Exhibit 99.1
XXXXXX & COMPANY, INC.
FINANCIAL INSTITUTION CONSULTANTS
000 XXXXX XXXXX XXXXX
XXXXX 000
XXXXXX, XXXX 00000
(000) 000-0000
(000) 000-0000 FAX
June 13, 2001
The Board of Directors
X. X. Xxxxx Federal Savings Bank
00000 X. Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Re: Conversion Valuation Agreement
Attn.: Xxxxxx X. Xxxxxx
Xxxxxx & Company, Inc. (hereinafter referred to as XXXXXX) hereby proposes
to prepare an independent conversion appraisal of X. X. Xxxxx Federal Savings
Bank (hereinafter referred to as "X. X. XXXXX FEDERAL", relating to the mutual
to stock conversion of X. X. XXXXX FEDERAL and formation of a mutual holding
company. XXXXXX will provide a pro forma valuation of the market value of the
shares to be sold in the proposed conversion of X. X. XXXXX FEDERAL, recognizing
the minority offering with the mutual holding company.
XXXXXX is a financial consulting firm that primarily serves the financial
institution industry. XXXXXX is experienced in evaluating and appraising thrift
institutions and thrift institution holding companies. XXXXXX is an experienced
conversion appraiser for filings with the Office of Thrift Supervision ("OTS")
and the Federal Deposit Insurance Corporation ("FDIC"), and is also approved by
the Internal Revenue Service as an expert in bank and thrift stock valuations.
Xxxxxx is an experienced conversion appraiser for standard conversions, mutual
holding company conversions and conversions involving foundations.
XXXXXX agrees to prepare the conversion appraisal in the format required by
the OTS in a timely manner for prompt filing with the OTS and the Securities and
Exchange Commission. XXXXXX will provide any additional information as requested
and will complete appraisal updates in accordance with regulatory requirements
and based on market conditions.
The appraisal report will provide a detailed description of X. X. XXXXX
FEDERAL, including its financial condition, operating performance, asset
quality, rate sensitivity position, liquidity level and management
qualifications. The appraisal will include a description of X. X. XXXXX
FEDERAL's market area, including both economic and demographic characteristics
and trends. An analysis of other publicly-traded thrift institutions will be
performed to determine a comparable group, and adjustments to the appraised
value will be made based on a comparison of X. X. XXXXX FEDERAL with the
comparable group and recognizing the risk related to an initial public offering.
In making its appraisal, XXXXXX will rely upon the information in the
Subscription and Community Offering Circular (Prospectus), including the audited
financial statements. Among other factors, XXXXXX will also consider the
following: the present and projected operating results and financial condition
of X. X. XXXXX FEDERAL; the economic and demographic conditions in X. X. XXXXX
FEDERAL's existing marketing area; pertinent historical financial and other
information relating to X. X. XXXXX FEDERAL; a comparative evaluation of the
operating and financial statistics of X. X. XXXXX FEDERAL with those of other
thrift institutions; the proposed price per share; the aggregate size of the
offering of common stock; the impact of the conversion on X. X. XXXXX FEDERAL's
capital position and earnings potential; X. X. XXXXX FEDERAL's proposed initial
dividend, if any; and the trading market for securities of comparable
institutions and general conditions in the market for such securities. In
preparing the appraisal, XXXXXX will rely solely upon, and assume the accuracy
and completeness of, financial and statistical information provided by X. X.
XXXXX FEDERAL, and will not independently value the assets or liabilities of X.
X. XXXXX FEDERAL in order to prepare the appraisal.
Upon completion of the conversion appraisal, XXXXXX will make a
presentation to the board of directors of X. X. XXXXX FEDERAL to review the
content of the appraisal, the format and the assumptions. A written presentation
will be provided to each board member as a part of the overall presentation.
For its services in making this appraisal, XXXXXX'x fee will be $20,000,
plus out-of-pocket expenses not to exceed $500. The appraisal fee will include
the preparation of one valuation update and any requested analysis regarding the
financial impact of a charitable foundation in the conversion appraisal. All
additional valuation updates will be subject to an additional fee of $1,000
each. Upon the acceptance of this proposal, XXXXXX shall be paid a retainer of
$3,000 to be applied to the total appraisal fee of $20,000, the balance of which
will be payable at the time of the completion of the appraisal.
X. X. XXXXX FEDERAL agrees, by the acceptance of this proposal, to
indemnify XXXXXX and its employees and affiliates for certain costs and
expenses, including reasonable legal fees, in connection with claims or
litigation relating to the appraisal and arising out of any misstatement or
untrue statement of a material fact in information supplied to XXXXXX by X. X.
XXXXX FEDERAL or by an intentional omission by X. X. XXXXX FEDERAL to state a
material fact in the information so provided, except where XXXXXX or its
employees and affiliates have been negligent or at fault.
XXXXXX agrees to indemnify X. X. XXXXX FEDERAL and its employees and
affiliates for certain cost and expenses, including reasonable legal fees, in
connection with claims or litigation relating to or based upon the negligence or
willful misconduct of XXXXXX or its employees or affiliates.
This proposal will be considered accepted upon the execution of the two
enclosed copies of this agreement and the return of one executed copy to XXXXXX,
accompanied by the specified retainer.
XXXXXX & COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx
President
X. X. XXXXX FEDERAL SAVINGS BANK
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx
Chief Executive Officer
Date: 6-28-01
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