board of Directors determines that
any proposed transaction of the type described in clause (i) or (ii) of the immediately preceding sentence should be rejected,
it may take any lawful action to defeat such transaction, including, but not limited to, any or 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 or other securities or granting options or rights with respect thereto; and obtaining a more favorable offer
from another individual or entity. This Article 9 sets forth certain factors that may be considered by the Board of Directors,
but does not create any implication concerning the factors that must be considered, or any other factors that may or may not be
considered, by the Board of Directors regarding any proposed transaction of the type described in clause (i) or (ii) of the first
sentence of this Article 9.
For purposes of this
Article 9, a “Person” shall include an individual, 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 syndicate or any
other group or entity formed to acquire, hold or dispose of securities.
ARTICLE 10. Indemnification, etc. of Directors
and Officers.
A. Indemnification.
The Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation or at its
request any other entity, to the fullest extent required or permitted by the MGCL now or hereafter in force, including the advancement
of expenses under the procedures and to the fullest extent permitted by law, and (2) other employees and agents to such extent
as shall be authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section B
of this Article 10 with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee
in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation.
B. Procedure.
If a claim under Section A of this Article 10 is not paid in full by the Corporation within sixty (60) days after a written
claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense
of prosecuting or defending such suit. It shall be a defense to any action for advancement of expenses that the Corporation has
not received both (i) an undertaking as required by law to repay such advances if it shall ultimately be determined that the standard
of conduct has not been met and (ii) a written affirmation by the indemnitee of his or her good faith belief that the standard
of conduct necessary for indemnification by the Corporation has been met. In (i) any suit brought by the indemnitee to enforce
a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses)
it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of
an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not
met the applicable standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a determination before the commencement of such suit
that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct, or, in the case of such a suit brought by the indemnitee, be a defense
to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that
the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article 10 or otherwise, shall
be on the Corporation.
C. Non-Exclusivity.
The rights to indemnification and to the advancement of expenses conferred in this Article 10 shall not be exclusive of any
other right that any Person may have or hereafter acquire under any statute, these Articles, the Corporation’s Bylaws, any
agreement, any vote of stockholders or the Board of Directors, or otherwise.
D. Insurance.
The Corporation may maintain insurance, at its expense, to insure itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such Person against such expense, liability or loss under the
MGCL.
E. Miscellaneous.
The Corporation shall not be liable for any payment under this Article 10 in connection with a claim made by any indemnitee
to the extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the
amounts otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections
A and B of this Article 10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director
or officer and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.
F. Limitations
Imposed by Federal Law.
Notwithstanding any other provision set forth in this Article 10, in no event shall any payments made
by the Corporation pursuant to this Article 10 exceed the amount permissible under applicable federal law, including, without limitation,
Section 18(k) of the Federal Deposit Insurance Act and the regulations promulgated thereunder.
Any repeal or modification
of this Article 10 by the stockholders of the Corporation or the Board of Directors shall not in any way diminish any rights to
indemnification or advancement of expenses of such director or officer or the obligations of the Corporation arising hereunder
with respect to events occurring, or claims made, while this Article 10 is in force.
ARTICLE 11. Limitation
of Liability.
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 personal 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.
ARTICLE 12. Amendment
of the Articles of Incorporation.
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 Whole Board (rounded up to the nearest whole number), 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.
No proposed amendment
or repeal of any provision of these Articles shall be submitted to a stockholder vote unless the Board of Directors shall have
(1) approved the proposed amendment or repeal, (2) determined that it is advisable, and (3) directed that it be submitted for consideration
at either an annual or special meeting of the stockholders pursuant to a resolution approved by the Board of Directors. Any proposed
amendment or repeal of any provision of these Articles may be abandoned by the Board of Directors at any time before its effective
time upon the adoption of a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number).
The amendment or repeal
of any provision of these Articles shall be approved by at least two-thirds (2/3) of all votes entitled to be cast by the holders
of shares of capital stock of the Corporation entitled to vote on the matter (after giving due effect to the provisions of Article
5 of these Articles), except that the proposed amendment or repeal of any provision of these Articles need only be approved by
the vote of a majority of all the votes entitled to be cast by the holders of shares of capital stock of the Corporation entitled
to vote on the matter (after giving due effect to the provisions of Article 5 of these Articles) if the amendment or repeal of
such provision is approved by the Board of Directors pursuant to a resolution approved by at least two-thirds (2/3) of the Whole
Board (rounded up to the nearest whole number).
Notwithstanding any
other provision of these Articles or any provision of law that might otherwise permit a lesser vote or no vote, but in addition
to any vote of the holders of any class or series of the stock of the Corporation required by law or by these Articles, the affirmative
vote of the holders of at least eighty percent (80%) of the voting power of all of the then-outstanding shares of the capital stock
of the Corporation entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5),
voting together as a single class, shall be required to amend or repeal this Article 12, Section C, D, E or F of Article 5, Article
7 (other than the removal of the list of original directors), Article 8, Article 9, Article 10 or Article 11.
ARTICLE 13. Name and Address of Incorporator.
The name and mailing address of the sole incorporator are as follows:
[Remainder of Page Intentionally Left
Blank]
IN WITNESS WHEREOF, I have signed these
Articles of Incorporation and acknowledge the same to be my act, this _____ day of ____________, 2019.
BYLAWS
OF
PIONEER BANCORP, INC.
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meeting.
Pioneer Bancorp, Inc.
(the “Corporation”) shall hold an annual meeting of its stockholders to elect directors and to transact any other business
within its powers, at such place, on such date and at such time as the Board of Directors shall fix. Failure to hold an annual
meeting does not invalidate the Corporation’s existence or affect any otherwise valid corporate act.
Section 2. Special Meetings.
Special meetings of
stockholders of the Corporation may be called by the Chairperson of the Board or by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of directors that the Corporation would have if there were no vacancies on the Board
of Directors (hereinafter the “Whole Board”). Special meetings of the stockholders shall be called by the Secretary
at the request of stockholders only on the written request of stockholders entitled to cast a majority of all the votes entitled
to be cast at the meeting. Such written request shall state the purpose or purposes of the meeting and the matters proposed to
be acted upon at the meeting, and shall be delivered at the principal office of the Corporation addressed to the President or the
Secretary. The Secretary shall inform the stockholders who make the request of the reasonably estimated cost of preparing and mailing
a notice of the meeting and, upon payment of these costs to the Corporation, notify each stockholder entitled to notice of the
meeting. The Board of Directors shall have the sole power to fix (i) the record date for determining stockholders entitled to request
a special meeting of stockholders and the record date for determining stockholders entitled to notice of and to vote at the special
meeting and (ii) the date, time and place of the special meeting and the means of remote communication, if any, by which stockholders
and proxy holders may be considered present in person and may vote at the special meeting.
Section 3. Notice of Meetings; Adjournment.
Not less than ten (10)
nor more than ninety (90) days before each stockholders’ meeting, the Secretary shall give notice of the meeting in writing
or by electronic transmission to each stockholder entitled to vote at the meeting and to each other stockholder entitled to notice
of the meeting. The notice shall state the time and place of the meeting, the means of remote communication, if any, by which stockholders
and proxy holders may be deemed to be present in person and may vote at the meeting, and, if the meeting is a special meeting or
notice of the purpose is required by statute, the purpose of the meeting. Notice is given to a stockholder when it is personally
delivered to the stockholder, left at the stockholder’s residence or usual place of business, mailed to the stockholder at
his or her address as it appears on the records of the Corporation, or transmitted to the stockholder by an electronic transmission
to any address or number of the stockholder at which the stockholder receives electronic transmissions. If the Corporation has
received a request from a stockholder that notice not be sent by electronic transmission, the Corporation may not provide notice
to the stockholder by electronic transmission. Notwithstanding the foregoing provisions, each person who is entitled to notice
waives notice if such person, before or after the meeting, delivers a written waiver or waiver by electronic transmission that
is filed with the records of the stockholders’ meeting or is present at the meeting in person or by proxy.
A meeting of stockholders
convened on the date for which it was called may be adjourned from time to time and without further notice to a date not more than
one hundred twenty (120) days after the original record date. At any adjourned meeting, any business may be transacted that might
have been transacted at the original meeting.
As used in these Bylaws,
the term “electronic transmission” shall have the meaning given to such term by Section 1-101(m) of the Maryland General
Corporation Law (the “MGCL”) or any successor provision.
Section 4. Quorum.
Unless the Articles
of the Corporation provide otherwise, where a separate vote by a class or classes is required, a majority of the shares of such
class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to
that vote on that matter.
If a quorum shall fail
to attend any meeting, the chairperson of the meeting or the holders of a majority of the shares of stock who are present at the
meeting, in person or by proxy, may, in accordance with Section 3 of this Article I, adjourn the meeting to another place, date
or time.
Section 5. Organization and Conduct of Business.
The Chairperson of
the Board of the Corporation or in his or her absence, the Chief Executive Officer, or in his or her absence, such other person
as may be designated by a majority of the Whole Board, shall call to order any meeting of the stockholders and act as chairperson
of the meeting. In the absence of the Secretary, the secretary of the meeting shall be such person as the chairperson appoints.
The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including
such regulation of the manner of voting and the conduct of discussion as seem to him or her to be in order.
Section 6. Advance Notice Provisions for Business to
be Transacted at Annual Meetings and Elections of Directors.
(a) At
any annual meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i)
as specified in the Corporation’s notice of the meeting, (ii) by or at the direction of the Board of Directors or (iii) by
any stockholder of the Corporation who (1) is a stockholder of record on the date such stockholder gives the notice provided for
in this Section 6(a) and on the record date for the determination of stockholders entitled to vote at such annual meeting, and
(2) complies with the notice procedures set forth in this Section 6(a). For business to be properly brought before an annual meeting
by a stockholder pursuant to clause (iii) of the immediately preceding sentence the stockholder must have given timely notice thereof
in writing to the Secretary of the Corporation and such business must otherwise be a proper matter for action by stockholders.
To be timely, a stockholder’s
notice must be delivered or mailed to and received by the Secretary at the principal executive office of the Corporation by not
later than the close of business on the ninetieth (90
th
) day before the anniversary date of the proxy statement relating
to the preceding year’s annual meeting and not earlier than the close of business on the one hundred twentieth (120
th
)
day before the anniversary date of the proxy statement relating to the preceding year’s annual meeting; provided, that if
(A) less than ninety (90) days’ prior public disclosure of the date of the meeting is given to stockholders and (B) the date
of the annual meeting is advanced more than thirty (30) days before or delayed more than thirty (30) days after the anniversary
of the preceding year’s annual meeting, such written notice shall be timely if delivered or mailed to and received by the
Secretary of the Corporation at the principal executive office of the Corporation not later than the tenth (10
th
) day
following the day on which public disclosure of the date of such meeting is first made. With respect to the first annual meeting
of stockholders of the Corporation following the Corporation becoming the sole stockholder of Pioneer Bank, notice by the stockholder
shall be timely if delivered or mailed to and received by the Secretary of the Corporation not later than the close of business
on the later of (i) the one hundred twentieth (120
th
) day before the date of the annual meeting and (ii) the tenth (10
th
)
day following the day on which public disclosure of the date of the annual meeting is first made. No adjournment or postponement
of a meeting of stockholders shall commence a new period for the giving of notice hereunder.
A stockholder’s
notice to the Secretary must 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 of such stockholder as they appear on the Corporation’s books and of the beneficial
owner, if any, on whose behalf the proposal is made; (iii) the class or series and number of shares of capital stock of the Corporation
that are owned beneficially or of record by such stockholder and such beneficial owner; (iv) a description of all arrangements
or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal
of such business by such stockholder and any material interest of such stockholder in such business; and (v) a representation that
such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.
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(a). The officer of the Corporation 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(a) 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.
At any special meeting
of the stockholders, only such business shall be conducted as shall have been brought before the meeting pursuant to the Corporation’s
notice of the meeting.
(b) Only
persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation.
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
who (1) is a stockholder of record on the date such stockholder gives the notice provided for in this Section 6(b) and on the record
date for the determination of stockholders entitled to vote at such meeting, and (2) complies with the notice procedures set forth
in this Section 6(b). 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 must be delivered or mailed
to and received by the Secretary at the principal executive office of the Corporation by not later than the close of business on
the ninetieth (90
th
) day before the anniversary date of the proxy statement relating to the preceding year’s annual
meeting and not earlier than the close of business on the one hundred twentieth (120
th
) day before the anniversary date
of the proxy statement relating to the preceding year’s annual meeting; provided, that if (A) less than ninety (90) days’
prior public disclosure of the date of the meeting is given to stockholders and (B) the date of the annual meeting is advanced
more than thirty (30) days before or delayed more than thirty (30) days after the anniversary of the preceding year’s annual
meeting, such written notice shall be timely if delivered or mailed to and received by the Secretary of the Corporation at the
principal executive office of the Corporation not later than the tenth (10
th
) day following the day on which public
disclosure of the date of such meeting is first made. With respect to the first annual meeting of stockholders of the Corporation
following the Corporation becoming the sole stockholder of Pioneer Bank, notice by the stockholder shall be timely if delivered
or mailed to and received by the Secretary of the Corporation not later than the close of business on the later of (i) the one
hundred twentieth (120
th
) day before the date of the annual meeting and (ii) the tenth (10
th
) day following
the day on which public disclosure of the date of the annual meeting is first made. No adjournment or postponement of a meeting
of stockholders shall commence a new period for the giving of notice hereunder.
A stockholder’s
notice must be in writing and set forth (a) as to each person whom the stockholder proposes to nominate for election as a director,
(i) all information relating to such person that would indicate such person’s qualification to serve on the Board of Directors
of the Corporation; (ii) an affidavit that such person would not be disqualified under the provisions of Article II, Section 12
of these Bylaws; (iii) such information relating to such person that is required to be disclosed in connection with 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 (the “Exchange Act”), or any successor rule or regulation and (iv) a written consent of each
proposed nominee to be named as a nominee and to serve as a director if elected; and (b) as to the stockholder giving the notice:
(i) the name and address of such stockholder as they appear on the Corporation’s books and of the beneficial owner, if any,
on whose behalf the nomination is made; (ii) the class or series and number of shares of capital stock of the Corporation that
are owned beneficially or of record by such stockholder and such beneficial owner; (iii) a description of all arrangements or understandings
between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the
nomination(s) are to be made by such stockholder; (iv) a representation that such stockholder intends to appear in person or by
proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder that
would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of
proxies for election of directors pursuant to Regulation 14A under the Exchange Act or any successor rule or regulation. No person
shall be eligible for election as a director of the Corporation unless nominated in accordance with the provisions of this Section
6(b). The chairperson of the meeting shall, if the facts so warrant, determine that a nomination was not made in accordance with
such provisions and, if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall
be disregarded.
(c) For
purposes of subsections (a) and (b) of this Section 6, the term “public disclosure” shall mean disclosure (i) in a
press release issued through a nationally recognized news service, (ii) in a document publicly filed or furnished by the Corporation
with the U.S. Securities and Exchange Commission or (iii) on a website maintained by the Corporation or its wholly-owned subsidiary,
Pioneer Bank. The timely notice requirements provided in subsections (a) and (b) of this Section 6 shall apply to all stockholder
nominations for election as a director and all stockholder proposals for business to be conducted at an annual meeting regardless
of whether such proposal is submitted for inclusion in the Corporation’s proxy materials pursuant to Rule 14a-8 of Regulation
14A under the Exchange Act.
Section 7. Proxies and Voting.
Unless the Articles
of the Corporation provide for a greater or lesser number of votes per share or limits or denies voting rights, each outstanding
share of stock, regardless of class, is entitled to one (1) vote on each matter submitted to a vote at a meeting of stockholders;
however, a share is not entitled to be voted if any installment payable on it is overdue and unpaid. In all elections for directors,
directors shall be determined by a plurality of the votes cast, and except as otherwise required by law or as provided in the Articles
of the Corporation, all other matters voted on by stockholders shall be determined by a majority of the votes cast on the matter.
A stockholder may vote
the stock the stockholder owns of record either in person or by proxy. A stockholder may sign a writing authorizing another person
to act as proxy. Signing may be accomplished by the stockholder or the stockholder’s authorized agent signing the writing
or causing the stockholder’s signature to be affixed to the writing by any reasonable means, including facsimile signature.
A stockholder may authorize another person to act as proxy by transmitting, or authorizing the transmission of, an authorization
for the person to act as the proxy to the person authorized to act as proxy or to any other person authorized to receive the proxy
authorization on behalf of the person authorized to act as the proxy, including a proxy solicitation firm or proxy support service
organization. The authorization may be transmitted by a telegram, cablegram, datagram, electronic mail or any other electronic
or telephonic means. Unless a proxy provides otherwise, it is not valid more than eleven (11) months after its date. 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 8. Conduct of Voting
The Board of Directors
shall, in advance of any meeting of stockholders, appoint one (1) or more persons as inspectors of election, to act at the meeting
or any adjournment thereof and make a written report thereof, in accordance with applicable law. If one (1) or more inspectors
are not so elected, the Chairperson of the Board shall make such appointment at the meeting of stockholders. At all meetings of
stockholders, the proxies and ballots shall be received, and all questions relating to the qualification of voters and the validity
of proxies and the acceptance or rejection of votes shall be decided or determined by, the inspector of election. All voting, including
on the election of directors but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefor by a stockholder entitled to vote or his or her proxy or the chairperson of the meeting, a written vote shall be
taken. Every written vote shall be taken by ballot, each of which shall state the name of the stockholder or proxy voting and such
other information as may be required under the procedure established for the meeting. No candidate for election as a director at
a meeting shall serve as an inspector at such meeting.
Section 9. Control Share Acquisition Act.
Notwithstanding any
other provision of the Articles of the Corporation or these Bylaws, Title 3, Subtitle 7 of the MGCL (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 by a majority
of the Whole Board, in whole or in part, at any time, whether before or after an acquisition of Control Shares (as defined in Section
3-701(d) of the MGCL, 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 defined in Section 3-701(d) of the MGCL, or any successor provision).
ARTICLE II
BOARD OF DIRECTORS
Section 1. General Powers, Number and Term of Office.
The business and affairs
of the Corporation shall be managed under the direction of the Board of Directors. 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 MGCL, be fixed from time to
time exclusively by vote of the Board of Directors; provided, however, that such number shall never be less than the minimum number
of directors required by the MGCL now or hereafter in force. The Board of Directors shall annually elect a Chairperson of the Board
from among its members and shall designate the Chairperson of the Board or his or her designee to preside at its meetings.
The directors,
other than those who may be elected by the holders of any series of preferred stock, shall be divided into three (3) 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 until his or her successor shall have been duly elected and qualified. At each annual
meeting of stockholders, commencing with the first annual meeting, 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 or for such shorter period of time as the Board of Directors may determine, with each director to hold office until
his or her successor shall have been duly elected and qualified.
Section 2. Vacancies and Newly Created Directorships.
By virtue of the Corporation’s
election made hereby to be subject to Section 3-804(c) of the MGCL, 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 two-thirds (2/3) 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 3. Regular Meetings.
Regular meetings of
the Board of Directors shall be held at such place or places or by means of remote communication, on such date or dates, and at
such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each
regular meeting shall not be required. Any regular meeting of the Board of Directors may adjourn from time to time to reconvene
at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.
Section 4. Special Meetings.
Special meetings of
the Board of Directors may be called by one-third (1/3) of the directors then in office (rounded up to the nearest whole number)
or the Chairperson of the Board and shall be held at such place or by means of remote communication, on such date, and at such
time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given to each director
who has not waived notice by mailing and post-marking written notice not less than five (5) days before the meeting, or by facsimile
or other electronic transmission of the same not less than twenty four (24) hours before the meeting. Any director may waive notice
of any special meeting, either before or after such meeting, by delivering a written waiver or a waiver by electronic transmission
that is filed with the records of the meeting. Attendance of a director at a special meeting shall constitute a waiver of notice
of such meeting, except where the director 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. Neither the business to be transacted
nor the purpose of any special meeting of the Board of Directors need be specified in the notice of such meeting. Any special meeting
of the Board of Directors may adjourn from time to time to reconvene at the same or some other place, and no notice need be given
of any such adjourned meeting other than by announcement.
Section 5. Quorum.
At any meeting of the
Board of Directors, a majority of the Whole Board shall constitute a quorum for all purposes. If a quorum shall fail to attend
any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver
thereof.
Section 6. Participation in Meetings by Conference Telephone.
Members of the Board
of Directors, or of any committee thereof, may only once per calendar year, unless otherwise authorized by an affirmative vote
of at least three quarters (3/4) of the Whole Board, participate in a meeting of such Board or committee by means of a conference
telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Such
participation shall constitute presence in person at such meeting.
Section 7. Conduct of Business.
At any meeting of the
Board of Directors, business shall be transacted in such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present, except as otherwise provided in these Bylaws or
the Corporation’s Articles or required by law. Action may be taken by the Board of Directors without a meeting if a unanimous
consent that sets forth the action is given in writing or by electronic transmission by each member of the Board of Directors and
filed in paper or electronic form with the minutes of proceedings of the Board of Directors.
Section 8. Powers.
All powers of the Corporation
may be exercised by or under the authority of the Board of Directors except as provided by the Articles of the Corporation. Consistent
with the foregoing, the Board of Directors shall have, among other powers, the unqualified power:
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(i)
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To declare dividends from time to time in accordance with law;
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(ii)
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To purchase or otherwise acquire any property, rights or privileges on such terms as it shall determine;
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(iii)
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To authorize the creation, making and issuance, in such form as it may determine, of written obligations
of every kind, negotiable or non-negotiable, secured or unsecured, and to do all things necessary in connection therewith;
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(iv)
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To remove any officer of the Corporation with or without cause, and from time to time to devolve
the powers and duties of any officer upon any other person for the time being;
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(v)
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To confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate
officers, employees and agents;
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(vi)
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To adopt from time to time such stock, option, stock purchase, bonus or other compensation plans
for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine;
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(vii)
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To adopt from time to time such insurance, retirement, and other benefit plans for directors, officers,
employees and agents of the Corporation and its subsidiaries as it may determine; and
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(viii)
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To adopt from time to time regulations, not inconsistent with these Bylaws, for the management
of the Corporation’s business and affairs.
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Section 9. Compensation of Directors.
Directors, as such,
may receive, pursuant to resolution of the Board of Directors, fixed fees and other compensation for their services as directors,
including, without limitation, their services as members of committees of the Board of Directors.
Section 10. Resignation.
Any director may resign
at any time by giving written notice of such resignation to the President or the Secretary at the principal office of the Corporation.
Unless otherwise specified therein, such resignation shall take effect upon receipt thereof.
Section 11. Presumption of Assent.
A director of the Corporation
who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have
assented to such action unless such director announces his or her dissent at the meeting and (a) such director’s dissent
is entered in the minutes of the meeting, (b) such director files his or her written dissent to such action with the secretary
of the meeting before the adjournment thereof, or (c) such director forwards his or her written dissent within twenty four (24)
hours after the meeting is adjourned, by certified mail, return receipt requested, bearing a postmark from the United States Postal
Service, to the secretary of the meeting or the Secretary of the Corporation. Such right to dissent shall not apply to a director
who voted in favor of such action or failed to make his or her dissent known at the meeting.
Section 12. Director Qualifications.
(a) No
person shall be eligible for election or appointment to the Board of Directors: (i) if a financial or securities regulatory agency
has, within the past ten years, issued a cease and desist, consent or other formal order, other than a civil money penalty, against
such person, which order is subject to public disclosure by such agency; (ii) if such person has been convicted of a crime involving
dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under state or federal law; or
(iii) if such person is currently charged in any information, indictment, or other complaint with the commission of or participation
in such a crime. No person may serve on the Board of Directors if such person is: (i) at the same time, a director, trustee, officer,
employee or ten percent (10%) or more stockholder of a bank, savings institution, credit union, mortgage banking company, consumer
loan company or similar organization, other than an affiliate of the Corporation, that engages in business activities or solicits
customers, whether through a physical presence or electronically, in the same market area as the Corporation or any of its affiliates;
(ii) does not agree in writing to comply with all of the Corporation’s policies applicable to directors including but not
limited to its confidentiality policy; (iii) does not confirm in writing that he or she is not a party to any agreement, understanding
or commitment with respect to how he or she would act or vote on any issue or question before the Board of Directors or that would
otherwise impact his or her ability to discharge his or her fiduciary duties as a director; (iv) is the representative or agent
of, or a member of a group acting in concert that includes, a person who is ineligible for election or appointment to the Board
of Directors under this Section 12; or (v) is the nominee or representative, as that term is defined in the regulations of the
Board of Governors of the Federal Reserve System, 12 C.F.R §212.2(n) or any successor provision, of a company of which any
of the directors, partners, trustees, or ten percent (10%) stockholders would not be eligible for election or appointment to the
Board of Directors under this Section 12. For purposes of this Section 12, a person shall be deemed to be acting in concert with
another person if such person knowingly acts toward a common goal relating to the management, governance or control of the corporation
in parallel with such other person and there are overt actions by, or communications between, such persons reasonably suggesting
that they are coordinating their efforts toward such common goal or if such persons are acting in concert within the meaning of
12 C.F.R. §303.81 or any successor provision.
(b) The
Board of Directors shall have the power to construe and apply the provisions of this Section 12 and to make all determinations
necessary or desirable to implement such provisions, including but not limited to determinations as to whether a person is a nominee
or representative of a person, a company or a group, whether a person or company is included in a group, and whether a person is
the representative, agent or nominee of a group acting in concert.
Section 13. Age Limitation.
No person 75 years
of age shall be eligible for election, reelection, appointment, or reappointment to the board of the Corporation. No director shall
serve as such beyond the annual meeting of the Corporation following the director becoming 75.
Section 14. Attendance at Board Meetings.
The Board of Directors
shall have the right to remove any director from the Board upon a director’s unexcused absence from (i) three (3) consecutive
regularly scheduled meetings of the Board of Directors or (ii) five (5) regularly scheduled meetings of the Board of Directors
in any fiscal year of the Corporation.
ARTICLE III
COMMITTEES
Section 1. Committees of the Board of Directors.
(a)
General
Provisions.
The Board of Directors may appoint from among its members an Audit Committee, a Compensation Committee, a Nominating/Governance
Committee, and such other committees as the Board of Directors deems necessary or desirable.
The Board of Directors may delegate to any committee so appointed
any of the powers and authorities of the Board of Directors to the fullest extent permitted by the MGCL and any other applicable
law.
(b)
Composition.
Each committee shall be composed of one (1) or more directors or any other number of members specified in these Bylaws. The Chairperson
of the Board may recommend committees, committee memberships, and committee chairs to the Board of Directors. The Board of Directors
shall have the power at any time to appoint the chairperson and the members of any committee, change the membership of any committee,
to fill all vacancies on committees, to designate alternate members to replace or act in the place of any absent or disqualified
member of a committee, or to dissolve any committee. A member of a committee may resign from that committee at any time by giving
written notice of such resignation to the Chairperson of the Board. Unless otherwise specified therein, such resignation from the
committee shall take effect upon receipt thereof.
(c)
Issuance
of Stock.
If the Board of Directors has given general authorization for the issuance of stock providing for or establishing
a method or procedure for determining the maximum number of shares to be issued, a committee of the Board of Directors, in accordance
with that general authorization or any stock option or other plan or program adopted by the Board of Directors, may authorize or
fix the terms of stock subject to classification or reclassification and the terms on which any stock may be issued, including
all terms and conditions required or permitted to be established or authorized by the Board of Directors. Any committee so designated
may exercise the power and authority of the Board of Directors if the resolution that designated the committee or a supplemental
resolution of the Board of Directors shall so provide.
Section 2. Conduct of Business.
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; one-third (1/3) of
the members shall constitute a quorum unless the committee shall consist of one (1) or two (2) members, in which event one member
shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken
by any committee without a meeting if a unanimous consent that sets forth the action is given in writing or by electronic transmission
by each member of the committee and filed in paper or electronic form with the minutes of the proceedings of such committee. The
members of any committee may conduct any meeting thereof by conference telephone or other communications equipment in accordance
with the provisions of Section 6 of Article II.
ARTICLE IV
OFFICERS
Section 1. Generally.
(a) The
Board of Directors as soon as may be practicable after the annual meeting of stockholders shall choose a Chairperson of the Board,
Chief Executive Officer, President, a Secretary and a Chief Financial Officer/Treasurer and from time to time may choose one or
more Vice Presidents or such other officers as it may deem proper. Any number of offices may be held by the same person, except
that no person may concurrently serve as both President and Vice President of the Corporation.
(b) The term of
office of all officers shall be until the next annual election of officers and until their respective successors are chosen, but
any officer may be removed from office at any time by the affirmative vote of a majority of the Whole Board.
(c) All officers
chosen by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject
to the specific provisions of this Article IV. Such officers shall also have such powers and duties as from time to time may be
conferred by the Board of Directors or by any committee thereof.
Section 2. Chairperson of the Board of Directors.
The Chairperson of
the Board of Directors of the Corporation shall perform all duties and have all powers that are commonly incident to the office
of Chairperson of the Board or that are delegated to him or her by the Board of Directors. He or she shall have power to sign all
stock certificates, contracts and other instruments of the Corporation that are authorized.
Section 3. Chief Executive Officer.
The Chief Executive
Officer, subject to the control of the Board of Directors, shall serve in a general executive capacity and have general power over
the management and oversight of the administration and operation of the Corporation’s business and general supervisory power
and authority over its policies and affairs. The Chief Executive Officer shall see that all orders and resolutions of the Board
of Directors and of any committee thereof are carried into effect.
Section 4. President.
The President shall
perform the duties of the Chief Executive Officer in the Chief Executive Officer’s absence or during his or her disability
to act. In addition, the President shall perform the duties and exercise the powers usually incident to his or her office and/or
such other duties and powers as may be properly assigned to the President from time to time by the Board of Directors, the Chairperson
of the Board or the Chief Executive Officer.
Section 5. Vice President.
The Vice President
or Vice Presidents (including Executive Vice Presidents or other levels of Vice President designated by the Board of Directors),
if any, shall perform the duties of the Chief Executive Officer in the absence of both the Chief Executive Officer and the President,
or during their disability to act. In addition, the Vice Presidents shall perform the duties and exercise the powers usually incident
to their respective office and/or such other duties and powers as may be properly assigned to the Vice Presidents from time to
time by the Board of Directors, the Chairperson of the Board or the Chief Executive Officer.
Section 6. Secretary.
The Secretary or an
Assistant Secretary shall issue notices of meetings, keep the minutes of meetings, have charge of the seal and the corporate books,
perform such other duties and exercise such other powers as are usually incident to such offices and/or such other duties and powers
as are properly assigned thereto by the Board of Directors, the Chairperson of the Board or the Chief Executive Officer.
Section 7. Chief Financial Officer/Treasurer.
The Chief Financial
Officer/Treasurer shall have charge of all monies and securities of the Corporation, other than monies and securities of any division
of the Corporation that has a treasurer or financial officer appointed by the Board of Directors, and shall keep regular books
of account. The funds of the Corporation shall be deposited in the name of the Corporation by the Chief Financial Officer/Treasurer
with such banks or trust companies or other entities as the Board of Directors from time to time shall designate. The Chief Financial
Officer/Treasurer shall sign or countersign such instruments as require his or her signature, shall perform all such duties and
have all such powers as are usually incident to such office and/or such other duties and powers as are properly assigned to him
or her by the Board of Directors, the Chairperson of the Board or the Chief Executive Officer, and may be required to give bond
for the faithful performance of his or her duties in such sum and with such surety as may be required by the Board of Directors.
Section 8. Other Officers.
The Board of Directors
may designate and fill such other offices in its discretion and the persons holding such other offices shall have such powers and
shall perform such duties as the Board of Directors or Chief Executive Officer may from time to time assign.
Section 9. Action with Respect to Securities of 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.
ARTICLE V
STOCK
Section 1. Certificates of Stock.
The Board of
Directors may determine to issue certificated or uncertificated shares of capital stock and other securities of the
Corporation. For certificated stock, each stockholder is 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 or other person to whom it is issued, and the class of stock and number of shares it represents. It
shall also include on its face or back (a) a statement of any restrictions on transferability and a statement of the
designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the stock of each class that the Corporation is authorized to
issue, of the differences in the relative rights and preferences between the shares of each series of preferred stock that
the Corporation is authorized to issue, to the extent they have been set, and of the authority of the Board of Directors to
set the relative rights and preferences of subsequent series of preferred stock or (b) a statement that provides in substance
that the Corporation will furnish a full statement of such information to any stockholder on request and without charge. Such
request may be made to the Secretary or to the Corporation’s transfer agent. Upon the issuance of uncertificated shares
of capital stock, the Corporation shall send the stockholder a written statement of the same information required above with
respect to stock certificates. Each stock certificate shall be in such form, not inconsistent with law or with the
Corporation’s Articles, as shall be approved by the Board of Directors or any officer or officers designated for such
purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the Chairperson of the Board, the
President, or a Vice President, and countersigned by the Secretary, an Assistant Secretary, the Chief Financial Officer
or the Treasurer. Each certificate may be sealed with the actual corporate seal or a facsimile of it or in any other form and
the signatures 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 when it is issued. A certificate may not be issued until the stock represented by
it is fully paid.
Section 2. Transfers of Stock.
Transfers of stock
shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated
to transfer shares of the stock of the Corporation. Except where a certificate is issued in accordance with Section 4 of Article
V of these Bylaws, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a
new certificate is issued therefor.
Section 3. Record Dates or Closing of Transfer Books.
The Board of Directors
may, and shall have the power to, set a record date or direct that the stock transfer books be closed for a stated period to make
any proper determination with respect to stockholders, including which stockholders are entitled to notice of a meeting, vote
at a meeting, receive a dividend, or be allotted other rights. The record date may not be before the close of business on the
day the record date is fixed nor, subject to Section 3 of Article I of these Bylaws, more than ninety (90) days before the date
on which the action requiring the determination will be taken; the transfer books may not be closed for a period longer than twenty
(20) days; and, in the case of a meeting of stockholders, the record date or the closing of the transfer books shall be at least
ten (10) days before the date of the meeting. Any shares of the Corporation’s own stock acquired by the Corporation between
the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders and the time of the
meeting may be voted at the meeting by the holder of record as of the record date and shall be counted in determining the total
number of outstanding shares entitled to be voted at the meeting.
Section 4. Lost, Stolen or Destroyed Certificates.
The Board of Directors
of the Corporation may determine the conditions for issuing a new stock certificate in place of one that is alleged to have been
lost, stolen, or destroyed, or the Board of Directors may delegate such power to any officer or officers of the Corporation or
to the transfer agent designated to transfer shares of the stock of the Corporation. In their discretion, the Board of Directors
or such officer or officers may require the owner of the certificate to give a bond, with sufficient surety, to indemnify the Corporation
against any loss or claim arising as a result of the issuance of a new certificate. In their discretion, the Board of Directors
or such officer or officers may refuse to issue such new certificate without the order of a court having jurisdiction over the
matter.
Section 5. 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
that the stockholder holds. 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 or, if none, at the principal executive office of the Corporation.
Section 6. Regulations.
The issue, transfer, conversion and registration
of certificates of stock shall be governed by such other regulations as the Board of Directors may establish.
ARTICLE VI
MISCELLANEOUS
Section 1. Facsimile Signatures.
In addition to the
provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer
or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.
Section 2. Corporate Seal.
The Board of Directors
may 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. If the Corporation is required to place
its corporate seal to a document, it is sufficient to meet the requirement of any law, rule, or regulation relating to a corporate
seal to place the word “(seal)” adjacent to the signature of the person authorized to sign the document on behalf
of the Corporation.
Section 3. Books and Records.
The Corporation shall keep correct
and complete books and records of its accounts and transactions and minutes of the proceedings of its stockholders and Board
of Directors and of any committee when exercising any of the powers of the Board of Directors. The books and records of the
Corporation may be in written form or in any other form which can be converted within a reasonable time into written form for
visual inspection. Minutes shall be recorded in written form but may be maintained in the form of a reproduction. The
original or a certified copy of these Bylaws shall be kept at the principal office of the Corporation.
Section 4. Reliance upon Books, Reports and Records.
Each director, each
member of any committee designated by the Board of Directors, and each officer and agent of the Corporation shall, in the performance
of his or her duties, in addition to any protections conferred upon him or her by law, be fully protected in relying in good faith
upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented
to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other
person as to matters which such director, committee member, officer or agent reasonably believes are within such other person’s
professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.
Section 5. 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.
Section 6. Time Periods.
In applying any provision
of these Bylaws that requires that an act be done or not be done a specified number of days before an event or that an act be done
during a period of a specified number of days before an event, calendar days shall be used, the day of the doing of the act shall
be excluded and the day of the event shall be included.
Section 7. 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 be
signed by any officer, employee or agent of the Corporation that is authorized by the Board of Directors.
Section 8. Mail.
Any notice or other document that is required
by these Bylaws to be mailed shall be deposited in the United States mail, postage prepaid.
Section 9. Contracts and Agreements.
To the extent permitted
by applicable law, and except as otherwise prescribed by the Articles or these Bylaws, the Board of Directors may authorize any
officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and
on behalf of the Corporation. Such authority may be general or confined to specific instances. A person who holds more than one
office in the Corporation may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law
to be executed, acknowledged, or verified by more than one officer.
ARTICLE VIII
AMENDMENTS
These Bylaws may be adopted, amended or
repealed as provided in the Articles of the Corporation.
EXHIBIT C
Organizational Certificate and Bylaws
of the MHC
ORGANIZATION CERTIFICATE
OF
PIONEER BANCORP, MHC
We, the undersigned,
all being of full age, each of us being citizens of the United States, having associated ourselves together for the purpose of
forming a mutual holding company under and pursuant to New York Banking Law (the “Banking Law”), do hereby certify
the following:
First:
Name
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The name of the corporation is “Pioneer Bancorp, MHC” (the “Mutual Holding Company”).
Second:
Principal
Office
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The Mutual Holding Company’s principal office shall be located at 652 Albany-Shaker Road, Albany, NY 12211.
Third:
Duration
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The Mutual Holding Company shall have perpetual duration.
Fourth:
Purpose
and Powers
.
The purpose of the Mutual Holding Company is to conduct the business of a mutual holding company under the
Banking Law, subject to any federal laws, regulations, commitments or orders as applicable. The Mutual Holding Company shall have
all of the powers of a mutual holding company under Article VI-C of the Banking Law, the regulations of the New York State Department
of Financial Services (the “Department”), any order of the New York Superintendent of Financial Services (the “Superintendent”)
and federal laws, regulations, commitments or orders as applicable, and such powers as are incidental to and implied therefrom,
except the power to accept deposits.
Fifth:
Capital
.
The Mutual Holding Company shall not have any capital stock.
Sixth:
Incorporators
.
The name, occupation, residence and post-office address of each incorporator is as follows:
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Occupation
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Residence and Address
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The incorporators will
not contribute any amounts to a surplus fund because the Mutual Holding Company is a mutual holding company, which cannot accept
deposits and is not a banking organization under the Banking Law and therefore is not required to establish a surplus fund thereunder.
Seventh:
Trustees
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The Board of Trustees of the Mutual Holding Company shall have the entire management and control of the affairs of the Mutual
Holding Company. The number of trustees shall be not less than seven (7) nor more than twenty (20), except that the number of
trustees may be decreased to a number less than seven (7) or increased to a number greater than twenty (20) if approved by the
Department. The precise number of trustees shall be fixed from time to time by the Board of Trustees pursuant to the bylaws of
the Mutual Holding Company or a resolution adopted by a majority of the Board of Trustees. The incorporators of the Mutual Holding
Company, each of whom is free of the disqualifications set forth in Section 246 of the Banking Law, unless otherwise approved
by the Department, shall constitute the Mutual Holding Company’s initial Board of Trustees.
Eighth: Indemnification.
(a) The Mutual Holding Company shall, to the maximum extent permitted and
in the manner provided by the Banking Law, indemnify each person made, or threatened to be made, a party to any action, suit or
proceeding, whether criminal or civil, by reason of the fact that such person or such person’s testator or intestate is
or was a trustee or officer of the Mutual Holding Company, or is or was serving, in any capacity, at the request of the Mutual
Holding Company, or any corporation, or any partnership, joint venture, trust, employee benefit plan or other enterprise, against
judgments, fines, penalties, amounts paid in settlement and reasonable expenses, including attorneys’ fees and expenses
actually and necessarily incurred in connection therewith, or any appeal therein, provided that the person to be indemnified has
met the applicable standard of conduct to be so indemnified under the Banking Law or any other applicable law.
(b) The Mutual Holding Company shall
advance or promptly reimburse upon request any person entitled to indemnification hereunder for all reasonable expenses,
including attorneys’ fees and expenses, reasonably incurred in defending any action or proceeding in advance of the
final disposition thereof upon receipt of an undertaking by or on behalf of such person to repay such amount if such person
is ultimately found not to be entitled to indemnification or, where indemnification is granted, to the extent the expenses so
advanced or reimbursed exceed the amount to which such person in entitled, provided, however, that such person shall
cooperate in good faith with any request by the Mutual Holding Company that common counsel be used by the parties to any
action or proceeding who are similarly situated unless to do so would be inappropriate due to actual or potential differing
interest between or among parties.
(c) Nothing herein shall limit or affect any
right of any trustee, officer, or other corporate personnel otherwise than hereunder to indemnification or expenses, including
attorneys’ fees and expenses, under any statute, rule, regulation, certificate of incorporation, bylaws, insurance policy,
contract, or otherwise; without affecting or limiting the rights of any trustee, officer or other corporate personnel pursuant
to this Section Eighth, the Mutual Holding Company is authorized to enter into agreements with any of its trustees, officers or
other corporate personnel extending rights to indemnification and advancement of expenses to the fullest extent permitted by applicable
law.
(d) Anything in this Organization Certificate
to the contrary notwithstanding, no elimination or amendment of this Section Eighth adversely affecting the right of any person
to indemnification or advancement of expenses hereunder shall be effective until the 60
th
day following notice to such
person of such action, and no elimination of or amendment to this Section Eighth shall deprive any such person’s rights hereunder
arising out of alleged or actual occurrences, act or failures to act prior to such 60
th
day. Any amendments or eliminations
made pursuant to the Section Eighth are only effective with regard to acts occurring after such date. The indemnification of any
person provided by this Section Eighth shall continue after such person has ceased to be trustee or officer of the Mutual Holding
Company and shall inure to the benefit of such person’s heirs, executors, administrators and legal representatives.
(e) In case any provision in this Section Eighth
shall be determined at any time to be unenforceable in any respect, the other provisions of the Section Eighth shall not in any
way be affected or impaired thereby, and the affected provision shall be given the fullest possible enforcement in the circumstances,
it being the intention of the Mutual Holding Company to afford indemnification and advancement of expenses to its trustees or officers,
acting in such capacities or in the other capacities mentioned herein, to the fullest extent permitted by law.
Ninth:
Amendment
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Any proposed amendment to the Organization Certificate shall, if required under the Banking Law, be submitted to the Superintendent
and, upon the Superintendent’s written approval thereof, shall be posted in a conspicuous place in the office of the Mutual
Holding Company for thirty (30) days. Such proposed amendment thereafter shall be incorporated into the Organizational Certificate
by being duly adopted by a majority vote of the Mutual Holding Company’s Board of Trustees and, if necessary, shall be filed
in the office of the Superintendent within thirty (30) days of such adoption.
IN WITNESS WHEREOF
,
we hereby certify that this Organization Certificate was unanimously authorized by the Incorporators of the Mutual Holding Company,
and that we have made, signed and acknowledged this certificate in duplicate, this___________ day of ____________, 2019.
State of New York }
County of Albany } ss.:
On this ___ day of ______
2019, before me personally appeared _________, ______________, __________, _____________, ____________, ______________ and
_____________, to me known to be the persons described in, and who executed, the foregoing certificate and severally
acknowledged that they executed the same.
BYLAWS OF
PIONEER BANCORP,
MHC
TABLE OF CONTENTS
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ARTICLE I - IDENTIFICATION
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1
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Section 1. Name
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Section 2. Principal
Office and Place of Business
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1
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Section 3. Fiscal
Year
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Section 4. Seal
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ARTICLE II - BOARD OF TRUSTEES
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1
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Section 1. Number
and Qualifications
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1
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Section 2. Term
of Office
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1
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Section 3. Election
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2
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Section 4. Meetings
of the Board of Trustees
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(a) Regular
Meetings
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2
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(b) Special Meetings
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2
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(c) Notice
of Meetings
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2
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(d) Quorum
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3
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(e) Manner
of Acting
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3
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(f) Presence
at Meetings
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3
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(g) Organization
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3
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Section 5. Age
Limitations of Trustees
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3
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Section 6. Trustees Emeritus
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ARTICLE III - OFFICERS
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Section 1. Selection,
Tenure and Compensation of Officers
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Section 3. Delegation
of Duties
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4
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In
the absence or disability of an officer of the Mutual Holding Company, or for any other reason which may seem sufficient to the
Board, the Board of Trustees may delegate such officer’s powers and duties to any other officer
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ARTICLE IV - COMMITTEES
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Section 1. Establishment
of Committees
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Section 2. Executive
Committee
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Section 3. Audit
Committee
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Section 4. The
Governance and Nominating Committee
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Section 5. Quorum
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5
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Section 6. Removal
and Resignations
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5
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Section 7. Vacancies
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TABLE OF CONTENTS
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ARTICLE V - CONDUCT OF MEETINGS
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ARTICLE VI - INDEMNIFICATION OF TRUSTEES, OFFICERS AND EMPLOYEES
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Section 1. Indemnification
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Section 2. Indemnification
Rights are Non-exclusive
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ARTICLE VII - SURETY BONDS
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ARTICLE VIII - COMPENSATION OF TRUSTEES, OFFICERS, ETC.
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Section 1. Trustees
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Section 2. Officers
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Section 3. Employees
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ARTICLE IX - MISCELLANEOUS
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Section 1. Depositories
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Section 2. Continuation
of Mutual Holding Company Operation in the Event of an Emergency
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ARTICLE X - AMENDMENTS
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ARTICLE I - IDENTIFICATION
Section 1. Name.
The name of this corporation
is PIONEER BANCORP, MHC (the “Mutual Holding Company”).
Section 2. Principal
Office and Place of Business.
The address
of the principal office and place of business of the Mutual Holding Company is 652 Albany-Shaker Road, Albany, NY 12211.
Section 3. Fiscal Year.
The fiscal year of the Mutual Holding Company shall begin on the first day of July in each year and end on the
last day of June in each year.
Section 4. Seal.
The Mutual Holding Company shall have an official corporate seal on which the words
“PIONEER BANCORP, MHC” shall be inscribed.
ARTICLE II - BOARD OF TRUSTEES
Section 1. Number and Qualifications.
The entire management and
control of the affairs of the Mutual Holding Company shall be vested in a Board of Trustees (sometimes referred to herein as the
“Board” or “Trustees”). The Board shall consist of such number of Trustees as is established by the Board
from time to time, which number shall not be less than seven (7) nor more than twenty (20), except that the number of Trustees
may be decreased to a number less than seven (7) or a number greater than twenty (20) if approved by the New York State Department
of Financial Services (the “Department”). Unless otherwise approved by the Department, all Trustees shall meet all
of the qualifications of a Trustee pursuant to New York Banking Law (“Banking Law”).
Section 2. Term of Office.
The
term of office of the Trustees shall be three (3) years, except as set forth below for the initial classification of the Trustees.
At the first meeting of the Board of Trustees after these Bylaws are adopted, Trustees shall be divided into three classes, as
nearly equal in number as possible as proposed by the Chairman and the three classes shall be staggered, so that the term of office
of one of the classes shall expire at the regular annual Board meeting in each of the next three years. Vacancies resulting from
the expiration of a term shall be filled at the regular annual Board meeting in each year to expire at the regular Board meeting
held three years later. Any Trustee elected to fill a vacancy resulting from any other cause shall serve for the remainder of the
unexpired term. Vacancies resulting from an increase in the number of Trustees shall be assigned to the existing classes so that
the classes remain as nearly equal in number as possible.
The Board may reassign vacancies to different
classes if necessary for the three classes to remain as nearly equal in number as possible.
A Trustee may be removed only pursuant
to the Banking Law and in accordance with the procedures contained therein. A Trustee shall be deemed to have vacated his or her
office upon the occurrence of certain events and/or conditions as set forth in the Banking Law.
Section 3. Election.
Whenever a vacancy occurs
on the Board of Trustees, the Board of Trustees, unless it determines to decrease the size of the Board, shall elect a new Trustee
to fill such vacancy. The Board shall nominate the person or persons to be elected Trustee at a regular Board meeting prior to
the election of such person or persons by vote of at least three quarters (3/4) of all Trustees then in office at such prior regular
Board meeting. Trustees shall be elected only by a vote of at least three quarters (3/4) of all Trustees then in office at a regular
Board meeting.
Section 4. Meetings of the Board of Trustees.
The Board shall hold at
least three (3) regular meetings per year. The Board of Directors may provide, by resolution, the time and place for the holding
of regular meetings of the Board of Directors without notice other than such resolution. The Board may, by resolution, hold meetings
at any place within or outside of the State of New York. The Board shall hold an annual meeting, to be held at such time and place
as may be set by the Board from time to time, at which meeting (i) the Trustees and officers shall be elected or appointed, (ii)
the compensation for the Trustees and officers shall be reviewed and fixed and (iii) any other business that may come before the
Board shall be conducted.
Special meetings of the Board
may be called by the Chairman of the Board or the Chief Executive Officer, or by written request to the Secretary by one-third
(1/3) of the members of the Board of Trustees.
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(i)
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No notice of the time and place of a regular meeting of
the Board shall be required.
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(ii)
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Forty-eight (48) hours prior notice shall be given to each
Trustee of special meetings. Such notice shall state the purpose for holding the special meeting and the time and place for the
holding of the meeting.
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(iii)
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When required to be given, notice of any meeting of the
Board may be given personally, by overnight mail or courier, by facsimile, email or other electronic transmission, or by telephone.
Notice shall be deemed given when sent, personally delivered or given to any mail or courier service.
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(iv)
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Due proof of the giving of adequate notice shall be given
at the meeting if requested.
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(v)
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Any Trustee may waive notice by written waiver given before
or after a meeting and presence at a meeting without objection to lack of notice shall constitute wavier thereof.
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(d) Quorum.
A quorum for the transaction
of business, as may be adjusted by the majority of the entire Board of Trustees, including vacancies, shall consist of a majority
of Trustees then in office.
(e) Manner
of Acting.
Except as provided by
law or these Bylaws, the affirmative vote of a majority of the Trustees present at a meeting, if a quorum is present at such time,
shall be the act of the Board. A majority of the Trustees present, whether or not a quorum is present, shall have power
to adjourn the meeting to another time and place. No notice of the adjournment need be given.
(f) Presence
at Meetings.
Any member of the Board
or member of any committee may, only once per calendar year, unless otherwise authorized by a vote of at least three quarters (3/4)
of all Trustees then in office, participate in a meeting of the Board of Trustees or committee thereof by means of a conference
telephone or communications equipments allowing all persons participating in the meeting to hear and speak to each other at the
same time, and any person who participates by such means shall be deemed to be present in person at such meeting.
(g) Organization.
Unless the Board of Trustees
shall otherwise provide by resolution, the Chairman of the Board, or in his/her absence the President, or a Trustee designated
by the Board of Trustees, shall act as chairman at all meetings of the Board and the Secretary, or in his/her absence another officer
or Trustee designated by the Board of Trustees, shall act as Secretary at all such meetings.
Section 5. Age Limitations
of Trustees.
No person who is 70
years of age or more shall be eligible for initial election as a Trustee and, unless otherwise approved by the Department, no Trustee
shall continue to serve as a Trustee beyond the last day of the calendar year in which such Trustee reaches age 75.
Section 6. Trustees Emeritus.
The Board may, from
time to time, designate former Trustees as Trustee Emeritus which shall be an honorary title. A Trustee Emeritus, upon
invitation by the Board, shall be permitted to attend Board meetings but shall not be entitled to vote.
ARTICLE III - OFFICERS
Section 1. Selection, Tenure
and Compensation of Officers.
The officers of the
Mutual Holding Company shall be a Chairman of the Board, a Chief Executive Officer, a President, a Secretary and a Chief Financial
Officer. Any two (2) or more offices may be held by the same person except the offices of President and Secretary. The
officers shall have such authority and perform such duties as the Board of Trustees may from time to time authorize or determine. In
the absence of action by the Board of Trustees, the officers shall have such powers and duties as generally pertain to their respective
offices.
The Board and the Chairman
may, in their discretion, elect or appoint such other officers and assistants as they deem necessary who shall have such authority
and such designation and shall perform such duties as the Chairman or the Board may prescribe from time to time. The Board shall,
in its discretion, fix the compensation of the Chairman and the President and may authorize contracts of employment between the
Mutual Holding Company and any officer. Officers may be removed with or without cause by vote of the Board at any time. The provisions
of this paragraph shall be without prejudice to the contractual rights, if any, of the officer.
Section 3. Delegation of
Duties.
In the absence or disability
of an officer of the Mutual Holding Company, or for any other reason which may seem sufficient to the Board, the Board of Trustees
may delegate such officer’s powers and duties to any other officer.
ARTICLE IV - COMMITTEES
Section 1. Establishment
of Committees.
The Board of Trustees
may establish committees to facilitate the work of the Board from time to time. Committees shall consist of such members
of the Board and other persons as the Board may appoint, provided that only Trustees may be members of the Executive Committee. Except
as expressly set forth below, the terms of the office of all the members of committees shall expire as set forth in the resolution
appointing such members, or, in the absence thereof, one year after the date of appointment.
Section 2. Executive Committee.
The Executive Committee
shall consist of five Trustees, one of whom shall be the Chairman of the Board. The committee shall meet at such time
and on such notice as the Chairman of the Executive Committee may direct or at the written request of two (2) committee members
for the purpose of:
(a) examining
all claims against the Mutual Holding Company;
(b) supervising
the general management of the Mutual Holding Company;
(c) advising
the Chief Executive Officer in the performance of his/her duties; and
(d) for
such purposes and business that the committee deems necessary.
During the intervals
between meetings of the Board of Trustees, and subject to such limitations imposed by law or by the Board, the Executive Committee
shall have and may exercise all of the authority of the Board of Trustees in the management of the Mutual Holding Company. Any
action taken by the Executive Committee during such intervals shall, nevertheless, be reported to the Board at its next regular
meeting.
The Executive Committee
shall have the power to adopt rules and regulations for the conduct of its business.
Section 3. Audit Committee.
The Audit Committee
shall consist of at least three (3) members of the Board of Trustees. No salaried officer, employee or attorney who
receives any fee, compensation or any other form of emolument for legal services rendered to the Mutual Holding Company shall serve
on the Audit Committee. The committee shall, once in each calendar year, make an examination of the records and affairs
of the Mutual Holding Company as of a date not less than six (6) months after the end of the Mutual Holding Company’s fiscal
year. The committee shall have the full power and authority to make other examinations of the books, records, securities, properties,
management and business of the Mutual Holding Company, at such time and in such manner as it deems proper. The Mutual
Holding Company may employ outside accountants, auditors and other persons as it deems advisable to assist in such examinations,
the cost thereof to be paid by the Mutual Holding Company. In the conduct of such examinations, inquiry shall be made
into the policies of management for the purpose of determining whether such policies are sound and consistent with the requirements
of law, and into such others matters as shall be necessary to enable the Trustees to determine whether adequate protection is afforded
to depositors.
The committee may also
make recommendations to the Board of Trustees, the Chairman and the President with respect to the management and business of the
Mutual Holding Company.
Section 4. The Governance
and Nominating Committee.
The Governance and
Nominating Committee shall consist of at least three (3) members of the Board of Trustees, none of whom shall be a salaried officer
of the Bank. The Governance and Nominating Committee shall be responsible for nomination and screening of trustee candidates; filling
vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, or resulting from
an increase in the authorized number of trustees; evaluation of trustee performance; trustee training; and committee assignment
and rotation.
Section 5. Quorum.
A majority of the members
of any committee present at a meeting shall constitute a quorum. Less than a majority, however, shall have the power
to adjourn.
Section 6. Removal and Resignations.
The Board of Trustees
shall have the power at any meeting to remove, with or without cause, any member of any committee. Any member of any
committee may resign from such committee by giving written notice to the Board of Trustees.
Section 7. Vacancies.
A vacancy on any committee
may be filled by the Board of Trustees.
ARTICLE V - CONDUCT OF MEETINGS
Meetings of the Board
of Trustees and all committees of said Board shall be conducted in accordance with such reasonable procedures as may be established
by majority vote of the members of the Board of Trustees or such committee, and in the absence thereof, as reasonably established
by the chairman of the meeting. Except as otherwise required by law or in these Bylaws, a majority vote of the members
present at any meeting of any committee at which a quorum exists shall be sufficient to approve any action.
ARTICLE VI - INDEMNIFICATION OF TRUSTEES,
OFFICERS AND EMPLOYEES
Section 1. Indemnification.
The Mutual Holding
Company shall indemnify any Trustee, officer, former Trustee or former officer of the Mutual Holding Company, to the maximum extent
allowed by law, against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys’ fees,
resulting from such person being made or threatened to be made a party to any action or proceeding by reason of the fact that such
person was or is a Trustee or officer of the Mutual Holding Company, or served at the request of the Mutual Holding Company in
any capacity with any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The
right to indemnification shall continue to apply to the estate of a deceased Trustee or officer and his/her executors and administrators. No
indemnification may be made to or on behalf of any Trustee or officer, unless expressly permitted by law or court order, if a judgment
or final adjudication adverse to the Trustee or officer establishes that his/her acts were committed in bad faith or were the result
of active and deliberate dishonesty material to the cause of action so adjudicated, or that he/she personally gained in fact a
financial profit or other advantage to which he/she was not legally entitled.
Section 2. Indemnification
Rights are Non-exclusive.
Such rights of indemnification
and reimbursement shall not be deemed exclusive of any other rights to which such Trustee or officer may be entitled by law, agreement
or otherwise. Nothing contained in these Bylaws shall affect any rights to indemnification to which Mutual Holding Company
employees other than Trustees and officers may be entitled by contract or otherwise under law.
ARTICLE VII - SURETY BONDS
Bonds of recognized
surety companies covering Trustees, officers and employees, shall be provided at the expense of the Mutual Holding Company as directed
by the Board of Trustees or the Executive Committee.
ARTICLE VIII - COMPENSATION OF TRUSTEES,
OFFICERS, ETC.
Section 1. Trustees.
The Trustees, including
Trustee Emeriti but excluding Trustees who are salaried officers of the Mutual Holding Company, may whenever permitted by law,
be paid an annual retainer fee, or such other compensation as the Board may from time to time establish.
Section 2. Officers.
The officers of the
Mutual Holding Company shall receive such salaries, bonuses, benefits and other compensation for their services as the Board of
Trustees shall from time to time establish subject to the officer’s contractual rights, if any. No officer shall
vote upon his/her own compensation.
Section 3. Employees.
The employees of the
Mutual Holding Company shall receive such compensation and ancillary benefits as the Board of Trustees may from time to time establish,
or within limits or schedules from time to time fixed or established by the Board or by a committee of the Board. The
Board shall have the right to delegate to the Chairman, Chief Executive Officer, President or any officer acting under his/her
direction, the authority to fix the compensation of non-officer employees.
ARTICLE IX - MISCELLANEOUS
Section 1. Depositories.
Funds of the Mutual
Holding Company shall be deposited to its credit in Pioneer Bank or other depositories as the majority of the Board of Trustees
exclusive of Trustees excluded from such majority by law shall by resolution from time to time designate.
Section 2. Continuation of
Mutual Holding Company Operation in the Event of an Emergency.
If a state of disaster
occurs of such severity as to prevent the conduct and management of the affairs and business of the Mutual Holding Company by its
Trustees and officers as otherwise provided in these Bylaws, any two (2) or more available members of the then incumbent Executive
Committee shall constitute a quorum of that committee for the full conduct and management of the affairs and business of the Mutual
Holding Company. If less than two (2) members of the then incumbent Executive Committee are available, then any Trustee
who can be assembled by the senior (by years of service) available Trustee shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Mutual Holding Company and any two (2) Trustees shall constitute a quorum
of such committee.
If in any such emergency, any authorized place of business of the Mutual Holding Company shall be
unable to function because of the emergency, the business ordinarily conducted at such location may be relocated elsewhere, in
addition to or in lieu of the locations otherwise authorized. Such relocation shall be as designated by the Board of
Trustees, the Executive Committee or by such persons as are then, in accordance with this Bylaw and any implementing regulations,
dealing with the conduct of the affairs of the Mutual Holding Company.
This Bylaw shall be
subject to the implementation by resolutions of the Board of Trustees. All other provisions of these Bylaws or any resolution
of the Board of Trustees which is contrary to this Bylaw or contrary to any resolution adopted hereunder shall be suspended in
the event of such disaster until the Executive Committee of the Board acting under this section determines that the Mutual Holding
Company may resume operation under all the provisions of these Bylaws.
ARTICLE X - AMENDMENTS
Any proposed amendment
to these Bylaws shall, if required under the Banking Law, be submitted to the Superintendent of Financial Services (the “Superintendent”)
and, upon the Superintendent’s written approval thereof, shall be posted in a conspicuous place in the office of the Mutual
Holding Company for thirty (30) days. Such proposed amendment thereafter shall be incorporated into the Bylaws by being
duly adopted by a majority vote of the Mutual Holding Company’s Board of Trustees and, if necessary, shall be filed in the
office of the Superintendent within thirty (30) days of such adoption.
Adopted as of ________, 2019
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
Pioneer
B
ANCORP, INC.
The undersigned Benjamin
M. Azoff, whose address is 5335 Wisconsin Avenue, NW Suite 780, Washington, DC 20015, being at least eighteen (18) years of age,
does hereby form a corporation under the general laws of the State of Maryland having the following Articles of Incorporation (the
“Articles”):
ARTICLE 1. Name.
The name of the corporation is Pioneer Bancorp, Inc. (herein, the “Corporation”).
ARTICLE 2. Principal
Office.
The street address of the principal office of the Corporation in the State of Maryland is c/o CSC-Lawyers Incorporating
Service Company, 7 St. Paul Street, Suite 1660, Baltimore, Maryland 21202.
ARTICLE 3. Purpose.
The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be organized
under the general laws of the State of Maryland as now or hereafter in force.
ARTICLE 4. Resident
Agent.
The name and address of the registered agent of the Corporation in the State of Maryland is CSC-Lawyers Incorporating
Service Company, 7 St. Paul Street, Suite 1660, Baltimore, Maryland 21202. Said resident agent is a Maryland corporation.
ARTICLE 5. Capital
Stock
A. Authorized
Capital Stock.
The total number of shares of capital stock of all classes that the Corporation has authority to issue is eighty
million (80,000,000) shares, consisting of:
1. Five
million (5,000,000) shares of preferred stock, par value one cent ($0.01) per share (the “Preferred Stock”); and
2. Seventy-five
million (75,000,000) shares of common stock, par value one cent ($0.01) per share (the “Common Stock”).
The aggregate par value
of all the authorized shares of capital stock is eight hundred thousand dollars ($800,000). Except to the extent required by governing
law, rule or regulation, the shares of capital stock may be issued from time to time by the Board of Directors without further
approval of the stockholders of the Corporation. The Corporation shall have the authority to purchase its capital stock out of
funds lawfully available therefor, which funds shall include, without limitation, the Corporation’s unreserved and unrestricted
capital surplus. The Board of Directors, pursuant to a resolution approved by a majority of the Whole Board (rounded up to the
nearest whole number), 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. For the
purposes of these Articles, the term “Whole Board” shall mean the total number of directors that the Corporation would
have if there were no vacancies on the Board of Directors at the time any such resolution is presented to the Board of Directors
for adoption.
B. Common
Stock.
Except as provided under the terms of any series of the Preferred Stock and as limited by Section D of this Article
5, the exclusive voting power shall be vested in the Common Stock. Except as otherwise provided for in these Articles, each holder
of the Common Stock shall be entitled to one (1) vote for each share of Common Stock standing in the holder’s name on the
books of the Corporation. Subject to any rights and preferences of any series of Preferred Stock, holders of the Common Stock shall
be entitled to such dividends as may be declared by the Board of Directors out of funds lawfully available therefor. Upon the liquidation,
dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, holders of the Common Stock shall
be entitled to receive all the remaining assets of the Corporation available for distribution to its stockholders ratably in proportion
to the number of shares held by them, respectively, after: (i) payment or provision for payment of the Corporation’s debts
and liabilities; and (ii) distributions or provisions for distributions to holders of any class or series of stock having a preference
over the Common Stock in the liquidation, dissolution or winding up of the Corporation.
C. Preferred
Stock.
The Board of Directors is hereby expressly authorized, subject to any limitations prescribed by law, to provide for
the issuance of shares of the Preferred Stock in series, to establish from time to time the number of shares to be included in
each such series, and to fix the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the shares of each such series. The number of authorized shares of the
Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the Common Stock, without a vote of the holders of the Preferred Stock, or of any series thereof,
unless a vote of any such holders is required by law or pursuant to the terms of the Preferred Stock. The power of the stockholders
to increase or decrease the authorized shares of the Preferred Stock shall not limit any of the powers of the Board of Directors
provided under these Articles.
D. Restrictions
on Voting Rights of the Corporation’s Equity Securities.
1. Notwithstanding
any other provision of these Articles, in no event shall the record owner (or if more than one record owner, all such record owners
taken as a group) 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 in excess of ten percent (10%)
of the then-outstanding shares of Common Stock (the “Limit”), 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 particular record owner by virtue of the provisions
hereof in respect of Common Stock beneficially owned by such Person owning shares in excess of the Limit (a “Holder in Excess”)
shall be a number equal to the total number of votes that a single record owner of all Common Stock owned by such Holder in Excess
would be entitled to cast after giving effect to the provisions hereof, multiplied by a fraction, the numerator of which is the
number of shares of such class or series that are both (i) beneficially owned by such Holder in Excess and (ii) owned of record
by such particular record owner, and the denominator of which is the total number of shares of Common Stock beneficially owned
by such Holder in Excess. The provisions of this Section D of this Article 5 shall not be applicable to any mutual holding company
parent of the Corporation. The provisions of this Section D of this Article 5 also shall not be applicable if, before the Holder
in Excess acquired beneficial ownership of such shares in excess of the Limit, such acquisition was approved by a majority of the
“Unaffiliated Directors.” For this purpose, the term “Unaffiliated Director” means any member of the Board
of Directors who is unaffiliated with the Holder in Excess and was a member of the Board of Directors before the time that the
Holder in Excess became such, and any director who is thereafter chosen to fill any vacancy on the Board of Directors and who is
elected and who, in either event, is unaffiliated with the Holder in Excess 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 serving on the Board of Directors.
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2.
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The following definitions shall apply to this Section D of this Article 5:
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(a)
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An “affiliate” of a specified Person shall mean a Person that directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified.
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(b)
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“Beneficial ownership” shall be determined pursuant to Rule 13d-3 of the General Rules
and Regulations under the Securities Exchange Act of 1934 (or any successor rule or statutory provision), or, if said Rule 13d-3
shall be rescinded and there shall be no successor rule or statutory provision thereto, pursuant to said Rule 13d-3 as in effect
on the filing date of these Articles; provided, however, that a Person shall, in any event, also be deemed the “beneficial
owner” of any Common Stock:
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(1)
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that such Person or any of its affiliates beneficially owns, directly or indirectly; or
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(2)
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that such Person or any of its affiliates has (i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding (but shall not be deemed
to be the beneficial owner of any voting shares solely by reason of an agreement, contract, or other arrangement with the Corporation
to effect any transaction of the type described in clause (i) or (ii) of the first sentence of Article 9 hereof) or upon the exercise
of conversion rights, exchange rights, warrants, or options or otherwise, or (ii) 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
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(3)
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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 (i) 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 (ii) neither any employee stock ownership or similar plan of the Corporation or any subsidiary
of the Corporation nor any trustee with respect thereto (or any affiliate of such trustee) shall, solely by reason of such capacity
of such trustee, be deemed, for any purposes hereof, to beneficially own any Common Stock held under any such plan. For purposes
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 subsection 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 Common Stock then outstanding and shall not include any
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)
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A “Person” shall mean any individual, firm, corporation, or other entity.
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(d)
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The Board of Directors shall have the power to construe and apply the provisions of this Section
D and to make all determinations necessary or desirable to implement such provisions including, but not limited to, matters with
respect to (i) the number of shares of Common Stock beneficially owned by any Person, (ii) whether a Person is an affiliate of
another, (iii) whether a Person has an agreement, arrangement, or understanding with another as to the matters referred to in the
definition of beneficial ownership, (iv) the application of any other definition or operative provision of this Section D to the
given facts, or (v) any other matter relating to the applicability or effect of this Section D.
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3. The
Board of Directors shall have the right to demand that any Person reasonably believed by the Board of Directors to be a Holder
in Excess (or holder of record of Common Stock beneficially owned by any Holder in Excess) supply the Corporation with complete
information as to (i) the record owner(s) of all shares beneficially owned by such Holder in Excess, and (ii) any other factual
matter relating to the applicability or effect of this section as may reasonably be requested of such Holder in Excess. The Board
of Directors shall further have the right to receive from any Holder in Excess reimbursement for all expenses incurred by the Board
in connection with its investigation of any matters relating to the applicability or effect of this section on such Holder in Excess,
to the extent such investigation is deemed appropriate by the Board of Directors as a result of the Holder in Excess refusing to
supply the Corporation with the information described in the previous sentence.
4. Any
constructions, applications, or determinations made by the Board of Directors pursuant to this Section D 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.
5. If
any provision (or portion thereof) of this Section D shall be found to be invalid, prohibited or unenforceable for any reason,
the remaining provisions (or portions thereof) of this Section D 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 D remain,
to the fullest extent permitted by law, applicable and enforceable as to all stockholders, including Holders in Excess, notwithstanding
any such finding.
E. Majority
Vote for Certain Actions.
With respect to those actions as to which any provision of the Maryland General Corporation Law (the
“MGCL”) requires stockholder authorization 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, any 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.
F. Quorum.
Except as otherwise provided by law or expressly provided in these Articles, 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 Article 5, Section D) 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
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.
ARTICLE 6. Preemptive
Rights and Appraisal Rights.
A. Preemptive
Rights.
Except for preemptive rights approved by the Board of Directors pursuant to a resolution approved by a majority of
the directors then in office, no holder of the capital stock of the Corporation or series of stock or of options, warrants or other
rights to purchase shares of any class or series of stock or of other securities of the Corporation shall have any preemptive right
to purchase or subscribe for any unissued capital stock of any class or series, or any unissued bonds, certificates of indebtedness,
debentures or other securities convertible into or exchangeable for capital stock of any class or series or carrying any right
to purchase stock of any class or series.
B.
Appraisal
Rights.
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.
ARTICLE 7. Directors.
The following provisions are made a part of these Articles for the management of the business and the conduct of the affairs
of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors
and stockholders:
A. Management
of the Corporation.
The business and affairs of the Corporation shall be managed under the direction of the Board of Directors.
All powers of the Corporation may be exercised by or under the authority of the Board of Directors, except as conferred on or as
reserved to the stockholders by law or by these Articles or the Bylaws of the Corporation; 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. Number,
Class and Terms of Directors; No Cumulative Voting.
The number of directors constituting the Board of Directors of the Corporation
shall initially be six (6), which number may be increased or decreased in the manner provided in the Bylaws of the Corporation;
provided, however, that such number shall never be less than the minimum number of directors required by the MGCL now or hereafter
in force. The directors, other than those who may be elected by the holders of any series of Preferred Stock, shall be divided
into three (3) classes, with the term of office of the first class (“Class I”) to expire at the conclusion of the first
annual meeting of stockholders, the term of office of the second class (“Class II”) to expire at the conclusion of
the annual meeting of stockholders one year thereafter and the term of office of the third class (“Class III”) to expire
at the conclusion of the annual meeting of stockholders two years thereafter, with each director to hold office until his or her
successor shall have been duly elected and qualified. At each annual meeting of stockholders, 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 or for such shorter period of time as the Board of Directors may determine, with each director to hold office
until his or her term expires and until his or her successor shall have been duly elected and qualified.
The names of the individuals
who will serve as the initial directors of the Corporation until their successors are elected and qualify are as follows:
Term to Expire in 2019:
Eileen C. Bagnoli
Madeline Taylor
Term to Expire in 2020
:
Dr. James K. Reed
Edward Reinfurt
Term to Expire in 2021
:
Thomas L. Amell
Donald E. Fane
Stockholders shall
not be permitted to cumulate their votes in the election of directors. A plurality of all the votes cast at a meeting at which
a quorum is present is sufficient to elect a director.
C. Vacancies.
Any vacancies in the Board of Directors may be filled in the manner provided in the Bylaws of the Corporation.
D. Removal.
Subject to the rights of the holders of any series of Preferred Stock then outstanding, 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
two-thirds (2/3) of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors (after giving effect to the provisions of Article 5 hereof) voting together as a single
class.
E. Stockholder
Proposals and Nominations of Directors.
Advance notice of stockholder nominations for the election of directors and of business
to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in
the Bylaws of the Corporation. Stockholder proposals to be presented in connection with a special meeting of stockholders shall
be presented by the Corporation only to the extent required by Section 2-502 of the MGCL and the Bylaws of the Corporation.
ARTICLE 8. Bylaws.
The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment
or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the Whole Board.
The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation. In addition to any vote of the
holders of any class or series of stock of the Corporation required by law or by these Articles, the affirmative vote of the holders
of at least eighty percent (80%) of the voting power of all of the then-outstanding shares of the capital stock of the Corporation
entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5 hereof), voting together
as a single class, shall be required for the adoption, amendment or repeal of any provisions of the Bylaws of the Corporation by
the stockholders.
ARTICLE 9. Evaluation
of Certain Offers.
The Board of Directors, when evaluating (i) any offer of another Person (as defined below) to (A) make a
tender or exchange offer for any equity security of the Corporation, (B) merge or consolidate the Corporation with another corporation
or entity, or (C) purchase or otherwise acquire all or substantially all of the properties and assets of the Corporation or (ii)
any other 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,
share exchange, dissolution, liquidation, sale of all or substantially all of the assets of the Corporation, proxy solicitation
or otherwise), may, in connection with the exercise of its business judgment in determining what is in the best interests of the
Corporation and its stockholders and in making any recommendation to the Corporation’s stockholders, give due consideration
to all relevant factors, including, but not limited to: (A) the economic effect, both immediate and long-term, upon the Corporation’s
stockholders, including stockholders, if any, who do not participate in the transaction; (B) the social and economic effect on
the present and future employees, creditors 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; (C) whether the proposal is acceptable
based on the historical, current or projected future operating results or financial condition of the Corporation; (D) whether a
more favorable price could be obtained for the Corporation’s stock or other securities in the future; (E) the reputation
and business practices of the other entity to be involved in the transaction and its management and affiliates as they would affect
the employees of the Corporation and its subsidiaries; (F) the future value of the stock or any other securities of the Corporation
or the other entity to be involved in the proposed transaction; (G) any anti-trust or other legal and regulatory issues that are
raised by the proposal; (H) the business and historical, current or expected future financial condition or operating results of
the other entity to be involved in the transaction, including, but not limited to, debt service and other existing financial obligations,
financial obligations to be incurred in connection with the proposed transaction, and other likely financial obligations of the
other entity to be involved in the proposed transaction; and (I) the ability of the Corporation to fulfill its objectives as a
financial institution holding company and on the ability of its subsidiary financial institution(s) to fulfill the objectives of
a federally insured financial institution under applicable statutes and regulations. If the Board of Directors determines that
any proposed transaction of the type described in clause (i) or (ii) of the immediately preceding sentence should be rejected,
it may take any lawful action to defeat such transaction, including, but not limited to, any or 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 or other securities or granting options or rights with respect thereto; and obtaining a more favorable offer
from another individual or entity. This Article 9 sets forth certain factors that may be considered by the Board of Directors,
but does not create any implication concerning the factors that must be considered, or any other factors that may or may not be
considered, by the Board of Directors regarding any proposed transaction of the type described in clause (i) or (ii) of the first
sentence of this Article 9.
For purposes of this
Article 9, a “Person” shall include an individual, 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 syndicate or any
other group or entity formed to acquire, hold or dispose of securities.
ARTICLE 10. Indemnification,
etc. of Directors and Officers.
A. Indemnification.
The Corporation shall indemnify (1) its current and former directors and officers, whether serving the Corporation or at its
request any other entity, to the fullest extent required or permitted by the MGCL now or hereafter in force, including the advancement
of expenses under the procedures and to the fullest extent permitted by law, and (2) other employees and agents to such extent
as shall be authorized by the Board of Directors and permitted by law; provided, however, that, except as provided in Section B
of this Article 10 with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee
in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized
by the Board of Directors of the Corporation.
B. Procedure.
If a claim under Section A of this Article 10 is not paid in full by the Corporation within sixty (60) days after a written
claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty (20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall also be entitled to be reimbursed the expense
of prosecuting or defending such suit. It shall be a defense to any action for advancement of expenses that the Corporation has
not received both (i) an undertaking as required by law to repay such advances if it shall ultimately be determined that the standard
of conduct has not been met and (ii) a written affirmation by the indemnitee of his or her good faith belief that the standard
of conduct necessary for indemnification by the Corporation has been met. In (i) any suit brought by the indemnitee to enforce
a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses)
it shall be a defense that, and (ii) any suit by the Corporation to recover an advancement of expenses pursuant to the terms of
an undertaking the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not
met the applicable standard for indemnification set forth in the MGCL. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a determination before the commencement of such suit
that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the MGCL, nor an actual determination by the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that
the indemnitee has not met the applicable standard of conduct, or, in the case of such a suit brought by the indemnitee, be a defense
to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that
the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article 10 or otherwise, shall
be on the Corporation.
C. Non-Exclusivity.
The rights to indemnification and to the advancement of expenses conferred in this Article 10 shall not be exclusive of any
other right that any Person may have or hereafter acquire under any statute, these Articles, the Corporation’s Bylaws, any
agreement, any vote of stockholders or the Board of Directors, or otherwise.
D. Insurance.
The Corporation may maintain insurance, at its expense, to insure itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss,
whether or not the Corporation would have the power to indemnify such Person against such expense, liability or loss under the
MGCL.
E. Miscellaneous.
The Corporation shall not be liable for any payment under this Article 10 in connection with a claim made by any indemnitee
to the extent such indemnitee has otherwise actually received payment under any insurance policy, agreement, or otherwise, of the
amounts otherwise indemnifiable hereunder. The rights to indemnification and to the advancement of expenses conferred in Sections
A and B of this Article 10 shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director
or officer and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.
F. Limitations
Imposed by Federal Law.
Notwithstanding any other provision set forth in this Article 10, in no event shall any payments made
by the Corporation pursuant to this Article 10 exceed the amount permissible under applicable federal law, including, without limitation,
Section 18(k) of the Federal Deposit Insurance Act and the regulations promulgated thereunder.
Any repeal or modification
of this Article 10 by the stockholders of the Corporation or the Board of Directors shall not in any way diminish any rights to
indemnification or advancement of expenses of such director or officer or the obligations of the Corporation arising hereunder
with respect to events occurring, or claims made, while this Article 10 is in force.
ARTICLE 11. Limitation
of Liability.
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 personal 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.
ARTICLE 12. Amendment
of the Articles of Incorporation.
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 Whole Board (rounded up to the nearest whole number), 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.
No proposed amendment
or repeal of any provision of these Articles shall be submitted to a stockholder vote unless the Board of Directors shall have
(1) approved the proposed amendment or repeal, (2) determined that it is advisable, and (3) directed that it be submitted for consideration
at either an annual or special meeting of the stockholders pursuant to a resolution approved by the Board of Directors. Any proposed
amendment or repeal of any provision of these Articles may be abandoned by the Board of Directors at any time before its effective
time upon the adoption of a resolution approved by a majority of the Whole Board (rounded up to the nearest whole number).
The amendment or repeal
of any provision of these Articles shall be approved by at least two-thirds (2/3) of all votes entitled to be cast by the holders
of shares of capital stock of the Corporation entitled to vote on the matter (after giving due effect to the provisions of Article
5 of these Articles), except that the proposed amendment or repeal of any provision of these Articles need only be approved by
the vote of a majority of all the votes entitled to be cast by the holders of shares of capital stock of the Corporation entitled
to vote on the matter (after giving due effect to the provisions of Article 5 of these Articles) if the amendment or repeal of
such provision is approved by the Board of Directors pursuant to a resolution approved by at least two-thirds (2/3) of the Whole
Board (rounded up to the nearest whole number).
Notwithstanding any
other provision of these Articles or any provision of law that might otherwise permit a lesser vote or no vote, but in addition
to any vote of the holders of any class or series of the stock of the Corporation required by law or by these Articles, the affirmative
vote of the holders of at least eighty percent (80%) of the voting power of all of the then-outstanding shares of the capital stock
of the Corporation entitled to vote generally in the election of directors (after giving effect to the provisions of Article 5),
voting together as a single class, shall be required to amend or repeal this Article 12, Section C, D, E or F of Article 5, Article
7 (other than the removal of the list of original directors), Article 8, Article 9, Article 10 or Article 11.
ARTICLE 13. Name
and Address of Incorporator.
The name and mailing address of the sole incorporator are as follows:
Benjamin M. Azoff
5335 Wisconsin Avenue, NW
Suite 780
Washington, DC 20015
[Remainder of Page Intentionally Left
Blank]
IN WITNESS WHEREOF,
I have signed these Articles of Incorporation and acknowledge the same to be my act, this 4
th
day of March, 2019.
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/s/ Benjamin M. Azoff
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Benjamin M. Azoff
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Incorporator
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Exhibit 3.2
BYLAWS
OF
Pioneer
bancorp, inc.
ARTICLE I
STOCKHOLDERS
Section 1. Annual
Meeting.
Pioneer Bancorp, Inc.
(the “Corporation”) shall hold an annual meeting of its stockholders to elect directors and to transact any other business
within its powers, at such place, on such date and at such time as the Board of Directors shall fix. Failure to hold an annual
meeting does not invalidate the Corporation’s existence or affect any otherwise valid corporate act.
Section 2. Special
Meetings.
Special meetings of
stockholders of the Corporation may be called by the Chairperson of the Board or by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of directors that the Corporation would have if there were no vacancies on the Board
of Directors (hereinafter the “Whole Board”). Special meetings of the stockholders shall be called by the Secretary
at the request of stockholders only on the written request of stockholders entitled to cast a majority of all the votes entitled
to be cast at the meeting. Such written request shall state the purpose or purposes of the meeting and the matters proposed to
be acted upon at the meeting, and shall be delivered at the principal office of the Corporation addressed to the President or the
Secretary. The Secretary shall inform the stockholders who make the request of the reasonably estimated cost of preparing and mailing
a notice of the meeting and, upon payment of these costs to the Corporation, notify each stockholder entitled to notice of the
meeting. The Board of Directors shall have the sole power to fix (i) the record date for determining stockholders entitled to request
a special meeting of stockholders and the record date for determining stockholders entitled to notice of and to vote at the special
meeting and (ii) the date, time and place of the special meeting and the means of remote communication, if any, by which stockholders
and proxy holders may be considered present in person and may vote at the special meeting.
Section 3. Notice
of Meetings; Adjournment.
Not less than ten (10)
nor more than ninety (90) days before each stockholders’ meeting, the Secretary shall give notice of the meeting in writing
or by electronic transmission to each stockholder entitled to vote at the meeting and to each other stockholder entitled to notice
of the meeting. The notice shall state the time and place of the meeting, the means of remote communication, if any, by which stockholders
and proxy holders may be deemed to be present in person and may vote at the meeting, and, if the meeting is a special meeting or
notice of the purpose is required by statute, the purpose of the meeting. Notice is given to a stockholder when it is personally
delivered to the stockholder, left at the stockholder’s residence or usual place of business, mailed to the stockholder at
his or her address as it appears on the records of the Corporation, or transmitted to the stockholder by an electronic transmission
to any address or number of the stockholder at which the stockholder receives electronic transmissions. If the Corporation has
received a request from a stockholder that notice not be sent by electronic transmission, the Corporation may not provide notice
to the stockholder by electronic transmission. Notwithstanding the foregoing provisions, each person who is entitled to notice
waives notice if such person, before or after the meeting, delivers a written waiver or waiver by electronic transmission that
is filed with the records of the stockholders’ meeting or is present at the meeting in person or by proxy.
A meeting of stockholders
convened on the date for which it was called may be adjourned from time to time and without further notice to a date not more than
one hundred twenty (120) days after the original record date. At any adjourned meeting, any business may be transacted that might
have been transacted at the original meeting.
As used in these Bylaws,
the term “electronic transmission” shall have the meaning given to such term by Section 1-101(m) of the Maryland General
Corporation Law (the “MGCL”) or any successor provision.
Section 4. Quorum.
Unless the Articles
of the Corporation provide otherwise, where a separate vote by a class or classes is required, a majority of the shares of such
class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to
that vote on that matter.
If a quorum shall fail
to attend any meeting, the chairperson of the meeting or the holders of a majority of the shares of stock who are present at the
meeting, in person or by proxy, may, in accordance with Section 3 of this Article I, adjourn the meeting to another place, date
or time.
Section 5. Organization
and Conduct of Business.
The Chairperson of
the Board of the Corporation or in his or her absence, the Chief Executive Officer, or in his or her absence, such other person
as may be designated by a majority of the Whole Board, shall call to order any meeting of the stockholders and act as chairperson
of the meeting. In the absence of the Secretary, the secretary of the meeting shall be such person as the chairperson appoints.
The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including
such regulation of the manner of voting and the conduct of discussion as seem to him or her to be in order.
Section 6. Advance
Notice Provisions for Business to be Transacted at Annual Meetings and Elections of Directors.
(a) At
any annual meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i)
as specified in the Corporation’s notice of the meeting, (ii) by or at the direction of the Board of Directors or (iii) by
any stockholder of the Corporation who (1) is a stockholder of record on the date such stockholder gives the notice provided for
in this Section 6(a) and on the record date for the determination of stockholders entitled to vote at such annual meeting, and
(2) complies with the notice procedures set forth in this Section 6(a). For business to be properly brought before an annual meeting
by a stockholder pursuant to clause (iii) of the immediately preceding sentence the stockholder must have given timely notice thereof
in writing to the Secretary of the Corporation and such business must otherwise be a proper matter for action by stockholders.
To be timely, a stockholder’s
notice must be delivered or mailed to and received by the Secretary at the principal executive office of the Corporation by not
later than the close of business on the ninetieth (90
th
) day before the anniversary date of the proxy statement relating
to the preceding year’s annual meeting and not earlier than the close of business on the one hundred twentieth (120
th
)
day before the anniversary date of the proxy statement relating to the preceding year’s annual meeting; provided, that if
(A) less than ninety (90) days’ prior public disclosure of the date of the meeting is given to stockholders and (B) the date
of the annual meeting is advanced more than thirty (30) days before or delayed more than thirty (30) days after the anniversary
of the preceding year’s annual meeting, such written notice shall be timely if delivered or mailed to and received by the
Secretary of the Corporation at the principal executive office of the Corporation not later than the tenth (10
th
) day
following the day on which public disclosure of the date of such meeting is first made. With respect to the first annual meeting
of stockholders of the Corporation following the Corporation becoming the sole stockholder of Pioneer Bank, notice by the stockholder
shall be timely if delivered or mailed to and received by the Secretary of the Corporation not later than the close of business
on the later of (i) the one hundred twentieth (120
th
) day before the date of the annual meeting and (ii) the tenth (10
th
)
day following the day on which public disclosure of the date of the annual meeting is first made. No adjournment or postponement
of a meeting of stockholders shall commence a new period for the giving of notice hereunder.
A stockholder’s
notice to the Secretary must 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 of such stockholder as they appear on the Corporation’s books and of the beneficial
owner, if any, on whose behalf the proposal is made; (iii) the class or series and number of shares of capital stock of the Corporation
that are owned beneficially or of record by such stockholder and such beneficial owner; (iv) a description of all arrangements
or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal
of such business by such stockholder and any material interest of such stockholder in such business; and (v) a representation that
such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.
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(a). The officer of the Corporation 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(a) 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.
At any special meeting
of the stockholders, only such business shall be conducted as shall have been brought before the meeting pursuant to the Corporation’s
notice of the meeting.
(b) Only
persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation.
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
who (1) is a stockholder of record on the date such stockholder gives the notice provided for in this Section 6(b) and on the record
date for the determination of stockholders entitled to vote at such meeting, and (2) complies with the notice procedures set forth
in this Section 6(b). 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 must be delivered or mailed
to and received by the Secretary at the principal executive office of the Corporation by not later than the close of business on
the ninetieth (90
th
) day before the anniversary date of the proxy statement relating to the preceding year’s annual
meeting and not earlier than the close of business on the one hundred twentieth (120
th
) day before the anniversary date
of the proxy statement relating to the preceding year’s annual meeting; provided, that if (A) less than ninety (90) days’
prior public disclosure of the date of the meeting is given to stockholders and (B) the date of the annual meeting is advanced
more than thirty (30) days before or delayed more than thirty (30) days after the anniversary of the preceding year’s annual
meeting, such written notice shall be timely if delivered or mailed to and received by the Secretary of the Corporation at the
principal executive office of the Corporation not later than the tenth (10
th
) day following the day on which public
disclosure of the date of such meeting is first made. With respect to the first annual meeting of stockholders of the Corporation
following the Corporation becoming the sole stockholder of Pioneer Bank, notice by the stockholder shall be timely if delivered
or mailed to and received by the Secretary of the Corporation not later than the close of business on the later of (i) the one
hundred twentieth (120
th
) day before the date of the annual meeting and (ii) the tenth (10
th
) day following
the day on which public disclosure of the date of the annual meeting is first made. No adjournment or postponement of a meeting
of stockholders shall commence a new period for the giving of notice hereunder.
A stockholder’s
notice must be in writing and set forth (a) as to each person whom the stockholder proposes to nominate for election as a director,
(i) all information relating to such person that would indicate such person’s qualification to serve on the Board of Directors
of the Corporation; (ii) an affidavit that such person would not be disqualified under the provisions of Article II, Section 12
of these Bylaws; (iii) such information relating to such person that is required to be disclosed in connection with 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 (the “Exchange Act”), or any successor rule or regulation and (iv) a written consent of each
proposed nominee to be named as a nominee and to serve as a director if elected; and (b) as to the stockholder giving the notice:
(i) the name and address of such stockholder as they appear on the Corporation’s books and of the beneficial owner, if any,
on whose behalf the nomination is made; (ii) the class or series and number of shares of capital stock of the Corporation that
are owned beneficially or of record by such stockholder and such beneficial owner; (iii) a description of all arrangements or understandings
between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the
nomination(s) are to be made by such stockholder; (iv) a representation that such stockholder intends to appear in person or by
proxy at the meeting to nominate the persons named in its notice; and (v) any other information relating to such stockholder that
would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of
proxies for election of directors pursuant to Regulation 14A under the Exchange Act or any successor rule or regulation. No person
shall be eligible for election as a director of the Corporation unless nominated in accordance with the provisions of this Section
6(b). The chairperson of the meeting shall, if the facts so warrant, determine that a nomination was not made in accordance with
such provisions and, if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall
be disregarded.
(c) For
purposes of subsections (a) and (b) of this Section 6, the term “public disclosure” shall mean disclosure (i) in a
press release issued through a nationally recognized news service, (ii) in a document publicly filed or furnished by the Corporation
with the U.S. Securities and Exchange Commission or (iii) on a website maintained by the Corporation or its wholly-owned subsidiary,
Pioneer Bank. The timely notice requirements provided in subsections (a) and (b) of this Section 6 shall apply to all stockholder
nominations for election as a director and all stockholder proposals for business to be conducted at an annual meeting regardless
of whether such proposal is submitted for inclusion in the Corporation’s proxy materials pursuant to Rule 14a-8 of Regulation
14A under the Exchange Act.
Section 7. Proxies
and Voting.
Unless the Articles
of the Corporation provide for a greater or lesser number of votes per share or limits or denies voting rights, each outstanding
share of stock, regardless of class, is entitled to one (1) vote on each matter submitted to a vote at a meeting of stockholders;
however, a share is not entitled to be voted if any installment payable on it is overdue and unpaid. In all elections for directors,
directors shall be determined by a plurality of the votes cast, and except as otherwise required by law or as provided in the Articles
of the Corporation, all other matters voted on by stockholders shall be determined by a majority of the votes cast on the matter.
A stockholder may vote
the stock the stockholder owns of record either in person or by proxy. A stockholder may sign a writing authorizing another person
to act as proxy. Signing may be accomplished by the stockholder or the stockholder’s authorized agent signing the writing
or causing the stockholder’s signature to be affixed to the writing by any reasonable means, including facsimile signature.
A stockholder may authorize another person to act as proxy by transmitting, or authorizing the transmission of, an authorization
for the person to act as the proxy to the person authorized to act as proxy or to any other person authorized to receive the proxy
authorization on behalf of the person authorized to act as the proxy, including a proxy solicitation firm or proxy support service
organization. The authorization may be transmitted by a telegram, cablegram, datagram, electronic mail or any other electronic
or telephonic means. Unless a proxy provides otherwise, it is not valid more than eleven (11) months after its date. 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 8. Conduct
of Voting
The Board of Directors
shall, in advance of any meeting of stockholders, appoint one (1) or more persons as inspectors of election, to act at the meeting
or any adjournment thereof and make a written report thereof, in accordance with applicable law. If one (1) or more inspectors
are not so elected, the Chairperson of the Board shall make such appointment at the meeting of stockholders. At all meetings of
stockholders, the proxies and ballots shall be received, and all questions relating to the qualification of voters and the validity
of proxies and the acceptance or rejection of votes shall be decided or determined by, the inspector of election. All voting, including
on the election of directors but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefor by a stockholder entitled to vote or his or her proxy or the chairperson of the meeting, a written vote shall be
taken. Every written vote shall be taken by ballot, each of which shall state the name of the stockholder or proxy voting and such
other information as may be required under the procedure established for the meeting. No candidate for election as a director at
a meeting shall serve as an inspector at such meeting.
Section 9. Control
Share Acquisition Act.
Notwithstanding any
other provision of the Articles of the Corporation or these Bylaws, Title 3, Subtitle 7 of the MGCL (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 by a majority
of the Whole Board, in whole or in part, at any time, whether before or after an acquisition of Control Shares (as defined in Section
3-701(d) of the MGCL, 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 defined in Section 3-701(d) of the MGCL, or any successor provision).
ARTICLE II
BOARD OF DIRECTORS
Section 1. General
Powers, Number and Term of Office.
The business and affairs
of the Corporation shall be managed under the direction of the Board of Directors. 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 MGCL, be fixed from time to
time exclusively by vote of the Board of Directors; provided, however, that such number shall never be less than the minimum number
of directors required by the MGCL now or hereafter in force. The Board of Directors shall annually elect a Chairperson of the Board
from among its members and shall designate the Chairperson of the Board or his or her designee to preside at its meetings.
The directors, other
than those who may be elected by the holders of any series of preferred stock, shall be divided into three (3) 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 until
his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders, commencing with the first
annual meeting, 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 or for such shorter period of time as the Board of
Directors may determine, with each director to hold office until his or her successor shall have been duly elected and qualified.
Section 2. Vacancies
and Newly Created Directorships.
By virtue of the Corporation’s
election made hereby to be subject to Section 3-804(c) of the MGCL, 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 two-thirds (2/3) 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 3. Regular
Meetings.
Regular meetings of
the Board of Directors shall be held at such place or places or by means of remote communication, on such date or dates, and at
such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each
regular meeting shall not be required. Any regular meeting of the Board of Directors may adjourn from time to time to reconvene
at the same or some other place, and no notice need be given of any such adjourned meeting other than by announcement.
Section 4. Special
Meetings.
Special meetings of
the Board of Directors may be called by one-third (1/3) of the directors then in office (rounded up to the nearest whole number)
or the Chairperson of the Board and shall be held at such place or by means of remote communication, on such date, and at such
time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given to each director
who has not waived notice by mailing and post-marking written notice not less than five (5) days before the meeting, or by facsimile
or other electronic transmission of the same not less than twenty four (24) hours before the meeting. Any director may waive notice
of any special meeting, either before or after such meeting, by delivering a written waiver or a waiver by electronic transmission
that is filed with the records of the meeting. Attendance of a director at a special meeting shall constitute a waiver of notice
of such meeting, except where the director 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. Neither the business to be transacted
nor the purpose of any special meeting of the Board of Directors need be specified in the notice of such meeting. Any special meeting
of the Board of Directors may adjourn from time to time to reconvene at the same or some other place, and no notice need be given
of any such adjourned meeting other than by announcement.
Section 5. Quorum.
At any meeting of the
Board of Directors, a majority of the Whole Board shall constitute a quorum for all purposes. If a quorum shall fail to attend
any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver
thereof.
Section 6. Participation
in Meetings by Conference Telephone.
Members of the Board
of Directors, or of any committee thereof, may only once per calendar year, unless otherwise authorized by an affirmative vote
of at least three quarters (3/4) of the Whole Board, participate in a meeting of such Board or committee by means of a conference
telephone or other communications equipment if all persons participating in the meeting can hear each other at the same time. Such
participation shall constitute presence in person at such meeting.
Section 7. Conduct
of Business.
At any meeting of the
Board of Directors, business shall be transacted in such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present, except as otherwise provided in these Bylaws or
the Corporation’s Articles or required by law. Action may be taken by the Board of Directors without a meeting if a unanimous
consent that sets forth the action is given in writing or by electronic transmission by each member of the Board of Directors and
filed in paper or electronic form with the minutes of proceedings of the Board of Directors.
Section 8. Powers.
All powers of the Corporation
may be exercised by or under the authority of the Board of Directors except as provided by the Articles of the Corporation. Consistent
with the foregoing, the Board of Directors shall have, among other powers, the unqualified power:
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(i)
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To declare dividends from time to time in accordance with
law;
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(ii)
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To purchase or otherwise acquire any property, rights or
privileges on such terms as it shall determine;
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(iii)
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To authorize the creation, making and issuance, in such
form as it may determine, of written obligations of every kind, negotiable or non-negotiable, secured or unsecured, and to do
all things necessary in connection therewith;
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(iv)
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To remove any officer of the Corporation with or without
cause, and from time to time to devolve the powers and duties of any officer upon any other person for the time being;
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(v)
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To confer upon any officer of the Corporation the power
to appoint, remove and suspend subordinate officers, employees and agents;
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(vi)
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To adopt from time to time such stock, option, stock purchase,
bonus or other compensation plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it
may determine;
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(vii)
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To adopt from time to time such insurance, retirement,
and other benefit plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine;
and
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(viii)
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To adopt from time to time regulations, not inconsistent
with these Bylaws, for the management of the Corporation’s business and affairs.
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Section 9. Compensation
of Directors.
Directors, as such,
may receive, pursuant to resolution of the Board of Directors, fixed fees and other compensation for their services as directors,
including, without limitation, their services as members of committees of the Board of Directors.
Section 10. Resignation.
Any director may resign
at any time by giving written notice of such resignation to the President or the Secretary at the principal office of the Corporation.
Unless otherwise specified therein, such resignation shall take effect upon receipt thereof.
Section 11. Presumption
of Assent.
A director of the Corporation
who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have
assented to such action unless such director announces his or her dissent at the meeting and (a) such director’s dissent
is entered in the minutes of the meeting, (b) such director files his or her written dissent to such action with the secretary
of the meeting before the adjournment thereof, or (c) such director forwards his or her written dissent within twenty four (24)
hours after the meeting is adjourned, by certified mail, return receipt requested, bearing a postmark from the United States Postal
Service, to the secretary of the meeting or the Secretary of the Corporation. Such right to dissent shall not apply to a director
who voted in favor of such action or failed to make his or her dissent known at the meeting.
Section
12. Director Qualifications.
(a) No
person shall be eligible for election or appointment to the Board of Directors: (i) if a financial or securities regulatory agency
has, within the past ten years, issued a cease and desist, consent or other formal order, other than a civil money penalty, against
such person, which order is subject to public disclosure by such agency; (ii) if such person has been convicted of a crime involving
dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under state or federal law; or
(iii) if such person is currently charged in any information, indictment, or other complaint with the commission of or participation
in such a crime. No person may serve on the Board of Directors if such person is: (i) at the same time, a director, trustee, officer,
employee or ten percent (10%) or more stockholder of a bank, savings institution, credit union, mortgage banking company, consumer
loan company or similar organization, other than an affiliate of the Corporation, that engages in business activities or solicits
customers, whether through a physical presence or electronically, in the same market area as the Corporation or any of its affiliates;
(ii) does not agree in writing to comply with all of the Corporation’s policies applicable to directors including but not
limited to its confidentiality policy; (iii) does not confirm in writing that he or she is not a party to any agreement, understanding
or commitment with respect to how he or she would act or vote on any issue or question before the Board of Directors or that would
otherwise impact his or her ability to discharge his or her fiduciary duties as a director; (iv) is the representative or agent
of, or a member of a group acting in concert that includes, a person who is ineligible for election or appointment to the Board
of Directors under this Section 12; or (v) is the nominee or representative, as that term is defined in the regulations of the
Board of Governors of the Federal Reserve System, 12 C.F.R §212.2(n) or any successor provision, of a company of which any
of the directors, partners, trustees, or ten percent (10%) stockholders would not be eligible for election or appointment to the
Board of Directors under this Section 12. For purposes of this Section 12, a person shall be deemed to be acting in concert with
another person if such person knowingly acts toward a common goal relating to the management, governance or control of the corporation
in parallel with such other person and there are overt actions by, or communications between, such persons reasonably suggesting
that they are coordinating their efforts toward such common goal or if such persons are acting in concert within the meaning of
12 C.F.R. §303.81 or any successor provision.
(b) The
Board of Directors shall have the power to construe and apply the provisions of this Section 12 and to make all determinations
necessary or desirable to implement such provisions, including but not limited to determinations as to whether a person is a nominee
or representative of a person, a company or a group, whether a person or company is included in a group, and whether a person is
the representative, agent or nominee of a group acting in concert.
Section 13. Age
Limitation.
No person 75 years of age shall be eligible
for election, reelection, appointment, or reappointment to the board of the Corporation. No director shall serve as such beyond
the annual meeting of the Corporation following the director becoming 75.
Section
14. Attendance at Board Meetings.
The Board of Directors
shall have the right to remove any director from the Board upon a director’s unexcused absence from (i) three (3) consecutive
regularly scheduled meetings of the Board of Directors or (ii) five (5) regularly scheduled meetings of the Board of Directors
in any fiscal year of the Corporation.
ARTICLE III
COMMITTEES
Section 1. Committees
of the Board of Directors.
(a)
General
Provisions.
The Board of Directors may appoint from among its members an Audit Committee, a Compensation Committee, a Nominating/Governance
Committee, and such other committees as the Board of Directors deems necessary or desirable. The Board of Directors may delegate
to any committee so appointed any of the powers and authorities of the Board of Directors to the fullest extent permitted by the
MGCL and any other applicable law.
(b)
Composition.
Each committee shall be composed of one (1) or more directors or any other number of members specified in these Bylaws. The Chairperson
of the Board may recommend committees, committee memberships, and committee chairs to the Board of Directors. The Board of Directors
shall have the power at any time to appoint the chairperson and the members of any committee, change the membership of any committee,
to fill all vacancies on committees, to designate alternate members to replace or act in the place of any absent or disqualified
member of a committee, or to dissolve any committee. A member of a committee may resign from that committee at any time by giving
written notice of such resignation to the Chairperson of the Board. Unless otherwise specified therein, such resignation from the
committee shall take effect upon receipt thereof.
(c)
Issuance
of Stock.
If the Board of Directors has given general authorization for the issuance of stock providing for or establishing
a method or procedure for determining the maximum number of shares to be issued, a committee of the Board of Directors, in accordance
with that general authorization or any stock option or other plan or program adopted by the Board of Directors, may authorize or
fix the terms of stock subject to classification or reclassification and the terms on which any stock may be issued, including
all terms and conditions required or permitted to be established or authorized by the Board of Directors. Any committee so designated
may exercise the power and authority of the Board of Directors if the resolution that designated the committee or a supplemental
resolution of the Board of Directors shall so provide.
Section 2. Conduct
of Business.
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; one-third (1/3) of
the members shall constitute a quorum unless the committee shall consist of one (1) or two (2) members, in which event one member
shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by
any committee without a meeting if a unanimous consent that sets forth the action is given in writing or by electronic transmission
by each member of the committee and filed in paper or electronic form with the minutes of the proceedings of such committee. The
members of any committee may conduct any meeting thereof by conference telephone or other communications equipment in accordance
with the provisions of Section 6 of Article II.
ARTICLE IV
OFFICERS
Section 1. Generally.
(a) The
Board of Directors as soon as may be practicable after the annual meeting of stockholders shall choose a Chairperson of the Board,
Chief Executive Officer, President, a Secretary and a Chief Financial Officer/Treasurer and from time to time may choose one or
more Vice Presidents or such other officers as it may deem proper. Any number of offices may be held by the same person, except
that no person may concurrently serve as both President and Vice President of the Corporation.
(b) The
term of office of all officers shall be until the next annual election of officers and until their respective successors are chosen,
but any officer may be removed from office at any time by the affirmative vote of a majority of the Whole Board.
(c) All
officers chosen by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices,
subject to the specific provisions of this Article IV. Such officers shall also have such powers and duties as from time to time
may be conferred by the Board of Directors or by any committee thereof.
Section 2. Chairperson
of the Board of Directors.
The Chairperson of
the Board of Directors of the Corporation shall perform all duties and have all powers that are commonly incident to the office
of Chairperson of the Board or that are delegated to him or her by the Board of Directors. He or she shall have power to sign all
stock certificates, contracts and other instruments of the Corporation that are authorized.
Section 3. Chief
Executive Officer.
The Chief Executive
Officer, subject to the control of the Board of Directors, shall serve in a general executive capacity and have general power over
the management and oversight of the administration and operation of the Corporation’s business and general supervisory power
and authority over its policies and affairs. The Chief Executive Officer shall see that all orders and resolutions of the Board
of Directors and of any committee thereof are carried into effect.
Section 4. President.
The President shall
perform the duties of the Chief Executive Officer in the Chief Executive Officer’s absence or during his or her disability
to act. In addition, the President shall perform the duties and exercise the powers usually incident to his or her office and/or
such other duties and powers as may be properly assigned to the President from time to time by the Board of Directors, the Chairperson
of the Board or the Chief Executive Officer.
Section 5. Vice
President.
The Vice President
or Vice Presidents (including Executive Vice Presidents or other levels of Vice President designated by the Board of Directors),
if any, shall perform the duties of the Chief Executive Officer in the absence of both the Chief Executive Officer and the President,
or during their disability to act. In addition, the Vice Presidents shall perform the duties and exercise the powers usually incident
to their respective office and/or such other duties and powers as may be properly assigned to the Vice Presidents from time to
time by the Board of Directors, the Chairperson of the Board or the Chief Executive Officer.
Section 6. Secretary.
The Secretary or an
Assistant Secretary shall issue notices of meetings, keep the minutes of meetings, have charge of the seal and the corporate books,
perform such other duties and exercise such other powers as are usually incident to such offices and/or such other duties and powers
as are properly assigned thereto by the Board of Directors, the Chairperson of the Board or the Chief Executive Officer.
Section 7. Chief
Financial Officer/Treasurer.
The Chief Financial
Officer/Treasurer shall have charge of all monies and securities of the Corporation, other than monies and securities of any division
of the Corporation that has a treasurer or financial officer appointed by the Board of Directors, and shall keep regular books
of account. The funds of the Corporation shall be deposited in the name of the Corporation by the Chief Financial Officer/Treasurer
with such banks or trust companies or other entities as the Board of Directors from time to time shall designate. The Chief Financial
Officer/Treasurer shall sign or countersign such instruments as require his or her signature, shall perform all such duties and
have all such powers as are usually incident to such office and/or such other duties and powers as are properly assigned to him
or her by the Board of Directors, the Chairperson of the Board or the Chief Executive Officer, and may be required to give bond
for the faithful performance of his or her duties in such sum and with such surety as may be required by the Board of Directors.
Section 8. Other
Officers.
The Board of Directors
may designate and fill such other offices in its discretion and the persons holding such other offices shall have such powers and
shall perform such duties as the Board of Directors or Chief Executive Officer may from time to time assign.
Section 9. Action
with Respect to Securities of 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.
ARTICLE V
STOCK
Section 1. Certificates
of Stock.
The Board of Directors
may determine to issue certificated or uncertificated shares of capital stock and other securities of the Corporation. For certificated
stock, each stockholder is 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 or other person to whom
it is issued, and the class of stock and number of shares it represents. It shall also include on its face or back (a) a statement
of any restrictions on transferability and a statement of the designations and any preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption of the stock of each
class that the Corporation is authorized to issue, of the differences in the relative rights and preferences between the shares
of each series of preferred stock that the Corporation is authorized to issue, to the extent they have been set, and of the authority
of the Board of Directors to set the relative rights and preferences of subsequent series of preferred stock or (b) a statement
that provides in substance that the Corporation will furnish a full statement of such information to any stockholder on request
and without charge. Such request may be made to the Secretary or to the Corporation’s transfer agent. Upon the issuance of
uncertificated shares of capital stock, the Corporation shall send the stockholder a written statement of the same information
required above with respect to stock certificates. Each stock certificate shall be in such form, not inconsistent with law or with
the Corporation’s Articles, as shall be approved by the Board of Directors or any officer or officers designated for such
purpose by resolution of the Board of Directors. Each stock certificate shall be signed by the Chairperson of the Board, the President,
or a Vice President, and countersigned by the Secretary, an Assistant Secretary, the Chief Financial Officer or the Treasurer.
Each certificate may be sealed with the actual corporate seal or a facsimile of it or in any other form and the signatures 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 when it is issued. A certificate may not be issued until the stock represented by it is fully paid.
Section 2. Transfers
of Stock.
Transfers of stock
shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated
to transfer shares of the stock of the Corporation. Except where a certificate is issued in accordance with Section 4 of Article V
of these Bylaws, an outstanding certificate for the number of shares involved shall be surrendered for cancellation before a new
certificate is issued therefor.
Section 3. Record
Dates or Closing of Transfer Books.
The Board of Directors
may, and shall have the power to, set a record date or direct that the stock transfer books be closed for a stated period to make
any proper determination with respect to stockholders, including which stockholders are entitled to notice of a meeting, vote at
a meeting, receive a dividend, or be allotted other rights. The record date may not be before the close of business on the day
the record date is fixed nor, subject to Section 3 of Article I of these Bylaws, more than ninety (90) days before the date on
which the action requiring the determination will be taken; the transfer books may not be closed for a period longer than twenty
(20) days; and, in the case of a meeting of stockholders, the record date or the closing of the transfer books shall be at least
ten (10) days before the date of the meeting. Any shares of the Corporation’s own stock acquired by the Corporation between
the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders and the time of the
meeting may be voted at the meeting by the holder of record as of the record date and shall be counted in determining the total
number of outstanding shares entitled to be voted at the meeting.
Section 4. Lost,
Stolen or Destroyed Certificates.
The Board of Directors
of the Corporation may determine the conditions for issuing a new stock certificate in place of one that is alleged to have been
lost, stolen, or destroyed, or the Board of Directors may delegate such power to any officer or officers of the Corporation or
to the transfer agent designated to transfer shares of the stock of the Corporation. In their discretion, the Board of Directors
or such officer or officers may require the owner of the certificate to give a bond, with sufficient surety, to indemnify the Corporation
against any loss or claim arising as a result of the issuance of a new certificate. In their discretion, the Board of Directors
or such officer or officers may refuse to issue such new certificate without the order of a court having jurisdiction over the
matter.
Section 5. 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
that the stockholder holds. 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 or, if none, at the principal executive office of the Corporation.
Section 6. Regulations.
The issue, transfer,
conversion and registration of certificates of stock shall be governed by such other regulations as the Board of Directors may
establish.
ARTICLE VI
MISCELLANEOUS
Section 1. Facsimile
Signatures.
In addition to the
provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer
or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.
Section 2. Corporate
Seal.
The Board of Directors
may 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. If the Corporation is required to place its corporate
seal to a document, it is sufficient to meet the requirement of any law, rule, or regulation relating to a corporate seal to place
the word “(seal)” adjacent to the signature of the person authorized to sign the document on behalf of the Corporation.
Section 3. Books
and Records.
The Corporation shall
keep correct and complete books and records of its accounts and transactions and minutes of the proceedings of its stockholders
and Board of Directors and of any committee when exercising any of the powers of the Board of Directors. The books and records
of the Corporation may be in written form or in any other form which can be converted within a reasonable time into written form
for visual inspection. Minutes shall be recorded in written form but may be maintained in the form of a reproduction. The original
or a certified copy of these Bylaws shall be kept at the principal office of the Corporation.
Section 4. Reliance
upon Books, Reports and Records.
Each director, each
member of any committee designated by the Board of Directors, and each officer and agent of the Corporation shall, in the performance
of his or her duties, in addition to any protections conferred upon him or her by law, be fully protected in relying in good faith
upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented
to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other
person as to matters which such director, committee member, officer or agent reasonably believes are within such other person’s
professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.
Section 5. 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.
Section 6. Time
Periods.
In applying any provision
of these Bylaws that requires that an act be done or not be done a specified number of days before an event or that an act be done
during a period of a specified number of days before an event, calendar days shall be used, the day of the doing of the act shall
be excluded and the day of the event shall be included.
Section 7. 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 be
signed by any officer, employee or agent of the Corporation that is authorized by the Board of Directors.
Section 8. Mail.
Any notice or other
document that is required by these Bylaws to be mailed shall be deposited in the United States mail, postage prepaid.
Section 9. Contracts
and Agreements.
To the extent permitted
by applicable law, and except as otherwise prescribed by the Articles or these Bylaws, the Board of Directors may authorize any
officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and
on behalf of the Corporation. Such authority may be general or confined to specific instances. A person who holds more than one
office in the Corporation may not act in more than one capacity to execute, acknowledge, or verify an instrument required by law
to be executed, acknowledged, or verified by more than one officer.
ARTICLE VIII
AMENDMENTS
These Bylaws may be
adopted, amended or repealed as provided in the Articles of the Corporation.
Exhibit 4
INCORPORATED UNDER THE LAWS OF THE STATE
OF MARYLAND
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No.
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PIONEER BANCORP, INC.
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Shares
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CUSIP: ___________
FULLY
PAID AND NON-ASSESSABLE
PAR VALUE $0.01 PER SHARE
THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO
RESTRICTIONS, SEE REVERSE SIDE
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THIS CERTIFIES that
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is the owner of
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SHARES OF COMMON STOCK
of
Pioneer Bancorp, Inc.
a Maryland corporation
The shares evidenced by
this certificate are transferable only on the books of Pioneer Bancorp, Inc. by the holder hereof, in person or by attorney, upon
surrender of this certificate properly endorsed.
The
capital stock evidenced hereby is not an account of an insurable type and is not insured by the Federal Deposit Insurance Corporation
or any other Federal or state governmental agency.
IN WITNESS WHEREOF, Pioneer
Bancorp, Inc. has caused this certificate to be executed by the facsimile signatures of its duly authorized officers and has caused
a facsimile of its seal to be hereunto affixed.
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By:
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[SEAL]
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By:
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Frank C. Sarratori
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Thomas l. amell
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CORPORATE SECRETARY
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PRESIDENT AND CHIEF EXECUTIVE OFFICER
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The Board of Directors
of Pioneer Bancorp, Inc. (the “Company”) is authorized by resolution or resolutions, from time to time adopted, to
provide for the issuance of more than one class of stock, including preferred stock in series, and to fix and state the voting
powers, designations, preferences, limitations and restrictions thereof. The Company will furnish to any stockholder upon request
and without charge a full description of each class of stock and any series thereof.
The shares evidenced 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 (other than Pioneer Bancorp, MHC) 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 shares represented
by this certificate may not be cumulatively voted on any matter. The Articles of Incorporation requires that, with limited exceptions,
no amendment, addition, alteration, change or repeal of the Articles of Incorporation shall be made, unless such is first approved
by the Board of Directors of the Company and approved by the stockholders by a majority of the total shares entitled to vote, or
in certain circumstances approved by the affirmative vote of up to 80% of the shares entitled to vote.
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.
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TEN COM
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- as tenants in common
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UNIF GIFT MIN ACT
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- _________ Custodian __________
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(Cust)
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(Minor)
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TEN ENT
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- as tenants by the entireties
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Under Uniform Gifts to Minors Act
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JT TEN
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- as joint tenants with right
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of survivorship and not as
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tenants in common
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(State)
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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 NUMBER OR OTHER
IDENTIFYING NUMBER
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(please print or typewrite name and address including postal zip code of assignee)
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_______________________________________________________________________________________
Shares of the Common Stock represented by the within Certificate, and do hereby irrevocably constitute and
appoint ________________________________________________________________________ Attorney to transfer the said
shares on the books of the within named corporation with full power of substitution in the premises.
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Dated, ________________________________
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In the presence of
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Signature:
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NOTE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME OF THE STOCKHOLDER(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT, OR ANY CHANGE WHATSOEVER.
Exhibit 5
LUSE GORMAN,
PC
ATTORNEYS AT LAW
5335 Wisconsin Avenue, NW, Suite 780
Washington, D.C. 20015
—————
Telephone (202) 274-2000
Facsimile (202) 362-2902
www.luselaw.com
March 12, 2019
The Board of Directors
Pioneer Bancorp, Inc.
652 Albany-Shaker Rd.
Albany, New York 12211
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Re:
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Pioneer Bancorp, Inc.
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Common Stock, Par
Value $0.01 Per Share
Ladies and Gentlemen:
You have requested
the opinion of this firm as to certain matters in connection with the offer and sale of the shares of common stock, par value
$0.01 per share (the “Common Stock”), of Pioneer Bancorp, Inc. (the “Company”). We have reviewed the
Company’s Articles of Incorporation and its Registration Statement on Form S-1 (the “Form S-1”), the Plan
of Mutual Holding Company Reorganization and Minority Stock Issuance (the
“Plan”), as well as applicable statutes and regulations governing the Company and the offer and sale of the
Common Stock. The opinion expressed below is limited to the laws of the State of Maryland (which includes applicable
provisions of the Maryland General Corporation Law, the Maryland Constitution and reported judicial decisions interpreting
the Maryland General Corporation Law and the Maryland Constitution).
We are of the opinion that,
upon the declaration of effectiveness of the Form S-1, the Common Stock, when issued and sold in accordance with the Plan, will
be legally issued, fully paid and non-assessable.
We hereby consent to our
firm being referenced under the caption “Legal Matters” contained in the Prospectus forming a part of the Form S-1
and to the filing of this opinion as an exhibit to the Form S-1.
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Very truly yours,
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/s/ Luse Gorman, PC
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Luse Gorman, PC
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Exhibit 8.1
LUSE
GORMAN, PC
ATTORNEYS
AT LAW
5335
Wisconsin Avenue, N.W., Suite 780
WASHINGTON,
D.C. 20015
Telephone
(202) 274-2000
FACSIMILE
(202) 362-2902
www.luselaw.com
FORM OF FEDERAL TAX OPINION
[Date]
Board of Trustees
Pioneer Savings Bank
652 Albany-Shaker Road
Albany, NY 12211
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Re:
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Federal Tax Consequences of Mutual Holding Company
Reorganization and Minority Stock Offering
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Ladies and Gentlemen:
We have been requested
as special counsel to Pioneer Savings Bank, a New York-chartered mutual savings bank (the “
Bank
,” or “
Stock
Bank
,” as the context requires), Pioneer Bancorp, MHC, a to-be-formed New York-chartered mutual holding company (“
MHC
”)
and Pioneer Bancorp, Inc., a Maryland stock corporation subsidiary holding company with the power to issue stock (“
Holding
Company
”), to express our opinion concerning certain federal income tax consequences relating to the reorganization of
the Bank into the “two-tier” mutual holding company structure (the “
Reorganization
”) pursuant to
that certain Plan of Mutual Holding Company Reorganization and Minority Stock Issuance, dated January 15, 2019 (the “
Plan
of Reorganization
”). Concurrently with the Reorganization, the Stock Holding Company will offer for sale 43% of its Common
Stock on a priority basis to depositors and the Tax-Qualified Employee Plans in a subscription and community offering (collectively,
the “
Offering
”), contribute 2% of its Common Stock to the Pioneer Bank Charitable Foundation, a charitable foundation
established by the Bank, and issue 55% of its common stock to the Mutual Holding Company. Unless otherwise defined, all terms used
herein have the meanings given to them in the Plan of Reorganization.
Source of
Facts
. In preparing this letter, we relied on the attached, duly authorized and executed representations regarding
the Reorganization. If any of the facts are incorrect or incomplete, our discussion and conclusion may be different than those
set forth below. We are under no obligation and we expressly disavow any obligation to advise the Bank, the MHC or 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 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.
Board of Trustees
Pioneer Savings Bank
[Date]
Page 2
In connection therewith,
we have examined the Plan of Reorganization and certain other documents of or relating to the Reorganization, some of which are
described or referred to in the Plan of Reorganization and which we deemed necessary to examine in order to issue the opinions
set forth below. In issuing our opinions, we have assumed that the Plan of Reorganization has been duly and validly authorized
and has been approved and adopted by the Board of Trustees of the Bank at a meeting duly called and held; that the Bank will comply
with the terms and conditions of the Plan of Reorganization, and that the various representations and warranties which are provided
to us are accurate, complete, true and correct. Accordingly, we express no opinion concerning the effect, if any, of variations
from the foregoing. We specifically express no opinion concerning tax matters relating to the Plan of Reorganization under state
and local tax laws and under federal income tax laws except on the basis of the documents and assumptions described above.
Source
of Law
. In issuing the opinions set forth below, we have referred solely to existing provisions of the Internal Revenue
Code of 1986, as amended (the “
Code
”), existing and proposed regulations of the United States Treasury Department
(“
Treasury Regulations
”) thereunder, and upon current Internal Revenue Service (the “
Service
”)
administrative rulings, notices and procedures and court decisions. Such laws, regulations, administrative rulings, notices and
procedures and court decisions are subject to change at any time.
Any such change could affect the continuing validity of
the opinions set forth below. These opinions are 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.
In rendering our opinions,
we have assumed that the persons and entities identified in the Plan of Reorganization will at all times comply with the requirements
of Code Section 368(a)(1)(F) and Code Section 351, and the other applicable state and federal laws and the representations of the
Bank. In addition, we have assumed that the activities of the persons and entities identified in the Plan of Reorganization will
be conducted strictly in accordance with the Plan of Reorganization. Any variations may affect the opinions we are rendering.
We emphasize that the
outcome of litigation cannot be predicted with certainty and, although we have attempted in good faith to opine as to the probable
outcome of the merits of each tax issue with respect to which an opinion was requested, there can be no assurance that our conclusions
are correct or that they would be adopted by the Service or a court.
Facts Regarding
the Reorganization
.
On January 15, 2019,
the Board of Trustees of the Bank unanimously adopted the Plan of Reorganization for the valid business purposes set forth therein,
whereby the Bank will reorganize into the mutual holding company structure pursuant to applicable law. The following steps are
proposed to effect the Reorganization:
Board of Trustees
Pioneer Savings Bank
[Date]
Page 3
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(i)
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the Bank will organize a New York-chartered interim stock savings bank as a wholly-owned
subsidiary (“
Interim One
”);
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(ii)
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Interim One will organize a New York-chartered interim stock savings bank as a wholly-owned
subsidiary (“
Interim Two
”);
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(iii)
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Interim One will organize the Holding Company as a wholly-owned subsidiary;
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(iv)
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the Bank will convert to stock form by exchanging its mutual savings bank organization certificate
for a stock savings bank organization certificate and thereby become the Stock Bank and will transfer all of its assets and liabilities
to the Stock Bank as successor to the Bank (the “
F Reorganization
”) and Interim
One will become the wholly-owned subsidiary of the Stock Bank. In the F Reorganization, depositors of the Bank will constructively
exchange their ownership interests (consisting of liquidation rights and limited voting rights) in the Bank for common stock of
the Stock Bank. In addition, Eligible Account Holders and Supplemental Eligible Account Holders will also receive an interest in
a Liquidation Account in the Stock Bank in the F Reorganization;
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(v)
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the shares of common stock of
Interim One will be cancelled and Interim One will exchange its organization certificate for New York mutual holding company organization
certificate to become the MHC;
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(vi)
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concurrently with steps (iv) and (v), Interim Two will merge with and into the Stock Bank,
with the Stock Bank as the resulting subsidiary of the MHC, whereby the depositors will constructively exchange the shares of common
stock of the Stock Bank received in the F Reorganization for liquidation interests in the MHC (the “
351 Transaction
”);
and
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Board of Trustees
Pioneer Savings Bank
[Date]
Page 4
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(vii)
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the MHC will contribute the capital stock of the Stock Bank to the Holding Company, and the Stock
Bank will become a wholly-owned subsidiary of the Holding Company.
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(viii)
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Contemporaneously with the Reorganization described above, the Holding Company will offer up to
49% of its outstanding shares of Common Stock in the Subscription Offering and, if applicable, the Community Offering (steps (vii)
and (viii) are referred to herein as the “
Secondary 351 Transaction
”).
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Those persons who,
as of the date of the Reorganization, hold depository rights with respect to the Bank will thereafter have such rights solely with
respect to the Stock Bank. Each deposit account with the Bank at the time of the exchange will become a deposit account in the
Stock Bank in the same amount and upon the same terms and conditions.
The principal purpose
of the Reorganization is to reorganize the Bank into a corporate structure that enables it to access capital sources not available
to mutual savings banks. The Holding Company will have the power to issue shares of capital stock (consisting of common and preferred
stock) to persons other than the MHC, however, so long as the MHC is in existence, it must own a majority of the voting stock of
the Holding Company. The Holding Company may issue any amount of non-voting stock to persons other than the MHC. No such non-voting
stock will be issued as of the date of the Reorganization.
At the time of the
Reorganization, the Bank will establish a Liquidation Account in an amount equal to the Bank’s total equity as reflected
in the latest statement of financial condition contained in the final Prospectus used in the Offering. Following the Reorganization,
the Liquidation Account will be maintained by the Bank for the benefit of the Eligible Account Holders and Supplemental Eligible
Account Holders who continue to maintain their deposit accounts at the Bank. Each Eligible Account Holder and Supplemental Eligible
Account Holder will hold a related inchoate interest in a portion of the Liquidation Account balance, in relation to his Deposit
Account balance at the Eligibility Record Date or Supplemental Eligibility Record Date, respectively, or to such balance as it
may subsequently be reduced, as provided in the Plan of Reorganization.
LAW AND ANALYSIS
Code Section 368(a)(1)(F)
provides that the term “reorganization” means a mere change in identity, form, or place of organization of one corporation,
however effected. In the Reorganization, the Bank, in mutual form, will incorporate a stock bank subsidiary. The Bank will convert
to stock form by exchanging its mutual savings bank organization certificate for a stock savings bank organization certificate
and will transfer all of its assets and liabilities to the Stock Bank in a transaction that qualifies as a mere change in identity,
form or place of organization within the meaning of Code Section 368(a)(1)(F).
Board of Trustees
Pioneer Savings Bank
[Date]
Page 5
The MHC is initially
organized in stock form as Interim One. Although the MHC is temporarily organized as a stock corporation solely due to regulatory
requirements, the parties intend at the time that the MHC will operate as a mutual holding company and function in mutual form.
Because the status of the MHC as a stock corporation is transitory, the conversion of the MHC from a stock corporation to a mutual
holding company is disregarded. Rev. Rul. 2003-48, 2003-2 C.B. 86;
C.f.
Rev. Rul. 67-448, 1967-2 C.B. 144.
Code Section 351(a)
provides that no gain or loss will be recognized if property is transferred to a corporation by one or more persons solely in exchange
for stock in such corporation and immediately after the exchange such person or persons are in control (as defined in Code Section
368(c)) of the corporation. The “transfer” requirement is satisfied so long as the transferor transfers to the transferee
all substantial rights associated with the transferred property. In connection with the merger of Interim Two into Stock Bank,
the depositors who constructively exchanged their ownership interests in the Bank for common stock in Stock Bank will constructively
transfer such common Stock to the MHC in exchange for liquidation rights in the MHC and are thereafter in control of the MHC, within
the meaning of Code Section 368(c).
Code Section 368(c)
provides that “control” means the ownership of stock possessing at least 80 percent of the total combined voting power
of all classes of stock entitled to vote and at least 80 percent of the total number of shares of all other classes of stock of
the corporation. Because the former owners of Stock Bank are in control (within the meaning of Code Section 368(c)) of the MHC
their transfer of their equity interests in the Stock Bank to the MHC in exchange for ownership interests in the MHC qualifies
as a transfer described in Code Section 351.
In Revenue Ruling 2003-48,
in a similar reorganization, the Service ruled that because the former owners of a state-chartered mutual bank were in control
(within the meaning of Code Section 368(c)) of the mutual holding company, the transfer of their equity interests in a state-chartered
mutual bank to the mutual holding company, in exchange for ownership interests in the mutual holding company, qualified as a transfer
described in Code Section 351.
In Revenue Ruling 2003-48,
the Service also ruled that contribution of the common stock of the stock bank to the mutual holding company’s stock holding
company subsidiary in exchange for the voting stock of the stock holding company and almost contemporaneous sale of additional
shares of stock holding company to members of the public through an underwriting transaction also constituted a transfer under
Code Section 351. Treasury Regulations Section 1.351-1(a)(3) provides that for purposes of Code Section 351, if a person acquires
stock of a corporation for cash in a qualified underwriting transaction, the person who acquires stock from the underwriter is
treated as transferring cash directly to the corporation in exchange for stock of the corporation and the underwriter is disregarded.
Board of Trustees
Pioneer Savings Bank
[Date]
Page 6
In Revenue Ruling 2003-51,
the Service ruled that a transfer of assets to a corporation (the “first corporation”) in exchange for an amount of
stock of the first corporation constituting control satisfies the control requirement of Code Section 351, even if pursuant to
a binding agreement entered into by the transferor with a third party prior to the exchange, the transferor transfers the stock
of the first corporation to another corporation (the “second corporation”) simultaneously with the transfer of assets
by the third party to the second corporation and, immediately thereafter, the transferor and the third party are in control of
the second corporation.
Code Section 1032(a)
provides that a corporation will recognize no gain or loss on the receipt of money or other property in exchange for its stock.
Code Section 1223(1)
provides that, in determining the period for which a taxpayer has held property received in an exchange, there shall be included
the period for which he held the property exchanged, if for purposes of determining gain or loss from a sale or exchange, the property
has the same basis in whole or in part in his hands as the property exchanged and the property was a capital asset on the date
of the exchange.
Code Section 1223(2)
provides that in determining the period for with the taxpayer has held property, however acquired, there shall be included the
period for which such property was held by any other person, if such property has, for the purpose of determining gain or loss
from a sale or exchange, the same basis in whole or in part in his hands as it would have in the hands of such other person.
Overall Conclusions
.
Based on the facts,
representations and assumptions set forth herein, we are of the opinion that:
With Respect to the F Reorganization
1. The
merger of the Bank into Stock Bank in the F Reorganization will represent a mere change in identity, form, or place of organization
of one corporation and will qualify as a reorganization under Code Section 368(a)(1)(F).
2. The
Stock Bank’s holding period in the assets received from the Bank will include the period during which such assets were held
by the Bank. (Code Section 1223(2)).
Board of Trustees
Pioneer Savings Bank
[Date]
Page 7
3. The
Stock Bank’s basis in the assets of the Bank will be the same as the basis of such assets in the hands of the Bank immediately
prior to the Reorganization. (Code Section 362(b)).
4. The
Bank depositors will recognize no gain or loss upon the constructive receipt of the Stock Bank common stock in exchange for their
ownership interests in the Bank.
5. The
Stock Bank will succeed to and take into account the Bank’s earnings and profits or deficit in earnings and profits, as of
the date of the Reorganization. (Code Section 381).
6. For
purposes of Code Section 381, the Stock Bank will be treated the same as the Bank, and therefore, the Bank’s tax year will
not end merely as a result of the conversion of the Bank to stock form and the Stock Bank will not be required to obtain a new
employee identification number. (Treas. Reg. Section 1.381(b)-2 and Rev. Rul. 73-526, 1973-2 CB. 404).
7. No
gain or loss shall be recognized by depositors of the Bank on the issuance to them of withdrawable deposit accounts in the Stock
Bank, in exchange for their deposit accounts in the Bank. (Code Section 354(a)(1)). In addition, Eligible Account Holders and Supplemental
Eligible Account Holders will not recognize gain or loss upon receipt of an interest in the Liquidation Account in the Stock Bank
in exchange for their ownership interests (i.e., liquidation and limited voting rights) in the Bank
. (Code Section 354(a)(1)).
8. Gain
realized, if any, by the Eligible Account Holders, Supplemental Eligible Account Holders and Other Depositors on the distribution
to them of nontransferable subscription rights to purchase shares of Common Stock will be recognized but only in an amount not
in excess of the fair market value of such subscription rights. (Code Section 356(a)(1)). It is more likely than not that the fair
market value of the subscription rights to purchase Common Stock is zero. Accordingly, no gain or loss will be recognized by Eligible
Account Holders or Supplemental Eligible Account Holders upon the distribution to them of the nontransferable subscription rights
to purchase shares of Common Stock of Holding Company. Eligible Account Holders, Supplemental Eligible Account Holders and Other
Depositors will not realize any taxable income as a result of the exercise by them of the nontransferable subscription rights (Rev.
Rul. 56-572, 1956-2 C.B. 182).
9. The
basis of the deposit accounts in the Stock Bank to be received by depositors of the Bank will be the same as the basis of their
deposit accounts in the Bank surrendered in exchange therefor. (Code Section 358(a)(1)). The basis of the interests in the liquidation
rights in the MHC to be received by the depositors of the Bank shall be zero. The basis of each Eligible Account Holder’s
and Supplemental Eligible Account Holder’s interest in the Liquidation Account will be zero, which is the cost of such interests
to such persons (Revenue Ruling 71-233, 1971-1 C.B. 113).
Board of Trustees
Pioneer Savings Bank
[Date]
Page 8
With Respect
to the 351 Transaction
:
10. The
exchange of the Stock Bank common stock constructively received by the depositors in exchange for ownership interests in the MHC
will constitute a tax-free exchange of property solely for “stock” pursuant to Section 351 of the Code.
(Rev.
Rul. 2003-48, 2003-19 I.R.B. 863).
11. Depositors
will recognize no gain or loss upon the transfer of the Stock Bank common stock which they constructively received in the F Reorganization
to the MHC solely in exchange for ownership interests in the MHC. (Code Section 351).
12. Depositors
basis in the MHC ownership interests received in the transaction (which basis is zero) will be the same as the basis of the property
transferred in exchange therefor. (Code Section 358(a)(1)).
13. The
MHC will recognize no gain or loss upon the receipt of property from the depositors in exchange for ownership interests in the
MHC. (Code Section 1032(a)).
14. The
MHC’s basis in the property received from depositors (which basis is zero) will be the same as the basis of such property
in the hands of the depositors immediately before the F Reorganization. (Code Section 362(a)).
15. The
MHC
’s holding period for the property received from the depositors
will include the period during which such property was held by such persons. (Code Section 1223(2)).
With Respect
to the Secondary 351 Transaction
:
16. The
MHC and the persons who purchased Common Stock of the Holding Company in the Subscription and Community Offering (“Minority
Stockholders”) will recognize no gain or loss upon the transfer of the Stock Bank stock and cash, respectively, to the Holding
Company in exchange for stock in the Holding Company (Code Section 351(a)).
17. The
Holding Company will recognize no gain or loss on its receipt of the Stock Bank stock and cash in exchange for Holding Company
Common Stock. (Code Section 1032(a)).
18. The
MHC’s basis in the Holding Company Common Stock received in the Secondary 351 Transaction will be the same as its basis in
the Stock Bank stock transferred. (Code Section 358(a)(1)).
19. The
MHC’s holding period in the Holding Company Common Stock received will include the period during which it held the Stock
Bank common stock, provided that such property was a capital asset on the date of the exchange. (Code Section 1223(1)).
Board of Trustees
Pioneer Savings Bank
[Date]
Page 9
20. The
Holding Company’s basis in the Stock Bank stock received from the MHC will be the same as the basis of such property in the
hands of the MHC. (Code Section 362(a)).
21. The
Holding Company’s holding period for the Stock Bank stock received from the MHC will include the period during which such
property was held by the MHC. (Code Section 1223(2)).
22. It
is more likely than not that the basis of the
Holding Company
Common
Stock to its stockholders will be the purchase price thereof. (Code Section 1012). The holding period of the Common Stock purchased
pursuant to the exercise of subscription rights shall commence on the date on which the right to acquire such stock was exercised.
(Code Section 1223(5)).
The opinions set forth
above represent our conclusions as to the application of existing Federal income tax law to the facts of the instant transaction,
and we can give no assurance that changes in such law, or in the interpretation thereof, will not affect the opinions expressed
by us. Moreover, there can be no assurance that contrary positions may not be taken by the IRS, or that a court considering the
issues would not hold contrary to such opinions.
Our opinion under paragraph
8 above is predicated on the representation that no person shall receive any payment, whether in money or property, in lieu of
the issuance of subscription rights. With respect to our opinion under paragraphs 8 and 22, we note that the subscription rights
will be granted at no cost to the recipients, will be legally non-transferable and of short duration, and will provide the recipient
with the right only to purchase shares of Common Stock at the same price to be paid by members of the general public in any Community
Offering. We also note that RP Financial, LC. has issued a letter to the Board of Trustees of the Bank, dated ___________ __, 20__,
that the subscription rights will have no ascertainable fair market value. Finally, we note that the Internal Revenue Service has
not in the past concluded that subscription rights have value.
If the subscription
rights are subsequently found to have a fair market 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 Stock Bank may be taxable on the
distribution of the subscription rights.
* *
*
The opinions set forth
above represent our conclusions as to the application of existing federal income tax law to the facts of the instant transaction,
and we can give no assurance that changes in such law, or in the interpretation thereof, will not affect the opinions expressed
by us. Moreover, there can be no assurance that contrary positions may not be taken by the Service, or that a court considering
the issues would not hold contrary to such opinions.
Board of Trustees
Pioneer Savings Bank
[Date]
Page 10
All of the opinions
set forth above are qualified to the extent that the validity of any provision of any agreement may be subject to or affected by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally. We do
not express any opinion as to the availability of any equitable or specific remedy upon any breach of any of the covenants, warranties
or other provisions contained in any agreement.
It is expressly understood
that the opinions set forth above represent our conclusions based upon the documents reviewed by us and the facts presented to
us. Any material amendments to such documents or changes in any significant fact would affect the opinions expressed herein.
[Signature Page Follows]
Board of Trustees
Pioneer Savings Bank
[Date]
Page 11
We hereby consent to
the filing of this opinion as an exhibit to the Bank’s Form 86-AC Application for Plan of Mutual Holding Company Reorganization
and Minority Stock Issuance, as filed with the New York State Department of Financial Services, as an exhibit to the Holding Company’s
and Mutual Holding Company’s Application on Form FRY-3, as filed with the Board of Governors of the Federal Reserve System
and as an exhibit to the Holding Company’s Registration Statement on Form S-1, as filed with the SEC. We also consent to
the references to our firm in the Prospectus contained in such filings under the captions “The Reorganization and Offering
- Material Income Tax Consequences” and “Legal and Tax Matters,” and to the summarization of our opinion in such
Prospectus.
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Very truly yours,
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LUSE GORMAN, PC
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Exhibit 8.2
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_________, 2019
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Boards of Directors
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Pioneer Savings Bank (the “Bank” or “Mutual Savings Bank”)
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Pioneer Bancorp, MHC (the “Mutual Holding Company” or “MHC”)
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Pioneer Bancorp, Inc. (the “Mid-Tier Holding Company” or “Holding Company”)
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Pioneer Bank (the “Stock Bank”)
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RE: New York State (NYS) Income and Franchise Tax Consequences of Conversion of Pioneer Savings Bank from a New York-chartered Mutual Savings Bank into a “Two-Tier” Mutual Holding Company Form of Organization and Minority Stock Offering
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To the Members of the Boards of Directors:
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Scope of Opinion
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You
have requested our opinion with
regard to the material New York State (NYS) income and franchise tax consequences
resulting directly from the reorganization of Pioneer Savings Bank (the “Bank”), a New York-chartered mutual
savings bank, into a mutual holding company structure (the “Reorganization”) pursuant to the Plan of Mutual
Holding Company Reorganization and Minority Stock Issuance dated January 15, 2019 (the “Plan”). As
part of the Reorganization and the Plan, the Bank will convert to a New York-chartered stock savings bank (“the Stock
Bank”), which will be a wholly-owned subsidiary of Pioneer Bancorp, Inc. (the “Holding Company”), a stock
holding company established as a Maryland-chartered corporation. The Holding Company, in turn, will be a
subsidiary of Pioneer
Bancorp, MHC, a New York-chartered
mutual holding company. Concurrently with the Reorganization, the Holding
Company will offer for sale 43% of its Common Stock on a priority basis to depositors and the Tax-Qualified Employee Plans
in a subscription and community
offering (the “Stock Offering),
and contribute 2% of its Common Stock to the Pioneer Bank
Charitable Foundation. Each capitalized term used herein, unless otherwise defined, has the meaning set forth in
the Plan and/or the Federal Tax Opinion.
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In rendering our opinion, we have relied upon the facts, information, assumptions and representations as contained in the Plan. We have also relied on the facts, assumptions and federal income tax conclusions set forth in the Federal Tax Opinion issued by Luse Gorman, PC on ______, 2019. We have reasonably assumed these facts to be complete and accurate and have not independently audited or otherwise verified any of these facts or assumptions. You have represented to us that we have been provided with all of the facts necessary to render our opinion. If any of the facts, assumptions, or federal income tax conclusions in the Federal Tax Opinion are inaccurate or incorrect, our opinion expressed herein may require modification.
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We have not considered any non-income tax, or federal, local or foreign income tax consequences (other than the NYS General Business Corporation Franchise Tax). We have also not considered NYS taxes other than those recited in this opinion or taxes that might be levied by other states, and, therefore, do not express any opinion regarding the treatment that would be given the transaction by the applicable authorities on any issues outside of the above-specified NYS taxes. We also express no opinion on non-tax issues such as corporate law or securities law matters. We express no opinion other than that as stated below, and neither this opinion nor any prior statements are intended to imply or to be an opinion on any other matters.
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In connection
with our opinion, we have examined originals or copies, certified or otherwise, and identified to our satisfaction the Plan and
such other documents as we have deemed necessary or appropriate to enable us to render the opinion below. In our examination,
we have assumed the conformity to the originals of all documents submitted to us as copies. We have also relied upon the
assumptions that:
(i) all
signatures are genuine
and all documents submitted to us, both originals and copies, are authentic,
(ii) each document examined
by us has been or will be fully executed and delivered in substantially the same form, is or will be in full force and effect and
has not been or will not be amended or modified in any respect,
(iii) all parties to the documents
at all times had and will have full corporate power, authority and capacity to enter into, execute and perform all obligations
under those documents and to observe and perform the terms and conditions thereof, and
(iv) the factual matters, statements,
and recitations contained in the documents are accurate, true and complete.
You have represented to us that we have
been provided all of the facts necessary to render our opinion.
Statement of Facts
Pioneer Savings Bank (the “Bank”)
is a New York-chartered mutual savings bank that has served the banking needs of its customers since 1889. The Bank is the parent
company of three wholly-owned subsidiaries: PSB Financial Services, Inc., Pioneer Commercial Bank, and Anchor Agency, Inc.
The Bank has no capital stock or direct
owners. Rather, the owners are the depositors of the Bank, who are entitled upon the complete liquidation of the Bank to any liquidation
proceeds after the payment of creditors. Depositors of the Bank have limited voting rights related only to specific matters pertaining
to the Bank, such as the proposed reorganization into the mutual holding company form of ownership.
Proposed Transaction
The Board of Directors of Pioneer Savings
Bank adopted the Plan providing for the reorganization of the Bank from a mutual savings bank into a “two-tier” mutual
holding company form of organization, with the result as follows: the Stock Bank will be a subsidiary of the Holding Company, which
will be a subsidiary of the MHC. Concurrently with the Reorganization, the Holding Company will offer for sale 43% of its Common
Stock on a priority basis to depositors and the Tax-Qualified Employee Plans in a subscription and community offering (the Stock
Offering), and contribute 2% of its Common Stock to the Pioneer Bank Charitable Foundation.
Pursuant to the Plan, the Reorganization
will be effected as follows, in such order as is necessary to consummate the Reorganization:
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(1)
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the Bank will organize a New York-chartered interim stock savings bank as a wholly-owned subsidiary
(“Interim One”);
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(2)
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Interim One will organize a New York-chartered interim stock savings bank as a wholly-owned subsidiary
(“Interim Two”);
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(3)
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Interim One will organize the Holding Company as a wholly-owned subsidiary;
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(4)
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the Bank will convert to stock form by exchanging its mutual savings bank organization certificate
for a stock savings bank organization certificate and thereby become the Stock Bank and will transfer all of its assets and liabilities
to the Stock Bank as successor to the Bank (the “F Reorganization”) and Interim One will become the wholly-owned subsidiary
of the Stock Bank. In the F Reorganization, depositors of the Bank will constructively exchange their ownership interests (consisting
of liquidation rights and limited voting rights) in the Bank for common stock of the Stock Bank. In addition, Eligible Account
Holders and Supplemental Eligible Account Holders will also receive an interest in a Liquidation Account in the Stock Bank in the
F Reorganization;
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(5)
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the shares of common stock of Interim One will be cancelled and Interim One will exchange its organization
certificate for a New York mutual holding company organization certificate to become the MHC;
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(6)
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concurrently with steps (4) and (5), Interim Two will merge with and into the Stock Bank, with
the Stock Bank as the resulting subsidiary of the MHC, whereby the depositors will constructively exchange the shares of common
stock of the Stock Bank received in the F Reorganization for liquidation interests in the MHC (the “§351 Transaction”);
and
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(7)
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the MHC will contribute the capital stock of the Stock Bank to the Holding Company, and the Stock
Bank will become a wholly-owned subsidiary of the Holding Company.
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(8)
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Contemporaneously with the Reorganization described above, the Holding Company will offer up to
49% of its outstanding shares of Common Stock in the Subscription Offering and, if applicable, the Community Offering (steps (7)
and (8) are referred to herein as the “Secondary §351 Transaction”).
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At the time of the Reorganization, the
Bank will establish a Liquidation Account in an amount equal to the Bank’s total equity as reflected in the latest statement
of financial condition contained in the final Prospectus used in the Offering. Following the Reorganization, the Liquidation Account
will be maintained by the Bank for the benefit of the Eligible Account Holders and Supplemental Eligible Account Holders who continue
to maintain their deposit accounts at the Bank. The terms of the Liquidation Account are described in Section 23 of the Plan.
Effect of Misstatement of, or Changes
in, Facts, Assumptions or Representations
A misstatement or omission of any fact
or a change or amendment in any of the facts, assumptions or representations upon which we have relied may require a modification
of all or a part of this opinion.
Opinion
You have provided us with a copy of the
Federal Tax Opinion regarding the Plan in which Luse Gorman, PC has opined that the various proposed transactions to be undertaken
as part of the Plan will be treated for federal income tax purposes as “reorganizations” within the meaning of §368(a)(1) or
“property transfers” under §351 of the Internal Revenue Code of 1986, as amended. Our opinion regarding the NYS
income and franchise tax consequences related to the Plan adopts and relies upon the facts, representations, assumptions, and conclusions
as set forth in the Federal Tax Opinion. Our opinion assumes that the ultimate federal income tax consequences of the Plan will
be those as described in the Federal Tax Opinion. Based upon that information, we render the following opinion with respect to
the NYS income and franchise tax effects of the Plan:
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1.
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It is more likely than not that the federal tax treatment of the Plan (as outlined in the Federal
Tax Opinion under the headings F Reorganization, §351 Transaction, and Secondary §351 Transaction) will be respected
in determining the computation of NYS taxable income (more specifically entitled “business income” for purposes of
the NYS General Business Corporation Franchise Tax) of the Bank, MHC, Holding Company, and Stock Bank.
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2.
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It is more likely than not that the federal tax treatment of the Plan (as outlined in the Federal
Tax Opinion under the headings F Reorganization, §351 Transaction, and Secondary §351 Transaction), including receipt
of subscription rights and/or liquidation interests by Depositors, Eligible Account Holders, and Supplemental Eligible Account
Holders, will be respected in determining the computation of NYS taxable income (or for corporations, more specifically entitled
“business income”) of the Depositors, Eligible Account Holders, and Supplemental Eligible Account Holders who are otherwise
required to file a NYS corporate or personal income tax return.
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3.
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It is more likely than not that the federal tax treatment of the Plan, including the tax basis
and holding period of the Common Stock, will be respected in determining the computation of NYS taxable income (or for corporations,
more specifically entitled “business income”) of the Minority Stockholders who acquire Common Stock in the Stock Offering.
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Limitations on Opinion
Our opinion is as of _______, 2019 and
we have no responsibility to update this opinion for events, transactions, circumstances or changes in any of the facts, assumptions
or representations occurring after this date. Our opinion is based solely upon our interpretation of the current New York
Tax Law, New York Code, New York Department of Taxation administrative interpretations, and judicial interpretations as of the
date of this letter, all of which are subject to change. If there is a change, including a change having retroactive effect, in
the Internal Revenue Code of 1986, as amended, U.S. Treasury Regulations, New York Tax Law, New York Code, New York Department
of Taxation administrative interpretations or in the prevailing judicial interpretations of the foregoing, the opinions expressed
herein would necessarily have to be reevaluated in light of any such changes. We have no responsibility to update this opinion
for any such changes occurring after the date of this letter.
Our opinion is not binding on the New York
State Department of Taxation & Finance, and there can be no assurance that the New York State Department of Taxation &
Finance will not take a position contrary to the conclusions reached in the opinion. In the event of such disagreement, there
can be no assurance that the New York State Department of Taxation & Finance would not prevail in a judicial proceeding.
The opinion expressed herein reflects our
assessment of the probable outcome of litigation and other adversarial proceedings based solely on an analysis of the existing
tax authorities relating to the issues. It is important, however, to note that litigation and other adversarial proceedings
are frequently decided on the basis of such matters as negotiation and pragmatism upon the outcome of such potential litigation
or other adversarial proceedings.
The opinion expressed herein reflects what
we regard to be the material NYS income and franchise tax consequences to the Bank, MHC, Holding Company, Stock Bank, Depositors,
Eligible Account Holders, and Supplemental Eligible Account Holders of the transaction as described herein; nevertheless, it is
an opinion only and should not be taken as assurance of the ultimate tax treatment.
Should it finally be determined that the
facts or the federal income tax consequences are not as outlined in the Federal Tax Opinion, the NYS income and franchise tax consequences
and our New York tax opinion may differ from what is contained herein. If any fact contained in this opinion letter or the
Federal Tax Opinion changes to alter the federal tax treatment, it is imperative that we be notified in order to determine the
effect on the NYS income and franchise tax consequences, if any. We have no responsibility to update this opinion for events,
transactions, circumstances, or changes in any of the facts, assumptions or representations occurring after the date of this letter.
Consent
We hereby consent to the filing of this
opinion as an exhibit to the Bank’s Form 86-AC Application for Plan of Mutual Holding Company Reorganization and Minority
Stock Issuance, as filed with the New York State Department of Financial Services, as an exhibit to the Holding Company’s
and Mutual Holding Company’s Application on Form FRY-3, as filed with the Board of Governors of the Federal Reserve System
and as an exhibit to the Holding Company’s Registration Statement on Form S-1, as filed with the SEC. We also consent to
the references to our firm in the Prospectus contained in such filings under the captions “The Reorganization and Offering
- Material Income Tax Consequences” and “Legal and Tax Matters,” and to the summarization of our opinion in such
Prospectus.
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Very truly yours,
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BONADIO & CO., LLP
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Exhibit 10.1
EMPLOYMENT
AGREEMENT
This Employment Agreement
(the “
Agreement
”) is made and entered into, effective as of ______________ ___, 2019 (the “
Effective
Date
”), by and between Pioneer Bank, a New York-chartered stock savings bank (the “
Bank
”) and Thomas
L. Amell (“Executive”). Any reference to the “Company” shall mean Pioneer Bancorp, Inc., the newly-formed
the stock holding company of the Bank, or any successor thereto.
RECITALS
WHEREAS
, the
Bank desires to continue to employ the Executive in an executive capacity in the conduct of its businesses, and the Executive desires
to be so employed on the terms contained herein;
NOW, THEREFORE
,
in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties
hereby agree as follows:
1. POSITION
AND RESPONSIBILITIES.
(a)
Employment
.
During the term of this Agreement, Executive agrees to serve as President and Chief Executive Officer of the Bank and the Company
or any successor executive position with the Bank and the Company that is agreed to and consented by Executive (the “
Executive
Position
”), and will perform the duties and will have all powers associated with Executive Position as are appropriate
for a person in the position of the Executive Position, as well as those as shall be assigned by the Board of Directors of the
Bank (the “
Board
”). As President and Chief Executive Officer, Executive will report directly to the Board. During
the period provided in this Agreement, Executive also agrees to serve, if elected, as an officer, director or trustee of any subsidiary
or affiliate of the Bank and in such capacity carry out such duties and responsibilities reasonably appropriate to that office.
(b)
Responsibilities
.
During Executive’s employment hereunder, Executive will be employed on a full-time basis and devote Executive’s full
business time and best efforts, business judgment, skill and knowledge to the performance of Executive’s duties and responsibilities
related to the Executive Position. Except as otherwise provided in Section 1(c), Executive will not engage in any other business
activity during the term of this Agreement except as may be approved by the Board.
(c)
Service
on Other Boards and Committees
. The Bank encourages participation by Executive on community boards and committees and in
activities generally considered to be in the public interest, but the Board shall have the right to approve or disapprove, in its
sole discretion, Executive’s participation on such boards and committees.
2. TERM.
(a)
Term
and Annual Renewal
. The term of this Agreement and the period of Executive’s employment hereunder will begin as of
the Effective Date and will continue through December 31, 2021 (the “
Term
”). Commencing on January 1, 2020 and
continuing on each January 1
st
thereafter (the “
Renewal Date
”), the Term will extend automatically
for one additional year, so that the Term will be three (3) years from such Renewal Date, unless either the Bank or Executive by
written notice to the other given at least 30 days prior to such Renewal Date notifies the other of its intent not to extend the
same. In the event that notice not to extend is given by either the Bank or the Executive, this Agreement will terminate as of
the last day of the then current Term. For avoidance of doubt, any extension to the Term will become the “Term” for
purposes of this Agreement.
At least 30 days prior
to the Renewal Date, the disinterested members of the Board will conduct a comprehensive performance evaluation and review of Executive
for purposes of determining whether to take action regarding non-renewal of the Agreement, and the results thereof will be included
in the minutes of the Board’s meeting.
(b)
Change
in Control
. Notwithstanding the foregoing, in the event the Bank or the Company has entered into an agreement to effect
a transaction that would be considered a Change in Control as defined under Section 5 hereof, the Term of this Agreement will be
extended automatically so that it is scheduled to expire no less than two (2) years beyond the effective date of the Change in
Control, subject to extensions as set forth above.
(c)
Continued
Employment Following Expiration of Term
. Nothing in this Agreement will mandate or prohibit a continuation of Executive’s
employment following the expiration of the term of this Agreement.
3. COMPENSATION,
BENEFITS AND REIMBURSEMENT.
(a)
Base
Salary
. In consideration of Executive’s performance of the responsibilities and duties set forth in this Agreement,
Executive shall receive an annual base salary of $___________ per year (“
Base Salary
”). Such Base Salary will
be payable in accordance with the customary payroll practices of the Bank. During the term of this Agreement, the Board (or the
Compensation Committee of the Board (the “
Committee
”)) may increase, but not decrease, Executive’s Base
Salary. Any increase in Base Salary will become the “Base Salary” for purposes of this Agreement.
(b)
Bonus
and Incentive Compensation
. Executive (1) is eligible to participate in any bonus plan or arrangement of the Bank in which
senior management is eligible to participate, pursuant to which a bonus may be paid to Executive in accordance with such plan or
arrangement; and/or (2) may receive a bonus, if any, on a discretionary basis, as determined by the Board or the Committee.
(c)
Benefit
Plans
. Executive will be entitled to participate in all employee benefit plans, arrangements and perquisites offered to
employees and officers of the Bank, on the same terms and conditions as such plans are available to other employees and officers
of the Bank. Without limiting the generality of the foregoing provisions of this Section 3(c), Executive also will be entitled
to participate in any employee benefit plans including but not limited to retirement plans, pension plans, profit-sharing plans,
health-and-accident plans, or any other employee benefit plan or arrangement made available by the Bank in the future to management
employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements
as applicable to other management employees.
(d)
Vacation
.
Executive will be entitled to paid vacation time each year during the term of this Agreement measured on a calendar year basis,
in accordance with the Bank’s customary practices, as well as sick leave, holidays and other paid absences in accordance
with the Bank’s policies and procedures for officers. Any unused paid time off during an annual period will be treated in
accordance with the Bank’s personnel policies as in effect from time to time.
(e)
Expense
Reimbursements
. The Bank will reimburse Executive for all reasonable travel, entertainment and other reasonable expenses
incurred by Executive during the course of performing Executive’s obligations under this Agreement, including, without limitation,
fees for memberships in such organizations as Executive and the Board mutually agree are necessary and appropriate in connection
with the performance of Executive’s duties under this Agreement. All reimbursements shall be made as soon as practicable
upon substantiation of such expenses by Executive in accordance with the applicable policies and procedures of the Bank.
4. TERMINATION
AND TERMINATION PAY.
Subject to Section
5 of this Agreement which governs the occurrence of a Change in Control, Executive’s employment under this Agreement will
terminate under the following circumstances:
(a)
Death
.
This Agreement and Executive’s employment with the Bank will terminate upon Executive’s death, in which event the Bank’s
sole obligation shall be to pay or provide Executive’s estate or beneficiary any “Accrued Obligations.”
For purposes of this
Agreement, “
Accrued Obligations
” means the sum of : (i) any Base Salary earned through the Executive’s
Date of Termination, (ii) unpaid expense reimbursements (subject to, and in accordance with, Section 3(e) of this Agreement), (iii)
unused paid time off that accrued through the Date of Termination, (iv) any earned but unpaid short-term and long-term incentive
compensation for the year immediately preceding the year of termination and (v) any vested benefits the Executive may have under
any employee benefit plan of the Bank through the Date of Termination, which vested benefits shall be paid and/or provided in accordance
with the terms of such employee benefit plans. Unless otherwise provided by the applicable employee benefit plan, the Accrued Obligations,
if any, will be paid to Executive (or Executive’s estate or beneficiary) within 30 days following Executive’s Date
of Termination.
(b)
Disability
.
The Bank shall be entitled to terminate Executive’s employment and this Agreement due to Executive’s Disability. If
Executive’s employment is terminated due to Executive’s Disability, the Bank’s sole obligation under this Agreement
shall be to pay or provide Executive any Accrued Obligations. For purposes of this Agreement, “
Disability
” means
that Executive is deemed disabled for purposes of the Bank’s long-term disability plan or policy that covers Executive or
is determined to be disabled by the Social Security Administration.
(c)
Termination
for Cause
. The Board may immediately terminate Executive’s employment and this Agreement at any time for “Cause.”
In the event Executive’s employment is terminated for Cause, the Bank’s sole obligation will be to pay or provide to
Executive any Accrued Obligations. Termination for “
Cause
” means termination because of, in the good faith determination
of the Board, Executive’s:
(i) material
act of dishonesty or fraud in performing Executive’s duties on behalf of the Bank;
(ii) willful
misconduct that in the judgment of the Board will likely cause economic damage to the Bank or injury to the business reputation
of the Bank;
(iii) breach
of fiduciary duty involving personal profit;
(iv) intentional
failure to perform stated duties under this Agreement after written notice thereof from the Board;
(v) willful
violation of any law, rule or regulation (other than traffic violations or similar offenses which results only in a fine or other
non-custodial penalty) that reflect adversely on the reputation of the Bank, any felony conviction, any violation of law involving
moral turpitude, or any violation of a final cease-and-desist order; or any violation of the policies and procedures of the Bank
as outlined in the Bank’s employee handbook, which would result in termination of the Bank employees, as from time to time
amended and incorporated herein by reference; or
(vi) material
breach by Executive of any provision of this Agreement.
Any determination of
Cause under this Agreement will be made by resolution adopted by at least two-thirds vote of the disinterested members of the Board
at a meeting called and held for that purpose. Executive will be provided with reasonable notice of such meeting and Executive
will be given an opportunity to be heard before such vote is taken by the disinterested members of the Board.
(d)
Resignation
by Executive without Good Reason
. Executive may resign from employment during the term of this Agreement without Good Reason
upon at least 30 days prior written notice to the Board, provided, however, that the Bank may accelerate the Date of Termination
upon receipt of written notice of Executive’s resignation. In the event Executive resigns without Good Reason, the Bank’s
sole obligation under this Agreement will be to pay or provide to Executive any Accrued Obligations.
(e)
Termination
Without Cause or With Good Reason
.
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(i)
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The Board may immediately terminate Executive’s employment
at any time for a reason other than Cause (a termination “
Without Cause
”), and Executive may, by written notice
to the Board, terminate this Agreement at any time within 90 days following an event constituting “Good Reason,” as
defined below (a termination “
With Good Reason
”); provided, however, that the Bank will have 30 days to cure
the “Good Reason” condition, but the Bank may waive its right to cure. In the event of termination as described under
Section 4(e)(i) during the Term and subject to the requirements of Section 4(e)(iii), the Bank will pay or provide Executive with
the following:
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(A) any
Accrued Obligations;
(B) a
cash lump sum payment equal to the amount of Base Salary that Executive would have earned had Executive remained employed for the
greater of: (1) the remaining Term; or (2) 12 months (the “
Benefits Period
”); and
(C) non-taxable
medical and dental insurance coverage substantially comparable (and on substantially the same terms and conditions) to the coverage
maintained by the Bank for Executive immediately prior to Executive’s termination under the same cost-sharing arrangements
that apply for active employees of the Bank as of Executive’s Date of Termination. Such continued coverage will cease upon
the earlier of: (1) the completion of the Benefit Period; or (2) the date on which Executive becomes a full-time employee of another
employer, provided Executive is entitled to benefits that are substantially similar to the health and welfare benefits provided
by the Bank. The period of continued health coverage required by Section 4980B(f) of the Internal Revenue Code of 1986, as amended
(the “
Code
”), will run concurrently with the coverage period provided herein.
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(ii)
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“
Good Reason
” exists if, without Executive’s
express written consent, any of the following occurs:
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(A) a
material reduction in Executive’s Base Salary;
(B) a
material reduction in Executive’s authority, duties or responsibilities from the position and attributes associated with
the Executive Position;
(C) the
Bank requiring Executive to be based at any office or location resulting in an increase in Executive’s commute of 35 miles
or more; or
(D) a
material breach of this Agreement by the Bank.
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(iii)
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Notwithstanding anything to the contrary in Section 4(e)(i),
Executive will not receive any payments or benefits under this Section 4(e) unless and until Executive executes a release of claims
(the “
Release
”) against the Bank and any affiliate, and their officers, directors, successors and assigns,
releasing said persons from any and all claims, rights, demands, causes of action, suits, arbitrations or grievances relating
to the employment relationship, including claims under the Age Discrimination in Employment Act, but not including claims for
benefits under tax-qualified plans or other benefit plans in which Executive is vested, claims for benefits required by applicable
law or claims with respect to obligations set forth in this Agreement that survive the termination of this Agreement. The Release
must be executed and become irrevocable by the 60
th
day following the Date of Termination, provided that if the 60-day
period spans two (2) calendar years, then, to the extent necessary to comply with Code Section 409A, the payments and benefits
described in this Section 4(e) will be paid, or commence, in the second calendar year.
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(f)
Effect
on Status as a Director
. In the event of Executive’s termination of employment under this Agreement for any reason,
such termination will also constitute Executive’s resignation as a director of the Bank or the Company, or as a director
or trustee of any subsidiary or affiliate thereof, to the extent Executive is acting as a director or trustee of any of the aforementioned
entities.
(g)
Notice;
Effective Date of Termination
. Notice of Termination of employment under this Agreement must be communicated by or to Executive
or the Bank, as applicable, in accordance with Section 17. “
Date of Termination
” as referenced in this Agreement
means Executive’s termination of employment pursuant to this Agreement, which will be effective on the earliest of: (i) immediately
after the Bank gives notice to Executive of Executive’s termination Without Cause, unless the parties agree to a later date,
in which case, termination will be effective as of such later date; (ii) immediately upon approval by the Board of termination
of Executive’s employment for Cause; (iii) immediately upon Executive’s death or Disability; or (iv) 30 days after
Executive gives written notice to the Bank of Executive’s resignation from employment (including With Good Reason), provided
that the Bank may set an earlier termination date at any time prior to the date of termination of employment, in which case Executive’s
resignation shall be effective as of such date.
5. CHANGE
IN CONTROL.
(a)
Change
in Control Defined
. For purposes of this Agreement, the term “
Change in Control
” means: (i) a change
in the ownership of the Corporation; (ii) a change in the effective control of the Corporation; or (iii) a change in the ownership
of a substantial portion of the assets of the Corporation as defined in accordance with Code Section 409A. For purposes of this
Section 5(a), the term “
Corporation
” is defined to include the Bank, the Company or any of their successors,
as applicable.
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(i)
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A change in the ownership of a Corporation occurs on the
date that any one person, or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(v)(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.
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(ii)
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A change in the effective control of the Corporation occurs
on the date that either (A) any one person, or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(vi)(D))
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 the Corporation,
or (B) a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election
is not endorsed by a majority of the members of the Board prior to the date of the appointment or election, provided that this
subsection “(B)” is inapplicable where a majority stockholder of the Corporation is another corporation.
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(iii)
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A change in a substantial portion of the Corporation’s
assets occurs on the date that any one person or more than one person acting as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(vii)(C))
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 percent of the total gross fair
market value of (A) all of the assets of the Corporation, or (B) the value of the assets being disposed of, either of which is
determined without regard to any liabilities associated with such assets. For all purposes hereunder, the definition of Change
in Control shall be construed to be consistent with the requirements of Treasury Regulation 1.409A-3(i)(5), except to the extent
that such regulations are superseded by subsequent guidance.
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Notwithstanding anything
herein to the contrary, a Change in Control will not be deemed to have occurred for purposes of this Agreement in connection with
the Bank’s mutual holding company reorganization and/or minority stock offering of the Company. Similarly, a Change in Control
for purposes of this Agreement will not be deemed to have occurred in the event of a second-step conversion of the Bank’s
mutual holding company from mutual-to-stock form and/or contemporaneous stock offering of a newly-formed stock holding company.
(b)
Change
in Control Benefits
. Upon the termination of Executive’s employment by the Bank (or any successor) Without Cause
or by Executive With Good Reason during the Term on or after the effective time of a Change in Control, the Bank (or any successor)
will pay or provide Executive, or Executive’s estate in the event of Executive’s subsequent death, with the following:
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(i)
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any Accrued Obligations;
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(ii)
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a cash lump sum payment (the “
Change in Control
Severance
”) in an amount equal to three (3) times the sum of Executive’s: (A) Base Salary (or Executive’s
Base Salary in effect immediately prior to the Change in Control, if higher); and (B) the highest annual cash bonus earned by
Executive for the three (3) most recently completed annual performance periods prior to the Change Control. The Change in Control
Severance is payable within 30 days following Executive’s Date of Termination; and
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(iii)
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life insurance coverage and non-taxable medical and dental
insurance coverage substantially comparable to the coverage maintained by the Bank for Executive immediately prior to the Date
of Termination at no cost to Executive. Such continued coverage will cease upon the earlier of: (A) the date which is 36 months
following from Executive’s Date of Termination; or (B) the date on which Executive becomes a full-time employee of another
employer, provided Executive is entitled to benefits that are substantially similar to the health and welfare benefits provided
by the Bank. The period of continued health coverage required by Section 4980B(f) of the Code shall not run concurrently with
the coverage period provided herein.
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Notwithstanding the
foregoing, the payments and benefits provided in this Section 5(b) will be payable to Executive in lieu of any payments or benefits
that are payable under Section 4(e).
6. COVENANTS
OF EXECUTIVE.
(a)
Non-Solicitation/Non-Compete
.
Executive hereby covenants and agrees that during the “Restricted Period,” Executive shall not, without the written
consent of the Bank, either directly or indirectly:
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(i)
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solicit, offer employment to, or take any other action
intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any officer or
employee of the Bank, or any of its respective subsidiaries or affiliates, to terminate his or her employment with the Bank and/or
accept employment with another employer; or
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(ii)
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become an officer, employee, consultant, director, independent
contractor, agent, joint venturer, partner or trustee of any savings bank, savings and loan association, savings and loan holding
company, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker or any other entity
that competes with the business of the Bank or any of their direct or indirect subsidiaries or affiliates within the New York
State counties of Albany, Greene, Rensselaer, Saratoga, Schenectady and Warren or in any other county where the Bank has one or
more offices or branches; or
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(iii)
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solicit, provide any information, advice or recommendation
or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of
causing any customer of the Bank to terminate an existing business or commercial relationship with the Bank.
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The restrictions contained
in this Section 6(a) shall not apply in the event of Executive’s termination of employment on or after the effective time
of a Change in Control.
For purposes of this
Section 6(a), the “
Restricted Period
” will be: (i) at all times during Executive’s period of employment
with the Bank; and (ii) except as provided above, during the period beginning on Executive’s Date of Termination and ending
on the one-year anniversary of the Date of Termination.
(b)
Confidentiality
.
Executive recognizes and acknowledges that Executive has been and will be the recipient of confidential and proprietary business
information concerning the Bank, including without limitation, past, present, planned or considered business activities of the
Bank, and Executive acknowledges and agrees that Executive will not, during or after the term of Executive’s employment,
disclose such confidential and proprietary information for any purposes whatsoever, except as may be expressly permitted in writing
signed by the Bank, or as may be required by regulatory inquiry, law or court order.
(c)
Information/Cooperation
.
Executive will, upon reasonable notice, furnish such information and assistance to the Bank as may be reasonably required by the
Bank, in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided,
however, that Executive shall not be required to provide information or assistance with respect to any litigation between Executive
and the Bank or any other subsidiaries or affiliates.
(d)
Reliance
.
Except as otherwise provided, all payments and benefits to Executive under this Agreement will be subject to Executive’s
compliance with this Section 6, to the extent applicable. The parties hereto, recognizing that irreparable injury will result to
the Bank, its business and property in the event of Executive’s breach of this Section 6, agree that, in the event of any
such breach by Executive, the Bank will be entitled, in addition to any other remedies and damages available, to an injunction
to restrain the violation hereof by Executive and all persons acting for or with Executive. Executive represents and admits that
Executive’s experience and capabilities are such that Executive can obtain employment in a business engaged in other lines
of business than the Bank, and that the enforcement of a remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such
breach or threatened breach, including the recovery of damages from Executive.
7. SOURCE
OF PAYMENTS.
All payments provided
in this Agreement shall be timely paid by check or direct deposit from the general funds of the Bank (or any successor of the Bank).
8. EFFECT
ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains
the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor
of the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring
to Executive under another plan, program or agreement (other than an employment agreement) between the Bank and Executive.
9. NO
ATTACHMENT; BINDING ON SUCCESSORS.
(a) Except
as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment
by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.
(b) The
Bank’s obligations under this Agreement will be binding on any and all successors or assigns, whether direct or indirect,
by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Bank, in the same manner
and to the same extent that the Bank would be required to perform if no such succession or assignment had taken place.
10. MODIFICATION
AND WAIVER.
(a) This
Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.
(b) No
term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement
of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written
waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
11. Applicable
law.
Notwithstanding anything
herein contained to the contrary, the following provisions shall apply:
(a) The
Bank may terminate Executive’s employment at any time, but any termination by the Bank other than termination for Cause shall
not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall have no right to
receive compensation or other benefits under this Agreement for any period after Executive’s termination for Cause, other
than the Accrued Obligations.
(b) In
no event shall the Bank (nor any affiliate) be obligated to make any payment pursuant to this Agreement that is prohibited by Section
18(k) of the Federal Deposit Insurance Act (codified at 12 U.S.C. sec. 1828(k)), 12 C.F.R. Part 359, or any other applicable law.
(c) Notwithstanding
anything in this Agreement to the contrary, to the extent that a payment or benefit described in this Agreement constitutes “non-qualified
deferred compensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the
Executive’s termination of employment, then such payments or benefits will be payable only upon the Executive’s “Separation
from Service.” For purposes of this Agreement, a “
Separation from Service
” will have occurred if the Bank
and Executive reasonably anticipate that either no further services will be performed by Executive after the Date of Termination
(whether as an employee or as an independent contractor) or the level of further services performed is less than 50 percent of
the average level of bona fide services in the 36 months immediately preceding the termination. For all purposes hereunder, the
definition of Separation from Service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii).
(d) Notwithstanding
the foregoing, if Executive is a “
Specified Employee
” (i.e., a “key employee” of a publicly traded
company within the meaning of Section 409A of the Code and the final regulations issued thereunder) and any payment under this
Agreement is triggered due to Executive’s Separation from Service, then solely to the extent necessary to avoid penalties
under Section 409A of the Code, no payment shall be made during the first six (6) months following Executive’s Separation
from Service. Rather, any payment which would otherwise be paid to Executive during such period shall be accumulated and paid to
Executive in a lump sum on the first day of the seventh month following such Separation from Service. All subsequent payments shall
be paid in the manner specified in this Agreement.
(e) If
the Bank cannot provide Executive or Executive’s dependents any continued health insurance or other welfare benefits as required
by this Agreement because Executive is no longer an employee, applicable rules and regulations prohibit such benefits or the payment
of such benefits in the manner contemplated, or it would subject the Bank to penalties, then the Bank will pay Executive a cash
lump sum payment reasonably estimated to be equal to the value of such benefits or the value of the remaining benefits at the time
of such determination. Such cash payment will be made in a lump sum within 30 days after the later of Executive’s Date of
Termination or the effective date of the rules or regulations prohibiting such benefits or subjecting the Bank to penalties. Notwithstanding
the foregoing, if such cash payment would violate the requirements of Treasury Regulation Section 1.409A-3(j), the Executive’s
cash payment in lieu of the continued health insurance or welfare benefits as required by this Agreement will be payable at the
same time the related premium payments would have been paid by the Bank and for the duration of the applicable coverage period.
(f) To
the extent not specifically provided in this Agreement, any compensation or reimbursements payable to Executive shall be paid or
provided no later than two and one-half (2.5) months after the calendar year in which such compensation is no longer subject to
a substantial risk of forfeiture within the meaning of Treasury Regulation Section 1.409A-1(d).
(g) Each
payment pursuant to this Agreement is intended to constitute a separate payment for purposes Treasury Regulation Section 1.409A-2(b)(2).
(h) Notwithstanding
anything in this Agreement to the contrary, Executive understands that nothing contained in this Agreement limits Executive’s
ability to file a charge or complaint with the Securities and Exchange Commission or any other federal, state or local governmental
agency or commission (“
Government Agencies
”) about a possible securities law violation without approval of the
Bank (or any affiliate). Executive further understands that this Agreement does not limit Executive’s ability to communicate
with any Government Agency or otherwise participate in any investigation or proceeding that may be conducted by any Government
Agency, including providing documents or other information, without notice to the Bank (or any affiliate) related to the possible
securities law violation. This Agreement does not limit Executive’s right to receive any resulting monetary award for information
provided to any Government Agency.
12. SEVERABILITY.
If any provision of
this Agreement is determined to be void or unenforceable, then the remaining provisions of this Agreement will remain in full force
and effect.
13. GOVERNING
LAW.
This Agreement shall
be governed by the laws of the State of New York, but only to the extent not superseded by federal law.
14. ARBITRATION.
Any
dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted
within 50 miles of Albany, New York, in accordance with the Commercial Rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrators’ award in any court having jurisdiction. The above notwithstanding, the
Bank may seek injunctive relief in a court of competent jurisdiction in New York to restrain any breach or threatened breach of
any provision of this Agreement, without prejudice to any other rights or remedies that may otherwise be available to the Bank.
15. INDEMNIFICATION.
The Bank will provide
Executive (including Executive’s heirs, executors and administrators) with coverage under a standard directors’ and
officers’ liability insurance policy at its expense, and will indemnify Executive (and Executive’s heirs, executors
and administrators) in accordance with the charter and bylaws of the Bank and to the fullest extent permitted under applicable
law against all expenses and liabilities reasonably incurred by Executive in connection with or arising out of any action, suit
or proceeding in which Executive may be involved by reason of having been a trustee, director or officer of the Bank or any subsidiary
or affiliate of the Bank.
16. TAX
Withholding.
The Bank may withhold
from any amounts payable to Executive hereunder all federal, state, local or other taxes that the Bank may reasonably determine
are required to be withheld pursuant to any applicable law or regulation (it being understood that Executive is responsible for
payment of all taxes in respect of the payments and benefits provided herein).
17. Notice.
For the purposes of
this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to
have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed
to the respective addresses set forth below or if sent by facsimile or email, on the date it is actually received.
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To the Bank
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Pioneer Bank
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652 Albany-Shaker Road
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Albany, New York 12211
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Attention: Corporate Secretary
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To Executive:
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Most recent address on file with the Bank
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[Signature Page Follows]
IN WITNESS WHEREOF
,
the parties have executed this Agreement as of the date first
written above.
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PIONEER BANK
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By:
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Name:
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Title:
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EXECUTIVE
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Thomas L. Amell
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Exhibit 10.2
TWO-YEAR CHANGE IN CONTROL AGREEMENT
This Change in Control
Agreement (the “Agreement”) is made effective as of the ___ day of _____, 2019 (the “
Effective Date
”),
by and between Pioneer Bank, a New York-chartered stock savings bank (the “
Bank
”) and ______________ (the “
Executive
”).
Any reference to the “
Company
” shall mean Pioneer Bancorp, Inc., the newly-formed the stock holding company
of the Bank, or any successor thereto.
RECITALS
WHEREAS
, Executive
is currently employed as an executive officer of the Bank;
WHEREAS
, the
Bank desires to assure itself of the Executive’s continued active participation in the business of the Bank; and
WHEREAS
, in
order to induce Executive to remain in the employ of the Bank and in consideration of Executive’s agreeing to remain in the
employ of the Bank, the parties desire to specify the severance benefits which shall be due Executive in the event that his employment
with the Bank is terminated under specified circumstances.
NOW THEREFORE
,
in consideration of the mutual agreements herein contained, and upon the other terms and conditions hereinafter provided, the parties
hereby agree as follows:
(a)
Two
Year Contract; Annual Renewal
. The term of this Agreement will begin as of the Effective Date and will continue through
December 31, 2020 (the “
Term
”). Commencing on January 1, 2020 and continuing on each January 1
st
thereafter (the “
Renewal Date
”), the Term will extend automatically for one additional year, so that the Term
will be two (2) years from such Renewal Date, unless either the Bank or Executive by written notice to the other given at least
sixty (60) days prior to such Renewal Date notifies the other of its intent not to extend the same. In the event that notice not
to extend is given by either the Bank or the Executive, this Agreement will terminate as of the last day of the then current Term.
For avoidance of doubt, any extension to the Term will become the “Term” for purposes of this Agreement.
At least thirty (30)
days prior to the Renewal Date, the disinterested members of the Board of Directors of the Bank (the “
Board
”)
will conduct a comprehensive performance evaluation and review of Executive for purposes of determining whether to take action
regarding non-renewal of the Agreement, and the results thereof will be included in the minutes of the Board’s meeting.
(b)
Change
in Control
. Notwithstanding the foregoing, in the event the Bank or the Company has entered into an agreement to effect
a transaction that would be considered a Change in Control as defined under Section 5 hereof, the Term of this Agreement will be
extended automatically so that it is scheduled to expire no less than two (2) years beyond the effective date of the Change in
Control, subject to extensions as set forth above.
(a)
Base
Salary
. Executive’s “Base Salary” for purposes of this Agreement shall mean the annual rate of base salary
paid to Executive by the Bank.
(b)
Change
in Control
. For purposes of this Agreement, the term “
Change in Control
” means: (i) a change in the ownership
of the Corporation; (ii) a change in the effective control of the Corporation; or (iii) a change in the ownership of a substantial
portion of the assets of the Corporation as defined in accordance with Code Section 409A. For purposes of this Section 2(b), the
term “
Corporation
” is defined to include the Bank, the Company or any of their successors, as applicable.
A change
in the ownership of a Corporation occurs on the date that any one person, or more than one person acting as a group (as defined
in Treasury Regulation 1.409A-3(i)(5)(v)(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.
A change
in the effective control of the Corporation occurs on the date that either (A) any one person, or more than one person acting as
a group (as defined in Treasury Regulation 1.409A-3(i)(5)(vi)(D)) 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 the Corporation, or (B) a majority of the members of the Board is replaced during
any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior
to the date of the appointment or election, provided that this subsection “(B)” is inapplicable where a majority stockholder
of the Corporation is another corporation.
A change
in a substantial portion of the Corporation’s assets occurs on the date that any one person or more than one person acting
as a group (as defined in Treasury Regulation 1.409A-3(i)(5)(vii)(C)) 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 percent of the total gross fair market value of (A) all of the assets of the Corporation,
or (B) the value of the assets being disposed of, either of which is determined without regard to any liabilities associated with
such assets. For all purposes hereunder, the definition of Change in Control shall be construed to be consistent with the requirements
of Treasury Regulation 1.409A-3(i)(5), except to the extent that such regulations are superseded by subsequent guidance.
Notwithstanding anything
herein to the contrary, a Change in Control will not be deemed to have occurred for purposes of this Agreement in connection with
the Bank’s mutual holding company reorganization and/or minority stock offering of the Company. Similarly, a Change in Control
for purposes of this Agreement will not be deemed to have occurred in the event of a second-step conversion of the Bank’s
mutual holding company from mutual-to-stock form and/or contemporaneous stock offering of a newly-formed stock holding company.
(c)
Code
.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
(d)
Good
Reason
shall mean a termination by Executive following a Change in Control if, without Executive’s express written consent,
any of the following occurs:
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(i)
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a material reduction in Executive’s Base Salary;
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(ii)
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a material reduction in Executive’s authority, duties or responsibilities from the position
and attributes associated with Executive’s executive position with the Bank in effect as of the Effective Date or any successor
executive position, as mutually agreed to by the Bank and Executive;
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(iii)
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the Bank requiring Executive to be based at any office or location resulting in an increase in
Executive’s commute of 35 miles or more; or
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(iv)
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a material breach of this Agreement by the Bank;
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provided, however, that prior to any termination
of employment for Good Reason, Executive must first provide written notice to the Bank (or its successor) within 90) days following
the initial existence of the condition, describing the existence of such condition, and the Bank shall thereafter have the right
to remedy the condition within 30 days of the date the Bank received the written notice from Executive. If the Bank remedies the
condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition.
If the Bank does not remedy the condition within such 30-day cure period, then Executive may deliver a Notice of Termination for
Good Reason at any time within 60 days following the expiration of such cure period.
(e)
Termination
for Cause
shall mean termination because of, in the good faith determination of the Board, Executive’s:
(i) material
act of dishonesty or fraud in performing Executive’s duties on behalf of the Bank;
(ii) willful
misconduct that in the judgment of the Board will likely cause economic damage to the Bank or injury to the business reputation
of the Bank;
(iii) breach
of fiduciary duty involving personal profit;
(iv) intentional
failure to perform stated duties under this Agreement after written notice thereof from the Board;
(v) willful
violation of any law, rule or regulation (other than traffic violations or similar offenses which results only in a fine or other
non-custodial penalty) that reflect adversely on the reputation of the Bank, any felony conviction, any violation of law involving
moral turpitude, or any violation of a final cease-and-desist order; or any violation of the policies and procedures of the Bank
as outlined in the Bank’s employee handbook, which would result in termination of the Bank employees, as from time to time
amended and incorporated herein by reference; or
(vi) material
breach by Executive of any provision of this Agreement.
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3.
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BENEFITS UPON TERMINATION
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(a) If
Executive’s employment by the Bank shall be terminated subsequent to a Change in Control and during the term of this Agreement
by (i) the Bank for other than Cause, or (ii) Executive for Good Reason, then the Bank shall:
(1) pay Executive,
or in the event of Executive’s subsequent death, Executive’s beneficiary or beneficiaries or estate, as applicable,
a cash severance amount equal to:
(i) two (2)
times Executive’s base salary in effect as of the Date of Termination,
(ii) the highest
rate of bonus earned by Executive from the Bank in any one of the three calendar years immediately preceding the year in which
the termination occurs, and
(iii) payable
by lump sum within ten (10) business days of the Date of Termination.
(2) cause to
be continued at no cost to Executive, non-taxable medical and dental coverage substantially identical to the coverage maintained
by the Bank for Executive prior to Executive’s termination for twenty-four (24) months. Notwithstanding the foregoing, if
applicable law prohibits (including, but not limited to, laws prohibiting discriminating in favor of highly compensated employees),
or, if participation by the Executive is not permitted under the terms of the applicable health plans, or if providing such benefits
would subject the Bank to penalties, then the Bank shall pay the Executive a cash lump sum payment reasonably estimated to be equal
to the value of such non-taxable medical and dental benefits, with such payment to be made by lump sum within ten (10) business
days of the Date of Termination, or if later, the date on which the Bank determines that such insurance coverage (or the remainder
of such insurance coverage) cannot be provided for the foregoing reasons.
Any purported termination
by the Bank or by Executive in connection with or following a Change in Control shall be communicated by Notice of Termination
to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which
shall indicate the Date of Termination and, in the event of termination by Executive, the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination
of Executive’s employment under the provision so indicated. “Date of Termination” shall mean the date specified
in the Notice of Termination (which, in the case of a termination for Cause, shall be immediate). In no event shall the Date of
Termination exceed thirty (30) days from the date the Notice of Termination is given.
All payments provided
in this Agreement shall be timely paid in cash or check from the general funds of the Bank.
Except as required
by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation
of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void, and of no effect.
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7.
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ENTIRE AGREEMENT; MODIFICATION AND WAIVER
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(a) This
Agreement contains the entire understanding between the parties hereto and supersedes any prior agreement between the Bank and
Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of
a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer
benefits than those available to her without reference to this Agreement.
(b) This
Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.
(c) No
term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement
of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written
waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other
than that specifically waived.
If, for any reason,
any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the
full extent consistent with law continue in full force and effect.
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9.
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HEADINGS FOR REFERENCE ONLY
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The headings of sections
and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any
of the provisions of this Agreement.
This Agreement shall
be governed by the laws of the State of New York but only to the extent not superseded by federal law.
Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, as an alternative to civil
litigation and without any trial by jury to resolve such claims, conducted by a single arbitrator, mutually acceptable to the Bank
and Executive, sitting in a location selected by the Bank within fifty (50) miles from the main office of the Bank, in accordance
with the rules of the American Arbitration Association’s National Rules for the Resolution of Employment Disputes then in
effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.
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12.
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PAYMENT OF LEGAL FEES
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To the extent that
such payment(s) may be made without triggering penalty under Code Section 409A, all reasonable legal fees paid or incurred by Executive
pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, provided
that the dispute or interpretation has been resolved in Executive’s favor, and such reimbursement shall occur no later than
sixty (60) days after the end of the year in which the dispute is settled or resolved in Executive’s favor.
The termination of
Executive’s employment, other than following a Change in Control, shall not result in any obligation of the Bank under this
Agreement.
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14.
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SUCCESSORS AND ASSIGNS
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The
Bank shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all
or substantially all the business or assets of the Bank, expressly and unconditionally to assume and agree to perform the Bank’s
obligations under this Agreement, in the same manner and to the same extent that the Bank would be required to perform if no such
succession or assignment had taken place.
[Signature Page Follows]
SIGNATURES
IN WITNESS WHEREOF
,
the Bank has caused this Agreement to be executed by its duly authorized officer, and Executive has signed this Agreement, as of
the Effective Date.
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PIONEER BANK
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By:
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EXECUTIVE
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Exhibit 10.3
PIONEER BANK
TARGET INCENTIVE PLAN
ARTICLE I
Establishment, Purpose and Duration
1.1
Establishment
.
This Target Incentive Plan (the “
Plan
”) is adopted by Pioneer Bank (the “
Bank
”), effective
as of January 1, 2018 (the “
Effective Date
”).
1.2
Purpose
.
The Plan seeks to provide participating personnel with incentives and motivation to stimulate the Bank’s profitability and
growth while maintaining its safety and soundness. The plan also seeks to improve the ability of the Bank to attract and retain
quality personnel, critical to its continued success.
1.3
Duration
of this Plan
. This Plan shall commence on the Effective Date, and shall remain in effect until terminated, modified or
amended in accordance with Section 4.1 of the Plan.
ARTICLE II
Definitions
For the purposes of
this Plan, the following words and phrases shall have the meanings indicated, unless the context clearly indicates otherwise:
2.1
“
Base
Salary
” means the Participant’s annual rate of base salary paid during each calendar year, excluding bonuses
and other forms of variable income, fringe benefits, reimbursements, etc.
2.2
“
Bonus
Award
” means an annual bonus paid as a cash lump sum under the Plan.
2.3
“
Committee
”
means the Compensation Committee of the Board of Directors of the Bank or disinterred members of the Board of Directors of the
Bank, as applicable.
2.4
“
Eligible
Employee
” means executives of the Bank who are selected by the Committee, in its sole discretion, to participate
in this Plan. Being selected to participate in this Plan for one Plan Year does not guarantee selection for participation in the
Plan for any other Plan Year.
2.5
“
Plan
Year
” means the Bank’s fiscal year, which is the calendar year.
2.6
“
Participant
”
means an Eligible Employee who has been notified by the Committee in writing that he or she has been selected to participate in
this Plan for the current Plan Year.
ARTICLE III
Annual Cash Bonuses
3.1
Bonus
Award
.
(a) Each
Plan Year, the Committee shall set performance objectives pursuant to Section 3.2 for each Participant in writing in an Award Agreement,
which shall be provided to each Participant and included as an exhibit to the Plan. If the performance objectives for the Participant
are accomplished, the Participant shall receive a Bonus Award under the Plan equal to a designated percentage of the Participant’s
Base Salary, as determined by the Committee in its sole discretion and set forth in the Participant’s Award Agreement.
(b) In
addition to the attainment of the performance objectives set forth by the Committee for the Participant in the Award Agreement,
payment of the Bonus Award is also contingent on the Participant’s and the Bank’s overall performance level being satisfactory,
as determined by the Committee. The Committee shall have the final authority to determine whether the Bank and/or any Participant
has satisfied these requirements.
3.2
Performance
Objectives
.
(a) Payment
of Bonus Awards in any Plan Year is contingent upon the performance objectives specified by the Committee for any Participant being
met by the Bank and/or Participant. The specific performance objectives are determined annually by the Committee, with input from
the President and Chief Executive Officer, and are subject to change by the Committee, but generally include objective performance
targets focused on financial performance, growth, asset quality, and risk management, including, but not limited to, return on
average assets, net income margin, return on equity, loan production, asset quality, core deposit growth and subjective, discretionary
performance targets, such as particular qualitative factors for each Participant, based on his or her duties for the Bank.
(b) Each
performance objective shall specify levels of achievement of goals ranging from a minimum level of performance to a maximum level
of performance, which can be satisfied incrementally between such achievement levels. Minimum level of performance is a level of
performance deemed worthy of a Bonus Award. Maximum level of performance is a level of performance deemed outstanding performance.
(c) Each
objective will be weighted based on priority as a percentage of the total Bonus Award payable to the Participant. The weight of
each performance objective attributable to a Participant will be set forth in his or her Award Agreement.
3.3
Termination
of Employment
. Unless otherwise determined by the Committee, a Participant who is not employed as of the payout date for
his or her Bonus Award shall forfeit the Bonus Award.
3.4
Time
of Payout
. Except as provided in Article IV, no later than two and one half (2 ½) months after the close of the
Plan Year (i.e., by the March 15 that immediately follows the end of the Plan Year for which the performance is measured), the
Bonus Award will be paid to the Participant in a cash lump sum, through regular payroll practices, including all applicable withholdings.
Bonus Awards under the Plan are intended to be exempt from Section 409A of the Internal Revenue Code under the “short term
deferral rule” set forth in Treasury Regulations Section 1.409A-1(b)(4). The Chief Financial Officer of the Bank shall calculate
the Bonus Awards for the Participants, which shall be certified by the Committee.
ARTICLE IV
Amendments and Termination
4.1
Right
to Amend or Terminate
. The Committee may amend or terminate this Plan at any time without the consent of any Participants,
provided, however, that the Committee may not reduce the amount of the Bonus Award already earned by any Participant in any Plan
Year without the Participant’s consent.
ARTICLE V
Miscellaneous
5.1
No
Guarantee of Employment
. This Plan is not an employment policy or contract. It does not give any Participant the right
to remain an employee of the Bank, nor does it interfere with the Bank’s right to discharge the Participant. It also does
not interfere with the Participant’s right to terminate employment at any time.
5.2
Non-Transferability
.
Bonus Awards under this Plan cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner.
5.3
Applicable
Law
. The Plan and all rights hereunder will be governed by the laws of the State of New York, except to the extent preempted
by the laws of the United States of America.
5.4
Entire
Agreement
.
This Plan constitutes the entire agreement between the Bank and each Participant as to the subject matter
hereof. No rights are granted to the Participant by virtue of this Plan other than those specifically set forth herein.
5.5
Administration
.
The Committee shall have powers which are necessary to administer this Plan, including but not limited to:
(a) Interpreting
the provisions of the Plan;
(b) Determine
the persons eligible to participate in the Plan;
(c) Maintaining
a record of benefit payments; and
(d) Establishing
rules and prescribing any forms necessary or desirable to administer the Plan.
[Signature Page to Follow]
IN WITNESS WHEREOF
,
the Bank has executed this Plan on the date set forth below.
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PIONEER BANK
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_____________
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By:
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Date
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PIONEER BANK
TARGET INCENTIVE PLAN
AWARD AGREEMENT
Name: __________________________________________________________________________________
Plan Year: ___________________________________________________________________
____________
Bonus Award Opportunity: _________________________________________________________
_________
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(a)
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As a % of Base Salary
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(b)
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(a) x (b) x bonus
opportunity
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Performance Objective
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Weight
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Below
Minimum
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Minimum
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Maximum &
Above
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% Results for
the Plan Year
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Total Amount of
Bonus
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0
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%
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0
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%
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0
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%
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0
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%
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0
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%
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0
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%
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
100
|
%
|
|
|
N/A
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
N/A
|
|
|
$
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|
|
Exhibit 10.4
PIONEER BANK
BOARD OF TRUSTEES AND EXECUTIVE EMPLOYEES DEFERRED
COMPENSATION PLAN
This document is drafted with the intent that it comply with
Internal Revenue Code Section 409A and regulations promulgated thereunder.
MassMutual Retirement Services and MyDeferral
Executive Benefits have provided you this specimen document strictly in their capacity as service provider, employee benefits consulting
firm and plan recordkeeper. MassMutual Retirement Services and MyDeferral Executive Benefits do NOT provide legal, tax or accounting
consultation or advice. It is MassMutual Retirement Services’ and MyDeferral Executive Benefits’ recommendation that
you seek appropriately specialized professional consultation regarding the information and/or material contained herein.
Pioneer Bank
Board of Trustees and Executive Employees Deferred
Compensation Plan
Table of Contents
|
Article 1
|
Definitions
|
1
|
|
1.1
|
Account
|
1
|
|
1.2
|
Administrator
|
1
|
|
1.3
|
Board
|
1
|
|
1.4
|
Bonus Awards
|
1
|
|
1.5
|
Change-in-Control
|
1
|
|
1.6
|
Code
|
2
|
|
1.7
|
Compensation
|
2
|
|
1.8
|
Deferrals
|
2
|
|
1.9
|
Deferral Election
|
2
|
|
1.10
|
Disability
|
2
|
|
1.11
|
Effective Date
|
2
|
|
1.12
|
Eligible Employee
|
2
|
|
1.13
|
Eligible Trustee of the Board
|
3
|
|
1.14
|
Employee
|
3
|
|
1.15
|
Employer
|
3
|
|
1.16
|
ERISA
|
3
|
|
1.17
|
Investment Fund
|
3
|
|
1.18
|
Participant
|
3
|
|
1.19
|
Performance-based Compensation
|
3
|
|
1.20
|
Plan Year
|
3
|
|
1.21
|
Salary
|
3
|
|
1.22
|
Separation from Service
|
3
|
|
1.23
|
Service Recipient
|
4
|
|
1.24
|
Specified Employee
|
4
|
|
1.25
|
Trust
|
4
|
|
1.26
|
Trustee
|
4
|
|
1.27
|
Trustee of the Board
|
4
|
|
Article 2
|
Participation
|
4
|
|
2.1
|
Commencement of Participation
|
4
|
|
2.2
|
Loss of Eligible Trustee of the Board or Employee Status
|
4
|
|
Article 3
|
Contributions
|
4
|
|
3.1
|
Deferral Elections - General
|
4
|
|
3.2
|
Time of Election
|
5
|
|
3.3
|
Distribution Elections
|
5
|
|
3.4
|
Additional Requirements
|
5
|
|
3.5
|
Cancellation of Deferral Election due to Disability
|
5
|
|
Article 4
|
Vesting
|
6
|
|
4.1
|
Vesting of Deferrals
|
6
|
|
Article 5
|
Accounts
|
6
|
|
5.1
|
Accounts
|
6
|
|
5.2
|
Investments, Gains and Losses
|
6
|
|
Article 6
|
Distributions
|
6
|
|
6.1
|
Distribution Election
|
6
|
|
6.2
|
Distributions upon an In-Service Account Triggering Date
|
7
|
|
6.3
|
Distributions upon a Separation
|
7
|
|
6.4
|
Substantially Equal Annual Installments
|
7
|
|
6.5
|
Distributions due to Disability
|
7
|
|
6.6
|
Distributions upon Death
|
7
|
|
6.7
|
Changes to Distribution Elections
|
8
|
|
6.8
|
Acceleration or Delay in Payments
|
8
|
|
6.9
|
Unforeseeable Emergency
|
8
|
|
6.10
|
Distributions to Specified Employee
|
8
|
|
6.11
|
Minimum Distribution
|
8
|
|
6.12
|
Form of Payment
|
8
|
|
Article 7
|
Beneficiaries
|
9
|
|
7.1
|
Beneficiaries
|
9
|
|
7.2
|
Lost Beneficiary
|
9
|
|
Article 8
|
Funding
|
9
|
|
8.1
|
Prohibition against Funding
|
9
|
|
8.2
|
Deposits in Trust
|
9
|
|
8.3
|
Withholding of Employee Contributions
|
9
|
|
Article 9
|
Claims Administration
|
9
|
|
9.1
|
General
|
9
|
|
9.2
|
Claims Procedure
|
10
|
|
9.3
|
Right of Appeal
|
10
|
|
9.4
|
Review of Appeal
|
10
|
|
9.5
|
Designation
|
11
|
|
Article 10
|
General Provisions
|
11
|
|
10.1
|
Administrator
|
11
|
|
10.2
|
No Assignment
|
11
|
|
10.3
|
No Employment Rights
|
11
|
|
10.4
|
Incompetence
|
11
|
|
10.5
|
Identity
|
12
|
|
10.6
|
Other Benefits
|
12
|
|
10.7
|
Expenses
|
12
|
|
10.8
|
Insolvency
|
12
|
|
10.9
|
Amendment or Modification
|
12
|
|
10.10
|
Plan Suspension
|
12
|
|
10.11
|
Plan Termination
|
12
|
|
10.12
|
Plan Termination due to a Change-in-Control
|
13
|
|
10.13
|
Construction
|
13
|
|
10.14
|
Governing Law
|
13
|
|
10.15
|
Severability
|
13
|
|
10.16
|
Headings
|
13
|
|
10.17
|
Terms
|
13
|
|
10.18
|
Code Section 409A Fail Safe Provision
|
13
|
Pioneer Bank
Board of Trustees and Executive Employees Deferred
Compensation Plan
WHEREAS, Pioneer Bank, and its affiliates and
subsidiaries (the “Employer”), adopted the Pioneer Bank Board of Trustees and Executive Employees Deferred
Compensation Plan (“Prior Plan”) on September 1, 2004 with an effective date of September 1, 2004;
WHEREAS, the Employer
amended and restated the Plan effective January 1, 2005 retaining the nonqualified deferred compensation provisions from the Prior
Plan whilst maintaining compliance with Internal Revenue Code Section 409A and regulations promulgated thereunder; and
WHEREAS, the Employer,
effective September 1, 2014 retained MassMutual Retirement Services, and its subcontractor, MyDeferral Executive Benefits, to provide
recordkeeping and administrative services to the Prior Plan;
WHEREAS, the Employer desires to change
certain provisions of the Prior Plan effective September 1, 2014; and
WHEREAS, Section 8.1 of the Prior Plan
provides Employer with the authority to amend and modify the Plan, subject to non-applicable restrictions;
NOW THEREFORE, the
Employer hereby amends and restates the Prior Plan as the Pioneer Bank Nonqualified Deferred Compensation Plan (“Plan”).
This Plan is an unfunded arrangement and is intended to be exempt from the participation, vesting, funding, and fiduciary requirements
set forth in Title I of the Employee Retirement Income Security Act of 1974, as amended. It is intended to comply with Internal
Revenue Code Section 409A.
Article 1 Definitions
The sum of all the bookkeeping sub-accounts
as may be established for each Participant as provided in Section 5.1 hereof.
The Employer or individuals
or an administrative committee or officer of the Employer appointed by the Employer shall serve as the Administrator of the Plan.
The Administrator shall serve as the agent for the Employer with respect to the Trust
The Board of Trustees of the Employer.
Compensation which
is designated as such by the Employer and which relates to services performed during an incentive period by an Eligible Employee
in addition to his or her Salary, including any pretax elective deferrals from said Bonus Awards to any Employer sponsored plan
that includes amounts deferred under a Deferral Election or any elective deferral as defined in Code Section 402(g)(3) or any amount
contributed or deferred at the election of the Eligible Employee in accordance with Code Section 125 or 132(f)(4).
Provided that such term shall be interpreted
within the meaning of regulations promulgated under Code Section 409A, a “Change-in-Control” of the Employer
(which, for purpose of this Section 1.5 shall mean Pioneer Bank but not any of its affiliates or subsidiaries) shall mean the
first to occur of any of the following:
(a) the
date that any one person or persons acting as a group acquires ownership of Employer stock constituting more than fifty percent
(50%) of the total fair market value or total voting power of the Employer;
(b) the
date that any one person or persons acting as a group 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 the stock of the Employer possessing thirty percent (30%) or
more of the total voting power of the stock of the Employer;
(c) the
date that any one person or persons acting as a group 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 Employer that have a total gross fair market value equal
to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Employer immediately prior
to such acquisition; or
(d) the
date that a majority of members of the Employer’s Board is replaced during any 12-month period by directors whose appointment
or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or elections.
The Internal Revenue Code of 1986, as amended.
The Participant’s
earned income, including Trustee Fees, Employee Salary, Bonus Awards, Performance-based Compensation, and other remuneration from
the Employer as may be included by the Administrator.
The portion of Compensation that a Participant
elects to defer in accordance with Section 3.1 hereof.
The separate agreement, submitted to the
Administrator, by which an Eligible Employee agrees to participate in the Plan and make Deferrals thereto.
Provided that such
term shall be interpreted within the meaning of regulations promulgated under Code Section 409A, a Participant shall be considered
to have incurred a Disability if: (i) the Participant is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months; (ii) the Participant is, by reason of any medically determinable physical or mental
impairment which 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 3 months under an accident and health plan covering employees
of the Participant’s Employer; or (iii) determined to be totally disabled by the Social Security Administration.
September 1, 2014
An Employee shall be considered an Eligible
Employee if such Employee is a member of a “select group of management or highly compensated employees,” within
the meaning of Sections 201, 301 and 401 of ERISA, and is designated as an Eligible Employee by the Administrator. The
Administrator may at any time, in its sole discretion, change the eligible criteria for an Eligible Employee or determine
that one or more Participants will cease to be an Eligible Employee. The designation of an Employee as an Eligible Employee
in any year shall not confer upon such Employee any right to be designated as an Eligible Employee in any future Plan
Year.
|
|
1.13
|
Eligible Trustee of the Board
|
A trustee shall be
considered an Eligible Trustee of the Board as designated by the Administrator in its sole discretion. The Administrator may at
any time, in its sole discretion, change the eligible criteria for an Eligible Trustee of the Board or determine that one or more
Participants will cease to be an Eligible Trustee of the Board. The designation of a Trustee of the Board as an Eligible Trustee
of the Board in any year shall not confer upon such Trustee of the Board any right to be designated as an Eligible Trustee of the
Board in any future Plan Year.
Any person employed by the Employer.
Pioneer Bank and its subsidiaries and affiliates.
The Employee Retirement Income Security Act of 1974,
as amended.
Each investment(s) which serves as a means
to measure value, increases or decreases with respect to a Participant’s Accounts.
An Eligible Employee who is a Participant as provided
in Article 2.
|
|
1.19
|
Performance-based Compensation
|
Provided that such term shall be interpreted
within the meaning of regulations promulgated under Code Section 409A, “Performance-based Compensation” shall
mean compensation that (i) meets the definition of Code Section 409A(a)(4)(B)(iii) and related guidance and regulations, and
(ii) is designated as such by the Employer and relates to services performed during a performance period of at least twelve
months by an Eligible Employee, including any pretax elective deferrals from said Performance-based Compensation to any
Employer sponsored plan that includes amounts deferred under a Deferral Election or any elective deferral as defined in Code
Section 402(g)(3) or any amount contributed or deferred at the election of the Eligible Employee in accordance with Code
Section 125 or 132(f)(4).
Calendar year
An Eligible Employee’s
base salary earned during a Plan Year, including any pretax elective deferrals from said Salary to any Employer sponsored plan
that includes amounts deferred under a Deferral Election or any elective deferral as defined in Code Section 402(g)(3) or any amount
contributed or deferred at the election of the Eligible Employee in accordance with Code Section 125 or 132(f)(4).
|
|
1.22
|
Separation from Service
|
Provided that such
term shall be interpreted within the meaning of regulations promulgated under Code Section 409A, a Participant shall incur a Separation
from Service with the Service Recipient due to death, retirement or other termination of employment with the Service Recipient
unless the employment relationship is treated as continuing intact while the individual is on military leave, sick leave, or other
bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual retains
a right to reemployment with the Service Recipient under an applicable statute or by contract. Upon a sale or other disposition
of the assets of the Employer to an unrelated purchaser, the Administrator reserves the right, to the extent permitted by Code
section 409A to determine whether Participants providing services to the purchaser after and in connection with the purchase transaction
have experienced a Separation from Service.
Provided that such
term shall be interpreted within the meaning of regulations promulgated under Code Section 409A, Service Recipient shall mean the
Employer or person for whom the services are performed and with respect to whom the legally binding right to compensation arises,
and all persons with whom such person would be considered a single employer under Code Section 414(b) (employees of controlled
group of corporations), and all persons with whom such person would be considered a single employer under Code Section 414(c) (employees
of partnerships, proprietorships, etc., under common control).
Provided that such term shall be interpreted
within the meaning of regulations promulgated under Code Section 409A, a “Specified Employee” shall mean a
participant who is considered a key employee on the Identification Date, as defined in Code Section 416(i) without regard to
section 416(i)(5) and such other requirements imposed under Code Section 409A(a)(2)(B)(i) and regulations thereunder for the
period beginning April 1 of the year subsequent to the Identification Date and ending March 31 of the following year. The
Identification Date for this Plan is December 31 of each year. Notwithstanding anything to the contrary, a Participant is not
a Specified Employee unless any stock of the Service Recipient is publicly traded on an established securities market or
otherwise.
The agreement between the Employer and the
Trustee under which the assets of the Plan are held, administered and managed, which shall conform to the terms of Rev. Proc. 92-64.
State Street Bank & Trust, or such other
successor that shall become trustee pursuant to the terms of the Plan.
|
|
1.27
|
Trustee of the Board
|
Any person on the Board of Trustees for the Employer.
Article 2 Participation
|
|
2.1
|
Commencement of Participation
|
Each Eligible Trustee of the Board or Employee
shall become a Participant at the earlier of the date on which his or her Deferral Election first becomes effective.
|
|
2.2
|
Loss of Eligible Trustee of the Board or Employee Status
|
A Participant who is
no longer an Eligible Trustee of the Board or Employee shall not be permitted to submit a Deferral Election and all Deferrals for
such Participant shall cease as of the end of the year in which such Participant is determined to no longer be an Eligible Trustee
of the Board or Employee. Amounts credited to the Account of a Participant who is no longer an Eligible Trustee of the Board or
Employee shall continue to be held pursuant to the terms of the Plan and shall be distributed as provided in Article 6.
Article 3 Contributions
|
|
3.1
|
Deferral Elections - General
|
A
Participant’s Deferral Election for a Plan Year, is irrevocable for that applicable Plan Year; provided, however that a
cessation of Deferrals shall be allowed if required by the terms of the Employer’s qualified 401(k) plan in order for
the Participant to obtain a hardship withdrawal from the 401(k) plan, or if required under Section 6.9 (Unforeseeable
Emergency) of this Plan. Such amounts deferred under the Plan shall not be made available to such Participant, except as
provided in Article 6, and shall reduce such Participant’s Compensation from the Employer in accordance with the
provisions of the applicable Deferral Election; provided, however, that all such amounts shall be subject to the rights of
the general creditors of the Employer as provided in Article 8. The Deferral Election, in addition to the requirements set
forth below, must designate: (i) the amount of Compensation to be deferred, (ii) the time of the distribution, and (iii) the
form of the distribution.
A Deferral Election shall be void if it is not made
in a timely manner as follows:
(a) A
Deferral Election with respect to any Compensation must be submitted to the Administrator before the beginning of the calendar
year during which the amount to be deferred will be earned. As of December 31 of each calendar year, said Deferral Election is
irrevocable for the calendar year.
(b) Notwithstanding
the foregoing and in the discretion of the Employer, in a year in which a Trustee of the Board or Employee is first eligible to
participate, and provided that such Trustee of the Board or Employee is not eligible to participate in any other similar account
balance arrangement subject to Code Section 409A, such Deferral Election shall be submitted within thirty (30) days after the date
on which a Trustee of the Board or Employee is first eligible to participate, and such Deferral Election shall apply to Compensation
to be earned during the remainder of the calendar year after such election is made.
(c) Notwithstanding
the foregoing and in the discretion of the Employer, a Deferral Election with respect to any Performance-based Compensation may
be submitted by the Eligible Employee or Participant provided that such Deferral Election is submitted at least six (6) months
prior to the end of the performance period on which the Performance-based Compensation is based.
|
|
3.3
|
Distribution Elections
|
At the time a Participant
makes a Deferral Election, he or she must also elect the time and form of the distribution by establishing one or more In-Service
Account or Separation Account(s) as provided in Sections 5.1 and 6.1. If the Participant fails to properly designate the time and
form of a distribution, the Participant’s Account shall be designated as a Separation Account and shall be paid in a lump
sum.
|
|
3.4
|
Additional Requirements
|
The Deferral Election,
subject to the limitations set forth in Sections 3.1 and 3.2 hereof, shall comply with the following additional requirements, or
as otherwise required by the Administrator in its sole discretion:
(a) Deferrals
may be made in whole percentages or stated dollar amounts as determined by the Administrator.
(b) The
maximum amount that may be deferred each Plan Year is one-hundred percent (100%) of the Trustee of the Board’s Fees, one-hundred
percent (100%) of the Participant’s Salary and one-hundred percent (100%) of the Participant’s Bonus Awards and Performance-based
Compensation, net of applicable taxes.
|
|
3.5
|
Cancellation of Deferral Election due to Disability
|
Notwithstanding anything
to the contrary, if a Participant incurs a disability as defined in this Section 3.5, said Participant may file an election to
stop Deferrals as of the date the election is received by the Administrator, provided that such cancellation occurs by the later
of the end of the calendar year or the 15th day of the third month following the date the Participant incurs a disability. Disability
for purposes of this Section 3.5 only means that a Participant incurs a medically determinable physical or mental impairment resulting
in the Participant’s inability to perform the duties of his or her position or any substantially similar position, where
such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months,
as determined by the Administrator in its sole discretion.
Article 4 Vesting
A Participant shall be one-hundred percent
(100%) vested in his or her Account attributable to Deferrals and any earning or losses on the investment of such Deferrals.
Article 5 Accounts
The Administrator shall
establish and maintain a bookkeeping account in the name of each Participant. The Administrator shall also establish sub-accounts
as provided in subsection (a) and (b), below, as elected by the Participant pursuant to Article 3. A Participant may have a maximum
of ten (10) sub-accounts at any time.
(a) A
Participant may establish one or more Separation Account (“Separation sub-account”) by designating as such on the Participant’s
Deferral Election. Each Participant’s Separation sub-account shall be credited with Deferrals (as specified in the Participant’s
Deferral Election), and the Participant’s allocable share of any earnings or losses on the foregoing. Each Participant’s
Separation sub-account shall be reduced by any distributions made plus any federal and state tax withholding, and any social security
withholding tax as may be required by law.
(b)
A Participant may elect to establish one or more In-Service Account
(“In-Service sub-account”) by designating as such in the Participant’s Deferral Election the year in which
payment shall be made. Each Participant’s In-Service sub-account shall be credited with Deferrals (as specified in the
Participant’s Deferral Election), and the Participant’s allocable share of any earnings or losses on the
foregoing. Each Participant’s In-Service sub-account shall be reduced by any distributions made plus any federal and
state tax withholding and any social security withholding tax as may be required by law.
|
|
5.2
|
Investments, Gains and Losses
|
(a) A
Participant may direct that his or her Separation sub-accounts and or In-Service sub-accounts established pursuant to Section 5.1
may be valued as if they were invested in one or more Investment Funds as selected by the Employer in multiples of one percent
(1%). The Employer may from time to time, at the discretion of the Administrator, change the Investment Funds for purposes of this
Plan.
(b) The
Administrator shall adjust the amounts credited to each Participant’s Account to reflect Deferrals, investment experience,
distributions and any other appropriate adjustments. Such adjustments shall be made as frequently as is administratively feasible.
(c) A
Participant may change his or her selection of Investment Funds no more than six (6) times each Plan Year with respect to his or
her Account or sub-accounts by filing a new election in accordance with procedures established by the Administrator. An election
shall be effective as soon as administratively feasible following the date the change is submitted on a form prescribed by the
Administrator.
(d) Notwithstanding
the Participant’s ability to designate the Investment Fund in which his or her deferred Compensation shall be deemed invested,
the Employer shall have no obligation to invest any funds in accordance with the Participant’s election. Participants’
Accounts shall merely be bookkeeping entries on the Employer’s books, and no Participant shall obtain any property right
or interest in any Investment Fund.
Article 6 Distributions
|
|
6.1
|
Distribution Election
|
Each Participant shall designate in
his or her Deferral Election the form and timing of his or her distribution by indicating the type of sub-account as
described under Section 5.1, and by designating the form in which payments shall be made from the choices available under
Section 6.2 and 6.3 hereof. Notwithstanding anything to the contrary contained herein provided, no acceleration of the time
or schedule of payments under the Plan shall occur except as permitted under both this Plan and Code Section 409A.
|
|
6.2
|
Distributions upon an In-Service Account Triggering
Date
|
In-Service sub-account
distributions shall begin as soon as administratively feasible but no later than sixty (60) days following June 1 of the calendar
year designated by the Participant on a properly submitted Deferral Election, and are payable in either a lump-sum payment or substantially
equal annual installments, as described in Section 6.4 below, over a period of up to five (5) years as elected by the Participant
in his or her Deferral Election. If the Participant fails to designate the form of the distribution, the sub-account shall be paid
in a lump-sum payment. Notwithstanding anything to the contrary contained herein, in the event the Participant has an In-Service
sub-account from the Prior Plan, such Prior Plan In-Service sub-account shall be maintained and accounted for pursuant to the applicable
Prior Plan rules, which shall include but not be limited to, those requirements affecting distribution(s).
|
|
6.3
|
Distributions upon a Separation
|
If the Participant
has a Separation from Service, the Participant’s Separation sub-account shall be distributed as soon as administratively
feasible but no later than sixty (60) days following the Participant’s Separation from Service, subject to Section 6.10 (Distributions
to Specified Employees).
Distribution shall be made either in a
lump-sum payment or in substantially equal annual installments, as defined in Section 6.4 below, over a period of up to ten (10)
years as elected by the Participant. If the Participant fails to designate the form of the distribution, the sub-account shall
be paid in a lump-sum payment. If a Participant has any In-Service sub-accounts at the time of his or her Separation, said sub-accounts
shall be distributed in a lump sum as soon as administratively feasible but no later than sixty (60) days following Participant’s
Separation from Service, subject to Section 6.10 (Distributions to Specified Employees). Notwithstanding anything to the contrary
contained herein, in the event the Participant has a Separation sub-account (a.k.a. Retirement Account) from the Prior Plan, such
Prior Plan Separation sub-account shall be maintained and accounted for pursuant to the applicable Prior Plan rules, which shall
include but not be limited to, those requirements affecting distribution(s).
|
|
6.4
|
Substantially Equal Annual Installments
|
(a) The
amount of the substantially equal payments shall be determined by multiplying the Participant’s Account or sub-account by
a fraction, the denominator of which in the first year of payment equals the number of years over which benefits are to be paid,
and the numerator of which is one (1). The amounts of the payments for each succeeding year shall be determined by multiplying
the Participant’s Account or sub-account as of the applicable anniversary of the payout by a fraction, the denominator of
which equals the number of remaining years over which benefits are to be paid, and the numerator of which is one (1). Installment
payments made pursuant to this Section 6.4 shall be made as soon as administratively feasible but no later than sixty (60) days
following the anniversary of the distribution event, subject to Section 6.10 (Distributions to Specified Employees).
(b) For
purposes of the Plan pursuant to Code Section 409A and regulations thereunder, a series of annual installments from a particular
subaccount shall be considered a single payment.
|
|
6.5
|
Distributions due to Disability
|
Upon a Participant’s
Disability, all amounts credited to his or her Account shall be paid to the Participant in a lump sum as soon as administratively
feasible but no later than sixty (60) days following the date of Disability.
|
|
6.6
|
Distributions upon Death
|
Upon the death of a
Participant, all amounts credited to his or her Account shall be paid, as soon as administratively feasible but no later than sixty
(60) days following Participant’s date of death, to his or her beneficiary or beneficiaries, as determined under Article
7 hereof, in a lump sum.
|
|
6.7
|
Changes to Distribution Elections
|
A Participant will
be permitted to elect to change the form or timing of the distribution of the balance of his or her one or more sub-accounts within
his or her Account to the extent permitted and in accordance with the requirements of Code Section 409A(a)(4)(C), including the
requirement that (i) a redeferral election may not take effect until at least twelve (12) months after such election is filed with
the Employer, (ii) an election to further defer a distribution (other than a distribution upon death, Disability or an unforeseeable
emergency) must result in the first distribution subject to the election being made at least five (5) years after the previously
elected date of distribution, and (iii) any redeferral election affecting a distribution at a fixed date must be filed with the
Employer at least twelve (12) months before the first scheduled payment under the previous fixed date distribution election.
|
|
6.8
|
Acceleration or Delay in Payments
|
To the extent
permitted by Code Section 409A, and notwithstanding any provision of the Plan to the contrary, the Administrator, in its sole
discretion, may elect to (i) accelerate the time or form of payment of a benefit owed to a Participant hereunder in
accordance with the terms and subject to the conditions of Treasury Regulations Section 1.409A-3(j)(4), or (ii) delay the
time of payment of a benefit owed to a Participant hereunder in accordance with the terms and subject to the conditions of
Treasury Regulations Section 1.409A-2(b)(7). By way of example, and at the sole discretion of the Administrator, if a
Participant’s entire Account balance is less than the applicable Code Section 402(g) annual limit, the Employer may
distribute the Participant’s Account in a lump sum provided that the distribution results in the termination of the
participant’s entire interest in the Plan, subject to the plan aggregation rules of Code Section 409A and regulations
thereunder. By way of example, the Administrator may permit such acceleration of the time or schedule of a payment under the
arrangement to an individual other than a Participant as may be necessary to fulfill a domestic relations order (as defined
in Code Section 414(p)(1)(B)).
|
|
6.9
|
Unforeseeable Emergency
|
The Administrator may
permit an early distribution of part or all of any deferred amounts; provided, however, that such distribution shall be made only
if the Administrator, in its sole discretion, determines that the Participant, or the Participant’s beneficiary, has experienced
an Unforeseeable Emergency. An Unforeseeable Emergency is defined as a severe financial hardship resulting from an illness or accident
of the Participant, the Participant’s spouse, the Participant’s beneficiary, or a dependent (as defined in Code Section
152(a)) of the Participant, 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. If an Unforeseeable Emergency is determined
to exist, a distribution may not exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of the distribution, 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 of such assets would not itself cause severe financial hardship).
|
|
6.10
|
Distributions to Specified Employee
|
Notwithstanding anything
herein to the contrary, if any Participant is a Specified Employee upon a Separation from Service for any reason other than death,
distributions shall commence no earlier than six months following Separation from Service (or, if earlier, the date of death of
the Participant) and no later than eight months following Separation from Service. If distributions are to be made in annual installments,
the second installment and all those thereafter will be made on the applicable anniversaries of the date on which the Participant’s
initial installment was payable.
|
|
6.11
|
Minimum Distribution
|
Notwithstanding any
provision to the contrary, if the balance of a Participant’s Account or sub-account at the time of a distribution event is
$10,000 or less, then the Participant shall be paid his or her Account or sub-account as a single lump sum.
All distributions shall be made in the form of cash.
Article 7 Beneficiaries
Each Participant may
from time to time designate one or more persons (who may be any one or more members of such person’s family or other persons,
administrators, trusts, foundations or other entities) as his or her beneficiary under the Plan. Such designation shall be made
in a form prescribed by the Administrator. Each Participant may at any time and from time to time, change any previous beneficiary
designation, without notice to or consent of any previously designated beneficiary, by amending his or her previous designation
in a form prescribed by the Administrator. If the beneficiary does not survive the Participant (or is otherwise unavailable to
receive payment), or if no beneficiary is validly designated then the amounts payable under this Plan shall be paid to the Participant’s
estate. If more than one person is the beneficiary of a deceased Participant, each such person shall receive a pro rata share of
any death benefit payable unless otherwise designated in the applicable form. If a beneficiary who is receiving benefits dies,
all benefits that were payable to such beneficiary shall then be payable to the estate of that beneficiary.
All Participants and
beneficiaries shall have the obligation to keep the Administrator informed of their current address until such time as all benefits
due have been paid. If a Participant or beneficiary cannot be located by the Administrator exercising due diligence, then, in its
sole discretion, the Administrator may presume that the Participant or beneficiary is deceased for purposes of the Plan and all
unpaid amounts (net of due diligence expenses) owed to the Participant or beneficiary shall be paid accordingly or, if a beneficiary
cannot be so located, then such amounts may be forfeited. Any such presumption of death shall be final, conclusive and binding
on all parties.
Article 8 Funding
|
|
8.1
|
Prohibition against Funding
|
Should any investment
be acquired in connection with the liabilities assumed under this Plan, it is expressly understood and agreed that the Participants
and beneficiaries shall not have any right with respect to, or claim against, such assets nor shall any such purchase be construed
to create a trust of any kind or a fiduciary relationship between the Employer and the Participants, their beneficiaries or any
other person. Any such assets shall be and remain a part of the general, unpledged, unrestricted assets of the Employer, subject
to the claims of its general creditors. It is the express intention of the parties hereto that this arrangement shall be unfunded
for tax purposes and for purposes of Title I of the ERISA. Each Participant and beneficiary shall be required to look to the provisions
of this Plan and to the Employer itself for enforcement of any and all benefits due under this Plan, and to the extent any such
person acquires a right to receive payment under this Plan, such right shall be no greater than the right of any unsecured general
creditor of the Employer. The Employer or the Trust shall be designated the owner and beneficiary of any investment acquired in
connection with its obligation under this Plan.
Notwithstanding Section
8.1, or any other provision of this Plan to the contrary, the Employer may deposit into the Trust any amounts it deems appropriate
to pay the benefits under this Plan. The amounts so deposited may include all contributions made pursuant to a Deferral Election
by a Participant.
|
|
8.3
|
Withholding of Employee Contributions
|
The Administrator is authorized to make
any and all necessary arrangements with the Employer in order to withhold the Participant’s Deferrals under Section 3.1
hereof from his or her Compensation. The Administrator shall determine the amount and timing of such withholding.
Article 9 Claims Administration
If a Participant, beneficiary or his
or her representative is denied all or a portion of an expected Plan benefit for any reason and the Participant, beneficiary
or his or her representative desires to dispute the decision of the Administrator, he or she must file a written notification
of his or her claim with the Administrator.
Upon receipt of any
written claim for benefits, the Administrator shall be notified and shall give due consideration to the claim presented. If any
Participant or beneficiary claims to be entitled to benefits under the Plan and the Administrator determines that the claim should
be denied in whole or in part, the Administrator shall, in writing, notify such claimant within ninety (90) days (forty-five (45)
days if the claim is on account of Disability) of receipt of the claim that the claim has been denied. The Administrator may extend
the period of time for making a determination with respect to any claim for a period of up to ninety (90) days (thirty (30) days
if claim is on account of Disability), provided that the Administrator determines that such an extension is necessary because of
special circumstances and notifies the claimant, prior to the expiration of the initial ninety (90) day (or forty-five (45) day)
period, of the circumstances requiring the extension of time and the date by which the Plan expects to render a decision. If the
claim is denied to any extent by the Administrator, the Administrator shall furnish the claimant with a written notice setting
forth:
(a) the
specific reason or reasons for denial of the claim;
(b) a specific
reference to the Plan provisions on which the denial is based;
(c) a
description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why
such material or information is necessary; and
(d) an explanation
of the provisions of this Article.
Under no circumstances shall any failure by the
Administrator to comply with the provisions of this Section 9.2 be considered to constitute an allowance of the
claimant’s claim.
A claimant who has
a claim denied wholly or partially under Section 9.2 may appeal to the Administrator for reconsideration of that claim. A request
for reconsideration under this Section must be filed by written notice within sixty (60) days (one-hundred and eighty (180) days
if the claim is on account of Disability) after receipt by the claimant of the notice of denial under Section 9.2.
Upon receipt of an
appeal the Administrator shall promptly take action to give due consideration to the appeal. Such consideration may include a hearing
of the parties involved, if the Administrator feels such a hearing is necessary. In preparing for this appeal, the claimant shall
be given the right to review pertinent documents and the right to submit in writing a statement of issues and comments. After consideration
of the merits of the appeal, the Administrator shall issue a written decision, which shall be binding on all parties. The decision
shall specifically state its reasons and pertinent Plan provisions on which it relies. The Administrator’s decision shall
be issued within sixty (60) days (forty-five (45) days if the claim is on account of Disability) after the appeal is filed, except
that the Administrator may extend the period of time for making a determination with respect to any claim for a period of up one-hundred
and twenty (120) days (ninety (90) days if the claim is on account of Disability), provided that the Administrator determines that
such an extension is necessary because of special circumstances and notifies the claimant, prior to the expiration of the initial
one-hundred and twenty (120) day (or, if the claim is on account of Disability, initial ninety (90) day) period, of the circumstances
requiring the extension of time and the date by which the Plan expects to render a decision. Under no circumstances shall any failure
by the Administrator to comply with the provisions of this Section 9.4 be considered to constitute an allowance of the claimant’s
claim. In the case of a claim on account of Disability: (i) the review of the denied claim shall be conducted by an employee who
is neither the individual who made the initial determination or a subordinate of such person; and (ii) no deference shall be given
to the initial determination. For issues involving medical judgment, the employee must consult with an independent health care
professional who may not be the health care professional who rendered the initial claim.
The Administrator may
designate any other person of its choosing to make any determination otherwise required under this Article. Any person so designated
shall have the same authority and discretion granted to the Administrator hereunder.
Article 10 General Provisions
(a) The
Administrator is expressly empowered to limit the amount of Compensation that may be deferred; to deposit amounts into the Trust
in accordance with Section 8.2 hereof; to interpret the Plan, and to determine all questions arising in the administration, interpretation
and application of the Plan; to employ actuaries, accountants, counsel, and other persons it deems necessary in connection with
the administration of the Plan; to request any information from the Employer it deems necessary to determine whether the Employer
would be considered insolvent or subject to a proceeding in bankruptcy; and to take all other necessary and proper actions to fulfill
its duties as Administrator.
(b) The
Administrator shall not be liable for any actions by it hereunder, unless due to its own negligence, willful misconduct or lack
of good faith.
(c) The
Administrator shall be indemnified and saved harmless by the Employer from and against all personal liability to which it may be
subject by reason of any act done or omitted to be done in its official capacity as Administrator in good faith in the administration
of the Plan and Trust, including all expenses reasonably incurred in its defense in the event the Employer fails to provide such
defense upon the request of the Administrator. The Administrator is relieved of all responsibility in connection with its duties
hereunder to the fullest extent permitted by law, short of breach of duty to the beneficiaries.
Benefits or payments
under this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of the Participant or the Participant’s beneficiary, whether voluntary or involuntary,
and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber, attach or garnish the same shall not be valid,
nor shall any such benefit or payment be in any way liable for or subject to the debts, contracts, liabilities, engagement or torts
of any Participant or beneficiary, or any other person entitled to such benefit or payment pursuant to the terms of this Plan,
except to such extent as may be required by law. If any Participant or beneficiary or any other person entitled to a benefit or
payment pursuant to the terms of this Plan becomes bankrupt or attempts to anticipate, alienate, sell, transfer, assign, pledge,
encumber, attach or garnish any benefit or payment under this Plan, in whole or in part, or if any attempt is made to subject any
such benefit or payment, in whole or in part, to the debts, contracts, liabilities, engagements or torts of the Participant or
beneficiary or any other person entitled to any such benefit or payment pursuant to the terms of this Plan, then such benefit or
payment, in the discretion of the Administrator, shall cease and terminate with respect to such Participant or beneficiary, or
any other such person.
|
|
10.3
|
No Employment Rights
|
Participation in this
Plan shall not be construed to confer upon any Participant the legal right to be retained in the employ of the Employer, or give
a Participant or beneficiary, or any other person, any right to any payment whatsoever, except to the extent of the benefits provided
for hereunder. Each Participant shall remain subject to discharge to the same extent as if this Plan had never been adopted.
If the Administrator
determines that any person to whom a benefit is payable under this Plan is incompetent by reason of physical or mental disability,
the Administrator shall have the power to cause the payments becoming due to such person to be made to another for his or her benefit
without responsibility of the Administrator or the Employer to see to the application of such payments. Any payment made pursuant
to such power shall, as to such payment, operate as a complete discharge of the Employer, the Administrator and the Trustee.
If, at any time, any
doubt exists as to the identity of any person entitled to any payment hereunder or the amount or time of such payment, the Administrator
shall be entitled to hold such sum until such identity or amount or time is determined or until an order of a court of competent
jurisdiction is obtained. The Administrator shall also be entitled to pay such sum into court in accordance with the appropriate
rules of law. Any expenses incurred by the Employer, Administrator, and Trust incident to such proceeding or litigation shall be
charged against the Account of the affected Participant.
The benefits of each
Participant or beneficiary hereunder shall be in addition to any benefits paid or payable to or on account of the Participant or
beneficiary under any other pension, disability, annuity or retirement plan or policy whatsoever.
All expenses incurred in the administration
of the Plan, whether incurred by the Employer or the Plan, shall be paid by the Employer.
Should the Employer
be considered insolvent (as defined by the Trust), the Employer, through its Board and chief executive officer, shall give immediate
written notice of such to the Administrator of the Plan and the Trustee. Upon receipt of such notice, the Administrator or Trustee
shall cease to make any payments to Participants who were Employees of the Employer or their beneficiaries and shall hold any and
all assets attributable to the Employer for the benefit of the general creditors of the Employer.
|
|
10.9
|
Amendment or Modification
|
The Employer may, at
any time, in its sole discretion, amend or modify the Plan in whole or in part, except that no such amendment or modification shall
have any retroactive effect to reduce any amounts allocated to a Participant’s Accounts, and provided that such amendment
or modification complies with Code Section 409A and related regulations thereunder.
The Employer further reserves the
right to suspend the Plan in whole or in part, except that no such suspension shall have any retroactive effect to reduce any
amounts allocated to a Participant’s Accounts, and provided that the distribution of the vested Participant Accounts
shall not be accelerated but shall be paid at such time and in such manner as determined under the terms of the Plan
immediately prior to suspension as if the Plan had not been suspended.
The Employer further
reserves the right to terminate the Plan in whole or in part, in the following manner, except that no such termination shall have
any retroactive effect to reduce any amounts allocated to a Participant’s Accounts, and provided that such termination complies
with Code Section 409A and related regulations thereunder:
(a)
The Employer, in its sole discretion, may terminate the Plan and distribute all
vested Participants’ Accounts no earlier than twelve (12) calendar months from the date of the Plan termination and no
later than twenty-four (24) calendar months from the date of the Plan termination, provided however that all other similar
arrangements are also terminated by the Employer for any affected Participant and no other similar arrangements are adopted
by the Employer for any affected Participant within a three (3) year period from the date of termination; or
(b)
The Employer may decide, in its sole discretion, to terminate the Plan in the event
of a corporate dissolution taxed under Code Section 331, or with the approval of a bankruptcy court, provided that the
Participants vested Account balances are distributed to Participants and are included in the Participants’ gross income
in the latest of: (i) the calendar year in which the termination occurs; (ii) the calendar year in which the amounts deferred
are no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which payment is
administratively practicable.
|
|
10.12
|
Plan
Termination due to a Change-in-Control
|
The
Employer may decide, in its discretion, to terminate the Plan in the event of a Change-in-Control and distribute all vested Participants
Account balances no earlier than thirty (30) days prior to the Change-in-Control and no later than twelve (12) months after the
effective date of the Change-in-Control, provided however that the Employer terminates all other similar arrangements for any affected
Participant.
All
questions of interpretation, construction or application arising under or concerning the terms of this Plan shall be decided by
the Administrator, in its sole and final discretion, whose decision shall be final, binding and conclusive upon all persons.
This
Plan shall be governed by, construed and administered in accordance with the applicable provisions of ERISA, Code Section 409A,
and any other applicable federal law, provided, however, that to the extent not preempted by federal law this Plan shall be governed
by, construed and administered under the laws of the State of New York other than its laws respecting choice of law.
If
any provision of this Plan is held invalid or unenforceable, its invalidity or unenforceability shall not affect any other provision
of this Plan and this Plan shall be construed and enforced as if such provision had not been included therein. If the inclusion
of any Employee (or Employees) as a Participant under this. Plan would cause the Plan to fail to comply with the requirements of
sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, then the Plan shall be severed with respect to such Employee or Employees, who
shall be considered to be participating in a separate arrangement.
The
Article headings contained herein are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge
or describe the scope or intent of this Plan nor in any way shall they affect this Plan or the construction of any provision thereof.
Capitalized
terms shall have meanings as defined herein. Singular nouns shall be read as plural, masculine pronouns shall be read as feminine,
and vice versa, as appropriate.
|
|
10.18
|
Code
Section 409A Fail Safe Provision
|
If
any provision of this Plan violates Code Section 409A, the regulations promulgated thereunder, regulatory interpretations, announcements
or mandatory judicial precedent construing Code Section 409A (collectively “Applicable Law”), then such provision shall
be void and have no effect. At all times, this Plan shall be interpreted in such manner that it complies with Applicable Law.
IN
WITNESS WHEREOF, Pioneer Bank has caused this instrument to be executed by its duly authorized officer, effective as of this
14
day of
august
, 2014.
|
Pioneer Bank
|
|
By:
|
Susan C. Vernooy
|
|
Title:
|
Senior Vice President /Chief Human Resources Officer
|
EXHIBIT 21
Significant Subsidiaries of the Registrant
|
Name
|
|
Percent Ownership
|
|
State of Incorporation
|
|
|
|
|
|
|
|
Pioneer Bank
|
|
100%
|
|
New York
|
|
|
|
|
|
|
|
Pioneer Commercial Bank*
|
|
100%
|
|
New York
|
|
|
|
|
|
|
|
Anchor Agency, Inc.*
|
|
100%
|
|
New York
|
|
|
|
|
|
|
|
Pioneer Financial Services, Inc.*
|
|
100%
|
|
New York
|
*Subsidiary of Pioneer Bank
Exhibit 23.2
|
|
RP
®
FINANCIAL, LC.
Advisory | Planning | Valuation
|
March 11, 2019
Board of Directors
Pioneer Bancorp, MHC
Pioneer Bancorp, Inc.
Board of Trustees
Pioneer Savings Bank
652 Albany-Shaker Road
Albany, New York 12211
Members of the Boards of Trustees and Directors:
We hereby consent to
the use of our firm’s name in the Notice of Intent to Convert, and any amendments thereto, to be filed with the Federal Deposit
Insurance Corporation, in the Form 86-AC, and any amendments thereto, to be filed with the New York State Department of Financial
Services, 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 of Pioneer Bancorp, Inc. We also consent to the reference to
our firm under the heading “Experts” in the prospectus.
|
|
Sincerely,
|
|
|
|
|
|
/s/ RP FINANCIAL, LC.
|
|
|
|
|
|
RP
®
FINANCIAL, LC.
|
|
|
|
|
|
|
|
Washington Headquarters
|
|
|
4250 N. Fairfax Drive
|
Telephone: (703) 528-1700
|
|
Suite 600
|
Fax No.: (703) 528-1788
|
|
Arlington, VA 22203
|
Toll-Free No.: (866) 723-0594
|
|
www.rpfinancial.com
|
E-Mail: mail@rpfinancial.com
|
Exhibit 23.3
CONSENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
We hereby consent to the incorporation
in this Registration Statement on Form S-1 of Pioneer Bancorp, Inc. of our report dated September 27, 2018 relating to the consolidated
financial statements of Pioneer Savings Bank and Subsidiaries as of and for the years ending June 30, 2018 and 2017. We also consent
to the reference to us under the heading “Experts” in such Registration Statement.
|
/s/ Bonadio & Co., LLP
|
|
|
Syracuse, New York
|
|
|
March 8, 2019
|
|
Exhibit 99.1
April 26, 2018
Thomas L. Amell
President and Chief Executive Officer
Pioneer Savings Bank
652 Albany Shaker Road
Albany, New York 12211
Dear Mr. Amell:
This letter sets forth
the agreement whereby Pioneer Savings Bank, Albany, New York, (the “Company”), has engaged RP
®
Financial,
LC. (“RP Financial”) for independent conversion appraisal services in conjunction with the minority stock offering
by the Company. The specific appraisal services to be rendered, along with the timing and fee structure for these appraisal services
are described below.
These appraisal services
will be performed by RP Financial senior staff with the assistance of associates.
Description of Appraisal Services
RP Financial will conduct
financial due diligence, including interviews of senior management and reviews of historical and pro forma financial information
and other documents and records, to gain insight into the operations, financial condition, profitability, market area, risks and
various internal and external factors which will be considered in estimating the pro forma market value of the Company in accordance
with the applicable regulatory appraisal guidelines.
RP Financial will prepare
a detailed written valuation report of the Company that will be fully consistent with applicable regulatory appraisal guidelines
and standard pro forma valuation practices, taking into consideration the intended minority stock offering. The appraisal report
will include an analysis of the Company’s financial condition and operating results, as well as an assessment of the Company’s
interest rate risk, credit risk and liquidity risk. The appraisal report will incorporate an evaluation of the Company’s
business strategies, market area, prospects for the future and the intended use of proceeds both in the short term and over the
longer term. A peer group analysis relative to certain relatively comparable publicly-traded companies will be conducted for the
purpose of determining appropriate valuation adjustments for the Company relative to the peer group’s pricing ratios.
We will review pertinent
sections of the prospectus and hold discussions with the Company’s management and legal, accounting and investment banking
representatives of the Company regarding key information for the appraisal, including key deal elements on the appraised value,
such as dividend policy and related regulatory requirements, use of proceeds and reinvestment rate, tax rate, offering expenses,
characteristics of stock plans and charitable foundation contribution (if applicable).
|
Washington Headquarters
|
|
|
Three Ballston Plaza
|
Direct: (703) 647-6553
|
|
4250 N. Fairfax Dr., Suite 600
|
Telephone: (703) 528-1700
|
|
Arlington, VA 22203
|
Fax No.: (703) 528-1788
|
|
E-Mail: mfaust@rpfinancial.com
|
Toll-Free No.: (866) 723-0594
|
Thomas L. Amell
April 26, 2018
Page 2
The original appraisal
report will establish a midpoint pro forma market value in accordance with the applicable regulatory requirements. The appraisal
report will provide the basis for the Company to determine the size of the minority stock offering. The appraisal report may be
periodically updated throughout the conversion process, and, in accordance with the conversion regulations, there will be at least
one updated appraisal prepared at the closing of the minority stock offering to determine the number of shares to be issued.
RP Financial agrees to deliver the original appraisal and subsequent updates, in writing, to the Company
at the above address in conjunction with the filing of the regulatory application. Subsequent updates will be filed promptly as
certain events occur which would warrant the preparation and filing of such valuation updates. Further, RP Financial agrees to
perform such other services as are necessary or required in connection with the regulatory review of the appraisal and respond
to the regulatory comments, if any, regarding the valuation appraisal and subsequent updates. RP Financial will also prepare the
pro forma presentations for inclusion in the prospectus, reflecting the original appraisal and subsequent updates, as appropriate.
RP Financial expects
to formally present the appraisal report, including the appraisal methodology, peer group selection and assumptions, to the Board
of Directors of the Company (the “Board”) for review and consideration. If appropriate, RP Financial will present subsequent
updates to the Board. It is understood that this appraisal may be presented either in person or telephonically.
Fee Structure and Payment Schedule
The Company agrees
to pay RP Financial a fixed fee of $95,000 for preparation and delivery of the original appraisal report and $10,000 for each subsequent
update, plus reimbursable expenses. Payment of these fees shall be made according to the following schedule:
|
|
·
|
$15,000 upon execution of this letter
of agreement engaging RP Financial’s appraisal services;
|
|
|
·
|
$80,000 upon delivery of the completed
original appraisal report; and,
|
|
|
·
|
$10,000 for each valuation update that
may be required, provided that the transaction is not delayed for reasons described below. It is anticipated that there will be
at least one appraisal update report, specifically the update to be prepared in conjunction with the completion of the stock offering.
|
The Company will reimburse
RP Financial for reasonable out-of-pocket expenses incurred in preparation of the original appraisal and subsequent updates. Such
out-of-pocket expenses will likely include travel, printing, telephone, facsimile, shipping, reasonable counsel fees, computer
and data services, and will not exceed $2,500 in the aggregate, without the Company’s authorization to exceed this level.
In the event the Company shall, for any reason, discontinue
the conversion prior to delivery of the completed documents set forth above and payment of the respective progress payment fees,
the Company agrees to compensate RP Financial according to RP Financial’s standard billing rates for consulting services
based on accumulated and verifiable time expenses, not to exceed the respective fee caps noted above, after giving full credit
to the initial retainer fee. RP Financial’s standard billing rates range from $75 per hour for research associates to $450
per hour for managing directors.
Thomas L. Amell
April 26, 2018
Page 3
If during the course
of the proposed transaction, unforeseen events occur so as to materially change the nature or the work content of the services
described in this contract, the terms of said contract shall be subject to renegotiation by the Company and RP Financial. Such
unforeseen events shall include, but not be limited to, material changes to the structure of the transaction such as inclusion
of a simultaneous business combination transaction, material changes in the conversion regulations, appraisal guidelines or processing
procedures as they relate to conversion appraisals, material changes in management or procedures, operating policies or philosophies,
and excessive delays or suspension of processing of conversion applications by the regulators such that completion of the conversion
transaction requires the preparation by RP Financial of a new appraisal.
Covenants, Representations and Warranties
The Company and RP
Financial agree to the following:
1. The
Company agrees to make available or to supply to RP Financial such information with respect to its business and financial condition
as RP Financial may reasonably request in order to provide the aforesaid valuation. Such information heretofore or hereafter supplied
or made available to RP Financial shall include, but not be limited to: annual audited and unaudited internal financial statements
and management reports, business plan and budget, periodic regulatory filings and material agreements, debt instruments, off balance
sheet assets or liabilities, commitments and contingencies, and other corporate books and records. All information provided by
the Company to RP Financial shall remain strictly confidential (unless such information is otherwise made available to the public),
and if the MHC reorganization and minority stock offering is not consummated, or the services of RP Financial are terminated hereunder,
RP Financial shall promptly return to the Company the original and any copies of such information.
2. RP
Financial represents that it will comply with any and all federal, state and local laws, regulations and ordinances governing or
relating to the privacy, security, confidentiality or integrity of personal information, data, and confidential information (“Privacy
Laws”). RP Financial shall implement such physical, administrative and technical safeguards as shall be necessary to ensure
the security and confidentiality of any personal information, data, and confidential information it receives, including maintaining
written policies and procedures detailing its compliance with any applicable Privacy Laws. Such written policies and procedures
shall be made available to the Company for review upon request. The Company represents and warrants to RP Financial that any information
provided to RP Financial does not and will not, to the best of the Company’s knowledge, at the times it is provided to RP
Financial, contain any untrue statement of a material fact or in response to informational requests by RP Financial fail to state
a material fact necessary to make the statements therein not false or misleading in light of the circumstances under which they
were made.
Thomas L. Amell
April 26, 2018
Page 4
3. (a) The Company agrees that it
will indemnify and hold harmless RP Financial, any affiliates of RP Financial, the respective members, officers, agents and employees
of RP Financial or their successors and assigns who act for or on behalf of RP Financial in connection with the services called
for under this agreement (hereinafter referred to as “RP Financial”), from and against any and all losses, claims,
damages and liabilities (including, but not limited to, reasonable attorneys fees, and all losses and expenses in connection with
claims under the federal securities laws) attributable to (i) any untrue statement of a material fact contained in the financial
statements or other information furnished or otherwise provided by the Company to RP Financial, either orally or in writing; (ii)
the omission of a material fact from the financial statements or other information furnished or otherwise made available by the
Company to RP Financial; or (iii) any action or omission to act by the Company, or the Company’s respective officers, directors,
employees or agents, which action or omission is undertaken in bad faith or is negligent. The Company will be under no obligation
to indemnify RP Financial hereunder if a court determines that RP Financial was negligent or acted in bad faith with respect to
any actions or omissions of RP Financial related to a matter for which indemnification is sought hereunder. Reasonable time devoted
by RP Financial to situations for which RP Financial is deemed entitled to indemnification hereunder, shall be an indemnifiable
cost payable by the Company at the normal hourly professional rate chargeable by such employee.
Notwithstanding anything
in this agreement to the contrary, RP Financial shall notify the Company immediately via telephone, to be followed up in writing,
of any actual, suspected or threatened security incident involving confidential information, and shall cooperate fully in investigating
and responding to each successful or attempted security breach. RP Financial will defend, indemnify and hold the Company harmless
from and against all third party claims, losses, damages and liabilities arising out of a security breach and shall pay for all
costs associated with responding to such breach, including without limitation, all legal, forensic, public relations, consultancy
and other expert fees incurred by Company, the costs of any and all notifications that Company sends to individuals whose information
was affected by any incident, and the cost of an annual credit monitoring services subscription for all such individuals.
(b) RP
Financial shall give written notice to the Company of such claim or facts within thirty days of the assertion of any claim or discovery
of material facts upon which RP Financial intends to base a claim for indemnification hereunder, including the name of counsel
that RP Financial intends to engage in connection with any indemnification related matter. In the event the Company elects, within
seven days of the receipt of the original notice thereof, to contest such claim by written notice to RP Financial, the Company
shall not be obligated to make payments under Section 3(c), but RP Financial will be entitled to be paid any amounts payable by
the Company hereunder within five days after the final non-appealable determination of such contest either by written acknowledgement
of the Company or a decision of a court of competent jurisdiction or alternative adjudication forum, unless it is determined in
accordance with Section 3(c) hereof that RP Financial is not entitled to indemnity hereunder. If the Company does not so elect
to contest a claim for indemnification by RP Financial hereunder, RP Financial shall (subject to the Company’s receipt of
the written statement and undertaking under Section 3(c) hereof) be paid promptly and in any event within thirty days after receipt
by the Company of detailed billing statements or invoices for which RP Financial is entitled to reimbursement under Section 3(c)
hereof.
Thomas L. Amell
April 26, 2018
Page 5
(c) Subject
to the Company’s right to contest under Section 3(b) hereof, the Company shall pay for or reimburse the reasonable expenses,
including reasonable attorneys’ fees, incurred by RP Financial in advance of the final disposition of any proceeding within
thirty days of the receipt of such request if RP Financial furnishes the Company: (1) a written statement of RP Financial’s
good faith belief that it is entitled to indemnification hereunder; (2) a written undertaking to repay the advance if it ultimately
is determined in a final, non-appealable adjudication of such proceeding that it or he is not entitled to such indemnification;
and (3) a detailed invoice of the expenses for which reimbursement is sought.
(d) In
the event the Company does not pay any indemnified loss or make advance reimbursements of expenses in accordance with the terms
of this agreement, RP Financial shall have all remedies available at law or in equity to enforce such obligation.
This agreement constitutes
the entire understanding of the Company and RP Financial concerning the subject matter addressed herein, and such contract shall
be governed and construed in accordance with the Commonwealth of Virginia. This agreement may not be modified, supplemented or
amended except by written agreement executed by both parties.
The Company and RP
Financial are not affiliated, and neither the Company nor RP Financial has an economic interest in, or is held in common with,
the other and has not derived a significant portion of its gross revenues, receipts or net income for any period from transactions
with the other. RP Financial represents and warrants that it is not aware of any fact or circumstance that would cause it not to
be “independent” within the meaning of the conversion regulations of the federal banking agencies or otherwise prohibit
or restrict in anyway RP Financial from serving in the role of independent appraiser for the Company.
******************************************************
Please acknowledge
your agreement to the foregoing by signing as indicated below and returning to RP Financial a signed copy of this letter, together
with the engagement fee of $15,000.
|
Agreed To and Accepted By:
|
Thomas L. Amell
|
/s/ Thomas L. Amell
|
|
|
President and Chief Executive Officer
|
|
Upon Authorization of the Board of Directors of:
|
Pioneer Savings Bank
|
|
|
Albany, New York
|
|
|
Sincerely,
|
|
|
|
|
|
|
|
|
Marcus Faust
|
|
|
Managing Director
|
Exhibit 99.2
|
|
RP
®
FINANCIAL, LC.
Advisory | Planning | Valuation
|
March 11, 2019
Board of Directors
Pioneer Bancorp, MHC
Pioneer Bancorp, Inc.
Board of Trustees
Pioneer Savings Bank
652 Albany-Shaker Road
Albany, New York 12211
|
|
Re:
|
Plan of Reorganization and Minority Stock Issuance
|
Pioneer Bancorp, MHC
Pioneer Bancorp, Inc.
Pioneer Savings Bank
Members of the Board of Directors:
All capitalized terms
not otherwise defined in this letter have the meanings given such terms in the plan of reorganization and minority stock Issuance
(the “Plan”) adopted by the Board of Trustees of Pioneer Savings Bank (the “Bank”). Pursuant to the Plan,
when the stock offering is completed purchasers in the stock offering will own 43.0% of Pioneer Bancorp, Inc.’s outstanding
shares of common stock, Pioneer Bancorp, MHC will own 55.0% of Pioneer Bancorp, Inc.’s outstanding shares of common stock
and a newly established charitable foundation will own 2.0% of Pioneer Bancorp, Inc.’s outstanding shares of common stock.
We understand that
in accordance with the Plan, subscription rights to purchase shares of common stock in Pioneer Bancorp, Inc. are to be issued to:
(1) Eligible Account Holders; (2) Tax-Qualified Plans, including the Bank’s employee stock ownership plan (the “ESOP”)
and 401(k) plan; (3) Supplemental Eligible Account Holders; and (4) Other Depositors. Based solely upon our observation that the
subscription rights will be available to such parties without cost, will be legally non-transferable and of short duration, and
will afford such parties the right only to purchase shares of common stock at the same price as will be paid by members of the
general public in the community or syndicated commitment offerings but without undertaking any independent investigation of state
or federal law or the position of the Internal Revenue Service with respect to this issue, we are of the belief that, as a factual
matter:
|
|
(1)
|
the subscription rights will have no ascertainable market value; and
|
|
|
(2)
|
the price at which the subscription rights are exercisable will not be more or less than the pro
forma market value of the shares upon issuance.
|
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 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 Pioneer Bancorp, Inc.’s value alone. Accordingly, no assurance can be given
that persons who subscribe to shares of common stock in the subscription offering will thereafter be able to buy or sell such shares
at the same price paid in the subscription offering.
|
|
Sincerely,
|
|
|
|
|
|
/s/ RP FINANCIAL, LC.
|
|
|
|
|
|
RP Financial, LC.
|
|
|
|
|
Washington Headquarters
|
|
|
4250 N. Fairfax Drive
|
Telephone: (703) 528-1700
|
|
Suite 600
|
Fax No.: (703) 528-1788
|
|
Arlington, VA 22203
|
Toll-Free No.: (866) 723-0594
|
|
www.rpfinancial.com
|
E-Mail: mail@rpfinancial.com
|
Exhibit 99.3
February 8, 2019
Board of Directors
Pioneer Bancorp, MHC
Pioneer Bancorp, Inc.
Board of Trustees
Pioneer Savings Bank
652 Albany-Shaker Road
Albany, New York 12211
Members of the Boards of Trustees and 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 stock issuance 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 Office of the Comptroller of the Currency (“OCC”), the Federal Deposit Insurance Corporation
(“FDIC”) and the New York State Department of Financial Services (the “Department”), and applicable regulatory
interpretations thereof.
Description of Plan
of Reorganization and Stock Offering
On January 15, 2019,
the Board of Trustees Pioneer Savings Bank adopted a plan of reorganization (the “Reorganization”) pursuant to which
Pioneer Savings Bank will reorganize into a two-tier mutual holding company structure. After the Reorganization, Pioneer Bancorp,
Inc. (“Pioneer Bancorp” or the “Company”), a Maryland corporation, will be the mid-tier stock holding company
and Pioneer Bancorp, MHC (the “MHC”), a New York chartered mutual holding company, will be the top-tier mutual holding
company. The Reorganization will be completed as follows:
|
|
(i)
|
Pioneer Savings Bank will organize a New York-chartered
interim stock savings bank as a wholly-owned subsidiary ("Interim One");
|
|
|
(ii)
|
Interim One will organize a New York-chartered interim
stock savings bank as a wholly-owned subsidiary (“Interim Two”);
|
|
|
(iii)
|
Interim One will organize the Company as a wholly-owned
subsidiary;
|
|
|
(iv)
|
the Bank will exchange its mutual savings bank organization
certificate for a New York stock savings bank organization certificate and thereby become the Stock Bank, and Interim One will
become the wholly-owned subsidiary of the Stock Bank;
|
|
Washington Headquarters
|
|
|
|
4250 North Fairfax Drive
|
|
Telephone: (703) 528-1700
|
|
Suite 600
|
|
Fax No.: (703) 528-1788
|
|
Arlington, VA 22203
|
|
Toll-Free No.: (866) 723-0594
|
|
www.rpfinancial.com
|
|
E-Mail: mail@rpfinancial.com
|
Board of Trustees
Board of Directors
February 8, 2019
Page 2
|
|
(v)
|
the shares of common stock of Interim One held by the Stock
Bank will be cancelled and Interim One will exchange its organization certificate for a New York organization certificate to become
the MHC;
|
|
|
(vi)
|
concurrently with steps (iv) and (v), Interim Two will
merge with and into the Stock Bank with the Stock Bank as the resulting entity and a subsidiary of the MHC, whereby all stock
of the Stock Bank will be issued to the MHC in exchange for liquidation interests in the MHC; and
|
|
|
(vii)
|
the MHC will contribute the capital stock of the Stock
Bank to the Company and the Stock Bank will become a wholly-owned subsidiary of the Company.
|
For purposes of this
document, Pioneer Savings Bank will hereinafter be referred to as “Pioneer Bank” or the “Bank”.
Concurrent with the
Reorganization, Pioneer Bancorp will issue a majority of its common stock to the MHC and sell a minority of its common stock to
the public. At the completion of the public stock offering, the Company will retain up to 50% of the net stock proceeds. The MHC
will own a controlling interest in the Company of at least 51%, and the Company will be the sole subsidiary of the MHC. The Company
will own 100% of the Bank’s outstanding stock. The Company’s initial activity will be ownership of its subsidiary,
Pioneer Bank, investment of the net cash proceeds retained at the holding company level and extending a loan to the employee stock
ownership plan.
Pioneer Bancorp will
offer its common stock in a subscription offering to Eligible Account Holders, Tax-Qualified Plans including Pioneer Bank’s
employee stock ownership plan (the “ESOP”), Supplemental Eligible Account Holders and Other Depositors as such terms
are defined for purposes of applicable regulatory guidelines governing stock offerings by mutual institutions. 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 members of the general public in a community offering and a syndicated community offering. At least
50% of the net proceeds from the stock offering will be invested in Pioneer Bank and the balance of the net proceeds will be retained
by the Company.
At this time, no other
activities are contemplated for the Company other than the ownership of the Bank, funding a loan to the newly-formed ESOP and reinvestment
of the proceeds that are retained by the Company. In the future, Pioneer Bancorp may acquire or organize other operating subsidiaries,
diversify into other banking-related activities, pay dividends or repurchase its stock, although there are no specific plans to
undertake such activities at the present time.
The Plan provides for
the establishment of a new charitable foundation, Pioneer Bank Community Foundation (the “Foundation”). The Foundation’s
contribution will be funded with 2.0% of the number of shares of common stock issued in the stock issuance and $250,000 of cash
funded by the net proceeds retained by the Company. The purpose of the Foundation is to provide financial support to charitable
organizations in the communities in which Pioneer Bank operates and to enable those communities to share in the Bank’s long-term
growth. The Foundation will be dedicated completely to community activities and the promotion of charitable causes.
Board of Trustees
Board of Directors
February 8, 2019
Page 3
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,
Pioneer Bank, the MHC and the other parties engaged by Pioneer Bank, the Company or the MHC to assist in the minority stock offering
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, the FDIC, the Department and the Securities and Exchange Commission (“SEC”).
We have conducted a financial analysis of the Company, Pioneer Bank and the MHC that has included a review of audited financial
information for the fiscal years ended June 30, 2014 through June 30, 2018, unaudited financial statements as of and for the six
months ended December 31, 2018, a review of various unaudited information and internal financial reports through December 31, 2018,
and due diligence related discussions with the Bank’s management; Bonadio & Co., LLP, the Bank’s independent auditor;
Luse Goreman, PC, the Bank’s counsel for the stock issuance and Sandler O’Neill & Partners, L.P., the Bank’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 Pioneer Bank operates and have assessed Pioneer Bank’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 Pioneer Bank and the industry as a whole. We have analyzed the potential effects of the stock offering on Pioneer Bank’s
operating characteristics and financial performance as they relate to the pro forma market value of Pioneer Bancorp. We have reviewed
the economic and demographic characteristics of the Bank’s primary market area. We have compared Pioneer Bank’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 thrift issues and initial public offerings by thrifts and thrift
holding companies. 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 Pioneer Bank’s representation that the information contained in the regulatory applications and additional information
furnished to us by Pioneer Bank 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 Pioneer Bank, or its independent
auditor, legal counsel and other authorized agents nor did we independently value the assets or liabilities of Pioneer Bank. The
valuation considers Pioneer Bank only as a going concern and should not be considered as an indication of Pioneer Bank’s
liquidation value.
Board of Trustees
Board of Directors
February 8, 2019
Page 4
Our appraised value
is predicated on a continuation of the current operating environment for Pioneer Bank 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 Pioneer Bancorp’s stock alone. It is our understanding that there are no current plans for selling
control of Pioneer Bancorp following completion of the stock offering. 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 Pioneer Bancorp’s common stock, immediately upon completion of the 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.
Valuation Conclusion
Based on the foregoing,
it is our opinion that, as of February 8, 2019, the estimated aggregate pro forma market value of the shares to be issued immediately
following the minority stock offering, both shares issued publicly as well as to the MHC, equaled $196,428,570 at the midpoint,
equal to 19,642,857 shares offered at a per share value of $10.00. Pursuant to conversion guidelines, the 15% offering range indicates
a minimum value of $166,964,280 and a maximum value of $225,892,860. Based on the $10.00 per share offering price determined by
the Board, this valuation range equates to total shares outstanding of 16,696,428 at the minimum and 22,589,286 at the maximum.
In the event the appraised value is subject to an increase, the aggregate pro forma market value may be increased up to a super
maximum value of $259,776,790 without a resolicitation. Based on the $10.00 per share offering price, the super maximum value would
result in total shares outstanding of 25,977,679. The Board of Directors has established a public offering range such that the
public ownership of the Company will constitute a 43.0% ownership interest prior to the issuance of shares to the Foundation. Accordingly,
the offering to the public of the minority stock will equal $71,794,650 at the minimum, $84,464,290 at the midpoint, $97,133,930
at the maximum and $111,704,020 at the super maximum of the valuation range. Based on the public offering range and inclusive of
the shares issued to the Foundation, equal to 2.0% of the shares issued in the stock issuance, the public ownership of shares will
represent 45.0% of the shares issued throughout the valuation range.
Board of Trustees
Board of Directors
February 8, 2019
Page 5
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 stock offering 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 Pioneer Bancorp 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 stock offering.
RP Financial’s
valuation was based on the financial condition and operations of Pioneer Bank as of December 31, 2018, the date of the financial
data included in the prospectus.
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 will
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 Pioneer Bank, 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 Pioneer Bancorp’s stock offering.
|
|
Respectfully submitted,
|
|
|
|
|
|
RP
®
FINANCIAL, LC.
|
|
|
|
|
|
Marcus Faust
|
|
|
Managing Director
|
|
|
|
|
|
|
|
|
Gregory E. Dunn
|
|
|
Director
|
|
RP
®
Financial, LC.
|
TABLE OF CONTENTS
|
i
TABLE OF CONTENTS
PIONEER BANCORP, INC.
PIONEER BANK
Albany, New York
|
|
|
PAGE
|
|
DESCRIPTION
|
|
NUMBER
|
|
|
|
|
|
CHAPTER ONE
|
OVERVIEW AND FINANCIAL ANALYSIS
|
|
|
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|
|
Introduction
|
|
I.1
|
|
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Plan of Reorganization and Stock Offering
|
|
I.1
|
|
|
Strategic Overview
|
|
I.3
|
|
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Balance Sheet Trends
|
|
I.6
|
|
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Income and Expense Trends
|
|
I.9
|
|
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Interest Rate Risk Management
|
|
I.12
|
|
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Lending Activities and Strategy
|
|
I.13
|
|
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Asset Quality
|
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I.16
|
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Funding Composition and Strategy
|
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I.16
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Subsidiary Activities
|
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1.17
|
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Legal Proceedings
|
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I.18
|
|
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CHAPTER TWO
|
MARKET AREA
|
|
|
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|
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Introduction
|
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II.1
|
|
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National Economic Factors
|
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II.1
|
|
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Market Area Demographics
|
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II.4
|
|
|
Regional Economy
|
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II.6
|
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Unemployment Trends
|
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II.8
|
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Market Area Deposit Characteristics and Competition
|
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II.9
|
|
|
|
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|
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|
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CHAPTER THREE
|
PEER GROUP ANALYSIS
|
|
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Peer Group Selection
|
|
III.1
|
|
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Financial Condition
|
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III.5
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Income and Expense Components
|
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III.8
|
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Loan Composition
|
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III.11
|
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Interest Rate Risk
|
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III.11
|
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Credit Risk
|
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III.14
|
|
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Summary
|
|
III.16
|
|
RP
®
Financial, LC.
|
TABLE OF CONTENTS
|
ii
TABLE OF CONTENTS
PIONEER BANCORP, INC.
PIONEER BANK
Albany, New York
(continued)
|
|
|
PAGE
|
|
DESCRIPTION
|
|
NUMBER
|
|
|
|
|
|
CHAPTER FOUR
|
VALUATION ANALYSIS
|
|
|
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|
|
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|
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Introduction
|
|
IV.1
|
|
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Appraisal Guidelines
|
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IV.1
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RP Financial Approach to the Valuation
|
|
IV.1
|
|
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Valuation Analysis
|
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IV.2
|
|
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1.
|
Financial Condition
|
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IV.3
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|
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2.
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Profitability, Growth and Viability of Earnings
|
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IV.4
|
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3.
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Asset Growth
|
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IV.6
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4.
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Primary Market Area
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IV.6
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5.
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Dividends
|
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IV.7
|
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6.
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Liquidity of the Shares
|
|
IV.8
|
|
|
7.
|
Marketing of the Issue
|
|
IV.9
|
|
|
|
|
A.
|
The Public Market
|
|
IV.9
|
|
|
|
|
B.
|
The New Issue Market
|
|
IV.13
|
|
|
|
|
C.
|
The Acquisition Market
|
|
IV.13
|
|
|
8.
|
Management
|
|
IV.15
|
|
|
9.
|
Effect of Government Regulation and Regulatory Reform
|
|
IV.16
|
|
|
Summary of Adjustments
|
|
IV.16
|
|
|
Valuation Approaches: Fully-Converted Basis
|
|
IV.16
|
|
|
Basis of Valuation- Fully-Converted Pricing Ratios
|
|
IV.18
|
|
|
1.
|
Price-to-Earnings ("P/E")
|
|
IV.18
|
|
|
2.
|
Price-to-Book ("P/B")
|
|
IV.20
|
|
|
3.
|
Price-to-Assets ("P/A")
|
|
IV.22
|
|
|
Comparison to Publicly-Traded MHCs
|
|
IV.23
|
|
|
Comparison to Recent MHC Offerings
|
|
IV.25
|
|
|
Valuation Conclusion
|
|
IV.27
|
|
RP
®
Financial, LC.
|
LIST OF TABLES
|
iii
LIST OF TABLES
PIONEER BANCORP, INC.
PIONEER BANK
Albany, New York
|
TABLE
|
|
|
|
|
|
Number
|
|
DESCRIPTION
|
|
page
|
|
|
|
|
|
|
|
1.1
|
|
Historical Balance Sheet Data
|
|
I.7
|
|
1.2
|
|
Historical Income Statements
|
|
I.10
|
|
|
|
|
|
|
|
2.1
|
|
Summary Demographic/Economic Data
|
|
II.5
|
|
2.2
|
|
Primary Market Area Employment Sectors
|
|
II.7
|
|
2.3
|
|
Market Area Largest Employers
|
|
II.8
|
|
2.4
|
|
Unemployment Trends
|
|
II.8
|
|
2.5
|
|
Deposit Summary
|
|
II.9
|
|
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 Pct. of Avg. Assets and Yields, Costs, Spreads
|
|
III.9
|
|
3.4
|
|
Loan Portfolio Composition and Related Information
|
|
III.12
|
|
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.14
|
|
4.3
|
|
Fully-Converted Pricing Versus Peer Group
|
|
IV.19
|
|
4.4
|
|
MHC Market Pricing Versus Peer Group
|
|
IV.21
|
|
4.5
|
|
Calculation of Implied Per Share Data- Incorporating
MHC Second Step Conversion
|
|
IV.24
|
|
4.6
|
|
MHC Institutions Implied Pricing Ratios, Full Conversion Basis
|
|
IV.26
|
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.1
I.
Overview and Financial Analysis
Introduction
Pioneer Savings Bank,
established in 1889, is a New York-chartered savings bank headquartered in Albany, New York. Pioneer Savings Bank serves the the
Capital Region of New York State, which includes Albany, Rensselaer, Saratoga, Greene, Schenectady and Warren Counties in New York
and surrounding markets through 22 full-service banking offices including one which is located in its administrative office building.
Pioneer Savings Bank has three wholly-owned subsidiaries, Pioneer Commercial Bank, Pioneer Financial Services, Inc., and Anchor
Agency, Inc. (See Subsidiary Activities). A map of Pioneer Savings Bank’s office locations is provided in Exhibit I-1. Pioneer
Savings 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”). As of December 31, 2018, the Pioneer Savings
Bank had total assets of $1.287 billion, total deposits of $1.115 billion and total equity of $126.4 million equal to 9.82% of
total assets. Pioneer Savings Bank’s audited financial statements are included by reference as Exhibit I-2.
Plan
of Reorganization and Stock Offering
On January 15, 2019,
the Board of Trustees of Pioneer Savings Bank adopted a plan of reorganization (the “Reorganization”) pursuant to which
Pioneer Savings Bank will reorganize into a two-tier mutual holding company structure. After the Reorganization, Pioneer Bancorp,
Inc. (“Pioneer Bancorp” or the “Company”), a Maryland corporation, will be the mid-tier stock holding company
and Pioneer Bancorp, MHC (the “MHC”), a New York chartered mutual holding company, will be the top-tier mutual holding
company. The Reorganization will be completed as follows:
|
|
(i)
|
Pioneer Savings Bank will organize a New York-chartered
interim stock savings bank as a wholly-owned subsidiary ("Interim One");
|
|
|
(ii)
|
Interim One will organize a New York-chartered interim
stock savings bank as a wholly-owned subsidiary (“Interim Two”);
|
|
|
(iii)
|
Interim One will organize the Company as a wholly-owned
subsidiary;
|
|
|
(iv)
|
the Bank will exchange its mutual savings bank organization
certificate for a New York stock savings bank organization certificate and thereby become the Stock Bank, and Interim One will
become the wholly-owned subsidiary of the Stock Bank;
|
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.2
|
|
(v)
|
the shares of common stock of Interim One held by the Stock
Bank will be cancelled and Interim One will exchange its organization certificate for a New York organization certificate to become
the MHC;
|
|
|
(vi)
|
concurrently with steps (iv) and (v), Interim Two will
merge with and into the Stock Bank with the Stock Bank as the resulting entity and a subsidiary of the MHC, whereby all stock
of the Stock Bank will be issued to the MHC in exchange for liquidation interests in the MHC; and
|
|
|
(vii)
|
the MHC will contribute the capital stock of the Stock
Bank to the Company and the Stock Bank will become a wholly-owned subsidiary of the Company.
|
For purposes
of this document, Pioneer Savings Bank will hereinafter be referred to as “Pioneer Bank” or the “Bank”.
Concurrent with the
Reorganization, Pioneer Bancorp will issue a majority of its common stock to the MHC and sell a minority of its common stock to
the public. At the completion of the public stock offering, the Company will retain up to 50% of the net stock proceeds. The MHC
will own a controlling interest in the Company of at least 51%, and the Company will be the sole subsidiary of the MHC. The Company
will own 100% of the Bank’s outstanding stock. The Company’s initial activity will be ownership of its subsidiary,
Pioneer Bank, investment of the net cash proceeds retained at the holding company level and extending a loan to the employee stock
ownership plan.
Pioneer Bancorp will
offer its common stock in a subscription offering to Eligible Account Holders, Tax-Qualified Plans including Pioneer Bank’s
employee stock ownership plan (the “ESOP”), Supplemental Eligible Account Holders and Other Depositors as such terms
are defined for purposes of applicable regulatory guidelines governing stock offerings by mutual institutions. 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 members of the general public in a community offering and a syndicated community offering. At least
50% of the net proceeds from the stock offering will be invested in Pioneer Bank and the balance of the net proceeds will be retained
by the Company.
At this time, no other
activities are contemplated for the Company other than the ownership of Pioneer Bank, a loan to the newly-formed ESOP and reinvestment
of the proceeds that are retained by the Company. In the future, Pioneer Bancorp may use the proceeds it retains from the offering
to invest in securities; repurchase shares of its common stock, including repurchases to fund stock-based benefit plans; to finance
potential acquisition of financial institutions or financial services companies, although the Bank does not currently have any
agreements regarding any specific acquisition transaction; and general corporate purposes.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.3
The Reorganization
provides for the establishment of a new charitable foundation (the “Foundation”). The Foundation contribution will
be funded with 2% of the number of shares of common stock issued in the stock issuance and $250,000 of cash funded by the net proceeds
retained by the Company. The purpose of the Foundation is to provide financial support to charitable organizations in the communities
in which Pioneer Bank operates and to enable those communities to share in the Bank’s long-term growth. The Foundation will
be dedicated completely to community activities and the promotion of charitable causes.
Strategic
Overview
Pioneer Bank maintains
a local community banking emphasis, with a primary strategic objective of meeting the borrowing and deposit needs of its local
customer base. Pioneer Bank’s strategic emphasis in recent years has been to provide full-service community banking products
and services. Pioneer Bank is pursuing a strategy of strengthening its community bank franchise dedicated to meeting the banking
needs of its business and retail customers in the communities that are served by Pioneer Bank. In recent years, growth strategies
have emphasized loan growth driven by growth of commercial real estate, commercial business and 1-4 family permanent mortgage loans.
In connection with the implementation of a full service community banking strategy, Pioneer Bank has invested in branches, including
by acquiring two branches with $30 million of deposits in August 2016; infrastructure and personnel to manage and facilitate balance
sheet growth and revenue diversification strategies.
To further diversify
Pioneer Bank’s revenue streams via insurance, employee benefits and wealth management related fee income, in recent years,
the Bank undertook three acquisitions. In May 2018, Pioneer Bank acquired substantially all of the operating assets of Ward Financial
Management, LTD, a financial services agency to expand wealth management services. Prior to that in July 2017, Pioneer Bank acquired
substantially all of the operating assets of Capital Region Strategic Employee Benefit Services LLC of Latham, New York to expand
its insurance business by offering related employee benefits products and services. In July 2016, Pioneer Bank acquired Albany,
New York based Anchor Agency Inc., an independent insurance agency to offer consumer and commercial insurance products.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.4
The Bank’s objective
is to fund asset growth through deposit growth, emphasizing growth of lower cost core deposits. Core deposit growth is expected
to continue to be facilitated by growth of commercial business lending relationships, pursuant to which Pioneer Bank seeks to establish
a full service banking relationship with its commercial business and, to a lesser degree, commercial real estate loan customers
through offering a full range of commercial loan and deposit products and services. As a complement to Pioneer Bank’s consumer
and business deposit products and services, Pioneer Bank also offers municipal deposit products and thereby gathers deposits from
municipalities in the Capital Region. Municipal deposits are on deposit at Pioneer Commercial Bank, a New York State Commercial
Bank and wholly-owned subsidiary of Pioneer Bank (See Subsidiary Activities).
The investment portfolio
provides supplemental interest income and is considered to be indicative of a low risk investment philosophy. U.S. Government and
agency obligations constitute the largest concentration of the investment portfolio, followed by municipal bonds. Other investments
held by the Bank include common and preferred stocks and small balances of mortgage-backed and asset-backed securities.
Deposits have consistently
served as the primary funding source for Pioneer Bank, with seasonal utilization of short-term FHLB borrowings to provide additional
funding during seasonal low periods of the Bank’s municipal deposit base Core deposits, consisting mostly of transaction
and money market account deposits, followed by savings account deposits constitute the major portion of Pioneer Bank’s deposit
base. Borrowings held by Pioneer Bank as of December 31, 2018 consisted entirely of FHLB advances totaling $30 million.
Pioneer Bank’s
earnings base is largely dependent upon net interest income and operating expense levels and to a lesser degree on a combination
of service charges on deposits, insurance, wealth management and other income sources. Pioneer Bank’s net interest margin
has trended higher in recent years, which has been facilitated by higher yielding loan growth that has provided for a more rapid
increases in the yield on earning assets compared to Pioneer Bank’s cost of funds. At the same time, non-interest operating
income driven by growth of wealth management and insurance related income has been an increasing contributor to Pioneer Bank’s
earnings in recent years. Containment of increases in operating expenses combined with asset growth has served to leverage the
Bank’s operating expense ratio in recent years, which along growth of net interest income and non-interest operating income
has translated into an improving efficiency ratio.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.5
The post-offering business
plan of Pioneer Bank is expected to continue to focus on implementing strategic initiatives to further develop and grow its full
service community banking franchise. Accordingly, Pioneer Bank will continue to be an independent full service community bank,
with a commitment to meeting the consumer and commercial banking needs of individuals and businesses in the Capital region of New
York.
Pioneer Bank’s
Board of Trustees has elected to complete a public stock offering to sustain growth strategies and to facilitate implementation
of its strategic plan. The capital realized from the stock offering will allow for additional growth of the balance sheet. The
additional funds realized from the stock offering will provide an alternative funding source to deposits and borrowings in meeting
the Bank’s future funding needs, which may facilitate a reduction in Pioneer Bank’s funding costs. Additionally, the
Bank’s higher equity-to-assets ratio will enable the Bank to pursue additional expansion opportunities. Such expansion would
most likely occur through the establishment of additional banking offices, or acquisition of branches and deposits from other financial
institutions operating in the Capital Region; and the expansion of its wealth management and insurance activities through acquisition
of businesses with operations in the Capital Region of New York. The Bank will also be in a better position to pursue growth through
acquisition of other financial institutions following the stock offering, given its strengthened capital position. The projected
uses of proceeds are highlighted below.
|
|
·
|
The Company.
The Company is expected
to retain 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 held as a deposit at Pioneer Bank. Over time, the funds may be utilized for various
corporate purposes, possibly including acquisitions, infusing additional equity into Pioneer Bank, repurchases of common stock
and the payment of cash dividends.
|
|
|
·
|
Pioneer Bank.
Approximately 50%
of the net conversion proceeds will be infused into Pioneer Bank. Cash proceeds (i.e., net proceeds less deposits withdrawn to
fund stock purchases) infused into Pioneer 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 will be
the Bank’s objective to pursue controlled growth that will serve to increase returns, while continuing to emphasize management
of the overall risk associated with Pioneer Bank’s operations.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.6
Balance
Sheet Trends
Table 1.1 shows Pioneer
Bank’s historical balance sheet data for the past five and one-half fiscal years. From June 30, 2014 through December 31,
2018, Pioneer Bank’s assets increased at a 10.40% annual rate. Asset growth was largely driven by loan growth, which was
primarily funded by deposit growth. A summary of Pioneer Bank’s key operating ratios for the past five and one-half fiscal
years is presented in Exhibit I-3.
Pioneer Bank’s
loans receivable portfolio increased at an 11.55% annual rate from June 30, 2014 through December 31, 2018. The balance of loans
receivable has consistently trended higher over the five and one-half years. The most significant loan growth was realized during
the fiscal year ended June 30, 2017, which was primarily attributable to growth of the commercial real estate and commercial business
loan portfolios. Pioneer Bank’s higher loan growth rate compared to its asset growth rate served to increase the loans-to-assets
ratio from 76.29% at fiscal yearend 2014 to 79.95% at December 31, 2018.
Growth of Pioneer Bank’s
loan portfolio since fiscal yearend 2014 has been primarily driven by growth of commercial business, commercial real estate loans
and 1-4 family loans, while the overall composition of the loan portfolio since fiscal year end 2014 has shifted somewhat more
towards higher concentrations of commercial business loans, 1-4 family permanent mortgage loans and commercial construction loans.
From fiscal yearend 2014 through December 31, 2018, commercial real estate loans (non-residential and multi-family loans) decreased
from 40.77% of total loans to 36.48% of total loans and commercial business loans increased from 13.90% of total loans to 17.62%
of total loans. Over the same time period, the relative concentrations of 1-4 family loans increased from 26.23% of total loans
to 28.98% of total loans and home equity loans and lines of credit decreased from 10.48% of total loans to 7.66% of total loans.
Commercial construction loans increased from 5.72% of total loans to 7.13% of total loans over the same period, while consumer
loans decreased from 2.89% of total loans to 2.13% of total loans.
The intent of Pioneer
Bank’s investment policy is to provide liquidity and to generate a favorable return within the context of supporting Pioneer
Bank’s overall credit and interest rate risk objectives. It is anticipated that proceeds retained at the holding company
level will be invested into liquid funds held as a deposit at Pioneer Bank. Since fiscal yearend 2014, Pioneer Bank’s level
of cash and investment securities (inclusive of FHLB stock) ranged from a low of 11.07% of assets at fiscal yearend 2017 to a high
of 18.14% of assets at fiscal yearend 2014. As of December 31,
2018, the balance of cash and investments equaled 13.21% of total assets. U.S. government and agency securities securities totaling
$83.4 million comprised the most significant component of Pioneer Bank’s investment portfolio at December 31, 2018. Other
investments held by Pioneer Bank at December 31, 2018 consisted of municipal bonds ($18.9 million), preferred stocks ($6.0 million),
common stocks ($2.8 million), mortgage backed securities ($1.1 million) and asset-backed securities ($144,000). As of December
31, 2018, investments maintained as as available for sale totaled $107.1 million and investments maintained as held to maturity
totaled $4.3 million. Investments maintained as available-at December 31, 2018 had a net unrealized loss of $681,000. Exhibit I-4
provides historical detail of Pioneer Bank’s investment portfolio. As of December 31, 2018, Pioneer Bank also held $56.5
million of cash and cash equivalents and $2.2 million of FHLB stock.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.7
Table 1.1
Pioneer Bank
Historical Balance Sheet Data
|
|
|
|
|
|
|
|
|
06/30/14-
12/31/18
|
|
|
|
|
At
June 30,
|
|
|
At
December 31,
|
|
|
Annual.
|
|
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
|
2018
|
|
|
Growth
Rate
|
|
|
|
|
Amount
|
|
|
Pct(1)
|
|
|
Amount
|
|
|
Pct(1)
|
|
|
Amount
|
|
|
Pct(1)
|
|
|
Amount
|
|
|
Pct(1)
|
|
|
Amount
|
|
|
Pct(1)
|
|
|
Amount
|
|
|
Pct(1)
|
|
|
Pct
|
|
|
|
|
($000)
|
|
|
(%)
|
|
|
($000)
|
|
|
(%)
|
|
|
($000)
|
|
|
(%)
|
|
|
($000)
|
|
|
(%)
|
|
|
($000)
|
|
|
(%)
|
|
|
($000)
|
|
|
(%)
|
|
|
(%)
|
|
|
Total
Amount of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
$
|
824,620
|
|
|
|
100.00
|
%
|
|
$
|
881,285
|
|
|
|
100.00
|
%
|
|
$
|
995,918
|
|
|
|
100.00
|
%
|
|
$
|
1,134,139
|
|
|
|
100.00
|
%
|
|
$
|
1,284,128
|
|
|
|
100.00
|
%
|
|
$
|
1,286,967
|
|
|
|
100.00
|
%
|
|
|
10.40
|
%
|
|
Cash
and cash equivalents
|
|
|
58,809
|
|
|
|
7.13
|
%
|
|
|
35,141
|
|
|
|
3.99
|
%
|
|
|
34,518
|
|
|
|
3.47
|
%
|
|
|
40,261
|
|
|
|
3.55
|
%
|
|
|
120,280
|
|
|
|
9.37
|
%
|
|
|
56,456
|
|
|
|
4.39
|
%
|
|
|
-0.90
|
%
|
|
Investment
securities
|
|
|
89,792
|
|
|
|
10.89
|
%
|
|
|
112,139
|
|
|
|
12.72
|
%
|
|
|
104,762
|
|
|
|
10.52
|
%
|
|
|
84,188
|
|
|
|
7.42
|
%
|
|
|
93,360
|
|
|
|
7.27
|
%
|
|
|
111,419
|
|
|
|
8.66
|
%
|
|
|
4.91
|
%
|
|
Loans
receivable, net
|
|
|
629,134
|
|
|
|
76.29
|
%
|
|
|
678,796
|
|
|
|
77.02
|
%
|
|
|
789,010
|
|
|
|
79.22
|
%
|
|
|
932,762
|
|
|
|
82.24
|
%
|
|
|
985,902
|
|
|
|
76.78
|
%
|
|
|
1,028,920
|
|
|
|
79.95
|
%
|
|
|
11.55
|
%
|
|
Loans
held-for-sale
|
|
|
576
|
|
|
|
0.07
|
%
|
|
|
1,062
|
|
|
|
0.12
|
%
|
|
|
-
|
|
|
|
0.00
|
%
|
|
|
-
|
|
|
|
0.00
|
%
|
|
|
-
|
|
|
|
0.00
|
%
|
|
|
-
|
|
|
|
0.00
|
%
|
|
|
-100.00
|
%
|
|
FHLB
stock
|
|
|
958
|
|
|
|
0.12
|
%
|
|
|
986
|
|
|
|
0.11
|
%
|
|
|
1,584
|
|
|
|
0.16
|
%
|
|
|
1,149
|
|
|
|
0.10
|
%
|
|
|
883
|
|
|
|
0.07
|
%
|
|
|
2,233
|
|
|
|
0.17
|
%
|
|
|
20.69
|
%
|
|
Bank-owned
life insurance
|
|
|
17,279
|
|
|
|
2.10
|
%
|
|
|
17,423
|
|
|
|
1.98
|
%
|
|
|
17,527
|
|
|
|
1.76
|
%
|
|
|
17,601
|
|
|
|
1.55
|
%
|
|
|
17,715
|
|
|
|
1.38
|
%
|
|
|
17,780
|
|
|
|
1.38
|
%
|
|
|
0.64
|
%
|
|
Goodwill/Other
intangibles
|
|
|
-
|
|
|
|
0.00
|
%
|
|
|
-
|
|
|
|
0.00
|
%
|
|
|
-
|
|
|
|
0.00
|
%
|
|
|
5,740
|
|
|
|
0.51
|
%
|
|
|
10,167
|
|
|
|
0.79
|
%
|
|
|
10,005
|
|
|
|
0.78
|
%
|
|
|
NM
|
|
|
Deposits
|
|
$
|
716,487
|
|
|
|
86.89
|
%
|
|
$
|
769,124
|
|
|
|
87.27
|
%
|
|
$
|
864,189
|
|
|
|
86.77
|
%
|
|
$
|
1,010,026
|
|
|
|
89.06
|
%
|
|
$
|
1,150,262
|
|
|
|
89.58
|
%
|
|
$
|
1,114,959
|
|
|
|
86.63
|
%
|
|
|
10.33
|
%
|
|
FHLB
advances and other borrowings
|
|
|
1,750
|
|
|
|
0.21
|
%
|
|
|
6,758
|
|
|
|
0.77
|
%
|
|
|
17,000
|
|
|
|
1.71
|
%
|
|
|
5,000
|
|
|
|
0.44
|
%
|
|
|
0
|
|
|
|
0.00
|
%
|
|
|
30,000
|
|
|
|
2.33
|
%
|
|
|
88.04
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
$
|
93,158
|
|
|
|
11.30
|
%
|
|
$
|
93,620
|
|
|
|
10.62
|
%
|
|
$
|
93,610
|
|
|
|
9.40
|
%
|
|
$
|
104,013
|
|
|
|
9.17
|
%
|
|
$
|
118,063
|
|
|
|
9.19
|
%
|
|
$
|
126,394
|
|
|
|
9.82
|
%
|
|
|
7.02
|
%
|
|
Tangible
equity
|
|
|
93,158
|
|
|
|
11.30
|
%
|
|
|
93,620
|
|
|
|
10.62
|
%
|
|
|
93,610
|
|
|
|
9.40
|
%
|
|
|
98,273
|
|
|
|
8.66
|
%
|
|
|
107,896
|
|
|
|
8.40
|
%
|
|
|
116,389
|
|
|
|
9.03
|
%
|
|
|
5.07
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans/Deposits
|
|
|
|
|
|
|
87.81
|
%
|
|
|
|
|
|
|
88.26
|
%
|
|
|
|
|
|
|
91.30
|
%
|
|
|
|
|
|
|
92.35
|
%
|
|
|
|
|
|
|
85.71
|
%
|
|
|
|
|
|
|
92.28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of offices
|
|
|
17
|
|
|
|
|
|
|
|
17
|
|
|
|
|
|
|
|
18
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
(1) Ratios are as a percent
of ending assets.
Sources: Pioneer Bank's
prospectus, audited and unaudited financial statements and RP Financial calculations.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.8
Pioneer Bank also maintains
an investment in bank-owned life insurance (“BOLI”) policies, which cover the lives of certain current and former officers
of Pioneer Bank. The life insurance policies earn tax-exempt income through cash value accumulation and death proceeds. As of December
31, 2018, the cash surrender value of Pioneer Bank’s BOLI equaled $17.8 million.
Since fiscal yearend
2014, Pioneer Bank’s funding needs have primarily been addressed through a combination of deposits and internal cash flows
and to a much lesser degree borrowings. From fiscal yearend 2014 through December 31, 2018, Pioneer Bank’s deposits increased
at a 10.33% annual rate. Deposits as a percent of assets remained fairly stable equaling 86.89% of assets at fiscal yearend 2014
and 86.63% of assets at December 31, 2018. Deposits growth was sustained from fiscal yearend 2014 through fiscal yearend 2018,
which was followed by a slight decrease in deposits during the six months ended December 31, 2018. Deposit growth trends in recent
years reflect that deposit growth has primarily consisted of core deposits and, to a lesser extent, growth in certificates of deposit
(“CDs”). Core deposits comprised 88.87% of total deposits at December 31, 2018, versus 85.81% of total deposits at
June 30, 2016.
Borrowings serve as
an alternative funding source for Pioneer Bank to provide additional funding during seasonal low periods for the Bank’s municipal
deposit base. From fiscal yearend 2014 through December 31, 2018, borrowings increased from $1.8 million or 0.21% of assets to
$30.0 million or 2.33% of assets. Borrowings currently held by Pioneer Bank consist of FHLB advances.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.9
Pioneer Bank’s
equity increased at a 7.02% annual rate from fiscal yearend 2014 through December 31, 2018, which was largely related to retention
of earnings. A higher rate of asset growth relative to equity growth since fiscal yearend 2014 provided for a decrease in Pioneer
Bank’s equity-to-assets ratio from 11.30% at fiscal yearend 2014 to 9.82% at December 31, 2018. Similarly, Pioneer Bank’s
tangible equity-to-assets ratio decreased from 11.30% at fiscal yearend 2014 to 9.03% at December 31, 2018. Goodwill and other
intangibles totaled $10.0 million or 0.78% of assets at December 31, 2018. Pioneer Bank maintained capital surpluses relative to
all of its regulatory capital requirements at December 31, 2018. The addition of stock proceeds will serve to strengthen Pioneer
Bank’s capital position, as well as support growth opportunities. At the same time, the increase in the pro forma capital
position may initially depress the ROE.
Income
and Expense Trends
Table 1.2 shows Pioneer
Bank’s historical income statements for the past five fiscal years and for the twelve months ended December 31, 2018. Pioneer
Bank’s reported earnings ranged from a low of $4.4 million or 0.54% of average assets for the fiscal year ended June 30,
2014 to a high of $16.8 million or 1.30% of average assets for the twelve months ended December 31, 2018. Net interest income and
operating expenses represent the primary components of Pioneer Bank’s recurring earnings, while non-interest operating income
has become an increasingly significant contributor to Pioneer Bank’s earnings. On a net basis, non-operating income and losses
have generally not been a significant factor in Pioneer Bank’s earnings over the past five and one-half fiscal years, while
loan loss provisions have had a varied impact on the Bank’s earnings over the past five and one-half fiscal years.
During the period
covered in Table 1.2, Pioneer Bank’s net interest income to average assets ratio ranged from a low of 3.22% for fiscal
year 2016 to a high of 3.62% for the twelve months ended December 31, 2018. The upward trend in Pioneer Bank’s net
interest income ratio since 2016 was due to a more significant increase in the interest income ratio compared to interest
expense ratio, which was supported by a widening of the Bank’s yield-cost spread realized through a comparatively
higher increase in the yield earned on interest-earning assets relative to the increase in the Bank’s cost of funds.
Overall, during the past five and one-half years, Pioneer Bank’s interest rate spread ranged from a low of 3.40% for
fiscal year 2015 to a high of 3.93% for the six months ended December 31, 2018. Pioneer Bank’s net interest rate
spreads, and yields and costs for the past five and one-half fiscal years are set forth in Exhibit I-3 and Exhibit I-5.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.10
Table 1.2
Pioneer Bank
Historical Income Statements
|
|
|
For
the Year Ended June 30,
|
|
|
For
the 12 Months
|
|
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
|
Ended
12/31/18
|
|
|
|
|
Amount
|
|
|
Pct(1)
|
|
|
Amount
|
|
|
Pct(1)
|
|
|
Amount
|
|
|
Pct(1)
|
|
|
Amount
|
|
|
Pct(1)
|
|
|
Amount
|
|
|
Pct(1)
|
|
|
Amount
|
|
|
Pct(1)
|
|
|
|
|
($000)
|
|
|
(%)
|
|
|
($000)
|
|
|
(%)
|
|
|
($000)
|
|
|
(%)
|
|
|
($000)
|
|
|
(%)
|
|
|
($000)
|
|
|
(%)
|
|
|
($000)
|
|
|
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
and dividend income
|
|
$
|
28,237
|
|
|
|
3.50
|
%
|
|
$
|
28,805
|
|
|
|
3.42
|
%
|
|
$
|
32,161
|
|
|
|
3.39
|
%
|
|
$
|
37,621
|
|
|
|
3.48
|
%
|
|
$
|
46,486
|
|
|
|
3.73
|
%
|
|
$
|
50,536
|
|
|
|
3.91
|
%
|
|
Interest
expense
|
|
|
(1,478
|
)
|
|
|
-0.18
|
%
|
|
|
(1,314
|
)
|
|
|
-0.16
|
%
|
|
|
(1,648
|
)
|
|
|
-0.17
|
%
|
|
|
(2,411
|
)
|
|
|
-0.22
|
%
|
|
|
(3,186
|
)
|
|
|
-0.26
|
%
|
|
|
(3,758
|
)
|
|
|
-0.29
|
%
|
|
Net interest income
|
|
$
|
26,759
|
|
|
|
3.31
|
%
|
|
$
|
27,491
|
|
|
|
3.26
|
%
|
|
$
|
30,513
|
|
|
|
3.22
|
%
|
|
$
|
35,210
|
|
|
|
3.25
|
%
|
|
$
|
43,300
|
|
|
|
3.47
|
%
|
|
$
|
46,778
|
|
|
|
3.62
|
%
|
|
Provision
for loan losses
|
|
|
(890
|
)
|
|
|
-0.11
|
%
|
|
|
(962
|
)
|
|
|
-0.11
|
%
|
|
|
(1,180
|
)
|
|
|
-0.12
|
%
|
|
|
(2,395
|
)
|
|
|
-0.22
|
%
|
|
|
(1,970
|
)
|
|
|
-0.16
|
%
|
|
|
(2,230
|
)
|
|
|
-0.17
|
%
|
|
Net interest income after
provisions
|
|
$
|
25,869
|
|
|
|
3.20
|
%
|
|
$
|
26,529
|
|
|
|
3.15
|
%
|
|
$
|
29,333
|
|
|
|
3.09
|
%
|
|
$
|
32,815
|
|
|
|
3.03
|
%
|
|
$
|
41,330
|
|
|
|
3.31
|
%
|
|
$
|
44,548
|
|
|
|
3.45
|
%
|
|
Gain
on sale of loans
|
|
$
|
62
|
|
|
|
0.01
|
%
|
|
$
|
75
|
|
|
|
0.01
|
%
|
|
$
|
34
|
|
|
|
0.00
|
%
|
|
$
|
0
|
|
|
|
0.00
|
%
|
|
$
|
0
|
|
|
|
0.00
|
%
|
|
$
|
0
|
|
|
|
0.00
|
%
|
|
Other
non-intereset operating income
|
|
|
7,317
|
|
|
|
0.91
|
%
|
|
|
7,024
|
|
|
|
0.83
|
%
|
|
|
7,480
|
|
|
|
0.79
|
%
|
|
|
11,167
|
|
|
|
1.03
|
%
|
|
|
12,120
|
|
|
|
0.97
|
%
|
|
|
13,270
|
|
|
|
1.03
|
%
|
|
Operating
expense
|
|
|
(27,017
|
)
|
|
|
-3.35
|
%
|
|
|
(27,327
|
)
|
|
|
-3.24
|
%
|
|
|
(30,272
|
)
|
|
|
-3.19
|
%
|
|
|
(35,366
|
)
|
|
|
-3.27
|
%
|
|
|
(36,325
|
)
|
|
|
-2.91
|
%
|
|
|
(36,906
|
)
|
|
|
-2.86
|
%
|
|
Net operating income
|
|
$
|
6,231
|
|
|
|
0.77
|
%
|
|
$
|
6,301
|
|
|
|
0.75
|
%
|
|
$
|
6,575
|
|
|
|
0.69
|
%
|
|
$
|
8,616
|
|
|
|
0.80
|
%
|
|
$
|
17,125
|
|
|
|
1.37
|
%
|
|
$
|
20,912
|
|
|
|
1.62
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Operating
Income/(Losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
gain (loss) on securities
|
|
$
|
283
|
|
|
|
0.04
|
%
|
|
$
|
317
|
|
|
|
0.04
|
%
|
|
$
|
140
|
|
|
|
0.01
|
%
|
|
$
|
519
|
|
|
|
0.05
|
%
|
|
$
|
812
|
|
|
|
0.07
|
%
|
|
$
|
10
|
|
|
|
0.00
|
%
|
|
Net
gain (loss) on sale and write-down of OREO
|
|
|
(181
|
)
|
|
|
-0.02
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
(41
|
)
|
|
|
0.00
|
%
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(17
|
)
|
|
|
0.00
|
%
|
|
Net
gain (loss) disposal of assets
|
|
|
(228
|
)
|
|
|
-0.03
|
%
|
|
|
(18
|
)
|
|
|
0.00
|
%
|
|
|
613
|
|
|
|
0.06
|
%
|
|
|
(789
|
)
|
|
|
-0.07
|
%
|
|
|
(128
|
)
|
|
|
-0.01
|
%
|
|
|
127
|
|
|
|
0.01
|
%
|
|
Net non-operating income(loss)
|
|
($
|
126
|
)
|
|
|
-0.02
|
%
|
|
$
|
299
|
|
|
|
0.04
|
%
|
|
$
|
712
|
|
|
|
0.08
|
%
|
|
($
|
270
|
)
|
|
|
-0.02
|
%
|
|
$
|
684
|
|
|
|
0.05
|
%
|
|
$
|
120
|
|
|
|
0.01
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income before tax
|
|
$
|
6,105
|
|
|
|
0.76
|
%
|
|
$
|
6,600
|
|
|
|
0.78
|
%
|
|
$
|
7,287
|
|
|
|
0.77
|
%
|
|
$
|
8,346
|
|
|
|
0.77
|
%
|
|
$
|
17,809
|
|
|
|
1.43
|
%
|
|
$
|
21,032
|
|
|
|
1.63
|
%
|
|
Income
tax provision
|
|
|
(1,745
|
)
|
|
|
-0.22
|
%
|
|
|
(2,220
|
)
|
|
|
-0.26
|
%
|
|
|
(2,289
|
)
|
|
|
-0.24
|
%
|
|
|
(2,715
|
)
|
|
|
-0.25
|
%
|
|
|
(6,310
|
)
|
|
|
-0.51
|
%
|
|
|
(4,235
|
)
|
|
|
-0.33
|
%
|
|
Net income (loss)
|
|
$
|
4,360
|
|
|
|
0.54
|
%
|
|
$
|
4,380
|
|
|
|
0.52
|
%
|
|
$
|
4,998
|
|
|
|
0.53
|
%
|
|
$
|
5,631
|
|
|
|
0.52
|
%
|
|
$
|
11,499
|
|
|
|
0.92
|
%
|
|
$
|
16,797
|
|
|
|
1.30
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
4,360
|
|
|
|
0.54
|
%
|
|
$
|
4,380
|
|
|
|
0.52
|
%
|
|
$
|
4,998
|
|
|
|
0.53
|
%
|
|
$
|
5,631
|
|
|
|
0.52
|
%
|
|
$
|
11,499
|
|
|
|
0.93
|
%
|
|
$
|
16,797
|
|
|
|
1.30
|
%
|
|
Add(Deduct): Non-operating
income
|
|
|
126
|
|
|
|
0.02
|
%
|
|
|
(299
|
)
|
|
|
-0.04
|
%
|
|
|
(712
|
)
|
|
|
-0.08
|
%
|
|
|
270
|
|
|
|
0.02
|
%
|
|
|
(684
|
)
|
|
|
-0.05
|
%
|
|
|
(120
|
)
|
|
|
-0.01
|
%
|
|
Tax
effect (2)
|
|
|
(33
|
)
|
|
|
0.00
|
%
|
|
|
78
|
|
|
|
0.01
|
%
|
|
|
185
|
|
|
|
0.02
|
%
|
|
|
(70
|
)
|
|
|
-0.01
|
%
|
|
|
178
|
|
|
|
0.01
|
%
|
|
|
31
|
|
|
|
0.00
|
%
|
|
Adjusted earnings
|
|
$
|
4,453
|
|
|
|
0.55
|
%
|
|
$
|
4,159
|
|
|
|
0.49
|
%
|
|
$
|
4,471
|
|
|
|
0.47
|
%
|
|
$
|
5,831
|
|
|
|
0.54
|
%
|
|
$
|
10,993
|
|
|
|
0.88
|
%
|
|
$
|
16,708
|
|
|
|
1.29
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense
Coverage Ratio (3)
|
|
|
0.99
|
x
|
|
|
|
|
|
|
1.01
|
x
|
|
|
|
|
|
|
1.01
|
x
|
|
|
|
|
|
|
0.99
|
x
|
|
|
|
|
|
|
1.19
|
x
|
|
|
|
|
|
|
1.27
|
x
|
|
|
|
|
|
Efficiency
Ratio (4)
|
|
|
79.20
|
%
|
|
|
|
|
|
|
79.02
|
%
|
|
|
|
|
|
|
79.55
|
%
|
|
|
|
|
|
|
76.40
|
%
|
|
|
|
|
|
|
65.54
|
%
|
|
|
|
|
|
|
61.51
|
%
|
|
|
|
|
|
|
(1)
|
Ratios are as a percent of average assets.
|
|
|
(2)
|
Assumes a 26.0% effective tax rate.
|
|
|
(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: Pioneer
Bank's prospectus, audited & unaudited financial statements and RP Financial calculations.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.11
Loan loss provisions
have had a varied impact on Pioneer Bank’s earnings over the past five and one-half fiscal years. During the period covered
in Table 1.2, the amount of loan loss provisions established ranged from low of $890,000 or 0.11% of average assets for fiscal
year 2014 to a high of $2.4 million or 0.22% of average assets for fiscal year 2017. For the twelve months ended December 31, 2018,
the Bank reported loan loss provisions of $2.2 million or 0.17% of average assets. The increase in loss provisions established
in recent years was related to a combination of loan portfolio growth, an increase in non-performing loans and an increase in net
charge-offs recorded during the six months ended December 31, 2018. As of December 31, 2018, Pioneer Bank maintained loan loss
allowances of $13.6 million, equal to 1.13% of total loans receivable and 115.83% of non-performing loans. Exhibit I-6 sets forth
Pioneer Bank’s loan loss allowance activity for the past five and one-half fiscal years.
Non-interest operating
income has become a more significant contributor to Pioneer Bank’s earnings in recent years. While bank fees and service
charges continue to be the largest contributor to non-interest operating income, insurance and wealth management revenues have
become a more significant source of non-interest operating income through acquisition and expansion of those businesses. Throughout
the period shown in Table 1.2, non-interest operating income ranged from a from a low of $7.1 million or 0.84% of average assets
for fiscal year 2015 to a high of $13.3 million or 1.03% of average assets for the twelve months ended December 31, 2018.
Operating expenses
constitute the other major component of Pioneer Bank’s earnings and have decreased as a percentage of average assets in recent
years, even though the Bank has been expanding off-balance sheet activities, primarily wealth management and insurance services.
Overall, Pioneer Bank’s operating expense to average assets ratio has declined from a high of 3.35% during fiscal year 2014
to a low of 2.86% of average assets during the twelve months ended December 31, 2018.
Overall, during the
past five and one-half years, Pioneer Bank’s expense coverage ratios (net interest income divided by operating expenses)
ranged from a low of 0.99x for fiscal years 2014 and 2017 to a high of 1.27x for the twelve months ended December 31, 2018. Similarly,
Pioneer Bank’s efficiency ratio (operating expenses as a percent of the sum of net interest income and other operating income)
reflected an improving trend in core earnings in recent years. The Bank’s efficiency ratio remained in the range of 79% to
80% for fiscal years 2014 through 2016 and then trended lower to equal 61.51% for the twelve months ended December 31, 2018.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.12
On a net basis, non-operating
income and losses have generally not been a significant factor in Pioneer Bank’s earnings during the period covered in Table
1.2. With the exception of fiscal years 2014 and 2017, realized securities gains and gains on the disposal of other assets more
than offset losses on the sale of other real estate owned (“OREO”) and disposal of other assets. Overall, net non-operating
income and losses ranged from a net loss of $270,000 or 0.02% of average assets for fiscal year 2017 to a net gain of $711,000
or 0.07% of average assets for fiscal year 2016. For the twelve months ended December 31, 2018, net non-operating income equaled
$120,000 or 0.01% of average assets.
Over the past five
and one-half years, Pioneer Bank’s effective tax rate ranged from a low of 20.14% during the twelve months ended December
31, 2018 to a high of 35.43% during fiscal year 2018. The relatively high effective tax rate recorded for fiscal year 2018 includes
a reduction in the value of Pioneer Bank’s deferred tax assets and a corresponding charge to income tax expense of $1.2 million,
as the result of the reduction in Pioneer Bank’s federal marginal tax rate from 34% to 21% in connection with the Tax Cuts
and Jobs Act signed into law on December 22, 2017. As set forth in Pioneer Bank’s prospectus, Pioneer Bank’s marginal
effective tax rate (state and federal) is 26.0%.
Interest
Rate Risk Management
The Bank’s balance
sheet is slightly liability sensitive in the short-term (less than one year). While financial institutions in general have been
experiencing some interest spread compression during recent periods, due to the average yield earned on interest-earning assets
declining more relative to the average rate paid on interest-bearing liabilities, the Bank has been effective in increasing its
interest rate spread through increasing the overall yield earned on interest-earning assets while also maintaining a relative stable
cost of funds. The increase in yield has been primarily realized through loan growth driven by growth of higher yielding types
of loans. As of December 31, 2018, an analysis of the Bank’s net equity value (“NEV”) indicated that in the event
of an instantaneous parallel 200 basis point increase in the yield curve NEV would decrease by 6.8%, which was within policy limits
(see Exhibit I-7).
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.13
Pioneer Bank 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 and liabilities. Pioneer Bank manages interest rate risk from the asset side of the balance sheet
through emphasizing investing in short-term investment securities with terms of two years or less, maintaining most of the investment
portfolio as available for sale and significant 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, 2018, of Pioneer Bank’s
total loans due after June 30, 2019, adjustable rate loans comprised 51.3% of total loans receivable (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. Transaction, money market and savings
deposits comprised 88.87% of Pioneer Bank’s total deposits at December 31, 2018.
The infusion of stock
proceeds will serve to further limit Pioneer Bank’s interest rate risk exposure, as most of the net proceeds will be redeployed
into interest-earning assets and the increase in Pioneer Bank’s capital position will lessen the proportion of interest rate
sensitive liabilities funding assets.
Lending
Activities and Strategy
In recent years and
pursuant to Pioneer Bank’s current strategic plan, Pioneer Bank is pursuing a diversified lending strategy emphasizing commercial
business and commercial real estate loans as the primary areas of targeted loan growth. Other areas of lending for Pioneer Bank
include 1-4 family permanent mortgage loans (which it purchases from a large originator in the Capital Region and uses as collateral
for FHLB advances), construction loans, home equity loans and lines of credit and other consumer loans. Exhibit I-9 provides historical
detail of Pioneer Bank’s loan portfolio composition for the past five and one-half years and Exhibit I-10 provides the contractual
maturity of Pioneer Bank’s loan portfolio by loan type as of December 31, 2018.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.14
Commercial Real
Estate and Multi-Family Loans.
Commercial real estate and multi-family loans consist largely of loans originated by Pioneer
Bank, which are generally collateralized by properties in the Capital Region of New York or otherwise involve borrowers and/or
guarantors that have ties to the Capital Region. On a limited basis, Pioneer Bank supplements originations of commercial real estate
and multi-family loans with purchased loan participations from other banks. Loan participations are subject to the same underwriting
criteria and loan approvals as applied to loans originated by Pioneer Bank. Pioneer Bank 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 1.20 times. Commercial real estate and multi-family loans are generally originated for amortization terms of up to 20 years.
Commercial real estate and multi-family loans are generally offered as five-year adjustable rate loans with a ten year term, which
are typically indexed to the 5-year FHLB of New York amortizing indications, plus a margin subject to an interest rate floor. Properties
securing the commercial real estate and multi-family loan portfolio include office buildings, industrial/warehouse and manufacturing
facilities, retail plazas, medical office buildings, hotels, restaurants and apartment buildings. At December 31, 2018, Pioneer
Bank’s largest commercial real estate loan had an outstanding balance of $9.5 million and was secured by an office building
located in the Bank’s primary market area. At December 31, 2018, this loan was performing in accordance with its original
terms. At December 31, 2018, Pioneer Bank’s largest multi-family loan had an outstanding balance of $7.6 million and was
secured by a property in the Bank’s primary market area. At December 31, 2018, this loan was performing in accordance with
its original terms. As of December 31, 2018, Pioneer Bank’s outstanding balance of commercial real estate and multi-family
loans totaled $379.5 million equal to 36.48% of total loans outstanding.
1-4 Family Residential
Loans.
In recent years, Pioneer Bank originated primarily fixed rate and, to a much lesser degree, adjustable rate 1-4 family
permanent mortgage loans with terms of up to 30 years. On a selected basis, the Bank sold fixed rate loan originations to the secondary
market with servicing retained by the Bank. In January 2016, Pioneer Bank ceased in-house originations of 1-4 family permanent
mortgage loans and began purchasing 1-4 family permanent mortgage loans, including the related mortgage servicing rights, from
a third- party originator based in the Capital Region. As of December 31, 2018, Pioneer Bank’s outstanding balance of 1-4
family loans totaled $279.8 million equal to 26.90% of total loans outstanding.
Home Equity Loans
and Lines of Credit.
Pioneer Bank’s 1-4 family lending activities include in-house originated home equity loans and lines
of credit. Home equity loans are offered as fixed rate loans with terms of up to 20 years. Home equity lines of credit are indexed
to the prime rate as published in
The Wall Street Journal
and are offered as interest-only revolving lines of credit with
a draw period of up to 10 years followed by a 15 year repayment term. Pioneer Bank will generally originate home equity loans and
lines of credit up to a maximum LTV ratio of 80%, inclusive of other liens on the property. As of December 31, 2018, Pioneer Bank’s
outstanding balance of home equity loans and lines of credit totaled $79.7 million equal to 7.66% of total loans outstanding.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.15
Construction and
Land Development Loans.
Construction loans originated by Pioneer Bank consist of loans to finance the construction of 1-4 family
residences, commercial real estate properties and multi-family properties. Pioneer Bank also originates loans on unimproved land
for purposes of development. Construction and land development loans are generally structured as 12 to 24 month interest-only loans
with a floating interest rate based on the prime rate as published in
The Wall Street Journal or
LIBOR. At the end of the
construction phase, the loan generally converts to a permanent commercial real estate mortgage loan or the loan may be payable
in full. However, the Bank’s construction loans for the construction of one- to four-family residential developments do not
convert to permanent residential real estate loans. Construction loans are generally offered up to a maximum LTV ratio of 75% of
the appraised value on a completed basis or the cost of completion, whichever is less. Land development loans on raw land and on
improved lots are generally offered up to a maximum LTV ratio of 75%. As of December 31, 2018, Pioneer Bank’s outstanding
balance of commercial construction loans totaled $95.8 million equal to 9.21% of total loans outstanding.
Commercial Business
Loans.
The commercial business loan portfolio is generated through extending loans to businesses operating in the Capital Region
of New York. Expansion of commercial business lending activities continues to be a desired area of loan growth for Pioneer Bank,
pursuant to which the Bank establishes full servicing banking relationship with its commercial loan customers through offering
a full range of commercial loan products that are packaged with lower cost commercial deposit products. Pioneer Bank offers a variety
of secured and unsecured commercial business loans that include term loans for equipment financing and business acquisitions, working
capital loans, inventory financing and revolving lines of credit. Fixed rate loans are offered for terms of up to ten years and
are fully amortizing. Revolving lines of credit are generally extended as floating rate loans indexed to
The Wall Street Journal
prime rate or LIBOR. Fixed rate loans are priced based on a spread above the comparable term FHLB Amortizing Advance rate. Fixed
rate loans may also be converted to a variable rate through the use of interest rate derivative products (i.e. “swaps”).
Swaps are priced on a loan by loan basis. As of December 31, 2018, Pioneer Bank’s outstanding balance of commercial business
loans totaled $183.3 million equal to 17.62% of total loans outstanding.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.16
Other Consumer Loans.
Consumer loans and lines of credit have been a somewhat limited area of lending diversification for Pioneer Bank, with such loans
consisting primarily of unsecured personal loans and personal loans secured by investment and deposit accounts and, to a lesser
extent, loans on automobiles and overdraft accounts. As of December 31, 2018, Pioneer Bank’s outstanding balance of other
consumer loans totaled $22.1 million equal to 2.13% of total loans outstanding.
Asset
Quality
Historically, Pioneer
Bank’s lending emphasis on lending in local and familiar markets generally supported maintenance of relatively favorable
credit quality measures. Over the past five and one-half years, Pioneer Bank’s balance of non-performing assets has been
relatively steady, ranging from a high of $11.8 million or 0.92% of assets at December 31, 2018 to a low of $6.3 million or 0.63%
of assets at fiscal yearend 2016. As shown in Exhibit I-11, non-performing assets at December 31, 2018 consisted of $8.4 million
of non-accruing loans, $3.3 million of accruing loans past due 90 days or more and $55,000 of OREO.
To track Pioneer Bank’s
asset quality and the adequacy of valuation allowances, Pioneer Bank has established detailed asset classification policies and
procedures. Classified assets are reviewed monthly by senior management and the Board. Pursuant to these procedures, when needed,
Pioneer Bank establishes additional valuation allowances to cover anticipated losses in classified or non-classified assets. As
of December 31, 2018, Pioneer Bank maintained loan loss allowances of $13.6 million equal to 1.31% of total loans receivable and
115.83% of non-performing loans.
Funding
Composition and Strategy
Deposits have consistently
served as Pioneer Bank’s primary funding source and at December 31, 2018, deposits accounted for 97.38% of Pioneer Bank’s
combined balance of deposits and borrowings. Exhibit I-12 sets forth Pioneer Bank’s deposit composition for the past three
and one-half fiscal years. Transaction, savings and money market deposits constituted 88.87% of total deposits at December 31,
2018, as compared to 85.81% of total deposits at June 30, 2016. The increase in the concentration of core deposits comprising total
deposits since fiscal yearend 2016 was realized through comparatively stronger growth of core deposits relative to growth of CDs.
Since fiscal yearend 2016, non-interest-bearing demand accounts and money market accounts have been the largest sources of core
deposit growth for Pioneer Bank and also comprise the two largest concentrations of Pioneer Bank’s core deposits. As of December
31, 2018, non-interest-bearing demand accounts and money market accounts totaled $653.2 million or 65.92% of core deposits.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.17
The balance of Pioneer
Bank’s deposits consists of CDs, which equaled $124.1 million or 11.13% of total deposits at December 31, 2018 compared to
$122.6 million or 14.19% of total deposits at fiscal yearend 2016. As of December 31, 2018, jumbo CDs (CD accounts with balances
of $100,000 or more) amounted to $53.9 million or 43.44% of total CDs and $23.1 million or 42.79% of the jumbo CDs were schedules
to mature in one year or less. Exhibit I-13 sets forth the maturity schedule of Pioneer Bank’s jumbo CDs as of December 31,
2018.
Borrowings serve as
an alternative funding source for Pioneer Bank to facilitate management of funding costs and interest rate risk Borrowings totaled
$30.0 million at December 31, 2018 and consisted of FHLB advances. The FHLB advances had a weighted average interest rate of 2.67%
during the six months ended December 31, 2018. Exhibit I-14 provides further detail of Pioneer Bank’s borrowings activities
during the past three and one-half fiscal years.
Subsidiary Activities
Pioneer Bank currently
has three wholly-owned subsidiaries: Pioneer Financial Services, Inc., Anchor Agency, Inc. and Pioneer Commercial Bank.
Pioneer Financial
Services, Inc.
Pioneer Financial Services, Inc., a New York Corporation and wholly owned subsidiary of Pioneer Bank, provides
wealth management services to Pioneer Bank’s customers in partnership with LPL Financial, a registered broker dealer. It
had $481.5 million of assets under management at December 31, 2018. Pioneer Financial Services, Inc. operates under the name
Pioneer Wealth Management out of Pioneer Bank’s headquarters in Albany, New York, and has licensed representatives available
in the Bank’s branch offices. Wealth management services provided by Pioneer Financial Services, Inc. to customers include
investment advice, retirement income planning, estate planning, business succession and employer retirement planning.
|
RP
®
Financial, LC.
|
OVERVIEW AND FINANCIAL ANALYSIS
|
I.18
Anchor Agency, Inc.
On July 1, 2016, Pioneer Bank completed the acquisition of Anchor Agency, Inc. Anchor Agency, Inc., a New York corporation and
wholly-owned subsidiary of Pioneer Bank, is a full-service insurance agency offering personal and commercial insurance, including
homeowners, automobile and comprehensive business insurance. Anchor Agency, Inc. works with major national insurance companies,
as well as specialty markets. Anchor Agency, Inc. also offers employee benefits products and consulting services under the name
Pioneer Benefits Consulting, including group health, dental, disability and life insurance products and human resource management
services. Anchor Agency, Inc. operates out of Pioneer Bank’s headquarters in Albany, New York. The expansion into the insurance
and employee benefit services business has enabled Pioneer Bank to evolve from a traditional depository institution into a full-service
financial services organization.
Pioneer Commercial
Bank.
Pioneer Commercial Bank is a New York-chartered limited purpose commercial bank. Pioneer Bank incorporated Pioneer Commercial
Bank in October 2004 in order to hold municipal deposits. New York State prohibits a savings bank from soliciting and servicing
public funds (deposits of counties, cities, towns, school districts, etc.). The use of a limited-purpose commercial bank subsidiary
has facilitated the expansion of municipal deposit banking services throughout the service area of Pioneer Bank. At December 31,
2018, Pioneer Commercial Bank held $239.2 million in assets, consisting primarily of cash and municipal obligations. All disclosures
in this prospectus relating to Pioneer Bank’s consolidated investments and deposits include the investments and deposits
that are held by Pioneer Commercial Bank.
Legal
Proceedings
Pioneer Bank is not
currently party to any pending legal proceedings that Pioneer Bank’s management believes would have a material adverse effect
on Pioneer Bank’s financial condition, results of operations or cash flows.
|
RP
®
Financial, LC.
|
MARKET AREA
|
|
|
II.1
|
II. MARKET AREA
Introduction
Pioneer Bank is headquartered
in Albany, New York and currently serves the Albany-Schenectady-Troy metropolitan area (“Albany MSA”) through 22 full-service
banking offices. The Bank maintains branch locations in the counties of Albany (9), Rensselaer (4), Saratoga (4), Schenectady (2),
Greene (2) and Warren (1). Details regarding the Bank’s office properties are set forth in Exhibit II-1.
With operations in
a metropolitan area, the Bank’s competitive environment includes a significant number of commercial banks and other financial
services companies, some of which have a regional or national presence and are larger than the Bank in terms of deposits, loans,
scope of operations, and number of branches. These institutions also have greater resources at their disposal than the Bank. The
Albany MSA has a highly developed economy, with a relatively high concentration of skilled workers.
Future growth opportunities
for Pioneer Bank depend on the future growth and stability of the local and regional economy, demographic growth trends and the
nature and intensity of the competitive environment. These factors have been briefly examined to help determine the growth potential
that exists for the Bank, the relative economic health of the Bank’s market area, and the resultant impact on value.
National Economic
Factors
The future success
of the Bank’s operations is partially dependent upon various national and local economic trends. In assessing national economic
trends over the past few quarters, The July 2018 unemployment rate fell to 3.9%, with the U.S. economy adding 157,000 jobs in July
which was less than expected. Manufacturing and service sector activity for July expanded at slower rates, with respective readings
of 58.1 and 55.7. July retail sales showed a healthy 0.5% increase, while July U.S. housing starts increased 0.9%. Comparatively,
July sales of existing and new homes declined by 0.7% and 1.7%, respectively. The pace of manufacturing activity for August accelerated
to a 14-year high, with an index reading of 61.3. Similarly, August service sector expanded at a higher rate, based on an index
reading of 58.5. The U.S. economy added 201,000 jobs in August, which was more than expected, and the August unemployment rate
held steady at 3.9%. Existing home sales for August were unchanged from the prior month, while new home sales bounced back in August
increasing 3.5% compared to July. Manufacturing activity for September expanded at a slower rate with an index reading of 59.8,
while September service sector activity accelerated to a 10-year high index reading of 61.6. The September unemployment rate for
the U.S. fell to a new generational low of 3.7%, which was the lowest unemployment rate since December 1969. The U.S. economy added
134,000 jobs during September. However, notwithstanding the robust economic data, the housing market continued to languish. September
existing home sales declined 3.4%, while September new home sales declined 5.5% and stood at their lowest level in nearly two years.
Third quarter GDP increased at an annual rate of 3.5% (subsequently revised to 3.4%), which exceeded expectations.
|
RP
®
Financial, LC.
|
MARKET AREA
|
|
|
II.2
|
Manufacturing and service
sector activity for October 2018 expanded at slower rates, with respective readings of 57.7 and 60.3. U.S. employers added 250,000
jobs in October and the October unemployment rate held steady at 3.7%. October retail sales increased 0.8% and, after six straight
months of declines, existing home sales for October increased 1.4%. Comparatively, new home sales for October fell 8.9% and October
pending home sales declined by 2.6%. November manufacturing activity accelerated to an index reading of 59.3, while service sector
activity for November increased to an index reading of 60.7. The U.S. economy added 155,000 jobs in November, while the November
unemployment rate held steady at 3.7%. November existing and new home sales increased by1.9% and 16.9%, respectively. Manufacturing
activity slowed in December to a reading of 54.1, which was the largest one month drop since the end of 2008. Service sector activity
for December edged lower to an index reading of 58.0. The U.S. economy added 312,000 jobs in December, which beat economists’
expectations. The December unemployment rate edged up to 3.9%, as more people entered the labor force. Existing home sales for
December fell 6.4%, which was the weakest level since 2015. For all of 2018, existing home sales were the lowest report in three
years.
The U.S. economy added
304,000 jobs in January 2019, which exceeded expectations, and the January unemployment rate increased to 4.0% as more people entered
the labor force. Manufacturing activity accelerated in January with an index reading of 56.6, while service activity declined for
a second consecutive month with an index reading of 56.7.
In
terms of interest rates trends over the past few quarters, the 10-year Treasury yield stabilized around 2.85% during the first
half of July 2018, with June consumer price data showing U.S. inflation hitting its highest rate in more than six years. In late-July,
Treasury yields surged higher as investors dumped government bonds in favor of stocks amid strong second quarter earnings results
and signs of U.S. economic growth accelerating. The Federal Reserve concluded its early-August policy meeting keeping its target
interest rate unchanged as expected and gave an upbeat assessment of the economy, suggesting another rate increase was likely at
its next meeting. The outcome of the Federal Reserve meeting and news of rising federal budget deficits helped to push the 10-year
Treasury yield up to 3.0% following the Federal Reserve meeting. For the balance of August, the 10-year Treasury yield edged down
to slightly below 3.0%. The favorable employment report for August helped to push the 10-year Treasury yield back above 3.0% in
mid-September, as the benchmark rate approached a seven-year high. Long-term Treasury yields stabilized through the end of September,
as the Federal Reserve concluded its late-September policy meeting voting to lift interest rates by another quarter point and signaled
they would continue to implement a path of gradual rate hikes.
|
RP
®
Financial, LC.
|
MARKET AREA
|
|
|
II.3
|
Long-term
Treasury yields hit fresh highs in early-October 2018, as robust economic data and an easing of trade tensions across North America
sparked fresh optimism about the global growth outlook. After climbing up to 3.23% with the release of the September employment
report, the 10-year Treasury yield edged lower through the end of October and then bounced higher in early-November. The October
employment report, which showed that U.S. wages grew at the fastest rate since April 2009, was the primary catalyst that drove
Treasury yields higher. The Federal Reserve held rates steady at its early-November policy meeting and suggested another rate increase
was likely by the end of the year. Following the Federal Reserve meeting, long-term Treasury yields drifted lower into late-November.
The downward trend in long-term Treasury yields continued into December, as doubts over the U.S.-China trade truce renewed concerns
about the pace of economic growth. Treasury yields further declined after the Federal Reserve’s mid-December policy meeting
concluded with a 0.25% rate increase to its target rate to a range between 2.25% and 2.5%, as investors gravitated toward safe-haven
investments in the closing weeks of 2018 amid significant volatility in the stock market.
Long-term
Treasury yields continued to edge lower at the start of 2019, as an index reading for manufacturing activity in December posted
its largest one month decline since the end of 2008. Stronger-than-expected job growth reported for December served to reverse
the downward trend in long-term Treasury yields at the end of the first week of 2019, which was followed by interest rates stabilizing
through late-January. Long-term Treasury yields edged lower at the end of January after the Federal Reserve concluded its policy
meeting electing to hold their benchmark rate steady and indicated that it was done raising rates for now. As of February 8, 2019,
the bond equivalent yields for U.S. Treasury bonds with terms of one and ten years equaled 2.54% and 2.63%, respectively, versus
comparable year ago yields of 1.91% and 2.85%. Exhibit II-2 provides historical interest rate trends.
|
RP
®
Financial, LC.
|
MARKET AREA
|
|
|
II.4
|
Based on the consensus
outlook of economists surveyed by The Wall Street Journal in January 2019, GDP growth was projected to decrease to 2.2% in 2019.
The unemployment rate was forecasted to equal 3.6% in June 2019 and in December 2019. An average of 157,000 jobs were projected
to be added per month during 2019. On average, the economists forecasted an increase in the federal funds rate to 2.59% in June
2019 and to 2.75% in December 2019. On average, the economists forecasted that the 10-year Treasury yield would increase to 2.96%
in June 2019 and increase to 3.10% by the end of 2019. The surveyed economists also forecasted home prices would rise 3.8% in 2019
and housing starts were forecasted to increase slightly in 2019.
The January 2019 mortgage
finance forecast from the Mortgage Bankers Association (the “MBA”) was for 2019 existing home sales to increase by
3.4% from 2018 sales and new home sales were forecasted to increase by 3.8% in 2019 from sales in 2018. The 2019 median sale prices
for new and existing homes were forecasted to increase by 2.6% and 4.9%, respectively. Total mortgage production was forecasted
to decline in 2019 to $1.613 trillion, compared to $1.643 trillion in 2018. The forecasted decrease in 2019 originations was based
on a 4.0% increase in purchase volume and a 16.8% decrease in refinancing volume. Purchase mortgage originations were forecasted
to total $1.232 trillion in 2019, versus refinancing volume totaling $381 billion. Housing starts for 2019 were projected to increase
by 2.0% to total 1.285 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 Pioneer Bank. Demographic data for the primary market area counties, as well
as for New York, and the U.S., is provided in Table 2.1.
Population data indicates
growth trends for the primary market area counties have been somewhat varied over the past five years. For the 2014 to 2019 period,
Saratoga County and Albany County recorded the strongest population growth rates with annual growth rates of 0.8% and 0.3%, respectively.
Comparatively, Green and Warren Counties experienced population shrinkage over the five year period. Five year population growth
rates for the U.S. and New York equaled 0.7% and 0.2%, respectively.
|
RP
®
Financial, LC.
|
MARKET AREA
|
|
|
II.5
|
Table 2.1
Pioneer Bank
Summary Demographic/Economic Data
|
|
|
Year
|
|
|
Growth Rate
|
|
|
|
|
2014
|
|
|
2019
|
|
|
2024
|
|
|
2014-2019
|
|
|
2019-2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(%)
|
|
|
(%)
|
|
|
Population (000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USA
|
|
|
317,199
|
|
|
|
329,236
|
|
|
|
340,950
|
|
|
|
0.7
|
%
|
|
|
0.7
|
%
|
|
New York
|
|
|
19,675
|
|
|
|
19,904
|
|
|
|
20,197
|
|
|
|
0.2
|
%
|
|
|
0.3
|
%
|
|
Saratoga, NY
|
|
|
224
|
|
|
|
232
|
|
|
|
239
|
|
|
|
0.8
|
%
|
|
|
0.6
|
%
|
|
Schenectady, NY
|
|
|
155
|
|
|
|
156
|
|
|
|
157
|
|
|
|
0.1
|
%
|
|
|
0.2
|
%
|
|
Greene, NY
|
|
|
48
|
|
|
|
47
|
|
|
|
47
|
|
|
|
-0.4
|
%
|
|
|
-0.2
|
%
|
|
Warren, NY
|
|
|
65
|
|
|
|
64
|
|
|
|
64
|
|
|
|
-0.3
|
%
|
|
|
0.0
|
%
|
|
Albany, NY
|
|
|
306
|
|
|
|
311
|
|
|
|
315
|
|
|
|
0.3
|
%
|
|
|
0.3
|
%
|
|
Rensselaer, NY
|
|
|
160
|
|
|
|
160
|
|
|
|
161
|
|
|
|
0.0
|
%
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Households (000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USA
|
|
|
120,163
|
|
|
|
125,019
|
|
|
|
129,684
|
|
|
|
0.8
|
%
|
|
|
0.7
|
%
|
|
New York
|
|
|
7,462
|
|
|
|
7,584
|
|
|
|
7,719
|
|
|
|
0.3
|
%
|
|
|
0.4
|
%
|
|
Saratoga, NY
|
|
|
91
|
|
|
|
95
|
|
|
|
99
|
|
|
|
1.0
|
%
|
|
|
0.7
|
%
|
|
Schenectady, NY
|
|
|
63
|
|
|
|
63
|
|
|
|
64
|
|
|
|
0.0
|
%
|
|
|
0.2
|
%
|
|
Greene, NY
|
|
|
20
|
|
|
|
19
|
|
|
|
19
|
|
|
|
-0.2
|
%
|
|
|
0.0
|
%
|
|
Warren, NY
|
|
|
28
|
|
|
|
28
|
|
|
|
28
|
|
|
|
0.0
|
%
|
|
|
0.1
|
%
|
|
Albany, NY
|
|
|
128
|
|
|
|
130
|
|
|
|
132
|
|
|
|
0.4
|
%
|
|
|
0.4
|
%
|
|
Rensselaer, NY
|
|
|
65
|
|
|
|
66
|
|
|
|
67
|
|
|
|
0.2
|
%
|
|
|
0.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Median Household Income ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USA
|
|
|
51,579
|
|
|
|
63,174
|
|
|
|
68,744
|
|
|
|
4.1
|
%
|
|
|
1.7
|
%
|
|
New York
|
|
|
57,619
|
|
|
|
68,659
|
|
|
|
74,601
|
|
|
|
3.6
|
%
|
|
|
1.7
|
%
|
|
Saratoga, NY
|
|
|
69,888
|
|
|
|
83,671
|
|
|
|
91,847
|
|
|
|
3.7
|
%
|
|
|
1.9
|
%
|
|
Schenectady, NY
|
|
|
54,620
|
|
|
|
61,896
|
|
|
|
63,016
|
|
|
|
2.5
|
%
|
|
|
0.4
|
%
|
|
Greene, NY
|
|
|
50,801
|
|
|
|
55,559
|
|
|
|
58,768
|
|
|
|
1.8
|
%
|
|
|
1.1
|
%
|
|
Warren, NY
|
|
|
56,044
|
|
|
|
62,464
|
|
|
|
65,649
|
|
|
|
2.2
|
%
|
|
|
1.0
|
%
|
|
Albany, NY
|
|
|
60,750
|
|
|
|
67,889
|
|
|
|
75,044
|
|
|
|
2.2
|
%
|
|
|
2.0
|
%
|
|
Rensselaer, NY
|
|
|
62,595
|
|
|
|
70,080
|
|
|
|
77,169
|
|
|
|
2.3
|
%
|
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Capita Income ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USA
|
|
|
27,721
|
|
|
|
34,902
|
|
|
|
38,568
|
|
|
|
4.7
|
%
|
|
|
2.0
|
%
|
|
New York
|
|
|
32,019
|
|
|
|
39,830
|
|
|
|
43,799
|
|
|
|
4.5
|
%
|
|
|
1.9
|
%
|
|
Saratoga, NY
|
|
|
35,835
|
|
|
|
44,561
|
|
|
|
49,711
|
|
|
|
4.5
|
%
|
|
|
2.2
|
%
|
|
Schenectady, NY
|
|
|
28,614
|
|
|
|
33,053
|
|
|
|
33,747
|
|
|
|
2.9
|
%
|
|
|
0.4
|
%
|
|
Greene, NY
|
|
|
28,305
|
|
|
|
32,556
|
|
|
|
34,899
|
|
|
|
2.8
|
%
|
|
|
1.4
|
%
|
|
Warren, NY
|
|
|
30,671
|
|
|
|
34,369
|
|
|
|
36,768
|
|
|
|
2.3
|
%
|
|
|
1.4
|
%
|
|
Albany, NY
|
|
|
33,787
|
|
|
|
42,013
|
|
|
|
47,260
|
|
|
|
4.5
|
%
|
|
|
2.4
|
%
|
|
Rensselaer, NY
|
|
|
32,664
|
|
|
|
38,475
|
|
|
|
43,344
|
|
|
|
3.3
|
%
|
|
|
2.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 Age Distribution (%)
|
|
|
0-14 Yrs.
|
|
|
|
15-34 Yrs.
|
|
|
|
35-54 Yrs.
|
|
|
|
55-69 Yrs.
|
|
|
|
70+ Yrs.
|
|
|
USA
|
|
|
18.6
|
|
|
|
26.9
|
|
|
|
25.3
|
|
|
|
18.5
|
|
|
|
10.7
|
|
|
New York
|
|
|
17.4
|
|
|
|
27.4
|
|
|
|
25.6
|
|
|
|
18.7
|
|
|
|
10.8
|
|
|
Saratoga, NY
|
|
|
16.4
|
|
|
|
23.9
|
|
|
|
26.9
|
|
|
|
21.4
|
|
|
|
11.4
|
|
|
Schenectady, NY
|
|
|
17.7
|
|
|
|
25.8
|
|
|
|
25.2
|
|
|
|
19.7
|
|
|
|
11.6
|
|
|
Greene, NY
|
|
|
13.4
|
|
|
|
23.9
|
|
|
|
24.3
|
|
|
|
23.9
|
|
|
|
14.5
|
|
|
Warren, NY
|
|
|
14.7
|
|
|
|
22.6
|
|
|
|
24.1
|
|
|
|
24.3
|
|
|
|
14.4
|
|
|
Albany, NY
|
|
|
15.2
|
|
|
|
30.6
|
|
|
|
23.9
|
|
|
|
19.3
|
|
|
|
11.1
|
|
|
Rensselaer, NY
|
|
|
16.1
|
|
|
|
27.4
|
|
|
|
24.8
|
|
|
|
20.7
|
|
|
|
11.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 HH Income Dist. (%)
|
|
|
Less Than 25,000
|
|
|
|
$25,000 to 50,000
|
|
|
|
$50,000 to 100,000
|
|
|
|
$100,000+
|
|
|
|
|
|
|
USA
|
|
|
19.6
|
|
|
|
21.5
|
|
|
|
29.2
|
|
|
|
29.7
|
|
|
|
|
|
|
New York
|
|
|
19.9
|
|
|
|
19.0
|
|
|
|
26.7
|
|
|
|
34.4
|
|
|
|
|
|
|
Saratoga, NY
|
|
|
11.5
|
|
|
|
16.3
|
|
|
|
31.4
|
|
|
|
40.8
|
|
|
|
|
|
|
Schenectady, NY
|
|
|
19.6
|
|
|
|
22.3
|
|
|
|
31.5
|
|
|
|
26.5
|
|
|
|
|
|
|
Greene, NY
|
|
|
21.9
|
|
|
|
24.1
|
|
|
|
30.4
|
|
|
|
23.6
|
|
|
|
|
|
|
Warren, NY
|
|
|
18.1
|
|
|
|
22.7
|
|
|
|
32.2
|
|
|
|
27.0
|
|
|
|
|
|
|
Albany, NY
|
|
|
18.2
|
|
|
|
19.9
|
|
|
|
28.9
|
|
|
|
32.9
|
|
|
|
|
|
|
Rensselaer, NY
|
|
|
15.7
|
|
|
|
20.9
|
|
|
|
30.4
|
|
|
|
33.0
|
|
|
|
|
|
Source: S&P Global Market Intelligence.
|
RP
®
Financial, LC.
|
MARKET AREA
|
|
|
II.6
|
Household growth rates
for the primary market area counties paralleled population growth trends, with Saratoga County and Albany County displaying the
highest household growth rates for the past five years. Also consistent with population growth trends, the number of households
declined in Greene County and household growth for Warren County was flat over the past five years. Over the next five years, population
and household growth rates for the primary area counties are generally projected to be relatively stable or improve slightly relative
to the growth trends recorded over the past five years, although population and household growth rates for Saratoga County are
projected to be slightly lower.
Income measures show
that the counties of Saratoga, Albany and Rensselaer are relatively affluent markets, with household and per capita income measures
that exceed the comparable U.S. measures. Household and per capita income measures for Schenectady and Warren Counties were similar
to the U.S. measures, while Green County’s household and per capita income were lower than the U.S. measures. Over the past
five years, median household income growth rates for the primary market area counties fell below the U.S. annual growth rate of
4.1%, ranging from a high of 3.7% for Saratoga County to a low of 1.8% for Greene County. Over the next five years, median household
income annual growth rates ranged from 0.4% for Schenectady County to 2.0% for Albany County compared to 1.7% for both the U.S.
and the State of New York.
A comparison of household
income distribution measures provides another indication of the relative affluence of Saratoga, Albany and Rensselaer Counties,
which maintained a higher percentage of households with incomes above $100,000 compared to the U.S. Comparatively, Greene, Schenectady
and Warren Counties maintained lower percentages of households with incomes above $100,000 compared to the U.S. Age distribution
measures for the primary market area counties were fairly similar to the comparable U.S. and New York measures, although Greene
and Warren Counties had relatively older populations.
Regional Economy
Comparative employment
data shown in Table 2.2 shows that, except for Warren County, 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 New York. Service
jobs constituted the largest employment sector for Warren County, followed by employment in education/healthcare/social services.
Wholesale/retail trade jobs were the third largest employment sector for all three of the primary area counties, as well as for
New York. Other noteworthy employment sectors for the primary market area counties included manufacturing and government jobs.
Overall, the distribution of employment exhibited in the primary market area is indicative of a diverse economic environment.
|
RP
®
Financial, LC.
|
MARKET AREA
|
|
|
II.7
|
Table 2.2
Pioneer Bank
Primary Market Area Employment Sectors
(Percent of Labor Force)
|
|
|
|
|
|
Saratoga
|
|
|
Schenectady
|
|
|
Greene, NY
|
|
|
Warren, NY
|
|
|
Albany, NY
|
|
|
Rensselaer, NY
|
|
|
Employment Sector
|
|
New York
|
|
|
County
|
|
|
County
|
|
|
County
|
|
|
County
|
|
|
County
|
|
|
County
|
|
|
|
|
(% of Total Employment)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
|
26.4
|
%
|
|
|
23.9
|
%
|
|
|
23.3
|
%
|
|
|
22.3
|
%
|
|
|
28.1
|
%
|
|
|
25.2
|
%
|
|
|
21.7
|
%
|
|
Education,Healthcare, Soc. Serv.
|
|
|
27.4
|
%
|
|
|
24.7
|
%
|
|
|
28.1
|
%
|
|
|
24.7
|
%
|
|
|
25.8
|
%
|
|
|
27.2
|
%
|
|
|
27.8
|
%
|
|
Government
|
|
|
4.4
|
%
|
|
|
7.1
|
%
|
|
|
8.3
|
%
|
|
|
9.1
|
%
|
|
|
3.9
|
%
|
|
|
12.0
|
%
|
|
|
10.5
|
%
|
|
Wholesale/Retail Trade
|
|
|
13.1
|
%
|
|
|
15.0
|
%
|
|
|
13.7
|
%
|
|
|
13.7
|
%
|
|
|
18.2
|
%
|
|
|
12.1
|
%
|
|
|
12.1
|
%
|
|
Finance/Insurance/Real Estate
|
|
|
7.9
|
%
|
|
|
7.2
|
%
|
|
|
7.4
|
%
|
|
|
5.8
|
%
|
|
|
4.3
|
%
|
|
|
7.4
|
%
|
|
|
5.8
|
%
|
|
Manufacturing
|
|
|
6.3
|
%
|
|
|
9.9
|
%
|
|
|
7.5
|
%
|
|
|
6.9
|
%
|
|
|
8.6
|
%
|
|
|
4.8
|
%
|
|
|
7.2
|
%
|
|
Construction
|
|
|
5.6
|
%
|
|
|
6.3
|
%
|
|
|
4.5
|
%
|
|
|
7.5
|
%
|
|
|
5.5
|
%
|
|
|
4.8
|
%
|
|
|
6.2
|
%
|
|
Information
|
|
|
3.0
|
%
|
|
|
2.0
|
%
|
|
|
2.4
|
%
|
|
|
2.4
|
%
|
|
|
1.5
|
%
|
|
|
2.3
|
%
|
|
|
2.1
|
%
|
|
Transportation/Utility
|
|
|
5.3
|
%
|
|
|
3.3
|
%
|
|
|
4.7
|
%
|
|
|
6.0
|
%
|
|
|
3.9
|
%
|
|
|
3.8
|
%
|
|
|
6.0
|
%
|
|
Agriculture
|
|
|
0.5
|
%
|
|
|
0.6
|
%
|
|
|
0.2
|
%
|
|
|
1.7
|
%
|
|
|
0.2
|
%
|
|
|
0.4
|
%
|
|
|
0.6
|
%
|
|
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
Source: S&P Global Market Intelligence.
The market area served
by the Bank, characterized primarily as Albany MSA, has a highly developed and diverse economy. Healthcare, defense technology
and education jobs constitute major sources of employment in the Bank’s regional market area. Government jobs are also a
prominent source of employment, as Albany is the capital of the State of New York. Table 2.3 lists the major employers in the Albany
MSA.
|
RP
®
Financial, LC.
|
MARKET AREA
|
|
|
II.8
|
Table 2.3
Pioneer Bank
Market Area Largest Employers
|
Employer
|
|
Industry
|
|
|
|
|
|
St. Peter's Health Partners
|
|
Health care
|
|
Albany Medical Center
|
|
Academic medical center
|
|
Golub Corporation
|
|
Retail, supermarkets
|
|
General Electric
|
|
Gas, steam, wind turbines
|
|
Hannaford Supermarkets
|
|
Supermarkets
|
|
Ellis Medicine
|
|
Medical center network
|
|
Steward Shops
|
|
Convenience stores
|
|
Bechtel Marine Propulsion
|
|
Research and development
|
|
Glen Falls Hospital
|
|
Health network
|
|
Center for Disability Services Holding Corp.
|
|
Disability services
|
Source: alloveralbany.com
Unemployment Trends
Comparative unemployment
rates for the primary market area counties, as well as for the U.S. and New York, are shown in Table 2.4. December 2018 unemployment
rates for the primary market area counties ranged from a low of 3.2% for Saratoga County and Albany County to a high of 4.9% for
Warren County. Comparative unemployment rates for the U.S. and New York equal to 3.7% and 3.8%, respectively. Consistent with the
national and state trends, all of the primary market area counties reported lower unemployment rates for November 2018 compared
to a year ago.
Table 2.4
Pioneer Bank
Unemployment Trends
|
|
|
December, 2017
|
|
|
December, 2018
|
|
|
Region
|
|
Unemployment
|
|
|
Unemployment
|
|
|
|
|
|
|
|
|
|
|
USA
|
|
|
3.9
|
%
|
|
|
3.7
|
%
|
|
New York
|
|
|
4.4
|
%
|
|
|
3.8
|
%
|
|
Saratoga, NY
|
|
|
4.1
|
%
|
|
|
3.2
|
%
|
|
Schenectady, NY
|
|
|
4.5
|
%
|
|
|
3.6
|
%
|
|
Greene, NY
|
|
|
5.6
|
%
|
|
|
4.1
|
%
|
|
Warren, NY
|
|
|
6.5
|
%
|
|
|
4.9
|
%
|
|
Albany, NY
|
|
|
4.0
|
%
|
|
|
3.2
|
%
|
|
Rensselaer, NY
|
|
|
4.3
|
%
|
|
|
3.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Source: S&P Global Market Intelligence.
|
|
|
|
|
|
|
|
|
|
RP
®
Financial, LC.
|
MARKET AREA
|
|
|
II.9
|
Market Area Deposit
Characteristics and Competition
The Bank’s deposit
base is closely tied to the economic fortunes of the Albany MSA and, in particular, the areas that are nearby to one of Pioneer
Bank’s branches. Table 2.5 displays deposit market trends from June 30, 2013 through June 30, 2018 for all commercial bank
and savings institution branches located in the market area counties and the State of New York. Consistent with the State of New
York, commercial banks maintained a larger market share of deposits than savings institutions in all the primary market area counties
with the exception of Greene County. Overall, from June 30, 2013 to June 30, 2018, bank and thrift deposits increased in all of
the primary market area counties.
Table 2.5
Pioneer Bank
Deposit Summary
|
|
|
As of June 30,
|
|
|
|
|
|
|
|
2013
|
|
|
2018
|
|
|
Deposit
|
|
|
|
|
|
|
|
Market
|
|
|
No. of
|
|
|
|
|
|
Market
|
|
|
No. of
|
|
|
Growth Rate
|
|
|
|
|
Deposits
|
|
|
Share
|
|
|
Branches
|
|
|
Deposits
|
|
|
Share
|
|
|
Branches
|
|
|
2013-2018
|
|
|
|
|
(Dollars in Thousands)
|
|
|
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York
|
|
$
|
1,120,318,000
|
|
|
|
100.0
|
%
|
|
|
5,382
|
|
|
$
|
1,647,382,000
|
|
|
|
100.0
|
%
|
|
|
4,956
|
|
|
|
8.0
|
%
|
|
Commercial Banks
|
|
|
1,048,174,000
|
|
|
|
93.6
|
%
|
|
|
4,427
|
|
|
|
1,581,125,000
|
|
|
|
96.0
|
%
|
|
|
4,254
|
|
|
|
8.6
|
%
|
|
Savings Institutions
|
|
|
72,144,000
|
|
|
|
6.4
|
%
|
|
|
947
|
|
|
|
66,257,000
|
|
|
|
4.0
|
%
|
|
|
694
|
|
|
|
-1.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Saratgoga County
|
|
$
|
3,681,000
|
|
|
|
100.0
|
%
|
|
|
85
|
|
|
$
|
4,725,000
|
|
|
|
100.0
|
%
|
|
|
79
|
|
|
|
5.1
|
%
|
|
Commercial Banks
|
|
|
3,105,000
|
|
|
|
84.4
|
%
|
|
|
64
|
|
|
|
4,059,000
|
|
|
|
85.9
|
%
|
|
|
61
|
|
|
|
5.5
|
%
|
|
Savings Institutions
|
|
|
576,000
|
|
|
|
15.6
|
%
|
|
|
21
|
|
|
|
666,000
|
|
|
|
14.1
|
%
|
|
|
18
|
|
|
|
2.9
|
%
|
|
Pioneer Bank
|
|
|
81,079
|
|
|
|
2.2
|
%
|
|
|
4
|
|
|
|
163,384
|
|
|
|
3.5
|
%
|
|
|
4
|
|
|
|
15.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schnectady County
|
|
$
|
2,440,000
|
|
|
|
100.0
|
%
|
|
|
49
|
|
|
$
|
2,770,000
|
|
|
|
100.0
|
%
|
|
|
45
|
|
|
|
2.6
|
%
|
|
Commercial Banks
|
|
|
1,429,000
|
|
|
|
58.6
|
%
|
|
|
31
|
|
|
|
1,707,000
|
|
|
|
61.6
|
%
|
|
|
29
|
|
|
|
3.6
|
%
|
|
Savings Institutions
|
|
|
1,011,000
|
|
|
|
41.4
|
%
|
|
|
18
|
|
|
|
1,063,000
|
|
|
|
38.4
|
%
|
|
|
16
|
|
|
|
1.0
|
%
|
|
Pioneer Bank
|
|
|
90,312
|
|
|
|
3.7
|
%
|
|
|
1
|
|
|
|
131,969
|
|
|
|
4.8
|
%
|
|
|
2
|
|
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greene County
|
|
$
|
1,072,000
|
|
|
|
99.9
|
%
|
|
|
25
|
|
|
$
|
1,615,000
|
|
|
|
100.0
|
%
|
|
|
21
|
|
|
|
8.5
|
%
|
|
Commercial Banks
|
|
|
527,000
|
|
|
|
49.2
|
%
|
|
|
15
|
|
|
|
718,000
|
|
|
|
44.5
|
%
|
|
|
10
|
|
|
|
6.4
|
%
|
|
Savings Institutions
|
|
|
544,000
|
|
|
|
50.7
|
%
|
|
|
10
|
|
|
|
897,000
|
|
|
|
55.5
|
%
|
|
|
11
|
|
|
|
10.5
|
%
|
|
Pioneer Bank
|
|
|
43,241
|
|
|
|
4.0
|
%
|
|
|
2
|
|
|
|
29,976
|
|
|
|
1.9
|
%
|
|
|
2
|
|
|
|
-7.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warren County
|
|
$
|
1,476,000
|
|
|
|
100.0
|
%
|
|
|
32
|
|
|
$
|
1,898,000
|
|
|
|
100.0
|
%
|
|
|
31
|
|
|
|
5.2
|
%
|
|
Commercial Banks
|
|
|
1,418,000
|
|
|
|
96.1
|
%
|
|
|
29
|
|
|
|
1,810,000
|
|
|
|
95.4
|
%
|
|
|
26
|
|
|
|
5.0
|
%
|
|
Savings Institutions
|
|
|
58,000
|
|
|
|
3.9
|
%
|
|
|
3
|
|
|
|
88,000
|
|
|
|
4.6
|
%
|
|
|
5
|
|
|
|
8.7
|
%
|
|
Pioneer Bank
|
|
$
|
0
|
|
|
|
0.0
|
%
|
|
|
0
|
|
|
$
|
14,883
|
|
|
|
0.8
|
%
|
|
|
1
|
|
|
|
NA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albany County
|
|
$
|
14,066,000
|
|
|
|
100.0
|
%
|
|
|
122
|
|
|
$
|
19,375,000
|
|
|
|
100.0
|
%
|
|
|
114
|
|
|
|
6.6
|
%
|
|
Commercial Banks
|
|
|
12,419,000
|
|
|
|
88.3
|
%
|
|
|
84
|
|
|
|
17,898,000
|
|
|
|
92.4
|
%
|
|
|
84
|
|
|
|
7.6
|
%
|
|
Savings Institutions
|
|
|
1,647,000
|
|
|
|
11.7
|
%
|
|
|
38
|
|
|
|
1,477,000
|
|
|
|
7.6
|
%
|
|
|
30
|
|
|
|
-2.2
|
%
|
|
Pioneer Bank
|
|
|
279,232
|
|
|
|
2.0
|
%
|
|
|
7
|
|
|
|
451,390
|
|
|
|
2.3
|
%
|
|
|
9
|
|
|
|
10.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rensselaer County
|
|
$
|
1,822,000
|
|
|
|
100.0
|
%
|
|
|
44
|
|
|
$
|
2,105,000
|
|
|
|
100.0
|
%
|
|
|
36
|
|
|
|
2.9
|
%
|
|
Commercial Banks
|
|
|
1,347,000
|
|
|
|
73.9
|
%
|
|
|
31
|
|
|
|
1,492,000
|
|
|
|
70.9
|
%
|
|
|
25
|
|
|
|
2.1
|
%
|
|
Savings Institutions
|
|
|
475,000
|
|
|
|
26.1
|
%
|
|
|
13
|
|
|
|
613,000
|
|
|
|
29.1
|
%
|
|
|
11
|
|
|
|
5.2
|
%
|
|
Pioneer Bank
|
|
$
|
191,342
|
|
|
|
10.5
|
%
|
|
|
3
|
|
|
$
|
364,047
|
|
|
|
17.3
|
%
|
|
|
4
|
|
|
|
13.7
|
%
|
Source: FDIC
|
RP
®
Financial, LC.
|
MARKET AREA
|
|
|
II.10
|
The Bank maintains
its largest balance of deposits in Albany County, where the Bank is headquartered and maintains its largest branch presence. Based
on June 30, 2018 deposit data, Pioneer Bank’s $451.4 million of deposits provided for a 2.3% market share of bank and thrift
deposits in Albany County. The Bank’s deposit market share in the primary market area counties ranged from 0.8% in Warren
County to 17.3% in Rensselaer County. During the five year period covered in Table 2.5, Pioneer Bank gained deposit market in all
of the primary market area counties with the exception of Greene County.
Competition among financial
institutions in the Bank’s market area is significant. Among the Bank’s competitors are much larger and more diversified
institutions, which have greater resources than maintained by Pioneer Bank. Financial institution competitors in the Bank’s
primary market area include other locally based banks, as well as regional, super regional and money center banks. From a competitive
standpoint, Pioneer Bank has sought to emphasize its community orientation in the markets served by its branches. Table 2.6 lists
the Bank’s largest competitors in the market area counties, based on deposit market share as noted parenthetically.
|
RP
®
Financial, LC.
|
MARKET AREA
|
|
|
II.
11
|
Table 2.6
Pioneer Bank
Market Area Deposit Competitors
|
Location
|
|
Name
|
|
Market Share (%)
|
|
|
Rank
|
|
|
Saratoga, NY
|
|
Adirondack Trust Company (NY)
|
|
|
20.29
|
|
|
|
|
|
|
|
|
Bank of America Corporation (NC)
|
|
|
13.97
|
|
|
|
|
|
|
|
|
KeyCorp (OH)
|
|
|
13.73
|
|
|
|
|
|
|
|
|
Arrow Financial Corp. (NY)
|
|
|
10.65
|
|
|
|
|
|
|
|
|
TrustCo Bank Corp NY (NY)
|
|
|
10.64
|
|
|
|
|
|
|
|
|
Pioneer SB (NY)
|
|
|
3.46
|
|
|
|
9 out of 15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schenectady, NY
|
|
TrustCo Bank Corp NY (NY)
|
|
|
33.62
|
|
|
|
|
|
|
|
|
KeyCorp (OH)
|
|
|
16.84
|
|
|
|
|
|
|
|
|
Bank of America Corporation (NC)
|
|
|
14.73
|
|
|
|
|
|
|
|
|
Glenville Bank Holding Co. (NY)
|
|
|
11.75
|
|
|
|
|
|
|
|
|
NBT Bancorp Inc. (NY)
|
|
|
6.41
|
|
|
|
|
|
|
|
|
Pioneer SB (NY)
|
|
|
4.76
|
|
|
|
6 out of 12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greene, NY
|
|
Greene County Bncp Inc. (MHC) (NY)
|
|
|
72.64
|
|
|
|
|
|
|
|
|
National Bank of Coxsackie (NY)
|
|
|
11.54
|
|
|
|
|
|
|
|
|
KeyCorp (OH)
|
|
|
6.71
|
|
|
|
|
|
|
|
|
TrustCo Bank Corp NY (NY)
|
|
|
4.95
|
|
|
|
|
|
|
|
|
NBT Bancorp Inc. (NY)
|
|
|
2.30
|
|
|
|
|
|
|
|
|
Pioneer SB (NY)
|
|
|
1.86
|
|
|
|
6 out of 6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warren, NY
|
|
Arrow Financial Corp. (NY)
|
|
|
51.86
|
|
|
|
|
|
|
|
|
Toronto - Dominion Bank
|
|
|
20.85
|
|
|
|
|
|
|
|
|
Citizens Financial Group
|
|
|
6.62
|
|
|
|
|
|
|
|
|
KeyCorp (OH)
|
|
|
4.80
|
|
|
|
|
|
|
|
|
NBT Bancorp Inc. (NY)
|
|
|
4.14
|
|
|
|
|
|
|
|
|
Pioneer SB (NY)
|
|
|
0.78
|
|
|
|
10 out of 10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Albany, NY
|
|
KeyCorp (OH)
|
|
|
50.02
|
|
|
|
|
|
|
|
|
Citizens Financial Group Inc. (RI)
|
|
|
20.63
|
|
|
|
|
|
|
|
|
M&T Bank Corp. (NY)
|
|
|
7.21
|
|
|
|
|
|
|
|
|
Bank of America Corporation (NC)
|
|
|
5.95
|
|
|
|
|
|
|
|
|
TrustCo Bank Corp NY (NY)
|
|
|
5.01
|
|
|
|
|
|
|
|
|
Pioneer SB (NY)
|
|
|
2.33
|
|
|
|
6 out of 20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rensselaer, NY
|
|
KeyCorp (OH)
|
|
|
37.04
|
|
|
|
|
|
|
|
|
Pioneer SB (NY)
|
|
|
17.30
|
|
|
|
2 out of 11
|
|
|
|
|
TrustCo Bank Corp NY (NY)
|
|
|
11.81
|
|
|
|
|
|
|
|
|
Citizens Financial Group Inc. (RI)
|
|
|
7.69
|
|
|
|
|
|
|
|
|
M&T Bank Corp. (NY)
|
|
|
7.22
|
|
|
|
|
|
Source: S&P Global Market Intelligence.
|
RP
®
Financial, LC.
|
PEER GROUP ANALYSIS
|
|
|
III.1
|
III. PEER GROUP ANALYSIS
This chapter presents
an analysis of Pioneer Bank’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 Pioneer Bank 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 Pioneer Bank, 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 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 publicly-traded
MHCs with comparable resources, strategies and financial characteristics as Pioneer Bank. However, there are currently only 14
publicly-traded MHCs in total. Accordingly, in deriving a Peer Group comprised of institutions with relatively comparable characteristics
as Pioneer Bank, the companies selected for Pioneer Bank’s Peer Group are all fully-converted companies. The valuation adjustments
applied in the Chapter IV analysis will take into consideration differences between Pioneer Bank’s MHC form of ownership
relative to the fully-converted Peer Group companies. Also included in Chapter IV is a pricing analysis of the publicly-traded
MHCs on a fully-converted basis.
|
RP
®
Financial, LC.
|
PEER GROUP ANALYSIS
|
|
|
III.2
|
From the universe of
publicly-traded thrifts, we selected ten institutions with characteristics similar to those of Pioneer Bank. In the selection process,
we applied three “screens” to the universe of all public companies that were eligible for consideration:
|
|
o
|
Screen #1 Mid-Atlantic institutions with assets between $725 million
and $2.5 billion, tangible equity-to-assets ratios of greater than 7.50% and positive reported and core earnings.
Five companies
met the criteria for Screen #1 and all five were included in the Peer Group: ESSA Bancorp, Inc. of Pennsylvania, PCSB Financial
Corporation of New York, Prudential Bancorp, Inc. of Pennsylvania, Severn Bancorp, Inc. of Maryland and Standard AVB Financial
Corp. of Pennsylvania. Exhibit III-2 provides financial and public market pricing characteristics of all publicly-traded Mid-Atlantic
thrifts.
|
|
|
o
|
Screen #2 New England institutions with assets between $725 million
and $2.5 billion, tangible equity-to-assets ratios of greater than 7.50% and positive reported and core earnings.
Three companies
met the criteria for Screen #2 and all three were included in the Peer Group: Hingham Institution for Savings of Massachusetts,
Wellesley Bancorp, Inc. of Massachusetts and Western New England Bancorp, Inc. of Massachusetts. Exhibit III-3 provides financial
and public market pricing characteristics of all publicly-traded New England thrifts.
|
|
|
o
|
Screen #3 Midwest institutions with assets between $725 million
and $2.5 billion, tangible equity-to-assets ratios of greater than 7.50% and positive reported and core earnings.
Two companies
met the criteria for Screen #3 and both were included in the Peer Group: HMN Financial, Inc. of Minnesota and Waterstone Financial,
Inc. of Wisconsin. Exhibit III-4 provides financial and public market pricing characteristics of all publicly-traded Midwest thrifts.
|
Table 3.1 shows the
general characteristics of each of the ten Peer Group companies and Exhibit III-5 provides summary demographic and deposit market
share data for the primary market areas served by each of the Peer Group companies. While there are expectedly some differences
between the Peer Group companies and Pioneer Bank, we believe that the Peer Group companies, on average, provide a good basis for
valuation subject to valuation adjustments. The following sections present a comparison of Pioneer Bancorp’s financial condition,
income and expense trends, loan composition, interest rate risk and credit risk versus the Peer Group as of the most recent publicly
available date. Comparative data for all publicly-traded thrifts, and publicly-traded New York thrifts have been included in the
Chapter III tables as well.
|
RP
®
Financial, LC.
|
PEER GROUP ANALYSIS
|
|
|
Page
III.3
|
Table 3.1
Peer Group of Publicly-Traded
Thrifts
As of September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February
8, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
Fiscal
|
|
Stock
|
|
|
Market
|
|
|
Ticker
|
|
Financial
Institution
|
|
Exchange
|
|
|
|
Region
|
|
City
|
|
State
|
|
Assets
|
|
|
Offices
|
|
Mth
End
|
|
Price
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($Mil)
|
|
|
|
|
|
|
($)
|
|
|
($Mil)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESSA
|
|
ESSA Bancorp, Inc.
|
|
NASDAQ
|
|
0
|
|
MA
|
|
Stroudsburg
|
|
PA
|
|
$
|
1,834
|
|
|
23
|
|
Sep
|
|
$
|
15.25
|
|
|
$
|
168
|
|
|
HIFS
|
|
Hingham Institution for Savings
|
|
NASDAQ
|
|
0
|
|
NE
|
|
Hingham
|
|
MA
|
|
|
2,370
|
|
|
13
|
|
Dec
|
|
$
|
183.95
|
|
|
$
|
392
|
|
|
HMNF
|
|
HMN Financial, Inc.
|
|
NASDAQ
|
|
0
|
|
MW
|
|
Rochester
|
|
MN
|
|
|
737
|
|
|
14
|
|
Dec
|
|
$
|
19.55
|
|
|
$
|
90
|
|
|
PCSB
|
|
PCSB Financial Corporation
|
|
NASDAQ
|
|
0
|
|
MA
|
|
Yorktown Heights
|
|
NY
|
|
|
1,474
|
|
|
17
|
|
Jun
|
|
$
|
20.70
|
|
|
$
|
338
|
|
|
PBIP
|
|
Prudential Bancorp, Inc.
|
|
NASDAQ
|
|
0
|
|
MA
|
|
Philadelphia
|
|
PA
|
|
|
1,081
|
|
|
11
|
|
Sep
|
|
$
|
18.01
|
|
|
$
|
160
|
|
|
SVBI
|
|
Severn Bancorp, Inc.
|
|
NASDAQ
|
|
0
|
|
MA
|
|
Annapolis
|
|
MD
|
|
|
889
|
|
|
5
|
|
Dec
|
|
$
|
8.85
|
|
|
$
|
113
|
|
|
STND
|
|
Standard AVB Financial Corp.
|
|
NASDAQ
|
|
0
|
|
MA
|
|
Monroeville
|
|
PA
|
|
|
983
|
|
|
19
|
|
Dec
|
|
$
|
30.49
|
|
|
$
|
141
|
|
|
WSBF
|
|
Waterstone Financial, Inc.
|
|
NASDAQ
|
|
0
|
|
MW
|
|
Wauwatosa
|
|
WI
|
|
|
1,919
|
|
|
13
|
|
Dec
|
|
$
|
16.24
|
|
|
$
|
425
|
|
|
WEBK
|
|
Wellesley Bancorp, Inc.
|
|
NASDAQ
|
|
0
|
|
NE
|
|
Wellesley
|
|
MA
|
|
|
837
|
|
|
6
|
|
Dec
|
|
$
|
32.00
|
|
|
$
|
77
|
|
|
WNEB
|
|
Western New England Bancorp, Inc.
|
|
NASDAQ
|
|
0
|
|
NE
|
|
Westfield
|
|
MA
|
|
|
2,151
|
|
|
24
|
|
Dec
|
|
$
|
9.80
|
|
|
$
|
271
|
|
|
|
Source:
|
S&P Global Market Intelligence.
|
|
RP
®
Financial, LC.
|
PEER GROUP ANALYSIS
|
|
|
III.4
|
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 Pioneer Bank’s characteristics is detailed below.
|
|
o
|
ESSA Bancorp, Inc. of Pennsylvania. Comparable due to similar size of branch network, lending diversification
emphasis on commercial real estate loans and similar level of non-performing assets as a percent of assets.
|
|
|
o
|
Hingham Institution for Savings of Massachusetts. Comparable due to similar interest-earning asset
composition, similar return on average assets and lending diversification emphasis on commercial real estate loans.
|
|
|
o
|
HMN Financial, Inc. of Minnesota. Comparable due to similar interest-earning asset, similar interest-bearing
funding composition, similar net interest income to average assets ratio, relatively high earnings contribution from sources of
non-interest operating income, similar combined concentration of mortgage-backed securities and 1-4 family permanent mortgage loans
comprising assets, lending diversification emphasis on commercial real estate loans and similar level of non-performing assets
as a percent of assets.
|
|
|
o
|
PCSB Financial Corporation of New York. Comparable due to similar asset size, similar interest-bearing
funding composition, lending diversification emphasis on commercial real estate loans and similar level of non-performing assets
as a percent of assets.
|
|
|
o
|
Prudential Bancorp, Inc. of Pennsylvania. Comparable due to similar asset size, lending diversification
emphasis on commercial real estate loans and similar level of non-performing assets as a percent of assets.
|
|
|
o
|
Severn Bancorp, Inc. of Maryland. Comparable due to similar interest-earning asset composition,
similar net interest income to average assets ratio, relatively high earnings contribution from sources of non-interest operating
income, similar operating expenses as a percent of average assets and lending diversification emphasis on commercial real estate
loans,
|
|
|
o
|
Standard AVB Financial Corp. of Pennsylvania. Comparable due to similar size of branch network,
similar asset size, similar interest-earning asset composition and lending diversification emphasis on commercial real estate loans.
|
|
|
o
|
Waterstone Financial, Inc. of Wisconsin. Comparable due to similar interest-earning asset composition,
similar return on average assets, relatively high earnings contribution from sources of non-interest operating income and lending
diversification emphasis on commercial real estate loans.
|
|
|
o
|
Wellesley Bancorp, Inc. of Massachusetts.
Comparable due to lending diversification emphasis on commercial real estate loans.
|
|
|
o
|
Western New England Bancorp, Inc. Comparable to similar size of branch network, similar interest-earning
asset composition, lending diversification emphasis on commercial real estate loans and similar level of non-performing assets
as a percent of assets.
|
|
RP
®
Financial, LC.
|
PEER GROUP ANALYSIS
|
|
|
III.5
|
In aggregate, the Peer
Group companies maintained a similar level of tangible equity as the industry average (11.95% of assets versus 11.90% for all public
companies), generated similar earnings as a percent of average assets (0.96% core ROAA versus 0.89% for all public companies),
and earned a slightly higher ROE (8.03% core ROE versus 7.49% for all public companies). Overall, the Peer Group's average P/TB
ratio and average core P/E multiple were lower than the respective averages for all publicly-traded thrifts.
|
|
|
All
|
|
|
|
|
|
|
|
Publicly-Traded
|
|
|
Peer Group
|
|
|
|
|
|
|
|
|
|
|
Financial Characteristics (Averages)
|
|
|
|
|
|
|
|
|
|
Assets ($Mil)
|
|
$
|
4,285
|
|
|
$
|
1,428
|
|
|
Market capitalization ($Mil)
|
|
$
|
619
|
|
|
$
|
218
|
|
|
Tangible equity/assets (%)
|
|
|
11.90
|
%
|
|
|
11.95
|
%
|
|
Core return on average assets (%)
|
|
|
0.89
|
|
|
|
0.96
|
|
|
Core return on average equity (%)
|
|
|
7.49
|
|
|
|
8.03
|
|
|
|
|
|
|
|
|
|
|
|
|
Pricing Ratios (Averages)(1)
|
|
|
|
|
|
|
|
|
|
Core price/earnings (x)
|
|
|
17.00
|
x
|
|
|
14.38
|
x
|
|
Price/tangible book (%)
|
|
|
140.56
|
%
|
|
|
129.23
|
%
|
|
Price/assets (%)
|
|
|
15.02
|
|
|
|
15.54
|
|
(1) Based on market
prices as of February 8, 2019.
Ideally, the Peer Group
companies would be comparable to Pioneer Bank 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 Pioneer Bank, as will be highlighted in the following comparative analysis. Comparative data for all publicly-traded
thrifts and publicly-traded New York thrifts have been included in the Chapter III tables as well.
Financial
Condition
Table 3.2 shows
comparative balance sheet measures for Pioneer Bank and the Peer Group, reflecting the expected similarities and some
differences given the selection procedures outlined above. Pioneer Bank’s and the Peer Group's ratios reflect balances
as of December 31, 2018 and September 30, 2018, respectively. Pioneer Bank’s equity-to-assets ratio of 9.82% was lower
than the Peer Group's average of 12.54%. With the infusion of the net proceeds, the Bank’s pro forma equity-to-assets
ratio will exceed the Peer Group’s equity-to-assets ratio. Tangible equity-to-assets ratios for Pioneer Bank and the
Peer Group equaled 9.04% and 11.95%, respectively. The Bank’s higher 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 Bank’s higher pro forma capitalization may initially depress return on equity. Both Pioneer
Bank’s and the Peer Group's capital ratios reflected capital surpluses with respect to the regulatory
capital requirements.
|
RP
®
Financial, LC.
|
PEER GROUP ANALYSIS
|
|
|
Page
III.6
|
Table 3.2
Balance Sheet
Composition and Growth Rates
Comparable
Institution Analysis
As of September
30, 2018
|
|
|
|
|
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
|
|
|
|
|
|
|
Equivalents
|
|
|
Invest
|
|
|
BOLI
|
|
|
Loans
(1)
|
|
|
Deposits
|
|
|
Funds
|
|
|
Debt
|
|
|
Equity
|
|
|
&
Intang
|
|
|
Equity
|
|
|
Assets
|
|
|
Investments
|
|
|
Loans
|
|
|
Deposits
|
|
|
&Sub
debt
|
|
|
Equity
|
|
|
Equity
|
|
|
Leverage
|
|
|
Risk-Based
|
|
|
Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pioneer
Bank
|
NY
|
|
|
4.39
|
%
|
|
|
8.83
|
%
|
|
|
1.38
|
%
|
|
|
79.95
|
%
|
|
|
86.63
|
%
|
|
|
2.33
|
%
|
|
|
0.00
|
%
|
|
|
9.82
|
%
|
|
|
0.78
|
%
|
|
|
9.04
|
%
|
|
|
8.79
|
%
|
|
|
22.41
|
%
|
|
|
6.76
|
%
|
|
|
6.81
|
%
|
|
|
230.19
|
%
|
|
|
13.87
|
%
|
|
|
11.94
|
%
|
|
|
9.70
|
%
|
|
|
12.04
|
%
|
|
|
13.29
|
%
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Thrifts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
4.66
|
%
|
|
|
13.88
|
%
|
|
|
1.63
|
%
|
|
|
76.31
|
%
|
|
|
74.05
|
%
|
|
|
11.41
|
%
|
|
|
0.46
|
%
|
|
|
12.91
|
%
|
|
|
1.00
|
%
|
|
|
11.90
|
%
|
|
|
7.96
|
%
|
|
|
4.72
|
%
|
|
|
11.81
|
%
|
|
|
9.91
|
%
|
|
|
-5.08
|
%
|
|
|
11.75
|
%
|
|
|
10.42
|
%
|
|
|
11.99
|
%
|
|
|
16.86
|
%
|
|
|
18.02
|
%
|
|
Medians
|
|
|
|
3.19
|
%
|
|
|
10.66
|
%
|
|
|
1.76
|
%
|
|
|
78.14
|
%
|
|
|
75.20
|
%
|
|
|
10.74
|
%
|
|
|
0.00
|
%
|
|
|
11.88
|
%
|
|
|
0.30
|
%
|
|
|
10.78
|
%
|
|
|
5.56
|
%
|
|
|
-3.18
|
%
|
|
|
7.75
|
%
|
|
|
6.19
|
%
|
|
|
-4.30
|
%
|
|
|
2.49
|
%
|
|
|
2.92
|
%
|
|
|
11.40
|
%
|
|
|
15.18
|
%
|
|
|
16.15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
NY Thrifts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
4.93
|
%
|
|
|
13.41
|
%
|
|
|
1.28
|
%
|
|
|
77.06
|
%
|
|
|
75.76
|
%
|
|
|
10.87
|
%
|
|
|
0.67
|
%
|
|
|
11.40
|
%
|
|
|
1.18
|
%
|
|
|
10.22
|
%
|
|
|
1.28
|
%
|
|
|
18.09
|
%
|
|
|
1.28
|
%
|
|
|
3.01
|
%
|
|
|
-19.68
|
%
|
|
|
0.39
|
%
|
|
|
0.08
|
%
|
|
|
11.12
|
%
|
|
|
16.78
|
%
|
|
|
18.18
|
%
|
|
Medians
|
|
|
|
3.38
|
%
|
|
|
10.66
|
%
|
|
|
1.62
|
%
|
|
|
77.43
|
%
|
|
|
78.20
|
%
|
|
|
5.78
|
%
|
|
|
0.00
|
%
|
|
|
9.77
|
%
|
|
|
0.44
|
%
|
|
|
8.71
|
%
|
|
|
1.02
|
%
|
|
|
-0.21
|
%
|
|
|
5.94
|
%
|
|
|
4.31
|
%
|
|
|
-13.10
|
%
|
|
|
2.76
|
%
|
|
|
2.87
|
%
|
|
|
9.60
|
%
|
|
|
14.06
|
%
|
|
|
15.70
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
5.43
|
%
|
|
|
15.33
|
%
|
|
|
1.74
|
%
|
|
|
74.75
|
%
|
|
|
74.35
|
%
|
|
|
11.75
|
%
|
|
|
0.35
|
%
|
|
|
12.54
|
%
|
|
|
0.59
|
%
|
|
|
11.95
|
%
|
|
|
6.33
|
%
|
|
|
8.70
|
%
|
|
|
5.86
|
%
|
|
|
10.21
|
%
|
|
|
-10.46
|
%
|
|
|
1.73
|
%
|
|
|
1.87
|
%
|
|
|
11.85
|
%
|
|
|
16.20
|
%
|
|
|
17.10
|
%
|
|
Medians
|
|
|
|
4.09
|
%
|
|
|
11.84
|
%
|
|
|
1.86
|
%
|
|
|
77.90
|
%
|
|
|
74.32
|
%
|
|
|
12.46
|
%
|
|
|
0.00
|
%
|
|
|
11.03
|
%
|
|
|
0.29
|
%
|
|
|
10.68
|
%
|
|
|
3.98
|
%
|
|
|
-0.94
|
%
|
|
|
6.07
|
%
|
|
|
6.40
|
%
|
|
|
-12.89
|
%
|
|
|
0.36
|
%
|
|
|
1.10
|
%
|
|
|
11.05
|
%
|
|
|
14.95
|
%
|
|
|
15.66
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESSA
|
|
ESSA Bancorp, Inc.
|
|
PA
|
|
|
2.40
|
%
|
|
|
20.96
|
%
|
|
|
2.11
|
%
|
|
|
71.17
|
%
|
|
|
72.90
|
%
|
|
|
16.28
|
%
|
|
|
0.00
|
%
|
|
|
9.77
|
%
|
|
|
0.83
|
%
|
|
|
8.94
|
%
|
|
|
2.72
|
%
|
|
|
-4.04
|
%
|
|
|
5.53
|
%
|
|
|
4.86
|
%
|
|
|
-4.21
|
%
|
|
|
-1.94
|
%
|
|
|
-1.84
|
%
|
|
|
9.28
|
%
|
|
|
12.70
|
%
|
|
|
13.59
|
%
|
|
HIFS
|
|
Hingham Institution for Savings
|
|
MA
|
|
|
12.51
|
%
|
|
|
2.59
|
%
|
|
|
0.52
|
%
|
|
|
83.38
|
%
|
|
|
72.36
|
%
|
|
|
18.23
|
%
|
|
|
0.00
|
%
|
|
|
8.85
|
%
|
|
|
0.00
|
%
|
|
|
8.85
|
%
|
|
|
7.02
|
%
|
|
|
-12.76
|
%
|
|
|
11.67
|
%
|
|
|
18.40
|
%
|
|
|
-24.90
|
%
|
|
|
16.71
|
%
|
|
|
16.71
|
%
|
|
|
9.05
|
%
|
|
|
12.49
|
%
|
|
|
13.30
|
%
|
|
HMNF
|
|
HMN Financial, Inc.
|
|
MN
|
|
|
6.52
|
%
|
|
|
10.91
|
%
|
|
|
0.00
|
%
|
|
|
79.76
|
%
|
|
|
88.34
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
10.85
|
%
|
|
|
0.15
|
%
|
|
|
10.70
|
%
|
|
|
2.91
|
%
|
|
|
17.11
|
%
|
|
|
0.44
|
%
|
|
|
3.57
|
%
|
|
|
NA
|
|
|
|
-0.79
|
%
|
|
|
-0.68
|
%
|
|
|
10.49
|
%
|
|
|
12.66
|
%
|
|
|
13.91
|
%
|
|
PCSB
|
|
PCSB Financial Corporation
|
|
NY
|
|
|
4.63
|
%
|
|
|
30.10
|
%
|
|
|
1.62
|
%
|
|
|
61.38
|
%
|
|
|
78.20
|
%
|
|
|
1.28
|
%
|
|
|
0.00
|
%
|
|
|
19.66
|
%
|
|
|
0.44
|
%
|
|
|
19.22
|
%
|
|
|
4.45
|
%
|
|
|
-0.21
|
%
|
|
|
7.75
|
%
|
|
|
6.60
|
%
|
|
|
-47.38
|
%
|
|
|
2.76
|
%
|
|
|
2.87
|
%
|
|
|
13.80
|
%
|
|
|
21.17
|
%
|
|
|
21.68
|
%
|
|
PBIP
|
|
Prudential Bancorp, Inc.
|
|
PA
|
|
|
4.60
|
%
|
|
|
34.56
|
%
|
|
|
2.65
|
%
|
|
|
55.77
|
%
|
|
|
72.54
|
%
|
|
|
14.31
|
%
|
|
|
0.00
|
%
|
|
|
11.88
|
%
|
|
|
0.62
|
%
|
|
|
11.26
|
%
|
|
|
20.19
|
%
|
|
|
53.85
|
%
|
|
|
5.53
|
%
|
|
|
23.31
|
%
|
|
|
35.31
|
%
|
|
|
-5.71
|
%
|
|
|
-5.90
|
%
|
|
|
11.86
|
%
|
|
|
18.76
|
%
|
|
|
19.59
|
%
|
|
SVBI
|
|
Severn Bancorp, Inc.
|
|
MD
|
|
|
11.26
|
%
|
|
|
6.63
|
%
|
|
|
0.58
|
%
|
|
|
77.66
|
%
|
|
|
78.06
|
%
|
|
|
8.26
|
%
|
|
|
2.32
|
%
|
|
|
10.78
|
%
|
|
|
0.12
|
%
|
|
|
10.66
|
%
|
|
|
10.98
|
%
|
|
|
46.93
|
%
|
|
|
6.60
|
%
|
|
|
16.96
|
%
|
|
|
-17.49
|
%
|
|
|
4.20
|
%
|
|
|
4.24
|
%
|
|
|
13.55
|
%
|
|
|
16.85
|
%
|
|
|
18.10
|
%
|
|
STND
|
|
Standard AVB Financial Corp.
|
|
PA
|
|
|
3.57
|
%
|
|
|
15.65
|
%
|
|
|
2.28
|
%
|
|
|
74.08
|
%
|
|
|
73.82
|
%
|
|
|
11.92
|
%
|
|
|
0.00
|
%
|
|
|
13.77
|
%
|
|
|
2.90
|
%
|
|
|
10.87
|
%
|
|
|
-0.28
|
%
|
|
|
10.60
|
%
|
|
|
-2.59
|
%
|
|
|
1.93
|
%
|
|
|
-12.89
|
%
|
|
|
1.52
|
%
|
|
|
2.96
|
%
|
|
|
11.10
|
%
|
|
|
15.94
|
%
|
|
|
16.63
|
%
|
|
WSBF
|
|
Waterstone Financial, Inc.
|
|
WI
|
|
|
3.07
|
%
|
|
|
10.35
|
%
|
|
|
3.50
|
%
|
|
|
80.08
|
%
|
|
|
52.33
|
%
|
|
|
23.50
|
%
|
|
|
0.00
|
%
|
|
|
21.08
|
%
|
|
|
0.03
|
%
|
|
|
21.05
|
%
|
|
|
3.52
|
%
|
|
|
-17.43
|
%
|
|
|
8.08
|
%
|
|
|
4.98
|
%
|
|
|
3.59
|
%
|
|
|
-1.77
|
%
|
|
|
-1.78
|
%
|
|
|
19.92
|
%
|
|
|
26.10
|
%
|
|
|
27.01
|
%
|
|
WEBK
|
|
Wellesley Bancorp, Inc.
|
|
MA
|
|
|
2.90
|
%
|
|
|
8.74
|
%
|
|
|
0.92
|
%
|
|
|
86.12
|
%
|
|
|
80.12
|
%
|
|
|
10.74
|
%
|
|
|
1.17
|
%
|
|
|
7.53
|
%
|
|
|
0.00
|
%
|
|
|
7.53
|
%
|
|
|
8.71
|
%
|
|
|
-5.35
|
%
|
|
|
11.12
|
%
|
|
|
15.30
|
%
|
|
|
-19.65
|
%
|
|
|
6.74
|
%
|
|
|
6.74
|
%
|
|
|
8.49
|
%
|
|
|
11.41
|
%
|
|
|
12.46
|
%
|
|
WNEB
|
|
Western New England Bancorp, Inc.
|
|
MA
|
|
|
2.88
|
%
|
|
|
12.78
|
%
|
|
|
3.20
|
%
|
|
|
78.14
|
%
|
|
|
74.82
|
%
|
|
|
12.99
|
%
|
|
|
0.00
|
%
|
|
|
11.22
|
%
|
|
|
0.76
|
%
|
|
|
10.46
|
%
|
|
|
3.07
|
%
|
|
|
-1.68
|
%
|
|
|
4.48
|
%
|
|
|
6.19
|
%
|
|
|
-6.53
|
%
|
|
|
-4.46
|
%
|
|
|
-4.62
|
%
|
|
|
10.99
|
%
|
|
|
13.95
|
%
|
|
|
14.69
|
%
|
(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)
2019 by RP
®
Financial, LC.
|
RP
®
Financial, LC.
|
PEER GROUP ANALYSIS
|
|
|
III.7
|
The interest-earning
asset compositions for Pioneer Bank and the Peer Group were somewhat similar, with loans constituting the bulk of interest-earning
assets for both Pioneer Bank and the Peer Group. Pioneer Bank’s loans-to-assets ratio of 79.95% was higher than the Peer
Group ratio of 74.75%. Comparatively, Pioneer Bank’s cash and investments-to-assets ratio of 13.22% was lower than the comparable
Peer Group ratio of 20.76%. Overall, Pioneer Bank's interest-earning assets amounted to 93.17% of assets, which was less than the
Peer Group ratio of 95.51%. Pioneer Bank’s non-interest earning assets included BOLI equal to 1.38% of assets and goodwill/intangibles
equal to 0.78% of assets, while the Peer Group maintained BOLI equal to 1.74% of assets and goodwill/intangibles equal to 0.59%
of assets.
Pioneer Bank’s
funding liabilities reflected a funding composition that was more weighted toward deposits compared to the Peer Group's funding
composition. Pioneer Bank’s deposits equaled 86.63% of assets, as compared to the Peer Group’s ratio of 74.35%. Comparatively,
Pioneer Bank maintained a lower level of borrowings to fund assets, as indicated by borrowings-to-assets ratios of 2.33% and 12.10%
for Pioneer Bank and the Peer Group, respectively. Total interest-bearing liabilities maintained by Pioneer Bank and the Peer Group,
as a percent of assets, equaled 88.96% and 86.45%, respectively.
A key measure of balance
sheet strength for a thrift institution is its interest-earnings assets/interest-bearing liabilities (“IEA/IBL”) ratio.
Presently, Pioneer Bank’s IEA/IBL ratio is lower than the Peer Group’s ratio, based on IEA/IBL ratios of 104.73% and
110.48%, respectively. The additional capital realized from stock proceeds should serve to provide the Bank with an IEA/IBL ratio
that is more comparable to 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. Pioneer Bank’s growth rates are based on the eighteen months ended December 31, 2018, annualized,
whereas the growth rates for the Peer Group are based on the twelve months ended September 30, 2018. Pioneer Bank recorded an 8.79%
increase in assets, versus asset growth of 6.33% recorded by the Peer Group. Asset growth for Pioneer Bank was driven by a 6.76%
increase in loans and a 22.41% increase in cash and investments. Comparatively, asset growth for the Peer Group was driven by a
5.86% increase in loans and was supplemented with an 8.70% increase in cash and investments.
|
RP
®
Financial, LC.
|
PEER GROUP ANALYSIS
|
|
|
III.8
|
Asset growth for Pioneer
Bank was funded by a 6.81% increase in deposits and a 230.19% increase in borrowings. Asset growth for the Peer Group was primarily
funded through deposit growth of 10.21%, which also funded a 10.46% reduction in the Peer Group’s borrowings. Pioneer Bank’s
tangible equity growth rate equaled 11.94%, which was attributable to retention of earnings. Comparatively, the Peer Group’s
tangible capital growth rate equaled 1.87%. The Bank’s post-conversion capital growth rate will initially be constrained
by maintenance of a higher pro forma capital position. Additionally, implementation of any stock repurchases and dividend payments,
pursuant to regulatory limitations and guidelines, could also slow the Bank’s capital growth rate in the longer term following
the stock offering.
Income and Expense Components
Table 3.3 displays
statements of operations for Pioneer Bank and the Peer Group. Pioneer Bank’s ratios are based on earnings for the twelve
months ended December 31, 2018 and the Peer Group’s ratios are based on earnings for the twelve months ended September 30,
2018. Pioneer Bank and the Peer Group reported net income to average assets ratios of 1.30% and 0.81%, respectively. Pioneer Bank’s
higher return was realized through a higher net interest income ratio and a lower effective tax rate, which were partially offset
by the Peer Group’s higher ratio of non-interest operating income and lower ratios for loan loss provisions and operating
expenses.
The Bank’s higher
net interest income to average assets ratio was realized through both a higher interest income ratio and a lower interest expense
ratio. The Bank’s higher interest income ratio was supported by maintaining a higher overall yield earned on interest-earning
assets (4.26% versus 3.91% for the Peer Group), which was partially offset by the Peer Group’s higher concentration of assets
maintained in interest-earning assets. Similarly, the Bank’s lower interest expense ratio was supported by maintaining a
lower cost of funds (0.46% versus 0.77% for the Peer Group), which was partially by the Peer Group’s lower level of interest-bearing
liabilities funding assets. Overall, Pioneer Bank and the Peer Group reported net interest income to average assets ratios of 3.62%
and 3.01%, respectively.
|
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
September 30, 2018
|
|
|
|
|
|
|
|
Net
Interest Income
|
|
|
|
|
|
Non-Interest
Income
|
|
|
|
|
|
Non-Op.
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)
|
|
|
(%)
|
|
|
Pioneer Bank
|
NY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
|
1.30
|
%
|
|
|
3.91
|
%
|
|
|
0.29
|
%
|
|
|
3.62
|
%
|
|
|
0.17
|
%
|
|
|
3.45
|
%
|
|
|
0.00
|
%
|
|
|
1.03
|
%
|
|
|
2.86
|
%
|
|
|
0.01
|
%
|
|
|
0.00
|
%
|
|
|
0.33
|
%
|
|
|
4.26
|
%
|
|
|
0.46
|
%
|
|
|
3.80
|
%
|
|
$
|
5,027
|
|
|
|
20.14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Thrifts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
0.78
|
%
|
|
|
3.88
|
%
|
|
|
0.81
|
%
|
|
|
3.07
|
%
|
|
|
0.08
|
%
|
|
|
3.00
|
%
|
|
|
0.43
|
%
|
|
|
0.53
|
%
|
|
|
2.78
|
%
|
|
|
0.02
|
%
|
|
|
0.00
|
%
|
|
|
0.40
|
%
|
|
|
3.90
|
%
|
|
|
0.63
|
%
|
|
|
3.27
|
%
|
|
$
|
7,738
|
|
|
|
36.57
|
%
|
|
Medians
|
|
|
|
0.75
|
%
|
|
|
3.70
|
%
|
|
|
0.87
|
%
|
|
|
2.97
|
%
|
|
|
0.07
|
%
|
|
|
2.90
|
%
|
|
|
0.02
|
%
|
|
|
0.41
|
%
|
|
|
2.63
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.40
|
%
|
|
|
3.87
|
%
|
|
|
0.58
|
%
|
|
|
3.26
|
%
|
|
$
|
6,173
|
|
|
|
34.48
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All NY Thrifts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
|
0.67
|
%
|
|
|
3.57
|
%
|
|
|
0.85
|
%
|
|
|
2.72
|
%
|
|
|
0.05
|
%
|
|
|
2.67
|
%
|
|
|
0.12
|
%
|
|
|
0.35
|
%
|
|
|
2.48
|
%
|
|
|
0.24
|
%
|
|
|
0.00
|
%
|
|
|
0.22
|
%
|
|
|
3.92
|
%
|
|
|
0.61
|
%
|
|
|
3.31
|
%
|
|
$
|
8,752
|
|
|
|
38.10
|
%
|
|
Medians
|
|
|
|
|
0.85
|
%
|
|
|
3.62
|
%
|
|
|
0.92
|
%
|
|
|
2.71
|
%
|
|
|
0.02
|
%
|
|
|
2.70
|
%
|
|
|
0.00
|
%
|
|
|
0.37
|
%
|
|
|
2.23
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.23
|
%
|
|
|
3.92
|
%
|
|
|
0.60
|
%
|
|
|
3.27
|
%
|
|
$
|
6,054
|
|
|
|
33.69
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
|
0.81
|
%
|
|
|
3.83
|
%
|
|
|
0.82
|
%
|
|
|
3.01
|
%
|
|
|
0.05
|
%
|
|
|
2.96
|
%
|
|
|
0.67
|
%
|
|
|
0.39
|
%
|
|
|
2.74
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.48
|
%
|
|
|
3.91
|
%
|
|
|
0.77
|
%
|
|
|
3.14
|
%
|
|
$
|
8,842
|
|
|
|
38.31
|
%
|
|
Medians
|
|
|
|
|
0.71
|
%
|
|
|
3.80
|
%
|
|
|
0.92
|
%
|
|
|
2.92
|
%
|
|
|
0.06
|
%
|
|
|
2.91
|
%
|
|
|
0.01
|
%
|
|
|
0.42
|
%
|
|
|
2.23
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.43
|
%
|
|
|
3.89
|
%
|
|
|
0.65
|
%
|
|
|
3.13
|
%
|
|
$
|
6,723
|
|
|
|
39.59
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESSA
|
|
ESSA Bancorp, Inc.
|
|
PA
|
|
|
0.36
|
%
|
|
|
3.55
|
%
|
|
|
0.90
|
%
|
|
|
2.66
|
%
|
|
|
0.22
|
%
|
|
|
2.44
|
%
|
|
|
0.00
|
%
|
|
|
0.42
|
%
|
|
|
2.17
|
%
|
|
|
-0.02
|
%
|
|
|
0.00
|
%
|
|
|
0.31
|
%
|
|
|
3.83
|
%
|
|
|
0.43
|
%
|
|
|
3.40
|
%
|
|
$
|
6,597
|
|
|
|
46.45
|
%
|
|
HIFS
|
|
Hingham Institution for Savings
|
|
MA
|
|
|
1.42
|
%
|
|
|
3.99
|
%
|
|
|
1.09
|
%
|
|
|
2.90
|
%
|
|
|
0.06
|
%
|
|
|
2.83
|
%
|
|
|
0.00
|
%
|
|
|
0.06
|
%
|
|
|
0.87
|
%
|
|
|
0.06
|
%
|
|
|
0.00
|
%
|
|
|
0.66
|
%
|
|
|
4.06
|
%
|
|
|
1.33
|
%
|
|
|
2.73
|
%
|
|
$
|
23,706
|
|
|
|
31.72
|
%
|
|
HMNF
|
|
HMN Financial, Inc.
|
|
MN
|
|
|
0.87
|
%
|
|
|
4.07
|
%
|
|
|
0.28
|
%
|
|
|
3.79
|
%
|
|
|
-0.06
|
%
|
|
|
3.85
|
%
|
|
|
0.31
|
%
|
|
|
0.76
|
%
|
|
|
3.50
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.54
|
%
|
|
|
4.31
|
%
|
|
|
0.66
|
%
|
|
|
3.65
|
%
|
|
$
|
4,051
|
|
|
|
38.47
|
%
|
|
PCSB
|
|
PCSB Financial Corporation
|
|
NY
|
|
|
0.50
|
%
|
|
|
3.41
|
%
|
|
|
0.49
|
%
|
|
|
2.92
|
%
|
|
|
0.02
|
%
|
|
|
2.90
|
%
|
|
|
0.00
|
%
|
|
|
0.17
|
%
|
|
|
2.23
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.34
|
%
|
|
|
3.72
|
%
|
|
|
0.63
|
%
|
|
|
3.09
|
%
|
|
$
|
8,706
|
|
|
|
40.71
|
%
|
|
PBIP
|
|
Prudential Bancorp, Inc.
|
|
PA
|
|
|
0.72
|
%
|
|
|
3.57
|
%
|
|
|
1.04
|
%
|
|
|
2.53
|
%
|
|
|
0.08
|
%
|
|
|
2.45
|
%
|
|
|
0.00
|
%
|
|
|
0.29
|
%
|
|
|
1.60
|
%
|
|
|
-0.04
|
%
|
|
|
0.00
|
%
|
|
|
0.38
|
%
|
|
|
3.29
|
%
|
|
|
0.07
|
%
|
|
|
3.22
|
%
|
|
$
|
13,505
|
|
|
|
34.38
|
%
|
|
SVBI
|
|
Severn Bancorp, Inc.
|
|
MD
|
|
|
0.69
|
%
|
|
|
4.42
|
%
|
|
|
0.99
|
%
|
|
|
3.43
|
%
|
|
|
-0.04
|
%
|
|
|
3.47
|
%
|
|
|
0.29
|
%
|
|
|
0.68
|
%
|
|
|
3.11
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.63
|
%
|
|
|
3.62
|
%
|
|
|
0.45
|
%
|
|
|
3.17
|
%
|
|
$
|
5,098
|
|
|
|
47.70
|
%
|
|
STND
|
|
Standard AVB Financial Corp.
|
|
PA
|
|
|
0.86
|
%
|
|
|
3.72
|
%
|
|
|
0.70
|
%
|
|
|
3.01
|
%
|
|
|
0.07
|
%
|
|
|
2.95
|
%
|
|
|
0.02
|
%
|
|
|
0.42
|
%
|
|
|
2.23
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.30
|
%
|
|
|
3.77
|
%
|
|
|
1.16
|
%
|
|
|
2.61
|
%
|
|
$
|
6,173
|
|
|
|
25.59
|
%
|
|
WSBF
|
|
Waterstone Financial, Inc.
|
|
WI
|
|
|
1.52
|
%
|
|
|
3.87
|
%
|
|
|
0.95
|
%
|
|
|
2.92
|
%
|
|
|
-0.06
|
%
|
|
|
2.97
|
%
|
|
|
6.10
|
%
|
|
|
0.41
|
%
|
|
|
7.21
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.76
|
%
|
|
|
4.40
|
%
|
|
|
1.43
|
%
|
|
|
2.98
|
%
|
|
$
|
1,966
|
|
|
|
33.21
|
%
|
|
WEBK
|
|
Wellesley Bancorp, Inc.
|
|
MA
|
|
|
0.57
|
%
|
|
|
3.98
|
%
|
|
|
0.96
|
%
|
|
|
3.01
|
%
|
|
|
0.09
|
%
|
|
|
2.92
|
%
|
|
|
0.01
|
%
|
|
|
0.27
|
%
|
|
|
2.23
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.40
|
%
|
|
|
4.10
|
%
|
|
|
0.41
|
%
|
|
|
3.69
|
%
|
|
$
|
11,774
|
|
|
|
41.61
|
%
|
|
WNEB
|
|
Western New England Bancorp, Inc.
|
|
MA
|
|
|
0.59
|
%
|
|
|
3.74
|
%
|
|
|
0.84
|
%
|
|
|
2.90
|
%
|
|
|
0.10
|
%
|
|
|
2.80
|
%
|
|
|
0.00
|
%
|
|
|
0.42
|
%
|
|
|
2.20
|
%
|
|
|
0.01
|
%
|
|
|
0.00
|
%
|
|
|
0.45
|
%
|
|
|
3.96
|
%
|
|
|
1.12
|
%
|
|
|
2.84
|
%
|
|
$
|
6,848
|
|
|
|
43.24
|
%
|
(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) 2019 by RP
®
Financial, LC.
|
RP
®
Financial, LC.
|
PEER GROUP ANALYSIS
|
|
|
III.10
|
In another key area
of core earnings strength, the Bank maintained a slightly higher level of operating expenses than the Peer Group. For the period
covered in Table 3.3, the Bank and the Peer Group reported operating expense to average assets ratios of 2.86% and 2.74%, respectively.
The Bank’s slightly higher operating expense ratio is indicative of its greater degree of diversification of products and
services which generate sources of non-interest operating, including largely off-balance sheet activities related to its wealth
management and insurance operations. Consistent with the Bank’s higher operating expense ratio, Pioneer Bank maintained a
comparatively higher number of employees relative to its asset size. Assets per full time equivalent employee equaled $5.0 million
for the Bank, versus a comparable measure of $8.8 million for the Peer Group. On a post-offering basis, the Bank’s operating
expenses can be expected to increase with the addition of stock benefit plans and certain expenses that result from being a publicly-traded
company, with such expenses already impacting the Peer Group's operating expenses. At the same time, Pioneer Bank’s capacity
to leverage operating expenses will exceed the Peer Group’s leverage capacity following the increase in capital realized
from the infusion of net stock proceeds.
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 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 Bank’s earnings were more favorable than the Peer Group’s.
Expense coverage ratios for Pioneer Bank and the Peer Group equaled 1.27x and 1.10x, respectively.
Sources of non-interest
operating income provided a slightly larger contribution to the Peer Group’s earnings, with such income amounting to 1.03%
and 1.06% of Pioneer Bank’s and the Peer Group’s average assets, respectively. Taking non-interest operating income
into account in comparing the Bank’s and the Peer Group's earnings, Pioneer Bank’s efficiency ratio (operating expenses,
as a percent of the sum of non-interest operating income and net interest income) of 61.51% was more favorable than the Peer Group's
efficiency ratio of 67.32%.
Loan loss provisions
had a slightly larger impact on Pioneer Bank’s earnings, with loan loss provisions established by Pioneer Bank equaling 0.17%
of average assets. Comparatively, the Peer Group recorded loan loss provisions equal to 0.05% of average assets.
Net non-operating gains
and losses equaled net gains of 0.01% of average assets for Pioneer Bank, versus no impact on the Peer Group’s earnings.
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, particularly to the extent that such gains and losses result from the sale of investments
or other assets that are not considered to be part of an institution’s core operations. Extraordinary items were not a material
factor in either Pioneer Bank’s or the Peer Group's earnings.
|
RP
®
Financial, LC.
|
PEER GROUP ANALYSIS
|
|
|
III.11
|
Taxes had a less significant
impact on Pioneer Bank’s earnings, as Pioneer Bank and the Peer Group posted effective tax rates of 20.14% and 38.31%, respectively.
As indicated in the prospectus, Pioneer Bank’s effective marginal tax rate is equal to 26.00%.
Loan
Composition
Table 3.4 presents
data related to Pioneer Bank’s and the Peer Group’s loan portfolio compositions (including the investment in mortgage-backed
securities). Pioneer Bank’s loan portfolio composition reflected a lower combined concentration of 1-4 family permanent mortgage
loans and mortgage-backed securities in comparison to the Peer Group (21.82% of assets versus 40.95% for the Peer Group), as the
Peer Group had higher concentrations of both 1-4 family loans and mortgage-backed securities. Loan servicing intangibles constituted
a very minor balance sheet item for both Pioneer Bank and the Peer Group ($263,000 versus $460,000 for the Peer Group).
Overall, diversification
into higher risk and higher yielding types of lending was more significant for Pioneer Bank, which was primarily attributable to
Pioneer Bank’s significantly higher concentration of commercial business loans (14.24% of assets versus 4.47% for the Peer
Group). Commercial real estate loans constituted the most significant type of lending diversification for both Pioneer Bank and
the Peer Group (24.54% of assets versus 19.79% for the Peer Group). The Bank also maintained higher concentrations of consumer
loans and construction/land loans, while the Peer Group maintained a higher concentration of multi-family loans. In total, construction/land,
commercial real estate, multi-family, commercial business and consumer loans comprised 59.09% and 38.30% of Pioneer Bank’s
and the Peer Group’s assets, respectively. Overall, Pioneer Bank’s asset composition provided for a higher risk weighted
assets-to-assets ratio of 81.50%, versus a comparable Peer Group ratio of 72.08%.
Interest Rate Risk
Table 3.5 reflects
various key ratios highlighting the relative interest rate risk exposure of Pioneer Bank versus the Peer Group. In terms of balance
sheet composition, Pioneer Bank’s interest rate risk characteristics were considered to be less favorable than the comparable
measures for the Peer Group. Most notably, Pioneer Bank’s tangible equity-to-assets ratio and IEA/IBL ratio were lower than
the comparable Peer Group ratios. Additionally, Pioneer Bank maintained a slightly higher ratio of non-interest earning assets
as a percent of assets. On a pro forma basis, the infusion of stock proceeds should serve to provide Pioneer Bank with more comparable
balance sheet interest rate risk characteristics as maintained by the Peer Group, as the result of the increases that will be realized
in the Bank’s equity-to-assets and IEA/IBL ratios following the infusion of stock proceeds.
|
RP
®
Financial, LC.
|
PEER GROUP ANALYSIS
|
|
|
Page
III.12
|
Table 3.4
Loan Portfolio Composition
and Related Information
Comparable Institution
Analysis
As of September 30, 2018
|
|
|
|
|
|
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)
|
|
|
Pioneer Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
NY
|
|
|
|
0.08
|
%
|
|
|
21.74
|
%
|
|
|
7.44
|
%
|
|
|
4.95
|
%
|
|
|
24.54
|
%
|
|
|
14.24
|
%
|
|
|
7.92
|
%
|
|
|
81.50
|
%
|
|
$
|
263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
|
|
|
6.07
|
%
|
|
|
34.88
|
%
|
|
|
6.37
|
%
|
|
|
7.67
|
%
|
|
|
19.79
|
%
|
|
|
4.47
|
%
|
|
|
1.17
|
%
|
|
|
72.08
|
%
|
|
$
|
460
|
|
|
Medians
|
|
|
|
|
|
|
4.30
|
%
|
|
|
34.60
|
%
|
|
|
5.05
|
%
|
|
|
3.91
|
%
|
|
|
17.65
|
%
|
|
|
3.60
|
%
|
|
|
0.11
|
%
|
|
|
73.40
|
%
|
|
$
|
254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESSA Bancorp, Inc.
|
|
|
PA
|
|
|
|
0.00
|
%
|
|
|
36.36
|
%
|
|
|
3.71
|
%
|
|
|
2.74
|
%
|
|
|
14.39
|
%
|
|
|
0.00
|
%
|
|
|
7.91
|
%
|
|
|
72.40
|
%
|
|
$
|
206
|
|
|
Hingham Institution for Savings
|
|
|
MA
|
|
|
|
0.00
|
%
|
|
|
43.88
|
%
|
|
|
5.42
|
%
|
|
|
17.08
|
%
|
|
|
17.55
|
%
|
|
|
0.02
|
%
|
|
|
0.02
|
%
|
|
|
70.85
|
%
|
|
$
|
0
|
|
|
HMN Financial, Inc.
|
|
|
MN
|
|
|
|
1.11
|
%
|
|
|
21.85
|
%
|
|
|
8.21
|
%
|
|
|
4.59
|
%
|
|
|
31.71
|
%
|
|
|
10.74
|
%
|
|
|
3.09
|
%
|
|
|
82.21
|
%
|
|
$
|
1,845
|
|
|
PCSB Financial Corporation
|
|
|
NY
|
|
|
|
16.80
|
%
|
|
|
19.52
|
%
|
|
|
1.99
|
%
|
|
|
6.44
|
%
|
|
|
29.42
|
%
|
|
|
3.39
|
%
|
|
|
0.02
|
%
|
|
|
65.12
|
%
|
|
$
|
0
|
|
|
Prudential Bancorp, Inc.
|
|
|
PA
|
|
|
|
18.29
|
%
|
|
|
29.85
|
%
|
|
|
9.79
|
%
|
|
|
3.17
|
%
|
|
|
11.04
|
%
|
|
|
2.34
|
%
|
|
|
0.09
|
%
|
|
|
60.80
|
%
|
|
$
|
0
|
|
|
Severn Bancorp, Inc.
|
|
|
MD
|
|
|
|
2.95
|
%
|
|
|
32.84
|
%
|
|
|
14.59
|
%
|
|
|
0.78
|
%
|
|
|
26.33
|
%
|
|
|
3.82
|
%
|
|
|
0.21
|
%
|
|
|
74.39
|
%
|
|
$
|
482
|
|
|
Standard AVB Financial Corp.
|
|
|
PA
|
|
|
|
5.76
|
%
|
|
|
46.12
|
%
|
|
|
1.77
|
%
|
|
|
3.44
|
%
|
|
|
17.76
|
%
|
|
|
4.54
|
%
|
|
|
0.13
|
%
|
|
|
67.30
|
%
|
|
$
|
461
|
|
|
Waterstone Financial, Inc.
|
|
|
WI
|
|
|
|
5.65
|
%
|
|
|
36.54
|
%
|
|
|
0.47
|
%
|
|
|
30.62
|
%
|
|
|
11.63
|
%
|
|
|
1.73
|
%
|
|
|
0.02
|
%
|
|
|
76.20
|
%
|
|
$
|
1,212
|
|
|
Wellesley Bancorp, Inc.
|
|
|
MA
|
|
|
|
1.84
|
%
|
|
|
49.25
|
%
|
|
|
13.04
|
%
|
|
|
4.06
|
%
|
|
|
13.83
|
%
|
|
|
6.81
|
%
|
|
|
0.01
|
%
|
|
|
74.46
|
%
|
|
$
|
96
|
|
|
Western New England Bancorp, Inc.
|
|
|
MA
|
|
|
|
8.31
|
%
|
|
|
32.63
|
%
|
|
|
4.68
|
%
|
|
|
3.76
|
%
|
|
|
24.20
|
%
|
|
|
11.30
|
%
|
|
|
0.19
|
%
|
|
|
77.07
|
%
|
|
$
|
302
|
|
Note: Bank level data
|
|
Sources:
|
S&P Global Market Intelligence and RP
®
Financial, LC. calculations. The information provided in this table has been obtained from sources we believe are reilable, but
we cannot guarantee the accuracy or completeness of such information.
|
Copyright (c) 2019 by RP
®
Financial, LC.
|
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 December 31, 2018
|
|
|
|
|
|
Balance
Sheet Measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible
|
|
|
|
|
|
Non-Earn.
|
|
|
Quarterly
Change in Net Interest Income
|
|
|
|
|
|
|
|
Equity/
|
|
|
IEA/
|
|
|
Assets/
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
IBL
|
|
|
Assets
|
|
|
9/30/2018
|
|
|
6/30/2018
|
|
|
3/31/2018
|
|
|
12/31/2017
|
|
|
9/30/2017
|
|
|
6/30/2017
|
|
|
|
|
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(change
in net interest income is annualized in basis points)
|
|
|
Pioneer
Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
|
|
|
9.0
|
%
|
|
|
104.7
|
%
|
|
|
6.8
|
%
|
|
|
11
|
|
|
|
12
|
|
|
|
6
|
|
|
|
-6
|
|
|
|
5
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
NY Thrifts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
10.2
|
%
|
|
|
109.3
|
%
|
|
|
4.6
|
%
|
|
|
-7
|
|
|
|
1
|
|
|
|
-4
|
|
|
|
-1
|
|
|
|
1
|
|
|
|
-6
|
|
|
Median
|
|
|
|
|
|
8.7
|
%
|
|
|
108.2
|
%
|
|
|
3.8
|
%
|
|
|
-6
|
|
|
|
-5
|
|
|
|
-1
|
|
|
|
-2
|
|
|
|
6
|
|
|
|
-7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
12.0
|
%
|
|
|
110.8
|
%
|
|
|
4.5
|
%
|
|
|
-6
|
|
|
|
5
|
|
|
|
0
|
|
|
|
0
|
|
|
|
4
|
|
|
|
8
|
|
|
Median
|
|
|
|
|
|
10.7
|
%
|
|
|
108.8
|
%
|
|
|
4.8
|
%
|
|
|
-4
|
|
|
|
0
|
|
|
|
-2
|
|
|
|
3
|
|
|
|
0
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESSA
|
|
ESSA Bancorp, Inc.
|
|
|
PA
|
|
|
|
8.9
|
%
|
|
|
106.0
|
%
|
|
|
5.5
|
%
|
|
|
-15
|
|
|
|
15
|
|
|
|
1
|
|
|
|
3
|
|
|
|
3
|
|
|
|
-2
|
|
|
HIFS
|
|
Hingham Institution for Savings
|
|
|
MA
|
|
|
|
8.8
|
%
|
|
|
108.7
|
%
|
|
|
1.5
|
%
|
|
|
-1
|
|
|
|
1
|
|
|
|
-6
|
|
|
|
-5
|
|
|
|
-4
|
|
|
|
-4
|
|
|
HMNF
|
|
HMN Financial, Inc.
|
|
|
MN
|
|
|
|
10.7
|
%
|
|
|
110.0
|
%
|
|
|
2.8
|
%
|
|
|
21
|
|
|
|
6
|
|
|
|
22
|
|
|
|
-27
|
|
|
|
-2
|
|
|
|
12
|
|
|
PCSB
|
|
PCSB Financial Corporation
|
|
|
NY
|
|
|
|
19.2
|
%
|
|
|
120.9
|
%
|
|
|
3.9
|
%
|
|
|
-26
|
|
|
|
23
|
|
|
|
-1
|
|
|
|
11
|
|
|
|
13
|
|
|
|
-18
|
|
|
PBIP
|
|
Prudential Bancorp, Inc.
|
|
|
PA
|
|
|
|
11.3
|
%
|
|
|
109.3
|
%
|
|
|
5.1
|
%
|
|
|
-23
|
|
|
|
-8
|
|
|
|
-3
|
|
|
|
-9
|
|
|
|
-5
|
|
|
|
25
|
|
|
SVBI
|
|
Severn Bancorp, Inc.
|
|
|
MD
|
|
|
|
10.7
|
%
|
|
|
107.8
|
%
|
|
|
4.5
|
%
|
|
|
12
|
|
|
|
-5
|
|
|
|
13
|
|
|
|
13
|
|
|
|
17
|
|
|
|
20
|
|
|
STND
|
|
Standard AVB Financial Corp.
|
|
|
PA
|
|
|
|
10.9
|
%
|
|
|
108.8
|
%
|
|
|
6.7
|
%
|
|
|
-4
|
|
|
|
-1
|
|
|
|
-3
|
|
|
|
-7
|
|
|
|
19
|
|
|
|
24
|
|
|
WSBF
|
|
Waterstone Financial, Inc.
|
|
|
WI
|
|
|
|
21.0
|
%
|
|
|
123.3
|
%
|
|
|
6.5
|
%
|
|
|
-3
|
|
|
|
-1
|
|
|
|
2
|
|
|
|
12
|
|
|
|
-2
|
|
|
|
4
|
|
|
WEBK
|
|
Wellesley Bancorp, Inc.
|
|
|
MA
|
|
|
|
7.5
|
%
|
|
|
106.2
|
%
|
|
|
2.2
|
%
|
|
|
1
|
|
|
|
-2
|
|
|
|
-11
|
|
|
|
3
|
|
|
|
-4
|
|
|
|
9
|
|
|
WNEB
|
|
Western New England Bancorp, Inc.
|
|
|
MA
|
|
|
|
10.5
|
%
|
|
|
106.8
|
%
|
|
|
6.2
|
%
|
|
|
-26
|
|
|
|
18
|
|
|
|
-13
|
|
|
|
10
|
|
|
|
1
|
|
|
|
5
|
|
|
|
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) 2019 by RP
®
Financial, LC.
|
RP
®
Financial, LC.
|
PEER GROUP ANALYSIS
|
|
|
III.14
|
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 Pioneer Bank and the Peer Group. In general, the comparative fluctuations in Pioneer Bank’s and the Peer Group’s
net interest income ratios implied that a slightly greater degree of interest rate risk was associated with Pioneer Bank’s
net interest margin, based on the interest rate environment that prevailed during the period covered in Table 3.5. The stability
of Pioneer Bank’s net interest margin should be enhanced by the infusion of stock proceeds, as interest rate sensitive liabilities
will be funding a lower portion of Pioneer Bank’s assets and the proceeds will be substantially deployed into interest-earning
assets.
Credit Risk
Overall, based on a
comparison of credit risk measures, Pioneer Bank’s implied credit risk exposure was viewed to be slightly greater relative
to the Peer Group’s implied credit risk exposure. As shown in Table 3.6, Pioneer Bank’s ratios for non-performing assets/assets
and non-performing loans/loans equaled 0.92% and 1.13%, respectively, versus comparable measures of 0.77% and 1.02% for the Peer
Group. It should be noted that the measures for non-performing assets and non-performing loans in Table 3.6 include accruing loans
that are classified as troubled debt restructurings. The Bank’s and the Peer Group’s loss reserves as a percent of
non-performing loans equaled 115.83%and 203.65%, respectively. Loss reserves maintained as percent of loans receivable equaled
1.13% for Pioneer Bank, versus 0.88% for the Peer Group. Net loan charge-offs were a larger factor for the Bank, as net loan charge-offs
for the Bank and the Peer Group equaled 0.11% and 0.01% of loans, respectively.
|
RP
®
Financial, LC.
|
PEER GROUP ANALYSIS
|
|
|
Page
III.15
|
Table 3.6
Credit Risk Measures and
Related Information
Comparable Institution
Analysis - Bank Level
As of September 30, 2018
|
|
|
|
|
|
|
|
NPAs &
|
|
|
Adj NPAs
&
|
|
|
|
|
|
|
|
|
|
|
|
Rsrves/
|
|
|
|
|
|
|
|
|
|
|
|
REO/
|
|
|
90+Del/
|
|
|
90+Del/
|
|
|
NPLs/
|
|
|
Rsrves/
|
|
|
Rsrves/
|
|
|
NPAs &
|
|
|
Net Loan
|
|
NLCs/
|
|
|
|
|
|
|
Assets
|
|
|
Assets
(1)
|
|
|
Assets
(2)
|
|
|
Loans
(3)
|
|
|
Loans
HFI
|
|
|
NPLs
(3)
|
|
|
90+Del
(1)
|
|
|
Chargeoffs
(4)
|
|
Loans
|
|
|
|
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
($000)
|
|
(%)
|
|
|
Pioneer
Bank
|
|
NY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
|
|
|
0.00
|
%
|
|
|
0.92
|
%
|
|
|
0.92
|
%
|
|
|
1.13
|
%
|
|
|
1.31
|
%
|
|
|
115.83
|
%
|
|
|
115.29
|
%
|
|
$
|
1,167
|
|
|
0.11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
|
0.05
|
%
|
|
|
0.77
|
%
|
|
|
0.55
|
%
|
|
|
1.02
|
%
|
|
|
0.88
|
%
|
|
|
203.65
|
%
|
|
|
194.93
|
%
|
|
$
|
220
|
|
|
0.01
|
%
|
|
Medians
|
|
|
|
|
0.05
|
%
|
|
|
0.73
|
%
|
|
|
0.59
|
%
|
|
|
0.94
|
%
|
|
|
0.87
|
%
|
|
|
115.59
|
%
|
|
|
104.00
|
%
|
|
$
|
37
|
|
|
0.01
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESSA Bancorp, Inc.
|
|
PA
|
|
|
0.06
|
%
|
|
|
1.00
|
%
|
|
|
0.64
|
%
|
|
|
1.30
|
%
|
|
|
0.89
|
%
|
|
|
68.31
|
%
|
|
|
64.04
|
%
|
|
$
|
1,681
|
|
|
0.13
|
%
|
|
Hingham Institution for Savings
|
|
MA
|
|
|
0.00
|
%
|
|
|
0.08
|
%
|
|
|
0.02
|
%
|
|
|
0.09
|
%
|
|
|
0.68
|
%
|
|
|
719.32
|
%
|
|
|
719.32
|
%
|
|
$
|
0
|
|
|
0.00
|
%
|
|
HMN Financial, Inc.
|
|
MN
|
|
|
0.06
|
%
|
|
|
0.86
|
%
|
|
|
0.80
|
%
|
|
|
1.00
|
%
|
|
|
1.48
|
%
|
|
|
148.39
|
%
|
|
|
138.76
|
%
|
|
$
|
0
|
|
|
0.00
|
%
|
|
PCSB Financial Corporation
|
|
NY
|
|
|
0.05
|
%
|
|
|
0.76
|
%
|
|
|
0.57
|
%
|
|
|
1.16
|
%
|
|
|
0.55
|
%
|
|
|
47.38
|
%
|
|
|
44.15
|
%
|
|
$
|
689
|
|
|
0.08
|
%
|
|
Prudential Bancorp, Inc.
|
|
PA
|
|
|
0.09
|
%
|
|
|
1.39
|
%
|
|
|
1.33
|
%
|
|
|
2.31
|
%
|
|
|
0.85
|
%
|
|
|
36.80
|
%
|
|
|
34.30
|
%
|
|
$
|
118
|
|
|
0.02
|
%
|
|
Severn Bancorp, Inc.
|
|
MD
|
|
|
0.03
|
%
|
|
|
1.91
|
%
|
|
|
0.68
|
%
|
|
|
2.38
|
%
|
|
|
1.16
|
%
|
|
|
48.27
|
%
|
|
|
47.46
|
%
|
|
$
|
-405
|
|
|
-0.06
|
%
|
|
Standard AVB Financial Corp.
|
|
PA
|
|
|
0.05
|
%
|
|
|
0.31
|
%
|
|
|
0.30
|
%
|
|
|
0.34
|
%
|
|
|
0.62
|
%
|
|
|
184.73
|
%
|
|
|
150.31
|
%
|
|
$
|
75
|
|
|
0.01
|
%
|
|
Waterstone Financial, Inc.
|
|
WI
|
|
|
0.11
|
%
|
|
|
0.55
|
%
|
|
|
0.45
|
%
|
|
|
0.54
|
%
|
|
|
0.97
|
%
|
|
|
157.56
|
%
|
|
|
125.20
|
%
|
|
$
|
-284
|
|
|
-0.02
|
%
|
|
Wellesley Bancorp, Inc.
|
|
MA
|
|
|
0.00
|
%
|
|
|
0.14
|
%
|
|
|
0.14
|
%
|
|
|
0.17
|
%
|
|
|
0.90
|
%
|
|
|
542.99
|
%
|
|
|
542.99
|
%
|
|
$
|
0
|
|
|
0.00
|
%
|
|
Western New England Bancorp, Inc.
|
|
MA
|
|
|
0.00
|
%
|
|
|
0.69
|
%
|
|
|
0.60
|
%
|
|
|
0.87
|
%
|
|
|
0.72
|
%
|
|
|
82.79
|
%
|
|
|
82.79
|
%
|
|
$
|
330
|
|
|
0.02
|
%
|
|
|
(1)
|
NPAs are defined as nonaccrual loans, accruing loans
90 days plus delinquent, performing TDRs, and OREO.
|
|
|
(2)
|
Adjusted NPAs are defined as nonaccrual loans, accruing
loans 90 days plus delinquent and OREO (performing TDRs are excluded).
|
|
|
(3)
|
NPLs are defined as nonaccrual loans, accruing loans
90 days plus delinquent and performing TDRs.
|
|
|
(4)
|
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) 2019 by RP
®
Financial, LC.
|
RP
®
Financial, LC.
|
PEER GROUP ANALYSIS
|
|
|
III.16
|
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 Pioneer
Bank. 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 overall 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.
|
VALUATION ANALYSIS
IV.
1
|
IV.
VALUATION ANALYSIS
Introduction
This chapter presents
the valuation analysis and methodology prepared pursuant to the regulatory 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 Bank’s minority
stock offering.
Appraisal Guidelines
The federal regulatory
appraisal guidelines required by the OCC, FRB, the FDIC and state banking agencies specify the pro forma market value methodology
for estimating the pro forma market value of an institution. 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. Given the unique
differences in the pricing characteristics of publicly-traded MHCs relative to fully-converted thrift stocks, we have also reviewed
the pricing characteristics of publicly-traded MHCs on a fully-converted basis.
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 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 stock on a given day.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV.
2
|
The pro forma market
value determined herein is a preliminary value for the Bank’s to-be-issued stock. Throughout the stock issuance process,
RP Financial will: (1) review changes in the Bank’s operations and financial condition; (2) monitor the Bank’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 to, local and national economic conditions, interest rates and the stock market environment, including
the market for thrift stocks; and (4) monitor pending conversion offerings, both regionally and nationally. If material changes
should occur prior to the close of the offering, RP Financial will evaluate if updated valuation reports should be prepared reflecting
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 Bank 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 Pioneer Bank’s value, the market value of the stocks
of public MHC institutions, or Pioneer Bank’s value alone. To the extent a change in factors impacting the Bank’s value
can be reasonably anticipated and/or quantified, RP Financial has incorporated the estimated impact into its 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 Bank and the Peer Group and how those differences affect the pro forma valuation. Emphasis is placed
on the specific strengths and weaknesses of the Bank 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 Pioneer Bank coming to market at this time.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV.
3
|
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 Bank’s and the Peer Group's financial strengths are noted as follows:
|
|
o
|
Overall A/L Composition
. Loans funded by retail deposits were the primary components of
both Pioneer Bank’s and the Peer Group's balance sheets. In comparison to the Peer Group, the Bank’s interest-earning
asset composition exhibited a higher concentration of loans and a greater degree of diversification into higher risk types of loans.
Overall, the Bank’s asset composition provided for a higher yield earned on interest-earning assets and a higher risk weighted
assets-to-assets ratio in comparison to the Peer Group’s ratios. Pioneer Bank’s funding composition reflected a higher
level of deposits and a lower level of borrowings in comparison to the Peer Group’s ratios, which provided the Bank with
a lower cost of funds than maintained by the Peer Group. Overall, as a percent of assets, the Bank maintained a lower level of
interest-earning assets and a higher level of interest-bearing liabilities relative to the comparable ratios for the Peer Group,
which translated into a lower IEA/IBL ratio for the Bank. After factoring in the impact of the net stock proceeds, the Bank’s
IEA/IBL ratio will be more comparable to the Peer Group’s IEA/IBL ratio. On balance, RP Financial concluded that asset/liability
composition was a neutral factor in our adjustment for financial condition.
|
|
|
o
|
Credit Quality.
The Bank’s ratios for non-performing assets as a percent of assets
and non-performing loans as a percent of loans were slightly higher than the comparable ratios for the Peer Group. In comparison
to the Peer Group, the Bank maintained lower loss reserves as a percent of non-performing loans and a higher level of loss reserves
as a percent of loans. Net loan charge-offs as a percent of loans were higher for the Bank. The Bank’s risk weighted assets-to-assets
ratio was somewhat higher than the Peer Group’s ratio. Overall, RP Financial concluded that credit quality was a slightly
negative factor in our adjustment for financial condition.
|
|
|
o
|
Balance Sheet Liquidity
. The Bank maintained a lower level of cash and investment securities
than the Peer Group (13.22% of assets versus 20.76% for the Peer Group). Following the infusion of stock proceeds, the Bank’s
cash and investments ratio is expected to increase as a portion of the net proceeds will initially be held in short-term liquid
funds. The Bank’s future borrowing capacity was considered to be slightly greater than the Peer Group’s borrowing capacity,
based on the lower level of borrowings that is currently funding the Bank’s assets. Overall, RP Financial concluded that
balance sheet liquidity was a neutral factor in our adjustment for financial condition.
|
|
|
o
|
Funding Liabilities
. The Bank’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 lower cost of funds for the Bank. The Bank’s ratio of total interest-bearing liabilities as a percent of assets was
above the Peer Group’s ratio. Following the stock offering, the increase in the Bank’s capital position will reduce
the level of interest-bearing liabilities funding the Bank’s assets to a level that is more comparable to the Peer Group’s
ratio of interest-bearing liabilities as a percent of assets. Overall, RP Financial concluded that funding liabilities were a slightly
positive factor in our adjustment for financial condition.
|
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV.
4
|
|
|
o
|
Capital
. The Peer Group currently operates with a higher equity-to-assets ratio than the
Bank. Following the stock offering, Pioneer Bank’s pro forma capital position will exceed the Peer Group's equity-to-assets
ratio. On balance, RP Financial concluded that capital strength was a slightly positive factor in our adjustment for financial
condition.
|
On balance, Pioneer
Bank’s balance sheet strength was considered to be comparable to the Peer Group’s balance sheet strength and, thus,
no adjustment was applied for the Bank’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 prospects
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.
|
|
o
|
Reported Earnings
. The Bank’s reported earnings were higher than the Peer Group’s
on a ROAA basis (1.30% of average assets versus 0.81% for the Peer Group). The Bank maintained more favorable ratios for net interest
income and effective tax rate, which were partially offset by the Peer Group’s more favorable ratios for loan loss provisions,
non-interest operating income and operating expenses. Reinvestment of stock proceeds into interest-earning assets will serve to
increase the Bank’s earnings, with the benefit of reinvesting the proceeds expected to be somewhat offset by higher operating
expenses associated with operating as a publicly-traded company and the implementation of stock benefit plans. Overall, the Bank’s
reported earnings were considered to be more favorable than the Peer Group’s reported earnings and, thus, RP Financial concluded
that this was a slightly positive factor in our adjustment for profitability, growth and viability of earnings.
|
|
|
o
|
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 Bank’s and the Peer Group’s
core earnings. In these measures, the Bank operated with a higher net interest income ratio, a higher operating expense ratio and
a slightly lower level of non-interest operating income. The Bank’s higher net interest income and operating expense ratios
translated into a higher expense coverage ratio in comparison to the Peer Group’s ratio (equal to 1.27x versus 1.10x for
the Peer Group). Similarly, the Bank’s efficiency ratio of 61.51% was more favorable than the Peer Group’s efficiency
ratio of 67.32%. Loan loss provisions had a larger impact on the Bank’s earnings. Overall, these measures, as well as the
expected earnings benefits the Bank should realize from the redeployment of stock proceeds into interest-earning assets and leveraging
of post-offering capital, which will be somewhat negated by expenses associated with the stock benefit plans and operating as a
publicly-traded company, indicate that the Bank’s pro forma core earnings will remain more favorable than the Peer Group’s
core earnings. Therefore, RP Financial concluded that this was a slightly positive factor in our adjustment for profitability,
growth and viability of earnings.
|
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV.
5
|
|
|
o
|
Interest Rate Risk
. Quarterly changes in the Bank’s and the Peer Group's net interest
income to average assets ratios indicated that a slightly greater degree of volatility was associated with the Bank’s net
interest margin. Other measures of interest rate risk, such as capital levels, IEA/IBL ratios and levels of non-interest earning
assets were more favorable for the Peer Group. On a pro forma basis, the infusion of stock proceeds can be expected to provide
the Bank with equity-to-assets and IEA/ILB ratios that are more comparable to the Peer Group’s ratios, as well as enhance
the stability of the Bank’s net interest margin. Accordingly, on balance, interest rate risk was a neutral factor in our
adjustment for profitability, growth and viability of earnings.
|
|
|
o
|
Credit Risk
. Loan loss provisions were a larger factor in the Bank’s earnings (0.17%
of average assets versus 0.05% of average assets for the Peer Group). In terms of future exposure to credit quality related losses,
the Bank maintained a higher concentration of assets in loans and the Bank’s loan composition reflected a greater degree
of diversification into higher risk types of loans. The Bank’s credit quality measures generally implied a slightly greater
degree of credit risk exposure relative to the comparable credit quality measures indicated for the Peer Group. Overall, RP Financial
concluded that credit risk was a slightly negative factor in our adjustment for profitability, growth and viability of earnings.
|
|
|
o
|
Earnings Growth Potential
. Several factors were considered in assessing earnings growth
potential. First, the Bank currently maintains a higher interest rate spread than the Peer Group, which would tend to facilitate
a continuation of a higher net interest margin for the Bank goring forward. Second, the infusion of stock proceeds will provide
the Bank 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 Bank’s higher ratio of operating expenses were viewed as relative disadvantages
for the Bank 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.
|
|
|
o
|
Return on Equity
. Currently, the Bank’s core ROE is higher 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 Bank’s
equity, the Bank’s pro forma return equity on a core earnings basis will be similar to the Peer Group’s core ROE. Accordingly,
this was a neutral factor in the adjustment for profitability, growth and viability of earnings.
|
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV.
6
|
On balance, Pioneer
Bank’s pro forma earnings strength was considered to be more favorable than the Peer Group’s and, thus, a slight upward
adjustment was applied for profitability, growth and viability of earnings.
Comparative asset growth
rates for the Bank and the Peer Group showed an 8.79% increase in the Bank’s assets, versus a 6.33% increase in the Peer
Group’s assets. Asset growth for the Bank was sustained by a 6.76% increase in loans and a 22.41% increase in cash and investments.
The Peer Group’s asset growth was primarily sustained by a 5.86% increase in loans and also included an 8.70% increase in
cash and investments. Overall, the Bank’s recent asset growth trends would tend to be viewed as comparable to slightly more
favorable relative to the Peer Group’s asset growth trends in terms of supporting future earnings growth. On a pro forma
basis, the Bank’s tangible equity-to-assets ratio will exceed the Peer Group's tangible equity-to-assets ratio, providing
the Bank with greater leverage capacity than maintained by the Peer Group. On balance, a slight upward adjustment was applied for
asset growth.
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. Pioneer Bank serves the Capital Region of New York through the headquarters office and 22
full service branches. Operating in a large metropolitan area provides the Bank with growth opportunities, but such growth must
be achieved in a highly competitive market environment. The Bank competes against significantly larger institutions that have significantly
larger branch networks than maintained by Pioneer Bank.
The Peer Group companies
generally operate in markets with larger populations compared to Albany 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 in the markets served by
the Peer Group companies showed comparable growth as Albany County. Albany County has a slightly higher per capita income compared
to the primary market area counties served by Peer Group companies and, on average, the Peer Group’s primary market area
counties were slightly less affluent markets within their respective states compared to Albany County’s per capita income
as a percent of New York’s per capita income (98.9% for the Peer Group versus 105.5% for Albany County). The average and
median deposit market shares maintained by the Peer Group companies were higher than the Bank’s market share of deposits
in Albany County. Overall, the degree of competition faced by the Peer Group companies was viewed to slightly less than the Bank’s
competitive environment in Albany 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 Bank’s primary market area. Summary demographic and deposit market share data
for the Bank and the Peer Group companies is provided in Exhibit III-5. As shown in Table 4.1, the average unemployment rate for
the primary market area counties served by the Peer Group companies was slightly above the unemployment rate reflected for Albany
County. On balance, we concluded that no adjustment was appropriate for the Bank’s market area.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV.
7
|
Table 4.1
Market Area Unemployment Rates
Pioneer Bank. and the Peer Group Companies (1)
|
|
|
|
|
|
December 2018
|
|
|
|
|
County
|
|
|
Unemployment
|
|
|
|
|
|
|
|
|
|
|
Pioneer Bank - NY
|
|
Albany
|
|
|
|
3.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Peer Group Average
|
|
|
|
|
|
3.5
|
|
|
|
|
|
|
|
|
|
|
|
|
The Peer Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESSA Bancorp, Inc. - PA
|
|
Monroe
|
|
|
|
5.0
|
|
|
Hingham Institutions for Savings – MA
|
|
Plymouth
|
|
|
|
2.8
|
|
|
HMN Financial, Inc. – MN
|
|
Olmsted
|
|
|
|
2.5
|
|
|
PCSB Financial Corporation – NY
|
|
Westchester
|
|
|
|
3.4
|
|
|
Prudential Bancorp, Inc. - PA
|
|
Philadelphia
|
|
|
|
4.9
|
|
|
Severn Bancorp, Inc. – MD
|
|
Ann Arundel
|
|
|
|
2.8
|
|
|
Standard AVB Financial Corp. – PA
|
|
Allegheny
|
|
|
|
3.7
|
|
|
Waterstone Financial, Inc. WI
|
|
Milwaukee
|
|
|
|
3.4
|
|
|
Wellesley Bancorp, Inc. – MA
|
|
Norfolk
|
|
|
|
2.4
|
|
|
Western New England Bancshares – MA
|
|
Hampden
|
|
|
|
3.8
|
|
|
|
(1)
|
Unemployment rates are not seasonally adjusted.
|
Source: U.S. Bureau of Labor Statistics.
At this time the Bank
has not established a dividend policy. 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.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV.
8
|
Nine out of the ten
Peer Group companies pay regular cash dividends, with implied dividend yields ranging from 0.58% to 2.96%. The average dividend
yield on the stocks of the Peer Group institutions equaled 1.46% as of February 8, 2019. Comparatively, as of February 8, 2019,
the average dividend yield on the stocks of all fully-converted publicly-traded thrifts equaled 2.00%.
Our valuation adjustment
for dividends for Pioneer Bank also considered the regulatory policy with regard to payment of dividends to the MHC. Under current
FRB policy, any dividends declared by the Bank would be required to be paid to all shareholders. Accordingly, dividends paid by
the Bank would increase the amount of assets held by the MHC, after adjusting for applicable income taxes, and, thereby, increase
the implied dilution incurred by the minority shareholders in a second-step conversion pursuant to the calculation to account for
net assets held by the MHC in a second-step offering.
Overall, while the
Bank has not established a definitive dividend policy prior to its stock offering, the Bank will have the capacity to pay a dividend
comparable to the Peer Group’s average dividend yield based on the Bank’s pro forma earnings and capitalization. However,
dividend payments retained by the MHC would increase the implied dilution to minority shareholders in a second-step offering. Accordingly,
on balance, we concluded that a slight downward adjustment was warranted for purposes of the Bank’s dividend policy.
|
|
6.
|
Liquidity of the Shares
|
The Peer Group is by
definition composed of companies that are traded in the public markets. All ten of the Peer Group members trade on the NASDAQ system.
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 $77.4 million to $425.3 million as of
February 8, 2019, with average and median market values of $217.6 million and $163.9 million, respectively. The shares issued and
outstanding of the Peer Group companies ranged from 2.4 million to 27.7 million, with average and median shares outstanding of
11.7 million and 11.9 million, respectively. The Bank’s stock offering is expected to have a pro forma public market value
that will be in the lower end of the Peer Group’s range of market values and will be in middle of the range of shares outstanding
reported for the Peer Group companies. Like all of the Peer Group companies, the Bank’s stock will be quoted on the NASDAQ
following the stock offering. Overall, we anticipate that the Bank’s stock will have a comparable trading market as the Peer
Group companies on average and, therefore, concluded no adjustment was necessary for this factor.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV.
9
|
|
|
7.
|
Marketing of the Issue
|
Three separate markets
exist for thrift stocks: (1) the after-market for public companies, both fully-converted stock companies and MHCs, in which trading
activity is regular and investment decisions are made based upon financial condition, earnings, capital, ROE, dividends and future
prospects; (2) 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 publicly-held company and stock trading history; and (3) the thrift acquisition
market. All three of these markets were considered in the valuation of the Bank’s to-be-issued stock.
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 market trends for various indices and includes historical stock price index values for thrifts
and commercial banks. Exhibit IV-3 displays various stock price indices as of February 8, 2019.
In terms of assessing
general stock market conditions, the performance of the overall stock market has been mixed in recent quarters. Strong job growth
reflected in June employment report and signs that U.S. trade tensions with Europe may be easing propelled the stock market higher
at the start of the third quarter of 2018. Technology stocks led a broader stock market rally in mid-July, with the NASDAQ closing
at a new record high. Some favorable second quarter earnings reports continued the upward trend in the broader stock market heading
into the second half of July. Comparatively, technology stocks led the stock market lower at the end of July, as some technology
companies posted disappointing second quarter earnings. Strong earnings growth by some of America’s biggest companies contributed
to a rebound in the stock market in early-August. Energy shares led the broader stock market lower going into mid-August 2018,
which was attributed to a decline in oil prices. Upbeat data for the U.S. economy, deal activity and signs of cooperation between
the U.S. and China contributed to stocks rallying higher during the second half of August, as the NASDAQ soared past 8000 to a
new record high. Comparatively, stocks retreated at the end of August through the first part of September, in which technology
shares led the market lower on worries about trade and regulation. Manufacturer and financial shares helped stocks to rebound going
into the second half of September, as new tariffs announced by the U.S. and China were less than expected. After the Dow Jones
Industrial Average (“DJIA”) and S&P 500 closed at record highs, shares of industrial companies led the market lower
in late-September. Heightened trade tensions and the Federal Reserve’s rate hike, along with signaling a continued path of
rate hikes, were noted factors that stoked caution among investors.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV.
10
|
Stocks rebounded at the
end of September and the beginning of October 2018, as manufacturer shares led the DJIA to a new record high following completion
of a new North American trade pact. A sell-off in Treasury bonds prompted a broader stock market downturn at the end of the first
week of October, as investors reacted to the September employment report which showed the national unemployment rate hitting a
50-year low. The sell-off in stocks deepened in the second week of October, with the DJIA recording a two-day decline of 5.2% before
rebounding at the end of the week. Volatility continued to prevail in the broader stock market during the second half of October,
as investors reacted to mixed third quarter earnings reports and signs of softer global economic growth. Following a sell-off heading
into late-October 2018, stocks rebounded sharply higher at the end of October and at the start of November. The rebound in the
stock market was led by technology shares, based on some favorable third quarter earnings reports. Stocks continued to surge higher
following the mid-term elections, as a congressional power divide eased worries about swift policy changes. Following the mid-term
election rally, stocks trended sharply lower through late-November. Factors contributing to the sell-off included U.S.-China trade
tensions, concerns about the health of the technology sector, worries about slowing global growth and oil prices dropping to a
three-year low. Stocks rebounded in the last week of November, with the DJIA and the S&P 500 erasing their November declines
after the Federal Reserve Chairman eased investor worries about aggressively increasing interest rates. A strong retail sales report
for the Thanksgiving weekend and a trade truce between the U.S. and China also contributed to the stock market rally at the end
of November. Energy shares led the stock market higher at the start of December, as oil prices rounded after an easing of geopolitical
concerns. Stocks tumbled lower to close out the first trading week of December, as investors’ doubts about the U.S.-China
trade truce and a flattening yield curve raised fears of an economic slowdown. A rally in technology shares helped the broader
stock market to edge higher going into mid-December, which was followed by a mid-December sell-off prompted by signs that China’s
economy may be slowing. The stock market route deepened going into the second half of December, as investors reacted to the Federal
Reserve’s rate hike and possible government shutdown. After four days of sharp declines, the DJIA logged its biggest daily
point gain which was led by a rebound in energy shares. The positive trend in the broader stock market continued in the final trading
days of 2018, although 2018 was the worst yearly decline for stocks since 2008.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV.
11
|
Volatility continued
to prevail in the broader stock market at the start of 2019. Soft economic data for U.S. December manufacturing activity prompted
a sharp sell-off, which was followed a robust rally on strong job growth reported for December. The rally in the broader stock
market gained momentum through mid-January, which was supported signs of progress in the U.S.- China trade talks and the Federal
Reserve signaling its willingness to slow its pace of interest rate increases. The broad-based stock market rally paused in late-January,
as stocks retreated on signs that a slow down in China’s economy was hurting corporate profits in the U.S. Stocks soared
higher after the Federal Reserve concluded its end of January policy meeting, in which it elected to hold interest rates steady
and stated that is was done raising interest rates for a while. Overall, stocks posted their best January in three years, which
was led by the biggest laggards during the fourth quarter sell-off. Strong job growth reflected in the January employment report
helped to sustain stock market gains at the start of February, which was followed by a pullback related to China trade tensions.
On February 8, 2019, the DJIA closed at 25106.33, an increase of 3.8% from one year ago and an increase of 7.6% year-to-date, and
the NASDAQ closed at 7,298.20, an increase of 6.2% from one year ago and an increase of 19.4% year-to-date. The S&P 500 Index
closed at 2707.88 on February 8, 2019, an increase of 3.4% from one year ago and an increase of 8.0% year-to-date.
The performance of thrift
stocks has also been uneven in recent quarters. The strong jobs report for June boosted thrift stocks at the start of the third
quarter of 2018, which was followed by a slight decline in thrift shares ahead of third quarter earnings reports. After trading
in a narrow range through the release of second earnings reports, concerns of rising inflation pressured thrift shares lower in
late-July and into early-August. After drifting lower during the first half of August, signs of a strong labor market and a pick-up
in consumer spending contributed to gains in the thrift sector going into the second half of August. Following the upturn, thrift
shares trended lower through the end of August as thrift stocks were negatively impacted by July housing data showing a decline
in new and existing home sales. Thrift stocks traded in a narrow range during the first half of September, which was followed by
a pullback in thrift stocks through the end of September.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV.
12
|
The decline in thrift
shares became more pronounced in the first week of October 2018, as the shares of mortgage-based lenders were negatively impacted
by the rise in long-term Treasury yields and concerns that higher mortgage rates could further deter home buyers in a slumping
housing market. Financial shares were among the worst performers in the market sell-off that occurred during second week of October,
as investors dumped bank stocks heading into third quarter earnings season. The downturn in thrift stocks continued into the second
half of October, as third quarter earnings reports showed a trend of net interest margin compression among mortgage-based lenders.
After easing lower through mid-November 2018, comments by the Federal Reserve Chairman signaling a less aggressive approach to
raising interest rates spurred a rally in thrift shares at the end of November. Thrift shares reversed course during the first
half of December, as financial shares experienced a broad-based sell-off on concerns about the flattening yield curve and slower
economic growth translating into weaker demand for bank loans. The sell-off in thrift shares accelerated in the closing weeks of
2018, as financial shares were among the hardest hit in the stock market route that occurred in the second half of December.
The favorable jobs report
for December 2018 helped thrift stocks to start 2019 out trending higher. Thrift shares continued to rally through mid-January,
as some favorable fourth quarter earnings posted by some large banks served to lift financial shares in general. Expectations that
the Federal Reserve would slow down it pace of rate increases helped to sustain the positive trend in thrift shares through the
second half of January. The favorable jobs report for January, the Federal Reserve’s indication that it was taking a pause
in raising interest rates and consolidation in the banking sector contributed to sustaining the rebound in thrift shares through
the first week of February. On February 8, 2019, the SNL Index for all publicly-traded thrifts closed at 864.5, a decrease of 7.1%
from one year ago and an increase of 12.0% year-to-date.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV.
13
|
In addition to thrift
stock market conditions in general, the new issue market for converting thrifts is also an important consideration in determining
the Bank’s pro forma 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 often reflects 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,
two first-step MHC offerings were completed during the past three months. Rhinebeck Bancorp’s first-step offering was closed
at the top of its offering range and 1895 Bancorp’s first-step offering closed slightly above the minimum of its offering
range. The average closing fully-converted pro forma price/tangible book ratio of the two recent first-step offerings equaled 68.0%.
On average, the two recent first-step MHC offerings reflected price appreciation of 7.9% after the first week of trading. As of
February 8, 2019, the two recent first-step offerings reflected a 4.6% increase in price on average.
|
|
C.
|
The Acquisition Market
|
Also considered in
the valuation was the potential impact on Pioneer Bank’s stock price of recently completed and pending acquisitions of other
savings institutions operating in New York. As shown in Exhibit IV-4, there were seven New York thrift acquisitions completed from
the beginning of 2014 through year-to-date 2019 and there is currently one acquisition pending for a New York savings institution.
To the extent that speculation of a re-mutualization may impact the Bank’s valuation, we have largely taken this into account
in selecting companies for the Peer Group which operate in markets that have experienced a comparable level of acquisition activity
as the Bank’s market and, thus, are subject to the same type of acquisition speculation that may influence the Bank’s
stock. However, since converting thrifts are subject to a three-year regulatory moratorium from being acquired, acquisition speculation
in the Bank’s stock would tend to be less compared to the stocks of the Peer Group companies. Furthermore, in comparison
to the stocks of the fully-converted Peer Group companies, the degree of acquisition speculation in the Bank’s stock is also
viewed to be relatively more limited since there will be fewer potential acquirers for the Bank’s stock as a re-mutualization
transaction can only be completed by a mutual institution or an institution in the MHC form of ownership. Additionally, there tends
to be less acquisition speculation in the stocks of publicly-traded MHCs in general, given the majority of the shares are held
by the MHC rather than public shareholders which own 100% of the shares of the fully-converted Peer Group companies. Accordingly,
the Peer Group companies are considered to be subject to a greater degree of acquisition speculation relative to the acquisition
speculation that may influence the Bank’s trading price.
* * * * * * * * * *
*
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV.
14
|
Table 4.2
Pricing Characteristics
and After-Market Trends
Conversions Completed
in the Last Three 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:
|
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|
Excluding
Foundation
|
|
|
|
|
%
of
|
|
Benefit
Plans
|
|
|
|
|
|
Initial
|
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First
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After
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After
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Conversion
|
|
|
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|
|
|
Equity/
|
|
|
NPAs/
|
|
|
Res.
|
|
|
Gross
|
|
|
%
|
|
|
% of
|
|
|
Exp./
|
|
|
|
|
Public Off.
|
|
|
|
|
Recog.
|
|
|
Stk
|
|
|
Mgmt.&
|
|
|
Div.
|
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|
|
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|
Core
|
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|
|
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
|
|
|
2/8/2019
|
|
|
Chg
|
|
|
|
|
|
|
|
|
($Mil)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
($Mil.)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
|
|
(%)
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)(1)
|
|
|
(%)
|
|
|
(%)
|
|
|
(x)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
($)
|
|
|
($)
|
|
|
(%)
|
|
|
($)
|
|
|
(%)
|
|
|
($)
|
|
|
(%)
|
|
|
($)
|
|
|
(%)
|
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Standard
Conversions
|
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Second
Step Conversions
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual
Holding Companies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rhinebeck Bancorp, Inc.
|
|
1/17/19
|
|
RBKB-NASDAQ
|
|
$
|
820
|
|
|
|
6.96
|
%
|
|
|
1.25
|
%
|
|
|
74
|
%
|
|
$
|
47.9
|
|
|
|
43
|
%
|
|
|
132
|
%
|
|
|
3.7
|
%
|
|
N.A.
|
|
N.A.
|
|
|
9.1
|
%
|
|
|
4.6
|
%
|
|
|
11.4
|
%
|
|
|
3.8
|
%
|
|
|
0.00
|
%
|
|
|
74.0
|
%
|
|
|
40.3
|
x
|
|
|
12.2
|
%
|
|
|
0.3
|
%
|
|
|
16.5
|
%
|
|
|
1.8
|
%
|
|
$
|
10.00
|
|
|
$
|
11.75
|
|
|
|
17.50
|
%
|
|
$
|
11.58
|
|
|
|
15.8
|
%
|
|
$
|
11.44
|
|
|
|
14.4
|
%
|
|
$
|
11.44
|
|
|
|
14.4
|
%
|
|
1895 Bancorp of Wisconsin, Inc.
(PyraMax Bank)
|
|
1/9/19
|
|
BCOW-NASDAQ
|
|
$
|
483
|
|
|
|
7.82
|
%
|
|
|
0.34
|
%
|
|
|
199
|
%
|
|
$
|
21.5
|
|
|
|
44
|
%
|
|
|
89
|
%
|
|
|
7.0
|
%
|
|
C/S
|
|
2.2
|
%
|
|
8.7
|
%
|
|
|
4.4
|
%
|
|
|
10.9
|
%
|
|
|
2.1
|
%
|
|
|
0.00
|
%
|
|
|
62.0
|
%
|
|
|
NM
|
|
|
|
9.3
|
%
|
|
|
-0.4
|
%
|
|
|
15.0
|
%
|
|
|
-2.5
|
%
|
|
$
|
10.00
|
|
|
$
|
9.60
|
|
|
|
-4.0
|
%
|
|
$
|
10.00
|
|
|
|
0.0
|
%
|
|
$
|
9.48
|
|
|
|
-5.2
|
%
|
|
$
|
9.48
|
|
|
|
-5.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages -
MHC Conversions:
|
|
$
|
651
|
|
|
|
7.39
|
%
|
|
|
0.80
|
%
|
|
|
136
|
%
|
|
$
|
34.7
|
|
|
|
44
|
%
|
|
|
110
|
%
|
|
|
5.3
|
%
|
|
N.A.
|
|
N.A.
|
|
|
8.9
|
%
|
|
|
4.5
|
%
|
|
|
11.1
|
%
|
|
|
3.0
|
%
|
|
|
0.00
|
%
|
|
|
68.0
|
%
|
|
|
40.3
|
x
|
|
|
10.7
|
%
|
|
|
0.0
|
%
|
|
|
15.8
|
%
|
|
|
-0.4
|
%
|
|
$
|
10.00
|
|
|
$
|
10.68
|
|
|
|
6.8
|
%
|
|
$
|
10.79
|
|
|
|
7.9
|
%
|
|
$
|
10.46
|
|
|
|
4.6
|
%
|
|
$
|
10.46
|
|
|
|
4.6
|
%
|
|
|
|
|
|
Medians -
MHC Conversions:
|
|
$
|
651
|
|
|
|
7.39
|
%
|
|
|
0.80
|
%
|
|
|
136
|
%
|
|
$
|
34.7
|
|
|
|
44
|
%
|
|
|
110
|
%
|
|
|
5.3
|
%
|
|
N.A.
|
|
N.A.
|
|
|
8.9
|
%
|
|
|
4.5
|
%
|
|
|
11.1
|
%
|
|
|
3.0
|
%
|
|
|
0.00
|
%
|
|
|
68.0
|
%
|
|
|
40.3
|
x
|
|
|
10.7
|
%
|
|
|
0.0
|
%
|
|
|
15.8
|
%
|
|
|
-0.4
|
%
|
|
$
|
10.00
|
|
|
$
|
10.68
|
|
|
|
6.8
|
%
|
|
$
|
10.79
|
|
|
|
7.9
|
%
|
|
$
|
10.46
|
|
|
|
4.6
|
%
|
|
$
|
10.46
|
|
|
|
4.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages -
All Conversions:
|
|
$
|
651
|
|
|
|
7.39
|
%
|
|
|
0.80
|
%
|
|
|
136
|
%
|
|
$
|
34.7
|
|
|
|
44
|
%
|
|
|
110
|
%
|
|
|
5.3
|
%
|
|
N.A.
|
|
N.A.
|
|
|
8.9
|
%
|
|
|
4.5
|
%
|
|
|
11.1
|
%
|
|
|
3.0
|
%
|
|
|
0.00
|
%
|
|
|
68.0
|
%
|
|
|
40.3
|
x
|
|
|
10.7
|
%
|
|
|
0.0
|
%
|
|
|
15.8
|
%
|
|
|
-0.4
|
%
|
|
$
|
10.00
|
|
|
$
|
10.68
|
|
|
|
6.8
|
%
|
|
$
|
10.79
|
|
|
|
7.9
|
%
|
|
$
|
10.46
|
|
|
|
4.6
|
%
|
|
$
|
10.46
|
|
|
|
4.6
|
%
|
|
|
|
|
|
Medians -
All Conversions:
|
|
$
|
651
|
|
|
|
7.39
|
%
|
|
|
0.80
|
%
|
|
|
136
|
%
|
|
$
|
34.7
|
|
|
|
44
|
%
|
|
|
110
|
%
|
|
|
5.3
|
%
|
|
N.A.
|
|
N.A.
|
|
|
8.9
|
%
|
|
|
4.5
|
%
|
|
|
11.1
|
%
|
|
|
3.0
|
%
|
|
|
0.00
|
%
|
|
|
68.0
|
%
|
|
|
40.3
|
x
|
|
|
10.7
|
%
|
|
|
0.0
|
%
|
|
|
15.8
|
%
|
|
|
-0.4
|
%
|
|
$
|
10.00
|
|
|
$
|
10.68
|
|
|
|
6.8
|
%
|
|
$
|
10.79
|
|
|
|
7.9
|
%
|
|
$
|
10.46
|
|
|
|
4.6
|
%
|
|
$
|
10.46
|
|
|
|
4.6
|
%
|
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.
|
2/8/2019
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV. 15
|
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 MHC shares and the local acquisition market for thrift stocks. Taking these factors and trends into account,
RP Financial concluded that no adjustment was appropriate in the valuation analysis for purposes of marketing of the issue.
Pioneer Bank’s
management team appears to have experience and expertise in all of the key areas of the Bank’s operations. Exhibit IV-5 provides
summary resumes of the Bank’s Board of Trustees and senior management. The financial characteristics of the Bank suggest
that the Board and senior management have been effective in implementing an operating strategy that can be well managed by the
Bank’s present organizational structure. The Bank currently does not have any senior management positions that are vacant.
Similarly, the returns,
capital 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.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV. 16
|
|
|
9.
|
Effect of Government Regulation and Regulatory Reform
|
In summary, as a federally-insured
savings institution operating in the MHC form of ownership, Pioneer Bank will be operating 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. Accordingly, 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 Bank’s pro forma market value should reflect the following valuation adjustments
relative to the Peer Group:
|
Key Valuation Parameters:
|
|
Valuation Adjustment
|
|
|
|
|
|
Financial Condition
|
|
No Adjustment
|
|
Profitability, Growth and Viability of Earnings
|
|
Slight Upward
|
|
Asset Growth
|
|
Slight Upward
|
|
Primary Market Area
|
|
No Adjustment
|
|
Dividends
|
|
Slight Downward
|
|
Liquidity of the Shares
|
|
No Adjustment
|
|
Marketing of the Issue
|
|
No Adjustment
|
|
Management
|
|
No Adjustment
|
|
Effect of Government Regulations and Regulatory Reform
|
|
No Adjustment
|
Valuation
Approaches: Fully-Converted Basis
In applying the accepted
valuation methodology promulgated by the FDIC, the FRB and the Department, i.e., the pro forma market value approach, we considered
the three key pricing ratios in valuing the Bank’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 Bank’s prospectus for effective tax rate, stock benefit plan assumptions, the Foundation
and offering expenses (summarized in Exhibits IV-9 and IV-10). The assumptions utilized in the pro forma analysis in calculating
the Bank’s full conversion value were consistent with the assumptions utilized for the minority stock offering, except expenses
were assumed to equal 1.75% of gross proceeds (summarized in Exhibits IV-7 and IV-8).
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV. 17
|
In our estimate of
value, we assessed the relationship of the pro forma pricing ratios relative to the Peer Group, recent conversions and publicly-traded
MHCs on a fully-converted basis.
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. At the same time, recognizing that (1) the earnings multiples will be evaluated on a pro forma fully-converted basis for the Bank; and (2) the Peer Group on average has had the opportunity to realize the benefit of reinvesting net conversion 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 an initial 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.
|
The Bank will adopt
“Employers’ Accounting for Employee Stock Ownership Plans” (“ASC 718-40”), which will cause 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.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV. 18
|
Based on the application
of the three valuation approaches, taking into consideration the valuation adjustments discussed above and the dilutive impact
of the stock contribution to the Foundation, RP Financial concluded that as of February 8, 2019, the pro forma market value of
Pioneer Bank’s full conversion offering equaled $196,428,570 at the midpoint, equal to 19,642,857 shares at $10.00 per share.
Basis
of Valuation - Fully-Converted Pricing Ratios
1.
Price-to-Earnings
("P/E")
. The application of the P/E valuation method requires calculating the Bank’s pro forma market value
by applying a valuation P/E multiple (fully-converted basis) 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. In deriving Pioneer Bank’s core earnings,
the adjustments made to reported earnings were to eliminate the net gain on sale of securities equal to $10,000, the net gain on
the disposal of assets equal to $127,000 and the net loss on the sale and write-down of OREO equal to $17,000. As shown below,
on a tax effected basis, assuming an effective marginal tax rate of 26.0% for the earnings adjustments, the Bank’s core earnings
were determined to equal $16.708 million for the twelve months ended December 31, 2018.
|
|
|
Amount
|
|
|
|
|
($000)
|
|
|
|
|
|
|
|
Net income
|
|
$
|
16,797
|
|
|
Deduct: Net gain on sale of securities (1)
|
|
|
(7
|
)
|
|
Deduct: Net gain on disposal of assets (1)
|
|
|
(94
|
)
|
|
Add: Loss on sale and write-down of OREO (1)
|
|
|
12
|
|
|
Core earnings estimate
|
|
$
|
16,708
|
|
(1) Tax effected at
26.0%.
Based on Pioneer Bank’s
reported and core earnings and incorporating the impact of the pro forma assumptions discussed previously, the Bank’s pro
forma reported and core P/E multiples (fully-converted basis) at the $196.4 million midpoint value equaled 11.53 times and 11.59
times, respectively, which provided for discounts of 21.67% and 19.40% relative to the Peer Group's average reported and core P/E
multiples of 14.72 times and 14.38 times, respectively (see Table 4.3). In comparison to the Peer Group’s median reported
and core earnings multiples which equaled 14.63 times and 14.52 times, respectively, the Bank’s pro forma reported and core
P/E multiples (fully-converted basis) at the midpoint value indicated discounts of 21.19% and 20.18%, respectively. The Bank’s
pro forma fully-converted P/E ratios based on reported earnings at the minimum and the super maximum equaled 9.83x and 15.20x,
respectively, and based on core earnings at the minimum and the super maximum equaled 9.88x and 15.28x, respectively.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV. 19
|
Table 4.3
Fully-Converted Pricing
Versus Peer Group
Pioneer Bank
As of February 8, 2019
|
|
|
|
|
Market
|
|
|
Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalization
|
|
|
Core
|
|
|
Book
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends(3)
|
|
|
Financial Characteristics(5)
|
|
|
Offering
|
|
|
|
|
|
|
Price/
|
|
|
Market
|
|
|
12
Month
|
|
|
Value/
|
|
|
Pricing
Ratios(2)
|
|
|
Amount/
|
|
|
|
|
|
Payout
|
|
|
Total
|
|
|
Equity/
|
|
|
Tang.
Eq./
|
|
|
NPAs/
|
|
|
Reported
|
|
|
Core
|
|
|
Size
|
|
|
|
|
|
|
Share
|
|
|
Value
|
|
|
EPS(1)
|
|
|
Share
|
|
|
P/E
|
|
|
P/B
|
|
|
P/A
|
|
|
P/TB
|
|
|
P/Core
|
|
|
Share
|
|
|
Yield
|
|
|
Ratio(4)
|
|
|
Assets
|
|
|
Assets
|
|
|
T.
Assets
|
|
|
Assets
|
|
|
ROAA
|
|
|
ROAE
|
|
|
ROAA
|
|
|
ROAE
|
|
|
($Mil)
|
|
|
|
|
|
|
($)
|
|
|
($Mil)
|
|
|
($)
|
|
|
($)
|
|
|
(x)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(x)
|
|
|
($)
|
|
|
(%)
|
|
|
(%)
|
|
|
($Mil)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
|
|
|
Pioneer
Bank
|
|
NY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Super
Maximum
|
|
|
|
$
|
10.00
|
|
|
$
|
259.78
|
|
|
$
|
0.65
|
|
|
$
|
13.27
|
|
|
|
15.20
|
x
|
|
|
75.36
|
%
|
|
|
17.26
|
%
|
|
|
77.64
|
%
|
|
|
15.28
|
x
|
|
$
|
0.00
|
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
$
|
1,505
|
|
|
|
22.89
|
%
|
|
|
22.26
|
%
|
|
|
0.78
|
%
|
|
|
1.14
|
%
|
|
|
4.96
|
%
|
|
|
1.13
|
%
|
|
|
4.93
|
%
|
|
$
|
254.58
|
|
|
Maximum
|
|
|
|
$
|
10.00
|
|
|
$
|
225.89
|
|
|
$
|
0.75
|
|
|
$
|
14.07
|
|
|
|
13.23
|
x
|
|
|
71.07
|
%
|
|
|
15.28
|
%
|
|
|
73.42
|
%
|
|
|
13.30
|
x
|
|
$
|
0.00
|
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
$
|
1,478
|
|
|
|
21.50
|
%
|
|
|
20.84
|
%
|
|
|
0.80
|
%
|
|
|
1.16
|
%
|
|
|
5.37
|
%
|
|
|
1.15
|
%
|
|
|
5.35
|
%
|
|
$
|
221.38
|
|
|
Midpoint
|
|
|
|
$
|
10.00
|
|
|
$
|
196.43
|
|
|
$
|
0.86
|
|
|
$
|
14.91
|
|
|
|
11.53
|
x
|
|
|
67.07
|
%
|
|
|
13.52
|
%
|
|
|
69.44
|
%
|
|
|
11.59
|
x
|
|
$
|
0.00
|
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
$
|
1,453
|
|
|
|
20.15
|
%
|
|
|
19.48
|
%
|
|
|
0.81
|
%
|
|
|
1.17
|
%
|
|
|
5.82
|
%
|
|
|
1.17
|
%
|
|
|
5.79
|
%
|
|
$
|
192.50
|
|
|
Minimum
|
|
|
|
$
|
10.00
|
|
|
$
|
166.96
|
|
|
$
|
1.01
|
|
|
$
|
15.97
|
|
|
|
9.83
|
x
|
|
|
62.62
|
%
|
|
|
11.70
|
%
|
|
|
65.06
|
%
|
|
|
9.88
|
x
|
|
$
|
0.00
|
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
$
|
1,427
|
|
|
|
18.68
|
%
|
|
|
18.00
|
%
|
|
|
0.83
|
%
|
|
|
1.19
|
%
|
|
|
6.37
|
%
|
|
|
1.18
|
%
|
|
|
6.34
|
%
|
|
$
|
163.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Non-MHC Public Companies(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
$
|
22.01
|
|
|
$
|
618.58
|
|
|
$
|
1.56
|
|
|
$
|
17.59
|
|
|
|
15.92
|
x
|
|
|
125.94
|
%
|
|
|
15.02
|
%
|
|
|
140.56
|
%
|
|
|
17.00
|
x
|
|
$
|
0.40
|
|
|
|
2.00
|
%
|
|
|
45.56
|
%
|
|
$
|
4,285
|
|
|
|
12.91
|
%
|
|
|
12.00
|
%
|
|
|
0.79
|
%
|
|
|
0.78
|
%
|
|
|
6.64
|
%
|
|
|
0.89
|
%
|
|
|
7.49
|
%
|
|
|
|
|
|
Median
|
|
|
|
$
|
16.88
|
|
|
$
|
227.31
|
|
|
$
|
0.98
|
|
|
$
|
15.59
|
|
|
|
14.88
|
x
|
|
|
117.19
|
%
|
|
|
14.82
|
%
|
|
|
129.35
|
%
|
|
|
14.63
|
x
|
|
$
|
0.34
|
|
|
|
1.83
|
%
|
|
|
40.80
|
%
|
|
$
|
1,191
|
|
|
|
11.88
|
%
|
|
|
10.82
|
%
|
|
|
0.65
|
%
|
|
|
0.75
|
%
|
|
|
6.82
|
%
|
|
|
0.88
|
%
|
|
|
7.37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALL
NY Thrifts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
$
|
14.23
|
|
|
$
|
1,087.38
|
|
|
$
|
0.41
|
|
|
$
|
11.29
|
|
|
|
14.39
|
x
|
|
|
159.89
|
%
|
|
|
12.64
|
%
|
|
|
175.08
|
%
|
|
|
15.04
|
x
|
|
$
|
0.43
|
|
|
|
2.90
|
%
|
|
|
53.16
|
%
|
|
$
|
9,345
|
|
|
|
11.40
|
%
|
|
|
10.33
|
%
|
|
|
0.65
|
%
|
|
|
0.67
|
%
|
|
|
6.37
|
%
|
|
|
0.55
|
%
|
|
|
4.48
|
%
|
|
|
|
|
|
Medians
|
|
|
|
$
|
17.00
|
|
|
$
|
337.88
|
|
|
$
|
0.55
|
|
|
$
|
14.31
|
|
|
|
14.77
|
x
|
|
|
118.93
|
%
|
|
|
11.21
|
%
|
|
|
143.63
|
%
|
|
|
15.04
|
x
|
|
$
|
0.42
|
|
|
|
3.11
|
%
|
|
|
42.06
|
%
|
|
$
|
1,474
|
|
|
|
9.77
|
%
|
|
|
8.93
|
%
|
|
|
0.46
|
%
|
|
|
0.85
|
%
|
|
|
7.24
|
%
|
|
|
0.76
|
%
|
|
|
6.11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
$
|
35.48
|
|
|
$
|
217.55
|
|
|
$
|
3.45
|
|
|
$
|
26.63
|
|
|
|
14.72
|
x
|
|
|
123.16
|
%
|
|
|
15.54
|
%
|
|
|
129.23
|
%
|
|
|
14.38
|
x
|
|
$
|
0.41
|
|
|
|
1.46
|
%
|
|
|
31.05
|
%
|
|
$
|
1,428
|
|
|
|
12.54
|
%
|
|
|
12.02
|
%
|
|
|
0.75
|
%
|
|
|
0.81
|
%
|
|
|
6.78
|
%
|
|
|
0.96
|
%
|
|
|
8.03
|
%
|
|
|
|
|
|
Medians
|
|
|
|
$
|
18.78
|
|
|
$
|
163.91
|
|
|
$
|
1.08
|
|
|
$
|
15.63
|
|
|
|
14.63
|
x
|
|
|
117.29
|
%
|
|
|
14.36
|
%
|
|
|
125.03
|
%
|
|
|
14.52
|
x
|
|
$
|
0.21
|
|
|
|
1.23
|
%
|
|
|
21.05
|
%
|
|
$
|
1,278
|
|
|
|
11.03
|
%
|
|
|
10.69
|
%
|
|
|
0.66
|
%
|
|
|
0.71
|
%
|
|
|
6.31
|
%
|
|
|
0.93
|
%
|
|
|
7.34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESSA
|
|
ESSA Bancorp, Inc.
|
|
PA
|
|
$
|
15.25
|
|
|
$
|
167.65
|
|
|
$
|
1.05
|
|
|
$
|
15.63
|
|
|
|
14.95
|
x
|
|
|
97.55
|
%
|
|
|
9.68
|
%
|
|
|
106.23
|
%
|
|
|
14.52
|
x
|
|
$
|
0.40
|
|
|
|
2.62
|
%
|
|
|
36.27
|
%
|
|
$
|
1,834
|
|
|
|
9.77
|
%
|
|
|
9.02
|
%
|
|
|
0.64
|
%
|
|
|
0.36
|
%
|
|
|
3.61
|
%
|
|
|
0.60
|
%
|
|
|
6.01
|
%
|
|
|
|
|
|
HIFS
|
|
Hingham Institution for Savings
|
|
MA
|
|
$
|
183.95
|
|
|
$
|
392.32
|
|
|
$
|
14.99
|
|
|
$
|
99.67
|
|
|
|
13.23
|
x
|
|
|
184.55
|
%
|
|
|
16.29
|
%
|
|
|
184.55
|
%
|
|
|
12.27
|
x
|
|
$
|
1.48
|
|
|
|
0.80
|
%
|
|
|
13.81
|
%
|
|
$
|
2,370
|
|
|
|
8.85
|
%
|
|
|
8.85
|
%
|
|
|
0.08
|
%
|
|
|
1.42
|
%
|
|
|
16.55
|
%
|
|
|
1.38
|
%
|
|
|
16.14
|
%
|
|
|
|
|
|
HMNF
|
|
HMN Financial, Inc.
|
|
MN
|
|
$
|
19.55
|
|
|
$
|
89.55
|
|
|
|
NA
|
|
|
$
|
17.19
|
|
|
|
11.37
|
x
|
|
|
113.70
|
%
|
|
|
13.27
|
%
|
|
|
115.17
|
%
|
|
|
NM
|
|
|
$
|
0.00
|
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
$
|
737
|
|
|
|
10.85
|
%
|
|
|
10.72
|
%
|
|
|
0.93
|
%
|
|
|
0.87
|
%
|
|
|
7.55
|
%
|
|
|
1.03
|
%
|
|
|
8.93
|
%
|
|
|
|
|
|
PCSB
|
|
PCSB Financial Corporation
|
|
NY
|
|
$
|
20.70
|
|
|
$
|
337.88
|
|
|
$
|
0.55
|
|
|
$
|
15.62
|
|
|
|
NM
|
|
|
|
132.54
|
%
|
|
|
24.58
|
%
|
|
|
135.58
|
%
|
|
|
NM
|
|
|
$
|
0.12
|
|
|
|
0.58
|
%
|
|
|
21.05
|
%
|
|
$
|
1,474
|
|
|
|
19.66
|
%
|
|
|
19.30
|
%
|
|
|
0.76
|
%
|
|
|
0.50
|
%
|
|
|
2.51
|
%
|
|
|
0.61
|
%
|
|
|
3.08
|
%
|
|
|
|
|
|
PBIP
|
|
Prudential Bancorp, Inc.
|
|
PA
|
|
$
|
18.01
|
|
|
$
|
160.16
|
|
|
|
NA
|
|
|
$
|
14.69
|
|
|
|
18.38
|
x
|
|
|
122.56
|
%
|
|
|
14.36
|
%
|
|
|
129.12
|
%
|
|
|
NM
|
|
|
$
|
0.20
|
|
|
|
1.11
|
%
|
|
|
56.12
|
%
|
|
$
|
1,081
|
|
|
|
11.88
|
%
|
|
|
11.33
|
%
|
|
|
1.39
|
%
|
|
|
0.72
|
%
|
|
|
5.45
|
%
|
|
|
0.95
|
%
|
|
|
7.12
|
%
|
|
|
|
|
|
SVBI
|
|
Severn Bancorp, Inc.
|
|
MD
|
|
$
|
8.85
|
|
|
$
|
112.58
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
13.21
|
x
|
|
|
117.19
|
%
|
|
|
NA
|
|
|
|
118.55
|
%
|
|
|
NM
|
|
|
$
|
0.12
|
|
|
|
1.36
|
%
|
|
|
17.91
|
%
|
|
$
|
889
|
|
|
|
10.78
|
%
|
|
|
10.67
|
%
|
|
|
1.94
|
%
|
|
|
0.69
|
%
|
|
|
6.30
|
%
|
|
|
0.92
|
%
|
|
|
8.42
|
%
|
|
|
|
|
|
STND
|
|
Standard AVB Financial Corp.
|
|
PA
|
|
$
|
30.49
|
|
|
$
|
141.22
|
|
|
|
NA
|
|
|
$
|
28.65
|
|
|
|
16.22
|
x
|
|
|
106.42
|
%
|
|
|
15.10
|
%
|
|
|
137.21
|
%
|
|
|
NM
|
|
|
$
|
0.88
|
|
|
|
2.90
|
%
|
|
|
47.02
|
%
|
|
$
|
983
|
|
|
|
13.77
|
%
|
|
|
11.19
|
%
|
|
|
0.30
|
%
|
|
|
0.86
|
%
|
|
|
6.33
|
%
|
|
|
0.97
|
%
|
|
|
7.13
|
%
|
|
|
|
|
|
WSBF
|
|
Waterstone Financial, Inc.
|
|
WI
|
|
$
|
16.24
|
|
|
$
|
425.31
|
|
|
$
|
1.11
|
|
|
$
|
14.04
|
|
|
|
14.63
|
x
|
|
|
115.65
|
%
|
|
|
24.13
|
%
|
|
|
115.83
|
%
|
|
|
14.63
|
x
|
|
$
|
0.48
|
|
|
|
2.96
|
%
|
|
|
88.29
|
%
|
|
$
|
1,919
|
|
|
|
21.08
|
%
|
|
|
21.06
|
%
|
|
|
0.61
|
%
|
|
|
1.52
|
%
|
|
|
6.91
|
%
|
|
|
1.66
|
%
|
|
|
7.55
|
%
|
|
|
|
|
|
WEBK
|
|
Wellesley Bancorp, Inc.
|
|
MA
|
|
$
|
32.00
|
|
|
$
|
77.42
|
|
|
$
|
2.40
|
|
|
$
|
25.79
|
|
|
|
13.33
|
x
|
|
|
124.08
|
%
|
|
|
9.27
|
%
|
|
|
124.08
|
%
|
|
|
13.33
|
x
|
|
$
|
0.22
|
|
|
|
0.69
|
%
|
|
|
8.96
|
%
|
|
$
|
837
|
|
|
|
7.53
|
%
|
|
|
7.53
|
%
|
|
|
0.14
|
%
|
|
|
0.57
|
%
|
|
|
7.59
|
%
|
|
|
0.69
|
%
|
|
|
9.20
|
%
|
|
|
|
|
|
WNEB
|
|
Western New England Bancorp, Inc.
|
|
MA
|
|
$
|
9.80
|
|
|
$
|
271.39
|
|
|
$
|
0.57
|
|
|
$
|
8.35
|
|
|
|
17.19
|
x
|
|
|
117.39
|
%
|
|
|
13.13
|
%
|
|
|
125.99
|
%
|
|
|
17.12
|
x
|
|
$
|
0.16
|
|
|
|
1.63
|
%
|
|
|
21.05
|
%
|
|
$
|
2,151
|
|
|
|
11.22
|
%
|
|
|
10.54
|
%
|
|
|
0.69
|
%
|
|
|
0.59
|
%
|
|
|
5.00
|
%
|
|
|
0.78
|
%
|
|
|
6.67
|
%
|
|
|
|
|
|
|
(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.
|
|
|
(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)
|
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) 2019 by RP® Financial, LC.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV. 20
|
On an MHC reported
basis, the Bank’s reported and core P/E multiples at the midpoint value of $196.4 million equaled 11.74 times and 11.81 times,
respectively (see Table 4.4). The Bank’s reported and core P/E multiples provided for discounts of 20.24% and 17.87% relative
to the Peer Group’s average reported and core P/E multiples of 14.72 times and 14.38 times, respectively. In comparison to
the Peer Group’s median reported and core earnings multiples which equaled 14.63 times and 14.52 times, respectively, the
Bank’s pro forma reported and core P/E multiples (MHC basis) at the midpoint value indicated discounts of 19.75% and 18.66%,
respectively. The Bank’s pro forma MHC P/E ratios based on reported earnings at the minimum and the super maximum equaled
9.98x and 15.54x, respectively, and based on core earnings at the minimum and the super maximum equaled 10.03x and 15.63x, respectively.
2.
Price-to-Book
("P/B")
. The application of the P/B valuation method requires calculating the Bank’s pro forma market value
by applying a valuation P/B ratio, as derived from the Peer Group’s P/B ratio, to Pioneer Bank’s pro forma book value
(fully-converted basis). Based on the $196.4 million midpoint valuation, Pioneer Bank’s pro forma P/B and P/TB ratios (fully-converted
basis) equaled 67.07% and 69.44%, respectively. In comparison to the average P/B and P/TB ratios for the Peer Group of 123.16%
and 129.23%, respectively, the Bank’s ratios reflected a discount of 45.54% on a P/B basis and a discount of 46.27% on a
P/TB basis. In comparison to the Peer Group’s median P/B and P/TB ratios of 117.29% and 125.03%, respectively, the Bank’s
pro forma P/B and P/TB ratios (fully-converted basis) at the midpoint value reflected discounts of 42.82% and 44.46%, respectively.
At the top of the super range, the Bank’s P/B and P/TB ratios (fully-converted basis) equaled 75.36% and 77.64%, respectively.
In comparison to the Peer Group’s average P/B and P/TB ratios, the Bank’s P/B and P/TB ratios at the top of the super
range reflected discounts of 38.81% and 39.92%, respectively. In comparison to the Peer Group’s median P/B and P/TB ratios,
the Bank’s P/B and P/TB ratios at the top of the super range reflected discounts of 35.75% and 37.90%, respectively. RP Financial
considered the discounts under the P/B approach to be reasonable, given the nature of the calculation of the P/B ratio which mathematically
results in a ratio discounted to book value.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV. 21
|
Table 4.4
MHC Pricing Versus Peer
Group
Pioneer Bank
As of February 8, 2019
|
|
|
|
|
Market
|
|
|
Per Share Data
|
|
|
|
|
|
|
|
|
|
Capitalization
|
|
|
Core
|
|
|
Book
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends(3)
|
|
|
Financial Characteristics(5)
|
|
|
Offering
|
|
|
|
|
|
|
Price/
|
|
|
Market
|
|
|
12
Month
|
|
|
Value/
|
|
|
Pricing
Ratios(2)
|
|
|
Amount/
|
|
|
|
|
|
Payout
|
|
|
Total
|
|
|
Equity/
|
|
|
Tang.
Eq./
|
|
|
NPAs/
|
|
|
Reported
|
|
|
Core
|
|
|
Size
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
($)
|
|
|
($Mil)
|
|
|
($)
|
|
|
($)
|
|
|
(x)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(x)
|
|
|
($)
|
|
|
(%)
|
|
|
(%)
|
|
|
($Mil)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
|
|
|
Pioneer
Bank
|
|
NY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Super Maximum
|
|
|
|
$
|
10.00
|
|
|
$
|
259.78
|
|
|
$
|
0.64
|
|
|
$
|
8.52
|
|
|
|
15.54
|
x
|
|
|
117.37
|
%
|
|
|
18.80
|
%
|
|
|
123.00
|
%
|
|
|
15.63
|
x
|
|
$
|
0.00
|
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
$
|
1,392
|
|
|
|
16.02
|
%
|
|
|
15.32
|
%
|
|
|
0.85
|
%
|
|
|
1.21
|
%
|
|
|
7.55
|
%
|
|
|
1.20
|
%
|
|
|
7.51
|
%
|
|
$
|
111.70
|
|
|
Maximum
|
|
|
|
$
|
10.00
|
|
|
$
|
225.89
|
|
|
$
|
0.74
|
|
|
$
|
9.24
|
|
|
|
13.51
|
x
|
|
|
108.23
|
%
|
|
|
16.50
|
%
|
|
|
113.64
|
%
|
|
|
13.58
|
x
|
|
$
|
0.00
|
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
$
|
1,369
|
|
|
|
15.25
|
%
|
|
|
14.54
|
%
|
|
|
0.86
|
%
|
|
|
1.22
|
%
|
|
|
8.01
|
%
|
|
|
1.21
|
%
|
|
|
7.96
|
%
|
|
$
|
97.13
|
|
|
Midpoint
|
|
|
|
$
|
10.00
|
|
|
$
|
196.43
|
|
|
$
|
0.85
|
|
|
$
|
10.07
|
|
|
|
11.74
|
x
|
|
|
99.30
|
%
|
|
|
14.46
|
%
|
|
|
104.60
|
%
|
|
|
11.81
|
x
|
|
$
|
0.00
|
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
$
|
1,358
|
|
|
|
14.56
|
%
|
|
|
13.84
|
%
|
|
|
0.87
|
%
|
|
|
1.23
|
%
|
|
|
8.45
|
%
|
|
|
1.22
|
%
|
|
|
8.41
|
%
|
|
$
|
84.46
|
|
|
Minimum
|
|
|
|
$
|
10.00
|
|
|
$
|
166.96
|
|
|
$
|
1.00
|
|
|
$
|
11.19
|
|
|
|
9.98
|
x
|
|
|
89.37
|
%
|
|
|
12.39
|
%
|
|
|
94.43
|
%
|
|
|
10.03
|
x
|
|
$
|
0.00
|
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
$
|
1,347
|
|
|
|
13.87
|
%
|
|
|
13.14
|
%
|
|
|
0.88
|
%
|
|
|
1.24
|
%
|
|
|
8.95
|
%
|
|
|
1.24
|
%
|
|
|
8.91
|
%
|
|
$
|
71.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Non-MHC Public Companies(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
$
|
22.01
|
|
|
$
|
618.58
|
|
|
$
|
1.56
|
|
|
$
|
17.59
|
|
|
|
15.92
|
x
|
|
|
125.94
|
%
|
|
|
15.02
|
%
|
|
|
140.56
|
%
|
|
|
17.00
|
x
|
|
$
|
0.40
|
|
|
|
2.00
|
%
|
|
|
45.56
|
%
|
|
$
|
4,285
|
|
|
|
12.91
|
%
|
|
|
12.00
|
%
|
|
|
0.79
|
%
|
|
|
0.78
|
%
|
|
|
6.64
|
%
|
|
|
0.89
|
%
|
|
|
7.49
|
%
|
|
|
|
|
|
Median
|
|
|
|
$
|
16.88
|
|
|
$
|
227.31
|
|
|
$
|
0.98
|
|
|
$
|
15.59
|
|
|
|
14.88
|
x
|
|
|
117.19
|
%
|
|
|
14.82
|
%
|
|
|
129.35
|
%
|
|
|
14.63
|
x
|
|
$
|
0.34
|
|
|
|
1.83
|
%
|
|
|
40.80
|
%
|
|
$
|
1,191
|
|
|
|
11.88
|
%
|
|
|
10.82
|
%
|
|
|
0.65
|
%
|
|
|
0.75
|
%
|
|
|
6.82
|
%
|
|
|
0.88
|
%
|
|
|
7.37
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALL
NY Thrifts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
$
|
14.23
|
|
|
$
|
1,087.38
|
|
|
$
|
0.41
|
|
|
$
|
11.29
|
|
|
|
14.39
|
x
|
|
|
159.89
|
%
|
|
|
12.64
|
%
|
|
|
175.08
|
%
|
|
|
15.04
|
x
|
|
$
|
0.43
|
|
|
|
2.90
|
%
|
|
|
53.16
|
%
|
|
$
|
9,345
|
|
|
|
11.40
|
%
|
|
|
10.33
|
%
|
|
|
0.65
|
%
|
|
|
0.67
|
%
|
|
|
6.37
|
%
|
|
|
0.55
|
%
|
|
|
4.48
|
%
|
|
|
|
|
|
Medians
|
|
|
|
$
|
17.00
|
|
|
$
|
337.88
|
|
|
$
|
0.55
|
|
|
$
|
14.31
|
|
|
|
14.77
|
x
|
|
|
118.93
|
%
|
|
|
11.21
|
%
|
|
|
143.63
|
%
|
|
|
15.04
|
x
|
|
$
|
0.42
|
|
|
|
3.11
|
%
|
|
|
42.06
|
%
|
|
$
|
1,474
|
|
|
|
9.77
|
%
|
|
|
8.93
|
%
|
|
|
0.46
|
%
|
|
|
0.85
|
%
|
|
|
7.24
|
%
|
|
|
0.76
|
%
|
|
|
6.11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
$
|
35.48
|
|
|
$
|
217.55
|
|
|
$
|
3.45
|
|
|
$
|
26.63
|
|
|
|
14.72
|
x
|
|
|
123.16
|
%
|
|
|
15.54
|
%
|
|
|
129.23
|
%
|
|
|
14.38
|
x
|
|
$
|
0.41
|
|
|
|
1.46
|
%
|
|
|
31.05
|
%
|
|
$
|
1,428
|
|
|
|
12.54
|
%
|
|
|
12.02
|
%
|
|
|
0.75
|
%
|
|
|
0.81
|
%
|
|
|
6.78
|
%
|
|
|
0.96
|
%
|
|
|
8.03
|
%
|
|
|
|
|
|
Medians
|
|
|
|
$
|
18.78
|
|
|
$
|
163.91
|
|
|
$
|
1.08
|
|
|
$
|
15.63
|
|
|
|
14.63
|
x
|
|
|
117.29
|
%
|
|
|
14.36
|
%
|
|
|
125.03
|
%
|
|
|
14.52
|
x
|
|
$
|
0.21
|
|
|
|
1.23
|
%
|
|
|
21.05
|
%
|
|
$
|
1,278
|
|
|
|
11.03
|
%
|
|
|
10.69
|
%
|
|
|
0.66
|
%
|
|
|
0.71
|
%
|
|
|
6.31
|
%
|
|
|
0.93
|
%
|
|
|
7.34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESSA
|
|
ESSA Bancorp, Inc.
|
|
PA
|
|
$
|
15.25
|
|
|
$
|
167.65
|
|
|
$
|
1.05
|
|
|
$
|
15.63
|
|
|
|
14.95
|
x
|
|
|
97.55
|
%
|
|
|
9.68
|
%
|
|
|
106.23
|
%
|
|
|
14.52
|
x
|
|
$
|
0.40
|
|
|
|
2.62
|
%
|
|
|
36.27
|
%
|
|
$
|
1,834
|
|
|
|
9.77
|
%
|
|
|
9.02
|
%
|
|
|
0.64
|
%
|
|
|
0.36
|
%
|
|
|
3.61
|
%
|
|
|
0.60
|
%
|
|
|
6.01
|
%
|
|
|
|
|
|
HIFS
|
|
Hingham Institution for Savings
|
|
MA
|
|
$
|
183.95
|
|
|
$
|
392.32
|
|
|
$
|
14.99
|
|
|
$
|
99.67
|
|
|
|
13.23
|
x
|
|
|
184.55
|
%
|
|
|
16.29
|
%
|
|
|
184.55
|
%
|
|
|
12.27
|
x
|
|
$
|
1.48
|
|
|
|
0.80
|
%
|
|
|
13.81
|
%
|
|
$
|
2,370
|
|
|
|
8.85
|
%
|
|
|
8.85
|
%
|
|
|
0.08
|
%
|
|
|
1.42
|
%
|
|
|
16.55
|
%
|
|
|
1.38
|
%
|
|
|
16.14
|
%
|
|
|
|
|
|
HMNF
|
|
HMN Financial, Inc.
|
|
MN
|
|
$
|
19.55
|
|
|
$
|
89.55
|
|
|
|
NA
|
|
|
$
|
17.19
|
|
|
|
11.37
|
x
|
|
|
113.70
|
%
|
|
|
13.27
|
%
|
|
|
115.17
|
%
|
|
|
NM
|
|
|
$
|
0.00
|
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
$
|
737
|
|
|
|
10.85
|
%
|
|
|
10.72
|
%
|
|
|
0.93
|
%
|
|
|
0.87
|
%
|
|
|
7.55
|
%
|
|
|
1.03
|
%
|
|
|
8.93
|
%
|
|
|
|
|
|
PCSB
|
|
PCSB Financial Corporation
|
|
NY
|
|
$
|
20.70
|
|
|
$
|
337.88
|
|
|
$
|
0.55
|
|
|
$
|
15.62
|
|
|
|
NM
|
|
|
|
132.54
|
%
|
|
|
24.58
|
%
|
|
|
135.58
|
%
|
|
|
NM
|
|
|
$
|
0.12
|
|
|
|
0.58
|
%
|
|
|
21.05
|
%
|
|
$
|
1,474
|
|
|
|
19.66
|
%
|
|
|
19.30
|
%
|
|
|
0.76
|
%
|
|
|
0.50
|
%
|
|
|
2.51
|
%
|
|
|
0.61
|
%
|
|
|
3.08
|
%
|
|
|
|
|
|
PBIP
|
|
Prudential Bancorp, Inc.
|
|
PA
|
|
$
|
18.01
|
|
|
$
|
160.16
|
|
|
|
NA
|
|
|
$
|
14.69
|
|
|
|
18.38
|
x
|
|
|
122.56
|
%
|
|
|
14.36
|
%
|
|
|
129.12
|
%
|
|
|
NM
|
|
|
$
|
0.20
|
|
|
|
1.11
|
%
|
|
|
56.12
|
%
|
|
$
|
1,081
|
|
|
|
11.88
|
%
|
|
|
11.33
|
%
|
|
|
1.39
|
%
|
|
|
0.72
|
%
|
|
|
5.45
|
%
|
|
|
0.95
|
%
|
|
|
7.12
|
%
|
|
|
|
|
|
SVBI
|
|
Severn Bancorp, Inc.
|
|
MD
|
|
$
|
8.85
|
|
|
$
|
112.58
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
13.21
|
x
|
|
|
117.19
|
%
|
|
|
NA
|
|
|
|
118.55
|
%
|
|
|
NM
|
|
|
$
|
0.12
|
|
|
|
1.36
|
%
|
|
|
17.91
|
%
|
|
$
|
889
|
|
|
|
10.78
|
%
|
|
|
10.67
|
%
|
|
|
1.94
|
%
|
|
|
0.69
|
%
|
|
|
6.30
|
%
|
|
|
0.92
|
%
|
|
|
8.42
|
%
|
|
|
|
|
|
STND
|
|
Standard AVB Financial Corp.
|
|
PA
|
|
$
|
30.49
|
|
|
$
|
141.22
|
|
|
|
NA
|
|
|
$
|
28.65
|
|
|
|
16.22
|
x
|
|
|
106.42
|
%
|
|
|
15.10
|
%
|
|
|
137.21
|
%
|
|
|
NM
|
|
|
$
|
0.88
|
|
|
|
2.90
|
%
|
|
|
47.02
|
%
|
|
$
|
983
|
|
|
|
13.77
|
%
|
|
|
11.19
|
%
|
|
|
0.30
|
%
|
|
|
0.86
|
%
|
|
|
6.33
|
%
|
|
|
0.97
|
%
|
|
|
7.13
|
%
|
|
|
|
|
|
WSBF
|
|
Waterstone Financial, Inc.
|
|
WI
|
|
$
|
16.24
|
|
|
$
|
425.31
|
|
|
$
|
1.11
|
|
|
$
|
14.04
|
|
|
|
14.63
|
x
|
|
|
115.65
|
%
|
|
|
24.13
|
%
|
|
|
115.83
|
%
|
|
|
14.63
|
x
|
|
$
|
0.48
|
|
|
|
2.96
|
%
|
|
|
88.29
|
%
|
|
$
|
1,919
|
|
|
|
21.08
|
%
|
|
|
21.06
|
%
|
|
|
0.61
|
%
|
|
|
1.52
|
%
|
|
|
6.91
|
%
|
|
|
1.66
|
%
|
|
|
7.55
|
%
|
|
|
|
|
|
WEBK
|
|
Wellesley Bancorp, Inc.
|
|
MA
|
|
$
|
32.00
|
|
|
$
|
77.42
|
|
|
$
|
2.40
|
|
|
$
|
25.79
|
|
|
|
13.33
|
x
|
|
|
124.08
|
%
|
|
|
9.27
|
%
|
|
|
124.08
|
%
|
|
|
13.33
|
x
|
|
$
|
0.22
|
|
|
|
0.69
|
%
|
|
|
8.96
|
%
|
|
$
|
837
|
|
|
|
7.53
|
%
|
|
|
7.53
|
%
|
|
|
0.14
|
%
|
|
|
0.57
|
%
|
|
|
7.59
|
%
|
|
|
0.69
|
%
|
|
|
9.20
|
%
|
|
|
|
|
|
WNEB
|
|
Western New England Bancorp, Inc.
|
|
MA
|
|
$
|
9.80
|
|
|
$
|
271.39
|
|
|
$
|
0.57
|
|
|
$
|
8.35
|
|
|
|
17.19
|
x
|
|
|
117.39
|
%
|
|
|
13.13
|
%
|
|
|
125.99
|
%
|
|
|
17.12
|
x
|
|
$
|
0.16
|
|
|
|
1.63
|
%
|
|
|
21.05
|
%
|
|
$
|
2,151
|
|
|
|
11.22
|
%
|
|
|
10.54
|
%
|
|
|
0.69
|
%
|
|
|
0.59
|
%
|
|
|
5.00
|
%
|
|
|
0.78
|
%
|
|
|
6.67
|
%
|
|
|
|
|
|
|
(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.
|
|
|
(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)
|
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) 2019 by RP® Financial, LC.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV. 22
|
On an MHC reported
basis, the Bank’s P/B and P/TB ratios at the $196.4 million midpoint value equaled 99.30% and 104.60%, respectively. In comparison
to the average P/B and P/TB ratios indicated for the Peer Group of 123.16% and 129.23%, respectively, Pioneer Bank’s ratios
were discounted by 19.37% on a P/B basis and 19.06% on a P/TB basis. In comparison to the Peer Group’s median P/B and P/TB
ratios of 117.29% and 125.03%, respectively, the Bank’s pro forma P/B and P/TB ratios (MHC basis) at the midpoint value reflected
discounts of 15.34% and 16.34%, respectively. At the top of the super range, the Bank’s P/B and P/TB ratios (MHC basis) equaled
117.37% and 123.00%, respectively. In comparison to the Peer Group’s average P/B and P/TB ratios, the Bank’s P/B and
P/TB ratios at the top of the super range reflected discounts of 4.70% and 4.82%, respectively. In comparison to the Peer Group’s
median P/B and P/TB ratios, the Bank’s P/B and P/TB ratios at the top of the super range reflected a premium of 0.07% and
a discount of 1.62%, respectively.
3.
Price-to-Assets
("P/A")
. The P/A valuation methodology determines market value by applying a valuation P/A ratio (fully-converted
basis) to the Bank’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 $196.4 million midpoint of the valuation range, Pioneer Bank’s pro forma P/A ratio (fully-converted basis) equaled
13.52% of pro forma assets. Comparatively, the Peer Group companies exhibited an average P/A ratio of 15.54%, which implies a discount
of 13.00% has been applied to the Bank’s pro forma P/A ratio. In comparison to the Peer Group’s median P/A ratio of
14.36%, the Bank’s pro forma P/A ratio (fully-converted basis) at the midpoint value reflects a discount of 5.85%.
On an MHC reported
basis, Pioneer Bank’s pro forma P/A ratio at the $196.4 million midpoint value equaled 14.46%. In comparison to the Peer
Group's average P/A ratio of 15.54%, Pioneer Bank’s P/A ratio (MHC basis) indicated a discount of 6.95%. In comparison to
the Peer Group’s median P/A ratio of 14.36%, the Bank’s pro forma P/A ratio (MHC basis) at the midpoint value reflects
a premium of 0.70%.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV. 23
|
Comparison
to Publicly-Traded MHCs
As indicated in Chapter
III, we believe there are a number of characteristics of MHC shares that make them different from the shares of fully-converted
companies. These factors include: (1) lower aftermarket liquidity in the MHC shares since less than 50% of the shares are available
for trading; (2) no opportunity for public shareholders to exercise voting control; (3) the potential pro forma impact of second-step
conversions on the pricing of MHC institutions; and (4) the regulatory policies regarding the accounting for net assets held by
the MHC in a second-step conversion and, thereby, lessening the attractiveness of paying cash dividends. The above characteristics
of MHC shares have provided MHC stocks with different trading characteristics versus fully-converted companies. To account for
the unique trading characteristics of MHC shares, RP Financial has placed the financial data and pricing ratios of the publicly-traded
MHCs on a fully-converted basis to make them comparable for valuation purposes. Using the per share and pricing information of
the publicly-traded MHCs on a fully-converted basis accomplishes a number of objectives. First, such figures eliminate distortions
that result when trying to compare institutions that have different public ownership interests outstanding. Secondly, such an analysis
provides ratios that are comparable to the pricing information of fully-converted public companies and are directly applicable
to determining the pro forma market value range of the 100% ownership interest in Pioneer Bank as an MHC. This technique is validated
by the investment community's evaluation of MHC pricing, which also incorporates the pro forma impact of a second-step conversion
based on the current market price.
To calculate the fully-converted
pricing information for MHCs, the reported financial information for the public MHCs incorporates the following assumptions: (1)
all shares owned by the MHC are assumed to be sold at the current trading price in a second step-conversion; (2) the gross proceeds
from such a sale are adjusted to reflect reasonable offering expenses and standard stock based benefit plan parameters that would
be factored into a second-step conversion of an MHC institution; and (3) net proceeds are assumed to be reinvested at market rates
on a tax effected basis. Book value per share and earnings per share figures for the public MHCs were adjusted by the impact of
the assumed second step-conversion, resulting in an estimation of book value per share and earnings per share figures on a fully-converted
basis. Table 4.5 shows the calculation of per share financial data (fully-converted basis) for each of the 14 publicly-traded MHC
institutions.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV. 24
|
Table 4.5
Calculation of Implied
Per Share Data - Incorporating MHC Second Step Conversion
Publicly Traded MHC Institutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
|
|
|
|
|
|
|
|
|
Net
|
|
|
Net
|
|
|
Pro Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Ownership
|
|
|
TTM NI
|
|
|
Tang.
|
|
|
|
|
|
Share
|
|
|
Gross
|
|
|
Capital
|
|
|
Income
|
|
|
Net Inc./
|
|
|
Bk Value/
|
|
|
Tang. Bk.
|
|
|
Assets/
|
|
|
Ticker
|
|
Name
|
|
City
|
|
State
|
|
Exhange
|
|
Public
|
|
|
MHC
Shares
|
|
|
Total
Shares
|
|
|
Reported
|
|
|
Bk
Value
|
|
|
Assets
|
|
|
Price
|
|
|
Proceeds(1)
|
|
|
Increase(2)
|
|
|
Increase(3)
|
|
|
Share
|
|
|
Share
|
|
|
Value/Share
|
|
|
Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BCOW
|
|
1895 Bancorp Of Wisconsin,
Inc. (MHC)
|
|
Greenfield
|
|
WI
|
|
NASDAQ
|
|
|
2,194,505
|
|
|
|
2,682,172
|
|
|
|
4,876,677
|
|
|
$
|
(0.74
|
)
|
|
$
|
7.74
|
|
|
$
|
99.01
|
|
|
$
|
9.48
|
|
|
$
|
25,437,719
|
|
|
$
|
21,876,439
|
|
|
$
|
236,723
|
|
|
$
|
(0.70
|
)
|
|
$
|
12.23
|
|
|
$
|
12.23
|
|
|
$
|
103.50
|
|
|
CLBK
|
|
Columbia Financial, Inc. (MHC)
|
|
Fair Lawn
|
|
NJ
|
|
NASDAQ
|
|
|
53,309,020
|
|
|
|
62,580,155
|
|
|
|
115,889,175
|
|
|
$
|
0.20
|
|
|
$
|
8.34
|
|
|
$
|
57.74
|
|
|
$
|
15.77
|
|
|
$
|
986,889,044
|
|
|
$
|
848,724,578
|
|
|
$
|
9,183,989
|
|
|
$
|
0.28
|
|
|
$
|
15.71
|
|
|
$
|
15.66
|
|
|
$
|
65.07
|
|
|
CFBI
|
|
Community First Bancshares, Inc.
(MHC)
|
|
Covington
|
|
GA
|
|
NASDAQ
|
|
|
3,443,282
|
|
|
|
4,070,655
|
|
|
|
7,513,937
|
|
|
$
|
0.06
|
|
|
$
|
10.17
|
|
|
$
|
40.72
|
|
|
$
|
10.33
|
|
|
$
|
42,049,866
|
|
|
$
|
36,162,885
|
|
|
$
|
391,316
|
|
|
$
|
0.11
|
|
|
$
|
14.98
|
|
|
$
|
14.98
|
|
|
$
|
45.53
|
|
|
FFBW
|
|
FFBW, Inc. (MHC)
|
|
Brookfield
|
|
WI
|
|
NASDAQ
|
|
|
3,059,867
|
|
|
|
3,636,875
|
|
|
|
6,696,742
|
|
|
$
|
0.16
|
|
|
$
|
9.00
|
|
|
$
|
39.23
|
|
|
$
|
11.22
|
|
|
$
|
40,791,554
|
|
|
$
|
35,080,736
|
|
|
$
|
379,606
|
|
|
$
|
0.21
|
|
|
$
|
14.25
|
|
|
$
|
14.24
|
|
|
$
|
44.47
|
|
|
GCBC
|
|
Greene County Bancorp, Inc. (MHC)
|
|
Catskill
|
|
NY
|
|
NASDAQ
|
|
|
3,928,550
|
|
|
|
4,609,264
|
|
|
|
8,537,814
|
|
|
$
|
1.90
|
|
|
$
|
12.20
|
|
|
$
|
140.00
|
|
|
$
|
32.33
|
|
|
$
|
149,017,505
|
|
|
$
|
128,155,054
|
|
|
$
|
1,386,757
|
|
|
$
|
2.07
|
|
|
$
|
27.21
|
|
|
$
|
27.21
|
|
|
$
|
155.01
|
|
|
HONE
|
|
HarborOne Bancorp, Inc. (MHC)
|
|
Brockton
|
|
MA
|
|
NASDAQ
|
|
|
15,304,485
|
|
|
|
17,281,034
|
|
|
|
32,585,519
|
|
|
$
|
0.35
|
|
|
$
|
8.57
|
|
|
$
|
112.11
|
|
|
$
|
15.33
|
|
|
$
|
264,918,251
|
|
|
$
|
227,829,696
|
|
|
$
|
2,465,329
|
|
|
$
|
0.43
|
|
|
$
|
17.97
|
|
|
$
|
15.56
|
|
|
$
|
119.10
|
|
|
KFFB
|
|
Kentucky First Federal Bancorp
(MHC)
|
|
Frankfort
|
|
KY
|
|
NASDAQ
|
|
|
3,660,377
|
|
|
|
4,727,938
|
|
|
|
8,388,315
|
|
|
$
|
0.06
|
|
|
$
|
6.24
|
|
|
$
|
38.26
|
|
|
$
|
7.50
|
|
|
$
|
35,459,535
|
|
|
$
|
30,495,200
|
|
|
$
|
329,986
|
|
|
$
|
0.10
|
|
|
$
|
11.60
|
|
|
$
|
9.87
|
|
|
$
|
41.90
|
|
|
LSBK
|
|
Lake Shore Bancorp, Inc. (MHC)
|
|
Dunkirk
|
|
NY
|
|
NASDAQ
|
|
|
2,367,789
|
|
|
|
3,636,875
|
|
|
|
6,004,664
|
|
|
$
|
0.67
|
|
|
$
|
13.29
|
|
|
$
|
90.88
|
|
|
$
|
15.93
|
|
|
$
|
57,934,691
|
|
|
$
|
49,823,835
|
|
|
$
|
539,140
|
|
|
$
|
0.76
|
|
|
$
|
21.59
|
|
|
$
|
21.59
|
|
|
$
|
99.18
|
|
|
MGYR
|
|
Magyar Bancorp, Inc. (MHC)
|
|
New Brunswick
|
|
NJ
|
|
NASDAQ
|
|
|
2,620,296
|
|
|
|
3,200,450
|
|
|
|
5,820,746
|
|
|
$
|
0.41
|
|
|
$
|
8.99
|
|
|
$
|
110.57
|
|
|
$
|
11.65
|
|
|
$
|
37,285,243
|
|
|
$
|
32,065,309
|
|
|
$
|
346,976
|
|
|
$
|
0.47
|
|
|
$
|
14.50
|
|
|
$
|
14.50
|
|
|
$
|
116.08
|
|
|
OFED
|
|
Oconee Federal Financial Corp.
(MHC)
|
|
Seneca
|
|
SC
|
|
NASDAQ
|
|
|
1,600,483
|
|
|
|
4,164,415
|
|
|
|
5,764,898
|
|
|
$
|
0.53
|
|
|
$
|
14.10
|
|
|
$
|
86.12
|
|
|
$
|
24.43
|
|
|
$
|
101,736,658
|
|
|
$
|
87,493,526
|
|
|
$
|
946,761
|
|
|
$
|
0.70
|
|
|
$
|
29.80
|
|
|
$
|
29.28
|
|
|
$
|
101.30
|
|
|
PDLB
|
|
PDL Community Bancorp (MHC)
|
|
Bronx
|
|
NY
|
|
NASDAQ
|
|
|
8,917,641
|
|
|
|
9,545,387
|
|
|
|
18,463,028
|
|
|
$
|
(0.04
|
)
|
|
$
|
9.05
|
|
|
$
|
53.23
|
|
|
$
|
12.63
|
|
|
$
|
120,558,238
|
|
|
$
|
103,680,085
|
|
|
$
|
1,121,915
|
|
|
$
|
0.02
|
|
|
$
|
14.67
|
|
|
$
|
14.67
|
|
|
$
|
58.84
|
|
|
PVBC
|
|
Provident Bancorp, Inc. (MHC)
|
|
Amesbury
|
|
MA
|
|
NASDAQ
|
|
|
4,591,396
|
|
|
|
5,034,323
|
|
|
|
9,625,719
|
|
|
$
|
0.97
|
|
|
$
|
13.05
|
|
|
$
|
101.20
|
|
|
$
|
23.00
|
|
|
$
|
115,789,429
|
|
|
$
|
99,578,909
|
|
|
$
|
1,077,536
|
|
|
$
|
1.08
|
|
|
$
|
23.39
|
|
|
$
|
23.39
|
|
|
$
|
111.54
|
|
|
RBKB
|
|
Rhinebeck Bancorp, Inc. (MHC)
|
|
Poughkeepsie
|
|
NY
|
|
NASDAQ
|
|
|
4,787,315
|
|
|
|
6,345,975
|
|
|
|
11,133,290
|
|
|
$
|
0.39
|
|
|
$
|
5.17
|
|
|
$
|
79.26
|
|
|
$
|
11.44
|
|
|
$
|
72,597,954
|
|
|
$
|
62,434,240
|
|
|
$
|
675,597
|
|
|
$
|
0.45
|
|
|
$
|
10.93
|
|
|
$
|
10.78
|
|
|
$
|
84.87
|
|
|
TFSL
|
|
TFS Financial Corporation (MHC)
|
|
Cleveland
|
|
OH
|
|
NASDAQ
|
|
|
53,016,032
|
|
|
|
227,119,132
|
|
|
|
280,135,164
|
|
|
$
|
0.31
|
|
|
$
|
6.19
|
|
|
$
|
50.83
|
|
|
$
|
16.92
|
|
|
$
|
3,842,855,713
|
|
|
$
|
3,304,855,914
|
|
|
$
|
35,761,615
|
|
|
$
|
0.44
|
|
|
$
|
18.02
|
|
|
$
|
17.99
|
|
|
$
|
62.63
|
|
|
|
(1)
|
Gross proceeds calculated as stock price multiplied by
the number of shares owned by the MHC (i.e. non-public shares).
|
|
|
(2)
|
Net increase in capital reflects gross proceeds less
offering expenses, contra-equity account for leveraged ESOP and Restricted Stock Plan. For MHC's with assets at the MHC level,
the net increase in capital also includes consolidation of MHC assets with the capital of the institution concurrent with hypothetical
second step.
|
|
Offering Expense Percent:
|
|
|
2.00
|
%
|
|
ESOP Percent Purchase:
|
|
|
8.00
|
%
|
|
RRP Percent Purchase:
|
|
|
4.00
|
%
|
|
|
(3)
|
Net increase in earnings reflects after-tax reinvestment
income (assumes ESOP and RRP do not generate reinvestment income), less after-tax ESOP amortization and RRP vesting.
|
|
After-Tax Reinvestment Rate:
|
|
|
3.50
|
%
|
|
ESOP Loan Term (Yrs.):
|
|
|
10
|
|
|
Recognition Plan Vesting (Yrs.):
|
|
|
5
|
|
|
Effective Tax Rate:
|
|
|
34.00
|
%
|
Source: S&P Global Market
Intelligence and RP Financial, LC. calculations.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV. 25
|
The table below shows
a comparative pricing analysis of the publicly-traded MHCs on a fully-converted basis versus the Bank’s Peer Group. In comparison
to the Peer Group’s P/TB ratio, the P/TB ratio of the publicly-traded MHCs reflected a discount of 31.38%. In comparison
to the Peer Group’s core P/E multiple, the P/E multiple of the publicly-traded MHCs reflected a premium of 85.26%. Detailed
pricing characteristics of the fully-converted MHCs is shown in Table 4.6.
|
|
|
Publicly-Traded
|
|
|
|
|
|
|
|
MHCs
|
|
|
Peer Group
|
|
|
|
|
|
|
|
|
|
|
Pricing Ratios (Averages)(1)
|
|
|
|
|
|
|
|
|
|
Price/earnings (x)
|
|
|
27.27
|
x
|
|
|
14.72
|
x
|
|
Price/tangible book (%)
|
|
|
88.68
|
%
|
|
|
129.23
|
%
|
|
Price/assets (%)
|
|
|
18.98
|
|
|
|
15.54
|
|
(1) Based on market
prices as of February 8, 2019.
In comparison to the
publicly-traded MHCs, the Bank’s pro forma P/TB ratio (fully-converted basis) of 69.44% at the midpoint of the valuation
range reflected a discount of 21.70%. At the top of the super range, the Bank’s P/TB ratio (fully-converted basis) of 77.64%
reflected a discount of 10.43%. In comparison to the publicly-traded MHCs, the Bank’s pro forma P/E multiple (fully-converted
basis) of 11.53 times at the midpoint of the valuation range reflected a discount of 57.72%. At the top of the super range, the
Bank’s P/E multiple (fully-converted basis) of 15.20 times reflected a discount of 44.26%.
It should be noted
that in a comparison of the publicly-traded MHCs to Pioneer Bank, the publicly-traded MHCs maintain certain inherent characteristics
in support of increasing the attractiveness of their stocks relative to Pioneer Bank’s stock as an MHC that will just be
completing an IPO: (1) the seasoned publicly-traded MHCs are viewed as potential candidates to complete a second-step offering;
and (2) some of the publicly-traded MHCs have been grandfathered to waive dividend payments to the MHC pursuant to receiving an
annual majority vote by the depositors to approve the waiver of dividends.
Comparison
to Recent MHC 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). In comparison to the two recently completed first-step offerings average pro forma P/TB ratio of 68.00%, the Bank’s
P/TB ratio of 69.44% at the midpoint value reflects an implied premium of 2.12%. At the top of the super maximum, the Bank’s
P/TB ratio of 77.64% reflects an implied premium of 14.18% relative to average closing pro forma P/TB ratio of the two recently
completed first-step offerings.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV. 26
|
Table 4.6
MHC Institutions Implied
Pricing Ratios, Full Conversion Basis
Financial Data as of the
Most Recent Quarter or Twelve Month Period Available
Prices as of February
8, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key
Financial Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per
Share Data
|
|
|
Pricing
Ratios
|
|
|
Dividends
|
|
|
|
|
|
|
|
|
LTM
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Mkt
|
|
|
LTM
|
|
|
Tang.
|
|
|
P/E
|
|
|
Price/
|
|
|
Price/
|
|
|
Price/
|
|
|
Ann
Div
|
|
|
Div.
|
|
|
Div
Pay
|
|
|
Total
|
|
|
Tang.
|
|
|
Reported
|
|
|
Ticker
|
|
Company
Name
|
|
City
|
|
State
|
|
Exchange
|
|
Price
|
|
|
Value
|
|
|
EPS
|
|
|
BV/Sh
|
|
|
LTM
|
|
|
Book
|
|
|
TBk
|
|
|
Assts
|
|
|
Rate
|
|
|
Yield
|
|
|
Ratio
|
|
|
Assets
|
|
|
E/A
|
|
|
ROAA
|
|
|
ROAE
|
|
|
|
|
|
|
|
|
|
|
|
|
($)
|
|
|
($M)
|
|
|
($)
|
|
|
($)
|
|
|
(x)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
($)
|
|
|
(%)
|
|
|
(%)
|
|
|
($000)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Publicly Traded MHCs, Full Conversion Basis - Averages
|
|
|
15.57
|
|
|
|
606.5
|
|
|
|
0.46
|
|
|
|
17.28
|
|
|
|
27.27
|
|
|
|
86.68
|
|
|
|
88.68
|
|
|
|
18.98
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
2,624,604
|
|
|
|
21.82
|
|
|
|
0.46
|
|
|
|
2.10
|
|
|
Publicly Traded MHCs, Full Conversion Basis - Medians
|
|
|
13.98
|
|
|
|
134.1
|
|
|
|
0.43
|
|
|
|
15.27
|
|
|
|
25.06
|
|
|
|
83.66
|
|
|
|
84.77
|
|
|
|
20.74
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
810,254
|
|
|
|
22.66
|
|
|
|
0.45
|
|
|
|
2.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Publicly Traded MHCs, Full Conversion Basis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BCOW
|
|
1895 Bancorp Of Wisconsin, Inc.
(MHC)
|
|
Greenfield
|
|
WI
|
|
NASDAQ
|
|
|
9.48
|
|
|
|
46.3
|
|
|
|
-0.70
|
|
|
|
12.23
|
|
|
|
NM
|
|
|
|
77.57
|
|
|
|
77.57
|
|
|
|
9.16
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.0
|
|
|
|
504,720
|
|
|
|
11.81
|
|
|
|
-0.67
|
|
|
|
-5.69
|
|
|
CLBK
|
|
Columbia Financial, Inc. (MHC)
|
|
Fair Lawn
|
|
NJ
|
|
NASDAQ
|
|
|
15.77
|
|
|
|
1,827.6
|
|
|
|
0.28
|
|
|
|
15.66
|
|
|
|
NM
|
|
|
|
100.37
|
|
|
|
100.69
|
|
|
|
24.24
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.0
|
|
|
|
7,540,343
|
|
|
|
24.07
|
|
|
|
0.42
|
|
|
|
1.75
|
|
|
CFBI
|
|
Community First Bancshares, Inc.
(MHC)
|
|
Covington
|
|
GA
|
|
NASDAQ
|
|
|
10.33
|
|
|
|
77.6
|
|
|
|
0.11
|
|
|
|
14.98
|
|
|
|
NM
|
|
|
|
68.97
|
|
|
|
68.97
|
|
|
|
22.69
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.0
|
|
|
|
342,147
|
|
|
|
32.89
|
|
|
|
0.25
|
|
|
|
0.75
|
|
|
FFBW
|
|
FFBW, Inc. (MHC)
|
|
Brookfield
|
|
WI
|
|
NASDAQ
|
|
|
11.22
|
|
|
|
75.1
|
|
|
|
0.21
|
|
|
|
14.24
|
|
|
|
NM
|
|
|
|
78.70
|
|
|
|
78.77
|
|
|
|
25.22
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.0
|
|
|
|
297,807
|
|
|
|
32.02
|
|
|
|
0.48
|
|
|
|
1.51
|
|
|
GCBC
|
|
Greene County Bancorp, Inc. (MHC)
|
|
Catskill
|
|
NY
|
|
NASDAQ
|
|
|
32.33
|
|
|
|
276.0
|
|
|
|
2.07
|
|
|
|
27.21
|
|
|
|
15.64
|
|
|
|
118.84
|
|
|
|
118.84
|
|
|
|
20.86
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.0
|
|
|
|
1,323,441
|
|
|
|
17.55
|
|
|
|
1.33
|
|
|
|
7.60
|
|
|
HONE
|
|
HarborOne Bancorp, Inc. (MHC)
|
|
Brockton
|
|
MA
|
|
NASDAQ
|
|
|
15.33
|
|
|
|
499.5
|
|
|
|
0.43
|
|
|
|
15.56
|
|
|
|
36.04
|
|
|
|
85.33
|
|
|
|
98.54
|
|
|
|
12.87
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.0
|
|
|
|
3,880,951
|
|
|
|
13.06
|
|
|
|
0.36
|
|
|
|
2.37
|
|
|
KFFB
|
|
Kentucky First Federal Bancorp
(MHC)
|
|
Frankfort
|
|
KY
|
|
NASDAQ
|
|
|
7.50
|
|
|
|
62.9
|
|
|
|
0.10
|
|
|
|
9.87
|
|
|
|
NM
|
|
|
|
64.65
|
|
|
|
75.98
|
|
|
|
17.90
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.0
|
|
|
|
351,449
|
|
|
|
23.56
|
|
|
|
0.23
|
|
|
|
0.83
|
|
|
LSBK
|
|
Lake Shore Bancorp, Inc. (MHC)
|
|
Dunkirk
|
|
NY
|
|
NASDAQ
|
|
|
15.93
|
|
|
|
95.7
|
|
|
|
0.76
|
|
|
|
21.59
|
|
|
|
21.07
|
|
|
|
73.79
|
|
|
|
73.79
|
|
|
|
16.06
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.0
|
|
|
|
595,532
|
|
|
|
21.77
|
|
|
|
0.76
|
|
|
|
3.50
|
|
|
MGYR
|
|
Magyar Bancorp, Inc. (MHC)
|
|
New Brunswick
|
|
NJ
|
|
NASDAQ
|
|
|
11.65
|
|
|
|
67.8
|
|
|
|
0.47
|
|
|
|
14.50
|
|
|
|
24.81
|
|
|
|
80.35
|
|
|
|
80.35
|
|
|
|
10.04
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.0
|
|
|
|
675,650
|
|
|
|
12.49
|
|
|
|
0.40
|
|
|
|
3.24
|
|
|
OFED
|
|
Oconee Federal Financial Corp.
(MHC)
|
|
Seneca
|
|
SC
|
|
NASDAQ
|
|
|
24.43
|
|
|
|
140.8
|
|
|
|
0.70
|
|
|
|
29.28
|
|
|
|
35.14
|
|
|
|
81.99
|
|
|
|
83.44
|
|
|
|
24.12
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.0
|
|
|
|
583,974
|
|
|
|
28.90
|
|
|
|
0.69
|
|
|
|
2.33
|
|
|
PDLB
|
|
PDL Community Bancorp (MHC)
|
|
Bronx
|
|
NY
|
|
NASDAQ
|
|
|
12.63
|
|
|
|
233.2
|
|
|
|
0.02
|
|
|
|
14.67
|
|
|
|
NM
|
|
|
|
86.10
|
|
|
|
86.10
|
|
|
|
21.46
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.0
|
|
|
|
1,086,391
|
|
|
|
24.93
|
|
|
|
0.03
|
|
|
|
0.11
|
|
|
PVBC
|
|
Provident Bancorp, Inc. (MHC)
|
|
Amesbury
|
|
MA
|
|
NASDAQ
|
|
|
23.00
|
|
|
|
221.4
|
|
|
|
1.08
|
|
|
|
23.39
|
|
|
|
21.28
|
|
|
|
98.33
|
|
|
|
98.33
|
|
|
|
20.62
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.0
|
|
|
|
1,073,658
|
|
|
|
20.97
|
|
|
|
0.97
|
|
|
|
4.62
|
|
|
RBKB
|
|
Rhinebeck Bancorp, Inc. (MHC)
|
|
Poughkeepsie
|
|
NY
|
|
NASDAQ
|
|
|
11.44
|
|
|
|
127.4
|
|
|
|
0.45
|
|
|
|
10.78
|
|
|
|
25.31
|
|
|
|
104.65
|
|
|
|
106.12
|
|
|
|
13.48
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.0
|
|
|
|
944,857
|
|
|
|
12.70
|
|
|
|
0.53
|
|
|
|
4.13
|
|
|
TFSL
|
|
TFS Financial Corporation (MHC)
|
|
Cleveland
|
|
OH
|
|
NASDAQ
|
|
|
16.92
|
|
|
|
4,739.9
|
|
|
|
0.44
|
|
|
|
17.99
|
|
|
|
38.89
|
|
|
|
93.88
|
|
|
|
94.07
|
|
|
|
27.02
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.0
|
|
|
|
17,543,534
|
|
|
|
28.72
|
|
|
|
0.69
|
|
|
|
2.41
|
|
Source: S&P Global Market
Intelligence and RP Financial, LC. calculations.
|
RP
®
Financial, LC.
|
VALUATION ANALYSIS
IV. 27
|
Valuation
Conclusion
Based on the foregoing,
it is our opinion that, as of February 8, 2019, the estimated aggregate pro forma market value of the shares to be issued immediately
following the conversion, both shares issued publicly as well as to the MHC, equaled $196,428,570 at the midpoint, equal to 19,642,857
shares offered at a per share value of $10.00. Pursuant to conversion guidelines, the 15% offering range indicates a minimum value
of $166,964,280 and a maximum value of $225,892,860. Based on the $10.00 per share offering price determined by the Board, this
valuation range equates to total shares outstanding of 16,696,428 at the minimum and 22,589,286 at the maximum. In the event the
appraised value is subject to an increase, the aggregate pro forma market value may be increased up to a super maximum value of
$259,776,790 without a resolicitation. Based on the $10.00 per share offering price, the super maximum value would result in total
shares outstanding of 25,977,679. The Board of Directors has established a public offering range such that the public ownership
of the Bank will constitute a 43.0% ownership interest prior to the issuance of shares to the Foundation. Accordingly, the offering
to the public of the minority stock will equal $71,794,650 at the minimum, $84,464,290 at the midpoint, $97,133,930 at the maximum
and $111,704,020 at the super maximum of the valuation range. Based on the public offering range and inclusive of the shares issued
to the Foundation, equal to 2.0% of the shares issued in the stock issuance, the public ownership of shares will represent 45.0%
of the shares issued throughout the valuation range. The pro forma valuation calculations relative to the Peer Group (fully-converted
basis) are shown in Table 4.3 and are detailed in Exhibit IV-7 and Exhibit IV-8; the pro forma valuation calculations relative
to the Peer Group based on reported financials are shown in Table 4.4 and are detailed in Exhibits IV-9 and IV-10.
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 Jumbo Time Deposits
|
|
|
|
|
|
I-14
|
|
Borrowing Activity
|
|
|
|
|
|
II-1
|
|
Description of Office Properties
|
|
|
|
|
|
II-2
|
|
Historical Interest Rates
|
LIST OF EXHIBITS (continued)
|
Exhibit
Number
|
|
Description
|
|
|
|
|
|
III-1
|
|
General Characteristics of Publicly-Traded Institutions
|
|
|
|
|
|
III-2
|
|
Public Market Pricing of Mid-Atlantic Thrift Institutions
|
|
|
|
|
|
III-3
|
|
Public Market Pricing of New England Thrift Institutions
|
|
|
|
|
|
III-4
|
|
Public Market Pricing of Midwest Thrift Institutions
|
|
|
|
|
|
III-5
|
|
Peer Group Market Area Comparative Analysis
|
|
|
|
|
|
IV-1
|
|
Stock Prices: As of February 8, 2019
|
|
|
|
|
|
IV-2
|
|
Historical Stock Price Indices
|
|
|
|
|
|
IV-3
|
|
Stock Indices as of February 8, 2019
|
|
|
|
|
|
IV-4
|
|
New York Thrift Acquisitions 2014 - Present
|
|
|
|
|
|
IV-5
|
|
Director and Senior Management Summary Resumes
|
|
|
|
|
|
IV-6
|
|
Pro Forma Regulatory Capital Ratios
|
|
|
|
|
|
IV-7
|
|
Pro Forma Analysis Sheet – Fully Converted Basis
|
|
|
|
|
|
IV-8
|
|
Pro Forma Effect of Conversion Proceeds – Fully Converted Basis
|
|
|
|
|
|
IV-9
|
|
Pro Forma Analysis Sheet – Minority Stock Offering
|
|
|
|
|
|
IV-10
|
|
Pro Forma Effect of Conversion Proceeds – Minority Stock Offering
|
|
|
|
|
|
V-1
|
|
Firm Qualifications Statement
|
EXHIBIT I-1
Pioneer Bank
Map of Office Locations
Exhibit I-1
Pioneer Bank
Map of Office Locations
Source: S&P Global Market Intelligence.
EXHIBIT I-2
Pioneer Bank
Audited Financial Statements
[Incorporated by Reference]
EXHIBIT I-3
Pioneer Bank
Key Operating Ratios
Exhibit I-3
Pioneer Bank
Key Operating Ratios
|
|
|
At
or For the Six Months
Ended December 31, (1)
|
|
|
At
or For the Years Ended June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
|
|
1.41
|
%
|
|
|
0.64
|
%
|
|
|
0.92
|
%
|
|
|
0.52
|
%
|
|
|
0.53
|
%
|
|
|
0.52
|
%
|
|
|
0.54
|
%
|
|
Return on average equity
|
|
|
15.48
|
%
|
|
|
7.45
|
%
|
|
|
10.51
|
%
|
|
|
5.83
|
%
|
|
|
5.18
|
%
|
|
|
4.59
|
%
|
|
|
4.87
|
%
|
|
Interest rate spread (2)
|
|
|
3.93
|
%
|
|
|
3.64
|
%
|
|
|
3.67
|
%
|
|
|
3.47
|
%
|
|
|
3.43
|
%
|
|
|
3.40
|
%
|
|
|
3.52
|
%
|
|
Net interest margin (3)
|
|
|
4.07
|
%
|
|
|
3.74
|
%
|
|
|
3.78
|
%
|
|
|
3.57
|
%
|
|
|
3.51
|
%
|
|
|
3.46
|
%
|
|
|
3.59
|
%
|
|
Non-interest expenses to average
assets
|
|
|
2.81
|
%
|
|
|
2.92
|
%
|
|
|
2.91
|
%
|
|
|
3.27
|
%
|
|
|
3.19
|
%
|
|
|
3.23
|
%
|
|
|
3.32
|
%
|
|
Efficiency ratio (4)
|
|
|
59.99
|
%
|
|
|
66.93
|
%
|
|
|
64.74
|
%
|
|
|
76.70
|
%
|
|
|
78.14
|
%
|
|
|
78.33
|
%
|
|
|
79.43
|
%
|
|
Average interest-earning assets
to average interest-bearing liabilities
|
|
|
145.54
|
%
|
|
|
140.35
|
%
|
|
|
141.31
|
%
|
|
|
139.29
|
%
|
|
|
139.05
|
%
|
|
|
136.82
|
%
|
|
|
133.33
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average equity to average assets
|
|
|
9.41
|
%
|
|
|
8.79
|
%
|
|
|
8.77
|
%
|
|
|
8.93
|
%
|
|
|
10.17
|
%
|
|
|
11.26
|
%
|
|
|
11.01
|
%
|
|
Total capital to risk weighted
assets
|
|
|
13.29
|
%
|
|
|
12.60
|
%
|
|
|
12.86
|
%
|
|
|
12.41
|
%
|
|
|
14.10
|
%
|
|
|
15.65
|
%
|
|
|
16.11
|
%
|
|
Tier 1 capital to risk weighted
assets
|
|
|
12.04
|
%
|
|
|
11.33
|
%
|
|
|
11.59
|
%
|
|
|
11.18
|
%
|
|
|
12.91
|
%
|
|
|
14.38
|
%
|
|
|
14.72
|
%
|
|
Common equity tier 1 capital
to risk weighted assets
|
|
|
12.04
|
%
|
|
|
11.33
|
%
|
|
|
11.59
|
%
|
|
|
11.18
|
%
|
|
|
12.91
|
%
|
|
|
14.38
|
%
|
|
|
14.72
|
%
|
|
Tier 1 capital to average
assets
|
|
|
9.70
|
%
|
|
|
9.13
|
%
|
|
|
9.17
|
%
|
|
|
9.60
|
%
|
|
|
10.87
|
%
|
|
|
11.79
|
%
|
|
|
12.04
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality
Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses
as a percentage of total loans
|
|
|
1.31
|
%
|
|
|
1.28
|
%
|
|
|
1.35
|
%
|
|
|
1.25
|
%
|
|
|
1.23
|
%
|
|
|
1.31
|
%
|
|
|
1.43
|
%
|
|
Allowance for loan losses
as a percentage of non-performing loans
|
|
|
115.83
|
%
|
|
|
160.05
|
%
|
|
|
142.05
|
%
|
|
|
149.68
|
%
|
|
|
155.44
|
%
|
|
|
143.85
|
%
|
|
|
152.68
|
%
|
|
Net charge-offs to average
outstanding loans during the period
|
|
|
0.22
|
%
|
|
|
0.05
|
%
|
|
|
0.03
|
%
|
|
|
0.04
|
%
|
|
|
0.05
|
%
|
|
|
0.16
|
%
|
|
|
0.06
|
%
|
|
Non-performing loans as a
percentage of total loans
|
|
|
1.13
|
%
|
|
|
0.80
|
%
|
|
|
0.95
|
%
|
|
|
0.84
|
%
|
|
|
0.79
|
%
|
|
|
0.91
|
%
|
|
|
0.94
|
%
|
|
Non-performing loans as a
percentage of total assets
|
|
|
0.91
|
%
|
|
|
0.63
|
%
|
|
|
0.74
|
%
|
|
|
0.70
|
%
|
|
|
0.63
|
%
|
|
|
0.71
|
%
|
|
|
0.72
|
%
|
|
Total non-performing assets
as a percentage of total assets
|
|
|
0.92
|
%
|
|
|
0.63
|
%
|
|
|
0.75
|
%
|
|
|
0.70
|
%
|
|
|
0.63
|
%
|
|
|
0.78
|
%
|
|
|
0.77
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of offices
|
|
|
22
|
|
|
|
22
|
|
|
|
22
|
|
|
|
22
|
|
|
|
18
|
|
|
|
17
|
|
|
|
17
|
|
|
Number of full-time equivalent
employees
|
|
|
256
|
|
|
|
255
|
|
|
|
259
|
|
|
|
251
|
|
|
|
215
|
|
|
|
230
|
|
|
|
228
|
|
|
|
(2)
|
Represents the difference between the weighted average
yield on average interest-earning assets and the weighted average cost of interest-bearing liabilities.
|
|
|
(3)
|
Represents net interest income as a percentage of average
interest-earning assets.
|
|
|
(4)
|
Represents non-interest expenses divided by the sum of
net interest income and non-interest income.
|
Source: Pioneer Bank’s
prospectus.
EXHIBIT I-4
Pioneer Bank
Investment Portfolio Composition
Exhibit I-4
Pioneer Bank
Investment Portfolio Composition
|
|
|
At December 31,
|
|
|
At June 30,
|
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities available for
sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government
and agency obligations
|
|
$
|
83,538
|
|
|
$
|
83,420
|
|
|
$
|
58,743
|
|
|
$
|
58,558
|
|
|
$
|
42,967
|
|
|
$
|
42,919
|
|
|
$
|
61,915
|
|
|
$
|
62,172
|
|
|
Mortgage-backed securities
|
|
|
126
|
|
|
|
129
|
|
|
|
146
|
|
|
|
150
|
|
|
|
194
|
|
|
|
200
|
|
|
|
249
|
|
|
|
258
|
|
|
Asset-backed securities
|
|
|
102
|
|
|
|
144
|
|
|
|
115
|
|
|
|
162
|
|
|
|
140
|
|
|
|
261
|
|
|
|
172
|
|
|
|
292
|
|
|
Collateralized mortgage
obligations
|
|
|
599
|
|
|
|
962
|
|
|
|
692
|
|
|
|
1,079
|
|
|
|
934
|
|
|
|
1,469
|
|
|
|
1,229
|
|
|
|
1,662
|
|
|
Municipal obligations
|
|
|
14,644
|
|
|
|
14,668
|
|
|
|
19,264
|
|
|
|
19,263
|
|
|
|
28,350
|
|
|
|
28,366
|
|
|
|
27,119
|
|
|
|
27,147
|
|
|
Preferred stocks
|
|
|
6,007
|
|
|
|
4,640
|
|
|
|
6,007
|
|
|
|
5,749
|
|
|
|
6,019
|
|
|
|
5,963
|
|
|
|
6,840
|
|
|
|
7,002
|
|
|
Common stocks
|
|
|
2,809
|
|
|
|
3,181
|
|
|
|
2,541
|
|
|
|
3,102
|
|
|
|
2,762
|
|
|
|
2,797
|
|
|
|
2,478
|
|
|
|
2,418
|
|
|
Total
|
|
$
|
107,825
|
|
|
$
|
107,144
|
|
|
$
|
87,508
|
|
|
$
|
88,063
|
|
|
$
|
81,366
|
|
|
$
|
81,975
|
|
|
$
|
100,002
|
|
|
$
|
100,951
|
|
|
|
|
At
December 31,
|
|
|
At
June 30,
|
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair
Value
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
Amortized
Cost
|
|
|
Estimated
Fair Value
|
|
|
|
|
(In thousands)
|
|
|
Securities held to maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal
obligations
|
|
$
|
4,275
|
|
|
$
|
4,292
|
|
|
$
|
5,297
|
|
|
$
|
5,326
|
|
|
$
|
2,213
|
|
|
$
|
2,259
|
|
|
$
|
3,811
|
|
|
$
|
3,811
|
|
|
Total
|
|
$
|
4,275
|
|
|
$
|
4,292
|
|
|
$
|
5,297
|
|
|
$
|
5,326
|
|
|
$
|
2,213
|
|
|
$
|
2,259
|
|
|
$
|
3,811
|
|
|
$
|
3,811
|
|
Source: Pioneer Bank’s prospectus.
EXHIBIT I-5
Pioneer Bank
Yields and Costs
Exhibit I-5
Pioneer Bank
Yields and Costs
|
|
|
For the Six Months Ended December 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
|
|
|
Average
Yield/Cost (4)
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
|
|
|
Average
Yield/Cost (4)
|
|
|
|
|
|
|
|
|
|
|
(Dollars
in thousands)
|
|
|
|
|
|
|
|
|
Interest-earning
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
1,022,324
|
|
|
$
|
24,461
|
|
|
|
4.80
|
%
|
|
$
|
956,389
|
|
|
$
|
21,150
|
|
|
|
4.43
|
%
|
|
Securities
|
|
|
112,174
|
|
|
|
1,269
|
|
|
|
2.26
|
%
|
|
|
78,028
|
|
|
|
574
|
|
|
|
1.46
|
%
|
|
Interest-earning deposits
|
|
|
58,104
|
|
|
|
572
|
|
|
|
1.96
|
%
|
|
|
78,298
|
|
|
|
522
|
|
|
|
1.33
|
%
|
|
Other
|
|
|
1,116
|
|
|
|
30
|
|
|
|
5.40
|
%
|
|
|
804
|
|
|
|
36
|
|
|
|
9.08
|
%
|
|
Total interest-earning
assets
|
|
|
1,193,718
|
|
|
|
26,332
|
|
|
|
4.42
|
%
|
|
|
1,113,519
|
|
|
|
22,282
|
|
|
|
4.01
|
%
|
|
Non-interest-earning
assets
|
|
|
112,071
|
|
|
|
|
|
|
|
|
|
|
|
102,815
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
1,305,789
|
|
|
|
|
|
|
|
|
|
|
$
|
1,216,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
$
|
104,775
|
|
|
$
|
165
|
|
|
|
0.31
|
%
|
|
$
|
96,524
|
|
|
$
|
98
|
|
|
|
0.20
|
%
|
|
Savings deposits
|
|
|
244,304
|
|
|
|
63
|
|
|
|
0.05
|
%
|
|
|
240,869
|
|
|
|
62
|
|
|
|
0.05
|
%
|
|
Money market deposits
|
|
|
331,041
|
|
|
|
780
|
|
|
|
0.47
|
%
|
|
|
322,645
|
|
|
|
568
|
|
|
|
0.35
|
%
|
|
Certificates
of deposit
|
|
|
127,002
|
|
|
|
895
|
|
|
|
1.40
|
%
|
|
|
129,460
|
|
|
|
714
|
|
|
|
1.10
|
%
|
|
Total interest-bearing
deposits
|
|
|
807,122
|
|
|
|
1,903
|
|
|
|
0.47
|
%
|
|
|
789,498
|
|
|
|
1,442
|
|
|
|
0.36
|
%
|
|
Borrowings
|
|
|
5,163
|
|
|
|
69
|
|
|
|
2.67
|
%
|
|
|
190
|
|
|
|
1
|
|
|
|
1.05
|
%
|
|
Other
|
|
|
7,904
|
|
|
|
81
|
|
|
|
2.07
|
%
|
|
|
3,837
|
|
|
|
37
|
|
|
|
1.92
|
%
|
|
Total interest-bearing
liabilities
|
|
|
820,189
|
|
|
|
2,053
|
|
|
|
0.49
|
%
|
|
|
793,525
|
|
|
|
1,480
|
|
|
|
0.37
|
%
|
|
Non-interest-bearing
liabilities
|
|
|
362,746
|
|
|
|
|
|
|
|
|
|
|
|
315,885
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,182,935
|
|
|
|
|
|
|
|
|
|
|
|
1,109,410
|
|
|
|
|
|
|
|
|
|
|
Total
net worth
|
|
|
122,852
|
|
|
|
|
|
|
|
|
|
|
|
106,924
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and net worth
|
|
$
|
1,305,787
|
|
|
|
|
|
|
|
|
|
|
$
|
1,216,334
|
|
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
|
|
|
|
$
|
24,278
|
|
|
|
|
|
|
|
|
|
|
$
|
20,802
|
|
|
|
|
|
|
Net interest rate spread
(1)
|
|
|
|
|
|
|
|
|
|
|
3.93
|
%
|
|
|
|
|
|
|
|
|
|
|
3.64
|
%
|
|
Net
interest-earning assets (2)
|
|
$
|
373,529
|
|
|
|
|
|
|
|
|
|
|
$
|
319,994
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (3)
|
|
|
|
|
|
|
|
|
|
|
4.07
|
%
|
|
|
|
|
|
|
|
|
|
|
3.74
|
%
|
|
Average interest-earning
assets to interest-bearing liabilities
|
|
|
145.54
|
%
|
|
|
|
|
|
|
|
|
|
|
140.33
|
%
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted
average rate of interest-bearing liabilities.
|
|
|
(2)
|
Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
|
|
|
(3)
|
Net interest margin represents net interest income divided by average total interest-earning assets.
|
Exhibit I-5 (continued)
Pioneer Bank
Yields and Costs
|
|
|
For
the Years Ended June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
|
|
|
Average
Yield/Cost
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
|
|
|
Average
Yield/Cost
|
|
|
Average
Outstanding
Balance
|
|
|
Interest
|
|
|
Average
Yield/Cost
|
|
|
|
|
(Dollars in thousands)
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
969,624
|
|
|
$
|
43,649
|
|
|
|
4.50
|
%
|
|
$
|
869,816
|
|
|
$
|
36,174
|
|
|
|
4.16
|
%
|
|
$
|
740,794
|
|
|
$
|
30,782
|
|
|
|
4.16
|
%
|
|
Securities
|
|
|
82,514
|
|
|
|
1,367
|
|
|
|
1.66
|
%
|
|
|
100,455
|
|
|
|
1,225
|
|
|
|
1.22
|
%
|
|
|
110,667
|
|
|
|
1,234
|
|
|
|
1.11
|
%
|
|
Interest-earning deposits
|
|
|
91,941
|
|
|
|
1,408
|
|
|
|
1.53
|
%
|
|
|
14,230
|
|
|
|
117
|
|
|
|
0.82
|
%
|
|
|
16,913
|
|
|
|
69
|
|
|
|
0.41
|
%
|
|
Other
|
|
|
816
|
|
|
|
62
|
|
|
|
7.60
|
%
|
|
|
1,953
|
|
|
|
105
|
|
|
|
5.38
|
%
|
|
|
1,944
|
|
|
|
76
|
|
|
|
3.91
|
%
|
|
Total interest-earning assets
|
|
|
1,144,895
|
|
|
|
46,486
|
|
|
|
4.06
|
%
|
|
|
986,454
|
|
|
|
37,621
|
|
|
|
3.81
|
%
|
|
|
870,328
|
|
|
|
32,161
|
|
|
|
3.69
|
%
|
|
Non-interest-earning assets
|
|
|
102,942
|
|
|
|
|
|
|
|
|
|
|
|
95,973
|
|
|
|
|
|
|
|
|
|
|
|
78,089
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,247,837
|
|
|
|
|
|
|
|
|
|
|
$
|
1,082,427
|
|
|
|
|
|
|
|
|
|
|
$
|
948,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits
|
|
$
|
106,309
|
|
|
|
249
|
|
|
|
0.23
|
%
|
|
$
|
56,208
|
|
|
|
79
|
|
|
|
0.14
|
%
|
|
$
|
43,626
|
|
|
|
31
|
|
|
|
0.07
|
%
|
|
Savings deposits
|
|
|
241,357
|
|
|
|
124
|
|
|
|
0.05
|
%
|
|
|
233,843
|
|
|
|
120
|
|
|
|
0.05
|
%
|
|
|
219,157
|
|
|
|
112
|
|
|
|
0.05
|
%
|
|
Money market deposits
|
|
|
328,242
|
|
|
|
1,231
|
|
|
|
0.38
|
%
|
|
|
262,754
|
|
|
|
800
|
|
|
|
0.30
|
%
|
|
|
214,301
|
|
|
|
470
|
|
|
|
0.22
|
%
|
|
Certificates of deposit
|
|
|
129,495
|
|
|
|
1,491
|
|
|
|
1.15
|
%
|
|
|
126,988
|
|
|
|
1,156
|
|
|
|
0.91
|
%
|
|
|
117,513
|
|
|
|
821
|
|
|
|
0.70
|
%
|
|
Total interest-bearing
deposits
|
|
|
805,403
|
|
|
|
3,095
|
|
|
|
0.38
|
%
|
|
|
679,793
|
|
|
|
2,155
|
|
|
|
0.32
|
%
|
|
|
594,597
|
|
|
|
1,434
|
|
|
|
0.24
|
%
|
|
Borrowings
|
|
|
151
|
|
|
|
2
|
|
|
|
1.32
|
%
|
|
|
24,666
|
|
|
|
189
|
|
|
|
0.77
|
%
|
|
|
27,872
|
|
|
|
148
|
|
|
|
0.53
|
%
|
|
Other
|
|
|
4,623
|
|
|
|
89
|
|
|
|
1.93
|
%
|
|
|
3,722
|
|
|
|
67
|
|
|
|
1.80
|
%
|
|
|
3,425
|
|
|
|
66
|
|
|
|
1.93
|
%
|
|
Total interest-bearing
liabilities
|
|
|
810,177
|
|
|
|
3,186
|
|
|
|
0.39
|
%
|
|
|
708,181
|
|
|
|
2,411
|
|
|
|
0.34
|
%
|
|
|
625,894
|
|
|
|
1,648
|
|
|
|
0.26
|
%
|
|
Non-interest-bearing
liabilities
|
|
|
328,261
|
|
|
|
|
|
|
|
|
|
|
|
277,600
|
|
|
|
|
|
|
|
|
|
|
|
226,077
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
1,138,438
|
|
|
|
|
|
|
|
|
|
|
|
985,781
|
|
|
|
|
|
|
|
|
|
|
|
851,971
|
|
|
|
|
|
|
|
|
|
|
Total net worth
|
|
|
109,399
|
|
|
|
|
|
|
|
|
|
|
|
96,646
|
|
|
|
|
|
|
|
|
|
|
|
96,446
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
net worth
|
|
$
|
1,247,837
|
|
|
|
|
|
|
|
|
|
|
$
|
1,082,427
|
|
|
|
|
|
|
|
|
|
|
$
|
948,417
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
|
|
|
$
|
43,300
|
|
|
|
|
|
|
|
|
|
|
$
|
35,120
|
|
|
|
|
|
|
|
|
|
|
$
|
30,513
|
|
|
|
|
|
|
Net interest rate spread (1)
|
|
|
|
|
|
|
|
|
|
|
3.67
|
%
|
|
|
|
|
|
|
|
|
|
|
3.47
|
%
|
|
|
|
|
|
|
|
|
|
|
3.43
|
%
|
|
Net interest-earning assets (2)
|
|
$
|
334,718
|
|
|
|
|
|
|
|
|
|
|
$
|
278,273
|
|
|
|
|
|
|
|
|
|
|
$
|
244,434
|
|
|
|
|
|
|
|
|
|
|
Net interest margin (3)
|
|
|
|
|
|
|
|
|
|
|
3.78
|
%
|
|
|
|
|
|
|
|
|
|
|
3.57
|
%
|
|
|
|
|
|
|
|
|
|
|
3.51
|
%
|
|
Average interest-earning
assets to interest-bearing liabilities
|
|
|
141.31
|
%
|
|
|
|
|
|
|
|
|
|
|
139.29
|
%
|
|
|
|
|
|
|
|
|
|
|
139.05
|
%
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net interest rate spread represents the difference between
the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
|
|
|
(2)
|
Net interest-earning assets represent total interest-earning
assets less total interest-bearing liabilities.
|
|
|
(3)
|
Net interest margin represents net interest income divided
by average total interest-earning assets.
|
Source: Pioneer Bank’s prospectus.
EXHIBIT I-6
Pioneer Bank
Loan Loss Allowance Activity
Exhibit I-6
Pioneer Bank
Loan Loss Allowance Activity
|
|
|
At or for the
Six Months Ended
December 31,
|
|
|
At or for the Years Ended June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance at beginning of period
|
|
$
|
13,510
|
|
|
$
|
11,820
|
|
|
$
|
11,820
|
|
|
$
|
9,794
|
|
|
$
|
9,011
|
|
|
$
|
9,103
|
|
|
$
|
8,588
|
|
|
Provision for loan losses
|
|
|
1,210
|
|
|
|
950
|
|
|
|
1,970
|
|
|
|
2,395
|
|
|
|
1,180
|
|
|
|
962
|
|
|
|
890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge offs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
—
|
|
|
|
121
|
|
|
|
121
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4
|
|
|
Commercial and industrial
|
|
|
1,045
|
|
|
|
53
|
|
|
|
53
|
|
|
|
38
|
|
|
|
169
|
|
|
|
757
|
|
|
|
153
|
|
|
Commercial construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
One- to four-family residential real estate
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
148
|
|
|
|
118
|
|
|
|
169
|
|
|
|
84
|
|
|
Home equity loans and lines of credit
|
|
|
—
|
|
|
|
—
|
|
|
|
17
|
|
|
|
104
|
|
|
|
57
|
|
|
|
70
|
|
|
|
46
|
|
|
Consumer
|
|
|
90
|
|
|
|
87
|
|
|
|
152
|
|
|
|
165
|
|
|
|
160
|
|
|
|
139
|
|
|
|
194
|
|
|
Total charge-offs
|
|
|
1,135
|
|
|
|
262
|
|
|
|
343
|
|
|
|
455
|
|
|
|
504
|
|
|
|
1,135
|
|
|
|
481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoveries:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10
|
|
|
|
7
|
|
|
|
13
|
|
|
Commercial and industrial
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5
|
|
|
|
5
|
|
|
|
—
|
|
|
|
7
|
|
|
Commercial construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
One- to four-family residential real estate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
Home equity loans and lines of credit
|
|
|
—
|
|
|
|
2
|
|
|
|
3
|
|
|
|
15
|
|
|
|
14
|
|
|
|
2
|
|
|
|
3
|
|
|
Consumer
|
|
|
15
|
|
|
|
27
|
|
|
|
60
|
|
|
|
66
|
|
|
|
78
|
|
|
|
72
|
|
|
|
81
|
|
|
Total recoveries
|
|
|
15
|
|
|
|
29
|
|
|
|
63
|
|
|
|
86
|
|
|
|
107
|
|
|
|
81
|
|
|
|
106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs
|
|
|
1,120
|
|
|
|
233
|
|
|
|
280
|
|
|
|
369
|
|
|
|
397
|
|
|
|
1,054
|
|
|
|
375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance at end of period
|
|
$
|
13,600
|
|
|
$
|
12,537
|
|
|
$
|
13,510
|
|
|
$
|
11,820
|
|
|
$
|
9,974
|
|
|
$
|
9,011
|
|
|
$
|
9,103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance to non-performing loans
|
|
|
115.83
|
%
|
|
|
160.05
|
%
|
|
|
142.05
|
%
|
|
|
149.68
|
%
|
|
|
155.44
|
%
|
|
|
143.85
|
%
|
|
|
152.68
|
%
|
|
Allowance to total loans outstanding at the end of the period
|
|
|
1.31
|
%
|
|
|
1.28
|
%
|
|
|
1.35
|
%
|
|
|
1.25
|
%
|
|
|
1.23
|
%
|
|
|
1.31
|
%
|
|
|
1.43
|
%
|
|
Net (charge-offs) to average loans outstanding during the period
|
|
|
0.22
|
%
(1)
|
|
|
0.05
|
%
(1)
|
|
|
0.03
|
%
|
|
|
0.04
|
%
|
|
|
0.05
|
%
|
|
|
0.16
|
%
|
|
|
0.06
|
%
|
____________________________
(1) Annualized.
Source: Pioneer Bank’s prospectus.
EXHIBIT I-7
Pioneer Bank
Interest Rate Risk Analysis
Exhibit I-7
Pioneer Bank
Interest Rate Risk Analysis
|
|
|
|
|
|
|
|
|
|
|
|
EVE as a Percentage of Present
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Assets (3)
|
|
|
Change in Interest
|
|
|
|
|
Estimated Increase (Decrease) in
|
|
|
|
|
|
Increase
|
|
|
Rates (basis
|
|
Estimated
|
|
|
EVE
|
|
|
EVE
|
|
|
(Decrease)
|
|
|
points) (1)
|
|
EVE (2)
|
|
|
Amount
|
|
|
Percent
|
|
|
Ratio (4)
|
|
|
(basis points)
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
+400
|
|
$
|
166,131
|
|
|
$
|
(23,306
|
)
|
|
|
(12.3
|
)%
|
|
|
13.79
|
%
|
|
|
(72
|
)
|
|
+200
|
|
|
176,626
|
|
|
|
(12,811
|
)
|
|
|
(6.8
|
)%
|
|
|
14.12
|
%
|
|
|
(40
|
)
|
|
—
|
|
|
189,437
|
|
|
|
—
|
|
|
|
—
|
%
|
|
|
14.52
|
%
|
|
|
—
|
|
|
-200
|
|
|
198,997
|
|
|
|
9,560
|
|
|
|
5.0
|
%
|
|
|
14.70
|
%
|
|
|
18
|
|
|
|
(1)
|
Assumes an immediate uniform change in interest rates at
all maturities.
|
|
|
(2)
|
EVE is the discounted present value of expected cash flows
from assets, liabilities and off-balance sheet contracts.
|
|
|
(3)
|
Present value of assets represents the discounted present
value of incoming cash flows on interest-earning assets.
|
|
|
(4)
|
EVE Ratio represents EVE divided by the present value of
assets.
|
Source: Pioneer Bank’s
EXHIBIT I-8
Pioneer Bank
Fixed and Adjustable Rate Loans
Exhibit I-8
Pioneer Bank
Fixed and Adjustable Rate Loans
The following table sets forth our fixed
and adjustable-rate loans at June 30, 2018 that are contractually due after June 30, 2019.
|
|
|
Due After June 30, 2019
|
|
|
|
|
Fixed
|
|
|
Adjustable
|
|
|
Total
|
|
|
|
|
(In thousands)
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
$
|
78,694
|
|
|
$
|
264,157
|
|
|
$
|
342,851
|
|
|
Commercial and industrial
|
|
|
50,864
|
|
|
|
33,765
|
|
|
|
84,629
|
|
|
Commercial construction
|
|
|
4,636
|
|
|
|
71,937
|
|
|
|
76,573
|
|
|
One- to four-family residential real estate
|
|
|
224,241
|
|
|
|
25,064
|
|
|
|
249,305
|
|
|
Home equity loans and lines of credit
|
|
|
46,302
|
|
|
|
31,862
|
|
|
|
78,164
|
|
|
Consumer
|
|
|
1,738
|
|
|
|
734
|
|
|
|
2,472
|
|
|
Total loans
|
|
$
|
406,475
|
|
|
$
|
427,519
|
|
|
$
|
833,994
|
|
Source: Pioneer Bank’s prospectus.
EXHIBIT I-9
Pioneer Bank
Loan Portfolio Composition
Exhibit I-9
Pioneer Bank
Loan Portfolio Composition
|
|
|
|
|
|
At
June 30,
|
|
|
|
|
At December 31, 2018
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
$
|
379,458
|
|
|
|
36.5
|
%
|
|
$
|
375,852
|
|
|
|
37.7
|
%
|
|
$
|
399,074
|
|
|
|
42.3
|
%
|
|
$
|
293,445
|
|
|
|
36.8
|
%
|
|
$
|
268,369
|
|
|
|
39.1
|
%
|
|
$
|
260,022
|
|
|
|
40.8
|
%
|
|
Commercial and industrial
|
|
|
183,318
|
|
|
|
17.6
|
%
|
|
|
194,183
|
|
|
|
19.5
|
%
|
|
|
179,908
|
|
|
|
19.1
|
%
|
|
|
123,470
|
|
|
|
15.5
|
%
|
|
|
102,588
|
|
|
|
14.9
|
%
|
|
|
88,654
|
|
|
|
13.9
|
%
|
|
Commercial construction(1)
|
|
|
95,769
|
|
|
|
9.2
|
%
|
|
|
84,569
|
|
|
|
8.5
|
%
|
|
|
67,928
|
|
|
|
7.2
|
%
|
|
|
96,223
|
|
|
|
12.1
|
%
|
|
|
55,912
|
|
|
|
8.1
|
%
|
|
|
40,423
|
|
|
|
6.3
|
%
|
|
One- to four-family residential
real estate
|
|
|
279,784
|
|
|
|
26.9
|
%
|
|
|
249,635
|
|
|
|
25.0
|
%
|
|
|
202,733
|
|
|
|
21.5
|
%
|
|
|
197,670
|
|
|
|
24.8
|
%
|
|
|
173,421
|
|
|
|
25.2
|
%
|
|
|
163,334
|
|
|
|
25.6
|
%
|
|
Home equity loans and
line of credit
|
|
|
79,693
|
|
|
|
7.7
|
%
|
|
|
78,286
|
|
|
|
7.8
|
%
|
|
|
76,132
|
|
|
|
8.1
|
%
|
|
|
69,423
|
|
|
|
8.7
|
%
|
|
|
69,215
|
|
|
|
10.1
|
%
|
|
|
66,801
|
|
|
|
10.5
|
%
|
|
Consumer
|
|
|
22,190
|
|
|
|
2.1
|
%
|
|
|
14,977
|
|
|
|
1.5
|
%
|
|
|
18,042
|
|
|
|
1.9
|
%
|
|
|
17,878
|
|
|
|
2.2
|
%
|
|
|
17,562
|
|
|
|
2.6
|
%
|
|
|
18,409
|
|
|
|
2.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable
|
|
|
1,040,212
|
|
|
|
100.0
|
%
|
|
|
997,502
|
|
|
|
100.0
|
%
|
|
|
943,817
|
|
|
|
100.0
|
%
|
|
|
798,109
|
|
|
|
100.00
|
%
|
|
|
687,067
|
|
|
|
100.0
|
%
|
|
|
637,643
|
|
|
|
100.0
|
%
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred loan costs
|
|
|
2,308
|
|
|
|
|
|
|
|
1,910
|
|
|
|
|
|
|
|
765
|
|
|
|
|
|
|
|
695
|
|
|
|
|
|
|
|
740
|
|
|
|
|
|
|
|
594
|
|
|
|
|
|
|
Allowance
for losses
|
|
|
(13,600
|
)
|
|
|
|
|
|
|
(13,510
|
)
|
|
|
|
|
|
|
(11,820
|
)
|
|
|
|
|
|
|
(9,794
|
)
|
|
|
|
|
|
|
(9,011
|
)
|
|
|
|
|
|
|
(9,103
|
)
|
|
|
|
|
|
Total
loans receivable, net
|
|
$
|
1,028,920
|
|
|
|
|
|
|
$
|
985,902
|
|
|
|
|
|
|
$
|
932,762
|
|
|
|
|
|
|
$
|
789,010
|
|
|
|
|
|
|
$
|
678,796
|
|
|
|
|
|
|
$
|
629,134
|
|
|
|
|
|
|
|
(1)
|
Represents amounts disbursed at December 31, 2018 and June
30, 2018, 2017, 2016, 2015 and 2014. The undrawn amounts of the commercial construction loans totaled $84.0 million, $68.3 million,
$76.8 million, $49.1 million, $21.5 million and $28.7 million at December 31, 2018 and June 30, 2018, 2017, 2016, 2015 and 2014,
respectively.
|
Source: Pioneer Bank’s prospectus.
EXHIBIT I-10
Pioneer Bank
Contractual Maturity by Loan Type
Exhibit I-10
Pioneer Bank
Contractual Maturity by Loan Type
|
June 30, 2018
|
|
Commercial
Real Estate
|
|
Commercial
and Industrial
|
|
Commercial
Construction
|
|
One- to Four-
Family Residential
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts due in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One year or less
|
|
$
|
33,001
|
|
|
$
|
109,554
|
|
|
$
|
7,996
|
|
|
$
|
330,000
|
|
|
More than one to five years
|
|
|
115,694
|
|
|
|
58,546
|
|
|
|
40,887
|
|
|
|
2,657
|
|
|
More than five years
|
|
|
227,157
|
|
|
|
26,083
|
|
|
|
35,686
|
|
|
|
246,648
|
|
|
Total
|
|
$
|
375,852
|
|
|
$
|
194,183
|
|
|
$
|
84,569
|
|
|
$
|
249,635
|
|
|
June 30, 2018
|
|
Home Equity
Loans and Lines
of Credit
|
|
|
Consumer
|
|
|
Total
|
|
|
|
|
(In thousands)
|
|
|
Amounts due in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One year or less
|
|
$
|
122
|
|
|
$
|
12,505
|
|
|
$
|
163,508
|
|
|
More than one to five years
|
|
|
2,447
|
|
|
|
1,964
|
|
|
|
222,196
|
|
|
More than five years
|
|
|
75,717
|
|
|
|
508
|
|
|
|
611,798
|
|
|
Total
|
|
$
|
78,286
|
|
|
$
|
14,977
|
|
|
$
|
997,502
|
|
Source: Pioneer Bank’s prospectus.
EXHIBIT I-11
Pioneer Bank
Non-Performing Assets
Exhibit I-11
Pioneer Bank
Non-Performing Assets
|
|
|
At
December 31,
|
|
|
At June 30,
|
|
|
|
|
2018
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-accrual loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
$
|
2,233
|
|
|
$
|
2,236
|
|
|
$
|
2,375
|
|
|
$
|
1,386
|
|
|
$
|
1,304
|
|
|
$
|
932
|
|
|
Commercial and industrial
|
|
|
96
|
|
|
|
705
|
|
|
|
3
|
|
|
|
59
|
|
|
|
25
|
|
|
|
1,057
|
|
|
Commercial construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
44
|
|
|
One- to four-family residential real estate
|
|
|
4,645
|
|
|
|
3,834
|
|
|
|
3,325
|
|
|
|
2,874
|
|
|
|
2,912
|
|
|
|
2,621
|
|
|
Home equity loans and lines of credit
|
|
|
1,433
|
|
|
|
970
|
|
|
|
899
|
|
|
|
955
|
|
|
|
678
|
|
|
|
479
|
|
|
Consumer
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total non-accrual loans
|
|
|
8,407
|
|
|
|
7,745
|
|
|
|
6,602
|
|
|
|
5,274
|
|
|
|
4,919
|
|
|
|
5,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accruing loans past due 90 days or more
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
3,254
|
|
|
|
180
|
|
|
|
225
|
|
|
|
95
|
|
|
|
289
|
|
|
|
61
|
|
|
Commercial and industrial
|
|
|
40
|
|
|
|
—
|
|
|
|
4
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
One- to four-family residential real estate
|
|
|
—
|
|
|
|
1,232
|
|
|
|
583
|
|
|
|
395
|
|
|
|
276
|
|
|
|
248
|
|
|
Home equity loans and lines of credit
|
|
|
13
|
|
|
|
330
|
|
|
|
129
|
|
|
|
237
|
|
|
|
339
|
|
|
|
52
|
|
|
Consumer
|
|
|
27
|
|
|
|
24
|
|
|
|
354
|
|
|
|
300
|
|
|
|
441
|
|
|
|
468
|
|
|
Total accruing loans past due 90 days or more
|
|
|
3,334
|
|
|
|
1,766
|
|
|
|
1,295
|
|
|
|
1,027
|
|
|
|
1,345
|
|
|
|
829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate owned:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
391
|
|
|
|
347
|
|
|
Commercial and industrial
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Commercial construction
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
One- to four-family residential real estate
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
177
|
|
|
|
—
|
|
|
Home equity loans and lines of credit
|
|
|
55
|
|
|
|
72
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Consumer
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total real estate owned
|
|
|
55
|
|
|
|
72
|
|
|
|
—
|
|
|
|
—
|
|
|
|
568
|
|
|
|
347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing assets
|
|
$
|
11,796
|
|
|
$
|
9,583
|
|
|
$
|
7,897
|
|
|
$
|
6,301
|
|
|
$
|
6,832
|
|
|
$
|
6,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accruing troubled debt restructured loans
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,418
|
|
|
$
|
1,518
|
|
|
$
|
1,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing loans to total loans
|
|
|
1.13
|
%
|
|
|
0.95
|
%
|
|
|
0.84
|
%
|
|
|
0.79
|
%
|
|
|
0.91
|
%
|
|
|
0.94
|
%
|
|
Total non-performing assets to total assets
|
|
|
0.92
|
%
|
|
|
0.75
|
%
|
|
|
0.70
|
%
|
|
|
0.63
|
%
|
|
|
0.78
|
%
|
|
|
0.77
|
%
|
Source: Pioneer Bank’s prospectus.
EXHIBIT I-12
Pioneer Bank
Deposit Composition
Exhibit I-12
Pioneer Bank
Deposit Composition
|
|
|
|
|
|
At June 30,
|
|
|
|
|
At December 31, 2018
|
|
|
2018
|
|
|
2017
|
|
|
|
|
Amount
|
|
|
Percent
|
|
|
Average
Rate
|
|
|
Amount
|
|
|
Percent
|
|
|
|
|
|
Amount
|
|
|
Percent
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing demand accounts
|
|
$
|
356,291
|
|
|
|
32.0
|
%
|
|
|
—
|
|
|
$
|
345,048
|
|
|
|
30.0
|
%
|
|
|
—
|
|
|
$
|
275,374
|
|
|
|
27.3
|
%
|
|
|
—
|
|
|
Demand accounts
|
|
|
93,735
|
|
|
|
8.4
|
%
|
|
|
0.37
|
%
|
|
|
97,191
|
|
|
|
8.4
|
%
|
|
|
0.31
|
%
|
|
|
64,422
|
|
|
|
6.4
|
%
|
|
|
0.15
|
%
|
|
Savings accounts
|
|
|
243,970
|
|
|
|
21.9
|
%
|
|
|
0.05
|
%
|
|
|
244,050
|
|
|
|
21.2
|
%
|
|
|
0.05
|
%
|
|
|
243,621
|
|
|
|
24.1
|
%
|
|
|
0.05
|
%
|
|
Money market accounts
|
|
|
296,873
|
|
|
|
26.6
|
%
|
|
|
0.49
|
%
|
|
|
334,884
|
|
|
|
29.1
|
%
|
|
|
0.43
|
%
|
|
|
298,945
|
|
|
|
29.6
|
%
|
|
|
0.33
|
%
|
|
Certificates of deposit
|
|
|
124,090
|
|
|
|
11.1
|
%
|
|
|
1.53
|
%
|
|
|
129,089
|
|
|
|
11.2
|
%
|
|
|
1.29
|
%
|
|
|
127,664
|
|
|
|
12.6
|
%
|
|
|
1.04
|
%
|
|
Total
|
|
$
|
1,114,959
|
|
|
|
100.0
|
%
|
|
|
0.34
|
%
|
|
$
|
1,150,262
|
|
|
|
100.0
|
%
|
|
|
0.31
|
%
|
|
$
|
1,010,026
|
|
|
|
100.0
|
%
|
|
|
0.25
|
%
|
|
|
|
At June 30,
|
|
|
|
|
2016
|
|
|
|
|
Amount
|
|
|
Percent
|
|
|
Average Rate
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing demand accounts
|
|
$
|
241,243
|
|
|
|
27.9
|
%
|
|
|
—
|
|
|
Demand accounts
|
|
|
47,024
|
|
|
|
5.4
|
%
|
|
|
0.14
|
%
|
|
Savings accounts
|
|
|
228,354
|
|
|
|
26.4
|
%
|
|
|
0.05
|
%
|
|
Money market accounts
|
|
|
224,927
|
|
|
|
26.0
|
%
|
|
|
0.25
|
%
|
|
Certificates of deposit
|
|
|
122,640
|
|
|
|
14.2
|
%
|
|
|
0.82
|
%
|
|
Total
|
|
$
|
864,188
|
|
|
|
100.00
|
%
|
|
|
0.20
|
%
|
Source: Pioneer Bank’s prospectus.
EXHIBIT I-13
Pioneer Bank
Maturity of Jumbo Time Deposits
Exhibit I-13
Pioneer Bank
Maturity of Jumbo Time Deposits
As of December 31, 2018, the aggregate amount
of all our certificates of deposit in amounts greater than or equal to $100,000 was approximately $53.9 million. The following
table sets forth the maturity of these certificates as of December 31, 2018.
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Maturity Period:
|
|
|
|
|
|
Three months or less
|
|
$
|
7,303
|
|
|
Over three through six months
|
|
|
5,605
|
|
|
Over six through twelve months
|
|
|
10,155
|
|
|
Over twelve months
|
|
|
30,833
|
|
|
Total
|
|
$
|
53,896
|
|
Source: Pioneer Bank’s prospectus.
EXHIBIT I-14
Pioneer Bank
Borrowing Activity
Exhibit I-14
Pioneer Bank
Borrowing Activity
|
|
|
At or For the Six Months
Ended December 31,
|
|
|
At or For the Year
Ended June 30,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance outstanding at end of period
|
|
$
|
30,000
|
|
|
$
|
5,000
|
|
|
$
|
—
|
|
|
$
|
5,000
|
|
|
$
|
17,000
|
|
|
Weighted average interest rate at the end of period
|
|
|
2.64
|
%
|
|
|
1.53
|
%
|
|
|
—
|
|
|
|
1.13
|
%
|
|
|
0.59
|
%
|
|
Maximum amount of borrowings outstanding at any month end during the period
|
|
$
|
30,000
|
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
|
$
|
57,000
|
|
|
$
|
41,771
|
|
|
Average balance outstanding during the period
|
|
$
|
5,163
|
|
|
$
|
190
|
|
|
$
|
151
|
|
|
$
|
24.666
|
|
|
$
|
27,872
|
|
|
Weighted average interest rate during the period
|
|
|
2.67
|
%
|
|
|
1.05
|
%
|
|
|
1.32
|
%
|
|
|
0.77
|
%
|
|
|
0.53
|
%
|
Source: Pioneer Bank’s prospectus.
EXHIBIT II-1
Description of Office Properties
Exhibit II-1
Pioneer Bank
Description of Office Properties
Properties
As of December 31, 2018, the net book value
of our office properties was $35.0 million. The following table sets forth information regarding our offices.
|
Location
|
|
Leased or
Owned
|
|
Year Acquired
or Leased
|
|
Net Book Value of
Real Property
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Main Office:
|
|
|
|
|
|
|
|
|
652 Albany Shaker Road, Albany, NY 12211
|
|
Owned(1)
|
|
2016
|
|
$
|
16,271
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Properties:
|
|
|
|
|
|
|
|
|
|
21 Second Street, Troy, NY 12180
|
|
Leased
|
|
2016
|
|
|
68
|
|
|
531 Troy-Schenectady Road, Latham, NY 12110
|
|
Owned
|
|
2008
|
|
|
1,989
|
|
|
2000 Second Avenue, Watervliet, NY 12189
|
|
Leased
|
|
2017
|
|
|
149
|
|
|
1828 Altamont Avenue, Schenectady, NY 12305
|
|
Owned
|
|
2012
|
|
|
1,953
|
|
|
1208 Route 146, Clifton Park, NY 12065
|
|
Leased
|
|
1995
|
|
|
15
|
|
|
10 Kendall Way, Malta, NY 12020
|
|
Owned
|
|
2016
|
|
|
1,424
|
|
|
78 Main Avenue, Wynantskill, NY 12198
|
|
Owned
|
|
2014
|
|
|
1,908
|
|
|
712 Hoosick Street, Brunswick, NY 12180
|
|
Owned
|
|
2015
|
|
|
1,734
|
|
|
329 Glenmont Road, Glenmont, NY 12077
|
|
Leased
|
|
2014
|
|
|
240
|
|
|
142 Saratoga Avenue, Waterford, NY 12188
|
|
Owned
|
|
2015
|
|
|
1,277
|
|
|
1761 Central Avenue, Albany, NY 12205
|
|
Leased
|
|
2018
|
|
|
—
|
|
|
602 North Greenbush Road, Rensselaer, NY 12144
|
|
Leased
|
|
2017
|
|
|
300
|
|
|
90 State Street, Albany, NY 12207
|
|
Leased
|
|
2013
|
|
|
254
|
|
|
1881-1883 Western Avenue, Albany, NY 12203
|
|
Owned
|
|
2018
|
|
|
4,953
|
|
|
184 Delaware Avenue, Delmar, NY 12054
|
|
Owned
|
|
2010
|
|
|
965
|
|
|
843 Route 146, Clifton Park, NY 12065
|
|
Leased
|
|
2012
|
|
|
221
|
|
|
426 State Street, Schenectady, NY 12305
|
|
Leased
|
|
2014
|
|
|
255
|
|
|
440 Main Street, Cairo, NY 12413
|
|
Owned
|
|
2016
|
|
|
365
|
|
|
11565 NY-32, Greenville, NY 12083
|
|
Leased
|
|
2016
|
|
|
42
|
|
|
739 Upper Glen Street, Queensbury, NY 12804
|
|
Leased
|
|
2017
|
|
|
79
|
|
|
100 Mohawk Street, Cohoes, NY 12047
|
|
Owned
|
|
2017
|
|
|
556
|
|
(1) The property is
subject to a ground lease.
Source: Pioneer Bank’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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004:
|
|
Quarter 1
|
|
|
4.00
|
%
|
|
|
0.95
|
%
|
|
|
1.20
|
%
|
|
|
3.86
|
%
|
|
|
|
Quarter 2
|
|
|
4.00
|
%
|
|
|
1.33
|
%
|
|
|
2.09
|
%
|
|
|
4.62
|
%
|
|
|
|
Quarter 3
|
|
|
4.75
|
%
|
|
|
1.70
|
%
|
|
|
2.16
|
%
|
|
|
4.12
|
%
|
|
|
|
Quarter 4
|
|
|
5.25
|
%
|
|
|
2.22
|
%
|
|
|
2.75
|
%
|
|
|
4.24
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
%
|
|
As of Feb. 8, 2019
|
|
|
5.50
|
%
|
|
|
2.43
|
%
|
|
|
2.54
|
%
|
|
|
2.63
|
%
|
(1) End of period data.
Sources: Federal Reserve and The Wall Street Journal.
EXHIBIT III-1
General Characteristics of Publicly-Traded
Institutions
Exhibit III-1
Characteristics of Publicly-Traded
Thrifts
February 8, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 8, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
San Diego
|
|
CA
|
|
$
|
9,792
|
|
|
|
2
|
|
|
Jun
|
|
|
3/14/05
|
|
|
$
|
32.70
|
|
|
$
|
2,002
|
|
|
BCTF
|
|
Bancorp 34, Inc.
|
|
NASDAQ
|
|
SW
|
|
Alamogordo
|
|
NM
|
|
|
373
|
|
|
|
4
|
|
|
Dec
|
|
|
5/16/00
|
|
|
|
15.12
|
|
|
|
49
|
|
|
BYFC
|
|
Broadway Financial Corporation
|
|
NASDAQ
|
|
WE
|
|
Los Angeles
|
|
CA
|
|
|
419
|
|
|
|
3
|
|
|
Dec
|
|
|
1/8/96
|
|
|
|
1.30
|
|
|
|
35
|
|
|
CARV
|
|
Carver Bancorp, Inc.
|
|
NASDAQ
|
|
MA
|
|
New York
|
|
NY
|
|
|
615
|
|
|
|
8
|
|
|
Mar
|
|
|
10/24/94
|
|
|
|
3.40
|
|
|
|
13
|
|
|
CASH
|
|
Meta Financial Group, Inc.
|
|
NASDAQ
|
|
MW
|
|
Sioux Falls
|
|
SD
|
|
|
5,835
|
|
|
|
12
|
|
|
Sep
|
|
|
9/20/93
|
|
|
|
24.03
|
|
|
|
947
|
|
|
CBMB
|
|
CBM Bancorp, Inc.
|
|
NASDAQ
|
|
MA
|
|
Baltimore
|
|
MD
|
|
|
217
|
|
|
|
4
|
|
|
Dec
|
|
|
9/27/18
|
|
|
|
12.76
|
|
|
|
54
|
|
|
CFFN
|
|
Capitol Federal Financial, Inc.
|
|
NASDAQ
|
|
MW
|
|
Topeka
|
|
KS
|
|
|
9,450
|
|
|
|
57
|
|
|
Sep
|
|
|
3/31/99
|
|
|
|
12.86
|
|
|
|
1,770
|
|
|
DCOM
|
|
Dime Community Bancshares, Inc.
|
|
NASDAQ
|
|
MA
|
|
Brooklyn
|
|
NY
|
|
|
6,294
|
|
|
|
30
|
|
|
Dec
|
|
|
6/26/96
|
|
|
|
19.84
|
|
|
|
716
|
|
|
EBSB
|
|
Meridian Bancorp, Inc.
|
|
NASDAQ
|
|
NE
|
|
Peabody
|
|
MA
|
|
|
5,775
|
|
|
|
35
|
|
|
Dec
|
|
|
1/22/08
|
|
|
|
15.77
|
|
|
|
806
|
|
|
EFBI
|
|
Eagle Financial Bancorp, Inc.
|
|
NASDAQ
|
|
MW
|
|
Cincinnati
|
|
OH
|
|
|
138
|
|
|
|
3
|
|
|
Dec
|
|
|
7/20/17
|
|
|
|
15.65
|
|
|
|
24
|
|
|
ESBK
|
|
Elmira Savings Bank
|
|
NASDAQ
|
|
MA
|
|
Elmira
|
|
NY
|
|
|
571
|
|
|
|
12
|
|
|
Dec
|
|
|
3/1/85
|
|
|
|
18.68
|
|
|
|
65
|
|
|
ESSA
|
|
ESSA Bancorp, Inc.
|
|
NASDAQ
|
|
MA
|
|
Stroudsburg
|
|
PA
|
|
|
1,834
|
|
|
|
23
|
|
|
Sep
|
|
|
3/15/07
|
|
|
|
15.25
|
|
|
|
168
|
|
|
FBC
|
|
Flagstar Bancorp, Inc.
|
|
NYSE
|
|
MW
|
|
Troy
|
|
MI
|
|
|
18,697
|
|
|
|
161
|
|
|
Dec
|
|
|
4/30/97
|
|
|
|
31.70
|
|
|
|
1,831
|
|
|
FDEF
|
|
First Defiance Financial Corp.
|
|
NASDAQ
|
|
MW
|
|
Defiance
|
|
OH
|
|
|
3,098
|
|
|
|
44
|
|
|
Dec
|
|
|
7/19/93
|
|
|
|
29.39
|
|
|
|
594
|
|
|
FNWB
|
|
First Northwest Bancorp
|
|
NASDAQ
|
|
WE
|
|
Port Angeles
|
|
WA
|
|
|
1,238
|
|
|
|
11
|
|
|
Dec
|
|
|
1/29/15
|
|
|
|
15.69
|
|
|
|
162
|
|
|
FSBC
|
|
FSB Bancorp, Inc.
|
|
NASDAQ
|
|
MA
|
|
Fairport
|
|
NY
|
|
|
327
|
|
|
|
5
|
|
|
Dec
|
|
|
8/10/07
|
|
|
|
17.00
|
|
|
|
32
|
|
|
FSBW
|
|
FS Bancorp, Inc.
|
|
NASDAQ
|
|
WE
|
|
Mountlake Terrace
|
|
WA
|
|
|
1,191
|
|
|
|
13
|
|
|
Dec
|
|
|
7/9/12
|
|
|
|
52.00
|
|
|
|
227
|
|
|
HFBL
|
|
Home Federal Bancorp, Inc. of Louisiana
|
|
NASDAQ
|
|
SW
|
|
Shreveport
|
|
LA
|
|
|
428
|
|
|
|
7
|
|
|
Jun
|
|
|
1/18/05
|
|
|
|
30.62
|
|
|
|
54
|
|
|
HIFS
|
|
Hingham Institution for Savings
|
|
NASDAQ
|
|
NE
|
|
Hingham
|
|
MA
|
|
|
2,370
|
|
|
|
13
|
|
|
Dec
|
|
|
12/13/88
|
|
|
|
183.95
|
|
|
|
392
|
|
|
HMNF
|
|
HMN Financial, Inc.
|
|
NASDAQ
|
|
MW
|
|
Rochester
|
|
MN
|
|
|
737
|
|
|
|
14
|
|
|
Dec
|
|
|
6/30/94
|
|
|
|
19.55
|
|
|
|
90
|
|
|
HVBC
|
|
HV Bancorp, Inc.
|
|
NASDAQ
|
|
MA
|
|
Huntingdon Valley
|
|
PA
|
|
|
302
|
|
|
|
6
|
|
|
Jun
|
|
|
1/11/17
|
|
|
|
15.16
|
|
|
|
32
|
|
|
IROQ
|
|
IF Bancorp, Inc.
|
|
NASDAQ
|
|
MW
|
|
Watseka
|
|
IL
|
|
|
655
|
|
|
|
7
|
|
|
Jun
|
|
|
7/7/11
|
|
|
|
20.75
|
|
|
|
70
|
|
|
ISBC
|
|
Investors Bancorp, Inc.
|
|
NASDAQ
|
|
MA
|
|
Short Hills
|
|
NJ
|
|
|
25,518
|
|
|
|
151
|
|
|
Dec
|
|
|
10/11/05
|
|
|
|
12.60
|
|
|
|
3,458
|
|
|
KRNY
|
|
Kearny Financial Corp.
|
|
NASDAQ
|
|
MA
|
|
Fairfield
|
|
NJ
|
|
|
6,656
|
|
|
|
54
|
|
|
Jun
|
|
|
2/23/05
|
|
|
|
12.95
|
|
|
|
1,163
|
|
|
MELR
|
|
Melrose Bancorp, Inc.
|
|
NASDAQ
|
|
NE
|
|
Melrose
|
|
MA
|
|
|
322
|
|
|
|
1
|
|
|
Dec
|
|
|
10/21/14
|
|
|
|
18.02
|
|
|
|
43
|
|
|
MSBF
|
|
MSB Financial Corp.
|
|
NASDAQ
|
|
MA
|
|
Millington
|
|
NJ
|
|
|
590
|
|
|
|
4
|
|
|
Dec
|
|
|
1/4/07
|
|
|
|
17.80
|
|
|
|
93
|
|
|
MSVB
|
|
Mid-Southern Bancorp, Inc.
|
|
NASDAQ
|
|
MW
|
|
Salem
|
|
IN
|
|
|
199
|
|
|
|
3
|
|
|
Dec
|
|
|
4/8/98
|
|
|
|
12.89
|
|
|
|
43
|
|
|
NFBK
|
|
Northfield Bancorp, Inc.
|
|
NASDAQ
|
|
MA
|
|
Woodbridge
|
|
NJ
|
|
|
4,286
|
|
|
|
40
|
|
|
Dec
|
|
|
11/7/07
|
|
|
|
14.59
|
|
|
|
717
|
|
|
NWBI
|
|
Northwest Bancshares, Inc.
|
|
NASDAQ
|
|
MA
|
|
Warren
|
|
PA
|
|
|
9,575
|
|
|
|
173
|
|
|
Dec
|
|
|
11/4/94
|
|
|
|
17.90
|
|
|
|
1,850
|
|
|
NYCB
|
|
New York Community Bancorp, Inc.
|
|
NYSE
|
|
MA
|
|
Westbury
|
|
NY
|
|
|
51,247
|
|
|
|
256
|
|
|
Dec
|
|
|
11/23/93
|
|
|
|
11.98
|
|
|
|
5,673
|
|
|
ORIT
|
|
Oritani Financial Corp.
|
|
NASDAQ
|
|
MA
|
|
Township of Washington
|
|
NJ
|
|
|
4,110
|
|
|
|
27
|
|
|
Jun
|
|
|
1/23/07
|
|
|
|
16.88
|
|
|
|
768
|
|
|
OTTW
|
|
Ottawa Bancorp, Inc.
|
|
NASDAQ
|
|
MW
|
|
Ottawa
|
|
IL
|
|
|
278
|
|
|
|
3
|
|
|
Dec
|
|
|
7/11/05
|
|
|
|
13.53
|
|
|
|
44
|
|
|
PBBI
|
|
PB Bancorp, Inc.
|
|
NASDAQ
|
|
NE
|
|
Putnam
|
|
CT
|
|
|
520
|
|
|
|
8
|
|
|
Jun
|
|
|
10/4/04
|
|
|
|
11.13
|
|
|
|
80
|
|
|
PBIP
|
|
Prudential Bancorp, Inc.
|
|
NASDAQ
|
|
MA
|
|
Philadelphia
|
|
PA
|
|
|
1,081
|
|
|
|
11
|
|
|
Sep
|
|
|
3/29/05
|
|
|
|
18.01
|
|
|
|
160
|
|
|
PCSB
|
|
PCSB Financial Corporation
|
|
NASDAQ
|
|
MA
|
|
Yorktown Heights
|
|
NY
|
|
|
1,474
|
|
|
|
17
|
|
|
Jun
|
|
|
4/20/17
|
|
|
|
20.70
|
|
|
|
338
|
|
|
PFS
|
|
Provident Financial Services, Inc.
|
|
NYSE
|
|
MA
|
|
Iselin
|
|
NJ
|
|
|
9,710
|
|
|
|
86
|
|
|
Dec
|
|
|
1/15/03
|
|
|
|
27.43
|
|
|
|
1,833
|
|
|
PROV
|
|
Provident Financial Holdings, Inc.
|
|
NASDAQ
|
|
WE
|
|
Riverside
|
|
CA
|
|
|
1,157
|
|
|
|
15
|
|
|
Jun
|
|
|
6/27/96
|
|
|
|
18.63
|
|
|
|
140
|
|
|
RNDB
|
|
Randolph Bancorp, Inc.
|
|
NASDAQ
|
|
NE
|
|
Stoughton
|
|
MA
|
|
|
590
|
|
|
|
7
|
|
|
Dec
|
|
|
7/1/16
|
|
|
|
14.75
|
|
|
|
82
|
|
|
RVSB
|
|
Riverview Bancorp, Inc.
|
|
NASDAQ
|
|
WE
|
|
Vancouver
|
|
WA
|
|
|
1,148
|
|
|
|
19
|
|
|
Mar
|
|
|
10/26/93
|
|
|
|
7.47
|
|
|
|
169
|
|
|
SBT
|
|
Sterling Bancorp, Inc.
|
|
NASDAQ
|
|
MW
|
|
Southfield
|
|
MI
|
|
|
3,197
|
|
|
|
28
|
|
|
Dec
|
|
|
11/16/17
|
|
|
|
9.67
|
|
|
|
513
|
|
|
STND
|
|
Standard AVB Financial Corp.
|
|
NASDAQ
|
|
MA
|
|
Monroeville
|
|
PA
|
|
|
983
|
|
|
|
19
|
|
|
Dec
|
|
|
10/6/10
|
|
|
|
30.49
|
|
|
|
141
|
|
|
STXB
|
|
Spirit of Texas Bancshares, Inc.
|
|
NASDAQ
|
|
SW
|
|
Conroe
|
|
TX
|
|
|
1,102
|
|
|
|
23
|
|
|
Dec
|
|
|
5/3/18
|
|
|
|
21.70
|
|
|
|
263
|
|
|
SVBI
|
|
Severn Bancorp, Inc.
|
|
NASDAQ
|
|
MA
|
|
Annapolis
|
|
MD
|
|
|
889
|
|
|
|
5
|
|
|
Dec
|
|
|
NA
|
|
|
|
8.85
|
|
|
|
113
|
|
|
TBK
|
|
Triumph Bancorp, Inc.
|
|
NASDAQ
|
|
SW
|
|
Dallas
|
|
TX
|
|
|
4,537
|
|
|
|
51
|
|
|
Dec
|
|
|
11/6/14
|
|
|
|
30.41
|
|
|
|
816
|
|
|
TBNK
|
|
Territorial Bancorp Inc.
|
|
NASDAQ
|
|
WE
|
|
Honolulu
|
|
HI
|
|
|
2,026
|
|
|
|
30
|
|
|
Dec
|
|
|
7/13/09
|
|
|
|
27.46
|
|
|
|
252
|
|
|
TRST
|
|
TrustCo Bank Corp NY
|
|
NASDAQ
|
|
MA
|
|
Glenville
|
|
NY
|
|
|
4,885
|
|
|
|
148
|
|
|
Dec
|
|
|
NA
|
|
|
|
8.01
|
|
|
|
774
|
|
|
TSBK
|
|
Timberland Bancorp, Inc.
|
|
NASDAQ
|
|
WE
|
|
Hoquiam
|
|
WA
|
|
|
1,018
|
|
|
|
24
|
|
|
Sep
|
|
|
1/12/98
|
|
|
|
28.49
|
|
|
|
236
|
|
|
UBNK
|
|
United Financial Bancorp, Inc.
|
|
NASDAQ
|
|
NE
|
|
Hartford
|
|
CT
|
|
|
7,207
|
|
|
|
55
|
|
|
Dec
|
|
|
5/20/05
|
|
|
|
15.13
|
|
|
|
766
|
|
|
WEBK
|
|
Wellesley Bancorp, Inc.
|
|
NASDAQ
|
|
NE
|
|
Wellesley
|
|
MA
|
|
|
837
|
|
|
|
6
|
|
|
Dec
|
|
|
1/25/12
|
|
|
|
32.00
|
|
|
|
77
|
|
|
WNEB
|
|
Western New England Bancorp, Inc.
|
|
NASDAQ
|
|
NE
|
|
Westfield
|
|
MA
|
|
|
2,151
|
|
|
|
24
|
|
|
Dec
|
|
|
12/27/01
|
|
|
|
9.80
|
|
|
|
271
|
|
|
WSBF
|
|
Waterstone Financial, Inc.
|
|
NASDAQ
|
|
MW
|
|
Wauwatosa
|
|
WI
|
|
|
1,919
|
|
|
|
13
|
|
|
Dec
|
|
|
10/4/05
|
|
|
|
16.24
|
|
|
|
425
|
|
|
WSFS
|
|
WSFS Financial Corporation
|
|
NASDAQ
|
|
MA
|
|
Wilmington
|
|
DE
|
|
|
7,160
|
|
|
|
63
|
|
|
Dec
|
|
|
11/26/86
|
|
|
|
42.18
|
|
|
|
1,323
|
|
|
WVFC
|
|
WVS Financial Corp.
|
|
NASDAQ
|
|
MA
|
|
Pittsburgh
|
|
PA
|
|
|
350
|
|
|
|
6
|
|
|
Jun
|
|
|
11/29/93
|
|
|
|
15.75
|
|
|
|
28
|
|
Source: S&P Global Market Intelligence
EXHIBIT III-2
Public Market Pricing of Mid-Atlantic
Thrift Institutions
Exhibit III-2
Public Market Pricing of Mid
Atlantic Institutions
As of February 8, 2019
|
|
|
|
|
|
|
Market
|
|
|
Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalization
|
|
|
Core
|
|
|
Book
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends(4)
|
|
|
Financial Characteristics(6)
|
|
|
|
|
|
|
|
|
Price/
|
|
|
Market
|
|
|
12 Month
|
|
|
Value/
|
|
|
Pricing Ratios(3)
|
|
|
Amount/
|
|
|
|
|
|
Payout
|
|
|
Total
|
|
|
Equity/
|
|
|
Tang. Eq./
|
|
|
NPAs/
|
|
|
Reported
|
|
|
Core
|
|
|
|
|
|
|
|
|
Share(1)
|
|
|
Value
|
|
|
EPS(2)
|
|
|
Share
|
|
|
P/E
|
|
|
P/B
|
|
|
P/A
|
|
|
P/TB
|
|
|
P/Core
|
|
|
Share
|
|
|
Yield
|
|
|
Ratio(5)
|
|
|
Assets
|
|
|
Assets
|
|
|
T. Assets
|
|
|
Assets
|
|
|
ROAA
|
|
|
ROAE
|
|
|
ROAA
|
|
|
ROAE
|
|
|
|
|
|
|
|
|
($)
|
|
|
($Mil)
|
|
|
($)
|
|
|
($)
|
|
|
(x)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(x)
|
|
|
($)
|
|
|
(%)
|
|
|
(%)
|
|
|
($Mil)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Non-MHC Public Companies(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
|
|
$
|
22.01
|
|
|
$
|
618.58
|
|
|
$
|
1.56
|
|
|
$
|
17.59
|
|
|
|
15.92
|
|
|
|
125.9
|
%
|
|
|
15.0
|
%
|
|
|
140.6
|
%
|
|
|
17.00
|
|
|
$
|
0.40
|
|
|
$
|
0.02
|
|
|
|
46
|
%
|
|
$
|
4,355.02
|
|
|
|
12.84
|
%
|
|
|
11.86
|
%
|
|
|
0.97
|
%
|
|
|
0.91
|
%
|
|
|
7.71
|
%
|
|
|
0.88
|
%
|
|
|
7.00
|
%
|
|
Median
|
|
|
|
|
|
$
|
16.88
|
|
|
$
|
227.31
|
|
|
$
|
0.98
|
|
|
$
|
15.59
|
|
|
|
14.88
|
|
|
|
117.2
|
%
|
|
|
14.8
|
%
|
|
|
129.3
|
%
|
|
|
14.63
|
|
|
$
|
0.34
|
|
|
$
|
0.02
|
|
|
|
41
|
%
|
|
$
|
1,467.97
|
|
|
|
11.67
|
%
|
|
|
10.59
|
%
|
|
|
0.79
|
%
|
|
|
0.87
|
%
|
|
|
7.33
|
%
|
|
|
0.83
|
%
|
|
|
7.13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
|
|
$
|
17.19
|
|
|
$
|
886.93
|
|
|
$
|
0.94
|
|
|
$
|
14.57
|
|
|
|
16.20
|
|
|
|
132.5
|
%
|
|
|
15.0
|
%
|
|
|
148.7
|
%
|
|
|
17.83
|
|
|
$
|
0.46
|
|
|
|
2.63
|
%
|
|
|
58
|
%
|
|
$
|
6,394
|
|
|
|
12.65
|
%
|
|
|
11.52
|
%
|
|
|
1.02
|
%
|
|
|
0.86
|
%
|
|
|
7.05
|
%
|
|
|
0.75
|
%
|
|
|
5.64
|
%
|
|
Medians
|
|
|
|
|
$
|
16.32
|
|
|
$
|
252.76
|
|
|
$
|
0.90
|
|
|
$
|
13.98
|
|
|
|
15.16
|
|
|
|
118.1
|
%
|
|
|
15.4
|
%
|
|
|
133.3
|
%
|
|
|
15.44
|
|
|
$
|
0.40
|
|
|
|
2.74
|
%
|
|
|
56
|
%
|
|
$
|
1,710
|
|
|
|
11.43
|
%
|
|
|
10.01
|
%
|
|
|
0.84
|
%
|
|
|
0.84
|
%
|
|
|
6.93
|
%
|
|
|
0.80
|
%
|
|
|
6.64
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CARV
|
|
Carver Bancorp, Inc.
|
|
(7)
|
|
NY
|
|
$
|
3.40
|
|
|
$
|
12.58
|
|
|
($
|
1.15
|
)
|
|
$
|
0.85
|
|
|
|
NM
|
|
|
|
398.97
|
%
|
|
|
2.21
|
%
|
|
|
398.97
|
%
|
|
|
NM
|
|
|
$
|
0.00
|
|
|
|
0.00
|
%
|
|
|
NA
|
|
|
$
|
615
|
|
|
|
7.85
|
%
|
|
|
7.85
|
%
|
|
|
2.07
|
%
|
|
|
0.54
|
%
|
|
|
7.24
|
%
|
|
|
-0.65
|
%
|
|
|
-8.73
|
%
|
|
CBMB
|
|
CBM Bancorp, Inc.
|
|
(7)
|
|
MD
|
|
$
|
12.76
|
|
|
$
|
54.00
|
|
|
|
NA
|
|
|
$
|
14.23
|
|
|
|
NM
|
|
|
|
89.67
|
%
|
|
|
24.83
|
%
|
|
|
89.67
|
%
|
|
|
NM
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
$
|
217
|
|
|
|
27.69
|
%
|
|
|
27.69
|
%
|
|
|
0.89
|
%
|
|
|
NA
|
|
|
|
1.99
|
%
|
|
|
NA
|
|
|
|
3.95
|
%
|
|
DCOM
|
|
Dime Community Bancshares, Inc.
|
|
|
|
NY
|
|
$
|
19.84
|
|
|
$
|
716.08
|
|
|
$
|
1.36
|
|
|
$
|
16.68
|
|
|
|
14.38
|
x
|
|
|
118.93
|
%
|
|
|
11.33
|
%
|
|
|
131.04
|
%
|
|
|
14.62
|
x
|
|
$
|
0.56
|
|
|
|
2.82
|
%
|
|
|
40.58
|
%
|
|
$
|
6,321
|
|
|
|
9.53
|
%
|
|
|
8.72
|
%
|
|
|
NA
|
|
|
|
0.82
|
%
|
|
|
8.44
|
%
|
|
|
0.80
|
%
|
|
|
8.31
|
%
|
|
ESBK
|
|
Elmira Savings Bank
|
|
|
|
NY
|
|
$
|
18.68
|
|
|
$
|
65.47
|
|
|
$
|
1.21
|
|
|
$
|
16.52
|
|
|
|
15.44
|
x
|
|
|
113.07
|
%
|
|
|
11.10
|
%
|
|
|
143.63
|
%
|
|
|
15.46
|
x
|
|
$
|
0.92
|
|
|
|
4.92
|
%
|
|
|
76.03
|
%
|
|
$
|
590
|
|
|
|
9.82
|
%
|
|
|
7.90
|
%
|
|
|
0.78
|
%
|
|
|
0.75
|
%
|
|
|
7.37
|
%
|
|
|
0.75
|
%
|
|
|
7.38
|
%
|
|
ESSA
|
|
ESSA Bancorp, Inc.
|
|
|
|
PA
|
|
$
|
15.25
|
|
|
$
|
167.65
|
|
|
$
|
1.05
|
|
|
$
|
15.63
|
|
|
|
14.95
|
x
|
|
|
97.55
|
%
|
|
|
9.68
|
%
|
|
|
106.23
|
%
|
|
|
14.52
|
x
|
|
$
|
0.40
|
|
|
|
2.62
|
%
|
|
|
36.27
|
%
|
|
$
|
1,863
|
|
|
|
9.92
|
%
|
|
|
9.18
|
%
|
|
|
NA
|
|
|
|
0.61
|
%
|
|
|
6.21
|
%
|
|
|
0.63
|
%
|
|
|
6.39
|
%
|
|
FSBC
|
|
FSB Bancorp, Inc.
|
|
|
|
NY
|
|
$
|
17.00
|
|
|
$
|
32.45
|
|
|
$
|
0.07
|
|
|
|
NA
|
|
|
|
NM
|
|
|
|
105.48
|
%
|
|
|
NA
|
|
|
|
105.48
|
%
|
|
|
NM
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
$
|
328
|
|
|
|
9.60
|
%
|
|
|
9.60
|
%
|
|
|
NA
|
|
|
|
0.04
|
%
|
|
|
0.43
|
%
|
|
|
0.04
|
%
|
|
|
0.43
|
%
|
|
HVBC
|
|
HV Bancorp, Inc.
|
|
(7)
|
|
PA
|
|
$
|
15.16
|
|
|
$
|
31.83
|
|
|
$
|
0.51
|
|
|
$
|
13.72
|
|
|
|
NM
|
|
|
|
110.47
|
%
|
|
|
11.33
|
%
|
|
|
110.47
|
%
|
|
|
29.73
|
x
|
|
|
NA
|
|
|
|
NA
|
|
|
|
128.21
|
%
|
|
$
|
302
|
|
|
|
10.26
|
%
|
|
|
10.26
|
%
|
|
|
0.60
|
%
|
|
|
0.30
|
%
|
|
|
2.59
|
%
|
|
|
0.39
|
%
|
|
|
3.37
|
%
|
|
ISBC
|
|
Investors Bancorp, Inc.
|
|
|
|
NJ
|
|
$
|
12.60
|
|
|
$
|
3,457.83
|
|
|
$
|
0.82
|
|
|
$
|
10.50
|
|
|
|
17.50
|
x
|
|
|
120.02
|
%
|
|
|
13.75
|
%
|
|
|
124.88
|
%
|
|
|
15.43
|
x
|
|
$
|
0.44
|
|
|
|
3.49
|
%
|
|
|
55.56
|
%
|
|
$
|
26,229
|
|
|
|
11.46
|
%
|
|
|
NA
|
|
|
|
0.55
|
%
|
|
|
0.80
|
%
|
|
|
6.57
|
%
|
|
|
0.91
|
%
|
|
|
7.45
|
%
|
|
KRNY
|
|
Kearny Financial Corp.
|
|
|
|
NJ
|
|
$
|
12.95
|
|
|
$
|
1,163.43
|
|
|
$
|
0.44
|
|
|
$
|
12.62
|
|
|
|
33.21
|
x
|
|
|
102.63
|
%
|
|
|
18.12
|
%
|
|
|
124.25
|
%
|
|
|
29.40
|
x
|
|
$
|
0.20
|
|
|
|
1.54
|
%
|
|
|
82.05
|
%
|
|
$
|
6,702
|
|
|
|
17.65
|
%
|
|
|
NA
|
|
|
|
NA
|
|
|
|
0.57
|
%
|
|
|
2.95
|
%
|
|
|
0.64
|
%
|
|
|
3.35
|
%
|
|
MSBF
|
|
MSB Financial Corp.
|
|
|
|
NJ
|
|
$
|
17.80
|
|
|
$
|
92.73
|
|
|
$
|
0.90
|
|
|
$
|
12.37
|
|
|
|
19.78
|
x
|
|
|
143.93
|
%
|
|
|
16.41
|
%
|
|
|
143.93
|
%
|
|
|
19.78
|
x
|
|
$
|
0.00
|
|
|
|
0.00
|
%
|
|
|
100.56
|
%
|
|
$
|
585
|
|
|
|
11.40
|
%
|
|
|
11.40
|
%
|
|
|
NA
|
|
|
|
0.85
|
%
|
|
|
6.88
|
%
|
|
|
0.85
|
%
|
|
|
6.88
|
%
|
|
NYCB
|
|
New York Community Bancorp, Inc.
|
|
|
|
NY
|
|
$
|
11.98
|
|
|
$
|
5,672.97
|
|
|
|
NA
|
|
|
$
|
12.99
|
|
|
|
15.16
|
x
|
|
|
92.21
|
%
|
|
|
11.04
|
%
|
|
|
152.65
|
%
|
|
|
NM
|
|
|
$
|
0.68
|
|
|
|
5.68
|
%
|
|
|
86.08
|
%
|
|
$
|
51,899
|
|
|
|
12.82
|
%
|
|
|
8.53
|
%
|
|
|
NA
|
|
|
|
0.84
|
%
|
|
|
6.23
|
%
|
|
|
NA
|
|
|
|
NA
|
|
|
NFBK
|
|
Northfield Bancorp, Inc.
|
|
|
|
NJ
|
|
$
|
14.59
|
|
|
$
|
716.77
|
|
|
$
|
0.86
|
|
|
$
|
13.43
|
|
|
|
17.16
|
x
|
|
|
108.66
|
%
|
|
|
16.43
|
%
|
|
|
115.50
|
%
|
|
|
17.04
|
x
|
|
$
|
0.40
|
|
|
|
2.74
|
%
|
|
|
47.06
|
%
|
|
$
|
4,408
|
|
|
|
15.12
|
%
|
|
|
14.35
|
%
|
|
|
0.58
|
%
|
|
|
0.95
|
%
|
|
|
6.17
|
%
|
|
|
0.96
|
%
|
|
|
6.21
|
%
|
|
NWBI
|
|
Northwest Bancshares, Inc.
|
|
|
|
PA
|
|
$
|
17.90
|
|
|
$
|
1,850.04
|
|
|
$
|
1.06
|
|
|
$
|
12.17
|
|
|
|
17.55
|
x
|
|
|
147.10
|
%
|
|
|
19.26
|
%
|
|
|
198.84
|
%
|
|
|
16.91
|
x
|
|
$
|
0.72
|
|
|
|
4.02
|
%
|
|
|
67.65
|
%
|
|
$
|
9,608
|
|
|
|
13.09
|
%
|
|
|
10.03
|
%
|
|
|
0.97
|
%
|
|
|
1.11
|
%
|
|
|
8.61
|
%
|
|
|
1.15
|
%
|
|
|
8.94
|
%
|
|
ORIT
|
|
Oritani Financial Corp.
|
|
|
|
NJ
|
|
$
|
16.88
|
|
|
$
|
767.92
|
|
|
$
|
1.27
|
|
|
$
|
11.78
|
|
|
|
13.95
|
x
|
|
|
143.33
|
%
|
|
|
18.47
|
%
|
|
|
143.33
|
%
|
|
|
13.27
|
x
|
|
$
|
1.00
|
|
|
|
5.92
|
%
|
|
|
95.04
|
%
|
|
$
|
4,090
|
|
|
|
12.89
|
%
|
|
|
12.89
|
%
|
|
|
NA
|
|
|
|
1.30
|
%
|
|
|
9.70
|
%
|
|
|
1.37
|
%
|
|
|
10.20
|
%
|
|
PCSB
|
|
PCSB Financial Corporation
|
|
|
|
NY
|
|
$
|
20.70
|
|
|
$
|
337.88
|
|
|
$
|
0.55
|
|
|
$
|
15.62
|
|
|
|
NM
|
|
|
|
132.54
|
%
|
|
|
24.58
|
%
|
|
|
135.58
|
%
|
|
|
NM
|
|
|
$
|
0.12
|
|
|
|
0.58
|
%
|
|
|
21.05
|
%
|
|
$
|
1,557
|
|
|
|
18.54
|
%
|
|
|
18.20
|
%
|
|
|
NA
|
|
|
|
0.65
|
%
|
|
|
3.30
|
%
|
|
|
0.63
|
%
|
|
|
3.20
|
%
|
|
PFS
|
|
Provident Financial Services, Inc.
|
|
|
|
NJ
|
|
$
|
27.43
|
|
|
$
|
1,833.15
|
|
|
$
|
1.79
|
|
|
$
|
20.49
|
|
|
|
15.07
|
x
|
|
|
133.87
|
%
|
|
|
18.71
|
%
|
|
|
193.38
|
%
|
|
|
15.30
|
x
|
|
$
|
0.92
|
|
|
|
3.35
|
%
|
|
|
57.69
|
%
|
|
$
|
9,726
|
|
|
|
13.97
|
%
|
|
|
10.11
|
%
|
|
|
NA
|
|
|
|
1.22
|
%
|
|
|
8.93
|
%
|
|
|
1.20
|
%
|
|
|
8.80
|
%
|
|
PBIP
|
|
Prudential Bancorp, Inc.
|
|
|
|
PA
|
|
$
|
18.01
|
|
|
$
|
160.16
|
|
|
|
NA
|
|
|
$
|
14.69
|
|
|
|
18.38
|
x
|
|
|
122.56
|
%
|
|
|
14.36
|
%
|
|
|
129.12
|
%
|
|
|
NM
|
|
|
$
|
0.20
|
|
|
|
1.11
|
%
|
|
|
56.12
|
%
|
|
$
|
1,115
|
|
|
|
11.72
|
%
|
|
|
11.19
|
%
|
|
|
1.37
|
%
|
|
|
0.88
|
%
|
|
|
6.98
|
%
|
|
|
NA
|
|
|
|
NA
|
|
|
SVBI
|
|
Severn Bancorp, Inc.
|
|
|
|
MD
|
|
$
|
8.85
|
|
|
$
|
112.58
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
13.21
|
x
|
|
|
117.19
|
%
|
|
|
NA
|
|
|
|
118.55
|
%
|
|
|
NM
|
|
|
$
|
0.12
|
|
|
|
1.36
|
%
|
|
|
17.91
|
%
|
|
$
|
974
|
|
|
|
10.11
|
%
|
|
|
10.00
|
%
|
|
|
1.73
|
%
|
|
|
1.01
|
%
|
|
|
9.46
|
%
|
|
|
NA
|
|
|
|
NA
|
|
|
STND
|
|
Standard AVB Financial Corp.
|
|
|
|
PA
|
|
$
|
30.49
|
|
|
$
|
141.22
|
|
|
|
NA
|
|
|
$
|
28.65
|
|
|
|
16.22
|
x
|
|
|
106.42
|
%
|
|
|
15.10
|
%
|
|
|
137.21
|
%
|
|
|
NM
|
|
|
$
|
0.88
|
|
|
|
2.90
|
%
|
|
|
47.02
|
%
|
|
$
|
972
|
|
|
|
14.19
|
%
|
|
|
NA
|
|
|
|
NA
|
|
|
|
0.90
|
%
|
|
|
6.55
|
%
|
|
|
NA
|
|
|
|
NA
|
|
|
TRST
|
|
TrustCo Bank Corp NY
|
|
|
|
NY
|
|
$
|
8.01
|
|
|
$
|
774.24
|
|
|
|
NA
|
|
|
$
|
5.07
|
|
|
|
12.59
|
x
|
|
|
158.05
|
%
|
|
|
15.61
|
%
|
|
|
158.23
|
%
|
|
|
NM
|
|
|
$
|
0.27
|
|
|
|
3.40
|
%
|
|
|
42.06
|
%
|
|
$
|
4,959
|
|
|
|
9.88
|
%
|
|
|
9.87
|
%
|
|
|
NA
|
|
|
|
1.25
|
%
|
|
|
13.05
|
%
|
|
|
NA
|
|
|
|
NA
|
|
|
WSFS
|
|
WSFS Financial Corporation
|
|
|
|
DE
|
|
$
|
42.18
|
|
|
$
|
1,323.36
|
|
|
$
|
3.37
|
|
|
$
|
26.17
|
|
|
|
10.07
|
x
|
|
|
161.20
|
%
|
|
|
18.26
|
%
|
|
|
219.01
|
%
|
|
|
12.50
|
x
|
|
$
|
0.44
|
|
|
|
1.04
|
%
|
|
|
10.50
|
%
|
|
$
|
7,249
|
|
|
|
11.32
|
%
|
|
|
NA
|
|
|
|
0.66
|
%
|
|
|
1.92
|
%
|
|
|
17.63
|
%
|
|
|
1.55
|
%
|
|
|
14.19
|
%
|
|
WVFC
|
|
WVS Financial Corp.
|
|
|
|
PA
|
|
$
|
15.75
|
|
|
$
|
28.17
|
|
|
|
NA
|
|
|
$
|
17.18
|
|
|
|
10.79
|
x
|
|
|
91.68
|
%
|
|
|
8.77
|
%
|
|
|
91.68
|
%
|
|
|
NM
|
|
|
$
|
0.40
|
|
|
|
2.54
|
%
|
|
|
26.03
|
%
|
|
$
|
349
|
|
|
|
9.57
|
%
|
|
|
9.57
|
%
|
|
|
NA
|
|
|
|
0.75
|
%
|
|
|
7.79
|
%
|
|
|
NA
|
|
|
|
NA
|
|
EXHIBIT III-3
Public Market Pricing of New England
Thrift Institutions
Exhibit III-3
Public Market Pricing of New England Institutions
As of February 8, 2019
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalization
|
|
|
Core
|
|
|
Book
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends(4)
|
|
|
Financial Characteristics(6)
|
|
|
|
|
|
|
|
|
|
|
|
Price/
|
|
|
Market
|
|
|
12 Month
|
|
|
Value/
|
|
|
Pricing Ratios(3)
|
|
|
Amount/
|
|
|
|
|
|
Payout
|
|
|
Total
|
|
|
Equity/
|
|
|
Tang. Eq./
|
|
|
NPAs/
|
|
|
Reported
|
|
|
Core
|
|
|
|
|
|
|
|
|
|
Share(1)
|
|
|
Value
|
|
|
EPS(2)
|
|
|
Share
|
|
|
P/E
|
|
|
P/B
|
|
|
P/A
|
|
|
P/TB
|
|
|
P/Core
|
|
|
Share
|
|
|
Yield
|
|
|
Ratio(5)
|
|
|
Assets
|
|
|
Assets
|
|
|
T. Assets
|
|
|
Assets
|
|
|
ROAA
|
|
|
ROAE
|
|
|
ROAA
|
|
|
ROAE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Non-MHC Public Companies(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
|
|
|
|
$
|
22.01
|
|
|
$
|
618.58
|
|
|
$
|
1.56
|
|
|
$
|
17.59
|
|
|
|
15.92
|
|
|
|
125.9
|
%
|
|
|
15.0
|
%
|
|
|
140.6
|
%
|
|
|
17.00
|
|
|
$
|
0.40
|
|
|
$
|
0.02
|
|
|
|
46
|
%
|
|
$
|
4,355.02
|
|
|
|
12.84
|
%
|
|
|
11.86
|
%
|
|
|
0.97
|
%
|
|
|
0.91
|
%
|
|
|
7.71
|
%
|
|
|
0.88
|
%
|
|
|
7.00
|
%
|
|
Median
|
|
|
|
|
|
|
|
$
|
16.88
|
|
|
$
|
227.31
|
|
|
$
|
0.98
|
|
|
$
|
15.59
|
|
|
|
14.88
|
|
|
|
117.2
|
%
|
|
|
14.8
|
%
|
|
|
129.3
|
%
|
|
|
14.63
|
|
|
$
|
0.34
|
|
|
$
|
0.02
|
|
|
|
41
|
%
|
|
$
|
1,467.97
|
|
|
|
11.67
|
%
|
|
|
10.59
|
%
|
|
|
0.79
|
%
|
|
|
0.87
|
%
|
|
|
7.33
|
%
|
|
|
0.83
|
%
|
|
|
7.13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
|
|
|
|
|
|
$
|
37.57
|
|
|
$
|
314.75
|
|
|
$
|
2.92
|
|
|
$
|
25.27
|
|
|
|
16.65
|
|
|
|
121.9
|
%
|
|
|
13.6
|
%
|
|
|
129.5
|
%
|
|
|
15.03
|
|
|
$
|
0.46
|
|
|
|
1.78
|
%
|
|
|
30
|
%
|
|
$
|
2,546
|
|
|
|
11.46
|
%
|
|
|
10.68
|
%
|
|
|
0.95
|
%
|
|
|
0.67
|
%
|
|
|
6.59
|
%
|
|
|
0.75
|
%
|
|
|
7.52
|
%
|
|
Medians
|
|
|
|
|
|
|
|
|
|
$
|
15.45
|
|
|
$
|
176.52
|
|
|
$
|
1.10
|
|
|
$
|
13.49
|
|
|
|
14.88
|
|
|
|
115.2
|
%
|
|
|
14.0
|
%
|
|
|
126.0
|
%
|
|
|
13.84
|
|
|
$
|
0.28
|
|
|
|
1.78
|
%
|
|
|
21
|
%
|
|
$
|
1,495
|
|
|
|
11.05
|
%
|
|
|
10.50
|
%
|
|
|
0.95
|
%
|
|
|
0.76
|
%
|
|
|
7.59
|
%
|
|
|
0.79
|
%
|
|
|
8.51
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HIFS
|
|
Hingham Institution for Savings
|
|
|
|
|
MA
|
|
|
$
|
183.95
|
|
|
$
|
392.32
|
|
|
$
|
14.99
|
|
|
$
|
99.67
|
|
|
|
13.23
|
x
|
|
|
184.55
|
%
|
|
|
16.29
|
%
|
|
|
184.55
|
%
|
|
|
12.27
|
x
|
|
$
|
1.48
|
|
|
|
0.80
|
%
|
|
|
13.81
|
%
|
|
$
|
2,409
|
|
|
|
8.83
|
%
|
|
|
8.83
|
%
|
|
|
NA
|
|
|
|
1.32
|
%
|
|
|
14.97
|
%
|
|
|
1.42
|
%
|
|
|
16.15
|
%
|
|
MELR
|
|
Melrose Bancorp, Inc.
|
|
|
|
|
MA
|
|
|
$
|
18.02
|
|
|
$
|
42.79
|
|
|
|
NA
|
|
|
$
|
17.57
|
|
|
|
24.35
|
x
|
|
|
102.55
|
%
|
|
|
14.32
|
%
|
|
|
102.55
|
%
|
|
|
NM
|
|
|
$
|
0.34
|
|
|
|
1.89
|
%
|
|
|
45.95
|
%
|
|
$
|
324
|
|
|
|
13.96
|
%
|
|
|
13.96
|
%
|
|
|
NA
|
|
|
|
0.56
|
%
|
|
|
3.94
|
%
|
|
|
NA
|
|
|
|
NA
|
|
|
EBSB
|
|
Meridian Bancorp, Inc.
|
|
|
|
|
MA
|
|
|
$
|
15.77
|
|
|
$
|
805.94
|
|
|
$
|
1.10
|
|
|
$
|
12.60
|
|
|
|
14.88
|
x
|
|
|
125.15
|
%
|
|
|
13.67
|
%
|
|
|
129.58
|
%
|
|
|
14.34
|
x
|
|
$
|
0.28
|
|
|
|
1.78
|
%
|
|
|
20.75
|
%
|
|
$
|
6,179
|
|
|
|
10.92
|
%
|
|
|
10.59
|
%
|
|
|
NA
|
|
|
|
0.99
|
%
|
|
|
8.36
|
%
|
|
|
1.03
|
%
|
|
|
8.67
|
%
|
|
PBBI
|
|
PB Bancorp, Inc.
|
|
(7)
|
|
|
CT
|
|
|
$
|
11.13
|
|
|
$
|
80.34
|
|
|
$
|
0.55
|
|
|
$
|
11.19
|
|
|
|
20.61
|
x
|
|
|
99.50
|
%
|
|
|
16.32
|
%
|
|
|
108.28
|
%
|
|
|
20.07
|
x
|
|
$
|
0.28
|
|
|
|
2.52
|
%
|
|
|
59.26
|
%
|
|
$
|
520
|
|
|
|
16.41
|
%
|
|
|
15.28
|
%
|
|
|
NA
|
|
|
|
0.75
|
%
|
|
|
4.65
|
%
|
|
|
0.76
|
%
|
|
|
4.75
|
%
|
|
RNDB
|
|
Randolph Bancorp, Inc.
|
|
(7)
|
|
|
MA
|
|
|
$
|
14.75
|
|
|
$
|
81.64
|
|
|
$
|
(0.31
|
)
|
|
$
|
13.05
|
|
|
|
NM
|
|
|
|
113.04
|
%
|
|
|
14.98
|
%
|
|
|
NA
|
|
|
|
NM
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
$
|
590
|
|
|
|
13.25
|
%
|
|
|
NA
|
|
|
|
0.95
|
%
|
|
|
-0.63
|
%
|
|
|
-4.26
|
%
|
|
|
-0.29
|
%
|
|
|
-1.94
|
%
|
|
UBNK
|
|
United Financial Bancorp, Inc.
|
|
|
|
|
CT
|
|
|
$
|
15.13
|
|
|
$
|
766.17
|
|
|
$
|
1.16
|
|
|
$
|
13.94
|
|
|
|
12.93
|
x
|
|
|
108.54
|
%
|
|
|
10.51
|
%
|
|
|
131.14
|
%
|
|
|
13.01
|
x
|
|
$
|
0.48
|
|
|
|
3.17
|
%
|
|
|
41.03
|
%
|
|
$
|
7,357
|
|
|
|
9.69
|
%
|
|
|
8.15
|
%
|
|
|
NA
|
|
|
|
0.84
|
%
|
|
|
8.57
|
%
|
|
|
0.83
|
%
|
|
|
8.51
|
%
|
|
WEBK
|
|
Wellesley Bancorp, Inc.
|
|
|
|
|
MA
|
|
|
$
|
32.00
|
|
|
$
|
77.42
|
|
|
$
|
2.40
|
|
|
$
|
25.79
|
|
|
|
13.33
|
x
|
|
|
124.08
|
%
|
|
|
9.27
|
%
|
|
|
124.08
|
%
|
|
|
13.33
|
x
|
|
$
|
0.22
|
|
|
|
0.69
|
%
|
|
|
8.96
|
%
|
|
$
|
871
|
|
|
|
7.47
|
%
|
|
|
7.47
|
%
|
|
|
NA
|
|
|
|
0.72
|
%
|
|
|
9.66
|
%
|
|
|
0.72
|
%
|
|
|
9.66
|
%
|
|
WNEB
|
|
Western New England Bancorp, Inc.
|
|
|
|
|
MA
|
|
|
$
|
9.80
|
|
|
$
|
271.39
|
|
|
$
|
0.57
|
|
|
$
|
8.35
|
|
|
|
17.19
|
x
|
|
|
117.39
|
%
|
|
|
13.13
|
%
|
|
|
125.99
|
%
|
|
|
17.12
|
x
|
|
$
|
0.16
|
|
|
|
1.63
|
%
|
|
|
21.05
|
%
|
|
$
|
2,119
|
|
|
|
11.19
|
%
|
|
|
10.50
|
%
|
|
|
NA
|
|
|
|
0.78
|
%
|
|
|
6.82
|
%
|
|
|
0.79
|
%
|
|
|
6.84
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MHC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HONE
|
|
HarborOne Bancorp, Inc. (MHC)
|
|
|
|
|
MA
|
|
|
$
|
15.33
|
|
|
$
|
483.84
|
|
|
$
|
0.49
|
|
|
$
|
10.97
|
|
|
|
NM
|
|
|
|
139.70
|
%
|
|
|
13.67
|
%
|
|
|
178.98
|
%
|
|
|
31.58
|
x
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
$
|
3,653
|
|
|
|
9.79
|
%
|
|
|
7.81
|
%
|
|
|
NA
|
|
|
|
0.39
|
%
|
|
|
3.27
|
%
|
|
|
0.53
|
%
|
|
|
4.41
|
%
|
|
PVBC
|
|
Provident Bancorp, Inc. (MHC)
|
|
|
|
|
MA
|
|
|
$
|
23.00
|
|
|
$
|
212.27
|
|
|
$
|
1.00
|
|
|
$
|
13.05
|
|
|
|
23.00
|
x
|
|
|
176.29
|
%
|
|
|
22.73
|
%
|
|
|
176.29
|
%
|
|
|
23.00
|
x
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
$
|
974
|
|
|
|
12.89
|
%
|
|
|
12.89
|
%
|
|
|
NA
|
|
|
|
1.02
|
%
|
|
|
7.75
|
%
|
|
|
1.02
|
%
|
|
|
7.75
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BHBK
|
|
Blue Hills Bancorp, Inc.
|
|
|
|
|
MA
|
|
|
$
|
23.75
|
|
|
$
|
576.88
|
|
|
$
|
1.06
|
|
|
$
|
15.01
|
|
|
|
24.23
|
x
|
|
|
158.21
|
%
|
|
|
22.79
|
%
|
|
|
161.92
|
%
|
|
|
22.51
|
x
|
|
$
|
0.80
|
|
|
|
3.37
|
%
|
|
|
102.04
|
%
|
|
$
|
2,806
|
|
|
|
14.40
|
%
|
|
|
14.12
|
%
|
|
|
NA
|
|
|
|
0.91
|
%
|
|
|
6.10
|
%
|
|
|
0.98
|
%
|
|
|
6.57
|
%
|
|
BLMT
|
|
BSB Bancorp, Inc.
|
|
|
|
|
MA
|
|
|
$
|
33.30
|
|
|
$
|
313.42
|
|
|
$
|
2.55
|
|
|
$
|
20.64
|
|
|
|
13.65
|
x
|
|
|
161.31
|
%
|
|
|
10.74
|
%
|
|
|
161.31
|
%
|
|
|
13.03
|
x
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
$
|
3,030
|
|
|
|
6.66
|
%
|
|
|
6.66
|
%
|
|
|
NA
|
|
|
|
0.80
|
%
|
|
|
11.97
|
%
|
|
|
0.84
|
%
|
|
|
12.53
|
%
|
|
SIFI
|
|
SI Financial Group, Inc.
|
|
(7)
|
|
|
CT
|
|
|
$
|
13.43
|
|
|
$
|
157.40
|
|
|
$
|
0.87
|
|
|
$
|
14.13
|
|
|
|
24.42
|
x
|
|
|
95.06
|
%
|
|
|
10.06
|
%
|
|
|
105.24
|
%
|
|
|
15.38
|
x
|
|
$
|
0.24
|
|
|
|
1.79
|
%
|
|
|
43.64
|
%
|
|
$
|
1,607
|
|
|
|
10.58
|
%
|
|
|
9.65
|
%
|
|
|
1.17
|
%
|
|
|
0.41
|
%
|
|
|
3.82
|
%
|
|
|
0.65
|
%
|
|
|
6.12
|
%
|
|
|
(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)
|
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.
|
|
|
(7)
|
Financial Characteristics as of September, 2018 or the
most recent available
|
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) 2019 by RP® Financial, LC.
EXHIBIT III-4
Public Market Pricing of Midwest Thrift
Institutions
Exhibit III-4
Public Market Pricing of Midwest Institutions
As of February 8, 2019
|
|
|
|
|
|
|
|
|
Market
|
|
|
Per Share Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalization
|
|
|
Core
|
|
|
Book
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends(4)
|
|
|
Financial Characteristics(6)
|
|
|
|
|
|
|
|
|
|
|
Price/
|
|
|
Market
|
|
|
12 Month
|
|
|
Value/
|
|
|
Pricing Ratios(3)
|
|
|
Amount/
|
|
|
|
|
|
Payout
|
|
|
Total
|
|
|
Equity/
|
|
|
Tang. Eq./
|
|
|
NPAs/
|
|
|
Reported
|
|
|
Core
|
|
|
|
|
|
|
|
|
Share(1)
|
|
|
Value
|
|
|
EPS(2)
|
|
|
Share
|
|
|
P/E
|
|
|
P/B
|
|
|
P/A
|
|
|
P/TB
|
|
|
P/Core
|
|
|
Share
|
|
|
Yield
|
|
|
Ratio(5)
|
|
|
Assets
|
|
|
Assets
|
|
|
T. Assets
|
|
|
Assets
|
|
|
ROAA
|
|
|
ROAE
|
|
|
ROAA
|
|
|
ROAE
|
|
|
|
|
|
|
|
|
|
|
($)
|
|
|
($Mil)
|
|
|
($)
|
|
|
($)
|
|
|
(x)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(x)
|
|
|
($)
|
|
|
(%)
|
|
|
(%)
|
|
|
($Mil)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Non-MHC Public Companies(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
|
|
$
|
22.01
|
|
|
$
|
618.58
|
|
|
$
|
1.56
|
|
|
$
|
17.59
|
|
|
|
15.92
|
|
|
|
125.9
|
%
|
|
|
15.0
|
%
|
|
|
140.6
|
%
|
|
|
17.00
|
|
|
$
|
0.40
|
|
|
$
|
0.02
|
|
|
|
46
|
%
|
|
$
|
4,355.02
|
|
|
|
12.84
|
%
|
|
|
11.86
|
%
|
|
|
0.97
|
%
|
|
|
0.91
|
%
|
|
|
7.71
|
%
|
|
|
0.88
|
%
|
|
|
7.00
|
%
|
|
Median
|
|
|
|
|
|
$
|
16.88
|
|
|
$
|
227.31
|
|
|
$
|
0.98
|
|
|
$
|
15.59
|
|
|
|
14.88
|
|
|
|
117.2
|
%
|
|
|
14.8
|
%
|
|
|
129.3
|
%
|
|
|
14.63
|
|
|
$
|
0.34
|
|
|
$
|
0.02
|
|
|
|
41
|
%
|
|
$
|
1,467.97
|
|
|
|
11.67
|
%
|
|
|
10.59
|
%
|
|
|
0.79
|
%
|
|
|
0.87
|
%
|
|
|
7.33
|
%
|
|
|
0.83
|
%
|
|
|
7.13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages
|
|
|
|
|
|
|
|
$
|
18.75
|
|
|
$
|
577.21
|
|
|
$
|
1.27
|
|
|
$
|
16.79
|
|
|
|
15.94
|
|
|
|
116.0
|
%
|
|
|
16.3
|
%
|
|
|
132.7
|
%
|
|
|
18.46
|
|
|
$
|
0.25
|
|
|
|
1.32
|
%
|
|
|
44
|
%
|
|
$
|
4,028
|
|
|
|
15.11
|
%
|
|
|
14.19
|
%
|
|
|
0.75
|
%
|
|
|
1.05
|
%
|
|
|
8.41
|
%
|
|
|
1.07
|
%
|
|
|
7.26
|
%
|
|
Medians
|
|
|
|
|
|
|
|
$
|
16.24
|
|
|
$
|
425.31
|
|
|
$
|
0.90
|
|
|
$
|
17.12
|
|
|
|
13.00
|
|
|
|
115.7
|
%
|
|
|
16.3
|
%
|
|
|
115.8
|
%
|
|
|
16.68
|
|
|
$
|
0.20
|
|
|
|
1.02
|
%
|
|
|
26
|
%
|
|
$
|
1,915
|
|
|
|
12.56
|
%
|
|
|
11.68
|
%
|
|
|
0.79
|
%
|
|
|
1.04
|
%
|
|
|
7.58
|
%
|
|
|
0.91
|
%
|
|
|
6.73
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CFFN
|
|
Capitol Federal Financial, Inc.
|
|
|
|
KS
|
|
$
|
12.86
|
|
|
$
|
1,769.83
|
|
|
$
|
0.69
|
|
|
$
|
9.53
|
|
|
|
18.91
|
x
|
|
|
134.98
|
%
|
|
|
19.53
|
%
|
|
|
132.20
|
%
|
|
|
18.73
|
x
|
|
$
|
0.34
|
|
|
|
2.64
|
%
|
|
|
144.12
|
%
|
|
$
|
9,304
|
|
|
|
14.47
|
%
|
|
|
NA
|
|
|
|
NA
|
|
|
|
0.90
|
%
|
|
|
6.68
|
%
|
|
|
0.91
|
%
|
|
|
6.73
|
%
|
|
EFBI
|
|
Eagle Financial Bancorp, Inc.
|
|
(7)
|
|
OH
|
|
$
|
15.65
|
|
|
$
|
23.60
|
|
|
|
NA
|
|
|
$
|
17.05
|
|
|
|
NM
|
|
|
|
91.81
|
%
|
|
|
18.46
|
%
|
|
|
91.81
|
%
|
|
|
NM
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
$
|
138
|
|
|
|
20.11
|
%
|
|
|
20.11
|
%
|
|
|
0.79
|
%
|
|
|
0.41
|
%
|
|
|
1.95
|
%
|
|
|
0.26
|
%
|
|
|
1.24
|
%
|
|
FDEF
|
|
First Defiance Financial Corp.
|
|
|
|
OH
|
|
$
|
29.39
|
|
|
$
|
593.56
|
|
|
$
|
2.27
|
|
|
$
|
19.81
|
|
|
|
13.00
|
x
|
|
|
148.36
|
%
|
|
|
18.63
|
%
|
|
|
199.85
|
%
|
|
|
12.97
|
x
|
|
$
|
0.76
|
|
|
|
2.59
|
%
|
|
|
30.09
|
%
|
|
$
|
3,182
|
|
|
|
12.56
|
%
|
|
|
9.63
|
%
|
|
|
1.00
|
%
|
|
|
1.52
|
%
|
|
|
12.03
|
%
|
|
|
1.52
|
%
|
|
|
12.07
|
%
|
|
FBC
|
|
Flagstar Bancorp, Inc.
|
|
|
|
MI
|
|
$
|
31.70
|
|
|
$
|
1,830.66
|
|
|
|
NA
|
|
|
$
|
27.19
|
|
|
|
9.88
|
x
|
|
|
116.60
|
%
|
|
|
9.88
|
%
|
|
|
132.66
|
%
|
|
|
NM
|
|
|
$
|
0.16
|
|
|
|
0.50
|
%
|
|
|
1.25
|
%
|
|
$
|
18,531
|
|
|
|
8.47
|
%
|
|
|
7.52
|
%
|
|
|
0.45
|
%
|
|
|
1.04
|
%
|
|
|
12.57
|
%
|
|
|
NA
|
|
|
|
NA
|
|
|
HMNF
|
|
HMN Financial, Inc.
|
|
|
|
MN
|
|
$
|
19.55
|
|
|
$
|
89.55
|
|
|
|
NA
|
|
|
$
|
17.19
|
|
|
|
11.37
|
x
|
|
|
113.70
|
%
|
|
|
13.27
|
%
|
|
|
115.17
|
%
|
|
|
NM
|
|
|
$
|
0.00
|
|
|
|
0.00
|
%
|
|
|
NA
|
|
|
$
|
712
|
|
|
|
11.67
|
%
|
|
|
11.54
|
%
|
|
|
NA
|
|
|
|
1.14
|
%
|
|
|
9.88
|
%
|
|
|
NA
|
|
|
|
NA
|
|
|
IROQ
|
|
IF Bancorp, Inc.
|
|
|
|
IL
|
|
$
|
20.75
|
|
|
$
|
69.95
|
|
|
|
NA
|
|
|
$
|
21.71
|
|
|
|
23.58
|
x
|
|
|
95.57
|
%
|
|
|
11.30
|
%
|
|
|
95.57
|
%
|
|
|
NM
|
|
|
$
|
0.25
|
|
|
|
1.20
|
%
|
|
|
25.57
|
%
|
|
$
|
664
|
|
|
|
11.82
|
%
|
|
|
11.82
|
%
|
|
|
NA
|
|
|
|
0.50
|
%
|
|
|
3.95
|
%
|
|
|
NA
|
|
|
|
NA
|
|
|
CASH
|
|
Meta Financial Group, Inc.
|
|
|
|
SD
|
|
$
|
24.03
|
|
|
$
|
947.26
|
|
|
$
|
2.56
|
|
|
$
|
19.48
|
|
|
|
12.58
|
x
|
|
|
123.38
|
%
|
|
|
15.32
|
%
|
|
|
238.02
|
%
|
|
|
9.38
|
x
|
|
$
|
0.20
|
|
|
|
0.83
|
%
|
|
|
9.77
|
%
|
|
$
|
6,183
|
|
|
|
12.47
|
%
|
|
|
6.90
|
%
|
|
|
NA
|
|
|
|
1.26
|
%
|
|
|
11.15
|
%
|
|
|
1.70
|
%
|
|
|
15.44
|
%
|
|
MSVB
|
|
Mid-Southern Bancorp, Inc.
|
|
|
|
IN
|
|
$
|
12.89
|
|
|
$
|
43.38
|
|
|
$
|
0.41
|
|
|
|
NA
|
|
|
|
31.44
|
x
|
|
|
96.54
|
%
|
|
|
NA
|
|
|
|
96.54
|
%
|
|
|
31.44
|
x
|
|
$
|
0.08
|
|
|
|
0.62
|
%
|
|
|
9.76
|
%
|
|
$
|
201
|
|
|
|
24.34
|
%
|
|
|
24.34
|
%
|
|
|
NA
|
|
|
|
0.72
|
%
|
|
|
4.28
|
%
|
|
|
0.72
|
%
|
|
|
4.28
|
%
|
|
OTTW
|
|
Ottawa Bancorp, Inc.
|
|
(7)
|
|
IL
|
|
$
|
13.53
|
|
|
$
|
43.56
|
|
|
$
|
0.57
|
|
|
$
|
15.56
|
|
|
|
NM
|
|
|
|
86.95
|
%
|
|
|
16.48
|
%
|
|
|
88.44
|
%
|
|
|
23.61
|
x
|
|
$
|
0.20
|
|
|
|
1.48
|
%
|
|
|
88.33
|
%
|
|
$
|
278
|
|
|
|
18.96
|
%
|
|
|
18.69
|
%
|
|
|
NA
|
|
|
|
0.36
|
%
|
|
|
1.77
|
%
|
|
|
0.71
|
%
|
|
|
3.46
|
%
|
|
SBT
|
|
Sterling Bancorp, Inc.
|
|
|
|
MI
|
|
$
|
9.67
|
|
|
$
|
512.63
|
|
|
|
NA
|
|
|
$
|
6.32
|
|
|
|
8.06
|
x
|
|
|
153.00
|
%
|
|
|
16.04
|
%
|
|
|
153.20
|
%
|
|
|
NM
|
|
|
$
|
0.04
|
|
|
|
0.41
|
%
|
|
|
2.50
|
%
|
|
$
|
3,197
|
|
|
|
10.48
|
%
|
|
|
10.47
|
%
|
|
|
NA
|
|
|
|
2.05
|
%
|
|
|
20.66
|
%
|
|
|
NA
|
|
|
|
NA
|
|
|
WSBF
|
|
Waterstone Financial, Inc.
|
|
|
|
WI
|
|
$
|
16.24
|
|
|
$
|
425.31
|
|
|
$
|
1.11
|
|
|
$
|
14.04
|
|
|
|
14.63
|
x
|
|
|
115.65
|
%
|
|
|
24.13
|
%
|
|
|
115.83
|
%
|
|
|
14.63
|
x
|
|
$
|
0.48
|
|
|
|
2.96
|
%
|
|
|
88.29
|
%
|
|
$
|
1,915
|
|
|
|
20.87
|
%
|
|
|
20.84
|
%
|
|
|
NA
|
|
|
|
1.64
|
%
|
|
|
7.58
|
%
|
|
|
1.64
|
%
|
|
|
7.58
|
%
|
EXHIBIT III-5
Peer Group Market Area Comparative Analysis
Exhibit III-5
Peer Group Market Area Comparative Analysis
|
|
|
|
|
|
|
|
|
|
|
Proj.
|
|
|
|
|
|
|
|
|
Per
Capita Income
|
|
|
Deposit
|
|
|
|
|
|
|
Population
|
|
|
|
|
|
Pop.
|
|
|
2013-2019
|
|
|
2019-2024
|
|
|
2019
|
|
|
% State
|
|
|
Market
|
|
|
Institution
|
|
County
|
|
2013
|
|
|
2019
|
|
|
2024
|
|
|
%
Change
|
|
|
%
Change
|
|
|
Amount
|
|
|
Average
|
|
|
Share(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESSA Bancorp, Inc.
|
|
Monroe, PA
|
|
|
169,846
|
|
|
|
168,414
|
|
|
|
169,097
|
|
|
|
-0.1
|
%
|
|
|
0.1
|
%
|
|
|
31,740
|
|
|
|
90.0
|
%
|
|
|
29.32
|
%
|
|
Hingham Institution for Savings
|
|
Plymouth, MA
|
|
|
500,544
|
|
|
|
519,639
|
|
|
|
535,770
|
|
|
|
0.6
|
%
|
|
|
0.6
|
%
|
|
|
45,313
|
|
|
|
96.8
|
%
|
|
|
10.90
|
%
|
|
HMN Financial, Inc.
|
|
Olmsted, MN
|
|
|
147,528
|
|
|
|
157,269
|
|
|
|
164,543
|
|
|
|
1.1
|
%
|
|
|
0.9
|
%
|
|
|
41,587
|
|
|
|
106.5
|
%
|
|
|
6.55
|
%
|
|
PCSB Financial Corporation
|
|
Westchester, NY
|
|
|
963,608
|
|
|
|
984,709
|
|
|
|
1,003,537
|
|
|
|
0.4
|
%
|
|
|
0.4
|
%
|
|
|
55,378
|
|
|
|
139.0
|
%
|
|
|
1.04
|
%
|
|
Prudential Bancorp, Inc.
|
|
Philadelphia, PA
|
|
|
1,548,343
|
|
|
|
1,590,076
|
|
|
|
1,619,276
|
|
|
|
0.4
|
%
|
|
|
0.4
|
%
|
|
|
28,213
|
|
|
|
80.0
|
%
|
|
|
1.29
|
%
|
|
Severn Bancorp, Inc.
|
|
Anne Arundel, MD
|
|
|
552,258
|
|
|
|
579,979
|
|
|
|
602,811
|
|
|
|
0.8
|
%
|
|
|
0.8
|
%
|
|
|
50,705
|
|
|
|
114.7
|
%
|
|
|
4.99
|
%
|
|
Standard AVB Financial Corp.
|
|
Allegheny, PA
|
|
|
1,230,931
|
|
|
|
1,219,499
|
|
|
|
1,218,128
|
|
|
|
-0.2
|
%
|
|
|
0.0
|
%
|
|
|
39,517
|
|
|
|
112.0
|
%
|
|
|
0.36
|
%
|
|
Waterstone Financial, Inc.
|
|
Milwaukee, WI
|
|
|
153,898
|
|
|
|
158,703
|
|
|
|
163,665
|
|
|
|
0.5
|
%
|
|
|
0.6
|
%
|
|
|
29,045
|
|
|
|
62.1
|
%
|
|
|
1.58
|
%
|
|
Wellesley Bancorp, Inc.
|
|
Norfolk, MA
|
|
|
680,624
|
|
|
|
705,361
|
|
|
|
726,170
|
|
|
|
0.6
|
%
|
|
|
0.6
|
%
|
|
|
56,601
|
|
|
|
120.9
|
%
|
|
|
2.02
|
%
|
|
Western New England Bancorp, Inc.
|
|
Hampden, MA
|
|
|
463,914
|
|
|
|
470,574
|
|
|
|
478,090
|
|
|
|
0.2
|
%
|
|
|
0.3
|
%
|
|
|
31,188
|
|
|
|
66.6
|
%
|
|
|
13.04
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Averages:
|
|
|
641,149
|
|
|
|
655,422
|
|
|
|
668,109
|
|
|
|
0.4
|
%
|
|
|
0.5
|
%
|
|
|
40,929
|
|
|
|
98.9
|
%
|
|
|
7.11
|
%
|
|
|
|
Medians:
|
|
|
526,401
|
|
|
|
549,809
|
|
|
|
569,291
|
|
|
|
0.5
|
%
|
|
|
0.5
|
%
|
|
|
40,552
|
|
|
|
101.7
|
%
|
|
|
3.51
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pioneer Saving Bank
|
|
Albany, NY
|
|
|
302,659
|
|
|
|
310,526
|
|
|
|
314,931
|
|
|
|
0.4
|
%
|
|
|
0.3
|
%
|
|
|
42,013
|
|
|
|
105.5
|
%
|
|
|
2.33
|
%
|
(1) Total institution deposits in headquarters county as percent
of total county deposits as of June 30, 2018.
Sources: S&P Global Market Intelligence and the FDIC.
EXHIBIT IV-1
Stock Prices:
As of February 8, 2018
RP
®
Financial, LC.
Exhibit IV-1A
Weekly Thrift Market Line - Part One
Prices As of February 8, 2019
|
|
|
|
|
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)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Institution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AX
|
|
Axos Financial, Inc.
|
|
|
32.70
|
|
|
|
61,216
|
|
|
|
2,001.8
|
|
|
|
45.18
|
|
|
|
23.87
|
|
|
|
31.28
|
|
|
|
4.54
|
|
|
|
-4.80
|
|
|
|
29.86
|
|
|
|
2.45
|
|
|
|
NA
|
|
|
|
15.84
|
|
|
|
14.77
|
|
|
|
0.00
|
|
|
BCTF
|
|
Bancorp 34, Inc.
|
|
|
15.12
|
|
|
|
3,228
|
|
|
|
48.8
|
|
|
|
17.25
|
|
|
|
12.86
|
|
|
|
15.07
|
|
|
|
0.31
|
|
|
|
0.53
|
|
|
|
2.23
|
|
|
|
0.09
|
|
|
|
0.49
|
|
|
|
13.56
|
|
|
|
13.51
|
|
|
|
0.00
|
|
|
BYFC
|
|
Broadway Financial Corporation
|
|
|
1.30
|
|
|
|
26,762
|
|
|
|
34.8
|
|
|
|
2.54
|
|
|
|
0.95
|
|
|
|
1.35
|
|
|
|
-3.70
|
|
|
|
-47.37
|
|
|
|
23.81
|
|
|
|
0.02
|
|
|
|
0.03
|
|
|
|
1.75
|
|
|
|
1.75
|
|
|
|
0.00
|
|
|
CFFN
|
|
Capitol Federal Financial, Inc.
|
|
|
12.86
|
|
|
|
137,623
|
|
|
|
1,769.8
|
|
|
|
14.15
|
|
|
|
11.80
|
|
|
|
12.83
|
|
|
|
0.23
|
|
|
|
2.23
|
|
|
|
0.70
|
|
|
|
0.73
|
|
|
|
0.68
|
|
|
|
9.85
|
|
|
|
9.73
|
|
|
|
0.00
|
|
|
CARV
|
|
Carver Bancorp, Inc.
|
|
|
3.40
|
|
|
|
3,699
|
|
|
|
12.6
|
|
|
|
11.94
|
|
|
|
2.40
|
|
|
|
3.88
|
|
|
|
-12.37
|
|
|
|
22.61
|
|
|
|
14.09
|
|
|
|
-0.27
|
|
|
|
-1.15
|
|
|
|
0.85
|
|
|
|
0.85
|
|
|
|
0.00
|
|
|
CBMB
|
|
CBM Bancorp, Inc.
|
|
|
12.76
|
|
|
|
4,232
|
|
|
|
54.0
|
|
|
|
13.25
|
|
|
|
12.02
|
|
|
|
12.67
|
|
|
|
0.71
|
|
|
|
NA
|
|
|
|
1.92
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
14.23
|
|
|
|
14.23
|
|
|
|
0.00
|
|
|
DCOM
|
|
Dime Community Bancshares, Inc.
|
|
|
19.84
|
|
|
|
36,093
|
|
|
|
716.1
|
|
|
|
20.85
|
|
|
|
15.48
|
|
|
|
19.72
|
|
|
|
0.61
|
|
|
|
9.31
|
|
|
|
16.84
|
|
|
|
1.45
|
|
|
|
1.32
|
|
|
|
16.49
|
|
|
|
14.97
|
|
|
|
0.00
|
|
|
EFBI
|
|
Eagle Financial Bancorp, Inc.
|
|
|
15.65
|
|
|
|
1,508
|
|
|
|
23.6
|
|
|
|
16.84
|
|
|
|
14.56
|
|
|
|
15.54
|
|
|
|
0.68
|
|
|
|
-2.17
|
|
|
|
3.16
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
17.05
|
|
|
|
17.05
|
|
|
|
0.00
|
|
|
ESBK
|
|
Elmira Savings Bank
|
|
|
18.68
|
|
|
|
3,504
|
|
|
|
65.5
|
|
|
|
21.00
|
|
|
|
15.77
|
|
|
|
18.84
|
|
|
|
-0.83
|
|
|
|
-9.34
|
|
|
|
7.07
|
|
|
|
1.31
|
|
|
|
1.65
|
|
|
|
16.42
|
|
|
|
12.90
|
|
|
|
0.00
|
|
|
ESSA
|
|
ESSA Bancorp, Inc.
|
|
|
15.25
|
|
|
|
10,993
|
|
|
|
167.6
|
|
|
|
16.50
|
|
|
|
14.16
|
|
|
|
15.22
|
|
|
|
0.20
|
|
|
|
-0.97
|
|
|
|
-2.31
|
|
|
|
0.60
|
|
|
|
1.00
|
|
|
|
15.21
|
|
|
|
13.92
|
|
|
|
0.00
|
|
|
FDEF
|
|
First Defiance Financial Corp.
|
|
|
29.39
|
|
|
|
20,196
|
|
|
|
593.6
|
|
|
|
35.00
|
|
|
|
22.78
|
|
|
|
28.40
|
|
|
|
3.49
|
|
|
|
11.94
|
|
|
|
19.91
|
|
|
|
2.13
|
|
|
|
2.08
|
|
|
|
19.29
|
|
|
|
14.22
|
|
|
|
0.00
|
|
|
FNWB
|
|
First Northwest Bancorp
|
|
|
15.69
|
|
|
|
10,310
|
|
|
|
161.8
|
|
|
|
17.65
|
|
|
|
13.56
|
|
|
|
15.27
|
|
|
|
2.75
|
|
|
|
-3.92
|
|
|
|
5.80
|
|
|
|
0.47
|
|
|
|
0.56
|
|
|
|
15.18
|
|
|
|
15.18
|
|
|
|
0.00
|
|
|
FBC
|
|
Flagstar Bancorp, Inc.
|
|
|
31.70
|
|
|
|
57,749
|
|
|
|
1,830.7
|
|
|
|
38.00
|
|
|
|
25.30
|
|
|
|
32.02
|
|
|
|
-1.00
|
|
|
|
-8.96
|
|
|
|
20.08
|
|
|
|
1.49
|
|
|
|
2.92
|
|
|
|
26.34
|
|
|
|
25.13
|
|
|
|
0.00
|
|
|
FSBW
|
|
FS Bancorp, Inc.
|
|
|
52.00
|
|
|
|
4,371
|
|
|
|
227.3
|
|
|
|
66.40
|
|
|
|
41.25
|
|
|
|
48.71
|
|
|
|
6.75
|
|
|
|
-4.66
|
|
|
|
21.27
|
|
|
|
4.33
|
|
|
|
4.35
|
|
|
|
35.82
|
|
|
|
34.91
|
|
|
|
0.00
|
|
|
FSBC
|
|
FSB Bancorp, Inc.
|
|
|
17.00
|
|
|
|
1,909
|
|
|
|
32.5
|
|
|
|
18.50
|
|
|
|
15.96
|
|
|
|
16.80
|
|
|
|
1.19
|
|
|
|
-0.29
|
|
|
|
0.00
|
|
|
|
-0.05
|
|
|
|
0.07
|
|
|
|
16.12
|
|
|
|
16.12
|
|
|
|
0.00
|
|
|
HIFS
|
|
Hingham Institution for Savings
|
|
|
183.95
|
|
|
|
2,133
|
|
|
|
392.3
|
|
|
|
229.99
|
|
|
|
180.17
|
|
|
|
187.30
|
|
|
|
-1.79
|
|
|
|
-8.19
|
|
|
|
-6.97
|
|
|
|
14.83
|
|
|
|
14.46
|
|
|
|
98.35
|
|
|
|
98.35
|
|
|
|
0.00
|
|
|
HMNF
|
|
HMN Financial, Inc.
|
|
|
19.55
|
|
|
|
4,580
|
|
|
|
89.5
|
|
|
|
21.90
|
|
|
|
18.05
|
|
|
|
20.25
|
|
|
|
-3.46
|
|
|
|
5.68
|
|
|
|
-0.36
|
|
|
|
1.32
|
|
|
|
1.56
|
|
|
|
17.35
|
|
|
|
17.12
|
|
|
|
0.00
|
|
|
HFBL
|
|
Home Federal Bancorp, Inc. of Louisiana
|
|
|
30.62
|
|
|
|
1,770
|
|
|
|
54.2
|
|
|
|
37.30
|
|
|
|
25.64
|
|
|
|
31.25
|
|
|
|
-2.02
|
|
|
|
9.14
|
|
|
|
3.94
|
|
|
|
1.97
|
|
|
|
2.31
|
|
|
|
25.32
|
|
|
|
25.32
|
|
|
|
0.00
|
|
|
HVBC
|
|
HV Bancorp, Inc.
|
|
|
15.16
|
|
|
|
2,100
|
|
|
|
31.8
|
|
|
|
17.50
|
|
|
|
13.75
|
|
|
|
15.12
|
|
|
|
0.24
|
|
|
|
1.07
|
|
|
|
1.20
|
|
|
|
0.39
|
|
|
|
0.51
|
|
|
|
13.72
|
|
|
|
13.72
|
|
|
|
0.00
|
|
|
IROQ
|
|
IF Bancorp, Inc.
|
|
|
20.75
|
|
|
|
3,371
|
|
|
|
69.9
|
|
|
|
25.04
|
|
|
|
18.70
|
|
|
|
20.40
|
|
|
|
1.72
|
|
|
|
3.70
|
|
|
|
3.13
|
|
|
|
0.46
|
|
|
|
0.82
|
|
|
|
20.94
|
|
|
|
20.94
|
|
|
|
0.00
|
|
|
ISBC
|
|
Investors Bancorp, Inc.
|
|
|
12.60
|
|
|
|
274,431
|
|
|
|
3,457.8
|
|
|
|
14.41
|
|
|
|
9.94
|
|
|
|
12.74
|
|
|
|
-1.10
|
|
|
|
-3.45
|
|
|
|
21.15
|
|
|
|
0.57
|
|
|
|
0.79
|
|
|
|
10.39
|
|
|
|
10.09
|
|
|
|
0.00
|
|
|
KRNY
|
|
Kearny Financial Corp.
|
|
|
12.95
|
|
|
|
89,840
|
|
|
|
1,163.4
|
|
|
|
14.80
|
|
|
|
11.26
|
|
|
|
12.99
|
|
|
|
-0.31
|
|
|
|
0.78
|
|
|
|
1.01
|
|
|
|
0.29
|
|
|
|
0.39
|
|
|
|
12.64
|
|
|
|
10.42
|
|
|
|
0.00
|
|
|
MELR
|
|
Melrose Bancorp, Inc.
|
|
|
18.02
|
|
|
|
2,374
|
|
|
|
42.8
|
|
|
|
20.50
|
|
|
|
16.99
|
|
|
|
18.46
|
|
|
|
-2.38
|
|
|
|
-9.33
|
|
|
|
0.33
|
|
|
|
0.63
|
|
|
|
0.54
|
|
|
|
17.37
|
|
|
|
17.37
|
|
|
|
0.00
|
|
|
EBSB
|
|
Meridian Bancorp, Inc.
|
|
|
15.77
|
|
|
|
51,106
|
|
|
|
805.9
|
|
|
|
20.95
|
|
|
|
13.67
|
|
|
|
15.85
|
|
|
|
-0.50
|
|
|
|
-19.64
|
|
|
|
10.13
|
|
|
|
1.00
|
|
|
|
1.08
|
|
|
|
12.52
|
|
|
|
12.11
|
|
|
|
0.00
|
|
|
CASH
|
|
Meta Financial Group, Inc.
|
|
|
24.03
|
|
|
|
39,420
|
|
|
|
947.3
|
|
|
|
39.28
|
|
|
|
18.01
|
|
|
|
23.66
|
|
|
|
1.56
|
|
|
|
-33.03
|
|
|
|
23.93
|
|
|
|
1.67
|
|
|
|
2.53
|
|
|
|
19.00
|
|
|
|
9.45
|
|
|
|
0.00
|
|
|
MSVB
|
|
Mid-Southern Bancorp, Inc.
|
|
|
12.89
|
|
|
|
3,366
|
|
|
|
43.4
|
|
|
|
28.55
|
|
|
|
11.55
|
|
|
|
12.30
|
|
|
|
4.80
|
|
|
|
-50.42
|
|
|
|
11.41
|
|
|
|
0.64
|
|
|
|
0.84
|
|
|
|
13.35
|
|
|
|
13.35
|
|
|
|
0.00
|
|
|
MSBF
|
|
MSB Financial Corp.
|
|
|
17.80
|
|
|
|
5,210
|
|
|
|
92.7
|
|
|
|
21.95
|
|
|
|
16.14
|
|
|
|
17.80
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
-0.28
|
|
|
|
0.71
|
|
|
|
0.83
|
|
|
|
12.70
|
|
|
|
12.70
|
|
|
|
0.00
|
|
|
NYCB
|
|
New York Community Bancorp, Inc.
|
|
|
11.98
|
|
|
|
473,537
|
|
|
|
5,673.0
|
|
|
|
14.53
|
|
|
|
8.61
|
|
|
|
11.97
|
|
|
|
0.08
|
|
|
|
-9.58
|
|
|
|
27.31
|
|
|
|
0.86
|
|
|
|
0.77
|
|
|
|
12.83
|
|
|
|
7.86
|
|
|
|
0.00
|
|
|
NFBK
|
|
Northfield Bancorp, Inc.
|
|
|
14.59
|
|
|
|
49,127
|
|
|
|
716.8
|
|
|
|
17.33
|
|
|
|
12.76
|
|
|
|
14.52
|
|
|
|
0.48
|
|
|
|
-5.01
|
|
|
|
7.68
|
|
|
|
0.60
|
|
|
|
0.84
|
|
|
|
13.21
|
|
|
|
12.41
|
|
|
|
0.00
|
|
|
NWBI
|
|
Northwest Bancshares, Inc.
|
|
|
17.90
|
|
|
|
103,354
|
|
|
|
1,850.0
|
|
|
|
18.56
|
|
|
|
15.50
|
|
|
|
17.66
|
|
|
|
1.36
|
|
|
|
9.61
|
|
|
|
5.67
|
|
|
|
0.98
|
|
|
|
0.98
|
|
|
|
12.01
|
|
|
|
8.83
|
|
|
|
0.00
|
|
|
ORIT
|
|
Oritani Financial Corp.
|
|
|
16.88
|
|
|
|
45,493
|
|
|
|
767.9
|
|
|
|
17.20
|
|
|
|
14.07
|
|
|
|
16.99
|
|
|
|
-0.65
|
|
|
|
5.17
|
|
|
|
14.44
|
|
|
|
0.99
|
|
|
|
1.28
|
|
|
|
12.08
|
|
|
|
12.08
|
|
|
|
0.00
|
|
|
OTTW
|
|
Ottawa Bancorp, Inc.
|
|
|
13.53
|
|
|
|
3,220
|
|
|
|
43.6
|
|
|
|
14.30
|
|
|
|
12.75
|
|
|
|
13.85
|
|
|
|
-2.31
|
|
|
|
-2.47
|
|
|
|
1.50
|
|
|
|
0.30
|
|
|
|
0.57
|
|
|
|
15.56
|
|
|
|
15.30
|
|
|
|
0.00
|
|
|
PBBI
|
|
PB Bancorp, Inc.
|
|
|
11.13
|
|
|
|
7,218
|
|
|
|
80.3
|
|
|
|
12.20
|
|
|
|
10.25
|
|
|
|
11.06
|
|
|
|
0.68
|
|
|
|
8.01
|
|
|
|
3.06
|
|
|
|
0.54
|
|
|
|
0.55
|
|
|
|
11.19
|
|
|
|
10.28
|
|
|
|
0.00
|
|
|
PCSB
|
|
PCSB Financial Corporation
|
|
|
20.70
|
|
|
|
16,323
|
|
|
|
337.9
|
|
|
|
22.34
|
|
|
|
18.16
|
|
|
|
20.28
|
|
|
|
2.07
|
|
|
|
5.24
|
|
|
|
5.83
|
|
|
|
0.43
|
|
|
|
0.42
|
|
|
|
15.96
|
|
|
|
15.60
|
|
|
|
0.00
|
|
|
PROV
|
|
Provident Financial Holdings, Inc.
|
|
|
18.63
|
|
|
|
7,510
|
|
|
|
139.9
|
|
|
|
19.78
|
|
|
|
14.67
|
|
|
|
17.65
|
|
|
|
5.55
|
|
|
|
3.44
|
|
|
|
20.19
|
|
|
|
0.55
|
|
|
|
0.84
|
|
|
|
16.22
|
|
|
|
16.22
|
|
|
|
0.00
|
|
|
PFS
|
|
Provident Financial Services, Inc.
|
|
|
27.43
|
|
|
|
66,830
|
|
|
|
1,833.1
|
|
|
|
29.12
|
|
|
|
22.22
|
|
|
|
26.30
|
|
|
|
4.30
|
|
|
|
9.11
|
|
|
|
13.68
|
|
|
|
1.57
|
|
|
|
1.65
|
|
|
|
19.92
|
|
|
|
13.66
|
|
|
|
0.00
|
|
|
PBIP
|
|
Prudential Bancorp, Inc.
|
|
|
18.01
|
|
|
|
8,893
|
|
|
|
160.2
|
|
|
|
19.87
|
|
|
|
13.92
|
|
|
|
18.27
|
|
|
|
-1.42
|
|
|
|
6.88
|
|
|
|
2.33
|
|
|
|
0.78
|
|
|
|
1.02
|
|
|
|
14.29
|
|
|
|
13.55
|
|
|
|
0.00
|
|
|
RNDB
|
|
Randolph Bancorp, Inc.
|
|
|
14.75
|
|
|
|
5,535
|
|
|
|
81.6
|
|
|
|
17.45
|
|
|
|
13.16
|
|
|
|
15.00
|
|
|
|
-1.67
|
|
|
|
-5.51
|
|
|
|
4.24
|
|
|
|
-0.62
|
|
|
|
-0.31
|
|
|
|
13.05
|
|
|
|
NA
|
|
|
|
0.00
|
|
|
RVSB
|
|
Riverview Bancorp, Inc.
|
|
|
7.47
|
|
|
|
22,599
|
|
|
|
168.8
|
|
|
|
9.99
|
|
|
|
5.46
|
|
|
|
7.54
|
|
|
|
-0.93
|
|
|
|
-14.73
|
|
|
|
2.61
|
|
|
|
0.59
|
|
|
|
0.67
|
|
|
|
5.42
|
|
|
|
4.17
|
|
|
|
0.00
|
|
|
SVBI
|
|
Severn Bancorp, Inc.
|
|
|
8.85
|
|
|
|
12,721
|
|
|
|
112.6
|
|
|
|
9.86
|
|
|
|
7.10
|
|
|
|
8.24
|
|
|
|
7.35
|
|
|
|
15.69
|
|
|
|
10.90
|
|
|
|
0.44
|
|
|
|
0.58
|
|
|
|
7.55
|
|
|
|
7.47
|
|
|
|
0.00
|
|
|
STXB
|
|
Spirit of Texas Bancshares, Inc.
|
|
|
21.70
|
|
|
|
12,104
|
|
|
|
262.7
|
|
|
|
23.53
|
|
|
|
16.70
|
|
|
|
21.50
|
|
|
|
0.93
|
|
|
|
NA
|
|
|
|
-4.74
|
|
|
|
0.90
|
|
|
|
1.09
|
|
|
|
15.38
|
|
|
|
14.26
|
|
|
|
0.00
|
|
|
STND
|
|
Standard AVB Financial Corp.
|
|
|
30.49
|
|
|
|
4,632
|
|
|
|
141.2
|
|
|
|
39.45
|
|
|
|
28.75
|
|
|
|
30.31
|
|
|
|
0.59
|
|
|
|
1.43
|
|
|
|
2.04
|
|
|
|
1.79
|
|
|
|
2.00
|
|
|
|
28.16
|
|
|
|
22.22
|
|
|
|
0.00
|
|
|
SBT
|
|
Sterling Bancorp, Inc.
|
|
|
9.67
|
|
|
|
53,012
|
|
|
|
512.6
|
|
|
|
14.98
|
|
|
|
6.65
|
|
|
|
8.76
|
|
|
|
10.39
|
|
|
|
-25.50
|
|
|
|
39.14
|
|
|
|
1.03
|
|
|
|
1.11
|
|
|
|
6.03
|
|
|
|
6.02
|
|
|
|
0.00
|
|
|
TBNK
|
|
Territorial Bancorp Inc.
|
|
|
27.46
|
|
|
|
9,180
|
|
|
|
252.1
|
|
|
|
31.95
|
|
|
|
24.96
|
|
|
|
27.59
|
|
|
|
-0.47
|
|
|
|
-8.95
|
|
|
|
5.70
|
|
|
|
1.78
|
|
|
|
2.00
|
|
|
|
24.36
|
|
|
|
24.36
|
|
|
|
0.00
|
|
|
TSBK
|
|
Timberland Bancorp, Inc.
|
|
|
28.49
|
|
|
|
8,293
|
|
|
|
236.3
|
|
|
|
39.45
|
|
|
|
21.91
|
|
|
|
28.39
|
|
|
|
0.35
|
|
|
|
5.01
|
|
|
|
27.76
|
|
|
|
2.22
|
|
|
|
2.34
|
|
|
|
16.84
|
|
|
|
16.08
|
|
|
|
0.00
|
|
|
TBK
|
|
Triumph Bancorp, Inc.
|
|
|
30.41
|
|
|
|
26,849
|
|
|
|
816.5
|
|
|
|
44.70
|
|
|
|
27.47
|
|
|
|
30.88
|
|
|
|
-1.52
|
|
|
|
-20.08
|
|
|
|
2.39
|
|
|
|
1.66
|
|
|
|
2.23
|
|
|
|
23.10
|
|
|
|
15.42
|
|
|
|
0.00
|
|
|
TRST
|
|
TrustCo Bank Corp NY
|
|
|
8.01
|
|
|
|
96,659
|
|
|
|
774.2
|
|
|
|
9.45
|
|
|
|
6.51
|
|
|
|
7.84
|
|
|
|
2.17
|
|
|
|
-4.93
|
|
|
|
16.76
|
|
|
|
0.55
|
|
|
|
0.60
|
|
|
|
4.94
|
|
|
|
4.93
|
|
|
|
0.00
|
|
|
UBNK
|
|
United Financial Bancorp, Inc.
|
|
|
15.13
|
|
|
|
50,639
|
|
|
|
766.2
|
|
|
|
18.33
|
|
|
|
13.37
|
|
|
|
15.11
|
|
|
|
0.13
|
|
|
|
-3.66
|
|
|
|
2.93
|
|
|
|
1.13
|
|
|
|
1.19
|
|
|
|
13.88
|
|
|
|
11.55
|
|
|
|
0.00
|
|
|
WSBF
|
|
Waterstone Financial, Inc.
|
|
|
16.24
|
|
|
|
26,189
|
|
|
|
425.3
|
|
|
|
18.10
|
|
|
|
15.20
|
|
|
|
16.48
|
|
|
|
-1.46
|
|
|
|
-4.75
|
|
|
|
-3.10
|
|
|
|
1.01
|
|
|
|
1.10
|
|
|
|
13.93
|
|
|
|
13.91
|
|
|
|
0.00
|
|
|
WEBK
|
|
Wellesley Bancorp, Inc.
|
|
|
32.00
|
|
|
|
2,419
|
|
|
|
77.4
|
|
|
|
34.50
|
|
|
|
27.74
|
|
|
|
30.69
|
|
|
|
4.27
|
|
|
|
12.26
|
|
|
|
15.36
|
|
|
|
1.85
|
|
|
|
2.24
|
|
|
|
24.96
|
|
|
|
24.96
|
|
|
|
0.00
|
|
|
WNEB
|
|
Western New England Bancorp, Inc.
|
|
|
9.80
|
|
|
|
27,693
|
|
|
|
271.4
|
|
|
|
11.25
|
|
|
|
8.50
|
|
|
|
9.32
|
|
|
|
5.15
|
|
|
|
-1.51
|
|
|
|
-2.39
|
|
|
|
0.43
|
|
|
|
0.55
|
|
|
|
8.19
|
|
|
|
7.64
|
|
|
|
0.00
|
|
|
WSFS
|
|
WSFS Financial Corporation
|
|
|
42.18
|
|
|
|
31,374
|
|
|
|
1,323.4
|
|
|
|
57.70
|
|
|
|
33.75
|
|
|
|
42.64
|
|
|
|
-1.08
|
|
|
|
-11.57
|
|
|
|
11.26
|
|
|
|
2.94
|
|
|
|
3.26
|
|
|
|
25.08
|
|
|
|
19.26
|
|
|
|
0.00
|
|
|
WVFC
|
|
WVS Financial Corp.
|
|
|
15.75
|
|
|
|
1,788
|
|
|
|
28.2
|
|
|
|
17.90
|
|
|
|
12.25
|
|
|
|
15.65
|
|
|
|
0.64
|
|
|
|
-8.70
|
|
|
|
6.64
|
|
|
|
1.30
|
|
|
|
1.38
|
|
|
|
17.64
|
|
|
|
17.64
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MHC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BCOW
|
|
1895 Bancorp Of Wisconsin, Inc. (MHC)
|
|
|
9.48
|
|
|
|
4,877
|
|
|
|
46.3
|
|
|
|
10.50
|
|
|
|
9.16
|
|
|
|
9.45
|
|
|
|
0.32
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
0.00
|
|
|
CLBK
|
|
Columbia Financial, Inc. (MHC)
|
|
|
15.77
|
|
|
|
115,889
|
|
|
|
1,827.6
|
|
|
|
17.73
|
|
|
|
14.01
|
|
|
|
15.28
|
|
|
|
3.21
|
|
|
|
NA
|
|
|
|
3.14
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
8.17
|
|
|
|
8.12
|
|
|
|
0.00
|
|
|
CFBI
|
|
Community First Bancshares, Inc. (MHC)
|
|
|
10.33
|
|
|
|
7,481
|
|
|
|
77.3
|
|
|
|
11.92
|
|
|
|
10.06
|
|
|
|
10.61
|
|
|
|
-2.64
|
|
|
|
-8.50
|
|
|
|
-11.33
|
|
|
|
0.06
|
|
|
|
0.18
|
|
|
|
10.17
|
|
|
|
10.17
|
|
|
|
0.00
|
|
|
FFBW
|
|
FFBW, Inc. (MHC)
|
|
|
11.22
|
|
|
|
6,453
|
|
|
|
72.4
|
|
|
|
11.79
|
|
|
|
9.50
|
|
|
|
10.65
|
|
|
|
5.32
|
|
|
|
2.80
|
|
|
|
11.83
|
|
|
|
0.06
|
|
|
|
0.17
|
|
|
|
9.00
|
|
|
|
8.99
|
|
|
|
0.00
|
|
|
GCBC
|
|
Greene County Bancorp, Inc. (MHC)
|
|
|
32.33
|
|
|
|
8,538
|
|
|
|
276.0
|
|
|
|
38.00
|
|
|
|
28.85
|
|
|
|
30.67
|
|
|
|
5.41
|
|
|
|
-8.93
|
|
|
|
3.89
|
|
|
|
1.79
|
|
|
|
1.76
|
|
|
|
11.67
|
|
|
|
11.67
|
|
|
|
0.00
|
|
|
HONE
|
|
HarborOne Bancorp, Inc. (MHC)
|
|
|
15.33
|
|
|
|
31,562
|
|
|
|
483.8
|
|
|
|
20.01
|
|
|
|
14.90
|
|
|
|
15.19
|
|
|
|
0.92
|
|
|
|
-15.91
|
|
|
|
-3.52
|
|
|
|
0.41
|
|
|
|
0.43
|
|
|
|
10.87
|
|
|
|
10.45
|
|
|
|
0.00
|
|
|
KFFB
|
|
Kentucky First Federal Bancorp (MHC)
|
|
|
7.50
|
|
|
|
8,367
|
|
|
|
62.8
|
|
|
|
9.00
|
|
|
|
6.52
|
|
|
|
7.55
|
|
|
|
-0.66
|
|
|
|
-16.67
|
|
|
|
8.54
|
|
|
|
0.15
|
|
|
|
0.09
|
|
|
|
7.99
|
|
|
|
6.27
|
|
|
|
0.00
|
|
|
LSBK
|
|
Lake Shore Bancorp, Inc. (MHC)
|
|
|
15.93
|
|
|
|
5,862
|
|
|
|
93.4
|
|
|
|
18.00
|
|
|
|
14.64
|
|
|
|
15.93
|
|
|
|
0.00
|
|
|
|
-3.16
|
|
|
|
5.78
|
|
|
|
0.57
|
|
|
|
0.59
|
|
|
|
13.03
|
|
|
|
13.03
|
|
|
|
0.00
|
|
|
MGYR
|
|
Magyar Bancorp, Inc. (MHC)
|
|
|
11.65
|
|
|
|
5,821
|
|
|
|
67.8
|
|
|
|
13.50
|
|
|
|
11.55
|
|
|
|
11.55
|
|
|
|
0.87
|
|
|
|
-5.74
|
|
|
|
-4.90
|
|
|
|
0.35
|
|
|
|
0.41
|
|
|
|
8.82
|
|
|
|
8.82
|
|
|
|
0.00
|
|
|
OFED
|
|
Oconee Federal Financial Corp. (MHC)
|
|
|
24.43
|
|
|
|
5,690
|
|
|
|
139.0
|
|
|
|
30.27
|
|
|
|
23.06
|
|
|
|
26.17
|
|
|
|
-6.65
|
|
|
|
-13.21
|
|
|
|
-1.89
|
|
|
|
0.52
|
|
|
|
0.69
|
|
|
|
14.62
|
|
|
|
14.10
|
|
|
|
0.00
|
|
|
PDLB
|
|
PDL Community Bancorp (MHC)
|
|
|
12.63
|
|
|
|
17,824
|
|
|
|
225.1
|
|
|
|
16.23
|
|
|
|
12.42
|
|
|
|
12.85
|
|
|
|
-1.71
|
|
|
|
-14.66
|
|
|
|
-0.86
|
|
|
|
-0.05
|
|
|
|
0.07
|
|
|
|
9.05
|
|
|
|
9.05
|
|
|
|
0.00
|
|
|
PVBC
|
|
Provident Bancorp, Inc. (MHC)
|
|
|
23.00
|
|
|
|
9,229
|
|
|
|
212.3
|
|
|
|
30.80
|
|
|
|
19.81
|
|
|
|
22.88
|
|
|
|
0.52
|
|
|
|
-1.08
|
|
|
|
6.09
|
|
|
|
0.89
|
|
|
|
0.86
|
|
|
|
12.68
|
|
|
|
12.68
|
|
|
|
0.00
|
|
|
RBKB
|
|
Rhinebeck Bancorp, Inc. (MHC)
|
|
|
11.44
|
|
|
|
11,133
|
|
|
|
127.4
|
|
|
|
11.90
|
|
|
|
11.30
|
|
|
|
11.59
|
|
|
|
-1.29
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
0.00
|
|
|
TFSL
|
|
TFS Financial Corporation (MHC)
|
|
|
16.92
|
|
|
|
275,368
|
|
|
|
4,659.2
|
|
|
|
17.00
|
|
|
|
14.19
|
|
|
|
16.55
|
|
|
|
2.24
|
|
|
|
17.42
|
|
|
|
4.90
|
|
|
|
0.30
|
|
|
|
NA
|
|
|
|
6.27
|
|
|
|
6.24
|
|
|
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BNCL
|
|
Beneficial Bancorp, Inc.
|
|
|
15.64
|
|
|
|
72,321
|
|
|
|
1,131.1
|
|
|
|
18.60
|
|
|
|
13.74
|
|
|
|
15.81
|
|
|
|
-1.08
|
|
|
|
4.27
|
|
|
|
9.45
|
|
|
|
0.41
|
|
|
|
0.61
|
|
|
|
13.83
|
|
|
|
11.66
|
|
|
|
0.00
|
|
|
BHBK
|
|
Blue Hills Bancorp, Inc.
|
|
|
23.75
|
|
|
|
24,290
|
|
|
|
576.9
|
|
|
|
25.80
|
|
|
|
19.50
|
|
|
|
23.85
|
|
|
|
-0.42
|
|
|
|
21.79
|
|
|
|
11.29
|
|
|
|
0.81
|
|
|
|
0.93
|
|
|
|
14.98
|
|
|
|
14.64
|
|
|
|
0.00
|
|
|
BLMT
|
|
BSB Bancorp, Inc.
|
|
|
33.30
|
|
|
|
9,413
|
|
|
|
313.4
|
|
|
|
36.50
|
|
|
|
26.64
|
|
|
|
32.72
|
|
|
|
1.76
|
|
|
|
16.21
|
|
|
|
18.66
|
|
|
|
2.18
|
|
|
|
2.46
|
|
|
|
20.29
|
|
|
|
20.29
|
|
|
|
0.00
|
|
|
SIFI
|
|
SI Financial Group, Inc.
|
|
|
13.43
|
|
|
|
11,720
|
|
|
|
157.4
|
|
|
|
15.60
|
|
|
|
12.26
|
|
|
|
12.93
|
|
|
|
3.87
|
|
|
|
-3.38
|
|
|
|
5.50
|
|
|
|
0.55
|
|
|
|
0.87
|
|
|
|
14.13
|
|
|
|
12.76
|
|
|
|
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.
|
Source: S&P Market Intelligence, LC. 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) 2019 by RP
®
Financial, LC.
RP
®
Financial, LC.
Exhibit IV-1B
Weekly Bank and Thrift Market Line - Part
Two
Prices As of February 8, 2019
|
|
|
|
|
Key Financial Ratios
|
|
|
Asset Quality Ratios
|
|
|
Pricing Ratios
|
|
|
Dividend Data (6)
|
|
|
|
|
|
|
Equity/
|
|
|
Tang Equity/
|
|
|
Reported Earnings
|
|
|
Core Earnings
|
|
|
NPAs/
|
|
|
Rsvs/
|
|
|
Price/
|
|
|
Price/
|
|
|
Price/
|
|
|
Price/
|
|
|
Price/
|
|
|
Div/
|
|
|
Dividend
|
|
|
Payout
|
|
|
|
|
Assets(1)
|
|
|
Assets(1)
|
|
|
ROA(5)
|
|
|
ROE(5)
|
|
|
ROA(5)
|
|
|
ROE(5)
|
|
|
Assets
|
|
|
NPLs
|
|
|
Earnings
|
|
|
Book
|
|
|
Assets
|
|
|
Tang Book
|
|
|
Core Earnings
|
|
|
Share
|
|
|
Yield
|
|
|
Ratio (7)
|
|
|
|
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(x)
|
|
|
(%)
|
|
|
(%)
|
|
|
(%)
|
|
|
(x)
|
|
|
($)
|
|
|
(%)
|
|
|
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Institution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AX
|
|
Axos Financial, Inc.
|
|
|
10.22
|
|
|
|
9.60
|
|
|
|
1.68
|
|
|
|
16.86
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
0.40
|
|
|
|
166.31
|
|
|
|
12.67
|
|
|
|
202.31
|
|
|
|
20.41
|
|
|
|
220.06
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
BCTF
|
|
Bancorp 34, Inc.
|
|
|
12.37
|
|
|
|
12.32
|
|
|
|
0.09
|
|
|
|
0.62
|
|
|
|
0.46
|
|
|
|
3.33
|
|
|
|
1.43
|
|
|
|
60.52
|
|
|
|
NM
|
|
|
|
111.50
|
|
|
|
13.79
|
|
|
|
111.94
|
|
|
|
31.12
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
NM
|
|
|
BYFC
|
|
Broadway Financial Corporation
|
|
|
11.45
|
|
|
|
11.45
|
|
|
|
0.03
|
|
|
|
0.30
|
|
|
|
0.16
|
|
|
|
1.39
|
|
|
|
2.20
|
|
|
|
37.95
|
|
|
|
65.00
|
|
|
|
74.24
|
|
|
|
8.50
|
|
|
|
74.24
|
|
|
|
39.38
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
NM
|
|
|
CFFN
|
|
Capitol Federal Financial, Inc.
|
|
|
14.73
|
|
|
|
14.57
|
|
|
|
0.94
|
|
|
|
7.25
|
|
|
|
0.88
|
|
|
|
6.76
|
|
|
|
0.35
|
|
|
|
27.12
|
|
|
|
18.91
|
|
|
|
134.98
|
|
|
|
19.53
|
|
|
|
132.20
|
|
|
|
18.73
|
|
|
|
0.34
|
|
|
|
2.64
|
|
|
|
144.12
|
|
|
CARV
|
|
Carver Bancorp, Inc.
|
|
|
7.85
|
|
|
|
7.85
|
|
|
|
0.54
|
|
|
|
7.24
|
|
|
|
-0.65
|
|
|
|
-8.73
|
|
|
|
2.07
|
|
|
|
38.42
|
|
|
|
NM
|
|
|
|
398.97
|
|
|
|
2.21
|
|
|
|
398.97
|
|
|
|
NM
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
NM
|
|
|
CBMB
|
|
CBM Bancorp, Inc.
|
|
|
27.69
|
|
|
|
27.69
|
|
|
|
NA
|
|
|
|
1.99
|
|
|
|
NA
|
|
|
|
3.95
|
|
|
|
0.89
|
|
|
|
110.18
|
|
|
|
NA
|
|
|
|
89.67
|
|
|
|
24.83
|
|
|
|
89.67
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
DCOM
|
|
Dime Community Bancshares, Inc.
|
|
|
9.59
|
|
|
|
8.78
|
|
|
|
0.86
|
|
|
|
8.97
|
|
|
|
0.76
|
|
|
|
7.94
|
|
|
|
0.11
|
|
|
|
301.95
|
|
|
|
14.38
|
|
|
|
118.93
|
|
|
|
11.33
|
|
|
|
131.04
|
|
|
|
14.62
|
|
|
|
0.56
|
|
|
|
2.82
|
|
|
|
40.58
|
|
|
EFBI
|
|
Eagle Financial Bancorp, Inc.
|
|
|
20.11
|
|
|
|
20.11
|
|
|
|
0.41
|
|
|
|
1.95
|
|
|
|
0.26
|
|
|
|
1.24
|
|
|
|
0.79
|
|
|
|
136.04
|
|
|
|
NA
|
|
|
|
91.81
|
|
|
|
18.46
|
|
|
|
91.81
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
ESBK
|
|
Elmira Savings Bank
|
|
|
10.08
|
|
|
|
8.09
|
|
|
|
0.85
|
|
|
|
8.06
|
|
|
|
1.06
|
|
|
|
10.08
|
|
|
|
0.79
|
|
|
|
100.00
|
|
|
|
15.44
|
|
|
|
113.07
|
|
|
|
11.10
|
|
|
|
143.63
|
|
|
|
15.46
|
|
|
|
0.92
|
|
|
|
4.92
|
|
|
|
76.03
|
|
|
ESSA
|
|
ESSA Bancorp, Inc.
|
|
|
9.77
|
|
|
|
9.02
|
|
|
|
0.36
|
|
|
|
3.61
|
|
|
|
0.60
|
|
|
|
6.01
|
|
|
|
0.64
|
|
|
|
110.09
|
|
|
|
14.95
|
|
|
|
97.55
|
|
|
|
9.68
|
|
|
|
106.23
|
|
|
|
14.52
|
|
|
|
0.40
|
|
|
|
2.62
|
|
|
|
36.27
|
|
|
FDEF
|
|
First Defiance Financial Corp.
|
|
|
12.70
|
|
|
|
9.69
|
|
|
|
1.45
|
|
|
|
11.51
|
|
|
|
1.41
|
|
|
|
11.16
|
|
|
|
1.14
|
|
|
|
82.41
|
|
|
|
13.00
|
|
|
|
148.36
|
|
|
|
18.63
|
|
|
|
199.85
|
|
|
|
12.97
|
|
|
|
0.76
|
|
|
|
2.59
|
|
|
|
30.09
|
|
|
FNWB
|
|
First Northwest Bancorp
|
|
|
13.89
|
|
|
|
13.89
|
|
|
|
0.40
|
|
|
|
2.78
|
|
|
|
0.48
|
|
|
|
3.33
|
|
|
|
0.51
|
|
|
|
148.27
|
|
|
|
23.07
|
|
|
|
101.74
|
|
|
|
13.92
|
|
|
|
101.74
|
|
|
|
23.27
|
|
|
|
0.12
|
|
|
|
0.76
|
|
|
|
8.82
|
|
|
FBC
|
|
Flagstar Bancorp, Inc.
|
|
|
8.12
|
|
|
|
7.77
|
|
|
|
0.50
|
|
|
|
5.97
|
|
|
|
0.96
|
|
|
|
11.50
|
|
|
|
0.45
|
|
|
|
171.79
|
|
|
|
9.88
|
|
|
|
116.60
|
|
|
|
9.88
|
|
|
|
132.66
|
|
|
|
NA
|
|
|
|
0.16
|
|
|
|
0.50
|
|
|
|
1.25
|
|
|
FSBW
|
|
FS Bancorp, Inc.
|
|
|
11.17
|
|
|
|
10.92
|
|
|
|
1.54
|
|
|
|
13.06
|
|
|
|
1.54
|
|
|
|
13.12
|
|
|
|
0.18
|
|
|
|
554.56
|
|
|
|
8.27
|
|
|
|
129.76
|
|
|
|
14.41
|
|
|
|
136.21
|
|
|
|
10.17
|
|
|
|
0.60
|
|
|
|
1.15
|
|
|
|
9.06
|
|
|
FSBC
|
|
FSB Bancorp, Inc.
|
|
|
9.57
|
|
|
|
9.57
|
|
|
|
-0.03
|
|
|
|
-0.30
|
|
|
|
0.04
|
|
|
|
0.43
|
|
|
|
0.03
|
|
|
|
NM
|
|
|
|
NM
|
|
|
|
105.48
|
|
|
|
NA
|
|
|
|
105.48
|
|
|
|
242.86
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
HIFS
|
|
Hingham Institution for Savings
|
|
|
8.85
|
|
|
|
8.85
|
|
|
|
1.42
|
|
|
|
16.55
|
|
|
|
1.38
|
|
|
|
16.14
|
|
|
|
0.08
|
|
|
|
719.32
|
|
|
|
13.23
|
|
|
|
184.55
|
|
|
|
16.29
|
|
|
|
184.55
|
|
|
|
12.27
|
|
|
|
1.48
|
|
|
|
0.80
|
|
|
|
13.81
|
|
|
HMNF
|
|
HMN Financial, Inc.
|
|
|
10.85
|
|
|
|
10.72
|
|
|
|
0.87
|
|
|
|
7.55
|
|
|
|
1.03
|
|
|
|
8.93
|
|
|
|
0.93
|
|
|
|
137.72
|
|
|
|
11.37
|
|
|
|
113.70
|
|
|
|
13.27
|
|
|
|
115.17
|
|
|
|
NA
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
NM
|
|
|
HFBL
|
|
Home Federal Bancorp, Inc. of Louisiana
|
|
|
11.20
|
|
|
|
11.20
|
|
|
|
0.90
|
|
|
|
8.09
|
|
|
|
1.06
|
|
|
|
9.46
|
|
|
|
1.72
|
|
|
|
62.96
|
|
|
|
12.76
|
|
|
|
118.46
|
|
|
|
13.54
|
|
|
|
118.46
|
|
|
|
12.76
|
|
|
|
0.56
|
|
|
|
1.83
|
|
|
|
22.50
|
|
|
HVBC
|
|
HV Bancorp, Inc.
|
|
|
10.26
|
|
|
|
10.26
|
|
|
|
0.30
|
|
|
|
2.59
|
|
|
|
0.39
|
|
|
|
3.37
|
|
|
|
0.60
|
|
|
|
51.61
|
|
|
|
38.87
|
|
|
|
110.47
|
|
|
|
11.33
|
|
|
|
110.47
|
|
|
|
29.73
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
128.21
|
|
|
IROQ
|
|
IF Bancorp, Inc.
|
|
|
12.37
|
|
|
|
12.37
|
|
|
|
0.27
|
|
|
|
2.06
|
|
|
|
0.48
|
|
|
|
3.66
|
|
|
|
1.18
|
|
|
|
228.76
|
|
|
|
23.58
|
|
|
|
95.57
|
|
|
|
11.30
|
|
|
|
95.57
|
|
|
|
NA
|
|
|
|
0.25
|
|
|
|
1.20
|
|
|
|
25.57
|
|
|
ISBC
|
|
Investors Bancorp, Inc.
|
|
|
11.89
|
|
|
|
11.59
|
|
|
|
0.65
|
|
|
|
5.27
|
|
|
|
0.86
|
|
|
|
6.93
|
|
|
|
0.49
|
|
|
|
196.22
|
|
|
|
17.50
|
|
|
|
120.02
|
|
|
|
13.75
|
|
|
|
124.88
|
|
|
|
15.43
|
|
|
|
0.44
|
|
|
|
3.49
|
|
|
|
55.56
|
|
|
KRNY
|
|
Kearny Financial Corp.
|
|
|
18.57
|
|
|
|
15.82
|
|
|
|
0.45
|
|
|
|
2.25
|
|
|
|
0.59
|
|
|
|
2.95
|
|
|
|
0.39
|
|
|
|
128.92
|
|
|
|
33.21
|
|
|
|
102.63
|
|
|
|
18.12
|
|
|
|
124.25
|
|
|
|
29.40
|
|
|
|
0.20
|
|
|
|
1.54
|
|
|
|
82.05
|
|
|
MELR
|
|
Melrose Bancorp, Inc.
|
|
|
13.96
|
|
|
|
13.96
|
|
|
|
0.49
|
|
|
|
3.40
|
|
|
|
0.41
|
|
|
|
2.87
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
24.35
|
|
|
|
102.55
|
|
|
|
14.32
|
|
|
|
102.55
|
|
|
|
NA
|
|
|
|
0.34
|
|
|
|
1.89
|
|
|
|
45.95
|
|
|
EBSB
|
|
Meridian Bancorp, Inc.
|
|
|
11.76
|
|
|
|
11.42
|
|
|
|
0.96
|
|
|
|
7.95
|
|
|
|
1.03
|
|
|
|
8.44
|
|
|
|
0.35
|
|
|
|
245.10
|
|
|
|
14.88
|
|
|
|
125.15
|
|
|
|
13.67
|
|
|
|
129.58
|
|
|
|
14.34
|
|
|
|
0.28
|
|
|
|
1.78
|
|
|
|
20.75
|
|
|
CASH
|
|
Meta Financial Group, Inc.
|
|
|
12.81
|
|
|
|
6.84
|
|
|
|
1.13
|
|
|
|
10.58
|
|
|
|
1.71
|
|
|
|
16.47
|
|
|
|
0.66
|
|
|
|
197.64
|
|
|
|
12.58
|
|
|
|
123.38
|
|
|
|
15.32
|
|
|
|
238.02
|
|
|
|
9.38
|
|
|
|
0.20
|
|
|
|
0.83
|
|
|
|
9.77
|
|
|
MSVB
|
|
Mid-Southern Bancorp, Inc.
|
|
|
23.90
|
|
|
|
23.90
|
|
|
|
0.57
|
|
|
|
4.04
|
|
|
|
0.71
|
|
|
|
5.03
|
|
|
|
1.77
|
|
|
|
55.15
|
|
|
|
31.44
|
|
|
|
96.54
|
|
|
|
NA
|
|
|
|
96.54
|
|
|
|
31.44
|
|
|
|
0.08
|
|
|
|
0.62
|
|
|
|
9.76
|
|
|
MSBF
|
|
MSB Financial Corp.
|
|
|
11.86
|
|
|
|
11.86
|
|
|
|
0.69
|
|
|
|
5.41
|
|
|
|
0.81
|
|
|
|
6.36
|
|
|
|
2.26
|
|
|
|
42.38
|
|
|
|
19.78
|
|
|
|
143.93
|
|
|
|
16.41
|
|
|
|
143.93
|
|
|
|
19.78
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
100.56
|
|
|
NYCB
|
|
New York Community Bancorp, Inc.
|
|
|
13.26
|
|
|
|
8.93
|
|
|
|
0.93
|
|
|
|
6.74
|
|
|
|
0.84
|
|
|
|
6.11
|
|
|
|
0.15
|
|
|
|
247.77
|
|
|
|
15.16
|
|
|
|
92.21
|
|
|
|
11.04
|
|
|
|
152.65
|
|
|
|
NA
|
|
|
|
0.68
|
|
|
|
5.68
|
|
|
|
86.08
|
|
|
NFBK
|
|
Northfield Bancorp, Inc.
|
|
|
15.27
|
|
|
|
14.48
|
|
|
|
0.69
|
|
|
|
4.39
|
|
|
|
0.94
|
|
|
|
6.00
|
|
|
|
0.62
|
|
|
|
104.24
|
|
|
|
17.16
|
|
|
|
108.66
|
|
|
|
16.43
|
|
|
|
115.50
|
|
|
|
17.04
|
|
|
|
0.40
|
|
|
|
2.74
|
|
|
|
47.06
|
|
|
NWBI
|
|
Northwest Bancshares, Inc.
|
|
|
12.96
|
|
|
|
9.86
|
|
|
|
1.07
|
|
|
|
8.33
|
|
|
|
1.07
|
|
|
|
8.36
|
|
|
|
1.00
|
|
|
|
59.80
|
|
|
|
17.55
|
|
|
|
147.10
|
|
|
|
19.26
|
|
|
|
198.84
|
|
|
|
16.91
|
|
|
|
0.72
|
|
|
|
4.02
|
|
|
|
67.65
|
|
|
ORIT
|
|
Oritani Financial Corp.
|
|
|
13.70
|
|
|
|
13.70
|
|
|
|
1.07
|
|
|
|
7.91
|
|
|
|
1.38
|
|
|
|
10.20
|
|
|
|
0.27
|
|
|
|
305.25
|
|
|
|
13.95
|
|
|
|
143.33
|
|
|
|
18.47
|
|
|
|
143.33
|
|
|
|
13.27
|
|
|
|
1.00
|
|
|
|
5.92
|
|
|
|
95.04
|
|
|
OTTW
|
|
Ottawa Bancorp, Inc.
|
|
|
18.96
|
|
|
|
18.69
|
|
|
|
0.36
|
|
|
|
1.77
|
|
|
|
0.71
|
|
|
|
3.46
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
45.10
|
|
|
|
86.95
|
|
|
|
16.48
|
|
|
|
88.44
|
|
|
|
23.61
|
|
|
|
0.20
|
|
|
|
1.48
|
|
|
|
88.33
|
|
|
PBBI
|
|
PB Bancorp, Inc.
|
|
|
16.41
|
|
|
|
15.28
|
|
|
|
0.75
|
|
|
|
4.65
|
|
|
|
0.76
|
|
|
|
4.75
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
20.61
|
|
|
|
99.50
|
|
|
|
16.32
|
|
|
|
108.28
|
|
|
|
20.07
|
|
|
|
0.28
|
|
|
|
2.52
|
|
|
|
59.26
|
|
|
PCSB
|
|
PCSB Financial Corporation
|
|
|
19.66
|
|
|
|
19.30
|
|
|
|
0.50
|
|
|
|
2.51
|
|
|
|
0.61
|
|
|
|
3.08
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
36.32
|
|
|
|
132.54
|
|
|
|
24.58
|
|
|
|
135.58
|
|
|
|
37.52
|
|
|
|
0.12
|
|
|
|
0.58
|
|
|
|
21.05
|
|
|
PROV
|
|
Provident Financial Holdings, Inc.
|
|
|
10.51
|
|
|
|
10.51
|
|
|
|
0.36
|
|
|
|
3.44
|
|
|
|
0.56
|
|
|
|
5.38
|
|
|
|
0.76
|
|
|
|
86.34
|
|
|
|
20.47
|
|
|
|
114.00
|
|
|
|
12.41
|
|
|
|
114.00
|
|
|
|
20.47
|
|
|
|
0.56
|
|
|
|
3.01
|
|
|
|
61.54
|
|
|
PFS
|
|
Provident Financial Services, Inc.
|
|
|
13.71
|
|
|
|
9.83
|
|
|
|
1.05
|
|
|
|
7.76
|
|
|
|
1.11
|
|
|
|
8.18
|
|
|
|
0.74
|
|
|
|
81.72
|
|
|
|
15.07
|
|
|
|
133.87
|
|
|
|
18.71
|
|
|
|
193.38
|
|
|
|
15.30
|
|
|
|
0.92
|
|
|
|
3.35
|
|
|
|
57.69
|
|
|
PBIP
|
|
Prudential Bancorp, Inc.
|
|
|
11.88
|
|
|
|
11.33
|
|
|
|
0.72
|
|
|
|
5.45
|
|
|
|
0.95
|
|
|
|
7.12
|
|
|
|
1.39
|
|
|
|
36.80
|
|
|
|
18.38
|
|
|
|
122.56
|
|
|
|
14.36
|
|
|
|
129.12
|
|
|
|
NA
|
|
|
|
0.20
|
|
|
|
1.11
|
|
|
|
56.12
|
|
|
RNDB
|
|
Randolph Bancorp, Inc.
|
|
|
13.25
|
|
|
|
NA
|
|
|
|
-0.63
|
|
|
|
-4.26
|
|
|
|
-0.29
|
|
|
|
-1.94
|
|
|
|
0.95
|
|
|
|
70.24
|
|
|
|
NM
|
|
|
|
113.04
|
|
|
|
14.98
|
|
|
|
NA
|
|
|
|
NM
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
RVSB
|
|
Riverview Bancorp, Inc.
|
|
|
10.66
|
|
|
|
8.42
|
|
|
|
1.16
|
|
|
|
11.05
|
|
|
|
1.31
|
|
|
|
12.48
|
|
|
|
0.53
|
|
|
|
190.77
|
|
|
|
10.52
|
|
|
|
131.79
|
|
|
|
14.66
|
|
|
|
168.72
|
|
|
|
10.77
|
|
|
|
0.16
|
|
|
|
2.14
|
|
|
|
19.72
|
|
|
SVBI
|
|
Severn Bancorp, Inc.
|
|
|
10.78
|
|
|
|
10.67
|
|
|
|
0.69
|
|
|
|
6.30
|
|
|
|
0.92
|
|
|
|
8.42
|
|
|
|
1.94
|
|
|
|
47.38
|
|
|
|
13.21
|
|
|
|
117.19
|
|
|
|
NA
|
|
|
|
118.55
|
|
|
|
NA
|
|
|
|
0.12
|
|
|
|
1.36
|
|
|
|
17.91
|
|
|
STXB
|
|
Spirit of Texas Bancshares, Inc.
|
|
|
13.69
|
|
|
|
12.82
|
|
|
|
0.76
|
|
|
|
6.79
|
|
|
|
0.91
|
|
|
|
8.16
|
|
|
|
NA
|
|
|
|
174.10
|
|
|
|
20.87
|
|
|
|
132.12
|
|
|
|
17.89
|
|
|
|
157.36
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
STND
|
|
Standard AVB Financial Corp.
|
|
|
13.77
|
|
|
|
11.19
|
|
|
|
0.86
|
|
|
|
6.33
|
|
|
|
0.97
|
|
|
|
7.13
|
|
|
|
0.30
|
|
|
|
184.96
|
|
|
|
16.22
|
|
|
|
106.42
|
|
|
|
15.10
|
|
|
|
137.21
|
|
|
|
NA
|
|
|
|
0.88
|
|
|
|
2.90
|
|
|
|
47.02
|
|
|
SBT
|
|
Sterling Bancorp, Inc.
|
|
|
9.99
|
|
|
|
9.98
|
|
|
|
1.80
|
|
|
|
19.19
|
|
|
|
1.93
|
|
|
|
20.57
|
|
|
|
0.19
|
|
|
|
348.52
|
|
|
|
8.06
|
|
|
|
153.00
|
|
|
|
16.04
|
|
|
|
153.20
|
|
|
|
NA
|
|
|
|
0.04
|
|
|
|
0.41
|
|
|
|
2.50
|
|
|
TBNK
|
|
Territorial Bancorp Inc.
|
|
|
11.64
|
|
|
|
11.64
|
|
|
|
0.83
|
|
|
|
7.10
|
|
|
|
0.93
|
|
|
|
7.95
|
|
|
|
NA
|
|
|
|
77.66
|
|
|
|
13.53
|
|
|
|
112.40
|
|
|
|
12.80
|
|
|
|
112.40
|
|
|
|
13.55
|
|
|
|
0.88
|
|
|
|
3.20
|
|
|
|
57.14
|
|
|
TSBK
|
|
Timberland Bancorp, Inc.
|
|
|
12.24
|
|
|
|
11.75
|
|
|
|
1.70
|
|
|
|
14.27
|
|
|
|
1.79
|
|
|
|
15.04
|
|
|
|
0.65
|
|
|
|
223.08
|
|
|
|
11.82
|
|
|
|
150.95
|
|
|
|
19.73
|
|
|
|
169.29
|
|
|
|
11.52
|
|
|
|
0.60
|
|
|
|
2.11
|
|
|
|
30.71
|
|
|
TBK
|
|
Triumph Bancorp, Inc.
|
|
|
13.59
|
|
|
|
9.57
|
|
|
|
1.12
|
|
|
|
8.00
|
|
|
|
1.53
|
|
|
|
10.92
|
|
|
|
0.88
|
|
|
|
72.97
|
|
|
|
14.98
|
|
|
|
128.74
|
|
|
|
17.97
|
|
|
|
187.46
|
|
|
|
12.47
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
TRST
|
|
TrustCo Bank Corp NY
|
|
|
9.77
|
|
|
|
9.76
|
|
|
|
1.08
|
|
|
|
11.36
|
|
|
|
1.18
|
|
|
|
12.45
|
|
|
|
0.77
|
|
|
|
127.48
|
|
|
|
12.59
|
|
|
|
158.05
|
|
|
|
15.61
|
|
|
|
158.23
|
|
|
|
NA
|
|
|
|
0.27
|
|
|
|
3.40
|
|
|
|
42.06
|
|
|
UBNK
|
|
United Financial Bancorp, Inc.
|
|
|
9.85
|
|
|
|
8.34
|
|
|
|
0.81
|
|
|
|
8.23
|
|
|
|
0.85
|
|
|
|
8.70
|
|
|
|
0.59
|
|
|
|
123.24
|
|
|
|
12.93
|
|
|
|
108.54
|
|
|
|
10.51
|
|
|
|
131.14
|
|
|
|
13.01
|
|
|
|
0.48
|
|
|
|
3.17
|
|
|
|
41.03
|
|
|
WSBF
|
|
Waterstone Financial, Inc.
|
|
|
21.08
|
|
|
|
21.06
|
|
|
|
1.52
|
|
|
|
6.91
|
|
|
|
1.66
|
|
|
|
7.55
|
|
|
|
0.61
|
|
|
|
138.22
|
|
|
|
14.63
|
|
|
|
115.65
|
|
|
|
24.13
|
|
|
|
115.83
|
|
|
|
14.63
|
|
|
|
0.48
|
|
|
|
2.96
|
|
|
|
88.29
|
|
|
WEBK
|
|
Wellesley Bancorp, Inc.
|
|
|
7.53
|
|
|
|
7.53
|
|
|
|
0.57
|
|
|
|
7.59
|
|
|
|
0.69
|
|
|
|
9.20
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
13.33
|
|
|
|
124.08
|
|
|
|
9.27
|
|
|
|
124.08
|
|
|
|
13.33
|
|
|
|
0.22
|
|
|
|
0.69
|
|
|
|
8.96
|
|
|
WNEB
|
|
Western New England Bancorp, Inc.
|
|
|
11.22
|
|
|
|
10.54
|
|
|
|
0.59
|
|
|
|
5.00
|
|
|
|
0.78
|
|
|
|
6.67
|
|
|
|
0.69
|
|
|
|
82.82
|
|
|
|
17.19
|
|
|
|
117.39
|
|
|
|
13.13
|
|
|
|
125.99
|
|
|
|
17.12
|
|
|
|
0.16
|
|
|
|
1.63
|
|
|
|
21.05
|
|
|
WSFS
|
|
WSFS Financial Corporation
|
|
|
11.16
|
|
|
|
8.80
|
|
|
|
1.37
|
|
|
|
12.62
|
|
|
|
1.53
|
|
|
|
14.18
|
|
|
|
0.76
|
|
|
|
79.73
|
|
|
|
10.07
|
|
|
|
161.20
|
|
|
|
18.26
|
|
|
|
219.01
|
|
|
|
12.50
|
|
|
|
0.44
|
|
|
|
1.04
|
|
|
|
10.50
|
|
|
WVFC
|
|
WVS Financial Corp.
|
|
|
9.92
|
|
|
|
9.92
|
|
|
|
0.67
|
|
|
|
6.96
|
|
|
|
0.71
|
|
|
|
7.37
|
|
|
|
0.07
|
|
|
|
209.01
|
|
|
|
10.79
|
|
|
|
91.68
|
|
|
|
8.77
|
|
|
|
91.68
|
|
|
|
NA
|
|
|
|
0.40
|
|
|
|
2.54
|
|
|
|
26.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MHC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BCOW
|
|
1895 Bancorp Of Wisconsin, Inc. (MHC)
|
|
|
7.82
|
|
|
|
7.82
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
0.43
|
|
|
|
154.82
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
CLBK
|
|
Columbia Financial, Inc. (MHC)
|
|
|
14.42
|
|
|
|
14.34
|
|
|
|
0.19
|
|
|
|
1.72
|
|
|
|
0.72
|
|
|
|
6.49
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
|
188.01
|
|
|
|
27.31
|
|
|
|
189.12
|
|
|
|
35.78
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
CFBI
|
|
Community First Bancshares, Inc. (MHC)
|
|
|
24.96
|
|
|
|
24.96
|
|
|
|
0.15
|
|
|
|
0.59
|
|
|
|
0.46
|
|
|
|
1.75
|
|
|
|
2.09
|
|
|
|
61.74
|
|
|
|
NM
|
|
|
|
101.62
|
|
|
|
25.37
|
|
|
|
101.62
|
|
|
|
57.99
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
FFBW
|
|
FFBW, Inc. (MHC)
|
|
|
22.18
|
|
|
|
22.15
|
|
|
|
0.16
|
|
|
|
0.73
|
|
|
|
0.44
|
|
|
|
2.05
|
|
|
|
0.40
|
|
|
|
186.69
|
|
|
|
65.98
|
|
|
|
124.43
|
|
|
|
28.59
|
|
|
|
124.61
|
|
|
|
56.66
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
GCBC
|
|
Greene County Bancorp, Inc. (MHC)
|
|
|
8.39
|
|
|
|
8.39
|
|
|
|
1.37
|
|
|
|
16.51
|
|
|
|
1.35
|
|
|
|
16.24
|
|
|
|
0.42
|
|
|
|
249.25
|
|
|
|
17.02
|
|
|
|
265.10
|
|
|
|
23.09
|
|
|
|
265.10
|
|
|
|
17.02
|
|
|
|
0.40
|
|
|
|
1.24
|
|
|
|
20.92
|
|
|
HONE
|
|
HarborOne Bancorp, Inc. (MHC)
|
|
|
12.39
|
|
|
|
11.96
|
|
|
|
0.48
|
|
|
|
3.73
|
|
|
|
0.49
|
|
|
|
3.84
|
|
|
|
1.25
|
|
|
|
55.58
|
|
|
|
42.58
|
|
|
|
139.70
|
|
|
|
13.67
|
|
|
|
178.98
|
|
|
|
31.58
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
KFFB
|
|
Kentucky First Federal Bancorp (MHC)
|
|
|
21.27
|
|
|
|
17.49
|
|
|
|
0.38
|
|
|
|
1.75
|
|
|
|
0.20
|
|
|
|
0.92
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
|
94.17
|
|
|
|
19.60
|
|
|
|
120.28
|
|
|
|
NA
|
|
|
|
0.40
|
|
|
|
5.33
|
|
|
|
666.67
|
|
|
LSBK
|
|
Lake Shore Bancorp, Inc. (MHC)
|
|
|
14.43
|
|
|
|
14.43
|
|
|
|
0.68
|
|
|
|
4.55
|
|
|
|
0.70
|
|
|
|
4.71
|
|
|
|
0.94
|
|
|
|
98.40
|
|
|
|
24.14
|
|
|
|
119.86
|
|
|
|
17.53
|
|
|
|
119.86
|
|
|
|
NA
|
|
|
|
0.40
|
|
|
|
2.51
|
|
|
|
45.45
|
|
|
MGYR
|
|
Magyar Bancorp, Inc. (MHC)
|
|
|
8.23
|
|
|
|
8.23
|
|
|
|
0.33
|
|
|
|
3.95
|
|
|
|
0.39
|
|
|
|
4.58
|
|
|
|
2.25
|
|
|
|
77.06
|
|
|
|
28.41
|
|
|
|
129.58
|
|
|
|
10.54
|
|
|
|
129.58
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
OFED
|
|
Oconee Federal Financial Corp. (MHC)
|
|
|
16.97
|
|
|
|
16.47
|
|
|
|
0.63
|
|
|
|
3.84
|
|
|
|
0.85
|
|
|
|
5.14
|
|
|
|
1.22
|
|
|
|
22.86
|
|
|
|
46.98
|
|
|
|
167.11
|
|
|
|
28.37
|
|
|
|
173.24
|
|
|
|
35.18
|
|
|
|
0.40
|
|
|
|
1.64
|
|
|
|
76.92
|
|
|
PDLB
|
|
PDL Community Bancorp (MHC)
|
|
|
17.01
|
|
|
|
17.01
|
|
|
|
-0.09
|
|
|
|
-0.49
|
|
|
|
0.14
|
|
|
|
0.77
|
|
|
|
1.79
|
|
|
|
70.32
|
|
|
|
NM
|
|
|
|
139.51
|
|
|
|
23.73
|
|
|
|
139.51
|
|
|
|
186.65
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
PVBC
|
|
Provident Bancorp, Inc. (MHC)
|
|
|
13.35
|
|
|
|
13.35
|
|
|
|
0.91
|
|
|
|
6.95
|
|
|
|
0.83
|
|
|
|
6.34
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
23.00
|
|
|
|
176.29
|
|
|
|
22.73
|
|
|
|
176.29
|
|
|
|
23.00
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
RBKB
|
|
Rhinebeck Bancorp, Inc. (MHC)
|
|
|
6.96
|
|
|
|
6.76
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
TFSL
|
|
TFS Financial Corporation (MHC)
|
|
|
12.44
|
|
|
|
12.38
|
|
|
|
0.62
|
|
|
|
4.91
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
1.30
|
|
|
|
23.49
|
|
|
|
56.40
|
|
|
|
271.82
|
|
|
|
33.29
|
|
|
|
273.34
|
|
|
|
NA
|
|
|
|
1.00
|
|
|
|
5.91
|
|
|
|
280.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Under Acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BNCL
|
|
Beneficial Bancorp, Inc.
|
|
|
17.68
|
|
|
|
15.34
|
|
|
|
0.53
|
|
|
|
2.98
|
|
|
|
0.76
|
|
|
|
4.30
|
|
|
|
0.27
|
|
|
|
279.62
|
|
|
|
24.06
|
|
|
|
113.13
|
|
|
|
NA
|
|
|
|
134.10
|
|
|
|
23.48
|
|
|
|
0.24
|
|
|
|
1.53
|
|
|
|
36.92
|
|
|
BHBK
|
|
Blue Hills Bancorp, Inc.
|
|
|
14.49
|
|
|
|
14.20
|
|
|
|
0.75
|
|
|
|
5.02
|
|
|
|
0.88
|
|
|
|
5.84
|
|
|
|
0.57
|
|
|
|
163.80
|
|
|
|
24.23
|
|
|
|
158.21
|
|
|
|
22.79
|
|
|
|
161.92
|
|
|
|
22.51
|
|
|
|
0.80
|
|
|
|
3.37
|
|
|
|
102.04
|
|
|
BLMT
|
|
BSB Bancorp, Inc.
|
|
|
6.66
|
|
|
|
6.66
|
|
|
|
0.74
|
|
|
|
11.00
|
|
|
|
0.83
|
|
|
|
12.35
|
|
|
|
0.19
|
|
|
|
322.35
|
|
|
|
13.65
|
|
|
|
161.31
|
|
|
|
10.74
|
|
|
|
161.31
|
|
|
|
13.03
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NM
|
|
|
SIFI
|
|
SI Financial Group, Inc.
|
|
|
10.58
|
|
|
|
9.65
|
|
|
|
0.41
|
|
|
|
3.82
|
|
|
|
0.65
|
|
|
|
6.12
|
|
|
|
1.17
|
|
|
|
78.51
|
|
|
|
24.42
|
|
|
|
95.06
|
|
|
|
10.06
|
|
|
|
105.24
|
|
|
|
15.38
|
|
|
|
0.24
|
|
|
|
1.79
|
|
|
|
43.64
|
|
|
|
(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 Market Intelligence, LC. 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) 2019 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004:
|
|
|
|
Quarter 1
|
|
|
|
10357.7
|
|
|
|
1126.2
|
|
|
|
1994.2
|
|
|
|
1585.3
|
|
|
|
562.20
|
|
|
|
|
|
|
Quarter 2
|
|
|
|
10435.5
|
|
|
|
1140.8
|
|
|
|
2047.8
|
|
|
|
1437.8
|
|
|
|
546.62
|
|
|
|
|
|
|
Quarter 3
|
|
|
|
10080.3
|
|
|
|
1114.6
|
|
|
|
1896.8
|
|
|
|
1495.1
|
|
|
|
556.00
|
|
|
|
|
|
|
Quarter 4
|
|
|
|
10783.0
|
|
|
|
1211.9
|
|
|
|
2175.4
|
|
|
|
1605.6
|
|
|
|
595.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
As of Feb. 8, 2019
|
|
|
|
25106.3
|
|
|
|
2707.9
|
|
|
|
7298.2
|
|
|
|
864.5
|
|
|
|
554.9
|
|
Sources: S&P Global Market Intelligence and The Wall Street
Journal.
EXHIBIT IV-3
Stock Indices as of February 8, 2018
|
Bank & Thrift Daily
|
Monday,
February 11, 2019
|
|
|
|
|
|
|
|
Daily Index Values
|
|
|
|
|
|
|
|
Percentage Change
|
|
|
|
|
Value
|
|
|
1 Day
|
|
|
1 Week
|
|
|
YTD
|
|
|
52 Week
|
|
|
Bank
|
|
|
554.9
|
|
|
|
-0.76
|
|
|
|
-0.80
|
|
|
|
10.35
|
|
|
|
-10.24
|
|
|
SNL TARP Participants
|
|
|
135.8
|
|
|
|
-0.54
|
|
|
|
0.73
|
|
|
|
16.19
|
|
|
|
57.79
|
|
|
NE Bank
|
|
|
544.2
|
|
|
|
-0.92
|
|
|
|
-0.19
|
|
|
|
12.53
|
|
|
|
-20.27
|
|
|
Mid-Atlc Bank
|
|
|
532.6
|
|
|
|
-0.98
|
|
|
|
-1.85
|
|
|
|
8.57
|
|
|
|
-10.42
|
|
|
SE Bank
|
|
|
366.4
|
|
|
|
-0.19
|
|
|
|
0.51
|
|
|
|
14.62
|
|
|
|
-8.23
|
|
|
MW Bank
|
|
|
624.6
|
|
|
|
-0.88
|
|
|
|
0.02
|
|
|
|
10.81
|
|
|
|
-8.23
|
|
|
SW Bank
|
|
|
1,157.1
|
|
|
|
-1.16
|
|
|
|
1.46
|
|
|
|
14.79
|
|
|
|
-7.48
|
|
|
W Bank
|
|
|
1,288.1
|
|
|
|
-0.91
|
|
|
|
-1.63
|
|
|
|
6.44
|
|
|
|
-12.91
|
|
|
Bank < $500M
|
|
|
842.7
|
|
|
|
0.16
|
|
|
|
0.60
|
|
|
|
4.61
|
|
|
|
-8.67
|
|
|
Bank $500M-$1B
|
|
|
1,117.2
|
|
|
|
0.30
|
|
|
|
1.32
|
|
|
|
6.15
|
|
|
|
-0.13
|
|
|
Bank $1B-$5B
|
|
|
1,132.0
|
|
|
|
-0.15
|
|
|
|
0.90
|
|
|
|
7.34
|
|
|
|
-6.17
|
|
|
Bank $5B-$10B
|
|
|
1,342.4
|
|
|
|
-0.75
|
|
|
|
0.87
|
|
|
|
10.26
|
|
|
|
-1.62
|
|
|
Bank > $10B
|
|
|
481.1
|
|
|
|
-0.78
|
|
|
|
-0.91
|
|
|
|
10.47
|
|
|
|
-10.76
|
|
|
|
|
|
|
|
Percentage Change
|
|
|
|
|
Value
|
|
|
1 Day
|
|
|
1 Week
|
|
|
YTD
|
|
|
52 Week
|
|
|
Thrift
|
|
|
864.5
|
|
|
|
-0.34
|
|
|
|
0.94
|
|
|
|
11.99
|
|
|
|
-7.14
|
|
|
Bank/Thrift
|
|
|
529.8
|
|
|
|
-0.75
|
|
|
|
-0.76
|
|
|
|
10.39
|
|
|
|
-10.47
|
|
|
Thrift MHCs
|
|
|
5,727.1
|
|
|
|
0.03
|
|
|
|
2.06
|
|
|
|
3.48
|
|
|
|
5.44
|
|
|
NE Thrift
|
|
|
2,904.4
|
|
|
|
-0.31
|
|
|
|
0.45
|
|
|
|
4.62
|
|
|
|
-4.57
|
|
|
Mid-Atlc Thrift
|
|
|
3,361.8
|
|
|
|
-0.39
|
|
|
|
0.58
|
|
|
|
14.13
|
|
|
|
-1.01
|
|
|
SE Thrift
|
|
|
451.4
|
|
|
|
-2.01
|
|
|
|
-5.25
|
|
|
|
-5.49
|
|
|
|
4.09
|
|
|
MW Thrift
|
|
|
3,018.9
|
|
|
|
-0.14
|
|
|
|
1.51
|
|
|
|
9.44
|
|
|
|
-3.57
|
|
|
SW Thrift
|
|
|
843.7
|
|
|
|
0.44
|
|
|
|
-0.94
|
|
|
|
0.75
|
|
|
|
-16.99
|
|
|
W Thrift
|
|
|
160.0
|
|
|
|
-0.91
|
|
|
|
3.55
|
|
|
|
23.29
|
|
|
|
-6.56
|
|
|
Thrift < $250M
|
|
|
1,373.0
|
|
|
|
0.16
|
|
|
|
2.13
|
|
|
|
5.39
|
|
|
|
-1.80
|
|
|
Thrift $250M-$500M
|
|
|
6,174.2
|
|
|
|
-0.63
|
|
|
|
-1.67
|
|
|
|
1.25
|
|
|
|
-5.08
|
|
|
Thrift $500M-$1B
|
|
|
3,529.4
|
|
|
|
0.38
|
|
|
|
0.17
|
|
|
|
4.43
|
|
|
|
3.35
|
|
|
Thrift $1B-$5B
|
|
|
2,694.7
|
|
|
|
0.24
|
|
|
|
1.43
|
|
|
|
8.55
|
|
|
|
-24.73
|
|
|
Thrift > $5B
|
|
|
368.7
|
|
|
|
-0.54
|
|
|
|
0.90
|
|
|
|
13.71
|
|
|
|
-0.69
|
|
|
NASDAQ
|
|
|
7,298.9
|
|
|
|
0.14
|
|
|
|
0.48
|
|
|
|
10.00
|
|
|
|
6.17
|
|
Note: All SNL indexes
are market-value weighted; i.e., an institution’s effect on an index is proportional to that institution’s market capitalization.
All SNL bank indexes began at 100 on June 30, 1987. On that date, the S&P stood at 304.0. All SNL thrift indexes, except for
the SNL MHC Index, began at 100 on March 30, 1984. The SNL MHC Index began at 201.082 on Dec. 31, 1992, the level of the SNL Thrift
Index on that date. The SNL Bank and Thrift Index began at 100.00 on June 29, 1987. On March 30, 1984, the S&P 500 stood at
159.2. The SNL TARP Index began at 100.00 on September 29, 2003. On that date, the S&P 500 stood at 1006.6.
NEWSLETTER RESEND:
If
you do not receive your newsletter, call our Subscriptions Department at +1.434.977.5877.
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Copyright © 2019 by S&P Global Market Intelligence,
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spglobal.com/marketintelligence
EXHIBIT IV-4
New York Acquisitions 2014 - Present
Exhibit IV-4
New York Thrift Acquisitions 2014-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)
|
|
|
(%)
|
|
|
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/20/2018
|
|
|
|
Pending
|
|
|
Hanover Bancorp Inc.
|
|
|
NY
|
|
|
Chinatown Federal Savings Bank
|
|
|
NY
|
|
|
|
131,610
|
|
|
|
19.39
|
|
|
|
19.39
|
|
|
|
0.01
|
|
|
|
0.03
|
|
|
|
2.15
|
|
|
|
27.17
|
|
|
|
13.6
|
|
|
|
NA
|
|
|
|
131.74
|
|
|
|
131.74
|
|
|
|
NM
|
|
|
|
11.68
|
|
|
|
3.65
|
|
|
|
3/5/2018
|
|
|
|
9/29/2018
|
|
|
Seneca-Cayuga Bncp Inc. (MHC)
|
|
|
NY
|
|
|
Medina Savings and Loan Association
|
|
|
NY
|
|
|
|
53,925
|
|
|
|
6.90
|
|
|
|
6.90
|
|
|
|
0.06
|
|
|
|
0.95
|
|
|
|
0.31
|
|
|
|
284.85
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
3/15/2017
|
|
|
|
11/10/2017
|
|
|
Kinderhook Bank Corp.
|
|
|
NY
|
|
|
Patriot Federal Bank
|
|
|
NY
|
|
|
|
141,246
|
|
|
|
8.73
|
|
|
|
8.61
|
|
|
|
0.37
|
|
|
|
4.09
|
|
|
|
0.55
|
|
|
|
231.02
|
|
|
|
14.6
|
|
|
|
9.945
|
|
|
|
118.10
|
|
|
|
119.86
|
|
|
|
28.65
|
|
|
|
10.30
|
|
|
|
2.61
|
|
|
|
3/7/2017
|
|
|
|
10/2/2017
|
|
|
Sterling Bancorp
|
|
|
NY
|
|
|
Astoria Financial Corporation
|
|
|
NY
|
|
|
|
14,558,652
|
|
|
|
11.77
|
|
|
|
10.64
|
|
|
|
0.48
|
|
|
|
4.23
|
|
|
|
1.70
|
|
|
|
37.04
|
|
|
|
2229.7
|
|
|
|
21.919
|
|
|
|
140.03
|
|
|
|
158.56
|
|
|
|
35.35
|
|
|
|
15.32
|
|
|
|
9.86
|
|
|
|
12/16/2016
|
|
|
|
8/11/2017
|
|
|
Wallkill Valley FS&LA
|
|
|
NY
|
|
|
Hometown Bancorp, Inc. (MHC)
|
|
|
NY
|
|
|
|
122,950
|
|
|
|
6.73
|
|
|
|
6.44
|
|
|
|
-0.03
|
|
|
|
-0.38
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
3.1
|
|
|
|
3.010
|
|
|
|
84.60
|
|
|
|
88.68
|
|
|
|
NM
|
|
|
|
2.49
|
|
|
|
-5.42
|
|
|
|
2/24/2015
|
|
|
|
12/4/2015
|
|
|
Community Bank System Inc.
|
|
|
NY
|
|
|
Oneida Financial Corp.
|
|
|
NY
|
|
|
|
798,169
|
|
|
|
12.01
|
|
|
|
9.01
|
|
|
|
0.66
|
|
|
|
5.44
|
|
|
|
0.17
|
|
|
|
326.98
|
|
|
|
142.2
|
|
|
|
19.986
|
|
|
|
146.60
|
|
|
|
202.07
|
|
|
|
27.38
|
|
|
|
17.82
|
|
|
|
11.61
|
|
|
|
9/25/2014
|
|
|
|
4/28/2015
|
|
|
Putnam County SB
|
|
|
NY
|
|
|
CMS Bancorp, Inc.
|
|
|
NY
|
|
|
|
273,045
|
|
|
|
8.72
|
|
|
|
8.72
|
|
|
|
0.25
|
|
|
|
2.91
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
25.4
|
|
|
|
13.250
|
|
|
|
110.58
|
|
|
|
110.58
|
|
|
|
40.15
|
|
|
|
9.29
|
|
|
|
1.72
|
|
|
|
1/30/2014
|
|
|
|
6/30/2014
|
|
|
Kearny Financial Corp. (MHC)
|
|
|
NJ
|
|
|
Atlas Bank
|
|
|
NY
|
|
|
|
110,480
|
|
|
|
13.68
|
|
|
|
13.68
|
|
|
|
-0.93
|
|
|
|
-6.18
|
|
|
|
0.60
|
|
|
|
109.79
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average:
|
|
|
|
|
|
|
2,023,760
|
|
|
|
10.99
|
|
|
|
10.42
|
|
|
|
0.11
|
|
|
|
1.39
|
|
|
|
0.91
|
|
|
|
169.48
|
|
|
|
|
|
|
|
|
|
|
|
121.94
|
|
|
|
135.25
|
|
|
|
32.88
|
|
|
|
11.15
|
|
|
|
4.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Median:
|
|
|
|
|
|
|
136,428
|
|
|
|
10.25
|
|
|
|
8.87
|
|
|
|
0.16
|
|
|
|
1.93
|
|
|
|
0.58
|
|
|
|
170.40
|
|
|
|
|
|
|
|
|
|
|
|
124.92
|
|
|
|
125.80
|
|
|
|
32.00
|
|
|
|
10.99
|
|
|
|
3.13
|
|
Source: S&P Global Market Intelligence.
EXHIBIT IV-5
Pioneer Bank
Director and Senior Management Summary
Resumes
Exhibit IV-5
Pioneer Bank
Director and Senior Management Summary Resumes
The business experience for the past five
years of each or our directors is set forth below. Each individual’s biography also contains information regarding his experience,
qualifications, attributes or skills that caused the board of directors to determine that he should serve as a director. Unless
otherwise indicated, each individual has held his position for the past five years.
Thomas L. Amell
has served as President
and Chief Executive Officer of Pioneer Bank since June 2012. Mr. Amell’s banking career spans 30 years working in different
areas of banking, including retail and commercial sales management and executive leadership. Before joining Pioneer Bank, Mr. Amell
served as President – Commercial Services of State Employees Federal Credit Union. Mr. Amell is actively involved in various
organizations, currently serving as Chairman of the Independent Bankers Association of New York State, a member of the board of
the New York Bankers Association, a member of the 50 Group, the Chairman of the CEG and a member of the Siena College Board of
Trustees. He has also received many awards during his career, including Albany Business Review’s “40 Under 40,”
the AMA of New York Capital Region Chapter’s “Marketer of Excellence,” Hudson Valley Community College’s
“Otto V. Guenther Career Achievement Award,” the Big Brothers’/Big Sisters’ “Spirits of September
Honoree” and 2015 Champion for Children Award from Northern Rivers. Mr. Amell’s extensive knowledge of the banking
industry and strong leadership skills provides the board with invaluable insight and guidance into the business and regulatory
requirements of today’s banking environment.
Eileen C. Bagnoli
has served in various
capacities with Pioneer Bank since 1972 until her retirement with Pioneer Bank in June 2013 after a 41-year career. During her
tenure, Ms. Bagnoli held positions at Pioneer Bank in retail branch management, marketing, human resources and operations, and
served as Chief Executive Officer from June 2010 until June 2013 and as Executive Vice President and Chief Operating Officer from
2003 until June 2010. Ms. Bagnoli was actively involved in the New York Bankers Association as well as the Independent Bankers
Association of New York State. She served as a director and past board chair of the Commission on Economic Opportunity and the
New York State Higher Education Services Corporation Board and additionally served for over 22 years on the board of the Helping
Hands School. In 2008, she was honored for her distinguished career with the "Women of Excellence" award by the Albany-Colonie
Regional Chamber of Commerce and in 2010 was the recipient of the Capital District Business Review's Women in Business Outstanding
Executive award. Ms. Bagnoli currently serves on the board of WMHT Educational Telecommunications. Ms. Bagnoli’s extensive
experience in the local banking industry and involvement in business and civic organizations in the communities in which we serve
affords the board valuable insight regarding our business and operations.
Donald E. Fane
is the President of Callanan Industries, Inc., a leading supplier of asphaltic concrete, aggregates, ready mix concrete and construction
services in New York State. Prior to being named President in 2014, Mr. Fane held the position of Executive Vice President at Callanan.
He also serves as President of Clemente Latham Concrete. Mr. Fane is involved in and serves on various local boards including Hudson
Valley Community College and the Lansingburgh Boys & Girls Club. He formerly served on the board of Seton Health Foundation, the
Historic Troy 20/20 Group and the Troy Savings Bank Music Hall. He is the former Commissioner of the Spiegleltown Fire Company.
In 1999, Mr. Fane was bestowed with the "Uncle Sam Citizen of the Year" Award, in 2003 the Troy Police Benevolent Association's
"Gold Shield Award" and in 2006 the Rensselaer County Boy Scout's "Good Scout Award." Mr. Fane’s career
as a business executive provides the board with knowledge of the challenges facing business in our market area. Further, Mr. Fane,
both through his business and as an active member of the community, is knowledgeable of our local customer environment.
Dr. James K.
Reed
is President and Chief Executive Officer of St. Peter’s Health Partners. Dr. Reed became President and Chief Executive
Officer upon the merger of Northeast Health, Seton Health and St. Peter’s Health Care Services. As President and Chief Executive
Officer, Dr. Reed oversees the management and growth of the region’s largest and most comprehensive not-for-profit network
of high-quality, advanced medical care, primary care, rehabilitation and senior services. Dr. Reed has also held a number of high
level finance positions, including Director of Corporate Finance at International Paper Company, and Director of Acquisitions and
Divestitures at Union Pacific Corporation. He then went on to become the Chief Medical Officer of Northeast Health, before becoming
President and Chief Executive Officer of St. Peter’s Health Partners. Dr. Reed is also a board officer of the Medical Liability
Mutual Insurance Company (MLMIC), board and Executive Committee member of the CEG, and board member of HealthNow New York Inc.,
and Capital Region Chamber of Commerce. Dr. Reed has a proven record of success in managing large and complex organizations and
has a special understanding of the health care and technology sectors.
Exhibit IV-5 (continued)
Pioneer Bank
Director and Senior Management Summary Resumes
Edward Reinfurt
was the Director
of the Empire State Development Division of Science, Technology and Innovation (NYSTAR), retiring from this position in February
2014. Prior to his appointment at NYSTAR, Mr. Reinfurt was Vice President of The Business Council of New York State for 27 years.
He also served in the capacity of Director of Government Affairs for both the Carrier Corporation and Associated Industries of
New York State. During his career, Mr. Reinfurt has spent considerable time on a wide variety of public policy issues. He was a
member of the New York State Department of Health's Committee on Public Health Priorities, the Governor's Task Force to Restructure
Employment, Health and Social Services, and the Accountability Team of the Labor and Education Department's joint committee reviewing
the New York State's Workforce Development System. Mr. Reinfurt also served as past chair and board member of Northeast Health,
Inc. and currently serves as Vice Chairman of "Kids Count" in Watervliet. Mr. Reinfurt’s strong government affairs
experience and leadership skills are an invaluable asset to the board of directors.
Madeline Taylor
is a consultant to the Association Management Division of Capital Hill Management Services where she is involved in Business
Development and Client Relations. Prior to this, Ms. Taylor spent 17 years with the Albany-Colonie Regional Chamber of Commerce
where she served in various executive level positions, the last seven years of which were as President and Chief Executive Officer
of the Chamber. It is during her tenure as Chamber President Ms. Taylor was credited with spearheading the "Tech Valley"
initiative of the Capital Region and became a founding member of the Tech Valley Chamber Coalition. Ms. Taylor has served on the
boards of the New York State Economic Development Council, the Empire State Certified Development Corporation, the Albany Academy
for Girls, Albany Memorial and Samaritan Hospitals and as a member of the President's Council of Russell Sage College. Ms. Taylor
was also appointed by former New York Governor George Pataki to serve on the Board of the Harriman Campus Development Corp. Ms.
Taylor has been the recipient of several awards, including being named one of the "100 Women of Excellence" by the Women's
Business Council of the Albany-Colonie Chamber, the Marketer of the Year by the American Marketing Association, Distinguished Leadership
Award by the National Association for Community Leadership and was featured as a "Woman in the News" by the Women's Press
Club of New York State. Ms. Taylor’s business and public policy experience, community service and strong knowledge of the
business climate of the New York Capital Region brings extensive insight into the customers who live in our market area and economic
developments affecting our market area.
Executive Officers Who Are Not Directors
The following sets forth information regarding our executive
officers who are not directors. Age information is as of December 31, 2018. The executive officers of Pioneer Bancorp, Inc. and
Pioneer Bank are elected annually.
Joseph A. Fleming
, age 55, has served
as our Executive Vice President and Chief Lending Officer since December 2004. Prior to the appointment, Mr. Fleming served in
various banking positions at Pioneer Bank since 2002.
Susan M. Hollister
, age 53, has served
as our Executive Vice President and Chief Human Resources Officer since August 5, 2016. Prior to joining Pioneer Bank, Ms. Hollister
served as Senior Human Resources Manager for First Niagara Bank in the Eastern New York region from 1993 until August 2016.
Patrick J. Hughes
, age 46, has served
as our Executive Vice President and Chief Financial Officer since November 2016. Prior to joining Pioneer Bank, Mr. Hughes spent
20 years with UHY Advisors/UHY LLP, a professional services firm and from 2006 until November 2016 he served at the firm as a Managing
Director and Partner.
Laura A. Mazzara
, age 56, has served
as our Executive Vice President and Chief Risk Officer since December 2008 after having previously served in various positions
at Pioneer Bank since 1987.
Jesse Tomczak
, age 46, has served
as our Executive Vice President and Chief Customer Experience Officer since October 2013. Mr. Tomczak previously served as Director
of Business Development at State Employees Federal Credit Union.
Frank C. Sarratori
, age 54, has served
as our Executive Vice President and Chief Administrative Officer, General Counsel and Corporate Secretary since 2013. Prior to
2013, Mr. Sarratori served as Chief Compliance Officer, Corporate Secretary and General Counsel since his date of hire in 2004.
Mr. Sarratori currently serves as a trustee of Pioneer Bank.
Source: Pioneer Bank’s prospectus.
EXHIBIT IV-6
Pioneer Bank
Pro Forma Regulatory Capital Ratios
Exhibit IV-6
Pioneer Bank
Pro Forma Regulatory Capital Ratios
|
|
|
Pioneer
Bank Historical
at
December
31, 2018
|
|
|
Pro
Forma at December 31, 2018 Based Upon the Sale in the Offering of:
|
|
|
|
|
|
|
|
7,179,465
Shares
|
|
|
8,446,429
Shares
|
|
|
9,713,393
Shares
|
|
|
11,170,402
Shares (1)
|
|
|
|
|
Amount
|
|
|
Percent
of
Assets (2)
|
|
|
Amount
|
|
|
Percent
of
Assets (2)
|
|
|
Amount
|
|
|
Percent
of
Assets (2)
|
|
|
Amount
|
|
|
Percent
of
Assets (2)
|
|
|
Amount
|
|
|
Percent
of
Assets (2)
|
|
|
|
|
(unaudited)
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
|
Equity capital
|
|
$
|
126,394
|
|
|
|
9.82
|
%
|
|
$
|
151,420
|
|
|
|
11.46
|
%
|
|
$
|
155,965
|
|
|
|
11.74
|
%
|
|
$
|
160,509
|
|
|
|
12.03
|
%
|
|
$
|
165,737
|
|
|
|
12.35
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage capital
|
|
$
|
126,257
|
|
|
|
9.69
|
%
|
|
$
|
151,283
|
|
|
|
11.31
|
%
|
|
$
|
155,828
|
|
|
|
11.60
|
%
|
|
$
|
160,372
|
|
|
|
11.88
|
%
|
|
$
|
165,600
|
|
|
|
12.20
|
%
|
|
Tier
1 leverage requirement
|
|
|
65,115
|
|
|
|
5.00
|
%
|
|
|
66,857
|
|
|
|
5.00
|
%
|
|
|
67,171
|
|
|
|
5.00
|
%
|
|
|
67,484
|
|
|
|
5.00
|
%
|
|
|
67,845
|
|
|
|
5.00
|
%
|
|
Excess
|
|
$
|
61,143
|
|
|
|
4.69
|
%
|
|
$
|
84,426
|
|
|
|
6.31
|
%
|
|
$
|
88,657
|
|
|
|
6.60
|
%
|
|
$
|
92,888
|
|
|
|
6.88
|
%
|
|
$
|
97,755
|
|
|
|
7.20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 risk-based capital (3)
|
|
$
|
126,257
|
|
|
|
12.04
|
%
|
|
$
|
151,283
|
|
|
|
14.33
|
%
|
|
$
|
155,828
|
|
|
|
14.74
|
%
|
|
$
|
160,372
|
|
|
|
15.15
|
%
|
|
$
|
165,600
|
|
|
|
15.63
|
%
|
|
Tier
1 risk-based requirement
|
|
|
83,908
|
|
|
|
8.00
|
%
|
|
|
84,466
|
|
|
|
8.00
|
%
|
|
|
84,566
|
|
|
|
8.00
|
%
|
|
|
84,667
|
|
|
|
8.00
|
%
|
|
|
84,782
|
|
|
|
8.00
|
%
|
|
Excess
|
|
$
|
42,349
|
|
|
|
4.04
|
%
|
|
$
|
66,817
|
|
|
|
6.33
|
%
|
|
$
|
71,262
|
|
|
|
6.74
|
%
|
|
$
|
75,705
|
|
|
|
7.15
|
%
|
|
$
|
80,818
|
|
|
|
7.63
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-based capital (3)
|
|
$
|
139,353
|
|
|
|
13.29
|
%
|
|
$
|
164,379
|
|
|
|
15.57
|
%
|
|
$
|
168,924
|
|
|
|
15.98
|
%
|
|
$
|
173,468
|
|
|
|
16.39
|
%
|
|
$
|
178,696
|
|
|
|
16.86
|
%
|
|
Total
risk-based requirement
|
|
|
104,885
|
|
|
|
10.00
|
%
|
|
|
105,582
|
|
|
|
10.00
|
%
|
|
|
105,708
|
|
|
|
10.00
|
%
|
|
|
105,833
|
|
|
|
10.00
|
%
|
|
|
105,978
|
|
|
|
10.00
|
%
|
|
Excess
|
|
$
|
34,468
|
|
|
|
3.29
|
%
|
|
$
|
58,797
|
|
|
|
5.57
|
%
|
|
$
|
63,216
|
|
|
|
5.98
|
%
|
|
$
|
67,635
|
|
|
|
6.39
|
%
|
|
$
|
72,718
|
|
|
|
6.86
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity tier 1
capital
|
|
$
|
126,257
|
|
|
|
12.04
|
%
|
|
$
|
151,283
|
|
|
|
14.33
|
%
|
|
$
|
155,828
|
|
|
|
14.74
|
%
|
|
$
|
160,372
|
|
|
|
15.15
|
%
|
|
$
|
165,600
|
|
|
|
15.63
|
%
|
|
Common
equity tier 1 requirement
|
|
|
68,176
|
|
|
|
6.50
|
%
|
|
|
68,628
|
|
|
|
6.50
|
%
|
|
|
68,710
|
|
|
|
6.50
|
%
|
|
|
68,792
|
|
|
|
6.50
|
%
|
|
|
68,886
|
|
|
|
6.50
|
%
|
|
Excess
|
|
$
|
58,081
|
|
|
|
5.54
|
%
|
|
$
|
82,655
|
|
|
|
7.83
|
%
|
|
$
|
87,118
|
|
|
|
8.24
|
%
|
|
$
|
91,580
|
|
|
|
8.65
|
%
|
|
$
|
96,714
|
|
|
|
9.13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds infused into Pioneer Bank
|
|
|
$
|
34,844
|
|
|
|
|
|
|
$
|
41,121
|
|
|
|
|
|
|
$
|
47,398
|
|
|
|
|
|
|
$
|
54,617
|
|
|
|
|
|
|
Less: Common stock acquired by employee stock ownership plan
|
|
|
|
(6,545
|
)
|
|
|
|
|
|
|
(7,700
|
)
|
|
|
|
|
|
|
(8,855
|
)
|
|
|
|
|
|
|
(10,183
|
)
|
|
|
|
|
|
Less: Common stock acquired by stock-based benefit plan
|
|
|
|
(3,273
|
)
|
|
|
|
|
|
|
(3,850
|
)
|
|
|
|
|
|
|
(4,428
|
)
|
|
|
|
|
|
|
(5,092
|
)
|
|
|
|
|
|
Pro forma increase in tier 1 and risk-based capital
|
|
|
$
|
25,026
|
|
|
|
|
|
|
$
|
29,571
|
|
|
|
|
|
|
$
|
34,115
|
|
|
|
|
|
|
$
|
39,342
|
|
|
|
|
|
|
|
(1)
|
As adjusted to give effect to an increase in the number of shares, which increase could occur due to a 15% increase in the
offering range to reflect demand for the shares or changes in market conditions following the commencement of the offering.
|
|
|
(2)
|
Equity and 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.
|
|
|
(3)
|
Pro forma amounts and percentages assume net proceeds are invested in assets that carry a 20% risk weighting.
|
Source: Pioneer Bank’s prospectus.
EXHIBIT IV-7
Pioneer Bank
Pro Forma Analysis Sheet – Fully
Converted Basis
Exhibit IV-7
PRO FORMA ANALYSIS SHEET - FULLY CONVERTED
BASIS
Pioneer Bank
Prices as of February 8, 2019
|
|
|
|
|
|
|
|
|
|
|
Peer
Group
|
|
|
New
York Companies
|
|
|
All
Publicly-Traded
|
|
|
Price Multiple
|
|
|
|
|
|
Symbol
|
|
|
Subject
(1)
|
|
|
|
Average
|
|
|
|
Median
|
|
|
|
Average
|
|
|
|
Median
|
|
|
|
Average
|
|
|
|
Median
|
|
|
Price-earnings ratio (x)
|
|
|
|
|
|
P/E
|
|
|
11.53
|
x
|
|
|
24.33
|
x
|
|
|
24.95
|
x
|
|
|
19.04
|
x
|
|
|
13.72
|
x
|
|
|
25.85
|
x
|
|
|
19.67
|
x
|
|
Price-core earnings ratio (x)
|
|
|
|
|
|
P/Core
|
|
|
11.59
|
x
|
|
|
21.47
|
x
|
|
|
22.63
|
x
|
|
|
14.19
|
x
|
|
|
14.45
|
x
|
|
|
18.85
|
x
|
|
|
16.73
|
x
|
|
Price-book ratio (%)
|
|
|
|
=
|
|
P/B
|
|
|
67.07
|
%
|
|
|
122.32
|
%
|
|
|
133.04
|
%
|
|
|
134.44
|
%
|
|
|
125.57
|
%
|
|
|
138.45
|
%
|
|
|
126.33
|
%
|
|
Price-tangible book ratio (%)
|
|
|
|
=
|
|
P/TB
|
|
|
69.44
|
%
|
|
|
121.85
|
%
|
|
|
131.36
|
%
|
|
|
148.89
|
%
|
|
|
136.66
|
%
|
|
|
153.28
|
%
|
|
|
135.95
|
%
|
|
Price-assets ratio (%)
|
|
|
|
=
|
|
P/A
|
|
|
13.52
|
%
|
|
|
15.06
|
%
|
|
|
14.82
|
%
|
|
|
12.74
|
%
|
|
|
11.10
|
%
|
|
|
16.80
|
%
|
|
|
17.07
|
%
|
|
Valuation Parameters
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Conversion Earnings (Y)
|
|
$
|
16,797,000
|
|
|
ESOP Stock Purchases (E)
|
|
|
8.00
|
%
|
|
|
(5)
|
|
|
Pre-Conversion Earnings (CY)
|
|
$
|
16,708,000
|
|
|
Cost of ESOP Borrowings (S)
|
|
|
0.00
|
%
|
|
|
(4)
|
|
|
Pre-Conversion Book Value (B)
|
|
$
|
126,394,000
|
|
|
ESOP Amortization (T)
|
|
|
20.00
|
|
|
|
years
|
|
|
Pre-Conv. Tang. Book Val. (TB)
|
|
$
|
116,389,000
|
|
|
RRP Amount (M)
|
|
|
4.00
|
%
|
|
|
|
|
|
Pre-Conversion Assets (A)
|
|
$
|
1,286,967,000
|
|
|
RRP Vesting (N)
|
|
|
5.00
|
|
|
|
years (5)
|
|
|
Reinvestment Rate (2)(R)
|
|
|
2.51
|
%
|
|
Foundation (F)
|
|
|
2.17
|
%
|
|
|
|
|
|
Est. Conversion Expenses (3)(X)
|
|
|
1.75
|
%
|
|
Tax Benefit (Z)
|
|
|
1,086,428
|
|
|
|
|
|
|
Tax Rate (TAX)
|
|
|
26.00
|
%
|
|
Percentage Sold (PCT)
|
|
|
100.00
|
%
|
|
|
|
|
|
Shares Tax
|
|
$
|
0
|
|
|
Option (O1)
|
|
|
10.00
|
%
|
|
|
(6)
|
|
|
|
|
|
|
|
|
Estimated Option Value (O2)
|
|
|
29.50
|
%
|
|
|
(6)
|
|
|
|
|
|
|
|
|
Option vesting (O3)
|
|
|
5.00
|
|
|
|
(6)
|
|
|
|
|
|
|
|
|
Option pct taxable (O4)
|
|
|
25.00
|
%
|
|
|
(6)
|
|
|
Calculation of Pro Forma Value After Conversion
|
|
|
1.
|
V=
|
P/E * (Y)
|
|
V=
|
$196,428,570
|
|
|
|
1 - P/E * PCT * ((1-X-E-M-F)*R*(1-TAX) - (1-TAX)*E/T - (1-TAX)*M/N) - (1-(TAX*O4))*(O1*O2)/O3)
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
V=
|
P/Core * (Y)
|
|
V=
|
$196,428,570
|
|
|
|
1 - P/core * PCT * ((1-X-E-M-F)*R*(1-TAX) - (1-TAX)*E/T - (1-TAX)*M/N) - (1-(TAX*O4))*(O1*O2)/O3)
|
|
|
|
|
|
|
|
|
|
|
|
3.
|
V=
|
P/B * (B+Z)
|
|
V=
|
$196,428,570
|
|
|
|
1 - P/B * PCT * (1-X-E-M-F)
|
|
|
|
|
|
|
|
|
|
|
|
4.
|
V=
|
P/TB * (TB+Z)
|
|
V=
|
$196,428,570
|
|
|
|
1 - P/TB * PCT * (1-X-E-M-F)
|
|
|
|
|
|
|
|
|
|
|
|
5.
|
V=
|
P/A * (A+Z)
|
|
V=
|
$196,428,570
|
|
|
|
1 - P/A * PCT * (1-X-E-M-F)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
Shares Issued
|
|
|
Price Per
|
|
|
Gross Offering
|
|
|
Issued To
|
|
|
Total Shares
|
|
|
Market Value
|
|
|
Conclusion
|
|
|
To the Public
|
|
|
Share
|
|
|
Proceeds
|
|
|
Foundation
|
|
|
Issued
|
|
|
of Shares Issued
|
|
|
Supermaximum
|
|
|
|
25,458,125
|
|
|
|
10.00
|
|
|
$
|
254,581,250
|
|
|
|
519,554
|
|
|
|
25,977,679
|
|
|
$
|
259,776,790
|
|
|
Maximum
|
|
|
|
22,137,500
|
|
|
|
10.00
|
|
|
|
221,375,000
|
|
|
|
451,786
|
|
|
|
22,589,286
|
|
|
|
225,892,860
|
|
|
Midpoint
|
|
|
|
19,250,000
|
|
|
|
10.00
|
|
|
|
192,500,000
|
|
|
|
392,857
|
|
|
|
19,642,857
|
|
|
|
196,428,570
|
|
|
Minimum
|
|
|
|
16,362,500
|
|
|
|
10.00
|
|
|
|
163,625,000
|
|
|
|
333,928
|
|
|
|
16,696,428
|
|
|
|
166,964,280
|
|
|
|
(1)
|
Pricing
ratios shown reflect the midpoint value.
|
|
|
(2)
|
Net
return reflects a reinvestment rate of 2.51 percent and a tax rate of 26.0 percent.
|
|
|
(3)
|
Offering
expenses shown at estimated midpoint value.
|
|
|
(4)
|
No
cost is applicable since holding company will fund the ESOP loan.
|
|
|
(5)
|
ESOP
and MRP amortize over 20 years and 5 years, respectively; amortization expenses tax effected at 26.0 percent.
|
|
|
(6)
|
10
percent option plan with an estimated Black-Scholes valuation of 29.50 percent of the exercise price, including a 5 year vesting
with 25 percent of the options (granted to directors) tax effected at 26.0 percent.
|
EXHIBIT IV-8
Pioneer Bank
Pro Forma Effect of Conversion Proceeds
– Fully Converted Basis
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Pioneer Bank
At the Minimum
|
1.
|
|
Pro Forma Market Capitalization
|
|
$
|
166,964,280
|
|
|
|
|
Less: Foundation Shares
|
|
|
3,339,280
|
|
|
2.
|
|
Offering Proceeds
|
|
$
|
163,625,000
|
|
|
|
|
Less: Estimated Offering Expenses
|
|
|
4,090,625
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
159,534,375
|
|
|
|
|
|
|
|
|
|
|
3.
|
|
Estimated Additional Income from Conversion Proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
159,534,375
|
|
|
|
|
Less: Cash Contribution to Foundation
|
|
|
250,000
|
|
|
|
|
Less: Non-Cash Stock Purchases (1)
|
|
|
20,035,714
|
|
|
|
|
Net Proceeds Reinvested
|
|
$
|
139,248,661
|
|
|
|
|
Estimated net incremental rate of return
|
|
|
1.86
|
%
|
|
|
|
Reinvestment Income
|
|
$
|
2,586,405
|
|
|
|
|
Less: Shares Tax
|
|
|
0
|
|
|
|
|
Less: Estimated cost of ESOP borrowings (2)
|
|
|
0
|
|
|
|
|
Less: Amortization of ESOP borrowings (3)
|
|
|
494,214
|
|
|
|
|
Less: Amortization of Options (4)
|
|
|
921,058
|
|
|
|
|
Less: Recognition Plan Vesting (5)
|
|
|
988,429
|
|
|
|
|
Net Earnings Impact
|
|
$
|
182,703
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
Before
|
|
|
Earnings
|
|
|
After
|
|
|
4.
|
|
Pro Forma Earnings
|
|
Conversion
|
|
|
Increase
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Months ended December 31, 2018 (reported)
|
|
$
|
16,797,000
|
|
|
$
|
182,703
|
|
|
$
|
16,979,703
|
|
|
|
|
12 Months ended December 31, 2018 (core)
|
|
$
|
16,708,000
|
|
|
$
|
182,703
|
|
|
$
|
16,890,703
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
5.
|
|
Pro Forma Net Worth
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
126,394,000
|
|
|
$
|
139,248,661
|
|
|
$
|
933,213
|
|
|
$
|
266,575,874
|
|
|
|
|
December 31, 2018 (Tangible)
|
|
$
|
116,389,000
|
|
|
$
|
139,248,661
|
|
|
$
|
933,213
|
|
|
$
|
256,570,874
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
6.
|
|
Pro Forma
Assets
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of
Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
1,286,967,000
|
|
|
$
|
139,248,661
|
|
|
$
|
933,213
|
|
|
$
|
1,427,148,874
|
|
|
|
(1)
|
Includes ESOP and RRP stock purchases equal to 8.0 and
4.0 percent of total shares issued, respectively.
|
|
|
(2)
|
ESOP stock purchases are internally financed by a loan
from the holding company.
|
|
|
(3)
|
ESOP borrowings are amortized over 20 years, amortization
expense is tax-effected at a 26.0 percent rate.
|
|
|
(4)
|
Option valuation based on Black-Scholes model, 5 year vesting,
and assumes 25 percent is taxable.
|
|
|
(5)
|
RRP is amortized over 5 years, and amortization expense
is tax effected at 26.0 percent.
|
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Pioneer Bank
At the Midpoint
|
1.
|
|
Pro Forma Market Capitalization
|
|
$
|
196,428,570
|
|
|
|
|
Less: Foundation Shares
|
|
|
3,928,570
|
|
|
2.
|
|
Offering Proceeds
|
|
$
|
192,500,000
|
|
|
|
|
Less: Estimated Offering Expenses
|
|
|
3,368,750
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
189,131,250
|
|
|
|
|
|
|
|
|
|
|
3.
|
|
Estimated Additional Income from Conversion Proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
189,131,250
|
|
|
|
|
Less: Cash Contribution to Foundation
|
|
|
250,000
|
|
|
|
|
Less: Non-Cash Stock Purchases (1)
|
|
|
23,571,428
|
|
|
|
|
Net Proceeds Reinvested
|
|
$
|
165,309,822
|
|
|
|
|
Estimated net incremental rate of return
|
|
|
1.86
|
%
|
|
|
|
Reinvestment Income
|
|
$
|
3,070,465
|
|
|
|
|
Less: Shares Tax
|
|
|
0
|
|
|
|
|
Less: Estimated cost of ESOP borrowings (2)
|
|
|
0
|
|
|
|
|
Less: Amortization of ESOP borrowings (3)
|
|
|
581,429
|
|
|
|
|
Less: Amortization of Options (4)
|
|
|
1,083,598
|
|
|
|
|
Less: Recognition Plan Vesting (5)
|
|
|
1,162,857
|
|
|
|
|
Net Earnings Impact
|
|
$
|
242,581
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
Before
|
|
|
Earnings
|
|
|
After
|
|
|
4.
|
|
Pro Forma
Earnings
|
|
Conversion
|
|
|
Increase
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Months ended December 31, 2018 (reported)
|
|
$
|
16,797,000
|
|
|
$
|
242,581
|
|
|
$
|
17,039,581
|
|
|
|
|
12 Months ended December 31, 2018 (core)
|
|
$
|
16,708,000
|
|
|
$
|
242,581
|
|
|
$
|
16,950,581
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
5.
|
|
Pro Forma Net Worth
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
126,394,000
|
|
|
$
|
165,309,822
|
|
|
$
|
1,086,428
|
|
|
$
|
292,790,250
|
|
|
|
|
December 31, 2018 (Tangible)
|
|
$
|
116,389,000
|
|
|
$
|
165,309,822
|
|
|
$
|
1,086,428
|
|
|
$
|
282,785,250
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
6.
|
|
Pro Forma Assets
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
1,286,967,000
|
|
|
$
|
165,309,822
|
|
|
$
|
1,086,428
|
|
|
$
|
1,453,363,250
|
|
|
|
(1)
|
Includes
ESOP and RRP stock purchases equal to 8.0 and 4.0 percent of total shares issued, respectively.
|
|
|
(2)
|
ESOP
stock purchases are internally financed by a loan from the holding company.
|
|
|
(3)
|
ESOP
borrowings are amortized over 20 years, amortization expense is tax-effected at a 26.0 percent rate.
|
|
|
(4)
|
Option
valuation based on Black-Scholes model, 5 year vesting, and assumes 25 percent is taxable.
|
|
|
(5)
|
RRP
is amortized over 5 years, and amortization expense is tax effected at 26.0 percent.
|
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Pioneer Bank
At the Maximum Value
|
1.
|
|
Pro Forma Market Capitalization
|
|
$
|
225,892,860
|
|
|
|
|
Less: Foundation Shares
|
|
|
4,517,860
|
|
|
2.
|
|
Offering Proceeds
|
|
$
|
221,375,000
|
|
|
|
|
Less: Estimated Offering Expenses
|
|
|
3,874,063
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
217,500,938
|
|
|
|
|
|
|
|
|
|
|
3.
|
|
Estimated Additional Income from Conversion Proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
217,500,938
|
|
|
|
|
Less: Cash Contribution to Foundation
|
|
|
250,000
|
|
|
|
|
Less: Non-Cash Stock Purchases (1)
|
|
|
27,107,143
|
|
|
|
|
Net Proceeds Reinvested
|
|
$
|
190,143,794
|
|
|
|
|
Estimated net incremental rate of return
|
|
|
1.86
|
%
|
|
|
|
Reinvestment Income
|
|
$
|
3,531,731
|
|
|
|
|
Less: Shares Tax
|
|
|
0
|
|
|
|
|
Less: Estimated cost of ESOP borrowings (2)
|
|
|
0
|
|
|
|
|
Less: Amortization of ESOP borrowings (3)
|
|
|
668,643
|
|
|
|
|
Less: Amortization of Options (4)
|
|
|
1,246,138
|
|
|
|
|
Less: Recognition Plan Vesting (5)
|
|
|
1,337,286
|
|
|
|
|
Net Earnings Impact
|
|
$
|
279,664
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
Before
|
|
|
Earnings
|
|
|
After
|
|
|
4.
|
|
Pro Forma Earnings
|
|
|
Conversion
|
|
|
Increase
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Months ended December 31, 2018 (reported)
|
|
|
$
|
16,797,000
|
|
|
$
|
279,664
|
|
|
$
|
17,076,664
|
|
|
|
|
12 Months ended December 31, 2018 (core)
|
|
|
$
|
16,708,000
|
|
|
$
|
279,664
|
|
|
$
|
16,987,664
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
5.
|
|
Pro Forma Net Worth
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
126,394,000
|
|
|
$
|
190,143,794
|
|
|
$
|
1,239,644
|
|
|
$
|
317,777,438
|
|
|
|
|
December 31, 2018 (Tangible)
|
|
$
|
116,389,000
|
|
|
$
|
190,143,794
|
|
|
$
|
1,239,644
|
|
|
$
|
307,772,438
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
6.
|
|
Pro Forma Assets
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
1,286,967,000
|
|
|
$
|
190,143,794
|
|
|
$
|
1,239,644
|
|
|
$
|
1,478,350,438
|
|
|
|
(1)
|
Includes
ESOP and RRP stock purchases equal to 8.0 and 4.0 percent of total shares issued, respectively.
|
|
|
(2)
|
ESOP
stock purchases are internally financed by a loan from the holding company.
|
|
|
(3)
|
ESOP
borrowings are amortized over 20 years, amortization expense is tax-effected at a 26.0 percent rate.
|
|
|
(4)
|
Option
valuation based on Black-Scholes model, 5 year vesting, and assumes 25 percent is taxable.
|
|
|
(5)
|
RRP
is amortized over 5 years, and amortization expense is tax effected at 26.0 percent.
|
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Pioneer Bank
At the Super Maximum Value
|
1.
|
|
Pro Forma Market Capitalization
|
|
$
|
259,776,790
|
|
|
|
|
Less: Foundation Shares
|
|
|
5,195,540
|
|
|
2.
|
|
Offering Proceeds
|
|
$
|
254,581,250
|
|
|
|
|
Less: Estimated Offering Expenses
|
|
|
6,364,531
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
248,216,719
|
|
|
|
|
|
|
|
|
|
|
3.
|
|
Estimated Additional Income from Conversion Proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
248,216,719
|
|
|
|
|
Less: Cash Contribution to Foundation
|
|
|
250,000
|
|
|
|
|
Less: Non-Cash Stock Purchases (1)
|
|
|
31,173,215
|
|
|
|
|
Net Proceeds Reinvested
|
|
$
|
216,793,504
|
|
|
|
|
Estimated net incremental rate of return
|
|
|
1.86
|
%
|
|
|
|
Reinvestment Income
|
|
$
|
4,026,723
|
|
|
|
|
Less: Shares Tax
|
|
|
0
|
|
|
|
|
Less: Estimated cost of ESOP borrowings (2)
|
|
|
0
|
|
|
|
|
Less: Amortization of ESOP borrowings (3)
|
|
|
768,939
|
|
|
|
|
Less: Amortization of Options (4)
|
|
|
1,433,059
|
|
|
|
|
Less: Recognition Plan Vesting (5)
|
|
|
1,537,879
|
|
|
|
|
Net Earnings Impact
|
|
$
|
286,846
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
Before
|
|
|
Earnings
|
|
|
After
|
|
|
4.
|
|
Pro Forma Earnings
|
|
Conversion
|
|
|
Increase
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Months ended December 31, 2018 (reported)
|
|
$
|
16,797,000
|
|
|
$
|
286,846
|
|
|
$
|
17,083,846
|
|
|
|
|
12 Months ended December 31, 2018 (core)
|
|
$
|
16,708,000
|
|
|
$
|
286,846
|
|
|
$
|
16,994,846
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
5.
|
|
Pro Forma Net Worth
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
126,394,000
|
|
|
$
|
216,793,504
|
|
|
$
|
1,415,840
|
|
|
$
|
344,603,344
|
|
|
|
|
December 31, 2018 (Tangible)
|
|
$
|
116,389,000
|
|
|
$
|
216,793,504
|
|
|
$
|
1,415,840
|
|
|
$
|
334,598,344
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
6.
|
|
Pro Forma Assets
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
1,286,967,000
|
|
|
$
|
216,793,504
|
|
|
$
|
1,415,840
|
|
|
$
|
1,505,176,344
|
|
|
|
(1)
|
Includes ESOP and RRP stock purchases equal to 8.0 and
4.0 percent of total shares issued, respectively.
|
|
|
(2)
|
ESOP stock purchases are internally financed by a loan
from the holding company.
|
|
|
(3)
|
ESOP borrowings are amortized over 20 years, amortization
expense is tax-effected at a 26.0 percent rate.
|
|
|
(4)
|
Option valuation based on Black-Scholes model, 5 year vesting,
and assumes 25 percent is taxable.
|
|
|
(5)
|
RRP is amortized over 5 years, and amortization expense
is tax effected at 26.0 percent.
|
EXHIBIT IV-9
Pioneer Bank
Pro Forma Analysis Sheet – Minority
Stock Offering
EXHIBIT IV-9
PRO FORMA ANALYSIS SHEET - MINORITY STOCK
OFFERING
Pioneer Bank
February 8, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peer Group
|
|
|
|
New York Companies
|
|
|
|
All Publicly-Traded
|
|
|
Price Multiple
|
|
|
|
|
|
|
Symbol
|
|
|
|
Subject (1)
|
|
|
|
|
|
|
Average
|
|
|
|
Median
|
|
|
|
Average
|
|
|
|
Median
|
|
|
|
Average
|
|
|
|
Median
|
|
|
Price-earnings ratio (x)
|
|
|
|
|
|
|
P/E
|
|
|
|
11.74
|
|
|
x
|
|
|
|
24.33
|
x
|
|
|
24.95
|
x
|
|
|
19.04
|
x
|
|
|
13.72
|
x
|
|
|
25.85
|
x
|
|
|
19.67
|
x
|
|
Price-core earnings ratio (x)
|
|
|
|
|
|
|
P/Core
|
|
|
|
11.81
|
|
|
x
|
|
|
|
21.47
|
x
|
|
|
22.63
|
x
|
|
|
14.19
|
x
|
|
|
14.45
|
x
|
|
|
18.85
|
x
|
|
|
16.73
|
x
|
|
Price-book ratio (%)
|
|
|
|
=
|
|
|
P/B
|
|
|
|
99.30
|
%
|
|
|
|
|
|
122.32
|
%
|
|
|
133.04
|
%
|
|
|
134.44
|
%
|
|
|
125.57
|
%
|
|
|
138.45
|
%
|
|
|
126.33
|
%
|
|
Price-tangible book ratio (%)
|
|
|
|
=
|
|
|
P/TB
|
|
|
|
104.60
|
%
|
|
|
|
|
|
121.85
|
%
|
|
|
131.36
|
%
|
|
|
148.89
|
%
|
|
|
136.66
|
%
|
|
|
153.28
|
%
|
|
|
135.95
|
%
|
|
Price-assets ratio (%)
|
|
|
|
=
|
|
|
P/A
|
|
|
|
14.46
|
%
|
|
|
|
|
|
15.06
|
%
|
|
|
14.82
|
%
|
|
|
12.74
|
%
|
|
|
11.10
|
%
|
|
|
16.80
|
%
|
|
|
17.07
|
%
|
|
Valuation Parameters
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-Conversion Earnings (Y)(2)
|
|
$
|
16,795,000
|
|
|
ESOP Stock Purchases (E)
|
|
|
8.71
|
%
|
|
|
(6)
|
|
|
Pre-Conversion Earnings (CY)(2)
|
|
$
|
16,706,000
|
|
|
Cost of ESOP Borrowings (S)
|
|
|
0.00
|
%
|
|
|
(5)
|
|
|
Pre-Conversion Book Value (B)(2)
|
|
$
|
126,294,000
|
|
|
ESOP Amortization (T)
|
|
|
20.00
|
|
|
|
years
|
|
|
Pre-Conv. Tang. Book Value (TB)(2)
|
|
$
|
116,289,000
|
|
|
MRP Amount (M)
|
|
|
4.36
|
%
|
|
|
|
|
|
Pre-Conversion Assets (A)(2)
|
|
$
|
1,286,867,000
|
|
|
MRP Vesting (N)
|
|
|
5.00
|
|
|
|
years (6)
|
|
|
Reinvestment Rate (3)(R)
|
|
|
2.51
|
%
|
|
Foundation (F)
|
|
|
4.65
|
%
|
|
|
|
|
|
Est. Conversion Expenses (4)(X)
|
|
|
2.63
|
%
|
|
Tax Benefit (Z)
|
|
|
1,086,428
|
|
|
|
|
|
|
Tax Rate (TAX)
|
|
|
26.00
|
%
|
|
Percentage Sold (PCT)
|
|
|
45.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Option (O1)
|
|
|
10.89
|
%
|
|
|
(7)
|
|
|
|
|
|
|
|
|
Estimated Option Value (O2)
|
|
|
29.20
|
%
|
|
|
(7)
|
|
|
|
|
|
|
|
|
Option vesting (O3)
|
|
|
5.00
|
|
|
|
(7)
|
|
|
|
|
|
|
|
|
Option pct taxable (O4)
|
|
|
25.00
|
%
|
|
|
(7)
|
|
|
Calculation of Pro Forma Value After Conversion
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
V=
|
P/E * (Y)
|
|
V=
|
$196,428,570
|
|
|
|
1 - P/E * PCT * ((1-X-E-M-F)*R*(1-TAX) - (1-TAX)*E/T - (1-TAX)*M/N) - (1-(TAX*O4))*(O1*O2)/O3)
|
|
|
|
|
|
|
|
|
|
|
|
2.
|
V=
|
P/Core * (Y)
|
|
V=
|
$196,428,570
|
|
|
|
1 - P/core * PCT * ((1-X-E-M-F)*R*(1-TAX) - (1-TAX)*E/T - (1-TAX)*M/N) - (1-(TAX*O4))*(O1*O2)/O3)
|
|
|
|
|
|
|
|
|
|
|
|
3.
|
V=
|
P/B * (B+Z)
|
|
V=
|
$196,428,570
|
|
|
|
1 - P/B * PCT * (1-X-E-M-F)
|
|
|
|
|
|
|
|
|
|
|
|
4.
|
V=
|
P/TB * (TB+Z)
|
|
V=
|
$196,428,570
|
|
|
|
1 - P/TB * PCT * (1-X-E-M-F)
|
|
|
|
|
|
|
|
|
|
|
|
5.
|
V=
|
P/A * (A+Z)
|
|
V=
|
$196,428,570
|
|
|
|
1 - P/A * PCT * (1-X-E-M-F)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
Market Value
|
|
|
|
|
|
|
|
Shares Owned by
|
|
|
Shares Issued
|
|
|
Price Per
|
|
|
Gross Offering
|
|
|
Issued to
|
|
|
Total Shares
|
|
|
of Shares Issued
|
|
|
Full Value
|
|
|
Conclusion
|
|
The MHC
|
|
|
To the Public
|
|
|
Share
|
|
|
Proceeds
|
|
|
Foundation
|
|
|
Issued Publicly
|
|
|
Publicly
|
|
|
Total Shares
|
|
|
Super Maximum
|
|
|
14,287,723
|
|
|
|
11,170,402
|
|
|
|
10.00
|
|
|
$
|
111,704,020
|
|
|
|
519,554
|
|
|
|
11,689,956
|
|
|
$
|
116,899,560
|
|
|
|
25,977,679
|
|
|
Maximum
|
|
|
12,424,107
|
|
|
|
9,713,393
|
|
|
|
10.00
|
|
|
$
|
97,133,930
|
|
|
|
451,786
|
|
|
|
10,165,179
|
|
|
|
101,651,790
|
|
|
|
22,589,286
|
|
|
Midpoint
|
|
|
10,803,571
|
|
|
|
8,446,429
|
|
|
|
10.00
|
|
|
$
|
84,464,290
|
|
|
|
392,857
|
|
|
|
8,839,286
|
|
|
|
88,392,860
|
|
|
|
19,642,857
|
|
|
Minimum
|
|
|
9,183,035
|
|
|
|
7,179,465
|
|
|
|
10.00
|
|
|
$
|
71,794,650
|
|
|
|
333,928
|
|
|
|
7,513,393
|
|
|
|
75,133,930
|
|
|
|
16,696,428
|
|
|
|
(1)
|
Pricing ratios shown reflect the midpoint value.
|
|
|
(2)
|
Adjusted for capitalizing MHC with $100,000.
|
|
|
(3)
|
Net return reflects a reinvestment rate of 2.51 percent,
and a tax rate of 26.0 percent.
|
|
|
(4)
|
Offering expenses shown at estimated midpoint value.
|
|
|
(5)
|
No cost is applicable since holding company will fund the
ESOP loan.
|
|
|
(6)
|
ESOP and MRP amortize over 20 years and 5 years, respectively;
amortization expenses tax effected at 26.0 percent.
|
|
|
(7)
|
10 percent option plan with an estimated Black-Scholes
valuation of 29.20 percent of the exercise price, including a 5 year vesting with 25 percent of the options (granted to directors)
tax effected at 26.0 percent.
|
EXHIBIT IV-10
Pioneer Bank
Pro Forma Effect of Conversion Proceeds
– Minority Stock Offering
Exhibit IV-10
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Pioneer Bank
At the Minimum
|
1.
|
|
Pro Forma Market Capitalization
|
|
$
|
75,133,930
|
|
|
|
|
Less: Foundation Shares
|
|
|
3,339,280
|
|
|
2.
|
|
Offering Proceeds
|
|
$
|
71,794,650
|
|
|
|
|
Less: Estimated Offering Expenses
|
|
|
2,107,997
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
69,686,653
|
|
|
|
|
|
|
|
|
|
|
3.
|
|
Estimated Additional Income from Conversion Proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
69,686,653
|
|
|
|
|
Less: Cash Contribution to Foundation
|
|
|
250,000
|
|
|
|
|
Less: Non-Cash Stock Purchases (1)
|
|
|
9,817,500
|
|
|
|
|
Net Proceeds Reinvested
|
|
$
|
59,619,153
|
|
|
|
|
Estimated net incremental rate of return
|
|
|
1.86
|
%
|
|
|
|
Reinvestment Income
|
|
$
|
1,107,366
|
|
|
|
|
Less: Estimated cost of ESOP borrowings (2)
|
|
|
0
|
|
|
|
|
Less: Amortization of ESOP borrowings (3)
|
|
|
242,165
|
|
|
|
|
Less: Amortization of Options (4)
|
|
|
446,729
|
|
|
|
|
Less: Recognition Plan Vesting (5)
|
|
|
484,330
|
|
|
|
|
Net Earnings Impact
|
|
$
|
(65,858
|
)
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
Before
|
|
|
Earnings
|
|
|
After
|
|
|
4.
|
|
Pro Forma Earnings
|
|
Conversion
|
|
|
Increase
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Months ended December 31, 2018 (reported)
|
|
$
|
16,795,000
|
|
|
$
|
(65,858
|
)
|
|
$
|
16,729,142
|
|
|
|
|
12 Months ended December 31, 2018 (core)
|
|
$
|
16,706,000
|
|
|
$
|
(65,858
|
)
|
|
$
|
16,640,142
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
5.
|
|
Pro Forma Net Worth
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
126,294,000
|
|
|
$
|
59,619,153
|
|
|
$
|
933,213
|
|
|
$
|
186,846,366
|
|
|
|
|
December 31, 2018 (Tangible)
|
|
$
|
116,289,000
|
|
|
$
|
59,619,153
|
|
|
$
|
933,213
|
|
|
$
|
176,841,366
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
6.
|
|
Pro Forma Assets
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
1,286,867,000
|
|
|
$
|
59,619,153
|
|
|
$
|
933,213
|
|
|
$
|
1,347,419,366
|
|
|
|
(1)
|
Includes ESOP and MRP stock purchases equal to 8.71 percent
and 4.36 percent of the public shares, respectively.
|
|
|
(2)
|
ESOP stock purchases are internally financed by a loan
from the holding company.
|
|
|
(3)
|
ESOP borrowings are amortized over 20 years, amortization
expense is tax-effected at a 26.0 percent rate.
|
|
|
(4)
|
Option valuation based on Black-Scholes model, 5 year vesting,
and assuming 25 percent taxable.
|
|
|
(5)
|
MRP is amortized over 5 years, and amortization expense
is tax effected at 26.0 percent.
|
Exhibit IV-10
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Pioneer Bank
At the Midpoint
|
1.
|
|
Pro Forma Market Capitalization
|
|
$
|
88,392,860
|
|
|
|
|
Less: Foundation Shares
|
|
|
3,928,570
|
|
|
2.
|
|
Offering Proceeds
|
|
$
|
84,464,290
|
|
|
|
|
Less: Estimated Offering Expenses
|
|
|
2,223,143
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
82,241,147
|
|
|
|
|
|
|
|
|
|
|
3.
|
|
Estimated Additional Income from Conversion Proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
82,241,147
|
|
|
|
|
Less: Cash Contribution to Foundation
|
|
|
250,000
|
|
|
|
|
Less: Non-Cash Stock Purchases (1)
|
|
|
11,550,000
|
|
|
|
|
Net Proceeds Reinvested
|
|
$
|
70,441,147
|
|
|
|
|
Estimated net incremental rate of return
|
|
|
1.86
|
%
|
|
|
|
Reinvestment Income
|
|
$
|
1,308,374
|
|
|
|
|
Less: Estimated cost of ESOP borrowings (2)
|
|
|
0
|
|
|
|
|
Less: Amortization of ESOP borrowings (3)
|
|
|
284,900
|
|
|
|
|
Less: Amortization of Options (4)
|
|
|
525,564
|
|
|
|
|
Less: Recognition Plan Vesting (5)
|
|
|
569,800
|
|
|
|
|
Net Earnings Impact
|
|
$
|
(71,890
|
)
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
Before
|
|
|
Earnings
|
|
|
After
|
|
|
4.
|
|
Pro Forma Earnings
|
|
Conversion
|
|
|
Increase
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Months ended December 31, 2018 (reported)
|
|
$
|
16,795,000
|
|
|
$
|
(71,890
|
)
|
|
$
|
16,723,110
|
|
|
|
|
12 Months ended December 31, 2018 (core)
|
|
$
|
16,706,000
|
|
|
$
|
(71,890
|
)
|
|
$
|
16,634,110
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
5.
|
|
Pro Forma Net Worth
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
126,294,000
|
|
|
$
|
70,441,147
|
|
|
$
|
1,086,428
|
|
|
$
|
197,821,575
|
|
|
|
|
December 31, 2018 (Tangible)
|
|
$
|
116,289,000
|
|
|
$
|
70,441,147
|
|
|
$
|
1,086,428
|
|
|
$
|
187,816,575
|
|
|
|
|
|
|
|
Before
|
|
|
Net
Cash
|
|
|
Tax
Benefit
|
|
|
After
|
|
|
6.
|
|
Pro
Forma Assets
|
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of
Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
1,286,867,000
|
|
$
|
70,441,147
|
|
$
|
1,086,428
|
|
$
|
1,358,394,575
|
|
|
|
(1)
|
Includes ESOP and MRP stock purchases equal to 8.71 percent
and 4.36 percent of the public shares, respectively.
|
|
|
(2)
|
ESOP stock purchases are internally financed by a loan
from the holding company.
|
|
|
(3)
|
ESOP borrowings are amortized over 20 years, amortization
expense is tax-effected at a 26.0 percent rate.
|
|
|
(4)
|
Option valuation based on Black-Scholes model, 5 year vesting,
and assuming 25 percent taxable.
|
|
|
(5)
|
MRP is amortized over 5 years, and amortization expense
is tax effected at 26.0 percent.
|
Exhibit IV-10
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Pioneer Bank
At the Maximum
|
1.
|
|
Pro Forma Market Capitalization
|
|
$
|
101,651,790
|
|
|
|
|
Less: Foundation Shares
|
|
|
4,517,860
|
|
|
2.
|
|
Offering Proceeds
|
|
$
|
97,133,930
|
|
|
|
|
Less: Estimated Offering Expenses
|
|
|
2,338,289
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
94,795,641
|
|
|
|
|
|
|
|
|
|
|
3.
|
|
Estimated Additional Income from Conversion Proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
94,795,641
|
|
|
|
|
Less: Cash Contribution to Foundation
|
|
|
250,000
|
|
|
|
|
Less: Non-Cash Stock Purchases (1)
|
|
|
13,282,501
|
|
|
|
|
Net Proceeds Reinvested
|
|
$
|
81,263,140
|
|
|
|
|
Estimated net incremental rate of return
|
|
|
1.86
|
%
|
|
|
|
Reinvestment Income
|
|
$
|
1,509,382
|
|
|
|
|
Less: Estimated cost of ESOP borrowings (2)
|
|
|
0
|
|
|
|
|
Less: Amortization of ESOP borrowings (3)
|
|
|
327,635
|
|
|
|
|
Less: Amortization of Options (4)
|
|
|
604,398
|
|
|
|
|
Less: Recognition Plan Vesting (5)
|
|
|
655,270
|
|
|
|
|
Net Earnings Impact
|
|
$
|
(77,922
|
)
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
Before
|
|
|
Earnings
|
|
|
After
|
|
|
4.
|
|
Pro Forma Earnings
|
|
Conversion
|
|
|
Increase
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Months ended December 31, 2018 (reported)
|
|
$
|
16,795,000
|
|
|
$
|
(77,922
|
)
|
|
$
|
16,717,078
|
|
|
|
|
12 Months ended December 31, 2018 (core)
|
|
$
|
16,706,000
|
|
|
$
|
(77,922
|
)
|
|
$
|
16,628,078
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
5.
|
|
Pro Forma Net Worth
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
126,294,000
|
|
|
$
|
81,263,140
|
|
|
$
|
1,239,644
|
|
|
$
|
208,796,784
|
|
|
|
|
December 31, 2018 (Tangible)
|
|
$
|
116,289,000
|
|
|
$
|
81,263,140
|
|
|
$
|
1,239,644
|
|
|
$
|
198,791,784
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
6.
|
|
Pro Forma Assets
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
1,286,867,000
|
|
|
$
|
81,263,140
|
|
|
$
|
1,239,644
|
|
|
$
|
1,369,369,784
|
|
|
|
(1)
|
Includes ESOP and MRP stock purchases equal to 8.71 percent
and 4.36 percent of the public shares, respectively.
|
|
|
(2)
|
ESOP stock purchases are internally financed by a loan
from the holding company.
|
|
|
(3)
|
ESOP borrowings are amortized over 20 years, amortization
expense is tax-effected at a 26.0 percent rate.
|
|
|
(4)
|
Option valuation based on Black-Scholes model, 5 year vesting,
and assuming 25 percent taxable.
|
|
|
(5)
|
MRP is amortized over 5 years, and amortization expense
is tax effected at 26.0 percent.
|
Exhibit IV-10
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Pioneer Bank
At the Super Maximum Value
|
1.
|
|
Pro Forma Market Capitalization
|
|
$
|
116,899,560
|
|
|
|
|
Less: Foundation Shares
|
|
|
5,195,540
|
|
|
2.
|
|
Offering Proceeds
|
|
$
|
111,704,020
|
|
|
|
|
Less: Estimated Offering Expenses
|
|
|
2,470,708
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
109,233,312
|
|
|
|
|
|
|
|
|
|
|
3.
|
|
Estimated Additional Income from Conversion Proceeds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Conversion Proceeds
|
|
$
|
109,233,312
|
|
|
|
|
Less: Cash Contribution to Foundation
|
|
|
250,000
|
|
|
|
|
Less: Non-Cash Stock Purchases (1)
|
|
|
15,274,876
|
|
|
|
|
Net Proceeds Reinvested
|
|
$
|
93,708,436
|
|
|
|
|
Estimated net incremental rate of return
|
|
|
1.86
|
%
|
|
|
|
Reinvestment Income
|
|
$
|
1,740,540
|
|
|
|
|
Less: Estimated cost of ESOP borrowings (2)
|
|
|
0
|
|
|
|
|
Less: Amortization of ESOP borrowings (3)
|
|
|
376,780
|
|
|
|
|
Less: Amortization of Options (4)
|
|
|
695,058
|
|
|
|
|
Less: Recognition Plan Vesting (5)
|
|
|
753,561
|
|
|
|
|
Net Earnings Impact
|
|
$
|
(84,858
|
)
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
Before
|
|
|
Earnings
|
|
|
After
|
|
|
4.
|
|
Pro Forma Earnings
|
|
Conversion
|
|
|
Increase
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Months ended December 31, 2018 (reported)
|
|
$
|
16,795,000
|
|
|
$
|
(84,858
|
)
|
|
$
|
16,710,142
|
|
|
|
|
12 Months ended December 31, 2018 (core)
|
|
$
|
16,706,000
|
|
|
$
|
(84,858
|
)
|
|
$
|
16,621,142
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
5.
|
|
Pro Forma Net Worth
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
126,294,000
|
|
|
$
|
93,708,436
|
|
|
$
|
1,415,840
|
|
|
$
|
221,418,277
|
|
|
|
|
December 31, 2018 (Tangible)
|
|
$
|
116,289,000
|
|
|
$
|
93,708,436
|
|
|
$
|
1,415,840
|
|
|
$
|
211,413,277
|
|
|
|
|
|
|
Before
|
|
|
Net Cash
|
|
|
Tax Benefit
|
|
|
After
|
|
|
6.
|
|
Pro Forma Assets
|
|
Conversion
|
|
|
Proceeds
|
|
|
Of Contribution
|
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|
$
|
1,286,867,000
|
|
|
$
|
93,708,436
|
|
|
$
|
1,415,840
|
|
|
$
|
1,381,991,277
|
|
|
|
(1)
|
Includes
ESOP and MRP stock purchases equal to 8.71 percent and 4.36 percent of the public shares, respectively.
|
|
|
(2)
|
ESOP
stock purchases are internally financed by a loan from the holding company.
|
|
|
(3)
|
ESOP
borrowings are amortized over 20 years, amortization expense is tax-effected at a 26.0 percent rate.
|
|
|
(4)
|
Option
valuation based on Black-Scholes model, 5 year vesting, and assuming 25 percent taxable.
|
|
|
(5)
|
MRP
is amortized over 5 years, and amortization expense is tax effected at 26.0 percent.
|
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
|
|
Marcus Faust, Managing Director (31)
|
(703) 647-6553
|
mfaust@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
|
|
Carla Pollard, Senior Vice President (29)
|
(703) 647-6556
|
cpollard@rpfinancial.com
|
|
|
|
|
Washington Headquarters
|
|
|
4250 North Fairfax Drive
|
Telephone: (703) 528-1700
|
|
Suite 600
|
Fax No.: (703) 528-1788
|
|
Arlington, VA 22203
|
Toll-Free No.: (866) 723-0594
|
|
www.rpfinancial.com
|
E-Mail: mail@rpfinancial.com
|
Exhibit 99.6
|
RP
®
FINANCIAL, LC.
|
|
|
Advisory
|
Planning
|
Valuation
|
|
March 11, 2019
Board of Directors
Pioneer Bancorp, MHC
Pioneer Bancorp, Inc.
Board of Trustees
Pioneer Savings Bank
652 Albany-Shaker Road
Albany, New York 12211
|
Re:
|
Plan of Reorganization and Minority Stock Issuance
|
|
|
Pioneer Bancorp, MHC
|
|
|
Pioneer Bancorp, Inc.
|
|
|
Pioneer Savings Bank
|
Members of the Boards of Trustees
and Directors:
All capitalized terms
not otherwise defined in this letter have the meanings given such terms in the plan of reorganization and minority stock Issuance
(the “Plan”) adopted by the Board of Trustees of Pioneer Savings Bank (the “Bank”). Pursuant to the Plan,
when the stock offering is completed purchasers in the stock offering will own 43.0% of the outstanding shares of common stock
of Pioneer Bancorp, Inc. (the “Company”), Pioneer Bancorp, MHC (the “MHC”) will own 55.0% of the Company’s
outstanding shares of common stock and a newly established charitable foundation will own 2.0% of the Company’s outstanding
shares of common stock.
We understand that
in accordance with the Plan, depositors will receive rights in a liquidation account maintained by the Bank representing the amount
of the Bank’s total equity as of the date of the latest statement of financial condition used in the prospectus. The Bank
shall continue to hold the liquidation account for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders
who continue to maintain deposits in the Bank. The liquidation account is designed to provide payments to depositors of their liquidation
interests in the event of liquidation of the Bank.
In the unlikely event
that the Bank were to liquidate after the issuance of stock, all claims of creditors, including those of depositors, would be paid
first, followed by distribution to depositors as of December 31, 2017 and depositors as of March 31, 2019, of the liquidation account
maintained by the Bank.
Based upon our review
of the Plan and our observations that the liquidation rights become payable only upon the unlikely event of the liquidation of
the Bank, we are of the belief that: the Bank’s liquidation account does not have any economic value at the time of the transactions
contemplated in the first and second paragraphs above. We note that we have not undertaken any independent investigation of state
or federal law or the position of the Internal Revenue Service with respect to this issue.
|
|
Sincerely,
|
|
|
|
|
|
|
|
|
RP
®
Financial, LC.
|
|
|
|
|
Washington Headquarters
|
|
|
4250 North Fairfax Drive
|
Telephone: (703) 528-1700
|
|
Suite 600
|
Fax No.: (703) 528-1788
|
|
Arlington, VA 22203
|
Toll Free No.: (866) 723-0594
|
|
www.rpfinancial.com
|
E-Mail: mail@rpfinancial.com
|