As filed with
the Securities and Exchange Commission on November 5,
2010
Registration
No. 333-169363
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Pre-Effective Amendment
No. 2 to the
Form S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
Alliance
Bancorp, Inc. of Pennsylvania
and
Alliance Bank Profit Sharing/401(k) Plan
(Exact name of registrant as
specified in its articles of incorporation)
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Pennsylvania
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6036
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90-0606221
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard
Industrial Classification Code Number)
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(I.R.S. Employer
Identification No.)
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541 Lawrence Road
Broomall, Pennsylvania
19008
(610) 353-2900
(Address, including zip code,
and telephone number,
including area code, of
registrants principal executive offices)
Dennis D. Cirucci
President and Chief Executive
Officer
Alliance Bancorp, Inc. of
Pennsylvania
541 Lawrence Road
Broomall, Pennsylvania
19008
(610) 353-2900
(Name, address, including zip
code, and telephone number,
including area code, of agent
for service)
Copies to:
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Raymond A. Tiernan, Esq.
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John J. Spidi, Esq.
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Hugh T. Wilkinson, Esq.
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James C. Stewart, Esq.
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Kenneth B. Tabach, Esq.
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Malizia Spidi &Fisch, PC
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Elias, Matz, Tiernan & Herrick L.L.P.
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Suite 200 West
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734 15th Street, N.W., 11th Floor
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1227
25th
Street, N.W.
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Washington, D.C. 20005
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Washington, D.C. 20037
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202-347-0300
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202-434-4670
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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. þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) 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. o
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. o
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 registration statement for the same
offering. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the Exchange Act. (Check one):
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
(Do not check if a smaller reporting company)
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Smaller reporting company þ
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CALCULATION
OF REGISTRATION FEE
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Proposed Maximum
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Proposed Maximum
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Amount of
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Title of Each Class of
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Amount to be
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Offering Price
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Aggregate
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Registration
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Securities to be Registered
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Registered
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per Unit
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Offering Price
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Fee
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Common Stock, $.01 par value per share
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6,888,174 shares(1)
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$10.00
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$68,881,740(2)
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$4,912
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(3)
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Participation interests
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318,019 interests(2)
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(2)
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(1)
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Estimated solely for the purpose of calculating the registration
fee pursuant to Regulation 457(o) under the Securities Act.
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(2)
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The securities of Alliance Bancorp, Inc. of Pennsylvania to be
purchased by the Alliance Bank Profit Sharing/401(k) Plan are
included in the common stock being registered. Pursuant to
Rule 457(h)(2) of the Securities Act of 1933, as amended,
no separate fee is required for the participation interests.
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(3)
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Previously paid.
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The Registrant hereby amends this Registration Statement on
such date as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically
states that the 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 Commission acting pursuant to said
Section 8(a) may determine.
PROSPECTUS
(Proposed holding company for Alliance Bank)
Up to 3,565,000 Shares of
Common Stock for Sale
(Anticipated Maximum)
Alliance Bancorp, Inc. of Pennsylvania, a newly formed
Pennsylvania corporation (which we refer to as Alliance
Bancorp New), is offering up to
3,565,000 shares of its common stock to the public in
connection with the second step conversion of
Alliance Mutual Holding Company from the mutual to the stock
form of organization. All shares of common stock being offered
for sale will be sold at a price of $10.00 per share. The shares
being offered represent Alliance Mutual Holding Companys
current 59.5% ownership interest in the existing mid-tier
holding company for Alliance Bank, a federally chartered
corporation also known as Alliance Bancorp, Inc. of Pennsylvania
(which we refer to as Alliance Bancorp). The
remaining 40.5% ownership interest in Alliance Bancorp is now
owned by public shareholders and will be exchanged for shares of
common stock of Alliance Bancorp New. The common
stock of Alliance Bancorp is currently listed on the Nasdaq
Global Market under the symbol ALLB. We expect that
the common stock of Alliance Bancorp New will trade
under the symbol ALLBD for a period of 20 trading
days after completion of the conversion and offering.
Thereafter, the trading symbol will be ALLB.
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If you are a current or former depositor of Alliance Bank as of
one of the eligibility record dates, you may have priority
rights to purchase shares in the subscription offering.
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If you are not a depositor, but are interested in purchasing
shares of our common stock, you may be able to purchase shares
in the community offering to the extent shares remain available
after priority orders are filled.
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If you are a shareholder of Alliance Bancorp, the shares you own
will be exchanged for between 0.6631 and 0.8971 shares of
Alliance Bancorp New or up to 1.0317 shares in
the event the maximum of the offering range is increased by 15%.
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We are offering shares of common stock in a subscription
offering to eligible depositors of Alliance Bank. 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 residents of our
local communities and the shareholders of Alliance Bancorp. We
must sell a minimum of 2,635,000 shares to complete the
offering. Stifel, Nicolaus & Company, Incorporated
will assist us in selling our common stock on a best efforts
basis in the subscription and community offerings. We also may
offer for sale shares of common stock not purchased in the
subscription offering or community offering in a
syndicated community offering through a syndicate of
selected broker-dealers, with Stifel, Nicolaus &
Company, Incorporated serving as a sole book-running manager. We
retain the right to accept or reject, in part or in whole, any
order received in the community offering or the syndicated
community offering. Stifel, Nicolaus & Company,
Incorporated is not obligated to purchase any shares of common
stock that are being offered for sale.
The minimum order is 25 shares. The subscription offering
will end at 2:00 p.m., Eastern Time,
on ,
2010. We expect that the community offering, if held, will
terminate at the same time, although it may continue without
notice to you
until ,
2010. The offering may be extended further, if the Office of
Thrift Supervision approves a later date. No single extension
may exceed 90 days and the offering must be completed
by ,
2012. Once submitted, orders are irrevocable unless the offering
is terminated or is extended
beyond ,
2010, or the number of shares of common stock to be sold is
increased to more than 4,099,750 shares or decreased to
less than 2,635,000 shares. If we extend the offering
beyond ,
2010, all subscribers will be notified and given the opportunity
to confirm, change or cancel their orders. If you do not respond
to this notice, we will promptly return your funds, with
interest calculated at Alliance Banks passbook rate or
cancel your deposit account withdrawal authorization. If we
intend to sell fewer than 2,635,000 shares or more than
4,099,750 shares, we will promptly return all funds, with
interest, and set a new offering range. All subscribers will be
notified and given the opportunity to place a new order. Funds
received prior to the completion of the offering will be held in
a segregated account at Alliance Bank and will earn interest
calculated at Alliance Banks passbook savings rate, which
is currently % per annum.
This investment involves a degree of risk, including the
possible loss of principal. Please read Risk Factors
beginning on page 21.
OFFERING
SUMMARY
Price Per Share: $10.00
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Minimum
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Midpoint
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Maximum
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Maximum, As Adjusted
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Number of shares
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2,635,000
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3,100,000
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3,565,000
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4,099,750
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Gross offering proceeds
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$
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26,350,000
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31,000,000
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35,650,000
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$
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40,997,500
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Estimated offering expenses, excluding selling agent fees and
expenses
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$
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1,055,000
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$
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1,055,000
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$
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1,055,000
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$
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1,055,000
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Estimated selling agent fees and expenses(1)(2)
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$
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1,223,240
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$
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1,407,085
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$
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1,590,931
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$
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1,802,353
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Estimated net proceeds
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$
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24,071,760
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$
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28,537,915
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$
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33,004,069
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$
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38,140,147
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Estimated net proceeds per share
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$
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9.14
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$
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9.21
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$
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9.26
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$
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9.30
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(1)
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Includes: (i) selling
commissions payable by us to Stifel, Nicolaus &
Company, Incorporated in connection with the subscription and
community offerings equal to 1.0% of the aggregate amount of
common stock sold in the subscription and community offerings
(net of insider purchases) or approximately $141,000, at the
adjusted maximum of the offering range, assuming that 40% of the
offering is sold in the subscription and community offerings and
the remaining 60% of the offering will be sold by a syndicate of
broker-dealers in a syndicated community offering:
(ii) fees and selling commissions payable by us to Stifel,
Nicolaus & Company, Incorporated and any other
broker-dealers participating in the syndicated offering equal to
6.0% of the aggregate amount of common stock sold in the
syndicated community offering, or approximately $1,476,000 at
the adjusted maximum of the offering range, and (iii) other
expenses of the offering payable to Stifel, Nicolaus &
Company, Incorporated and the other broker-dealers that may
participate in the syndicated community offering, including the
assumptions regarding the number of shares that may be sold in
the subscription offering and the syndicated community offering
to determine the estimated offering expenses, see Pro
Forma Data on page and The
Conversion and the Offering Marketing
Arrangements on page .
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(2)
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If all shares of common stock are
sold in the syndicated community offering, the maximum selling
agent commissions and expenses would be $1.8 million at the
minimum, $2.0 million at the midpoint, $2.3 million at
the maximum, and $2.6 million at the adjusted maximum.
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These securities are not deposits or savings accounts and are
not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Neither the Securities and Exchange Commission, the Office of
Thrift Supervision nor any state securities commission 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.
Stifel Nicolaus
Weisel
For assistance, please contact the Stock Information Center,
toll-free, at
( ) -
The date of this prospectus
is ,
2010
TABLE OF
CONTENTS
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Page
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1
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21
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30
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32
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37
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39
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40
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41
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42
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43
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45
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51
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71
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97
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106
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108
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122
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124
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125
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150
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158
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159
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159
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159
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159
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159
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F-1
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EX-23.2 |
SUMMARY
This summary highlights material information from this
prospectus and may not contain all the information that is
important to you. To understand the stock offering fully, you
should read this entire prospectus carefully, including the
consolidated financial statements and the notes to the
consolidated financial statements of Alliance Bancorp and the
section entitled Risk Factors.
Alliance
Bancorp New
Alliance Bancorp New is a newly formed Pennsylvania
corporation. Alliance Bancorp New is conducting this
offering in connection with the conversion of Alliance Mutual
Holding Company from the mutual to the stock form of
organization. The shares of common stock of Alliance
Bancorp New to be sold represent the 59.5% ownership
interest in Alliance Bancorp currently owned by Alliance Mutual
Holding Company. The remaining 40.5% ownership interest in
Alliance Bancorp is currently owned by other shareholders (who
are sometimes referred to as the public
shareholders) and will be exchanged for shares of common
stock of Alliance Bancorp New based on an exchange
ratio of 0.6631 to 0.8971. The exchange ratio may be increased
to as much as 1.0317 in the event the maximum of the offering
range is increased by 15%. The actual exchange ratio will be
determined at the closing of the offering and will depend on the
number of shares of common stock sold in the stock offering. The
executive offices of Alliance Bancorp New are
located at 541 Lawrence Road, Broomall, Pennsylvania 19008, and
its telephone number is
(610) 353-2900.
Alliance
Bank
Alliance Bank is a Pennsylvania-chartered stock savings bank
operating out of its executive offices in Broomall, Pennsylvania
and nine other full service offices in Delaware and Chester
Counties, Pennsylvania. While the banks legal name is
Greater Delaware Valley Savings Bank, we conduct business, and
are known, as Alliance Bank. The bank is primarily
engaged in single-family residential lending and commercial real
estate lending funded by deposits and borrowings. The
banks loan portfolio primarily consists of single family
residential real estate loans and commercial real estate loans.
At June 30, 2010, single-family residential real estate
loans amounted to $110.4 million or 38.4% of total loans
and commercial real estate loans amounted to $136.9 million
or 47.6% of total loans. Alliance Banks main office is
located at 541 Lawrence Road, Broomall, Pennsylvania 19008 and
its telephone number is
(610) 353-2900.
Alliance
Mutual Holding Company
Alliance Mutual Holding Company is a federally chartered mutual
holding company which currently is the parent of Alliance
Bancorp. The principal business purpose of Alliance Mutual
Holding Company is owning more than a majority of the
outstanding shares of common stock of Alliance Bancorp. Alliance
Mutual Holding Company currently owns 59.5% of the outstanding
shares of Alliance Bancorp. Alliance Mutual Holding Company will
no longer exist upon completion of the conversion and offering.
Alliance
Bancorp
Alliance Bancorp is a federally chartered corporation and
currently is the mid-tier stock holding company for Alliance
Bank. At June 30, 2010, 59.5% of the issued and outstanding
shares of Alliance Bancorp were owned by Alliance Mutual Holding
Company, and the remaining 40.5% of Alliance Bancorps
issued and outstanding shares were owned by the public
shareholders. The common stock of Alliance Bancorp is registered
under the Securities Exchange Act of 1934, as amended, and is
publicly traded on the Nasdaq Global Market. At the conclusion
of the offering and the conversion of Alliance Mutual Holding
Company, Alliance Bancorp will no longer exist. The existing
public shareholders of Alliance Bancorp will have their shares
converted into 0.6631 to 0.8971 shares of Alliance
Bancorp New common stock. The shares of common stock
being offered by Alliance Bancorp New represent
Alliance Mutual Holding Companys current ownership
interest in Alliance Bancorp. As of June 30, 2010, Alliance
Bancorp had $448.4 million in total assets,
$381.2 million in total deposits and $48.6 million in
stockholders equity. The executive offices of
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Alliance Bancorp are located at 541 Lawrence Road, Broomall,
Pennsylvania 19008, its telephone number is
(610) 353-2900,
and its website is www.allianceanytime.com. Information
on our website should not be treated as part of this prospectus.
Our
Current and Proposed Organizational Structure
We have been organized in the mutual holding company form since
1995. In January 2007, we completed our reorganization into the
current two-tier mutual holding company structure. In our 2007
reorganization, existing shareholders of Alliance Bank,
including Alliance Mutual Holding Company, exchanged their
shares of common stock in Alliance Bank for shares of Alliance
Bancorp pursuant to an exchange ratio of 2.09945 shares of
Alliance Bancorp common stock for each outstanding share of
Alliance Bank common stock. As a result, Alliance Bancorp became
the mid-tier holding company for Alliance Bank.
Prior to such reorganization in 2007, Alliance Bank had been a
direct subsidiary of the mutual holding company. In addition, as
part of the 2007 reorganization, Alliance Bancorp sold
$16.5 million of its common stock, at a purchase price of
$10.00 per share, in a public offering. As a result of the 2007
reorganization and offering, the ownership interest of Alliance
Mutual Holding Company was reduced from 80.02% to 55.0%. As of
June 30, 2010, Alliance Mutual Holding Company owned 59.5%
of the issued and outstanding shares of common stock of Alliance
Bancorp.
The following chart shows our current ownership structure which
is commonly referred to as the two-tier mutual
holding company structure:
Pursuant to the terms of our plan of conversion and
reorganization, we are now converting from the partially public
mutual holding company structure to the fully public stock
holding company form of organization, in what is known as a
second step transaction. As part of the conversion,
we are offering for sale the majority ownership interest in
Alliance Bancorp that is currently owned by Alliance Mutual
Holding Company. Upon completion of the conversion and offering,
Alliance Mutual Holding Company and Alliance Bancorp will cease
to exist, we will be fully owned by public shareholders and
there will be no continuing interest by a mutual holding
company. Upon completion of the conversion, public shareholders
of Alliance Bancorp will receive shares of common stock of
Alliance Bancorp New in exchange for their shares of
Alliance Bancorp.
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Following our conversion and this offering, we will be organized
as a fully public holding company and our ownership structure
will be as follows:
These transactions are commonly referred to as a
second-step conversion.
Our
Operating Strategy
The key elements of our operating strategy include:
Expand Our Market Presence and Geographic
Reach. We continue to seek ways to increase our
market penetration to grow our business and expand our
geographic reach in banking on other complementary financial
services businesses.
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Expanding our Market Presence. We have
increased our market penetration through the use of television,
print media and outdoor sign marketing campaigns and by
increasing the products and services we offer. We incentivize
our employees to cross-sell our products and emphasize a
Customer
First®
mentality in an effort to maximize the number of our products
that each customer, household or business utilizes.
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Complementary acquisitions. In addition to
organic growth, we continue to evaluate market expansion
acquisition opportunities to acquire other financial
institutions or financial service companies (such as wealth
management and insurance companies) in our current market area
as well as contiguous market areas that afford us the
opportunity to add complementary products to our existing
businesses, although we currently have no plans, agreements or
understandings with respect to any acquisitions or de novo
openings.
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De novo branching. The net proceeds from the
offering will facilitate our ability to add new branch
locations, either on a de novo basis or through acquisitions to
provide our customers with better access and service in addition
to filling any gaps in our footprint. While our business plan
indicates our intention to open a new de novo branch office in
each of the next two years, any such openings will be subject
to, among other factors, market conditions, the economic
environment and the identification of sites which are acceptable
to us being available within our targeted expense range. We
currently have no specific plans, agreements or understandings
with respect to any acquisitions or de novo openings.
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Improve Our Earnings and Diversify Our Income
Sources. We continue to seek ways of increasing
our net interest income, net interest margin and other sources
of non-interest income.
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Emphasizing Origination of Commercial Real Estate
Loans. Commercial real estate loans are
attractive because they generally provide us with higher yields
and less interest rate risk because they typically have
adjustable rates of interest
and/or
shorter terms to maturity in comparison to
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traditional single-family residential mortgage loans. At
June 30, 2010, $136.9 million or 47.6% of our total
loan portfolio consisted of commercial real estate loans. The
net proceeds from the offering will increase our capital,
although we currently maintain regulatory capital in excess of
well capitalized standards, and will facilitate our
ability to expand our loan relationships, consistent with our
current underwriting guidelines. We intend to continue to
emphasize growth in our commercial real estate lending in a
manner consistent with our loan underwriting policies and
procedures. Commercial real estate loans generally are
considered to have a higher risk of loss than single-family
residential mortgage loans due to, among other things, the fact
that repayment of commercial real estate loans often depends on
the successful operation of a business or the underlying
property securing the loan as well as the fact that commercial
real estate loans often typically involve larger loan balances
to single borrowers or groups of related borrowers. See
Risk Factors Risks Related to Our
Business Our Loan Portfolio Includes a Significant
Amount of Commercial Real Estate Loans and Construction Loans,
Which Have a Higher Risk of Loss than Conforming, Single-Family
Residential Mortgage Loans.
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Expanding Business Banking Operations. We
hired an additional loan officer in 2009 and are currently
seeking more relationship managers and loan officers to
facilitate increased sales calls on local real estate investors,
builders and other area businesses to capitalize on our
commercial banking experience and to further penetrate the
markets we serve. As a community based bank, we believe that we
offer high quality customer service by combining locally based
management for fast decisions on loan applications and approvals
with customized deposit services which are attractive to small
and medium sized businesses.
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Controlling Non-interest Expense. We monitor
our expense ratios closely and strive to improve our efficiency
ratio through expense control and increases in non interest
income and in net interest income. Our largest non-interest
expense is compensation. We work to limit growth of compensation
expense by controlling increases in the number of employees to
those needed to support our growth and by maximizing the use of
technology to increase efficiency.
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Considering New Product Lines and
Businesses. We continue to evaluate new product
lines in our efforts to maintain a competitive edge and provide
our customers with a broad array of products and services to
meet the needs of our retail and business customers. In
particular, we continue to evaluate financial products to expand
our product offerings and improve our non-interest income. In
addition, we continue evaluate opportunities to provide our
customers with wealth management and insurance products and
services and to increase our non-interest income.
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Continuing Residential Mortgage Lending. As a
community bank we continue our mission of supporting the
communities we serve by offering a strong line of traditional
single-family residential mortgage products. We offer first and
second mortgages of various terms using fixed or adjustable rate
products. In addition, we offer home equity loans and lines of
credit to support short term financing needs. At June 30,
2010, our loans secured by single-family residential mortgages
amounted to $110.4 million or 38.4% of our total loan
portfolio. At such date, our single-family residential loans
included $20.0 million in home equity loans and lines of
credit. Our single-family residential loan portfolio also
includes loans which are considered subprime. Our
subprime loans amounted to $23.2 million, or 8.1% of our
total loan portfolio, at June 30, 2010. We are continuing
to originate subprime loans. By their nature, subprime loans
generally are considered to have a greater degree of risk than
conforming single-family residential mortgage loans. See
Risk Factors Risks Related to Our
Business We Originate Subprime Mortgage Loans For
Our Portfolio and Subprime Loans Have a Higher Risk of Loss than
Conforming Single-Family Residential Mortgage
Loans. We reported $1.2 million or 5.4%
of our subprime loans as non-performing at June 30, 2010.
We recognize the additional risk associated with subprime
lending and utilize a higher risk-weighting factor in
maintaining our allowance for loan losses with respect to these
loans.
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4
Maintaining a Quality Loan Portfolio While Exercising Prudent
Underwriting Standards. While the delinquencies
in our loan portfolio have increased during the current economic
downturn, we continue to emphasize maintaining strong asset
quality by following conservative underwriting criteria,
diligently applying our collection efforts, and originating
loans secured primarily by real estate. We will continue to
focus on asset quality as we seek to expand our commercial
lending activities. Our net charge-offs were 0.18% of our
average loans outstanding for the six months ended June 30,
2010, while our non-performing assets at June 30, 2010 were
$16.1 million, or 3.60% of total assets. Of the
$16.1 million, $9.8 million, or 60.9% of total non
performing assets, are related to two borrower relationships
that we believe are adequately collateralized and reserved
against.
Improve our Funding Mix and Increase Core
Deposits. We are continuing our efforts to
increase our core deposits in order to help reduce and control
our cost of funds. We value core deposits because the represent
longer-term customer relationships and lower costs of funds. We
offer competitive rates on a wide variety of deposit products to
meet the individual needs of our customers. We also promote
longer term deposits where possible, consistent with our asset
liability management goals. In addition, we have focused on
lowering outstanding borrowings to improve our funding mix.
Since the year ended December 31, 2009, we have reduced
borrowings by $21.9 million, or 62.6%, to
$13.1 million at June 30, 2010. We intend to continue
to pay down our borrowings to improve our funding mix to benefit
our net interest margin and results of operations.
The
Offering and Persons Who Can Purchase in the Offering
We are offering common stock which represents the 59.5%
ownership interest in Alliance Bancorp now owned by Alliance
Mutual Holding Company. We are offering between 2,635,000 and
3,565,000 shares of common stock, at a price of $10.00 per
share. The number of shares to be sold may be increased to
4,099,750. The actual number of shares we sell will depend on an
independent appraisal performed by RP Financial, LC, an
independent appraisal firm. We are also exchanging shares of
Alliance Bancorp, other than those held by Alliance Mutual
Holding Company, for shares of Alliance Bancorp New
based on an exchange ratio of between 0.6631 and 0.8971. The
exchange ratio may be increased to as much as 1.0317 in the
event the stock offering closes at the maximum, as adjusted of
the valuation range. See The Conversion and
Offering How We Determined the Price Per Share, the
Offering Range and the Exchange Ratio at
page . Shares are being offered in a
subscription offering in the following order of priority.
|
|
|
FIRST:
|
|
Eligible Account Holders (depositors at Alliance Bank with $50
or more on deposit as of June 30, 2009).
|
SECOND:
|
|
Alliance Banks employee stock ownership plan.
|
THIRD:
|
|
Supplemental Eligible Account Holders (depositors at Alliance
Bank with $50 or more on deposit as
of ,
2010).
|
FOURTH:
|
|
Other Depositors (depositors at Alliance Bank as
of ,
2010 who do not qualify as Eligible Account Holders or
Supplemental Eligible Account Holders).
|
The subscription offering will terminate at 2:00 p.m.,
Eastern Time,
on ,
2010. We may extend this expiration date without notice to you
for up to 45 days,
until ,
2010. Once submitted, your order is irrevocable unless the
offering is terminated or extended
beyond ,
2010. We may request permission from the Office of Thrift
Supervision to extend the offering
beyond ,
2010, but in no event may the offering be extended
beyond ,
2012. If the offering is extended
beyond ,
2010, we will be required to notify each subscriber and give
each subscriber the opportunity to confirm, change or cancel
their order.
If we receive subscriptions for more shares than are to be sold
in this offering, we may be unable to fill or may only partially
fill your order. Shares will be allocated in order of the
priorities described in the plan of conversion and
reorganization. See The Conversion and Offering
Subscription Offering at
page for a description of the allocation
procedure.
Concurrently with the subscription offering, or commencing after
the subscription offering begins, we may also offer shares of
common stock to the general public in a community offering. In
the community
5
offering, natural persons (and trusts of natural persons) who
reside in Delaware and Chester Counties, Pennsylvania, will have
a preference, and shareholders of Alliance Bancorp as
of ,
2009 will have a second preference in the community offering
after persons residing in Delaware and Chester Counties. The
community offering, if commenced, is expected to terminate at
2:00 p.m., Eastern Time,
on ,
2010, but may be extended without notice
until ,
2010.
Shares not sold in the subscription or community offering may be
offered for sale in a syndicated community offering, which would
be an offering to the general public on a best efforts basis by
a syndicate of selected broker-dealers.
We may begin the syndicated community offering at any time
following the commencement of the subscription offering. Stifel,
Nicolaus & Company, Incorporated will act as sole
book-running manager in the syndicated community offering, which
is also being conducted on a best efforts basis. Neither Stifel,
Nicolaus & Company, Incorporated nor any other member
of the syndicate is obligated to purchase any shares in the
syndicated community offering.
We have the right to reject any orders of stock in the community
offering and syndicated community offering either in whole or in
part. If your order is rejected in part, you cannot cancel the
remainder of your order.
The purchase price is $10.00 per share. All investors will pay
the same purchase price per share. Investors will not be charged
a commission to purchase shares of common stock in the offering.
Stifel, Nicolaus & Company, Incorporated, our
conversion advisor and marketing agent in the offering, will use
its best efforts to assist us in selling shares of our common
stock. Stifel, Nicolaus & Company, Incorporated is not
obligated to purchase any shares of common stock in the offering.
We may cancel the conversion and the offering at any time prior
to the special meeting of depositors of Alliance Bank to vote on
the plan of conversion and reorganization and the special
meeting of shareholders of Alliance Bancorp to vote on the plan
of conversion and reorganization. We may also cancel the
conversion and offering after the special meetings with the
concurrence of the Office of Thrift Supervision. If we cancel
the offering, orders for common stock already submitted will be
canceled and subscribers funds will be returned with
interest calculated at Alliance Banks passbook savings
rate.
You cannot transfer your rights to purchase shares in the
subscription offering. If you attempt to transfer your rights,
you may lose the right to purchase shares and may be subject to
criminal prosecution
and/or other
sanctions.
How We
Determined the Price Per Share, the Offering Range and the
Exchange Ratio
The offering range and the exchange ratio are based on an
independent appraisal by RP Financial, LC, an appraisal firm
experienced in appraisals of savings institutions. The pro forma
market value is the estimated market value of our common stock
assuming the sale of shares in this offering. RP Financial has
indicated that in its opinion as of August 20, 2010, the
estimated pro forma market value of our common stock was
$52.1 million at the midpoint. In the offering, we are
selling the number of shares representing the 59.5% of shares
currently owned by Alliance Mutual Holding Company, which
results in an offering range between $26.4 million and
$35.7 million, with a midpoint of $31.0 million. The
appraisal was based in part upon Alliance Bancorps
financial condition and operations and the effect of the
additional capital we will raise from the sale of common stock
in this offering.
Subject to regulatory approval, we may increase the amount of
common stock offered by up to 15%. Accordingly, at the minimum
of the offering range, we are offering 2,635,000 shares,
and at the maximum, as adjusted, of the offering range we are
offering 4,099,750 shares in the offering. The appraisal
will be updated before the conversion is completed. If the pro
forma market value of the common stock at that time is either
below $44.3 million or above $68.9 million, we will
notify subscribers, return their funds, with interest, or cancel
their deposit withdrawal authorizations, and subscribers will
have the opportunity to place a new order. See The
Conversion and Offering How We Determined the Price
Per Share, the Offering Range and the
6
Exchange Ratio for a description of the factors and
assumptions used in determining the stock price and offering
range.
The appraisal was based in part upon Alliance Bancorps
financial condition and results of operations, the effect of the
additional capital we will raise from the sale of common stock
in this offering, and an analysis of a peer group of ten
publicly traded savings and loan holding companies that RP
Financial considered comparable to us. The appraisal peer group
consists of the companies listed below. Total assets are as of
June 30, 2010.
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|
|
|
|
|
|
Company Name and Ticker Symbol
|
|
Exchange
|
|
Headquarters
|
|
Total Assets
|
|
|
|
|
|
|
|
(In millions)
|
|
|
New Hampshire Thrift Bancshares, Inc. (NHTB)
|
|
Nasdaq
|
|
Newport, New Hampshire
|
|
$
|
939
|
|
Harleysville Savings Financial Corporation (HARL)
|
|
Nasdaq
|
|
Harleysville, Pennsylvania
|
|
|
844
|
|
TF Financial Corporation (THRD)
|
|
Nasdaq
|
|
Newtown, Pennsylvania
|
|
|
721
|
|
BCSB Bancorp, Inc. (BCSB)
|
|
Nasdaq
|
|
Baltimore, Maryland
|
|
|
601
|
|
Central Bancorp, Inc. (CEBK)
|
|
Nasdaq
|
|
Somerville, Massachusetts
|
|
|
542
|
|
Elmira Savings Bank (ESBK)
|
|
Nasdaq
|
|
Elmira, New York
|
|
|
499
|
|
Newport Bancorp, Inc. (NFSB)
|
|
Nasdaq
|
|
Newport, Rhode Island
|
|
|
450
|
|
WVS Financial Corp. (WVFC)
|
|
Nasdaq
|
|
Pittsburgh, Pennsylvania
|
|
|
376
|
|
Rome Bancorp, Inc. (ROME)
|
|
Nasdaq
|
|
Rome, New York
|
|
|
330
|
|
Mayflower Bancorp, Inc. (MFLR)
|
|
Nasdaq
|
|
Middleboro, Massachusetts
|
|
|
256
|
|
In preparing its appraisal, RP Financial considered the
information in this prospectus, including our financial
statements. RP Financial also considered the following factors,
among others:
|
|
|
|
|
our historical, present and projected operating results
including, but not limited to, historical income statement
information such as return on assets, return on equity, net
interest margin trends, operating expense ratios, levels and
sources of non-interest income, and levels of loan loss
provisions;
|
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|
|
our historical, present and projected financial condition
including, but not limited to, historical balance sheet size,
composition and growth trends, loan portfolio composition and
trends, liability composition and trends, credit risk measures
and trends, and interest rate risk measures and trends;
|
|
|
|
the economic, demographic and competitive characteristics of
Alliance Bancorps primary market area including, but not
limited to, employment by industry type, unemployment trends,
size and growth of the population, trends in household and per
capita income, deposit market share and largest competitors by
deposit market share;
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|
a comparative evaluation of the operating and financial
statistics of Alliance Bancorps with those of other
similarly situated, publicly traded companies, which included a
comparative analysis of balance sheet composition, income
statement ratios, credit risk, interest rate risk and loan
portfolio composition;
|
|
|
|
the impact of the offering on Alliance Bancorps
consolidated stockholders equity and earning potential
including, but not limited to, the increase in consolidated
equity resulting from the offering, the estimated increase in
earnings resulting from the reinvestment of the net proceeds of
the offering, the estimated impact on the consolidated equity
and earnings resulting from adoption of the employee benefit
plans and the effect of higher consolidated equity on Alliance
Bancorps future operations;
|
|
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|
the impact of consolidation of Alliance Mutual Holding Company
with and into Alliance Bancorp, including the impact of
consolidation of Allliance Mutual Holding Companys assets
and liabilities, the addition of certain expenses currently
borne by Alliance Mutual Holding Company and the elimination of
certain intercompany income and expenses; and
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|
the trading market for securities of comparable institutions and
general conditions in the market for such securities.
|
7
Two of the measures investors use to analyze whether a stock
might be a good investment are the ratio of the offering price
to the issuers book value and the ratio of the
offering price to the issuers annual net income. RP
Financial considered these ratios, among other factors, in
preparing its appraisal. Book value is the same as total
stockholders equity, and represents the difference between
the issuers assets and liabilities. Tangible book value is
equal to total stockholders equity less intangible assets.
RP Financials appraisal also incorporates an analysis of a
peer group of publicly traded companies that RP Financial
considered to be comparable to us.
The following table presents a summary of selected pricing
ratios for the peer group companies and for us on a reported
basis as utilized by RP Financial in its appraisal. These ratios
are based on earnings for the 12 months ended June 30,
2010 and book value as of June 30, 2010 for us and the peer
group (other than one member of the peer group for which data
was through March 31, 2010).
|
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|
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|
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Price to Earnings
|
|
Price to Book
|
|
Price to Tangible
|
|
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Multiple
|
|
Value Ratio
|
|
Book Value Ratio
|
|
Alliance Bancorp New (pro forma)
|
|
|
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|
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Minimum
|
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|
55.53
|
x
|
|
|
57.80
|
%
|
|
|
57.80
|
%
|
MidPoint
|
|
|
65.94
|
x
|
|
|
64.72
|
|
|
|
64.72
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|
Maximum
|
|
|
76.55
|
x
|
|
|
70.97
|
|
|
|
70.97
|
|
Maximum, as adjusted
|
|
|
89.00
|
x
|
|
|
77.40
|
|
|
|
77.40
|
|
Peer group companies as of August 20, 2010
|
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|
|
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|
|
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Average
|
|
|
16.11
|
x
|
|
|
81.26
|
|
|
|
90.93
|
|
Median
|
|
|
14.55
|
x
|
|
|
81.87
|
|
|
|
86.75
|
|
Compared to the average pricing ratios of the peer group at the
maximum of the offering range, our stock would be priced at a
premium of 375.2% to the peer group on a
price-to-earnings
basis and a discount of 12.7% to the peer group on a price-to
book value basis and 22.0% on a price to tangible book value
basis. This means that, at the maximum of the offering range, a
share of our common stock would be more expensive than the peer
group based on an earnings per share basis and less expensive
than the peer group based on a book value and tangible book
value basis. See Pro Forma Data for the assumptions
used to derive these pricing ratios.
Compared to the average pricing ratios of the peer group, at the
minimum of the offering range our common stock would be priced
at a premium of 193.7% to the peer group on a
price-to-earnings
basis, discount of 28.9% to the peer group on a
price-to-book
basis, and a discount of 36.4% to the peer group on a
price-to-tangible
book basis. This means that, at the minimum of the offering
range, a share of our common stock would be more expensive than
the peer group on an earnings basis and less expensive than the
peer group on a book value and tangible book value basis.
Our board of directors reviewed RP Financials appraisal
report, including the methodology and the assumptions used by RP
Financial, and determined that the offering range was reasonable
and appropriate. Our board of directors has decided to offer the
shares for a price of $10.00 per share. The purchase price of
$10.00 per share was determined by us, taking into account,
among other factors, the market price of our stock prior to
adoption of the plan of conversion, the requirement under Office
of Thrift Supervision regulations that the common stock be
offered in a manner that will achieve the widest distribution of
the stock, the desired liquidity in the common stock after the
offering, and the fact that $10.00 per share is the most
commonly used price in conversion offerings. Our board of
directors also established the formula for determining the
exchange ratio. Based upon such formula and the offering range,
the exchange ratio ranged from a minimum of 0.6631 to a maximum
of 0.8971 shares of Alliance Bancorp New common
stock for each current share of Alliance Bancorp common stock,
with a midpoint of 0.7801.
Because of differences and important factors such as operating
characteristics, location, financial performance, asset size,
capital structure, and business prospects between us and other
fully converted institutions, you should not rely on these
comparative valuation ratios as an indication as to whether or
not the stock is an appropriate investment for you. The
independent valuation is not intended, and must not be
8
construed, as a recommendation of any kind as to the
advisability of purchasing the common stock. Because the
independent valuation is based on estimates and projections on a
number of matters, all of which are subject to change from time
to time, no assurance can be given that persons purchasing the
common stock will be able to sell their shares at a price equal
to or greater than the purchase price. See Risk
Factors Our Stock Price May Decline When Trading
Commences at page and Pro Forma
Data at page and The Conversion
and Offering How We Determined the Price Per Share,
The Offering Range and the Exchange Ratio at
page .
Possible
Change in Offering Range
RP Financial will update its appraisal before we complete the
conversion and offering. If, as a result of regulatory
considerations, demand for the shares or changes in financial
market conditions, RP Financial determines that our estimated
pro forma market value has increased, we may sell up to
4,099,750 shares without further notice to you. If our pro
forma market value at that time is either below
$44.3 million or above $68.9 million, then, after
consulting with the Office of Thrift Supervision, we may:
|
|
|
|
|
terminate the offering and promptly return all funds;
|
|
|
|
promptly return all funds, set a new offering range and give all
subscribers the opportunity to place a new order; or
|
|
|
|
take such other actions as may be permitted by the Office of
Thrift Supervision and the Securities and Exchange Commission.
|
The
Exchange of Alliance Bancorp Common Stock
If you are a shareholder of Alliance Bancorp, the existing
publicly traded mid-tier holding company, your shares will be
cancelled and exchanged for new shares of Alliance
Bancorp New common stock. The number of shares you
will receive will be based on an exchange ratio determined as of
the closing of the conversion. The actual number of shares you
receive will depend upon the number of shares we sell in our
offering, which in turn will depend upon the final appraised
value of Alliance Bancorp New. The following table
shows how the exchange ratio will adjust, based on the number of
shares sold in our offering. The table also shows how many
shares a hypothetical owner of Alliance Bancorp common stock
would receive in the exchange, based on the number of shares
sold in the offering.
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 Shares of
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shares of
|
|
|
|
Alliance Bancorp
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliance
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Bancorp New
|
|
|
|
would be
|
|
|
|
|
|
|
|
|
Shares of Alliance
|
|
Common Stock
|
|
|
|
Exchanged for
|
|
|
|
|
|
|
|
|
Bancorp New Stock
|
|
to be
|
|
|
|
the Following
|
|
|
|
|
Shares to be Sold in
|
|
to be Exchanged for
|
|
Outstanding
|
|
|
|
Number of Shares
|
|
Equivalent
|
|
|
the Offering
|
|
Current Common Stock
|
|
after the
|
|
Exchange
|
|
of Alliance
|
|
per Share
|
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Conversion
|
|
Ratio
|
|
Bancorp New(1)
|
|
Value(2)
|
|
Minimum
|
|
|
2,635,000
|
|
|
|
59.5
|
%
|
|
|
1,792,183
|
|
|
|
40.5
|
%
|
|
|
4,427,183
|
|
|
|
0.6631
|
|
|
|
66
|
|
|
$
|
6.63
|
|
Midpoint
|
|
|
3,100,000
|
|
|
|
59.5
|
|
|
|
2,108,449
|
|
|
|
40.5
|
|
|
|
5,208,449
|
|
|
|
0.7801
|
|
|
|
78
|
|
|
|
7.80
|
|
Maximum
|
|
|
3,565,000
|
|
|
|
59.5
|
|
|
|
2,424,717
|
|
|
|
40.5
|
|
|
|
5,989,717
|
|
|
|
0.8971
|
|
|
|
89
|
|
|
|
8.97
|
|
15% above the maximum
|
|
|
4,099,750
|
|
|
|
59.5
|
|
|
|
2,788,424
|
|
|
|
40.5
|
|
|
|
6,888,174
|
|
|
|
1.0317
|
|
|
|
103
|
|
|
|
10.32
|
|
|
|
|
(1) |
|
Cash will be paid instead of issuing any fractional shares. |
|
(2) |
|
Represents the value of shares of Alliance Bancorp-New common
stock to be received by a holder of one share of Alliance
Bancorp common stock at the exchange ratio, assuming a value of
$10.00 per share. |
If you own shares of Alliance Bancorp which are held in
street name, they will be exchanged within your
brokerage account without any action on your part. If you are
the record owner of shares of Alliance Bancorp and hold stock
certificates you will receive, after the conversion and offering
is completed, a transmittal form with instructions to surrender
your stock certificates. New certificates of our common stock
will be mailed within five business days after the exchange
agent receives properly executed transmittal forms and
certificates.
9
No fractional shares of our common stock will be issued to any
public shareholder of Alliance Bancorp upon consummation of the
conversion. For each fractional share that would otherwise be
issued, we will pay an amount equal to the product obtained by
multiplying the fractional share interest to which the holder
would otherwise be entitled by the $10.00 per share subscription
price. For further information, see The Conversion and
Offering Effect of the Conversion and Offering on
Public Shareholders beginning on page .
Reasons
for the Conversion and Offering
We are pursuing the conversion and offering for the following
reasons:
|
|
|
|
|
The additional funds resulting from the offering will increase
our capital (although Alliance Bank is deemed to be
well-capitalized) and support continued growth, as
well as provide increased lending capability.
|
|
|
|
We believe that our current mutual holding company structure has
limited our opportunities to acquire other institutions because
we cannot now issue stock in an acquisition in an amount that
would cause Alliance Mutual Holding Company to own less than a
majority of the outstanding shares of Alliance Bancorp. We
expect that our conversion will facilitate our ability to
acquire other institutions in the future by eliminating this
requirement of majority ownership by our mutual holding company.
Currently, we have no plans, agreements or understandings
regarding any merger or acquisition transactions.
|
|
|
|
The conversion to the fully public form of ownership will remove
the uncertainties associated with the mutual holding company
structure created by the recently enacted financial reform
legislation, which will result in a change of the federal
regulator for our holding company. We believe that the
conversion and offering will eliminate some of the uncertainties
associated with the recent legislation, and better position us
to continue to meet all future regulatory requirements,
including regulatory capital requirements.
|
|
|
|
The conversion will increase the number of outstanding shares
held by public shareholders, so we expect our stock to have
greater liquidity.
|
Our board of directors also considered certain disadvantages in
undertaking the conversion and offering at this time, as
described below, but concluded that the disadvantages did not
outweigh the reasons for the conversion described above.
|
|
|
|
|
Current shareholders of Alliance Bancorp will receive a lower
exchange ratio for their existing shares compared to
transactions that take place when market and economic conditions
are more favorable. However, there is no way that our board of
directors could ascertain when, or if, market or economic
conditions may become more or less favorable in this regard.
|
|
|
|
In the initial period following the conversion and offering, the
additional capital generated from the conversion and offering
will likely result in a lower return on equity for Alliance
Bancorp-New compared to many of its peers.
|
|
|
|
Given the current economic slowdown and the reduced demand for
new originations of loans meeting our underwriting standards, it
may be a challenge for us to deploy the net proceeds from the
conversion and offering as quickly as we would like.
|
Conditions
to Completion of the Conversion
We cannot complete our conversion and related offering unless:
|
|
|
|
|
The plan of conversion and reorganization is approved by at
least a majority of votes eligible to be cast by depositors of
Alliance Bank;
|
|
|
|
The plan of conversion and reorganization is approved by at
least:
|
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|
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two-thirds of the outstanding shares of Alliance Bancorp common
stock; and
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10
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a majority of the outstanding shares of Alliance Bancorp common
stock held by the public shareholders;
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We sell at least the minimum number of shares offered; and
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We receive the final approval of the Office of Thrift
Supervision and the Pennsylvania Department of Banking to
complete the conversion and offering and related transactions.
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Alliance Mutual Holding Company intends to vote its 59.5%
ownership interest in favor of the conversion. In addition, as
of ,
2010, directors and executive officers of Alliance Bancorp and
their associates
owned shares
of Alliance Bancorp or % of the
outstanding shares. They intend to vote those shares in favor of
the plan of conversion and reorganization.
After-Market
Performance Information
The following table presents for all second-step
conversions that began trading from December 19, 2009 to
August 20, 2010, the percentage change in the trading price
from the initial trading date of the offering to the dates shown
in the table. The table also presents the average and median
trading prices and percentage change in trading prices for the
same dates. This information relates to stock performance
experienced by other companies that may have no similarities to
us with regard to market capitalization, offering size, earnings
quality and growth potential, among other factors.
The table is not intended to indicate how our common stock may
perform. Data represented in the table reflects a small number
of transactions and is not necessarily indicative of general
stock market performance trends or of price performance trends
of companies that undergo second-step conversions.
Furthermore, this table presents only short-term price
performance and may not be indicative of the longer-term stock
price performance of these companies. There can be no assurance
that our stock price will appreciate or that our stock price
will not trade below $10.00 per share. The movement of any
particular companys stock price is subject to various
factors, including, but not limited to, the amount of proceeds a
company raises, the companys historical and anticipated
operating results, the nature and quality of the companys
assets, the companys market area and the quality of
management and managements ability to deploy proceeds
(such as through loans and investments, the acquisition of other
financial institutions or other businesses, the payment of
dividends and common stock repurchases). In addition, stock
prices may be affected by general market and economic
conditions, the interest rate environment, the market for
financial institutions and merger or takeover transactions and
the presence of professional and other investors who purchase
stock on speculation, as well as other unforeseeable events not
in the control of management. Before you make an investment
decision, please carefully read this entire prospectus,
including Risk Factors.
11
After
Market Trading Activity
Completed
Second-Step Offerings
Closing
Dates between December 19, 2009 and August 20,
2010
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Price Performance from Initial Trading Date
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Through
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Closing
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August 20,
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Company Name and Ticker Symbol
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Date
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Exchange
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1 Day
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1 Week
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1 Month
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2010
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Jacksonville Bancorp, Inc. (JXSB)
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7/15/10
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Nasdaq
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6.5
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%
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5.8
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%
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3.0
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%
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1.2
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%
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Colonial Fin. Services, Inc. (COBK)
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7/13/10
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Nasdaq
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0.5
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(3.5
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)
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(3.5
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)
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(2.0
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)
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Viewpoint Fin. Group (VPFG)
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7/7/10
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Nasdaq
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(5.0
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)
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(4.5
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)
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(3.0
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)
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(6.9
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)
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Oneida Financial Corp. (ONFC)
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7/7/10
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Nasdaq
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(6.3
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)
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(6.3
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)
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(1.3
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)
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(4.0
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)
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Fox Chase Bancorp, Inc. (FXCB)
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6/29/10
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Nasdaq
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(4.1
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)
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(4.0
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)
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(3.2
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)
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(6.5
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)
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Oritani Financial Corp. (ORIT)
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6/24/10
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Nasdaq
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3.1
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(1.4
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)
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(0.9
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)
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(5.7
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)
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Eagle Bancorp Montana, Inc. (EBMT)
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4/5/10
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Nasdaq
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5.5
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6.5
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4.1
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(6.8
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)
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Ocean Shore Holding Co. (OSHC)
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12/21/09
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Nasdaq
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7.5
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12.3
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13.1
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29.8
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Northwest Bancshares, Inc. (NWBI)
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12/18/09
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Nasdaq
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13.5
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13.0
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14.0
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9.6
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Average
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2.4
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%
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2.0
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%
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2.5
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%
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1.0
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%
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Median
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3.1
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(1.4
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)
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(0.9
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(4.0
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)
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THERE CAN BE NO ASSURANCE THAT OUR STOCK PRICE WILL TRADE
SIMILARLY TO THESE COMPANIES. THERE CAN ALSO BE NO ASSURANCE
THAT OUR STOCK PRICE WILL NOT TRADE BELOW $10.00 PER SHARE,
PARTICULARLY AS THE PROCEEDS RAISED AS A PERCENTAGE OF PRO FORMA
STOCKHOLDERS EQUITY MAY HAVE A NEGATIVE EFFECT ON OUR
STOCK PRICE PERFORMANCE.
Use of
Proceeds from the Sale of Our Common Stock
We will use the proceeds from the offering as follows:
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Percentage of Net
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Amount,
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Amount,
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Offering Proceeds
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Use of Proceeds
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at the Minimum
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at the Maximum
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at the Maximum
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(Dollars in thousands)
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Loan to our employee stock ownership plan
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$
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1,221
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$
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1,652
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5.0
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%
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Repurchase of shares for our recognition and retention plan
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1,771
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2,396
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7.3
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Investment in Alliance Bank
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12,036
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16,502
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50.0
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General corporate purposes dividend payments,
possible acquisitions and stock repurchases
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9,044
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12,454
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37.7
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Total
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$
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24,072
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$
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33,004
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100.0
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%
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We may use the portion of the proceeds that we retain to, among
other things, invest in securities, pay dividends to
shareholders, repurchase shares of common stock (subject to
regulatory restrictions), finance the possible acquisition of
financial institutions or other businesses that are related to
banking (although we have no current plans, agreements or
understandings with respect to any possible acquisitions) or for
general corporate purposes.
The proceeds to be contributed to Alliance Bank will be
available for general corporate purposes, including to support
the future expansion of operations through acquisitions of other
financial institutions, the establishment of additional branch
offices or other customer facilities, expansion into other
lending markets or diversification into other banking related
businesses, although no such transactions are specifically being
considered at this time. Pursuant to our business plan, we plan
to open a de novo branch office in each of the next two years,
subject to,
12
among other factors, market conditions, the economic environment
and our ability to identify acceptable sites where we can open
such new branches within our targeted budget of approximately
$300,000 per de novo branch office. The proceeds to be
contributed to Alliance Bank also will support its lending
activities.
The
Amount of Stock You May Purchase
The minimum purchase is 25 shares. Generally, you may
purchase no more than $500,000 (50,000 shares) of common
stock in the offering. The maximum amount of shares that a
person together with any associates or group of persons acting
in concert with such person may purchase is $1.0 million of
common stock (100,000 shares). Your associates include the
following persons:
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persons on joint accounts with you;
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relatives living in your house;
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companies, trusts or other entities in which you have a
controlling interest or hold a position as an officer or a
similar position;
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trusts or other estates in which you have a substantial
beneficial interest or as to which you serve as trustee or in
another fiduciary capacity; or
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other persons who may be acting together with you.
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In addition to the above, there is a limitation for Alliance
Bancorp public shareholders who wish to purchase additional
shares in the offering. The number of shares of Alliance
Bancorp New common stock that a public shareholder
may purchase in the offering individually, and together with
associates or persons acting in concert, plus any exchange
shares received, may not exceed 5% of the total shares of
Alliance Bancorp New common stock to be issued and
outstanding at the completion of the conversion and offering,
provided, however, that no one will be required to divest any
shares of Alliance Bancorp New or be limited in the
number of exchange shares received.
We have the right to determine, in our sole discretion, whether
subscribers are associates or acting in concert. Persons having
the same address or with accounts registered at the same address
generally will be assumed to be associates or acting in concert.
We may decrease or increase the maximum purchase limitations
without notifying you with the concurrence of the Office of
Thrift Supervision. In the event the maximum purchase limitation
is increased, persons who subscribed for the maximum in the
subscription offering and who indicated on their stock order
forms a desire to be resolicited, will be notified and permitted
to increase their subscription. For additional information, see
The Conversion and Offering Limitations on
Common Stock Purchases at page .
How to
Pay for Shares in the Subscription and Community
Offerings
In the subscription offering and the community offerings, you
may pay for your shares by:
1. personal check, bank check or money order made payable
directly to Alliance Bancorp, Inc.; or
2. authorizing us to withdraw money from the types of
Alliance Bank deposit accounts identified on the stock order
form.
If you wish to pay by cash rather than by the above recommended
methods, you must deliver your stock order form and payment in
person to Alliance Banks main office located at 541
Lawrence Road, Broomall, Pennsylvania. Alliance Bank is not
permitted to lend funds (including funds drawn on an Alliance
Bank line of credit) to anyone for the purpose of purchasing
shares of common stock in the offering. Additionally, you may
not use an Alliance Bank line of credit check or any type of
third party check or wire transfer to pay for shares of common
stock.
You may not designate on your stock order form a direct
withdrawal from a retirement account at Alliance Bank. If you
wish to use funds in a retirement account at Alliance Bank, see
The Conversion and Offering Procedure for
Purchasing Shares in the Subscription and Community
Offerings Using
13
Retirement Account Funds to Purchase Shares at
page . Additionally, you may not designate on
your stock order form a direct withdrawal from Alliance Bank
accounts with check-writing privileges. Please provide a check
instead. If you request a direct withdrawal, we reserve the
right to interpret that as your authorization to treat those
funds as if we had received a check for the designated amount,
and we will immediately withdraw the amount from your checking
account.
Checks will be immediately cashed, so the funds must be
available within the account when your stock order form is
received by us. Subscription funds will be held in a segregated
account at Alliance Bank. We will pay interest calculated at
Alliance Banks passbook rate from the date those funds are
processed until completion of or termination of the offering, at
which time subscribers will receive interest checks. Withdrawals
from certificate of deposit accounts at Alliance Bank for the
purpose of purchasing common stock in the offering may be made
without incurring an early withdrawal penalty. All funds
authorized from withdrawal from deposit accounts with Alliance
Bank must be available within the deposit accounts at the time
the stock order form is received. A hold will be placed on the
amount of funds designated on your stock order form. Those funds
will be unavailable to you during the offering; however, the
funds will not be withdrawn from the accounts until the offering
is completed and will continue to earn interest at the
applicable contractual deposit account rate until the completion
of the offering.
You may deliver your stock order form in one of three ways: by
mail, using the stock order reply envelope provided; by
overnight delivery to the Stock Information Center at the
address indicated on the stock order form; or by hand-delivery
to Alliance Banks main office, located at 541 Lawrence
Road, Broomall, Pennsylvania. Please do not deliver stock order
forms to other Alliance Bank offices or mail stock order forms
to Alliance Bank. Once submitted, your order is irrevocable. See
The Conversion and Offering Procedure for
Purchasing Shares in the Subscription and Community
Offerings at page .
We may, in our sole discretion, reject orders received in the
community offering, either in whole or in part. In addition, we
may reject an order submitted by a person who we believe is
making false representations or who we believe is attempting to
violate, evade or circumvent the terms and conditions of the
plan of conversion and reorganization. If your order is rejected
in part, you cannot cancel the remainder of your order.
Using IRA
Funds to Purchase Shares in the Offering
You may be able to subscribe for shares of common stock using
funds in your individual retirement account, or IRA. If you wish
to use some or all of other funds in your Alliance Bank IRA or
other retirement account, the applicable funds must first be
transferred to a self-directed retirement account maintained by
an unaffiliated institutional trustee or custodian, such as a
brokerage firm. An annual fee may be payable to the new trustee.
If you do not have such an account you will need to establish
one and transfer your funds before placing your stock order. Our
Stock Information Center can give you guidance if you wish to
place an order for stock using funds held in a retirement
account at Alliance Bank or elsewhere. Because processing
retirement account transactions takes additional time, we
recommend that you contact our Stock Information Center
promptly, preferably at least two weeks before
the ,
2010 offering deadline. Whether you may use retirement funds for
the purchase of shares in the offering will depend on timing
constraints and possibly, limitations imposed by the institution
where the funds are held. See The Conversion and
Offering Procedure for Purchasing Shares in the
Subscription and Community Offerings Using
Retirement Account Funds to Purchase Shares at
page .
Deadline
for Orders of Stock
The subscription offering will end at 2:00 p.m., Eastern
Time,
on ,
2010. We expect that the community offering, if held, will
terminate at the same time. If you wish to purchase shares, a
properly completed and signed original stock order form,
together with full payment for the shares of common stock, must
be received (not postmarked) no later than this time. We
are not required to accept copies or facsimiles of order forms.
The subscription offering
and/or
community offering may be extended
until ,
2010, or longer if the Office of Thrift Supervision approves a
later date. No single extension may be for more than
90 days. We are not required to provide notice to you of an
extension unless we extend the offering beyond
14
,
2010, in which case all subscribers in the subscription and
community offerings will be notified and given the opportunity
to confirm, change or cancel their orders. If you do not respond
to this notice, we will promptly return your funds, with
interest calculated at Alliance Banks passbook savings
rate or cancel your deposit account withdrawal authorization. If
we intend to sell fewer than 2,635,000 shares or more than
4,099,750 shares, we will promptly return all funds and set
a new offering range. All subscribers will be notified and given
the opportunity to place a new order.
Termination
of the Offering
We may terminate the offering at any time prior to the special
meetings of depositors of Alliance Bank and shareholders of
Alliance Bancorp that are being called to vote on the plan of
conversion and reorganization, and at any time thereafter with
the approval of the Office of Thrift Supervision. If we
terminate the offering, we will promptly return your funds, with
interest, and we will cancel deposit account withdrawal
authorizations.
Your
Subscription Rights are Not Transferable
You may not assign or sell your subscription rights. Any
transfer of subscription rights is prohibited by law. If you
exercise subscription rights to purchase shares in the
subscription offering, you will be required to acknowledge that
you are purchasing shares solely for your own account and that
you have no agreement or understanding regarding the sale or
transfer of shares. We intend to pursue any and all legal and
equitable remedies if we learn of the transfer of any
subscription rights. We will reject orders that we determine to
involve the transfer of subscription rights. On the stock order
form, you may not add the names of others for joint stock
registration who do not have subscription rights or who qualify
only in a lower subscription offering priority than you do. You
may add only those who were eligible to purchase shares of
common stock in the subscription offering at your date of
eligibility. 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, in the event of an oversubscription.
Benefits
to Management from the Conversion and Offering
Our employees, officers and directors will benefit from the
offering due to various stock-based benefit plans.
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Full-time employees, including officers, are participants in our
existing employee stock ownership plan which will purchase
additional shares of common stock in the offering;
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Subsequent to completion of the offering, we intend to implement:
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a stock recognition and retention plan; and
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a new stock option plan;
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which will benefit our employees and directors.
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Employee Stock Ownership Plan. The employee
stock ownership plan provides retirement benefits to all
eligible employees of Alliance Bank. The plan will purchase a
number of shares of Alliance Bancorp New common
stock equal to 4.63% of the shares in the offering. When
combined with the shares previously acquired by the employee
stock ownership plan, as adjusted for the exchange ratio, the
employee stock ownership plan will have acquired an aggregate of
7.0% of the shares of Alliance Bancorp-New to be outstanding
after the conversion and offering. Alliance Bancorp
New will make a loan to the employee stock ownership plan to
finance its purchase of shares in the offering (in our
discretion, subject to OTS approval, the ESOP may purchase such
shares in the open market after completion of the conversion and
offering). As the loan is repaid and shares are released from
collateral, the shares will be allocated to the accounts of
participants based on a participants compensation as a
percentage of total plan compensation. Non-employee directors
are not eligible to
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15
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participate in the employee stock ownership plan. We will incur
additional compensation expense as a result of this plan. See
Pro Forma Data for an illustration of the effects of
this plan.
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New Stock Option and Stock Recognition and Retention
Plans. We intend to implement a new stock option
plan and a stock recognition and retention plan no earlier than
six months after the conversion. Under these plans, we may award
stock options and shares of restricted stock to employees and
directors. Shares of restricted stock will be awarded at no cost
to the recipient. Stock options will be granted at an exercise
price equal to 100% of the fair market value of our common stock
on the option grant date. We will incur additional compensation
expense as a result of both plans. See Pro Forma
Data for an illustration of the effects of these plans.
Under the new stock option plan, we may grant stock options in
an amount up to 10.0% of the common stock of Alliance
Bancorp New to be sold in the offering. Under the
stock recognition and retention plan, we may award restricted
stock in an amount equal to 4.0% of the to-be outstanding shares
of Alliance Bancorp New, or 6.72% of the shares sold
in the offering. The plans will comply with all applicable
Office of Thrift Supervision regulations.
|
The following table presents the total value of all shares
expected to be available for restricted stock awards under the
new stock recognition and retention plan, based on a range of
market prices from $8.00 per share to $14.00 per share.
Ultimately, the value of the grants will depend on the actual
trading price of our common stock, which depends on numerous
factors.
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Value of
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177,087 Shares
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|
208,338 Shares
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|
239,589 Shares
|
|
275,527 Shares
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|
|
Awarded at
|
|
Awarded at
|
|
Awarded at
|
|
Awarded at 15%
|
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Minimum of
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|
Midpoint of
|
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Maximum of
|
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Above Maximum of
|
Share Price
|
|
Range
|
|
Range
|
|
Range
|
|
Range
|
|
|
(Dollars in thousands)
|
|
$8.00
|
|
$
|
1,417
|
|
|
$
|
1,667
|
|
|
$
|
1,917
|
|
|
$
|
2,204
|
|
10.00
|
|
|
1,771
|
|
|
|
2,083
|
|
|
|
2,396
|
|
|
|
2,755
|
|
12.00
|
|
|
2,125
|
|
|
|
2,500
|
|
|
|
2,875
|
|
|
|
3,306
|
|
14.00
|
|
|
2,479
|
|
|
|
2,917
|
|
|
|
3,354
|
|
|
|
3,857
|
|
The following table presents the total value of all stock
options expected to be made available for grant under the new
stock option plan, based on a range of market prices from $8.00
per share to $14.00 per share. For purposes of this table, the
value of the stock options was determined using the
Black-Scholes option-pricing formula. See Pro Forma
Data. Ultimately, financial gains can be realized on a
stock option only if the market price of the common stock
increases above the price at which the option is granted.
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Value of
|
|
|
|
|
|
|
|
|
|
|
409,975
|
|
|
|
|
263,500 Options
|
|
310,000 Options
|
|
356,500 Options
|
|
Options Granted
|
|
|
|
|
Granted at
|
|
Granted at
|
|
Granted at
|
|
at 15% Above
|
|
|
Per Share
|
|
Minimum of
|
|
Midpoint of
|
|
Maximum of
|
|
Maximum of
|
Per Share Exercise Price
|
|
Option Value
|
|
Range
|
|
Range
|
|
Range
|
|
Range
|
|
|
(Dollars in thousands, except per share amounts)
|
|
$8.00
|
|
$
|
2.50
|
|
|
$
|
659
|
|
|
$
|
775
|
|
|
$
|
891
|
|
|
$
|
1,025
|
|
10.00
|
|
|
3.13
|
|
|
|
825
|
|
|
|
970
|
|
|
|
1,116
|
|
|
|
1,283
|
|
12.00
|
|
|
3.76
|
|
|
|
991
|
|
|
|
1,166
|
|
|
|
1,340
|
|
|
|
1,542
|
|
14.00
|
|
|
4.38
|
|
|
|
1,154
|
|
|
|
1,358
|
|
|
|
1,561
|
|
|
|
1,796
|
|
16
The following table summarizes, at the minimum and the maximum
of the offering range, the total number and value of the shares
of common stock that the employee stock ownership plan expects
to acquire, the dilution resulting from these stock-based
benefit plans and the total value of all restricted stock awards
and stock options that are expected to be available under the
anticipated new stock recognition and retention plan and stock
option plan, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares to be Granted or Purchased
|
|
|
|
|
|
Total Estimated Value of Grants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Resulting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a % of
|
|
|
Shares for
|
|
|
|
|
|
|
|
|
|
At
|
|
|
At
|
|
|
As a %
|
|
|
Common
|
|
|
Stock-
|
|
|
|
|
|
At
|
|
|
|
Minimum of
|
|
|
Maximum of
|
|
|
of Shares
|
|
|
Stock to be
|
|
|
Based
|
|
|
At Minimum of
|
|
|
Maximum of
|
|
|
|
Offering
|
|
|
Offering
|
|
|
in the
|
|
|
Outstanding After
|
|
|
Benefit
|
|
|
Offering
|
|
|
Offering
|
|
|
|
Range
|
|
|
Range
|
|
|
Offering
|
|
|
the Offering
|
|
|
Plans(3)
|
|
|
Range
|
|
|
Range
|
|
|
|
(Dollars in Thousands)
|
|
|
Employee stock ownership plan(1)
|
|
|
122,100
|
|
|
|
165,204
|
|
|
|
4.63
|
%
|
|
|
2.76
|
%
|
|
|
|
%
|
|
$
|
1,221
|
|
|
$
|
1,652
|
|
Recognition and retention plan awards(1)
|
|
|
177,087
|
|
|
|
239,589
|
|
|
|
6.72
|
|
|
|
4.00
|
|
|
|
3.85
|
|
|
|
1,771
|
|
|
|
2,396
|
|
Stock options(2)
|
|
|
263,500
|
|
|
|
356,500
|
|
|
|
10.00
|
|
|
|
5.95
|
|
|
|
5.62
|
|
|
|
825
|
|
|
|
1,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
562,687
|
|
|
|
761,293
|
|
|
|
21.35
|
%
|
|
|
12.71
|
%
|
|
|
9.05
|
%
|
|
$
|
3,817
|
|
|
$
|
5,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Assumes the value of the common stock of Alliance
Bancorp New is $10.00 per share for purposes of
determining the total estimated value of the grants. |
|
(2) |
|
Assumes the value of a stock option is $3.13, which was
determined using the Black-Scholes
option-pricing
formula. See Pro Forma Data. |
|
(3) |
|
Represents the dilution of stock ownership interest assuming
that we use newly issued shares for the proposed recognition and
retention plan and new stock option plan, and that shares are
sold in the offering at the midpoint of the offering range. No
dilution is reflected for the employee stock ownership plan as
shares for it are assumed to be purchased in the offering. |
The following table presents information regarding our existing
employee stock ownership plan, our prior stock option plan, and
our proposed new stock option plan and recognition and retention
plan. The table below assumes that 5,989,717 shares are
outstanding after the offering, which includes the sale of
3,565,000 shares in the offering at the maximum of the
offering range and the issuance of 2,424,717 shares in
exchange for shares of Alliance Bancorp common stock using an
exchange ratio of 0.8971. It is also assumed that the value
17
of the stock is $10.00 per share and that the exchange of
existing shares is in accordance with the exchange ratio at the
maximum of the offering range.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Shares
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
Outstanding After the
|
|
Existing and New Stock Benefit Plans
|
|
Participants
|
|
Shares(1)
|
|
|
Value
|
|
|
Conversion
|
|
|
Employee Stock Ownership Plan:
|
|
All Employees
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares previously purchased(2)
|
|
|
|
|
254,076
|
|
|
$
|
2,540,760
|
|
|
|
4.24
|
%
|
Shares to be purchased in this offering
|
|
|
|
|
165,204
|
|
|
|
1,652,040
|
|
|
|
2.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total employee stock ownership plan
|
|
|
|
|
419,280
|
|
|
$
|
4,192,800
|
|
|
|
7.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proposed New Recognition and Retention Plan(3)
|
|
Directors and Officers
|
|
|
239,589
|
|
|
$
|
2,395,890
|
|
|
|
4.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Option Plans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1996 Stock Option Plan(4)
|
|
Directors and Officers
|
|
|
128,543
|
|
|
$
|
402,340
|
(5)
|
|
|
2.15
|
(4)
|
Proposed New Stock Option Plan(5)
|
|
Directors and Officers
|
|
|
356,500
|
|
|
|
1,115,845
|
|
|
|
5.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock option plans
|
|
|
|
|
485,043
|
|
|
|
1,518,185
|
|
|
|
8.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock benefits plans
|
|
|
|
|
1,143,912
|
|
|
$
|
8,106,875
|
|
|
|
19.10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Shares previously purchased by the employee stock ownership plan
prior to the conversion and shares reflected for the 1996 stock
option plan have been adjusted for the 0.8971 exchange ratio at
the maximum of the offering range. |
|
(2) |
|
Approximately 203,373 (226,700 shares prior to adjustment
for the exchange ratio) of these shares have been allocated to
the accounts of participants. |
|
(3) |
|
The actual value of new recognition and retention plan awards
will be determined based on their fair value as of the date
grants are made. For purposes of this table, fair value is
assumed to be the same as the offering price of $10.00 per share. |
|
(4) |
|
An aggregate of 143,287 shares previously were reserved for
issuance under the 1996 stock option plan. All options
previously granted under the 1996 stock option plan have been
exercised or have been cancelled. No options remain outstanding
under the 1996 stock option plan, and no additional options may
be granted thereunder as the plan has terminated by its terms. |
|
(5) |
|
The fair value of stock options has been estimated at $3.13 per
option using the Black-Scholes option-pricing model with the
following assumptions: exercise price, $10.00; trading price on
date of grant, $10.00; dividend yield, 0.96%; expected life,
10 years; expected volatility, 23.23%; and risk-free
interest of 2.53%. |
Market
for Common Stock
Alliance Bancorps common stock is currently listed on the
Nasdaq Global Market under the symbol ALLB. We have
applied to have the common stock of Alliance Bancorp
New listed for trading on the Nasdaq Global Market. For the
first 20 trading days after the conversion and offering is
completed, we expect Alliance Bancorp News common stock to
trade under the symbol ALLBD, thereafter it will
trade under ALLB.
Our
Dividend Policy
We have paid quarterly cash dividends since 1995. During the
quarter ended June 30, 2010, the cash dividend was $0.03
per share or $0.12 per share on an annual basis (which is
equivalent to a dividend yield of 1.2% based upon the $10.00 per
share purchase price in the offering). We intend to continue to
pay cash dividends on a quarterly basis after we complete the
conversion and the offering. We currently expect that the
18
level of cash dividends per share after the conversion and
offering will be substantially consistent with the current
amount of dividends per share paid by Alliance Bancorp. However,
the dividend rate and the continued payment of dividends will
depend on a number of factors, including our capital
requirements, our financial condition and results of operations,
tax considerations, statutory and regulatory limitations and
general economic conditions. No assurance can be given that we
will continue to pay dividends or that they will not be reduced
in the future. Additionally, we cannot guarantee that the amount
of dividends that we pay after the conversion will be equal to
the per share dividend amount that shareholders of Alliance
Bancorp currently receive.
Federal
and State Income Tax Consequences
As a general matter, the conversion will not be a taxable
transaction for purposes of federal or state income taxes to us
or persons who receive or exercise subscription rights.
Shareholders of Alliance Bancorp who receive cash in lieu of
fractional share interests in shares of Alliance
Bancorp New will recognize gain or loss equal to the
difference between the cash received and the tax basis of the
fractional share. Elias, Matz, Tiernan & Herrick
L.L.P. and ParenteBeard LLC, have issued opinions to this
effect, see The Conversion and Reorganization
Tax Aspects at page .
Restrictions
on the Acquisition of Alliance Bancorp New and
Alliance Bank
Federal regulation, as well as provisions contained in the
articles of incorporation and bylaws of Alliance
Bancorp New, contain certain restrictions on
acquisitions of Alliance Bancorp New or its capital
stock. These restrictions include the requirement that a
potential acquirer of common stock obtain the prior approval of
the Office of Thrift Supervision before acquiring in excess of
10% of the stock of Alliance Bancorp New.
Additionally, Office of Thrift Supervision approval would be
required for us to be acquired within three years after the
conversion.
In addition, the articles of incorporation and bylaws of
Alliance Bancorp New contain provisions that may
discourage takeover attempts and prevent you from receiving a
premium over the market price of your shares as part of a
takeover. These provisions include:
|
|
|
|
|
prohibitions on the acquisition of more than 10% of our stock;
|
|
|
|
limitations on voting rights of shares held in excess of 10%
thereafter;
|
|
|
|
staggered election of only approximately one-third of our board
of directors each year;
|
|
|
|
limitations on the ability of shareholders to call special
meetings;
|
|
|
|
advance notice requirements for shareholder nominations and new
business;
|
|
|
|
removals of directors only for cause and by a majority vote of
all shareholders;
|
|
|
|
requirement of a 75% vote of shareholders for certain amendments
to the bylaws and certain provisions of the articles of
incorporation;
|
|
|
|
the right of the board of directors to issue shares of preferred
or common stock without shareholder approval; and
|
|
|
|
a 75% vote of shareholders requirement for the approval of
certain business combinations not approved by two-thirds of the
board of directors.
|
For further information, see Restrictions on Acquisitions
of Alliance Bancorp New and Alliance Bank and
Related Anti-Takeover Provisions.
Receiving
a Prospectus and an Order Form
To ensure that each purchaser in the subscription and
community offerings receives a prospectus at least 48 hours
before the offering deadline, we may not mail prospectuses any
later than five days prior to such date or hand-deliver
prospectuses later than two days prior to that date. Stock order
forms may
19
only be delivered if accompanied or preceded by a prospectus.
We are not obligated to deliver a prospectus or order form by
means other than U.S. mail.
We will make reasonable attempts to provide a prospectus and
offering materials to holders of subscription rights. The
subscription offering and all subscription rights will expire at
2:00 p.m., Eastern Time,
on .
2010 whether or not we have been able to locate each person
entitled to subscription rights.
Delivery
of Stock Certificates
Certificates representing shares of common stock issued in the
subscription and community offerings will be mailed by
first-class mail by our transfer agent as soon as practicable
following completion of the conversion and offering.
Certificates will be mailed to purchasers at the registration
address provided by them on the order form. Until
certificates for common stock are available and delivered to
purchasers, purchasers may not be able to sell their shares,
even though trading of the common stock will have commenced.
Your ability to sell the shares of common stock prior to
your receipt of the stock certificate will depend on
arrangements you may make with your brokerage firm.
How You
Can Obtain Additional Information 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 toll-free telephone number is
( ) .
The Stock Information Center is open Monday through Friday, from
10:00 a.m. to 4:00 p.m., Eastern Time. The Stock
Information Center will be closed weekends and bank holidays.
20
RISK
FACTORS
You should consider carefully the following risk factors
in deciding how to vote on the conversion and before purchasing
Alliance Bancorp New common stock.
Risks
Related to Our Business
Our
Loan Portfolio Includes A Significant Amount of Commercial Real
Estate Loans and Construction Loans, Which Have a Higher Risk of
Loss than Conforming, Single-Family Residential Mortgage
Loans.
As of June 30, 2010, $136.9 million or 47.6% of our
loan portfolio consisted of commercial real estate loans and
$24.1 million or 8.4% of our loan portfolio consisted of
construction loans. Commercial real estate loans and
construction loans are generally considered to have a higher
risk of loss than conforming, single-family residential mortgage
loans. Commercial real estate loans generally are considered to
have a higher risk of loss because repayment of the loans often
depends on the successful operation of a business or the
underlying property securing the loan. Such loans typically
involve larger loan balances to single borrowers or groups of
related borrowers compared to one- to four-family residential
mortgage loans. Accordingly, an adverse development with respect
to one loan or one credit relationship can expose us to greater
risk of loss compared to an adverse development with respect to
a one- to four-family residential mortgage loan. We seek to
minimize these risks through our underwriting policies, which
require such loans to be qualified on the basis of the
propertys net income and debt service ratio; however,
there is no assurance that our underwriting policies will
protect us from credit-related losses. Construction loans
generally have a higher risk of loss than single-family
residential mortgage loans due primarily to the critical nature
of the initial estimates of a propertys value upon
completion of construction compared to the estimated costs,
including interest, of construction as well as other
assumptions. If the estimates upon which construction loans are
made prove to be inaccurate, we may be confronted with projects
that, upon completion, have values which are below the loan
amounts. Commercial real estate loans and construction loans are
also typically larger than single-family residential mortgage
loans. The deterioration of one or more of these loans could
cause a significant increase in non-performing loans, which
could adversely affect our results of operations by requiring us
to increase our provisions for loan losses. The net proceeds
from the offering will increase our capital and facilitate our
ability to make larger commercial real estate and construction
loans by increasing our internal loans to one borrower limits.
We
Originate Subprime Mortgage Loans For Our Portfolio and Subprime
Loans Have a Higher Risk of Loss than Conforming Single-Family
Residential Mortgage Loans.
Our single-family residential mortgage loan portfolio includes
loans which are considered subprime due to the
credit scores of our borrowers being lower than specified
thresholds or, to a lesser extent, loan documentation issues. At
June 30, 2010, we had $23.2 million of subprime loans,
which constitutes 8.1% of our total loan portfolio at such date.
At such date, $1.2 million, or 5.4%, of our subprime loans
were considered non-performing loans. By their nature, subprime
loans are generally considered to have a greater degree of risk
than conforming single-family residential mortgage loans because
the lower credit score of the borrower may indicate a reduced
ability to remain current on loan payments. As a result of the
composition of our loan portfolio, our credit risk profile will
be higher than traditional thrift institutions that have higher
concentrations of conforming one- to four-family residential
loans.
Our
Allowance for Losses on Loans May Not Be Adequate to Cover
Probable Losses.
We have established an allowance for loan losses based upon
various assumptions and judgments about the collectibility of
our loan portfolio which we believe is adequate to offset
probable losses on our existing loans. Since we must use
assumptions regarding individual loans and the economy, our
current allowance for loan losses may not be sufficient to cover
actual loan losses, and increases in the allowance may become
necessary in the future. Any future declines in real estate
market conditions, general economic conditions or changes in
regulatory policies may require us to increase our allowance for
loan losses, which would adversely affect our results of
operations. We may also need to significantly increase our
provision for loan losses,
21
particularly if one or more of our larger loans or credit
relationships becomes delinquent. In addition, federal
regulators periodically review our allowance for loan losses and
may require us to increase our provision for loan losses or
recognize loan charge-offs. Our allowance for loan losses
amounted to 31.9% of non-performing loans at June 30, 2010.
Our
Loans are Concentrated to Borrowers In Our Market Area, Which
Has Experienced an Economic Downturn, and That Has Adversely
Affected the Value of Collateral Securing our
Loans.
The preponderance of our total loans are to individuals
and/or
secured by properties located in our market area of the greater
Philadelphia metropolitan area and surrounding areas in
southeastern Pennsylvania and the contiguous counties in New
Jersey and Delaware. We have relatively few loans outside of our
market. As a result, we have a greater risk of loan defaults and
losses in the event of an economic downturn in our market area
as adverse economic changes may have a negative effect on the
ability of our borrowers to make timely repayment of their
loans. Beginning in 2008 and continuing in 2009 and 2010, our
market area has experienced a rise in unemployment as well as
certain declines in real estate values, both residential and
commercial. The decline in real estate values has adversely
affected the value of certain collateral securing loans in our
portfolio. Based on data obtained from the National Association
of Realtors, median single-family home prices in the
Philadelphia Metropolitan Statistical Area (MSA)
declined by 5.0% at June 30, 2010 compared to
December 31, 2007. In addition, we have seen an increased
amount of foreclosure activity in our market area. According to
data obtained from RealtyTrac, total foreclosure activity in
Delaware and Chester Counties, Pennsylvania, increased by
approximately 147% for the third quarter of 2010 compared to the
fourth quarter of 2007. Continuing increases in unemployment or
declines in collateral values could be a factor requiring us to
make additional provisions to the allowance for loan losses,
which would have a negative impact on net income. Additionally,
if we are required to liquidate a significant amount of
collateral during a period of reduced real estate values to
satisfy the debt, our earnings and capital could be adversely
affected.
Our
Non-Performing Assets Have Increased in Recent Periods and Have
Adversely Affected Our Results of Operations.
Our non-performing assets, which consist of non-accruing loans,
accruing loans 90 days or more past due and other real
estate owned and acquired by foreclosure or by accepting a
deed-in-lieu
of foreclosure (OREO), have increased in recent
periods, which has had a negative impact on our results of
operations. Our total non-performing assets increased to
$16.1 million, or 3.6% of total assets, at June 30,
2010 compared to $10.8 million and $7.0 million at
December 31, 2009 and 2008, respectively. In large part as
a result of the increases in our level of non-performing assets,
our provisions for loan losses, which are reflected as a charge
to earnings, amounted to $1.2 million for the six months
ended June 30, 2010 and $528,000 and $585,000 for the years
ended December 31, 2009 and 2008, respectively. If our
non-accruing loans at June 30, 2010 and at
December 31, 2009 and 2008 had been current in accordance
with their respective terms, we would have recorded an
additional $214,000, $199,000 and $226,000 in interest income
during the six months ended June 30, 2010 and the years
ended December 31, 2009 and 2008, respectively. In
addition, we recognized $135,000 and $107,000 in provisions for
losses on OREO during the six-months ended June 30, 2010
and the year ended December 31, 2009, respectively. Our
ability to manage and reduce the level of our non-performing
assets without incurring significant additional provisions for
loan losses or losses related to OREO is likely to bear a key
factor in our future results. No assurance can be given that we
will be able to reduce the level of our non-performing assets
without incurring additional provisions for loan losses or
losses related to OREO.
Our
Results of Operations are Significantly Dependent on Economic
Conditions and Related Uncertainties.
Banking is affected, directly and indirectly, by domestic and
international economic and political conditions and by
governmental monetary and fiscal policies. Conditions such as
inflation, recession, unemployment, volatile interest rates,
real estate values, government monetary policy, international
conflicts, the actions of terrorists and other factors beyond
our control may adversely affect our results of operations. As a
result of the downturn in the economy accompanying the national
recession, among other factors, we saw a
22
significant increase in delinquent and non-performing loans
during the first six months of 2010 and the years ended
December 31, 2009 and 2008 over the respective prior
periods as well as declines in property values of the collateral
securing loans we have made. The negative economic factors being
experienced in our market area could continue to have adverse
effects upon our operations. We are particularly sensitive to
changes in economic conditions and related uncertainties in
southeastern Pennsylvania because we derive substantially all of
our loans, deposits and other business from the greater
Philadelphia region in southeastern Pennsylvania and contiguous
counties in New Jersey and Delaware. Accordingly, we remain
subject to the risks associated with a continuing and prolonged
decline in the national or local economies. Changes in interest
rates also could adversely affect our net interest income and
have a number of other adverse effects on our operations, as
discussed further in the risk factors below.
Future
Changes in Interest Rates Could Reduce Our
Profits.
Our ability to make a profit largely depends on our net interest
income, which could be negatively affected by changes in
interest rates. 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 expense we pay on our interest-bearing liabilities,
such as deposits and borrowings.
|
As a result of our historical focus on one- to four-family
residential real estate loans, a substantial amount of our loans
have fixed interest rates. Additionally, many of our securities
investments have fixed interest rates. Like many savings
institutions, our focus on deposit accounts as a source of
funds, which have no stated maturity date or short contractual
maturities, results in our liabilities having a shorter duration
than our assets. For example, as of June 30, 2010, 69.2% of
our loans had contractual maturities of more than five years,
while 77.8% of our certificates of deposit had maturities of one
year or less. This imbalance can create significant earnings
volatility, because market interest rates change over time. In a
period of rising interest rates, the interest income earned on
our assets, such as loans and investments, may not increase as
rapidly as the interest paid on our liabilities, such as
deposits. In a period of declining interest rates, the interest
income earned on our assets may decrease more rapidly than the
interest paid on our liabilities, as borrowers prepay mortgage
loans, and mortgage-backed securities and callable investment
securities are called or prepaid, thereby requiring us to
reinvest these cash flows at lower interest rates. See
Managements Discussion and Analysis of Financial
Condition and Results of Operations Asset and
Liability Management.
Changes in interest rates create reinvestment risk, which is the
risk that we may not be able to reinvest prepayments at rates
that are comparable to the rates we earned on the prepaid loans
or securities in a declining interest rate environment.
Additionally, increases in interest rates may decrease loan
demand
and/or make
it more difficult for borrowers to repay adjustable-rate loans.
Changes in interest rates also affect the current fair value of
our interest-earning securities portfolio. Generally, the value
of securities moves inversely with changes in interest rates.
Any
Future Increases in Federal Deposit Insurance Corporation
Insurance Premiums or Special Assessments Will Adversely Impact
Our Earnings.
In May 2009, the Federal Deposit Insurance Corporation adopted a
final rule levying a five basis point special assessment on each
insured depository institution. We recorded an expense of
approximately $195,000 during the year ended December 31,
2009, to reflect the special assessment. Any further special
assessments that the Federal Deposit Insurance Corporation
levies will be recorded as an expense during the appropriate
period. In addition, the Federal Deposit Insurance Corporation
increased the general assessment rate and, therefore, our
Federal Deposit Insurance Corporation general insurance premium
expense has increased compared to prior periods.
The Federal Deposit Insurance Corporation also issued a final
rule pursuant to which all insured depository institutions were
required to prepay on December 30, 2009 their estimated
assessments for the fourth quarter of 2009, and for all of 2010,
2011 and 2012. We prepaid $2.3 million of our assessments
on December 30, 2009, based on our deposits and assessment
rate as of September 30, 2009. The prepaid balance
23
will be reduced by the actual expense for our quarterly
assessments, until the balance is exhausted. Depending on how
our actual assessments compare to the estimated assessments, the
prepaid balance may be exhausted earlier than or later than the
planned three year time period.
The
Requirement to Account for Certain Assets at Estimated Fair
Value, and a Proposal to Account for Additional Financial Assets
and Liabilities at Estimated Fair Value, May Adversely Affect
Our Stockholders Equity and Results of
Operations.
We report certain assets, including securities, at fair value,
and a recent proposal would require us to report nearly all of
our financial assets and liabilities at fair value. Generally,
for assets that are reported at fair value, we use quoted market
prices or valuation models that utilize observable market inputs
to estimate fair value. Because we carry these assets on our
books at their estimated fair value, we may incur losses even if
the asset in question presents minimal credit risk. Under
current accounting requirements, elevated delinquencies,
defaults, and estimated losses from the disposition of
collateral in our mortgage-backed securities portfolio may
require us to recognize additional
other-than-temporary
impairment in future periods with respect to our securities
portfolio. The amount and timing of any impairment recognized
will depend on the severity and duration of the decline in the
estimated fair value of the asset and our estimate of the
anticipated recovery period. Under proposed accounting
requirements, we may be required to record reductions in the
fair value of nearly all of our financial assets and liabilities
(including loans) either through a charge to net income or
through a reduction to accumulated other comprehensive income
(loss). Accordingly, we could be required to record charges on
assets such as loans where we have no intention to sell the loan
and expect to receive repayment in full on the loan. This could
result in a decrease in net income, or a decrease in our
stockholders equity, or both.
Strong
Competition Within Our Market Area Could Hurt our Profits and
Slow Growth.
We face intense competition both in making loans and attracting
deposits. This competition has made it more difficult for us to
make new loans and attract deposits. Price competition for loans
and deposits might result in us earning less on our loans and
paying more on our deposits, which would reduce net interest
income. Competition also makes it more difficult to maintain and
improve market share of loans and deposits. At June 30,
2009, which is the most recent date for which data is available
from the FDIC, we held approximately 3.2% of the deposits in
Delaware County, Pennsylvania and less than 1.0% of the deposits
in Chester County, Pennsylvania. Some 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. We expect continued strong competition in the
future. Our profitability depends upon our continued ability to
compete successfully in our market area.
We May
Not Succeed In Our Plan To Grow.
We intend to seek to either acquire other financial institutions
and/or
branch offices. Alliance Bank has never acquired another banking
institution and we cannot assure you that we will be able to
grow through acquisitions or, if we do, successfully integrate
other financial institutions or branch offices. Our ability to
successfully acquire other institutions depends on our ability
to identify, acquire and integrate such institutions into our
franchise. Currently, we have no agreements or understandings
with anyone regarding an acquisition. In addition to
acquisitions, we may seek to grow organically by opening new
branch offices. Our ability to establish new branch offices
depends on whether we can identify advantageous locations and
generate new deposits and loans from those locations that will
create an acceptable level of net income. New branches also
typically entail
start-up
expenses. We cannot assure you that we will be successful in our
plan to grow.
We
Have A Significant Deferred Tax Asset and Cannot Assure It Will
Be Fully Realized.
We had net deferred tax assets of $4.7 million as of
June 30, 2010. We did not establish a valuation allowance
against our federal net deferred tax assets as of June 30,
2010 as we believe that it is more likely than not that all of
these assets will be realized. In evaluating the need for a
valuation allowance, we estimated future taxable income based on
managements forecasts. This process required significant
judgment by
24
management about matters that are by nature uncertain. If future
events differ from our current forecasts, we may need to
establish a valuation allowance, which could have a material
adverse effect on our future results of operations and financial
condition.
We
Operate in a Highly Regulated Environment and We May Be
Adversely Affected By Changes in Laws and
Regulations.
Alliance Bank is subject to extensive regulation, supervision
and examination by the Pennsylvania Department of Banking and by
the Federal Deposit Insurance Corporation. Alliance
Bancorp New will be subject to regulation and
supervision by the Office of Thrift Supervision. Such regulation
and supervision governs the activities in which an institution
and its holding company may engage, and are intended primarily
for the protection of the insurance fund and the depositors and
borrowers of Alliance Bank rather than for holders of Alliance
Bancorp New common stock. Regulatory authorities
have extensive discretion in their supervisory and enforcement
activities, including the imposition of restrictions on our
operations, the classification of our assets and determination
of the level of our allowance for loan losses. Any change in
such regulation and oversight, whether in the form of regulatory
policy, regulations, legislation or supervisory action, may have
a material impact on our operations.
Recently
Enacted Regulatory Reform May Have a Material Impact on Our
Operations.
On July 21, 2010, the President signed into law the
Dodd-Frank Wall Street Reform and Consumer Protection Act that,
among other things, imposes new restrictions and an expanded
framework of regulatory oversight for financial institutions and
their holding companies, including Alliance Bank. Under the new
law, Alliance Bancorps primary regulator, the Office of
Thrift Supervision, will be eliminated. Savings and loan holding
companies will be regulated by the Federal Reserve Board, which
will have the authority to promulgate new regulations governing
Alliance Bancorp New that will impose additional
capital requirements and may result in additional restrictions
on investments and other holding company activities. The law
also creates a new consumer financial protection bureau that
will have the authority to promulgate rules intended to protect
consumers in the financial products and services market. The
creation of this independent bureau could result in new
regulatory requirements and raise the cost of regulatory
compliance. The federal preemption of state laws currently
accorded federally chartered financial institutions will be
reduced. In addition, regulation mandated by the new law could
require changes in regulatory capital requirements, loan loss
provisioning practices, and compensation practices which may
have a material impact on our operations. Because the
regulations under the new law have not been promulgated, we
cannot determine the full impact on our business and operations
at this time. See Regulation Recently Enacted
Regulatory Reform.
We
depend on the skills and performance of
management.
We depend heavily on our management team to provide leadership
and to implement our strategic plan. Our senior management team
provides valuable financial expertise and administrative
guidance. The loss of any member of our senior management team
could impair our ability to succeed. We can give no assurances,
however, that these executive officers will continue in their
capacities for any specific periods of time. The loss of
services of any member of our senior management team may make it
difficult for us to implement our business strategy and obtain
and retain customers. It may be difficult to replace any senior
management team member, and, upon the loss of any senior
officer, we would lose the benefit of the knowledge he or she
gained during his or her tenure with us.
If Our
Investment in the Common Stock of the Federal Home Loan Bank of
Pittsburgh is Classified as
Other-Than-Temporarily
Impaired or as Permanently Impaired, Our Earnings and
Stockholders Equity Could Decrease.
We own common stock of the Federal Home Loan Bank of Pittsburgh.
We hold this stock to qualify for membership in the Federal Home
Loan Bank System and to be eligible to borrow funds under the
Federal Home Loan Bank of Pittsburghs advance program. The
aggregate cost and fair value of our Federal Home
25
Loan Bank of Pittsburgh common stock as of June 30, 2010
was $2.4 million based on its par value. There is no market
for our Federal Home Loan Bank of Pittsburgh common stock.
Published reports indicate that certain member banks of the
Federal Home Loan Bank System may be subject to accounting rules
and asset quality risks that could result in materially lower
regulatory capital levels. In an extreme situation, it is
possible that the capital of a Federal Home Loan Bank, including
the Federal Home Loan Bank of Pittsburgh, could be substantially
diminished or reduced to zero. In December of 2008, the FHLB
notified member banks that it was suspending dividend payments
and the repurchase of capital stock. Consequently, we believe
that there is a risk that our investment in Federal Home Loan
Bank of Pittsburgh common stock could be impaired at some time
in the future, and if this occurs, it would cause our earnings
and stockholders equity to decrease by the after-tax
amount of the impairment charge. In addition, while we recently
have repaid all of our remaining advances from the Federal Home
Loan Bank of Pittsburgh, we have used the FHLB as a relatively
low costing source of funds in the past and expect that we may
do so again in the future. In the event that the financial
position of the FHLB of Pittsburgh continues to deteriorate, it
may cease to be a readily available or cost effective source of
funds for our operations. In such case, we would be required to
utilize other sources of funds, which may prove to be more
costly or which may impose borrowing requirements that may be
disadvantageous when compared to the loan products typically
provided by the Federal Home Loan Bank of Pittsburgh.
Risks
Related to this Offering
Our
Stock Price May Decline When Trading Commences.
We cannot guarantee that if you purchase shares in the offering
that you will be able to sell them at or above the $10.00
purchase price. The trading price of the common stock will be
determined by the marketplace, and will be influenced by many
factors outside of our control, including prevailing interest
rates, investor perceptions, securities analyst research reports
and general industry, geopolitical and economic conditions.
Publicly traded stocks, including stocks of financial
institutions, often experience substantial market price
volatility. These market fluctuations might not be related to
the operating performance of particular companies whose shares
are traded.
There
May Be a Limited Market For Our Common Stock, Which May
Adversely Affect Our Stock Price.
Currently, shares of Alliance Bancorp common stock are listed on
the Nasdaq Global Market. Since Alliance Bank common stock began
trading in 1995, trading in our shares has been relatively
limited. There is no guarantee that the offering will improve
the liquidity of our stock. If an active trading market for our
common stock does not develop, you may not be able to sell all
of your shares of common stock in an efficient manner and the
sale of a large number of shares at one time could temporarily
depress the market price. There also may be a wide spread
between the bid and asked price for our common stock. When there
is a wide spread between the bid and asked price, the price at
which you may be able to sell our common stock may be
significantly lower than the price at which you could buy it at
that time.
Our
Share Price Will Fluctuate.
The market price of our common stock could be subject to
significant fluctuations due to changes in sentiment in the
market regarding our operations or business prospects. Factors
that may affect market sentiment include:
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operating results that vary from the expectations of our
management or of securities analysts and investors;
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developments in our business or in the financial service sector
generally;
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regulatory or legislative changes affecting our industry
generally or our business and operations;
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operating and securities price performance of companies that
investors consider to be comparable to us;
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changes in estimates or recommendations by securities analysts;
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26
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announcements of strategic developments, acquisitions,
dispositions, financings and other material events by us or our
competitors; and
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changes in financial markets and national and local economies
and general market conditions, such as interest rates and stock,
commodity, credit or asset valuations or volatility.
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Beginning in 2008 and through the present, the business
environment for financial services firms has been extremely
challenging. During this period many publicly traded financial
services companies have experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate
to the operating performance or prospects of such companies. We
may experience market fluctuations that are not directly related
to our operating performance but are influenced by the
markets perception of the state of the financial services
industry in general and, in particular, the markets
assessment of general credit quality conditions, including
default and foreclosure rates in the industry.
While the U.S. and other governments continue efforts to
restore confidence in financial markets and promote economic
growth, we cannot assure you that further market and economic
turmoil will not occur in the near- or long-term, negatively
affecting our business, financial condition and results of
operations, as well as the price, trading volume and volatility
of our common stock.
Additional
Expenses Following the Offering From New Equity Benefit Plans
Will Adversely Affect Our Net Income.
Following the offering, we will recognize additional annual
employee compensation and benefit expenses stemming from options
and shares granted to employees, directors and executives under
new benefit plans. These additional expenses will adversely
affect our net income. We cannot determine the actual amount of
these new stock-related compensation and benefit expenses at
this time because applicable accounting practices generally
require that they be based on the fair market value of the
options or shares of common stock at the date of the grant;
however, we expect them to be significant. We will recognize
expenses for our employee stock ownership plan when shares are
committed to be released to participants accounts and will
recognize expenses for restricted stock awards and stock options
generally over the vesting period of awards made to recipients.
These benefit expenses in the first year following the offering
have been estimated to be approximately $575,000 at the maximum
of the offering range as set forth in the pro forma financial
information under Pro Forma Data assuming the $10.00
per share purchase price as fair market value. Actual expenses,
however, may be higher or lower, depending on the price of our
common stock at that time. For further discussion of these
plans, see Management-New Stock Benefit Plans.
Our
Return on Equity May Negatively Impact Our Stock
Price.
Return on equity, which equals net income divided by average
equity, is a ratio used by many investors to compare the
performance of a particular company with other companies. Our
return on equity was 2.97% and 1.21% for the years ended
December 31, 2009 and 2008, respectively, and on an
annualized basis, was 1.09% for the six months ended
June 30, 2010. These returns are lower than returns on
equity for many comparable publicly traded financial
institutions. We expect our return on equity ratio will not
increase substantially, due in part to our increased capital
level upon completion of the offering. Consequently, you should
not expect a competitive return on equity in the near future.
Failure to attain a competitive return on equity ratio may make
an investment in our common stock unattractive to some investors
which might cause our common stock to trade at lower prices than
comparable companies with higher returns on equity. The net
proceeds from the stock offering, which may be as much as
$38.1 million, will significantly increase our
stockholders equity. On a pro forma basis and based on net
income for the six months ended June 30, 2010, our
annualized return on equity ratio, assuming shares are sold at
the maximum of the offering range, would be approximately 0.27%.
Based on trailing
12-month
data for the most recent publicly available financial
information (as of March 31 or June 30, 2010), the ten
companies comprising our peer group in the independent appraisal
prepared by RP Financial and all publicly traded mutual holding
companies had average ratios of returns on equity of 4.90% and
-0.01%, respectively.
27
We
Have Broad Discretion in Allocating the Proceeds of the
Offering. Our Failure to Effectively Utilize Such Proceeds Would
Reduce Our Profitability.
We intend to contribute approximately 50% of the net proceeds of
the offering to Alliance Bank. Alliance Bancorp may use the
portion of the proceeds that it retains to, among other things,
invest in securities, pay cash dividends or repurchase shares of
common stock, subject to regulatory restriction. Alliance Bank
initially intends to use the net proceeds it retains to purchase
investment and mortgage-backed securities. In the future,
Alliance Bank may use the portion of the proceeds that it
receives to fund new loans, open new branches, invest in
securities and expand its business activities. Alliance Bancorp
and Alliance Bank may also use the proceeds of the offering to
diversify their business and acquire other companies, although
we have no specific plans to do so at this time. We have not
allocated specific amounts of proceeds for any of these
purposes, and we will have significant flexibility in
determining how much of the net proceeds we apply to different
uses and the timing of such applications. There is a risk that
we may fail to effectively use the net proceeds which could have
a negative effect on our future profitability.
Our
Employee Stock Benefit Plans Will Be Dilutive.
If the offering is completed and shareholders subsequently
approve a stock recognition and retention plan and a stock
option plan, we will allocate stock to our officers, employees
and directors through these plans. If the shares for the stock
recognition and retention plan are issued from our authorized
but unissued stock, the ownership percentage of outstanding
shares of Alliance Bancorp would be diluted by approximately
3.85%. However, it is our intention to purchase shares of our
common stock in the open market to fund the stock recognition
and retention plan. Assuming the shares of our common stock to
be awarded under the stock recognition and retention plan are
purchased at a price equal to the offering price in the
offering, the reduction to stockholders equity from the
stock recognition and retention plan would be between
$1.8 million and $2.8 million at the minimum and the
maximum, as adjusted, of the offering range. The ownership
percentage of Alliance Bancorps public shareholders (those
shareholders other than Alliance Mutual Holding Company) would
also decrease by approximately 5.62% if all potential stock
options under our proposed stock option plan are exercised and
are filled using shares issued from authorized but unissued
stock, assuming the offering closes at the maximum of the
offering range. On a combined basis, if authorized but unissued
shares of our common stock was the source of shares for both the
recognition and retention plan and the stock option plan, the
interests of public shareholders would be diluted by
approximately 9.05%. See Pro Forma Data for data on
the dilutive effect of the stock recognition and retention plan
and the stock option plan and Management New
Stock Benefit Plans for a description of the plans.
We
Intend to Remain Independent Which May Mean You Will Not Receive
a Premium for Your Common Stock.
We intend to remain independent for the foreseeable future.
Because we do not plan on seeking possible acquirors, it is
unlikely that we will be acquired in the foreseeable future.
Accordingly, you should not purchase our common stock with any
expectation that a takeover premium will be paid to you in the
near term.
Our
Stock Value May Suffer from Anti-Takeover Provisions That May
Impede Potential Takeovers That Management
Opposes.
Provisions in our corporate documents, as well as certain
federal regulations, may make it difficult and expensive to
pursue a tender offer, change in control or takeover attempt
that our board of directors opposes. As a result, our
shareholders may not have an opportunity to participate in such
a transaction, and the trading price of our stock may not rise
to the level of other institutions that are more vulnerable to
hostile takeovers. Anti-takeover provisions contained in our
corporate documents include:
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restrictions on acquiring more than 10% of our common stock by
any person and limitations on voting rights for positions of
more than 10%;
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the election of members of the board of directors to staggered
three-year terms;
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28
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the absence of cumulative voting by shareholders in the election
of directors;
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provisions restricting the calling of special meetings of
shareholders;
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advance notice requirements for shareholder nominations and new
business;
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removals of directors only for cause and by a majority vote of
all shareholders;
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requirement of a 75% vote of shareholders for certain amendments
to the bylaws and certain provisions of the articles of
incorporation;
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a 75% vote requirement for the approval of certain business
combinations not approved by two-thirds of our board of
directors; and
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our ability to issue preferred stock and additional shares of
common stock without shareholder approval.
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See Restrictions on Acquisitions of Alliance
Bancorp New and Alliance Bank and Related
Anti-Takeover Provisions for a description of
anti-takeover provisions in our corporate documents and federal
regulations.
Our
Stock Value May Suffer From Federal Regulations Restricting
Takeovers.
For three years following the offering, Office of Thrift
Supervision regulations prohibit any person from acquiring or
offering to acquire more than 10% of our common stock without
the prior written approval of the Office of Thrift Supervision.
Accordingly, the range of potential acquirors for Alliance
Bancorp New will be limited which will
correspondingly reduce the likelihood that shareholders will be
able to realize a gain on their investment through an
acquisition of Alliance Bancorp New. See
Restrictions on Acquisitions of Alliance
Bancorp New and Alliance Bank and Related
Anti-Takeover Provisions Regulatory
Restrictions for a discussion of applicable Office of
Thrift Supervision regulations regarding acquisitions.
29
SELECTED
CONSOLIDATED FINANCIAL AND OTHER DATA
The following tables contain certain information concerning the
financial position and results of operations of Alliance
Bancorp. You should read this information in conjunction with
the financial statements included in this prospectus. The data
presented as of and for the years ended December 31, 2009
and 2008 has been derived in part from the audited financial
statements included in this prospectus. The data presented at
June 30, 2010 and for the six month periods ended
June 30, 2010 and 2009 are derived from unaudited condensed
consolidated financial statements, but in the opinion of
management reflect all adjustments necessary to present fairly
the results for these interim periods. The adjustments consist
only of normal recurring adjustments. The results of operations
for the six months ended June 30, 2010 are not necessarily
indicative of the results of operations that may be expected for
the year ending December 31, 2010 or for any other period.
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At June 30,
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At December 31,
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2010
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2009
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2008
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2007
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2006
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2005
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(Unaudited)
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(Dollars in thousands, except per share amounts)
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Selected Financial Condition Data
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Total assets
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$
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448,446
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$
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464,216
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$
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424,109
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$
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424,467
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$
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410,350
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$
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389,035
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Cash and cash equivalents
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66,456
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74,936
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28,308
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42,079
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48,283
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20,956
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Loans receivable, net
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283,020
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285,008
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278,436
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256,932
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235,761
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224,294
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Mortgage-backed securities
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19,551
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23,355
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31,921
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35,632
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43,636
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48,362
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Investment securities
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50,291
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52,336
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62,070
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67,861
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59,305
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72,079
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Other real estate owned
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3,026
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2,968
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1,795
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Deposits
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381,210
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375,254
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327,267
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327,772
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330,083
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293,699
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Borrowings(1)
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13,112
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35,090
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41,632
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40,058
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40,891
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56,512
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Stockholders equity
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48,567
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48,445
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48,899
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51,458
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33,500
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34,127
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Non-performing assets(2)
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16,150
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10,805
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6,996
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2,097
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1,559
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3,735
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For the Six Months
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Ended June 30,
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For the Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Unaudited)
|
|
|
(Dollars in thousands, except per share amounts)
|
|
|
Selected Operating Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend income
|
|
$
|
10,132
|
|
|
$
|
10,604
|
|
|
$
|
21,091
|
|
|
$
|
22,542
|
|
|
$
|
24,340
|
|
|
$
|
21,752
|
|
|
$
|
19,883
|
|
Interest expense
|
|
|
3,787
|
|
|
|
4,983
|
|
|
|
9,509
|
|
|
|
11,701
|
|
|
|
13,999
|
|
|
|
11,331
|
|
|
|
8,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
6,345
|
|
|
|
5,621
|
|
|
|
11,582
|
|
|
|
10,841
|
|
|
|
10,341
|
|
|
|
10,421
|
|
|
|
10,976
|
|
Provision for loan losses
|
|
|
1,170
|
|
|
|
150
|
|
|
|
528
|
|
|
|
585
|
|
|
|
120
|
|
|
|
60
|
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses
|
|
|
5,175
|
|
|
|
5,471
|
|
|
|
11,054
|
|
|
|
10,256
|
|
|
|
10,221
|
|
|
|
10,361
|
|
|
|
10,856
|
|
Other income
|
|
|
559
|
|
|
|
590
|
|
|
|
1,164
|
|
|
|
241
|
|
|
|
484
|
|
|
|
1,452
|
|
|
|
1,133
|
|
Other expenses
|
|
|
5,674
|
|
|
|
5,495
|
|
|
|
10,900
|
|
|
|
10,303
|
|
|
|
9,807
|
|
|
|
10,509
|
|
|
|
10,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
60
|
|
|
|
566
|
|
|
|
1,318
|
|
|
|
194
|
|
|
|
898
|
|
|
|
1,304
|
|
|
|
1,017
|
|
Income tax benefit
|
|
|
(205
|
)
|
|
|
(59
|
)
|
|
|
(41
|
)
|
|
|
(411
|
)
|
|
|
(157
|
)
|
|
|
(67
|
)
|
|
|
(157
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
265
|
|
|
$
|
625
|
|
|
$
|
1,359
|
|
|
$
|
605
|
|
|
$
|
1,055
|
|
|
$
|
1,371
|
|
|
$
|
1,174
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share(3)
|
|
$
|
0.04
|
|
|
$
|
0.09
|
|
|
$
|
0.20
|
|
|
$
|
0.09
|
|
|
$
|
0.15
|
|
|
$
|
0.19
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Footnotes on following page)
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or for
|
|
|
|
|
the Six Months
|
|
|
|
|
Ended June 30,
|
|
At or for the Year Ended December 31,
|
|
|
2010
|
|
2009
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Selected Operating Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
|
0.11
|
%
|
|
|
0.30
|
%
|
|
|
0.30
|
%
|
|
|
0.14
|
%
|
|
|
0.25
|
%
|
|
|
0.35
|
%
|
|
|
0.30
|
%
|
Return on average equity
|
|
|
1.09
|
|
|
|
2.55
|
|
|
|
2.97
|
|
|
|
1.21
|
|
|
|
2.18
|
|
|
|
4.05
|
|
|
|
3.39
|
|
Average yield earned on interest- earning assets
|
|
|
4.62
|
|
|
|
5.27
|
|
|
|
5.08
|
|
|
|
5.64
|
|
|
|
6.12
|
|
|
|
5.89
|
|
|
|
5.43
|
|
Average rate paid on interest-bearing liabilities
|
|
|
1.91
|
|
|
|
2.78
|
|
|
|
2.57
|
|
|
|
3.32
|
|
|
|
4.03
|
|
|
|
3.39
|
|
|
|
2.69
|
|
Average interest rate spread(4)
|
|
|
2.71
|
|
|
|
2.49
|
|
|
|
2.51
|
|
|
|
2.32
|
|
|
|
2.09
|
|
|
|
2.50
|
|
|
|
2.74
|
|
Net interest margin(4)
|
|
|
2.89
|
|
|
|
2.80
|
|
|
|
2.79
|
|
|
|
2.72
|
|
|
|
2.60
|
|
|
|
2.82
|
|
|
|
3.00
|
|
Interest-earning assets to interest-bearing liabilities
|
|
|
110.75
|
|
|
|
112.23
|
|
|
|
111.98
|
|
|
|
113.54
|
|
|
|
114.54
|
|
|
|
110.66
|
|
|
|
110.74
|
|
Other expense as a percent of average assets
|
|
|
2.43
|
|
|
|
2.56
|
|
|
|
2.47
|
|
|
|
2.44
|
|
|
|
2.33
|
|
|
|
2.69
|
|
|
|
2.89
|
|
Dividend payout ratio(5)
|
|
|
62.26
|
|
|
|
28.32
|
|
|
|
25.59
|
|
|
|
122.91
|
|
|
|
58.56
|
|
|
|
90.39
|
|
|
|
105.54
|
|
Efficiency ratio(6)
|
|
|
82.18
|
|
|
|
88.47
|
|
|
|
85.52
|
|
|
|
92.97
|
|
|
|
90.60
|
|
|
|
88.51
|
|
|
|
90.61
|
|
Full-service offices at end of period
|
|
|
9
|
|
|
|
9
|
|
|
|
9
|
|
|
|
9
|
|
|
|
9
|
|
|
|
9
|
|
|
|
8
|
|
Asset Quality Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming loans as a percent of total loans receivable(2)
|
|
|
4.57
|
%
|
|
|
3.21
|
%
|
|
|
2.71
|
%
|
|
|
2.48
|
%
|
|
|
0.81
|
%
|
|
|
0.65
|
%
|
|
|
0.85
|
%
|
Nonperforming assets as a percent of total assets(2)
|
|
|
3.60
|
|
|
|
2.57
|
|
|
|
2.33
|
|
|
|
1.65
|
|
|
|
0.49
|
|
|
|
0.38
|
|
|
|
0.96
|
|
Allowance for loan losses as a percent of total loans receivable
|
|
|
1.46
|
|
|
|
1.15
|
|
|
|
1.23
|
|
|
|
1.13
|
|
|
|
1.09
|
|
|
|
1.14
|
|
|
|
1.18
|
|
Allowance for loan losses as a percent of nonperforming loans
|
|
|
31.89
|
|
|
|
35.71
|
|
|
|
45.14
|
|
|
|
45.30
|
|
|
|
135.00
|
|
|
|
174.39
|
|
|
|
137.63
|
|
Net charge-offs to average loans receivable outstanding during
the period
|
|
|
0.18
|
|
|
|
0.02
|
|
|
|
0.06
|
|
|
|
0.09
|
|
|
|
|
|
|
|
0.01
|
|
|
|
0.03
|
|
Provision for loan losses to net charge-offs
|
|
|
2.24
|
x
|
|
|
2.42
|
x
|
|
|
3.32
|
x
|
|
|
2.37
|
x
|
|
|
13.33
|
x
|
|
|
5.45
|
x
|
|
|
2.11
|
x
|
Capital Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average equity to average assets
|
|
|
10.46
|
%
|
|
|
11.43
|
%
|
|
|
11.08
|
%
|
|
|
11.79
|
%
|
|
|
11.52
|
%
|
|
|
8.68
|
%
|
|
|
8.94
|
%
|
Tier 1 risk-based capital ratio(7)
|
|
|
16.06
|
|
|
|
16.32
|
|
|
|
15.97
|
|
|
|
16.33
|
|
|
|
16.35
|
|
|
|
14.05
|
|
|
|
14.92
|
|
Total risk-based capital ratio(7)
|
|
|
17.32
|
|
|
|
17.47
|
|
|
|
17.17
|
|
|
|
17.47
|
|
|
|
17.38
|
|
|
|
15.12
|
|
|
|
16.06
|
|
Tier 1 leverage capital ratio(7)
|
|
|
10.05
|
|
|
|
10.65
|
|
|
|
10.17
|
|
|
|
10.67
|
|
|
|
10.52
|
|
|
|
8.98
|
|
|
|
9.02
|
|
|
|
|
(1)
|
|
Borrowings consist of Federal Home
Loan Bank (FHLB) advances, demand notes issued to
the U.S. Treasury, the Employee Stock Ownership Plan
(ESOP) debt and customer sweep accounts.
|
|
(2)
|
|
Nonperforming assets consist of
nonperforming loans, troubled debt restructurings and other real
estate owned (OREO). Nonperforming loans consist of
nonaccrual loans and accruing loans 90 days or more
overdue, while OREO consists of real estate acquired through, or
in lieu of, foreclosure.
|
|
(3)
|
|
The calculation of earnings per
share for 2005 and 2006 has been adjusted for the exchange and
additional share issuance in the reorganization and offering
completed on January 30, 2007
|
|
(4)
|
|
Interest rate spread represents the
difference between the weighted average yield on
interest-earning assets and the weighted average cost of
interest-bearing liabilities, and net interest margin represents
net interest income as a percentage of average interest-earning
assets.
|
|
(5)
|
|
Based on dividends paid on
outstanding shares. For all periods subsequent to
December 31, 2006, excludes the effect of dividends
declared on shares owned by Alliance Mutual Holding Company, as
Alliance Mutual Holding Company waived the receipt of dividends.
|
|
(6)
|
|
The efficiency ratio is calculated
by dividing other expenses by the sum of net interest income and
other income.
|
|
(7)
|
|
For Alliance Bank only.
|
31
RECENT
DEVELOPMENTS OF ALLIANCE BANCORP
The following tables contain certain information concerning the
financial position and results of operations of Alliance Bancorp
at and for the three months and nine months ended
September 30, 2010 as well as the prior comparison periods.
You should read this information in conjunction with the audited
financial statements included in this prospectus. The financial
information at September 30, 2010 and for the three months
and nine months ended September 30, 2010 and 2009 are
unaudited and are derived from our interim condensed
consolidated financial statements. The financial condition data
at December 31, 2009 is derived from Alliance
Bancorps audited consolidated financial statements. In the
opinion of management, financial information at
September 30, 2010 and for the three months and nine months
ended September 30, 2010 and 2009 reflect all adjustments,
consisting only of normal recurring accruals, which are
necessary to present fairly the results for such periods.
Results for the three-month and nine-month periods ended
September 30, 2010 may not be indicative of operations
of Alliance Bancorp for the year ending December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30,
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
At December 31, 2009
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
Selected Financial Condition Data
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
435,854
|
|
|
$
|
464,216
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
55,688
|
|
|
|
74,936
|
|
|
|
|
|
Loans receivable, net
|
|
|
285,322
|
|
|
|
285,008
|
|
|
|
|
|
Mortgage-backed securities
|
|
|
17,804
|
|
|
|
23,355
|
|
|
|
|
|
Investment securities
|
|
|
47,713
|
|
|
|
52,336
|
|
|
|
|
|
Other real estate owned
|
|
|
3,122
|
|
|
|
2,968
|
|
|
|
|
|
Deposits
|
|
|
373,848
|
|
|
|
375,254
|
|
|
|
|
|
Borrowings(1)
|
|
|
7,938
|
|
|
|
35,090
|
|
|
|
|
|
Stockholders equity
|
|
|
48,474
|
|
|
|
48,445
|
|
|
|
|
|
Non-performing assets(2)
|
|
|
16,596
|
|
|
|
10,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
|
For the Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
(Dollars in thousands, except per share amounts)
|
|
|
Selected Operating Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend income
|
|
$
|
4,917
|
|
|
$
|
5,265
|
|
|
$
|
15,050
|
|
|
$
|
15,869
|
|
Interest expense
|
|
|
1,369
|
|
|
|
2,290
|
|
|
|
5,156
|
|
|
|
7,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
3,548
|
|
|
|
2,975
|
|
|
|
9,894
|
|
|
|
8,596
|
|
Provision for loan losses
|
|
|
750
|
|
|
|
75
|
|
|
|
1,920
|
|
|
|
225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income after provision for loan losses
|
|
|
2,798
|
|
|
|
2,900
|
|
|
|
7,974
|
|
|
|
8,371
|
|
Other income
|
|
|
282
|
|
|
|
309
|
|
|
|
840
|
|
|
|
899
|
|
Other expenses
|
|
|
2,925
|
|
|
|
2,695
|
|
|
|
8,599
|
|
|
|
8,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax (benefit) expense
|
|
|
155
|
|
|
|
514
|
|
|
|
215
|
|
|
|
1,080
|
|
Income tax (benefit) expense
|
|
|
(54
|
)
|
|
|
55
|
|
|
|
(259
|
)
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
209
|
|
|
$
|
459
|
|
|
$
|
474
|
|
|
$
|
1,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.03
|
|
|
$
|
0.07
|
|
|
$
|
0.07
|
|
|
$
|
0.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Footnotes on next page)
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or For
|
|
|
At or For
|
|
|
|
the Three Months Ended
|
|
|
the Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
Selected Operating Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
|
|
|
0.19
|
%
|
|
|
0.41
|
%
|
|
|
0.14
|
%
|
|
|
0.33
|
%
|
Return on average equity
|
|
|
1.71
|
|
|
|
3.77
|
|
|
|
1.29
|
|
|
|
2.96
|
|
Average yield earned on interest-earning assets
|
|
|
4.74
|
|
|
|
5.03
|
|
|
|
4.66
|
|
|
|
5.19
|
|
Average rate paid on interest-bearing liabilities
|
|
|
1.46
|
|
|
|
2.44
|
|
|
|
1.77
|
|
|
|
2.66
|
|
Average interest rate spread(3)
|
|
|
3.28
|
|
|
|
2.59
|
|
|
|
2.89
|
|
|
|
2.53
|
|
Net interest margin(3)
|
|
|
3.42
|
|
|
|
2.84
|
|
|
|
3.06
|
|
|
|
2.81
|
|
Interest-earning assets to interest-bearing liabilities
|
|
|
110.31
|
|
|
|
111.56
|
|
|
|
110.60
|
|
|
|
112.00
|
|
Other expense as a percent of average assets
|
|
|
2.64
|
|
|
|
2.42
|
|
|
|
2.50
|
|
|
|
2.51
|
|
Dividend payout ratio(4)
|
|
|
39.2
|
|
|
|
18.7
|
|
|
|
52.1
|
|
|
|
24.3
|
|
Efficiency ratio(5)
|
|
|
76.4
|
|
|
|
82.1
|
|
|
|
80.1
|
|
|
|
86.3
|
|
Full-service offices at end of period
|
|
|
9
|
|
|
|
9
|
|
|
|
9
|
|
|
|
9
|
|
Asset Quality Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming loans as a percent of total loans receivable(2)
|
|
|
4.64
|
%
|
|
|
2.76
|
%
|
|
|
4.64
|
%
|
|
|
2.76
|
%
|
Nonperforming assets as a percent of total assets(2)
|
|
|
3.81
|
|
|
|
2.37
|
|
|
|
3.81
|
|
|
|
2.37
|
|
Allowance for loan losses as a percent of total loans receivable
|
|
|
1.68
|
|
|
|
1.14
|
|
|
|
1.68
|
|
|
|
1.14
|
|
Allowance for loan losses as a percent of nonperforming loans
|
|
|
36.18
|
|
|
|
41.30
|
|
|
|
36.18
|
|
|
|
41.30
|
|
Net charge-offs to average loans receivable outstanding during
the period
|
|
|
0.02
|
|
|
|
0.03
|
|
|
|
2.02
|
|
|
|
0.06
|
|
Provision for loan losses to net charge-offs
|
|
|
12.50
|
x
|
|
|
0.76
|
x
|
|
|
3.30
|
x
|
|
|
1.41
|
x
|
Capital Ratios
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average equity to average assets
|
|
|
11.04
|
%
|
|
|
10.92
|
%
|
|
|
10.65
|
%
|
|
|
11.26
|
%
|
Tier 1 risk-based capital ratio(6)
|
|
|
16.09
|
|
|
|
16.23
|
|
|
|
16.09
|
|
|
|
16.23
|
|
Total risk-based capital ratio(6)
|
|
|
17.34
|
|
|
|
17.35
|
|
|
|
17.34
|
|
|
|
17.35
|
|
Tier 1 leverage capital ratio(6)
|
|
|
10.70
|
|
|
|
10.43
|
|
|
|
10.70
|
|
|
|
10.43
|
|
|
|
|
(1)
|
|
Borrowings consist of demand notes
issued to the U.S. Treasury, the Employee Stock Ownership Plan
(ESOP) debt, customer sweep accounts and, at
December 31, 2009, advances from the Federal Home Loan Bank
(FHLB) of Pittsburgh.
|
|
(2)
|
|
Nonperforming assets consist of
nonperforming loans, troubled debt restructurings and other real
estate owned (OREO). Nonperforming loans consist of
nonaccrual loans and accruing loans 90 days or more
overdue, while OREO consists of real estate acquired through, or
in lieu of, foreclosure.
|
|
(3)
|
|
Interest rate spread represents the
difference between the weighted average yield on
interest-earning assets and the weighted average cost of
interest-bearing liabilities, and net interest margin represents
net interest income as a percentage of average interest-earning
assets.
|
|
(4)
|
|
Based on dividends paid on
outstanding shares. Excludes the effect of dividends declared on
shares owned by Alliance Mutual Holding Company, as Alliance
Mutual Holding Company waived the receipt of dividends.
|
|
(5)
|
|
The efficiency ratio is calculated
by dividing other expenses by the sum of net interest income and
other income.
|
|
(6)
|
|
For Alliance Bank only.
|
Comparison
of Financial Condition at September 30, 2010 and
December 31, 2009
Total assets decreased $28.4 million or 6.1% to
$435.9 million at September 30, 2010 compared to
$464.2 million at December 31, 2009. This decrease was
primarily due to a $19.2 million or 25.7% decrease in total
cash and cash equivalents, a $5.6 million or 23.8% decrease
in mortgage-backed securities available for sale, a
$3.7 million or 12.8% decrease in investment securities
available for sale, and a $916,000 or 3.9% decrease in
securities held to maturity. The decrease in total cash and cash
equivalents during the first nine months of 2010 was primarily
due to our use of such funds to repay maturing FHLB advances.
The decrease in mortgage-backed securities available for sale
was due to normal monthly repayments and the absence of any new
purchases of such securities in the 2010 period. The decrease in
investment securities available for
33
sale was due to increased amounts of such securities being
called by the issuers, which was partially offset by new
purchases of such securities during the 2010 period. Given
the low interest-rate environment, we have reduced our purchases
of investment securities and mortgage-backed securities in
recent periods.
Total liabilities decreased $28.4 million or 6.8% to
$387.4 million at September 30, 2010 compared to
$415.8 million at December 31, 2009. This decrease was
due primarily to a $32.0 million reduction in FHLB
advances, as all remaining FHLB advances matured and were repaid
during the nine months ended September 30, 2010, which was
partially offset by a $4.8 million or 156.9% increase in
other borrowed money at September 30, 2010 compared to
December 31, 2009. Total customer deposits decreased by
$1.4 million or 0.4% to $373.8 million at
September 30, 2010 compared to $375.3 million at
December 31, 2009.
Stockholders equity increased $29,000 to
$48.5 million, or 11.1% of total assets, as of
September 30, 2010 compared to $48.4 million at
December 31, 2009. The increase was primarily due to a
$183,000 reduction in accumulated other comprehensive loss and a
$227,000 increase in retained earnings. These items were
partially offset by a $437,000 increase in treasury stock.
Nonperforming assets, which consist of nonaccruing loans,
accruing loans 90 days or more delinquent and other real
estate owned (OREO) (which includes real estate
acquired through, or in lieu of, foreclosure) amounted to
$16.6 million or 3.81% of total assets at
September 30, 2010 compared to $16.2 million or 3.60%
of total assets at June 30, 2010 and $10.8 million or
2.33% of total assets at December 31, 2009. Total
nonperforming assets increased by $447,000 during the quarter
ended September 30, 2010 due primarily to a $260,000
increase in non-accruing commercial real estate loans.
The following table sets forth the amounts and categories of our
non-performing assets at the dates indicated. All troubled debt
restructurings at the dates indicated are included in
non-accruing loans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2010
|
|
|
2009
|
|
|
|
(Dollars in thousands)
|
|
|
Non-accruing loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family
|
|
$
|
75
|
|
|
$
|
76
|
|
|
$
|
479
|
|
Multi-family
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
1,623
|
|
|
|
1,363
|
|
|
|
1,778
|
|
Land and construction
|
|
|
9,874
|
|
|
|
9,767
|
|
|
|
3,728
|
|
Commercial business
|
|
|
73
|
|
|
|
74
|
|
|
|
472
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-accruing loans
|
|
|
11,645
|
|
|
|
11,280
|
|
|
|
6,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accruing loans 90 days or more delinquent:
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family residential real estate
|
|
|
1,564
|
|
|
|
1,638
|
|
|
|
1,227
|
|
Consumer
|
|
|
265
|
|
|
|
206
|
|
|
|
153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accruing loans 90 days or more delinquent
|
|
|
1,829
|
|
|
|
1,844
|
|
|
|
1,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing loans
|
|
|
13,474
|
|
|
|
13,124
|
|
|
|
7,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate owned
|
|
|
3,122
|
|
|
|
3,026
|
|
|
|
2,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing assets
|
|
$
|
16,596
|
|
|
$
|
16,150
|
|
|
$
|
10,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparison
of Results of Operations for the Three and Nine Months ended
September 30, 2010 and September 30, 2009
General. Net income decreased $250,000 or
54.4% to $209,000 or $0.03 per share for the three months ended
September 30, 2010 compared to net income of $459,000 or
$0.07 per share for the same period in 2009. The decrease in net
income was primarily due to a $675,000 increase in provision for
loan losses and a
34
$230,000 increase in other expenses for the three months ended
September 30, 2010 compared to the three months ended
September 30, 2009 which more than offset a $573,000
increase in net interest income.
Net income decreased $610,000 or 56.3% to $474,000 or $0.07 per
share for the nine months ended September 30, 2010 compared
to net income of $1.1 million or $0.16 per share for the
same period in 2009. Increases in the provision for loan losses
and in other expenses more than offset an increase in net
interest income.
Net Interest Income. Net interest income is
determined by the interest rate spread (i.e., the difference
between the yields earned on its interest-earning assets and the
rates paid on its interest-bearing liabilities) and the relative
amounts of interest-earning assets and interest-bearing
liabilities. Net interest income increased $573,000 or 19.3%
during the three months ended September 30, 2010 compared
to the same period in 2009. The increase in net interest income
was due to a $921,000 or 40.2% reduction in interest expense on
interest-bearing liabilities, primarily the result of a $453,000
or 25.9% decrease in interest expense on interest-bearing
deposits as well as a $468,000 or 86.2% decrease on interest
expense on FHLB advances and other borrowed money. The reduction
in interest expense in the three months ended September 30,
2010, was due primarily to lower average costs on
interest-bearing liabilities, primarily as a result of the
continuing low interest rate environment. The reduction in
interest expense during the period more than offset a $348,000
or 6.6% decrease in interest income for the three month period
ended September 30, 2010 compared to the same period in
2009.
Net interest income increased $1.3 million or 15.1% during
the nine months ended September 30, 2010 as compared to the
same period in 2009. The improvement in net interest income
during the first nine months of 2010 compared to the same period
in 2009 was again due primarily to the effects of the current
low market rates of interest, which has reduced our cost of
funds. Our interest expense on interest-bearing liabilities was
$2.1 million or 29.1% lower in the nine-month period ended
September 30, 2010, primarily as a result of a
$1.3 million or 22.6% decrease in the interest expense on
interest-bearing deposits as well as an $866,000 or 50.1%
decrease in interest expense on FHLB advances and other borrowed
money. The reduction in interest expense more than offset an
$819,000 or 5.2% decrease in interest income during the nine
months ended September 30, 2010 compared to the same period
in 2009.
Interest Income. Interest income decreased
$348,000 or 6.6% to $4.9 million for the three months ended
September 30, 2010, compared to the same period in 2009.
The decrease was primarily due to a $246,000 or 36.9% decrease
in interest income on investment securities, a $95,000 or 32.8%
decrease in interest income on mortgage backed securities, and a
$16,000 or 28.6% decrease in interest earned on balances due
from depository institutions. These decreases were partially
offset by a $9,000 increase in interest income earned on loans.
The decrease in interest income on investment securities was due
to a $9.7 million or 16.3% decrease in the average balance
of investment securities and a 109 basis point or 24.5%
decrease in the average yield earned. The decrease in interest
income on mortgage backed securities was due to a
$7.8 million or 29.2% decrease in the average balance of
mortgage backed securities and a 22 basis point or 5.1%
decrease in the average yield earned. The decrease in interest
income on balances due from depository institutions was due to a
20 basis point or 42.0% decrease in the average yield
earned, which was partially offset by a $10.7 million or
22.9% increase in the average balance of balances due from
depository institutions. The increase in interest income on
loans was due to a $3.2 million or 1.1% increase in the
average balance of loans outstanding, which was partially offset
by a five basis point or 0.9% decrease in the average yield
earned.
Interest income decreased $819,000 or 5.2% to $15.1 million
for the nine months ended September 30, 2010, compared to
the same period in 2009. The decrease was due to a $520,000 or
26.0% decrease in interest income on investment securities, a
$319,000 or 33.1% decrease in interest income on mortgage backed
securities, and a $46,000 or 0.4% decrease in interest income on
loans. These decreases were partially offset by a $66,000 or
53.2% increase in interest income earned on balances due from
depository institutions. The decrease in interest income on
investment securities was due to a $5.6 million or 9.7%
decrease in the average balance of investment securities and an
84 basis point or 18.2% decrease in the average yield
earned. The decrease in interest income on mortgage backed
securities was due to an $8.1 million or 28.1% decrease in
the average balance of mortgage backed securities and a
31 basis point or 7.0% decrease in the average yield
earned. The decrease in interest income on loans was due to a
12 basis point or 2.0% decrease in the average
35
yield earned on loans, which was partially offset by a
$4.9 million or 1.7% increase in the average balance of
loans. The increase in interest income on balances due from
depository institutions was due to a $31.8 million or 85.3%
increase in the average balance of balances due from depository
institutions, which was partially offset by a seven basis point
or 15.9% decrease in the average yield earned.
Interest Expense. Interest expense decreased
$921,000 or 40.2% to $1.4 million for the three months
ended September 30, 2010, compared to the same period in
2009. This decrease in interest expense was primarily the result
of a $453,000 or 25.9% decrease in interest expense on
interest-bearing deposits as well as a $468,000 or 86.2%
decrease on interest expense on FHLB advances and other borrowed
money. The decrease in interest expense on interest-bearing
deposits was the result of a 64 basis point or 31.0%
decrease in the average rate paid on interest-bearing deposits,
which was partially offset by a $24.8 million or 7.3%
increase in the average balance of interest bearing deposits.
The decrease in interest expense on FHLB advances and other
borrowed money was the result of a $23.8 million or 65.5%
decrease in the average balance of advances and other borrowed
money and a 359 basis point or 59.9% decrease in the
average rate paid on FHLB advances and other borrowed money.
Interest expense decreased $2.1 million or 29.1% to
$5.2 million for the nine months ended September 30,
2010, compared to the same period in 2009. This decrease in
interest expense was primarily the result of a $1.3 million
or 22.6% decrease in interest expense on interest-bearing
deposits and an $866,000 or 50.1% decrease in interest expense
on FHLB advances and other borrowed money. The decrease in
interest expense on interest-bearing deposits was the result of
a 72 basis point or 31.7% decrease in the average rate paid
on interest-bearing deposits, which was partially offset by a
$43.2 million or 13.3% increase in the average balance of
interest-bearing deposits. The decrease in interest expense on
FHLB advances and other borrowed money was the result of a
$17.8 million or 45.9% decrease in the average balance of
FHLB advances and other borrowed money and a 46 basis point
or 7.8% decrease in the average rate paid on FHLB advances and
other borrowed money.
Provision for Loan Losses. The provision for
loan losses amounted to $750,000 and $75,000 for the three
months ended September 30, 2010 and 2009, respectively. The
provision for loan losses amounted to $1.9 million and
$225,000 for the nine months ended September 30, 2010 and
2009, respectively.
The $675,000 increase in the provision for loan losses in the
three months ended September 30, 2010 compared to the three
months ended September 30, 2009 reflects, among other
factors, the $350,000 increase in non-performing loans in the
third quarter of 2010 and $60,000 in charge-offs to the
allowance for loan losses during the quarter in addition to a
provision covering a modest increase in the amount of our
outstanding commercial real estate loans and construction loans.
Also in the quarter ended September 30, 2010, we increased
our provision for losses for amounts allocated to our
$6.1 million participation interest in an acquisition and
development loan located in Bradenton, Florida by $300,000
primarily as a result of the borrowers failure to make a
scheduled payment to cover future interest and real estate
taxes, as required by an extension and forbearance agreement
entered into in June 2010. See Business Asset
Quality Delinquent Loans. In addition, real
estate sales activity in the Florida market area in which this
property is located continues to be slow. This loan was placed
on non-accrual status in March 2010. Given the borrowers
failure to make the scheduled payment in the quarter ended
September 30, 2010, as required by the extension and
forbearance agreement, and the inability of the borrower to
enter into agreements with potential buyers of any of the
collateral parcels securing the loan, we are considering all of
our options with respect to this loan, including the possibility
of foreclosure. No assurance can be given that we may not be
required to recognize additional provisions for loan losses
and/or
charge-offs with respect to this loan. Our provision for loan
losses for the quarter ended September 30, 2010 also
includes $276,000 allocated to our participation interests,
which had an aggregate outstanding balance of $2.9 million
at September 30, 2010, in two loans for the renovation and
conversion of an eight-story condominium building with 132
residential units and one commercial unit located in Center
City, Philadelphia. While these loans are performing and the
borrower has continued to make all scheduled payments, current
cash flow from the project does not cover the loan payments and
sales activity has not met projections. The cash shortfall is
being supplemented by a cash collateral account held by the lead
lender and other cash from the borrowers. In addition, the lead
lender recently obtained an updated appraisal
36
which reflected a reduction in the appraised value of the
condominium project and the other collateral securing these
loans.
Although management uses the best information available to make
determinations with respect to the provisions for loan losses,
additional provisions for loan losses may be required to be
established in the future should economic or other conditions
change substantially. In addition, the Pennsylvania Department
of Banking and the FDIC, as an integral part of their
examination process, periodically review our allowance for loan
losses. Such agencies may require us to recognize additions to
such allowance based on their judgments about information
available to them at the time of their examination.
Other Income. Other income was $282,000 for
the three months ended September 30, 2010 compared to
$309,000 for the same period in 2009. The $27,000 or 8.7%
decrease in other income included a $6,000 or 6.7% decrease in
management fees, a $4,000 or 4.7% decrease in the cash surrender
value of bank owned life insurance, and a $21,000 prior period
gain on the sale of OREO.
Other income was $840,000 for the nine months ended
September 30, 2010 compared to $899,000 for the same period
in 2009. The $59,000 or 6.6% decrease was primarily the result
of a $21,000 loss on the sale of OREO which was recorded as a
reduction of other income in the first quarter of 2010 compared
to a $21,000 gain in the nine months ended September 30,
2009. The decrease in other income also included an $18,000 or
6.7% decrease in management fees, and a $12,000 or 4.5% decrease
in the cash surrender value of bank owned life insurance,
partially offset by a $12,000 or 9.8% increase in other fee
income.
Other Expenses. Other expenses increased
$230,000 or 8.5% to $2.9 million for the three months ended
September 30, 2010 compared to the same period in 2009. The
increase was primarily due to a $213,000 or 174.4% increase in
professional fees that resulted from litigation expense related
to the protection of our Customer
First®
trademark. In addition, other expenses increased in the third
quarter of 2010 due to a $51,000 or 11.9% increase in expenses
related to occupancy and equipment, a $13,000 or 43.3% increase
in loan and OREO expense, and a $27,000 or 37.5% increase in
advertising and marketing expense. Salaries and employee
benefits expense were reduced by $87,000 or 5.6% in the three
months ended September 30, 2010 compared to the same period
in 2009.
Other expenses increased $409,000 or 5.0% to $8.6 million
for the nine months ended September 30, 2010 compared to
the same period in 2009. The increase was primarily due to a
$135,000 provision for loss on OREO, a $36,000 or 0.8% increase
in salaries and employee benefits, a $223,000 or 55.9% increase
in professional fees, primarily as a result of our trademark
litigation expense, and a $20,000 or 10.4% increase in
directors fees. Such increases were partially offset by an
$118,000 or 19.5% decrease in FDIC insurance premiums that
primarily resulted from the prior period special assessment.
Income Tax Expense (Benefit). Income tax
(benefit) expense amounted to $(54,000) and $55,000 for the
three months ended September 30, 2010 and 2009,
respectively, resulting in effective tax rates of (34.8)% and
10.7%, respectively. The increase in income tax benefit was
primarily due to a lower income before income tax benefit for
the three months ended September 30, 2010 compared to
income before income tax expense for the three months ended
September 30, 2009.
Income tax benefit amounted to $(259,000) and $(4,000) for the
nine months ended September 30, 2010 and 2009,
respectively, resulting in effective tax rates of (120.5)% and
(0.37)%, respectively. The increase in income tax benefit was
primarily due to a lower amount of income before income tax
benefit for the nine months ended September 30, 2010
compared to income before income tax benefit for the nine months
ended September 30, 2009.
FORWARD-LOOKING
STATEMENTS
This document contains forward-looking statements, which can be
identified by the use of such words as estimate,
project, believe, intend,
anticipate, plan, seek,
expect and similar expressions. These
forward-looking statements include, but are not limited to:
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statements of goals, intentions and expectations;
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37
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statements regarding prospects and business strategy;
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statements regarding asset quality and market risk; and
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estimates of future costs, benefits and results.
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These forward-looking statements are subject to significant
risks, assumptions and uncertainties, including, among other
things, the factors discussed under the heading Risk
Factors beginning at page that could
affect the actual outcome of future events and the following
factors:
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general economic conditions, either nationally or in our market
area, that are worse than expected;
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changes in the interest rate environment that reduce our
interest margins or reduce the fair value of financial
instruments;
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increased competitive pressures among financial services
companies;
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changes in consumer spending, borrowing and savings habits;
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legislative or regulatory changes that adversely affect our
business;
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adverse changes in the securities markets;
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our ability to successfully manage our growth;
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changes in accounting policies and practices, as may be adopted
by the bank regulatory agencies, the Securities and Exchange
Commission or the Financial Accounting Standards Board; and
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our ability to successfully implement our branch expansion
strategy, enter into new markets
and/or
expand product offerings successfully and take advantage of
growth opportunities.
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Any of the forward-looking statements that we make in this
prospectus and in other public statements we make may turn out
to be wrong because of inaccurate assumptions we might make,
because of the factors illustrated above or because of other
factors that we cannot foresee.
Because of these and other uncertainties, our actual future
results may be materially different from the results indicated
by these forward-looking statements and you should not rely on
such statements.
38
USE OF
PROCEEDS
The following table shows how we intend to use the net proceeds
of the offering. The actual net proceeds will depend on the
number of shares of common stock sold in the offering and the
expenses incurred in connection with the offering. Payments for
shares made through withdrawals from deposit accounts at
Alliance Bank will reduce Alliance Banks deposits and will
not result in the receipt of new funds for investment. See
Pro Forma Data for the assumptions used to arrive at
these amounts.
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15% Above
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Minimum of
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Midpoint of
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Maximum of
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Maximum of
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Offering Range
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Offering Range
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Offering Range
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Offering Range
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2,635,000
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|
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3,100,000
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3,565,000
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4,099,750
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Shares at
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Percent of
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Shares at
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Percent of
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Shares at
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Percent of
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Shares at
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Percent of
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$10.00
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Net
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$10.00
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Net
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$10.00
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Net
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$10.00
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|
Net
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per Share
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Proceeds
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per Share
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Proceeds
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per Share
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Proceeds
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per Share
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Proceeds
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(Dollars in thousands)
|
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Offering proceeds
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$
|
26,350
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|
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$
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31,000
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|
|
|
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$
|
35,650
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|
|
|
|
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$
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40,997
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|
|
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Less: offering expenses
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(2,278
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)
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(2,462
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)
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(2,646
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)
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(2,857
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)
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|
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Net offering proceeds
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|
24,072
|
|
|
|
100.0
|
%
|
|
|
28,538
|
|
|
|
100.0
|
%
|
|
|
33,004
|
|
|
|
100.0
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%
|
|
|
38,140
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|
|
|
100.0
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%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Less:
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|
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|
|
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Proceeds contributed to Alliance Bank
|
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|
12,036
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|
|
|
50.0
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%
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|
14,269
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|
|
|
50.0
|
%
|
|
|
16,502
|
|
|
|
50.0
|
%
|
|
|
19,070
|
|
|
|
50.0
|
%
|
Proceeds used for loan to employee stock ownership plan
|
|
|
1,221
|
|
|
|
5.1
|
|
|
|
1,437
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|
|
|
5.0
|
|
|
|
1,652
|
|
|
|
5.0
|
|
|
|
1,900
|
|
|
|
5.0
|
|
Proceeds used to repurchase shares for stock recognition plan
|
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|
1,771
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|
|
|
7.4
|
|
|
|
2,083
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|
|
|
7.3
|
|
|
|
2,396
|
|
|
|
7.3
|
|
|
|
2,755
|
|
|
|
7.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
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Proceeds remaining for Alliance Bancorp-New
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$
|
9,044
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|
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|
37.5
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%
|
|
$
|
10,749
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|
|
|
37.7
|
%
|
|
$
|
12,454
|
|
|
|
37.7
|
%
|
|
$
|
14,415
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|
|
|
37.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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Alliance Bancorp New intends to invest the proceeds
it retains from the offering initially in short-term, liquid
investments. Although there can be no assurance that Alliance
Bancorp New will invest the net proceeds in anything
other than short-term, liquid investments, over time, Alliance
Bancorp New may use the proceeds it retains from the
offering:
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to invest in securities;
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|
to pay dividends to shareholders;
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|
to repurchase shares of its common stock, subject to regulatory
restrictions;
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|
to finance the possible acquisition of financial institutions or
branch offices or other businesses that are related to banking
(although we currently have no plans, understandings or
agreements with respect to any specific acquisitions); and
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|
for general corporate purposes.
|
Under current Office of Thrift Supervision regulations, Alliance
Bancorp New may not repurchase shares of its common
stock during the first year following the offering, except to
fund equity benefit plans or, with prior regulatory approval,
when extraordinary circumstances exist.
Alliance Bank intends to initially use the net proceeds it
receives to purchase investment and mortgage-backed securities.
In the future, Alliance Bank may use the proceeds that it
receives from the offering, which is shown in the table above as
the amount contributed to Alliance Bank:
39
|
|
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|
|
to invest in short-term investment securities and
mortgage-backed securities;
|
|
|
|
to finance the possible expansion of its business activities,
including developing new branch locations; and
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|
for general corporate purposes.
|
We may need regulatory approvals to engage in some of the
activities listed above. Pursuant to our business plan, we plan
to open a de novo branch office in each of the next two years,
subject to, among other factors, market conditions, the economic
environment and our ability to identify acceptable sites where
we can open such new branches within our targeted budget of
approximately $300,000 per de novo branch office.
Except as described above, neither Alliance Bancorp
New nor Alliance Bank has any specific plans for the investment
of the proceeds of this offering and has not allocated a
specific portion of the proceeds to any particular use. For a
discussion of our business reasons for undertaking the offering
see The Conversion and Offering Purposes of
the Conversion and Offering.
OUR
DIVIDEND POLICY
Alliance Bancorp and Alliance Bank as its predecessor, has paid
quarterly cash dividends since 1995. Alliance Bancorps
current quarterly dividend is $0.03 per share or $0.12 per share
on an annual basis (which is equivalent to a dividend yield of
1.2% based upon the $10.00 per share purchase price in the
offering). After we complete the conversion, dividends will be
paid by Alliance Bancorp New on its outstanding
shares of common stock. We currently expect that the level of
cash dividends per share after the conversion and offering will
be substantially consistent with the current amount of dividends
per share paid by Alliance Bancorp on its common stock. However,
the rate of such dividends and the initial or continued payment
thereof will be in the discretion of the board of directors of
Alliance Bancorp New and will depend upon a number
of factors, including the amount of net proceeds retained by us
in the offering, investment opportunities available to us,
capital requirements, our financial condition and results of
operations, tax considerations, statutory and regulatory
limitations, and general economic conditions. No assurance can
be given that we will continue to pay dividends or that they
will not be reduced in the future. We cannot guarantee that the
amount of dividends that we pay after the conversion will be
equal to the per share dividend amount that Alliance
Bancorps shareholders currently receive. In addition,
during the first three years after the conversion, no dividend
will be declared or paid if it would be classified as a return
of capital.
Alliance Banks ability to pay dividends to Alliance
Bancorp New will be governed by the Home
Owners Loan Act, as amended, and the regulations of the
Office of Thrift Supervision. In addition, the prior approval of
the Office of Thrift Supervision will be required for the
payment of a dividend if the total of all dividends declared by
Alliance Bank in any calendar year would exceed the total of its
net profits for the year combined with its net profits for the
two preceding years, less any required transfers to surplus or a
fund for the retirement of any preferred stock. In addition,
Alliance Bank will be prohibited from paying cash dividends to
Alliance Bancorp New to the extent that any such
payment would reduce Alliance Banks regulatory capital
below required capital levels or would impair the liquidation
account to be established for the benefit of Alliance
Banks eligible account holders and supplemental eligible
account holders. See The Conversion and
Offering Liquidation Rights. Regulations of
the Pennsylvania Department of Banking also impose limitations
on the payment of capital distributions by savings
institutions such as Alliance Bank and require that Alliance
Bank pay dividends only out of accumulated earnings. See
Regulation Regulation of Alliance
Bank Restrictions on Capital Distributions.
Dividends from Alliance Bancorp New may eventually
depend, in part, upon receipt of dividends from Alliance Bank,
because Alliance Bancorp New initially will have no
source of income other than dividends from Alliance Bank,
earnings from the investment of proceeds from the sale of common
stock retained by us, and interest payments with respect to our
loan to our employee stock ownership plan.
Any payment of dividends by Alliance Bank to Alliance
Bancorp New which would be deemed to be drawn out of
Alliance Banks bad debt reserves would require a payment
of taxes at the then-current tax rate
40
by Alliance Bank on the amount of earnings deemed to be removed
from the reserves for such distribution. Alliance Bank does not
intend to make any distribution to Alliance Bancorp
New that would create such a federal tax liability. See
Taxation.
Unlike Alliance Bank, Alliance Bancorp New is not
subject to the above regulatory restrictions on the payment of
dividends to its shareholders. Alliance Bancorp-New is, however,
subject to the requirements of Pennsylvania law, which generally
limit the payment of dividends to amounts that will not have the
effect of making a corporation unable to pay its debts as they
become due in the ordinary course of business or if the
corporations total assets would be less than its total
liabilities plus the amount, if any, needed to satisfy any
preferential rights that shareholders may have if the
corporation were dissolved.
MARKET
FOR OUR COMMON STOCK
Alliance Bancorps common stock is currently listed on the
Nasdaq Global Market under the symbol ALLB, and
there is an established market for such common stock. We have
applied to have the common stock of Alliance Bancorp
New listed for trading on the Nasdaq Global Market and we expect
that the common stock will trade under the symbol
ALLBD for a period of 20 trading days after
completion of the offering. Thereafter, the trading symbol will
be ALLB. In order to list our common stock on the
Nasdaq Global Market, we are required to have at least three
broker-dealers who will make a market in our common stock. We
currently have more than six registered market makers.
Making a market may include the solicitation of potential buyers
and sellers in order to match buy and sell orders. The
development of a liquid public market depends upon the existence
of willing buyers and sellers, the presence of which is not
within our control or the control of any market maker. The
number of active buyers and sellers of our common stock at any
particular time may be limited, which may have an adverse effect
on the price at which our common stock can be sold. You should
view the common stock as a long-term investment. Furthermore,
there can be no assurance that you will be able to sell your
shares at or above the $10.00 per share price in the offering.
The following table sets forth the high and low closing stock
prices for Alliance Bancorp common stock and cash dividends per
share declared for the periods indicated.
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|
|
|
|
|
|
|
|
|
|
|
|
Stock Price
|
|
|
Cash
|
|
|
|
per Share
|
|
|
Dividends
|
|
Quarter Ended:
|
|
High
|
|
|
Low
|
|
|
per Share
|
|
|
December 31, 2010
(through ,
2010)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
0.03
|
|
September 30, 2010
|
|
|
8.44
|
|
|
|
7.20
|
|
|
|
0.03
|
|
June 30, 2010
|
|
|
8.75
|
|
|
|
8.00
|
|
|
|
0.03
|
|
March 31, 2010
|
|
|
8.65
|
|
|
|
8.25
|
|
|
|
0.03
|
|
December 31, 2009
|
|
|
8.75
|
|
|
|
8.40
|
|
|
|
0.03
|
|
September 30, 2009
|
|
|
8.89
|
|
|
|
8.50
|
|
|
|
0.03
|
|
June 30, 2009
|
|
|
8.65
|
|
|
|
7.50
|
|
|
|
0.03
|
|
March 31, 2009
|
|
|
8.05
|
|
|
|
7.25
|
|
|
|
0.03
|
|
December 31, 2008
|
|
|
8.44
|
|
|
|
7.25
|
|
|
|
0.06
|
|
September 30, 2008
|
|
|
8.83
|
|
|
|
7.24
|
|
|
|
0.06
|
|
June 30, 2008
|
|
|
9.48
|
|
|
|
8.81
|
|
|
|
0.06
|
|
March 31, 2008
|
|
|
9.06
|
|
|
|
6.82
|
|
|
|
0.06
|
|
At August 10, 2010, the business day immediately preceding
the public announcement of the conversion, and
at ,
2010, the date of this prospectus, the closing prices of
Alliance Bancorp common stock as reported on the Nasdaq Global
Market were $8.22 per share and $
per share, respectively.
At ,
2010, Alliance Bancorp had
approximately shareholders
of record.
41
REGULATORY
CAPITAL REQUIREMENTS
At June 30, 2010, Alliance Bank exceeded all of its
regulatory capital requirements. The table below sets forth
Alliance Banks historical capital under accounting
principles generally accepted in the United States of America
and regulatory capital at June 30, 2010, and the pro forma
capital of Alliance Bank after giving effect to the offering,
based upon the sale of the number of shares shown in the table.
The pro forma capital amounts reflect the receipt by Alliance
Bank of 50% of the net offering proceeds. The pro forma
risk-based capital amounts assume the investment of the net
proceeds received by Alliance Bank in assets which have a
risk-weight of 20% under applicable regulations, as if such net
proceeds had been received and so applied at June 30, 2010.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma at June 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15% Above
|
|
|
|
Alliance Bank
|
|
|
Minimum of
|
|
|
Midpoint of
|
|
|
Maximum of
|
|
|
Maximum of
|
|
|
|
Historical at
|
|
|
Offering Range
|
|
|
Offering Range
|
|
|
Offering Range
|
|
|
Offering Range
|
|
|
|
June 30, 2010
|
|
|
2,635,000 Shares
|
|
|
3,100,000 Shares
|
|
|
3,565,000 Shares
|
|
|
4,099,750 Shares
|
|
|
|
(Unaudited)
|
|
|
at $10.00 per Share
|
|
|
at $10.00 per Share
|
|
|
at $10.00 per Share
|
|
|
at $10.00 per Share
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
of
|
|
|
|
|
|
of
|
|
|
|
|
|
of
|
|
|
|
|
|
of
|
|
|
|
|
|
of
|
|
|
|
Amount
|
|
|
Assets(1)
|
|
|
Amount
|
|
|
Assets
|
|
|
Amount
|
|
|
Assets
|
|
|
Amount
|
|
|
Assets
|
|
|
Amount
|
|
|
Assets
|
|
|
|
(Unaudited)
|
|
|
(Dollars in thousands)
|
|
|
GAAP capital
|
|
$
|
46,796
|
|
|
|
10.44
|
%
|
|
$
|
55,840
|
|
|
|
12.17
|
%
|
|
$
|
57,545
|
|
|
|
12.49
|
%
|
|
$
|
59,250
|
|
|
|
12.81
|
%
|
|
$
|
61,211
|
|
|
|
13.17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
$
|
47,117
|
|
|
|
10.05
|
%
|
|
$
|
56,161
|
|
|
|
11.72
|
%
|
|
$
|
57,866
|
|
|
|
12.03
|
%
|
|
$
|
59,571
|
|
|
|
12.33
|
%
|
|
$
|
61,532
|
|
|
|
12.68
|
%
|
Requirement
|
|
|
18,755
|
|
|
|
4.00
|
|
|
|
19,166
|
|
|
|
4.00
|
%
|
|
|
19,242
|
|
|
|
4.00
|
%
|
|
|
19,319
|
|
|
|
4.00
|
%
|
|
|
19,408
|
|
|
|
4.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess
|
|
$
|
28,362
|
|
|
|
6.05
|
%
|
|
$
|
36,996
|
|
|
|
7.72
|
%
|
|
$
|
38,624
|
|
|
|
8.03
|
%
|
|
$
|
40,252
|
|
|
|
8.33
|
%
|
|
$
|
42,125
|
|
|
|
8.68
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 risk-based capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
$
|
47,117
|
|
|
|
16.06
|
%
|
|
$
|
56,161
|
|
|
|
19.01
|
%
|
|
$
|
57,866
|
|
|
|
19.57
|
%
|
|
$
|
59,571
|
|
|
|
20.12
|
%
|
|
$
|
61,532
|
|
|
|
20.75
|
%
|
Requirement
|
|
|
11,733
|
|
|
|
4.00
|
|
|
|
11,815
|
|
|
|
4.00
|
%
|
|
|
11,830
|
|
|
|
4.00
|
%
|
|
|
11,846
|
|
|
|
4.00
|
%
|
|
|
11,863
|
|
|
|
4.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess
|
|
$
|
35.384
|
|
|
|
12.06
|
%
|
|
$
|
44,346
|
|
|
|
15.01
|
%
|
|
$
|
46,036
|
|
|
|
15.57
|
%
|
|
$
|
47,725
|
|
|
|
16.12
|
%
|
|
$
|
49,669
|
|
|
|
16.75
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
$
|
50,790
|
|
|
|
17.32
|
%
|
|
$
|
59,834
|
|
|
|
20.26
|
%
|
|
$
|
61,539
|
|
|
|
20.81
|
%
|
|
$
|
63,244
|
|
|
|
21.36
|
%
|
|
$
|
65,205
|
|
|
|
21.99
|
%
|
Requirement
|
|
|
23,466
|
|
|
|
8.00
|
|
|
|
23,630
|
|
|
|
8.00
|
%
|
|
|
23,660
|
|
|
|
8.00
|
%
|
|
|
23,691
|
|
|
|
8.00
|
%
|
|
|
23,727
|
|
|
|
8.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excess
|
|
$
|
27,324
|
|
|
|
9.32
|
%
|
|
$
|
36,204
|
|
|
|
12.26
|
%
|
|
$
|
37,879
|
|
|
|
12.81
|
%
|
|
$
|
39,553
|
|
|
|
13.36
|
%
|
|
$
|
41,479
|
|
|
|
13.99
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of capital infused into Alliance Bank:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds infused
|
|
|
|
|
|
|
|
|
|
$
|
12,036
|
|
|
|
|
|
|
$
|
14,269
|
|
|
|
|
|
|
$
|
16,502
|
|
|
|
|
|
|
$
|
19,070
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock acquired by employee stock ownership plan
|
|
|
|
|
|
|
|
|
|
|
(1,221
|
)
|
|
|
|
|
|
|
(1,437
|
)
|
|
|
|
|
|
|
(1,652
|
)
|
|
|
|
|
|
|
(1,900
|
)
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares acquired by stock recognition plan
|
|
|
|
|
|
|
|
|
|
|
(1,771
|
)
|
|
|
|
|
|
|
(2,083
|
)
|
|
|
|
|
|
|
(2,396
|
)
|
|
|
|
|
|
|
(2,755
|
)
|
|
|
|
|
Pro forma increase in GAAP and regulatory capital
|
|
|
|
|
|
|
|
|
|
$
|
9,044
|
|
|
|
|
|
|
$
|
10,749
|
|
|
|
|
|
|
$
|
12,454
|
|
|
|
|
|
|
$
|
14,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Adjusted total or adjusted risk-weighted assets, as appropriate. |
42
OUR
CAPITALIZATION
The following table presents the historical capitalization of
Alliance Bancorp at June 30, 2010, and the pro forma
consolidated capitalization of Alliance Bancorp New
after giving effect to the conversion and offering, based upon
the sale of the number of shares shown below and the other
assumptions set forth under Pro Forma Data.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliance Bancorp New Pro
Forma
|
|
|
|
|
|
|
Based Upon Sale at $10.00 per Share
|
|
|
|
|
|
|
2,635,000
|
|
|
3,100,000
|
|
|
3,565,000
|
|
|
4,099,750
|
|
|
|
|
|
|
Shares
|
|
|
Shares
|
|
|
Shares
|
|
|
Shares(1)
|
|
|
|
Alliance Bancorp
|
|
|
(Minimum of
|
|
|
(Midpoint of
|
|
|
(Maximum of
|
|
|
(15% Above
|
|
|
|
Historical
|
|
|
Offering
|
|
|
Offering
|
|
|
Offering
|
|
|
Maximum of
|
|
|
|
Capitalization
|
|
|
Range)
|
|
|
Range)
|
|
|
Range)
|
|
|
Offering Range)
|
|
|
|
(In thousands)
|
|
|
Deposits(2)
|
|
$
|
381,210
|
|
|
$
|
381,210
|
|
|
$
|
381,210
|
|
|
$
|
381,210
|
|
|
$
|
381,210
|
|
FHLB advances
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
Other borrowings
|
|
|
8,112
|
|
|
|
8,112
|
|
|
|
8,112
|
|
|
|
8,112
|
|
|
|
8,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits and borrowings
|
|
$
|
394,322
|
|
|
$
|
394,322
|
|
|
$
|
394,322
|
|
|
$
|
394,322
|
|
|
$
|
394,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value, 10,000,000 shares
authorized (post-offering); none to be issued
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Common stock, $.01 par value, (post-offering)
50,000,000 shares authorized (post-offering); shares to be
issued as reflected(3)
|
|
|
72
|
|
|
|
44
|
|
|
|
52
|
|
|
|
60
|
|
|
|
69
|
|
Additional paid-in capital(3)
|
|
|
24,015
|
|
|
|
48,115
|
|
|
|
52,573
|
|
|
|
57,031
|
|
|
|
62,158
|
|
Retained earnings(4)
|
|
|
29,948
|
|
|
|
29,948
|
|
|
|
29,948
|
|
|
|
29,948
|
|
|
|
29,948
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity received from mutual holding company
|
|
|
|
|
|
|
6,929
|
|
|
|
6,929
|
|
|
|
6,929
|
|
|
|
6,929
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss
|
|
|
(321
|
)
|
|
|
(321
|
)
|
|
|
(321
|
)
|
|
|
(321
|
)
|
|
|
(321
|
)
|
Common stock held by the employee stock ownership plan(5)
|
|
|
(565
|
)
|
|
|
(1,786
|
)
|
|
|
(2,002
|
)
|
|
|
(2,217
|
)
|
|
|
(2,465
|
)
|
Common stock held by the recognition and retention plan(6)
|
|
|
|
|
|
|
(1,771
|
)
|
|
|
(2,083
|
)
|
|
|
(2,396
|
)
|
|
|
(2,755
|
)
|
Treasury stock
|
|
|
(4,582
|
)
|
|
|
(4,582
|
)
|
|
|
(4,582
|
)
|
|
|
(4,582
|
)
|
|
|
(4,582
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
$
|
48,567
|
|
|
$
|
76,576
|
|
|
$
|
80,514
|
|
|
$
|
84,452
|
|
|
$
|
88,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of total stockholders equity to total assets
|
|
|
10.83
|
%
|
|
|
16.07
|
%
|
|
|
16.76
|
%
|
|
|
17.44
|
%
|
|
|
18.20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
As adjusted to give effect to an increase in the number of
shares which could occur due to an increase in the offering
range of up to 15% to reflect changes in market and financial
conditions before we complete the offering or to fill the order
of our employee stock ownership plan. |
|
(2) |
|
Does not reflect withdrawals from deposit accounts for the
purchase of common stock in the offering. Such withdrawals would
reduce pro forma deposits by the amount of such withdrawals. |
(Footnotes continued on next page)
43
|
|
|
(3) |
|
Our pro forma amounts of common stock and additional paid-in
capital have been increased to reflect the number of shares of
our common stock to be outstanding, which includes the exchange
of all of the currently outstanding shares of Alliance Bancorp
common stock pursuant to the exchange ratio except for the
shares earned by Alliance Mutual Holding Company. No effect has
been given to the issuance of additional shares of common stock
pursuant to our proposed stock option plan. We intend to adopt a
new stock option plan and to submit such plan to shareholders at
a meeting of shareholders to be held at least six months
following completion of the offering. If the plan is approved by
shareholders, an amount up to 10.0% of the common stock of
Alliance Bancorp New to be outstanding after the
conversion and offering, less the number of options previously
reserved under Alliance Banks 1996 stock option plan
(143,287 shares), as adjusted for the exchange ratio, will
be reserved for future issuance pursuant to the plan. Your
ownership percentage would decrease by approximately 5.62% if
all potential stock options are exercised from our authorized
but unissued stock. See Pro Forma Data and
Management New Stock Benefit Plans
Stock Option Plan. |
|
(4) |
|
The retained earnings of Alliance Bank will be partially
restricted after the offering. |
|
(5) |
|
Assumes that 4.63% of the shares to be sold in the offering will
be purchased by our employee stock ownership plan in addition to
the shares already owned by the employee stock ownership plan.
The common stock acquired by our employee stock ownership plan
is reflected as a reduction of stockholders equity.
Assumes the funds used to acquire our employee stock ownership
plan shares will be borrowed from us. See Note 1 to the
tables set forth under Pro Forma Data and
Management-New Stock Benefit Plans Employee
Stock Ownership Plan. |
|
(6) |
|
Gives effect to the recognition plan which we expect to adopt
after the offering and present to shareholders for approval at a
meeting of shareholders to be held at least six months after we
complete the offering. No shares will be purchased by the
recognition plan in the offering, and such plan cannot purchase
any shares until shareholder approval has been obtained. If the
recognition plan is approved by our shareholders, the plan
intends to acquire an amount of common stock equal to 4.0% of
the common stock of Alliance Bancorp New to be
outstanding after the conversion and offering, or 6.72% of the
shares sold in the offering. The table assumes that shareholder
approval has been obtained and that such shares are purchased in
the open market at $10.00 per share. The common stock so
acquired by the recognition plan is reflected as a reduction in
stockholders equity. If the shares are purchased at prices
higher or lower than the initial purchase price of $10.00 per
share, such purchases would have a greater or lesser impact,
respectively, on stockholders equity. If the recognition
plan purchases authorized but unissued shares from us, such
issuance would dilute the voting interests of existing
shareholders by approximately 3.85%. See Pro Forma
Data and Management New Stock Benefit
Plans Recognition Plan. |
44
PRO FORMA
DATA
The actual net proceeds from the sale of Alliance
Bancorp New common stock in the offering cannot be
determined until the offering is completed. However, the net
proceeds are currently estimated to be between
$24.1 million and $33.0 million, or up to
$38.1 million in the event the offering range is increased
by approximately 15%, based upon the following assumptions:
|
|
|
|
|
We will sell 40% of the shares of common stock in the
subscription offering and community offerings with the remaining
60% of the shares sold in a syndicated community offering;
|
|
|
|
Our employee stock ownership plan will purchase an amount equal
to 4.63% of the shares sold in the offering and that such shares
are purchased at a price of $10.00 per share with a loan from
Alliance Bancorp New;
|
|
|
|
35,500 shares of common stock will be purchased by our
employees, directors and their immediate families;
|
|
|
|
Stifel, Nicolaus & Company, Incorporated will receive
an aggregate management fee equal to 1.0% of the aggregate
purchase price of the shares sold in the subscription and
community offerings, except that no fee will be paid with
respect to shares purchased by our officers, directors and
employees or members of their immediate families or by our
employee stock ownership plan;
|
|
|
|
The sales commission and management fee for shares sold in the
syndicated community offering will be equal to 6.0% of the
aggregate purchase price of the shares sold in the syndicated
community offering; and
|
|
|
|
Total expenses of the offering, excluding sales commissions and
management fees referenced above, will be approximately
$1.24 million.
|
We have prepared the following table, which sets forth our
historical consolidated net income and stockholders equity
prior to the conversion and offering and our pro forma
consolidated net income and stockholders equity following
the conversion and offering. In preparing these tables and in
calculating pro forma data, the following assumptions have been
made:
|
|
|
|
|
Pro forma earnings have been calculated assuming the common
stock had been sold at the beginning of the periods and the net
proceeds had been invested at an average yield of 2.60%, which
represents the average of the yield on the five-year
U.S. Treasury Note as of June 30, 2010 (1.79%) and on
15-year
fixed-rate mortgage-backed securities (3.42%, based on Freddie
Macs Primary Mortgage Market
Survey®)
for the week ended June 30, 2010. We have used an assumed
yield of 2.60% (1.72% after tax) in lieu of the arithmetic
average method because we believe it more accurately reflects
the yield that we will receive on the net proceeds of the
offering.
|
|
|
|
An effective tax rate of 34.0%.
|
|
|
|
No withdrawals were made from Alliance Banks deposit
accounts for the purchase of shares in the offering.
|
|
|
|
Historical and pro forma per share amounts have been calculated
by dividing historical and pro forma amounts by the indicated
number of shares of stock, as adjusted in the pro forma net
income per share to give effect to the purchase of shares by the
employee stock ownership plan.
|
|
|
|
Pro forma stockholders equity amounts have been calculated
as if our common stock had been sold in the offering on
December 31, 2009 and June 30, 2010, respectively,
and, accordingly, no effect has been given to the assumed
earnings effect of the transactions.
|
The following pro forma information may not be representative of
the financial effects of the offering at the date on which the
offering actually occurs and should not be taken as indicative
of future results of operations. Pro forma stockholders
equity represents the difference between the stated amount of
our assets and liabilities computed in accordance with generally
accepted accounting principles. Stockholders equity does
not give effect to intangible assets in the event of a
liquidation, to Alliance Banks bad debt reserve or to the
liquidation accounts to be maintained by Alliance Bank and
Alliance Bancorp-New. The pro forma stockholders equity is
not intended to
45
represent the fair market value of the common stock and may be
different than amounts that would be available for distribution
to shareholders in the event of liquidation.
The tables reflect the possible issuance of additional shares to
be reserved for future issuance pursuant to our proposed new
stock option plan which we expect to adopt following the
offering and present, together with the stock recognition plan
discussed below, to our shareholders for approval at a meeting
to be held at least six months after the offering is completed.
See Management New Stock Benefit Plans.
For purposes of the tables, we have assumed that shareholder
approval was obtained, that the exercise price of the stock
options and the market price of the common stock at the date of
grant were $10.00 per share, that the stock options had a term
of 10 years and vested pro rata over five years, and that
the new stock option plan granted options to acquire common
stock equal to 10.0% of the shares sold in the offering. We
applied the Black-Scholes option pricing model to estimate a
grant date fair value of $3.13 for each option. In addition to
the terms of the options described above, the Black-Scholes
option pricing model incorporated an estimated volatility rate
of 23.23% for the common stock, dividend yield of 0.96%, an
expected option life of 10 years and a risk free interest
rate of 2.53%. There can be no assurance that shareholder
approval of the stock option plan will be obtained, that the
exercise price of the options will be $10.00 per share or that
the Black-Scholes option pricing model assumptions used to
prepare the table will be the same at the time the options are
granted.
The tables also give effect to the stock recognition and
retention plan, which we expect to adopt following the offering
and present, together with the new stock option plan discussed
above, to our shareholders for approval at a meeting to be held
at least six months after the offering is completed. If approved
by shareholders, the stock recognition and retention plan
intends to acquire an amount of common stock equal to 6.72% of
the shares to be sold in the offering, or 4.0% of the common
stock of Alliance Bancorp New to be outstanding
after the offering, either through open market purchases, if
permissible, or from authorized but unissued shares of common
stock. The tables assume that shareholder approval has been
obtained and that the shares acquired by the stock recognition
and retention plan are purchased in the open market at $10.00
per share and vest over a five-year period at the rate of 20%
per year. There can be no assurance that shareholder approval of
the stock recognition and retention plan will be obtained, that
the shares will be purchased in the open market or that the
purchase price will be $10.00 per share.
46
The tables on the following pages are based on the assumptions
set forth above and in the tables and should not be used as a
basis for projection of the market value of our common stock
following the conversion and the offering.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or for the Six Months Ended June 30, 2010
|
|
|
|
2,635,000
|
|
|
3,100,000
|
|
|
3,565,000
|
|
|
4,099,750
|
|
|
|
Shares Sold
|
|
|
Shares Sold
|
|
|
Shares Sold
|
|
|
Shares Sold
|
|
|
|
at $10.00
|
|
|
at $10.00
|
|
|
at $10.00
|
|
|
at $10.00
|
|
|
|
per Share
|
|
|
per Share
|
|
|
per Share
|
|
|
per Share
|
|
|
|
(Minimum of
|
|
|
(Midpoint of
|
|
|
(Maximum of
|
|
|
(15% Above
|
|
|
|
Range)
|
|
|
Range)
|
|
|
Range)
|
|
|
Maximum)
|
|
|
|
(Dollars in thousands, except per share amounts)
|
|
|
Gross proceeds
|
|
$
|
26,350
|
|
|
$
|
31,000
|
|
|
$
|
35,650
|
|
|
$
|
40,997
|
|
Less: estimated offering expenses
|
|
|
(2,278
|
)
|
|
|
(2,462
|
)
|
|
|
(2,646
|
)
|
|
|
(2,857
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated net proceeds
|
|
$
|
24,072
|
|
|
$
|
28,538
|
|
|
$
|
33,004
|
|
|
$
|
38,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: common stock acquired by employee stock ownership plan(1)
|
|
|
(1,221
|
)
|
|
|
(1,437
|
)
|
|
|
(1,652
|
)
|
|
|
(1,900
|
)
|
Less: common stock to be acquired by recognition and retention
plan(2)
|
|
|
(1,771
|
)
|
|
|
(2,083
|
)
|
|
|
(2,396
|
)
|
|
|
(2,755
|
)
|
Plus: cash and investment assets received from mutual holding
company
|
|
|
4,286
|
|
|
|
4,286
|
|
|
|
4,286
|
|
|
|
4,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated net investable proceeds
|
|
|
25,366
|
|
|
|
29,304
|
|
|
|
33,242
|
|
|
|
37,771
|
|
Plus: fixed assets received from mutual holding company
|
|
|
2,643
|
|
|
|
2,643
|
|
|
|
2,643
|
|
|
|
2,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds, as adjusted
|
|
$
|
28,009
|
|
|
$
|
31,947
|
|
|
$
|
35,885
|
|
|
$
|
40,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$
|
265
|
|
|
$
|
265
|
|
|
$
|
265
|
|
|
$
|
265
|
|
Impact of mutual holding company consolidation(3)
|
|
|
(106
|
)
|
|
|
(106
|
)
|
|
|
(106
|
)
|
|
|
(106
|
)
|
Pro forma income on net investable proceeds(4):
|
|
|
218
|
|
|
|
252
|
|
|
|
285
|
|
|
|
324
|
|
Less: pro forma employee stock ownership plan adjustments(1)
|
|
|
(20
|
)
|
|
|
(24
|
)
|
|
|
(28
|
)
|
|
|
(32
|
)
|
Less: pro forma restricted stock award expense(2)
|
|
|
(117
|
)
|
|
|
(138
|
)
|
|
|
(158
|
)
|
|
|
(182
|
)
|
Less: pro forma stock option expense(5)
|
|
|
(76
|
)
|
|
|
(89
|
)
|
|
|
(102
|
)
|
|
|
(118
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income
|
|
$
|
164
|
|
|
$
|
160
|
|
|
$
|
156
|
|
|
$
|
151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical(6)
|
|
$
|
0.06
|
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.04
|
|
Impact of mutual holding company consolidation
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
Pro forma income on net investable proceeds:
|
|
|
0.05
|
|
|
|
0.05
|
|
|
|
0.05
|
|
|
|
0.05
|
|
Less: pro forma employee stock ownership plan adjustments(1)
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.00
|
|
|
|
0.00
|
|
Less: pro forma restricted stock award expense(2)
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
Less: pro forma stock option expense(5)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income per share
|
|
$
|
0.04
|
|
|
$
|
0.03
|
|
|
$
|
0.03
|
|
|
$
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering price as a multiple of pro forma net income per share
|
|
|
125.0
|
x
|
|
|
166.67
|
x
|
|
|
166.67
|
x
|
|
|
250.0
|
x
|
Number of shares used to calculate pro forma net income per
share(7)
|
|
|
4,308,134
|
|
|
|
5,068,388
|
|
|
|
5,828,642
|
|
|
|
6,702,947
|
|
Pro Forma Stockholders Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma stockholders equity (book value)(5):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$
|
48,567
|
|
|
$
|
48,567
|
|
|
$
|
48,567
|
|
|
$
|
48,567
|
|
Estimated net proceeds
|
|
|
24,072
|
|
|
|
28,538
|
|
|
|
33,004
|
|
|
|
38,140
|
|
Plus: equity increase from mutual holding company
|
|
|
6,929
|
|
|
|
6,929
|
|
|
|
6,929
|
|
|
|
6,929
|
|
Less: common stock acquired by employee stock ownership plan(1)
|
|
|
(1,221
|
)
|
|
|
(1,437
|
)
|
|
|
(1,652
|
)
|
|
|
(1,900
|
)
|
Less: common stock to be acquired by recognition and retention
plan(2)
|
|
|
(1,771
|
)
|
|
|
(2,083
|
)
|
|
|
(2,396
|
)
|
|
|
(2,755
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma stockholders equity
|
|
$
|
76,576
|
|
|
$
|
80,514
|
|
|
$
|
84,452
|
|
|
$
|
88,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma stockholders equity per share(6):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$
|
10.97
|
|
|
$
|
9.32
|
|
|
$
|
8.11
|
|
|
$
|
7.05
|
|
Estimated net proceeds
|
|
|
5.44
|
|
|
|
5.48
|
|
|
|
5.51
|
|
|
|
5.54
|
|
Plus: equity increase from mutual holding company
|
|
|
1.57
|
|
|
|
1.33
|
|
|
|
1.16
|
|
|
|
1.01
|
|
Less: common stock acquired by employee stock ownership plan(1)
|
|
|
(0.28
|
)
|
|
|
(0.28
|
)
|
|
|
(0.28
|
)
|
|
|
(0.28
|
)
|
Less: common stock to be acquired by recognition and retention
plan(2)
|
|
|
(0.40
|
)
|
|
|
(0.40
|
)
|
|
|
(0.40
|
)
|
|
|
(0.40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma stockholders equity per share
|
|
$
|
17.30
|
|
|
$
|
15.45
|
|
|
$
|
14.10
|
|
|
$
|
12.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering price as a percentage of pro forma stockholders
equity per share
|
|
|
57.80
|
%
|
|
|
64.72
|
%
|
|
|
70.92
|
%
|
|
|
77.40
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares used to calculate pro forma stockholders
equity per share(7)
|
|
|
4,427,182
|
|
|
|
5,208,449
|
|
|
|
5,989,717
|
|
|
|
6,888,174
|
|
(Footnotes begin on page 43)
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or for the Year Ended December 31, 2009
|
|
|
|
2,635,000
|
|
|
3,100,000
|
|
|
3,565,000
|
|
|
4,099,750
|
|
|
|
Shares Sold
|
|
|
Shares Sold
|
|
|
Shares Sold
|
|
|
Shares Sold
|
|
|
|
at $10.00
|
|
|
at $10.00
|
|
|
at $10.00
|
|
|
at $10.00
|
|
|
|
per Share
|
|
|
per Share
|
|
|
per Share
|
|
|
per Share
|
|
|
|
(Minimum of
|
|
|
(Midpoint of
|
|
|
(Maximum of
|
|
|
(15% Above
|
|
|
|
Range)
|
|
|
Range)
|
|
|
Range)
|
|
|
Maximum)
|
|
|
|
(Dollars in thousands, except per share amounts)
|
|
|
Gross proceeds
|
|
$
|
26,350
|
|
|
$
|
31,000
|
|
|
$
|
35,650
|
|
|
$
|
40,997
|
|
Less: estimated offering expenses
|
|
|
(2,278
|
)
|
|
|
(2,462
|
)
|
|
|
(2,646
|
)
|
|
|
(2,857
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated net proceeds
|
|
$
|
24,072
|
|
|
$
|
28,538
|
|
|
$
|
33,004
|
|
|
$
|
38,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: common stock acquired by employee stock ownership plan(1)
|
|
|
(1,221
|
)
|
|
|
(1,437
|
)
|
|
|
(1,652
|
)
|
|
|
(1,900
|
)
|
Less: common stock to be acquired by recognition and retention
plan(2)
|
|
|
(1,771
|
)
|
|
|
(2,083
|
)
|
|
|
(2,396
|
)
|
|
|
(2,755
|
)
|
Plus: cash and investment assets received from mutual holding
company
|
|
|
4,286
|
|
|
|
4,286
|
|
|
|
4,286
|
|
|
|
4,286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated net investable proceeds
|
|
|
25,366
|
|
|
|
29,304
|
|
|
|
33,242
|
|
|
|
37,771
|
|
Plus: fixed assets received from mutual holding company
|
|
|
2,643
|
|
|
|
2,643
|
|
|
|
2,643
|
|
|
|
2,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds, as adjusted
|
|
$
|
28,009
|
|
|
$
|
31,947
|
|
|
$
|
35,885
|
|
|
$
|
40,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$
|
1,359
|
|
|
$
|
1,359
|
|
|
$
|
1,359
|
|
|
$
|
1,359
|
|
Impact of mutual holding company consolidation(3)
|
|
|
(228
|
)
|
|
|
(228
|
)
|
|
|
(228
|
)
|
|
|
(228
|
)
|
Pro forma income on net investable proceeds(4):
|
|
|
435
|
|
|
|
503
|
|
|
|
570
|
|
|
|
648
|
|
Less: pro forma employee stock ownership plan adjustments(1)
|
|
|
(40
|
)
|
|
|
(47
|
)
|
|
|
(55
|
)
|
|
|
(63
|
)
|
Less: pro forma restricted stock award expense(2)
|
|
|
(234
|
)
|
|
|
(275
|
)
|
|
|
(316
|
)
|
|
|
(364
|
)
|
Less: pro forma stock option expense(5)
|
|
|
(151
|
)
|
|
|
(178
|
)
|
|
|
(204
|
)
|
|
|
(235
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income
|
|
$
|
1,141
|
|
|
$
|
1,134
|
|
|
$
|
1,126
|
|
|
$
|
1,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical(6)
|
|
$
|
0.32
|
|
|
$
|
0.27
|
|
|
$
|
0.23
|
|
|
$
|
0.20
|
|
Impact of mutual holding company consolidation
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
|
|
(0.04
|
)
|
|
|
(0.03
|
)
|
Pro forma income on net investable proceeds:
|
|
|
0.10
|
|
|
|
0.10
|
|
|
|
0.10
|
|
|
|
0.10
|
|
Less: pro forma employee stock ownership plan adjustments(1)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
|
|
(0.01
|
)
|
Less: pro forma restricted stock award expense(2)
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
Less: pro forma stock option expense(5)
|
|
|
(0.04
|
)
|
|
|
(0.04
|
)
|
|
|
(0.04
|
)
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net income per share
|
|
$
|
0.27
|
|
|
$
|
0.22
|
|
|
$
|
0.19
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering price as a multiple of pro forma net income per share
|
|
|
37.04
|
x
|
|
|
45.45
|
x
|
|
|
52.63
|
x
|
|
|
58.82
|
x
|
Number of shares used to calculate pro forma net income per
share(7)
|
|
|
4,311,187
|
|
|
|
5,071,979
|
|
|
|
5,832,772
|
|
|
|
6,707,697
|
|
Pro Forma Stockholders Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma stockholders equity (book value)(5):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$
|
48,445
|
|
|
$
|
48,445
|
|
|
$
|
48,445
|
|
|
$
|
48,445
|
|
Estimated net proceeds
|
|
|
24,072
|
|
|
|
28,538
|
|
|
|
33,004
|
|
|
|
38,140
|
|
Plus: equity increase from mutual holding company
|
|
|
6,929
|
|
|
|
6,929
|
|
|
|
6,929
|
|
|
|
6,929
|
|
Less: common stock acquired by employee stock ownership plan(1)
|
|
|
(1,221
|
)
|
|
|
(1,437
|
)
|
|
|
(1,652
|
)
|
|
|
(1,900
|
)
|
Less: common stock to be acquired by recognition and retention
plan(2)
|
|
|
(1,771
|
)
|
|
|
(2,083
|
)
|
|
|
(2,396
|
)
|
|
|
(2,755
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma stockholders equity
|
|
$
|
76,454
|
|
|
$
|
80,392
|
|
|
$
|
84,330
|
|
|
$
|
88,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma stockholders equity per share(6):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
$
|
10.94
|
|
|
$
|
9.30
|
|
|
$
|
8.09
|
|
|
$
|
7.03
|
|
Estimated net proceeds
|
|
|
5.44
|
|
|
|
5.48
|
|
|
|
5.51
|
|
|
|
5.54
|
|
Plus: equity increase from mutual holding company
|
|
|
1.57
|
|
|
|
1.33
|
|
|
|
1.16
|
|
|
|
1.01
|
|
Less: common stock acquired by employee stock ownership plan(1)
|
|
|
(0.28
|
)
|
|
|
(0.28
|
)
|
|
|
(0.28
|
)
|
|
|
(0.28
|
)
|
Less: common stock to be acquired by recognition and retention
plan(2)
|
|
|
(0.40
|
)
|
|
|
(0.40
|
)
|
|
|
(0.40
|
)
|
|
|
(0.40
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma stockholders equity per share
|
|
$
|
17.27
|
|
|
$
|
15.43
|
|
|
$
|
14.08
|
|
|
$
|
12.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offering price as a percentage of pro forma stockholders
equity per share
|
|
|
57.90
|
%
|
|
|
64.81
|
%
|
|
|
71.02
|
%
|
|
|
77.52
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares used to calculate pro forma stockholders
equity per share(7)
|
|
|
4,427,182
|
|
|
|
5,208,449
|
|
|
|
5,989,717
|
|
|
|
6,888,174
|
|
(Footnotes begin on next page)
48
|
|
|
(1) |
|
The employee stock ownership plan will borrow the funds used to
acquire these shares from the net proceeds from the
offering retained by Alliance Bancorp New. The
amount of this borrowing has been reflected as a reduction from
gross proceeds to determine estimated net investable proceeds.
Alliance Bank intends to make contributions to the employee
stock ownership plan in amounts at least equal to the principal
and interest requirement of the debt. Interest income that
Alliance Bancorp New will earn on the loan will
offset the interest paid on the loan by Alliance Bank. As the
debt is paid down, shares will be released for allocation to
participants accounts and stockholders equity will
be increased. The adjustment to pro forma net income for
the employee stock ownership plan reflects the after-tax
compensation expense associated with the plan, based on an
assumed effective tax rate of 34.0%. Applicable accounting
principles require that compensation expense for the employee
stock ownership plan be based upon shares committed to be
released and that unallocated shares be excluded from earnings
per share computations. An equal number of shares (1/20 of the
total, based on a
20-year
loan) will be released each year over the term of the loan. The
pro forma net income for the six months ended June 30, 2010
assumes the 3,053, 3,591, 4,130 and 4,749 shares were
committed to be released during the period at the minimum,
midpoint, maximum and maximum, as adjusted of the offering
range, respectively. For the year ended December 31, 2009,
the pro forma net income assumes that 6,105, 7,183, 8,260 and
9,499 shares were committed to be released at the minimum,
midpoint, maximum and maximum, as adjusted of the offering
range, respectively. The valuation of shares committed to be
released would be based upon the average market value of the
shares during the year, which, for purposes of this calculation,
was assumed to be equal to the $10.00 per share purchase price.
If the average market value per share is greater than $10.00 per
share, total employee stock ownership plan expense would be
greater. |
|
(2) |
|
Assumes that Alliance Bancorp New will purchase
shares in the open market for the recognition and retention plan
proposed to be adopted following the offering. The assumed cost
of these shares has been reflected as a reduction from gross
proceeds to determine estimated net investable proceeds. In
calculating the pro forma effect of the restricted stock awards,
it is assumed that the required shareholder approval has been
received, that the shares used to fund the awards were acquired
at the beginning of the respective period and that the shares
were acquired at the $10.00 per share purchase price. The
issuance of authorized but unissued shares of common stock
instead of shares repurchased in the open market would dilute
the ownership interests of shareholders of Alliance
Bancorp New, by approximately 3.85%, assuming the
midpoint of the offering range. The adjustment to pro forma net
income for the restricted stock awards reflects the after-tax
compensation expense associated with the awards. The assumed
effective tax rate is 34.0%. If the fair market value per share
is greater than $10.00 per share on the date shares are awarded
under the recognition and retention plan, total recognition and
retention plan expense would be greater. |
|
(3) |
|
As a result of the mergers contemplated by the plan of
conversion and reorganization and the elimination of Alliance
Mutual Holding Company, certain income and expense items
currently recognized by Alliance Mutual Holding Company will be
assumed by Alliance Bancorp-New. These items include an expense
related to the Directors Retirement Plan, which amounted
to $7,200 and $14,400 for the six months ended June 30,
2010 and the year ended December 31, 2009, respectively,
and office building depreciation, which amounted to $6,600 and
$13,200 for the six months ended June 30, 2010 and the year
ended December 31, 2009, respectively. In addition, certain
intercompany income and expense items of Alliance Mutual Holding
Company and Alliance Bancorp will be eliminated upon elimination
of Alliance Mutual Holding Company. These items include the
management fee paid by Alliance Mutual Holding Company to
Alliance Bancorp, which amounted to $168,000 and $360,000 for
the six months ended June 30, 2010 and the year ended
December 31, 2009, respectively, rental expense currently
paid by Alliance Bank to Alliance Mutual Holding Company, which
amounted to $21,000 and $42,000 for the six months ended
June 30, 2010 and the year ended December 31, 2009,
respectively, and rental expense currently paid by Alliance Bank
to Alliance Mutual Holding Company, which amounted to $21,000
and $42,000 for the six months ended June 30, 2010 and the
year ended December 31, 2009, respectively. The amounts
reflected in pro forma net income are shown net of taxes. |
(Footnotes continued on next page)
49
|
|
|
(4) |
|
Pro forma income on net investable proceeds is equal to the net
proceeds of the offering, plus the cash and investment assets
received from Alliance Mutual Holding Company, less the cost of
acquiring shares in the open market at the $10.00 per share
purchase price to fund the employee stock ownership plan and the
restricted stock awards under the recognition and retention plan
multiplied by the after-tax reinvestment rate. The after-tax
reinvestment rate is equal to 1.72% based on the following
assumptions: combined federal and state income tax rate of 34.0%
and a pre-tax reinvestment rate of 2.60%. |
|
(5) |
|
The adjustment to pro forma net income for stock options
reflects the compensation expense associated with the stock
options (assuming no federal tax benefit) that may be granted
under the new stock option plan to be adopted following the
offering. If the new stock option plan is approved by
shareholders, a number of shares equal to 10.0% of the shares
sold in the offering, or 5.95% of Alliance Bancorp
News common stock to be outstanding after the offering,
will be reserved for future issuance upon the exercise of stock
options that may be granted under the plan. The Black-Scholes
option-pricing formula has been used to estimate the values of
the options. Applicable accounting standards do not prescribe a
specific valuation technique to be used to estimate the fair
value of employee stock options. Alliance Bancorp
New may use a valuation technique other than the Black-Scholes
option-pricing formula and that technique may produce a
different value. In addition, if the fair market value per share
is different than $10.00 per share on the date options are
awarded under the stock option plan, or if the assumptions used
in the option-pricing formula are different from those used in
preparing this pro forma data, the value of the stock options
and the related expense would be different. The issuance of
authorized but unissued shares of common stock to satisfy option
exercises instead of shares repurchased in the open market would
dilute the ownership interests of existing shareholders, by
approximately 5.62%, assuming the midpoint of the offering range. |
|
(6) |
|
The historical net income per share has been adjusted to reflect
the exchange ratio of the additional shares to be issued by
Alliance Bancorp New in exchange for the currently
outstanding shares of Alliance Bancorp common stock. As
reported, the net income per share of Alliance Bancorp for the
six months ended June 30, 2010 and December 31, 2009
was $0.04 and $0.20, respectively. |
|
(7) |
|
The number of shares used to calculate pro forma net income per
share is equal to the total number of shares to be outstanding
upon completion of the offering, less the number of shares
purchased by the employee stock ownership plan not committed to
be released within one year following the offering. The number
of shares used to calculate pro forma stockholders equity
per share is equal to the total number of shares to be
outstanding upon completion of the offering. |
50
MANAGEMENTS
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Alliance Bancorp is a federally chartered holding company which
owns 100% of the capital stock of Alliance Bank, a community
oriented savings bank headquartered in Broomall, Pennsylvania.
We operate a total of nine banking offices, eight of which are
located in Delaware County and one in Chester County. Both
counties are suburbs of Philadelphia. Our primary business
consists of attracting deposits from the general public and
using those funds, together with funds we borrow, to originate
loans to our customers and invest in securities such as
U.S. Government and agency securities, mortgage-backed
securities and municipal obligations. At June 30, 2010,
Alliance Bancorp had $448.4 million of total assets,
$381.2 million of total deposits and
stockholders equity of $48.6 million.
Alliance Bank attracts the majority of its deposits from the
general public, businesses and municipalities using a
combination of its branch office network and the internet. These
deposits are used primarily to (i) originate and purchase
loans secured by first liens on single-family (one-to
four-family units) residential and commercial real estate
properties and (ii) invest in securities issued by the
United States (U.S.) Government and agencies
thereof, municipal and corporate debt securities and certain
mutual funds. Alliance Bank derives its income principally from
interest earned on loans, mortgage-backed securities and
investments and, to a lesser extent, from a variety of fees
received such as loan fees, services charges on deposits
accounts, safe deposit box rental income and ATM fees. Alliance
Banks primary expenses are interest expense on deposits
and borrowings and general operating expenses, including FDIC
deposit insurance premiums. Cash flow for activities is provided
primarily by new deposits, repayments, prepayments and
maturities of outstanding loans, investments, mortgage-backed
securities and other sources.
Alliance Bank is subject to regulation by the Pennsylvania
Department of Banking, as its chartering authority, and by the
FDIC, which insures Alliance Banks deposits up to
applicable limits.
The key elements of our operating strategy include:
Expand Our Market Presence and Geographic
Reach. We continue to seek ways to increase our
market penetration to grow our business and expand our
geographic reach in banking on other complementary financial
services businesses.
|
|
|
|
|
Expanding our Market Presence. We have
increased our market penetration through the use of television,
print media and outdoor sign marketing campaigns and by
increasing the products and services we offer. We incentivize
our employees to cross-sell our products and emphasize a
Customer
First®
mentality in an effort to maximize the number of our products
that each customer, household or business utilizes.
|
|
|
|
Complementary acquisitions. In addition to
organic growth, we continue to evaluate market expansion
acquisition opportunities to acquire other financial
institutions or financial service companies (such as wealth
management and insurance companies) in our current market area
as well as contiguous market areas that afford us the
opportunity to add complementary products to our existing
businesses, although we currently have no plans, agreements or
understandings with respect to any acquisitions or de novo
openings.
|
|
|
|
De novo branching. The net proceeds from the
offering will facilitate our ability to add new branch
locations, either on a de novo basis or through acquisitions to
provide our customers with better access and service in addition
to filling any gaps in our footprint. While our business plan
indicates our intention to open a new de novo branch office in
each of the next two years, any such openings will be subject
to, among other factors, market conditions, the economic
environment and the identification of sites which are acceptable
to us being available within our targeted expense range. We
currently have no specific plans, agreements or understandings
with respect to any acquisitions or de novo openings.
|
51
Improve Our Earnings and Diversify Our Income
Sources. We continue to seek ways of increasing
our net interest income, net interest margin and other sources
of non-interest income.
|
|
|
|
|
Emphasizing Origination of Commercial Real Estate
Loans. Commercial real estate loans are
attractive because they generally provide us with higher yields
and less interest rate risk because they typically have
adjustable rates of interest
and/or
shorter terms to maturity in comparison to traditional
single-family residential mortgage loans. At June 30, 2010,
$136.9 million or 47.6% of our total loan portfolio
consisted of commercial real estate loans. The net proceeds from
the offering will increase our capital, although we currently
maintain regulatory capital in excess of well
capitalized standards, and will facilitate our ability to
expand our loan relationships, consistent with our current
underwriting guidelines. We intend to continue to emphasize
growth in our commercial real estate lending in a manner
consistent with our loan underwriting policies and procedures
while recognizing the increased risk inherent in commercial real
estate loans. See Risk Factors Risks Related
to Our Business Our Loan Portfolio Includes a
Significant Amount of Commercial Real Estate Loans and
Construction Loans, which Have a Higher Risk of Loss than
Conforming, Single-Family Residential Mortgage Loans.
|
|
|
|
Expanding Business Banking Operations. We
hired an additional loan officer in 2009 and are currently
seeking more relationship managers and loan officers to
facilitate increased sales calls on local real estate investors,
builders and other area businesses to capitalize on our
commercial banking experience and to further penetrate the
markets we serve. As a community based bank, we believe that we
offer high quality customer service by combining locally based
management for fast decisions on loan applications and approvals
with customized deposit services which are attractive to small
and medium sized businesses.
|
|
|
|
Controlling Non-interest Expense. We monitor
our expense ratios closely and strive to improve our efficiency
ratio through expense control and increases in non interest
income and in net interest income. Our largest non-interest
expense is compensation. We work to limit growth of compensation
expense by controlling increases in the number of employees to
those needed to support our growth and by maximizing the use of
technology to increase efficiency.
|
|
|
|
Considering New Product Lines and
Businesses. We continue to evaluate new product
lines in our efforts to maintain a competitive edge and provide
our customers with a broad array of products and services to
meet the needs of our retail and business customers. In
particular, we continue to evaluate financial products to expand
our product offerings and improve our non-interest income. In
addition, we continue evaluate opportunities to provide our
customers with wealth management and insurance products and
services and to increase our non-interest income.
|
|
|
|
Continuing Residential Mortgage Lending. As a
community bank we continue our mission of supporting the
communities we serve by offering a strong line of traditional
single-family residential mortgage products. We offer first and
second mortgages of various terms using fixed or adjustable rate
products. In addition, we offer home equity loans and lines of
credit to support short term financing needs. At June 30,
2010, our loans secured by single-family residential mortgages
amounted to $110.4 million or 38.4% of our total loan
portfolio. At such date, our single-family residential loans
included $20.0 million in home equity loans and lines of
credit. Our single-family residential mortgage loans also
include subprime loans which, by their nature, generally are
considered to have a greater degree of risk than conforming
single-family residential mortgage loans. See Risk
Factors Risks Related to Our Business We
Originate Subprime Mortgage Loans For Our Portfolio and Subprime
Loans Have a Higher Risk of Loss than Conforming, Single-Family
Residential Mortgage Loans.
|
Maintaining a Quality Loan Portfolio While Exercising Prudent
Underwriting Standards. While the delinquencies
in our loan portfolio have increased during the current economic
downturn, we continue to emphasize maintaining strong asset
quality by following conservative underwriting criteria,
diligently applying our collection efforts, and originating
loans secured primarily by real estate. We will continue to
focus on asset quality as we seek to expand our commercial
lending activities. Our net charge-offs were
52
0.18% of our average loans outstanding for the six months ended
June 30, 2010, while our non-performing assets at
June 30, 2010 were $16.1 million, or 3.60% of total
assets. Of the $16.1 million, $9.8 million, or 60.9%
of total non-performing assets, are related to two borrower
relationships that we believe are adequately collateralized and
reserved against.
Improve our Funding Mix and Increase Core
Deposits. We are continuing our efforts to
increase our core deposits in order to help reduce and control
our cost of funds. We value core deposits because the represent
longer-term customer relationships and lower costs of funds. We
offer competitive rates on a wide variety of deposit products to
meet the individual needs of our customers. We also promote
longer term deposits where possible, consistent with our asset
liability management goals. In addition, we have focused on
lowering outstanding borrowings to improve our funding mix.
Since the year ended December 31, 2009, we have reduced
borrowings by $21.9 million, or 62.6%, to
$13.1 million at June 30, 2010. We intend to continue
to pay down our borrowings to improve our funding mix to benefit
our net interest margin and results of operations.
Our results of operations depend, to a large extent, on net
interest income, which is the difference between the income
earned on our loan and securities portfolios and interest
expense on deposits and borrowings. Our net interest income is
largely determined by our net interest spread, which is the
difference between the average yield earned on interest-earning
assets and the average rate paid on interest-bearing
liabilities, and the relative amounts of interest-earning assets
and interest-bearing liabilities. Results of operations are also
affected by our provisions for loan losses, fees and service
charges and other non-interest income and non-interest expense.
Non-interest expense principally consists of compensation and
employee benefits, office occupancy and equipment expense, data
processing, FDIC insurance premiums, advertising and other
expense. Our results of operations are also significantly
affected by general economic and competitive conditions,
particularly changes in interest rates, government policies and
actions of regulatory authorities. Future changes in applicable
law, regulations or government policies may materially impact
our financial condition and results of operations.
Our net income amounted to $265,000, $1.4 million and
$605,000 for the six months ended June 30, 2010 and the
years ended December 31, 2009 and 2008, respectively. Some
of the major factors and trends which have impacted our results
of operations in these periods include the following:
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|
Other than Temporary Impairment of
Securities. Management evaluates securities for
other-than-temporary
impairment at least on a quarterly basis, and more frequently
when economic or market conditions warrant such evaluation.
Consideration is given to (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, and (3) whether or not Alliance Bancorp intends to
sell or expects that it is more likely than not that it will be
required to sell the security prior to an anticipated recovery
in fair value. Once a decline in value for a debt security is
determined to be
other-than-temporary,
the
other-than-temporary
impairment is separated into (a) the amount of total
other-than-temporary
impairment related to a decrease in cash flows expected to be
collected from debt security (the credit loss) and (b) the
amount of
other-than-temporary
impairment related to all other factors. The amount of the total
other-than-temporary
impairment related to credit loss is recognized in earnings. The
amount of
other-than-temporary
impairment related to other factors is recognized in other
comprehensive income (loss). During 2008, Alliance Bancorp
recognized $882,000 in impairment charges on certain mutual
funds. During 2008, Alliance Bancorp identified the impairment
in these securities, which had a carrying value of
$18.0 million, as other than temporary and recorded the
charges against its operating results. During the second and
third quarters of 2008, we sold an aggregate of
$15.8 million of these securities into the market and
recorded additional pretax losses on such sales of $157,000 in
the aggregate. The remaining $2.7 million of such mutual
funds were sold at fair value to Alliance Mutual Holding Company
in 2008. During July 2010, Alliance Mutual Holding Company sold
all of its remaining interest in such mutual funds.
|
|
|
|
Low Market Rates of Interest. In recent
periods, our results have benefitted from the historically low
market rates of interest that have prevailed. During 2008, the
Federal Reserve Board reduced the federal
|
53
|
|
|
|
|
funds rate seven times from 4.25% at December 31, 2007 to a
range of 0% to 0.25% at December 31, 2008 and throughout
2009. The average rates that we pay on our interest-bearing
deposits and other liabilities have fallen steadily, from 4.03%
for the year ended December 31, 2007 to 1.91% during the
six months ended June 30, 2010. Because the average rates
on our deposits and other liabilities tend to adjust to changes
in market rates of interest more quickly than the average yields
we earn on our loans and other interest-earning assets, our
average interest rate spread (the difference between the average
yield earned on interest-earning assets and the average cost
paid on interest-bearing liabilities) has steadily increased
over this period, as has our net interest income. We anticipate
that the current low rate environment will continue to put
downward pressure on short term interest rates until the
economic recovery is sustainable. However, when the interest
rate environment begins to increase, it will cause pricing
pressure our deposit accounts and may have a negative impact on
our net income.
|
|
|
|
|
|
Increased Provisions for Loan Losses. In
recent periods, our results have been adversely affected by
provisions for loan losses, which are charged to expense, which
have been higher than our average historical levels. For the six
months ended June 30, 2010 and the years ended
December 31, 2009 and 2008, our provisions for loan losses
amounted to $1.2 million, $528,000 and $585,000,
respectively. The increases in our provisions for loan losses
reflect, among other factors, an increase in the amount of our
non-performing loans, which totaled $13.1 million or 4.57%
of our total loan portfolio at June 30, 2010 compared to
$2.1 million or 0.81% of the total loan portfolio at
December 31, 2007. At June 30, 2010, two loan
relationships accounted for $9.8 million or 74.8% of our
total non-performing loans. The increase in our non-performing
loans reflects the pressures imbedded in the national and local
economies as a result of the continuing recession. Our results
in future periods may be significantly affected by, among other
factors, additional provisions for loan losses or to recognize
losses on other non-performing assets.
|
|
|
|
|
|
Managing Other Expenses. Our other, or
non-interest expenses amounted to $5.7 million,
$10.9 million and $10.3 million for the six months
ended June 30, 2010 and the years ended December 31,
2009 and 2008, respectively. Our non-interest expenses increased
$179,000, or 3.3%, in the first six months of 2010 compared to
the first half of 2009. The primary reasons for the increase in
non-interest expenses in the 2010 period were increased
provisions for losses on other real estate owned
(OREO) and increased salary and employee benefits
expenses. The increase in 2009 compared to 2008 was primarily
due to a $563,000 or 290.9% increase in FDIC premium expense and
an increase in salary and employee benefits of $214,000. The
increase in FDIC deposit insurance premiums in the year ended
December 31, 2009 included a $195,000 charge for the FDIC
special assessment we paid in September of 2009. The increase in
salaries and employee benefits in 2009 compared to 2008 was due
to a higher level of staff members and annual increases in
employees salaries. We expect an additional
increase in salaries and benefits expenses after the conversion
and offering as a result of the proposed stock purchase by our
employee stock ownership plan as well as the new stock benefit
plans that we intend to implement. See
Management New Stock Benefit Plans.
|
Critical
Accounting Policies
In reviewing and understanding financial information for
Alliance Bancorp, you are encouraged to read and understand the
significant accounting policies used in preparing our
consolidated financial statements included elsewhere in this
document. These policies are described in Note 2 of the
notes to our consolidated financial statements. The accounting
and financial reporting policies of Alliance Bancorp conform to
accounting principles generally accepted in the United States of
America and to general practices within the banking industry.
Accordingly, the consolidated financial statements require
certain estimates, judgments, and assumptions, which are
believed to be reasonable, based upon the information available.
These estimates and assumptions affect the reported amounts of
assets and liabilities at the date of the consolidated financial
statements and the reported amounts of income and expenses
during the periods presented. The following accounting policies
comprise those that management believes are the most critical to
aid in fully understanding and evaluating our reported
consolidated financial results. These policies require numerous
estimates or
54
economic assumptions that may prove inaccurate or may be subject
to variations which may significantly affect our reported
results and financial condition for the period or in future
periods.
Allowance for Loan Losses. The allowance for
loan losses is established through a provision for loan losses
charged to expense. Charges against the allowance for loan
losses are made when management believes that the collectibility
of loan principal is unlikely. Subsequent recoveries are added
to the allowance. The allowance is an amount that management
believes will cover known and inherent losses in the loan
portfolio, based on evaluations of the collectibility of loans.
The evaluations take into consideration such factors as changes
in the types and amount of loans in the loan portfolio,
historical loss experience, adverse situations that may affect
the borrowers ability to repay, estimated value of any
underlying collateral, estimated losses relating to specifically
identified loans, and current economic conditions. This
evaluation is inherently subjective as it requires material
estimates including, among others, exposure at default, the
amount and timing of expected future cash flows on impaired
loans, value of collateral, estimated losses on our commercial
and residential loan portfolios and general amounts for
historical loss experience. All of these estimates may be
susceptible to significant change.
While management uses the best information available to make
loan loss allowance evaluations, adjustments to the allowance
may be necessary based on changes in economic and other
conditions or changes in accounting guidance. Historically, our
estimates of the allowance for loan losses have not required
significant adjustments from managements initial
estimates. In addition, the Pennsylvania Department of Banking
and the FDIC, as an integral part of their examination
processes, periodically review our allowance for loan losses.
The Pennsylvania Department of Banking and the FDIC may require
the recognition of adjustments to the allowance for loan losses
based on their judgment of information available to them at the
time of their examinations. To the extent that actual outcomes
differ from managements estimates, additional provisions
to the allowance for loan losses may be required that would
adversely impact earnings in future periods.
Income Taxes. We make estimates and judgments
to calculate some of our tax liabilities and determine the
recoverability of some of our deferred tax assets, which arise
from temporary differences between the tax and financial
statement recognition of revenues and expenses. We also estimate
a deferred tax asset valuation allowance if, based on the
available evidence, it is more likely than not that some portion
or all of the recorded deferred tax assets will not be realized
in future periods. These estimates and judgments are inherently
subjective. Historically, our estimates and judgments to
calculate our deferred tax accounts have not required
significant revision to our initial estimates.
In evaluating our ability to recover deferred tax assets, we
consider all available positive and negative evidence, including
our past operating results, recent cumulative losses and our
forecast of future taxable income. In determining future taxable
income, we make assumptions for the amount of taxable income,
the reversal of temporary differences and the implementation of
feasible and prudent tax planning strategies. These assumptions
require us to make judgments about our future taxable income and
are consistent with the plans and estimates we use to manage our
business. Any reduction in estimated future taxable income may
require us to record an additional valuation allowance against
our deferred tax assets. An increase in the valuation allowance
would result in additional income tax expense in the period and
could have a significant impact on our future earnings.
Other than Temporary Impairment of
Securities. Management evaluates securities for
other-than-temporary
impairment at least on a quarterly basis, and more frequently
when economic or market conditions warrant such evaluation.
Consideration is given to (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, and (3) whether or not we intend to sell or expects
that it is more likely than not that we will be required to sell
the security prior to an anticipated recovery in fair value.
Once a decline in value for a debt security is determined to be
other-than-temporary,
the
other-than-temporary
impairment is separated into (a) the amount of total
other-than-temporary
impairment related to a decrease in cash flows expected to be
collected from debt security (the credit loss) and (b) the
amount of
other-than-temporary
impairment related to all other factors. The amount of the total
other-than-temporary
impairment related to credit loss is recognized in earnings. The
55
amount of
other-than-temporary
impairment related to other factors is recognized in other
comprehensive income (loss).
FHLB Restricted Stock. Restricted stock
represents required investments in the common stock of a
correspondent bank and is carried at cost. As of June 30,
2010, December 31, 2009 and December 31, 2008,
restricted stock consisted solely of the common stock of the
Federal Home Loan Bank of Pittsburgh (FHLB). In
December of 2008, the FHLB notified member banks that it was
suspending dividend payments and the repurchase of capital stock.
Managements evaluation and determination of whether this
investment is impaired is based on its assessment of the
ultimate recoverability of its cost rather than by recognizing
temporary declines in value. The determination of whether a
decline affects the ultimate recoverability of an
investments cost is influenced by criteria such as
(1) the significance of the decline in net assets of the
FHLB as compared to the capital stock amount for the FHLB and
the length of time this situation has persisted,
(2) commitments by the FHLB to make payments required by
law or regulation and the level of such payments in relation to
the operating performance of the FHLB, and (3) the impact
of legislative and regulatory changes on institutions and,
accordingly, on the customer base of the FHLB.
Asset and
Liability Management
The ability to maximize net interest income is largely dependent
upon the achievement of a positive interest rate spread that can
be sustained during fluctuations in prevailing interest rates.
Interest rate sensitivity is a measure of the difference between
amounts of interest-earning assets and interest-bearing
liabilities which either reprice or mature within a given period
of time. The difference, or the interest rate repricing
gap, provides an indication of the extent to which a
banks interest rate spread will be affected by changes in
interest rates. A gap is considered positive when the amount of
interest-rate sensitive assets exceeds the amount of
interest-rate sensitive liabilities, and is considered negative
when the amount of interest-rate sensitive liabilities exceeds
the amount of interest-rate sensitive assets. Generally, during
a period of rising interest rates, a negative gap within shorter
maturities would adversely affect net interest income, while a
positive gap within shorter maturities would result in an
increase in net interest income, and during a period of falling
interest rates, a negative gap within shorter maturities would
result in an increase in net interest income while a positive
gap within shorter maturities would have the opposite effect.
Alliance Banks one year gap position at June 30, 2010
was a negative 35.9% primarily due to the $198.6 million of
certificate accounts which mature during the one year period
subsequent to June 30, 2010. In order to minimize the
potential for adverse effects of material and prolonged changes
in interest rates on Alliance Banks results of operations,
Alliance Banks management has implemented and continues to
monitor asset and liability management policies to better match
the maturities and repricing terms of Alliance Banks
interest-earning assets and interest-bearing liabilities. Such
policies have consisted primarily of: (i) emphasizing
investment in adjustable-rate mortgage loans (ARMs)
and shorter-term (15 years or less) mortgage-backed
securities; (ii) originating short-term secured commercial
loans with balloon provisions or the rate on the loan tied to
the prime rate; (iii) purchasing shorter-term (primarily
two to ten years) investment securities of investment grade
quality and U.S. Government Agency Bonds with terms of
15 years or less; (iv) selling longer-term
(15 years or more) fixed-rate residential mortgage loans in
the secondary market; (v) maintaining a high level of
liquid assets (including investments and mortgage backed
securities available for sale) that can be readily reinvested in
higher yielding investments should interest rates rise;
(vi) emphasizing the retention of lower-costing savings
accounts and other core deposits; (vii) using interest rate
floors and prepayment penalties on loan products; and
(viii) lengthening liabilities and locking in lower
borrowing rates with longer terms whenever possible.
56
The following table summarizes the anticipated maturities or
repricing of Alliance Banks interest-earning assets and
interest-bearing liabilities as of June 30, 2010 based on
the information and assumptions set forth in the footnotes below.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over
|
|
|
Over 3
|
|
|
Over 5
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year
|
|
|
Years
|
|
|
Years
|
|
|
|
|
|
|
|
|
|
1 Year
|
|
|
to 3
|
|
|
to 5
|
|
|
to 15
|
|
|
Over 15
|
|
|
|
|
|
|
or Less
|
|
|
Years
|
|
|
Years
|
|
|
Years
|
|
|
Years
|
|
|
Total
|
|
|
|
(Dollars in thousands)
|
|
|
Interest-earning assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable(1)
|
|
$
|
50,130
|
|
|
$
|
46,002
|
|
|
$
|
84,722
|
|
|
$
|
86,052
|
|
|
$
|
9,020
|
|
|
$
|
275,926
|
|
Mortgage-backed securities(2)
|
|
|
3,112
|
|
|
|
120
|
|
|
|
3,813
|
|
|
|
9,474
|
|
|
|
3,032
|
|
|
|
19,551
|
|
Investment securities(3)
|
|
|
9,026
|
|
|
|
10,085
|
|
|
|
5,021
|
|
|
|
16,653
|
|
|
|
9,506
|
|
|
|
50,291
|
|
Other interest-earning assets
|
|
|
60,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets
|
|
|
123,176
|
|
|
|
56,207
|
|
|
|
93,556
|
|
|
|
112,179
|
|
|
|
21,558
|
|
|
|
406,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings accounts(4)
|
|
|
8,573
|
|
|
|
8,573
|
|
|
|
8,573
|
|
|
|
8,573
|
|
|
|
8,572
|
|
|
|
42,864
|
|
NOW accounts
|
|
|
42,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,112
|
|
Money market deposit accounts
|
|
|
21,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,921
|
|
Certificate accounts
|
|
|
198,570
|
|
|
|
53,130
|
|
|
|
2,378
|
|
|
|
1,022
|
|
|
|
|
|
|
|
255,100
|
|
Borrowed money
|
|
|
13,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities
|
|
|
284,288
|
|
|
|
61,703
|
|
|
|
10,951
|
|
|
|
9,595
|
|
|
|
8,572
|
|
|
|
375,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repricing GAP during the period
|
|
|
(161,112
|
)
|
|
|
(5,496
|
)
|
|
|
82,605
|
|
|
|
102,584
|
|
|
|
12,986
|
|
|
|
31,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative GAP
|
|
$
|
(161,112
|
)
|
|
$
|
(166,608
|
)
|
|
$
|
(84,003
|
)
|
|
$
|
18,581
|
|
|
$
|
31,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of GAP during the period to total assets
|
|
|
(35.9
|
)%
|
|
|
(1.2
|
)%
|
|
|
18.4
|
%
|
|
|
22.9
|
%
|
|
|
2.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of cumulative GAP to total assets
|
|
|
(35.9
|
)%
|
|
|
(37.2
|
)%
|
|
|
(18.7
|
)%
|
|
|
4.1
|
%
|
|
|
7.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Adjustable-rate loans are included in the period in which
interest rates are next scheduled to adjust rather than in the
period in which they are contractually due to mature. Fixed-rate
loans are included in the period in which they are contractually
due to mature. Balances have been reduced by $11.3 million
for nonaccrual loans at June 30, 2010. |
|
(2) |
|
Reflects the repricing of the underlying loans and/or the
expected average life of the mortgage-backed security. |
|
(3) |
|
Reflects repricing or contractual maturity with respect to
investment securities. |
|
(4) |
|
For savings accounts, which totaled $42.9 million or 11.2%
of deposits at June 30, 2010, assumes a decay rate of 20%
per period. |
Management believes that the assumptions utilized to evaluate
the vulnerability of Alliance Banks operations to changes
in interest rates approximate actual experience and considers
them reasonable. However, the interest rate sensitivity of
Alliance Banks assets and liabilities in the above table
could vary substantially if different assumptions were used or
actual experience differs from the historical experience on
which they are based.
Although the actions taken by management of Alliance Bank have
reduced the potential effects of changes in interest rates on
Alliance Banks results of operations, significant
increases in interest rates may adversely affect Alliance
Banks net interest income because the repricing of
interest-bearing liabilities relative to interest-earning assets
occurs within shorter periods and because Alliance Banks
adjustable-rate, interest-earning assets generally are not as
responsive to changes in interest rates as its interest-bearing
liabilities. This is primarily due to terms which generally
permit only annual adjustments to loan interest rates and which
57
generally limit the amount which interest rates thereon can
adjust at such time and over the life of the related asset.
Net Portfolio Value and Net Interest Income
Analysis. Our interest rate sensitivity also is
monitored by management through the use of models which generate
estimates of the change in its net portfolio value
(NPV) and net interest income (NII) over
a range of interest rate scenarios. NPV is the present value of
expected cash flows from assets, liabilities, and off-balance
sheet contracts. The NPV ratio, under any interest rate
scenario, is defined as the NPV in that scenario divided by the
market value of assets in the same scenario.
The table below sets forth as of June 30, 2010, the
estimated changes in our net portfolio value that would result
from designated instantaneous changes in the United States
Treasury yield curve. Computations of prospective effects of
hypothetical interest rates changes are based on numerous
assumptions including relative levels of market interest rates,
loan prepayments and deposit decay, and should not be relied
upon as indicative of actual results.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2010
|
|
|
|
|
|
|
Percentage
|
Change in Interest
|
|
|
|
Dollar Change
|
|
Change from
|
Rates (Basis Points)(1)
|
|
Amount
|
|
from Base
|
|
Base
|
|
|
(Dollars in thousands)
|
|
|
+300
|
|
|
$
|
52,026
|
|
|
$
|
(1,591
|
)
|
|
|
(3.0
|
)%
|
|
+200
|
|
|
|
53,428
|
|
|
|
(188
|
)
|
|
|
(0.4
|
)
|
|
+100
|
|
|
|
54,395
|
|
|
|
778
|
|
|
|
1.5
|
|
|
0
|
|
|
|
53,616
|
|
|
|
|
|
|
|
|
|
|
−100
|
|
|
|
49,039
|
|
|
|
(4,577
|
)
|
|
|
(8.5
|
)
|
|
−200
|
|
|
|
45,446
|
|
|
|
(8,170
|
)
|
|
|
(15.2
|
)
|
|
|
|
(1) |
|
Assumes an instantaneous uniform change in interest rates. One
basis point equals 0.01%. |
In addition to modeling changes in NPV, we also analyze
potential changes to NII for a twelve-month period under rising
and falling interest rate scenarios. The following table shows
our NII model as of June 30, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in Interest Rates in
|
|
|
|
|
|
|
Basis Points (Rate Shock)
|
|
Net Interest Income
|
|
$ Change
|
|
% Change
|
|
|
(Dollars in thousands)
|
|
|
|
|
|
|
300
|
|
|
$
|
14,004
|
|
|
$
|
106
|
|
|
|
0.8
|
%
|
|
200
|
|
|
|
13,985
|
|
|
|
87
|
|
|
|
0.6
|
|
|
100
|
|
|
|
14,006
|
|
|
|
108
|
|
|
|
0.8
|
|
|
Static
|
|
|
|
13,898
|
|
|
|
|
|
|
|
|
|
|
(100
|
)
|
|
|
13,970
|
|
|
|
72
|
|
|
|
0.5
|
|
|
(200
|
)
|
|
|
13,966
|
|
|
|
68
|
|
|
|
0.5
|
|
The above table indicates that as of June 30, 2010, in the
event of an immediate and sustained 200 basis point
increase in interest rates, our net interest income for the
12 months ending June 30, 2011 would be expected to
increase by $87,000 or 0.6% to $14.0 million.
As is the case with the GAP Table, certain shortcomings are
inherent in the methodology used in the above interest rate risk
measurements. Modeling changes in NPV and NII require the making
of certain assumptions which may or may not reflect the manner
in which actual yields and costs respond to changes in market
interest rates. In this regard, the models presented assume that
the composition of our interest sensitive assets and liabilities
existing at the beginning of a period remains constant over the
period being measured and also assumes that a particular change
in interest rates is reflected uniformly across the yield curve
regardless of the duration to maturity or repricing of specific
assets and liabilities. Accordingly, although the NPV
measurements and net interest income models provide an
indication of interest rate risk exposure at a
58
particular point in time, such measurements are not intended to
and do not provide a precise forecast of the effect of changes
in market interest rates on net interest income and will differ
from actual results.
Financial
Condition
Changes
in Financial Condition at June 30, 2010 Compared to
December 31, 2009
Total assets decreased $15.8 million or 3.4% to
$448.4 million at June 30, 2010 compared to
$464.2 million at December 31, 2009. This decrease was
primarily due to an $8.5 million or 11.3% decrease in total
cash and cash equivalents, a $3.8 million or 16.3% decrease
in mortgage backed securities, a $1.4 million or 5.8%
decrease in investment securities held to maturity, a $674,000
or 2.3% decrease in investment securities available for sale,
and a $2.0 million or 0.7% decrease in loans receivable,
net of allowance for loan losses.
Total liabilities decreased $15.9 million or 3.8% to
$399.9 million at June 30, 2010 compared to
$415.8 million at December 31, 2009. This decrease was
due to a $27.0 million or 84.4% decrease in FHLB advances,
partially offset by a $6.0 million or 1.6% increase in
total deposits and a $5.0 million or 162.5% increase in
other borrowed money.
Stockholders equity increased $122,000 to
$48.6 million as of June 30, 2010 compared to
$48.4 million at December 31, 2009. The increase was
primarily due to a $262,000 decrease in accumulated other
comprehensive loss, and a $100,000 increase in retained
earnings. The increase was partially offset by a $277,000
increase in treasury stock. In January 2009, Alliance Bancorp
commenced a 292,612 share repurchase program and has
repurchased a total of 261,200 shares at an average price
of $8.14 per share through June 30, 2010.
Nonperforming assets, which consist of nonaccruing loans,
accruing loans 90 days or more delinquent and OREO (which
includes real estate acquired through, or in lieu of,
foreclosure), increased $5.3 million to $16.1 million
or 3.60% of total assets at June 30, 2010 from
$10.8 million or 2.33% of total assets at December 31,
2009. This increase was primarily due to a $6.1 million
land and development loan for a mixed use commercial real estate
project located in Bradenton, Florida, being placed on
non-accrual status at March 31, 2010. This resulted from a
lack of sales activity combined with a decline in the liquidity
of the borrowers and their inability to access additional funds.
At June 30, 2010, the $16.1 million of nonperforming
assets consisted of $1.8 million of accruing loans
90 days or more delinquent, $11.3 million of
nonaccrual loans, and $3.0 million in OREO. At
June 30, 2010, the $11.3 million of nonaccrual loans
consisted of one single family real estate loan in the amount of
$76,000, nine commercial real estate loans totaling
$1.4 million, two real estate construction loans in the
amount of $9.8 million, and one commercial business loan in
the amount of $74,000. The amount of specific allowances related
to nonaccrual loans was $1.2 million as of June 30,
2010. Management continues to aggressively pursue the collection
and resolution of all delinquent loans. See
Business Asset Quality Delinquent
Loans.
Alliance Bancorp strives to maintain current valuations of the
collateral supporting its impaired loans as well as other real
estate owned. In most cases, we utilize third-party appraisals
to determine the estimated fair value of the underlying
collateral when measuring for impairment. As part of our
valuation analysis, management considers the timing and
reliability of the original appraisal, the original
loan-to-value,
our overall exposure and current market conditions. As part of
our analysis, discounts may be applied to any collateral
valuations that were performed more than six months prior to the
reporting date.
At June 30, 2010 and December 31, 2009, the allowance
for loan losses amounted to $4.2 million and
$3.5 million, respectively. At June 30, 2010, the
allowance for loan losses amounted to 31.9% of nonperforming
loans and 1.46% of total loans receivable, as compared to 45.1%
and 1.23%, respectively, at December 31, 2009. The decrease
in the allowance for loan losses to total nonperforming loans
was primarily due to our analysis of the underlying real estate
collateral securing these loans.
Although management uses the best information available to make
determinations with respect to the provisions for loan losses,
additional provisions for loan losses may be required to be
established in the future should economic or other conditions
change substantially. In addition, the Pennsylvania Department
of
59
Banking and the FDIC, as an integral part of their examination
process, periodically review Alliance Banks allowance for
loan losses. Such agencies may require Alliance Bank to
recognize additions to such allowance based on their judgments
about information available to them at the time of their
examination.
Changes
in Financial Condition at December 31, 2009 compared to
December 31, 2008
Alliance Bancorps total assets increased
$40.1 million or 9.5% to $464.2 million at
December 31, 2009, compared to $424.1 million at
December 31, 2008. This increase was due primarily to a
$46.6 million or 164.7% increase in cash and cash
equivalents, a $6.6 million or 2.4% increase in loans
receivable, a $3.0 million increase in OREO, and a
$2.0 million increase in prepaid FDIC premium assessments.
These increases were partially offset by an $8.9 million or
23.6% decrease in investment securities available for sale, an
$8.6 million or 26.8% decrease in mortgage backed
securities, and an $810,000 decrease in investment securities
held to maturity. The increase in total cash and cash
equivalents in 2009 was primarily attributed to an increase in
customer deposits as well as cash received from certain
investment securities being called by the issuers as well as
normal principal repayments received on our portfolio of
mortgage backed securities available for sale. New loan
production amounted to $65.6 million for the year ended
December 31, 2009 and included $14.9 million in
residential and consumer lending, $43.0 million in
commercial and business lending and $7.7 million in real
estate construction lending. Alliance Bancorps net loans
receivable outstanding at December 31, 2009 grew
$6.6 million or 2.4% to $285.0 million compared to
$278.4 million at December 31, 2008. Alliance Bancorp
remains committed to continuing its lending emphasis on
developing and growing new and existing relationships with both
retail and commercial customers.
Total liabilities increased $40.6 million or 10.8% to
$415.8 million at December 31, 2009, compared to
$375.2 million at December 31, 2008. This increase was
primarily due to an increase of $46.1 million or 14.7% in
interest bearing deposits and a $1.9 million or 13.9%
increase in non-interest bearing deposits. The increase was
partially offset by a $5.0 million or 13.5% decrease in
FHLB advances. Stockholders equity decreased $454,000 or
0.9% to $48.4 million as of December 31, 2009 compared
to $48.9 million at December 31, 2008. During the year
ended December 31, 2009, Alliance Bancorp repurchased a
total of 228,000 shares of its common stock in its stock
repurchase program at an average price of $8.42 per share which
decreased stockholders equity by $1.9 million. The
decrease was partially offset by net income of $1.4 million
in 2009.
Nonperforming assets increased to $10.8 million or 2.33% of
total assets at December 31, 2009 from $7.0 million or
1.65% of total assets at December 31, 2008. At
December 31, 2009, $10.8 million of nonperforming
assets consisted of $1.4 million of accruing loans
90 days or more delinquent, $6.5 million of nonaccrual
loans and $3.0 million in other real estate owned. At
December 31, 2009, nonperforming loans consisted of
$1.7 million in single-family residential real estate
loans, $1.8 million in commercial real estate loans,
$3.7 million in a residential real estate construction
loan, $472,000 in commercial business loans, and $153,000 in
consumer and other loans.
At December 31, 2009, the total allowance for loan losses
amounted to $3.5 million, as compared to $3.2 million
at December 31, 2008. The increase was due to $528,000 in
provisions for loan losses made during the year ended
December 31, 2009 in light of factors such as the level of
nonperforming loans and the current economic environment. In
addition, in 2009, net charge-offs amounted to $159,000. At
December 31, 2009, the allowance for loan losses amounted
to 45.1% of total nonperforming loans and 1.23% of total loans
receivable, as compared to 45.3% and 1.13%, respectively, at
December 31, 2008 and 135.00% and 1.09% at
December 31, 2007.
Results
of Operations
Comparison
of Results of Operations for the Six Months Ended June 30,
2010 and 2009
General. Net income decreased $360,000 or
57.6% to $265,000 or $0.04 per basic and diluted share for the
six months ended June 30, 2010 compared to $625,000 or
$0.09 per basic and diluted share for the same period in 2009.
The decrease in net income was primarily due to a
$1.0 million or 680.0% increase in the provision for loan
losses for the six months ended June 30, 2010 compared to
the six months ended June 30, 2009. Also contributing to
the decrease in net income in the first six months of 2010 was
the $135,000 provision for loss on OREO
60
compared to no such provision in the prior year period. The
increase in the provision for loan losses was primarily due to
the need for specific allowances that resulted from our
quarterly valuation analysis for problem loans and, charge-offs
of $523,000. The provision for loss on OREO recorded was
primarily due to the need for additional write-downs that
resulted from our quarterly valuation analysis of our OREO.
Average Balances, Net Interest Income and Yields Earned and
Rates Paid. The following average balance sheet
table sets forth at the date and for the periods indicated,
information on Alliance Bancorp regarding: (i) the average
balance of interest-bearing assets and liabilities;
(ii) the total dollar amounts of interest income on
interest-earning assets and the resulting average yields;
(iii) the total dollar amounts of interest expense on
interest-bearing liabilities and the resulting average costs;
(iv) net interest income; (v) interest rate spread;
(vi) net average interest-earning assets; (vii) the
net yield earned on interest-earning assets; and (viii) the
ratio of total interest-earning assets to average total
interest-bearing liabilities. Information is based on average
daily balances during the six month periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
At June 30 2010,
|
|
|
2010
|
|
|
2009
|
|
|
|
Yield/
|
|
|
Average
|
|
|
|
|
|
Yield/
|
|
|
Average
|
|
|
|
|
|
Yield/
|
|
|
|
Rate
|
|
|
Balance
|
|
|
Interest
|
|
|
Rate
|
|
|
Balance
|
|
|
Interest
|
|
|
Rate
|
|
|
|
(Dollars in thousands)
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable(1)(2)
|
|
|
5.96
|
%
|
|
$
|
288,503
|
|
|
$
|
8,475
|
|
|
|
5.88
|
%
|
|
$
|
282,827
|
|
|
$
|
8,530
|
|
|
|
6.03
|
%
|
Mortgage-backed securities
|
|
|
4.61
|
|
|
|
21,774
|
|
|
|
450
|
|
|
|
4.14
|
|
|
|
30,070
|
|
|
|
674
|
|
|
|
4.48
|
|
Investment securities(2)
|
|
|
3.78
|
|
|
|
53,334
|
|
|
|
1,057
|
|
|
|
3.96
|
|
|
|
56,767
|
|
|
|
1,332
|
|
|
|
4.69
|
|
Other interest-earning assets
|
|
|
0.27
|
|
|
|
75,038
|
|
|
|
150
|
|
|
|
0.40
|
|
|
|
32,503
|
|
|
|
68
|
|
|
|
0.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets
|
|
|
4.79
|
|
|
|
438,649
|
|
|
|
10,132
|
|
|
|
4.62
|
|
|
|
402,167
|
|
|
|
10,604
|
|
|
|
5.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-earning assets
|
|
|
|
|
|
|
28,492
|
|
|
|
|
|
|
|
|
|
|
|
26,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
|
|
|
$
|
467,141
|
|
|
|
|
|
|
|
|
|
|
$
|
428,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
1.44
|
|
|
$
|
370,700
|
|
|
|
3,001
|
|
|
|
1.62
|
|
|
$
|
318,244
|
|
|
|
3,798
|
|
|
|
2.39
|
|
FHLB advances and other borrowings
|
|
|
2.69
|
|
|
|
25,369
|
|
|
|
786
|
|
|
|
6.20
|
|
|
|
40,111
|
|
|
|
1,185
|
|
|
|
5.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities
|
|
|
1.48
|
|
|
|
396,069
|
|
|
|
3,787
|
|
|
|
1.91
|
|
|
|
358,355
|
|
|
|
4,983
|
|
|
|
2.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing liabilities
|
|
|
|
|
|
|
22,220
|
|
|
|
|
|
|
|
|
|
|
|
20,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
|
|
418,289
|
|
|
|
|
|
|
|
|
|
|
|
379,300
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
|
|
|
|
48,852
|
|
|
|
|
|
|
|
|
|
|
|
48,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
|
|
|
|
$
|
467,141
|
|
|
|
|
|
|
|
|
|
|
$
|
428,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest-earning assets
|
|
|
|
|
|
$
|
42,580
|
|
|
|
|
|
|
|
|
|
|
$
|
43,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income/interest rate spread
|
|
|
|
|
|
|
|
|
|
$
|
6,345
|
|
|
|
2.71
|
%
|
|
|
|
|
|
$
|
5,621
|
|
|
|
2.49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.89
|
%
|
|
|
|
|
|
|
|
|
|
|
2.80
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning assets to interest-bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110.75
|
%
|
|
|
|
|
|
|
|
|
|
|
112.23
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Nonaccrual loans and loan fees have been included. |
|
(2) |
|
Indicated yields are not reflected on a tax equivalent basis. |
|
(3) |
|
Net interest income divided by average interest-earning assets. |
61
Rate/Volume Analysis. The following table
describes the extent to which changes in interest rates and
changes in volume of interest-related assets and liabilities
have affected our interest income and expense during the periods
indicated. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes
attributable to (i) changes in volume (change in volume
multiplied by prior year rate), (ii) changes in rate
(change in rate multiplied by prior year volume), and
(iii) total change in rate and volume. The combined effect
of changes in both rate and volume has been allocated
proportionately to the change due to rate and the change due to
volume.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2010 vs. 2009
|
|
|
|
Increase
|
|
|
|
(Decrease) Due To
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Increase
|
|
|
|
Rate
|
|
|
Volume
|
|
|
(Decrease)
|
|
|
|
(Dollars in thousands)
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable
|
|
$
|
(537
|
)
|
|
$
|
482
|
|
|
$
|
(55
|
)
|
Mortgage-backed securities
|
|
|
93
|
|
|
|
(317
|
)
|
|
|
(224
|
)
|
Investment securities
|
|
|
(330
|
)
|
|
|
55
|
|
|
|
(275
|
)
|
Other interest-earning assets
|
|
|
(99
|
)
|
|
|
181
|
|
|
|
82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets
|
|
|
(873
|
)
|
|
|
401
|
|
|
|
(472
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
(2,870
|
)
|
|
|
2,073
|
|
|
|
(797
|
)
|
FHLB advances and other borrowings
|
|
|
527
|
|
|
|
(926
|
)
|
|
|
(399
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities
|
|
|
(2,343
|
)
|
|
|
1,147
|
|
|
|
(1,196
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in net interest income
|
|
$
|
1,470
|
|
|
$
|
(746
|
)
|
|
$
|
724
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income. Net interest income is
determined by our interest rate spread (i.e., the difference
between the yields earned on our interest-earning assets and the
rates paid on our interest-bearing liabilities) and the relative
amounts of interest-earning assets and interest-bearing
liabilities Net interest income increased $724,000 or 12.9%
during the six months ended June 30, 2010 compared to the
same period in 2009. The increase in net interest income in the
2010 period was due to a $1.2 million or 24.0% decrease in
interest expense on interest bearing liabilities, primarily the
result of a $797,000 or 21.0% decrease in the interest expense
on interest bearing deposits as well as a $399,000 or 33.7%
decrease on interest expense on FHLB advances and other borrowed
money. This decrease more than offset a $472,000 or 4.5%
decrease in interest income during the six months ended
June 30, 2010 compared to the same period in 2009.
Interest Income. Interest income decreased
$472,000 or 4.5% to $10.1 million for the six months ended
June 30, 2010, compared to the same period in 2009. The
decrease was due to a $275,000 or 20.6% decrease in interest
income on investment securities, a $224,000 or 33.2% decrease in
interest income on mortgage backed securities, and a $55,000 or
0.6% decrease in interest income on loans. These decreases were
partially offset by an $82,000 or 120.6% increase in interest
income earned on balances due from depository institutions. The
decrease in interest income on investment securities was due to
a $3.4 million or 6.1% decrease in the average balance of
investment securities and a 73 basis point or 15.6%
decrease in the average yield earned. The decrease in interest
income on mortgage backed securities was due to an
$8.3 million or 27.6% decrease in the average balance of
mortgage backed securities and a 34 basis point or 7.6%
decrease in the average yield earned. The decrease in interest
income on loans was due to a 15 basis point or 2.5%
decrease in the average yield earned on loans, which was
partially offset by a $5.7 million or 2.0% increase in the
average balance of loans. The increase in interest income on
balances due from depository institutions was due to a
$42.5 million or 130.9% increase in the average balance of
balances due from depository institutions, which was partially
offset by a two basis point or 4.8% decrease in the average
yield earned.
62
Interest Expense. Interest expense decreased
$1.2 million or 24.0% to $3.8 million for the six
months ended June 30, 2010, compared to the same period in
2009. This decrease in interest expense was primarily the result
of a $797,000 or 21.0% decrease in interest expense on interest
bearing deposits and a $399,000 or 33.7% decrease on interest
expense on FHLB advances and other borrowed money. The decrease
in interest expense on interest bearing deposits was the result
of a 77 basis point or 32.2% decrease on rates paid on
interest bearing deposits, which was partially offset by a
$52.5 million or 16.5% increase in the average balance of
interest bearing deposits. The decrease in interest expense on
FHLB advances and other borrowed money was the result of a
$14.7 million or 36.8% decrease in the average balance of
FHLB advances and other borrowed money, partially offset by a
29 basis point or 4.9% increase in the average rate paid on
FHLB advances and other borrowed money.
Provision for Loan Losses. We establish
provisions for loan losses, which are charged to operations, to
maintain the allowance for loan losses at a level which will
cover known and inherent losses in the loan portfolio, based
upon an assessment of prior loss experience, the volume and type
of lending conducted, industry standards, past due loans,
economic conditions in our market area and other factors related
to the collectibility of the loan portfolio. The provision for
loan losses amounted to $1.2 million for the six months
ended June 30, 2010.
The higher provisions in 2010 primarily resulted from the
completion of our quarterly valuation analysis with respect to a
$3.7 million real estate construction loan on 16 remaining
substantially completed residential units located in center city
Philadelphia that has been on non-accrual status since March
2009 as well as a $6.1 million land and development loan
for a mixed use commercial real estate project located in
Bradenton, Florida that was placed on non-accrual status on
March 31, 2010. Also contributing to this increase were
charge-offs of $523,000 related to two residential real estate
loans and two commercial loan relationships. Such provisions
were necessary in light of, among other factors, the level of
nonperforming loans and the current economic environment.
Other Income. Other income was $559,000 for
the six months ended June 30, 2010 compared to $590,000 for
the same period in 2009. The decrease was primarily the result
of Alliance Bancorp realizing a $20,000 loss on the sale of OREO
which was recorded as a reduction of other income in the first
quarter of 2010. The decrease in other income also included a
$12,000 or 6.7% decrease in management fees and a $7,000 or 3.8%
decrease in the cash surrender value of bank owned life
insurance, which was partially offset by a $4,000 or 4.8%
increase in other fee income. For the six months ended
June 30, 2010, Alliance Bancorp collected $168,000 in
management fees from Alliance Mutual Holding Company compared to
$180,000 for the six months ended June 30, 2009.
Other Expenses. Other expenses increased
$179,000 or 3.3% to $5.7 million for the six months ended
June 30, 2010 compared to the same period in 2009. The
increase was primarily due to a $135,000 provision for loss on
OREO. The increase in the provision for loss on OREO was
primarily due to the need for additional write-downs that
resulted from our quarterly valuation analysis for OREO. Also
contributing to the increase in other expenses was a $123,000 or
4.2% increase in salaries and employee benefits, a $10,000 or
3.6% increase in professional fees, and a $12,000 or 9.4%
increase in directors fees. These increases in other expenses
were partially offset by a $122,000 or 27.1% decrease in FDIC
insurance premiums that primarily resulted from a special
assessment of $195,000 recorded on June 30, 2009.
In May 2010, Alliance Bank commenced legal action to defend its
trademark known as Customer First. For the quarter ended
June 30, 2010, we recorded $52,000 in related legal
expenses and estimate additional legal expenses ranging from
$200,000 to $250,000 to be recorded in the third quarter of 2010
with respect to this action. See Business
Legal Proceedings.
Income Tax Benefit. Income tax benefit
amounted to $(205,000) and $(59,000) for the six months ended
June 30, 2010 and 2009, respectively, resulting in
effective tax rates of (341.7)% and (10.4)%, respectively. The
increase in income tax benefit was primarily due to a lower
amount of income before income tax benefit for the six months
ended June 30, 2010 compared to income before income tax
benefit for the six months ended June 30, 2009. In
addition, as a result of changes to various items that result in
book to tax differences,
63
such as increases to the allowance for loan losses through the
recording of additional provisions, our net deferred tax assets
have been increasing.
Comparison
of Results of Operations for the Years Ended December 31,
2009 and 2008
General. We recorded net income of
$1.4 million, or $0.20 per basic and diluted share, for the
year ended December 31, 2009 compared to net income of
$605,000, or $0.09 per basic and diluted share, in 2008.
Net interest income increased $741,000 for the year ended
December 31, 2009 compared to 2008, primarily due to a
$2.2 million decrease in interest expense as a result of
decreasing interest rates paid on deposits during 2009 and 2008.
The lower interest rates paid on deposits reflect the generally
lower market rates of interest following the actions of the
Federal Reserve Board to reduce the key short-term rate seven
times from 4.25% at December 31, 2007 to a range of 0% to
0.25% at December 31, 2008 and throughout 2009. Other
income increased $923,000 or 383.0% for the year ended
December 31, 2009, compared to 2008. This increase was
primarily attributable to the prior year $882,000 impairment
charge on certain mutual funds and a $157,000 loss on the sale
of certain mutual funds recorded during 2008, which was
partially offset by a reduction in service charges in 2009
compared to 2008. Other expenses increased by $597,000 or 5.8%
for the year ended December 31, 2009 compared to 2008. The
increase in other expense in 2009 compared to 2008 was primarily
due to increases in salaries and employee benefits expense, an
increase in FDIC deposit insurance premiums, and an increase in
provision for loss on OREO. The increase in salaries and
employee benefits was primarily attributed to a higher level of
staff members and annual increases in employees salaries.
The increase in FDIC deposit insurance premiums included a
$195,000 charge for the FDIC special assessment recorded in the
second quarter of 2009. The increase in the provision for loss
on OREO was the result of our analysis of the underlying real
estate which warranted an additional allowance. The provision
for loan losses decreased $57,000 in 2009 compared to 2008
primarily due to a lower amount of charge-offs in 2009 as
compared to 2008. For 2009, we recorded a $41,000 income tax
benefit compared to a $411,000 tax benefit for 2008. The income
tax benefit decreased due to a higher amount of pretax income
for the year ended December 31, 2009 compared to 2008.
Average Balances, Net Interest Income and Yields Earned and
Rates Paid. The following average balance sheet
table sets forth for the periods indicated, information on
Alliance Bancorp regarding: (i) the average balance of
interest-bearing assets and liabilities; (ii) the total
dollar amounts of interest income on interest-earning assets and
the resulting average yields; (iii) the total dollar
amounts of interest expense on interest-bearing liabilities and
the resulting average costs; (iv) net interest income;
(v) interest rate spread; (vi) net average
interest-earning assets; (vii) the net yield earned on
interest-earning assets; and (viii) the ratio
64
of average total interest-earning assets to total
interest-bearing liabilities. Information is based on average
daily balances during the periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
Average
|
|
|
|
|
|
Yield/
|
|
|
Average
|
|
|
|
|
|
Yield/
|
|
|
Average
|
|
|
|
|
|
Yield/
|
|
|
|
Balance
|
|
|
Interest
|
|
|
Rate
|
|
|
Balance
|
|
|
Interest
|
|
|
Rate
|
|
|
Balance
|
|
|
Interest
|
|
|
Rate
|
|
|
|
(Dollars in thousands)
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable(1)(2)(4)
|
|
$
|
283,736
|
|
|
$
|
17,024
|
|
|
|
6.00
|
%
|
|
$
|
271,859
|
|
|
$
|
17,485
|
|
|
|
6.43
|
%
|
|
$
|
247,157
|
|
|
$
|
16,966
|
|
|
|
6.86
|
%
|
Mortgage-backed securities
|
|
|
28,897
|
|
|
|
1,230
|
|
|
|
4.26
|
|
|
|
32,531
|
|
|
|
1,494
|
|
|
|
4.59
|
|
|
|
39,660
|
|
|
|
1,816
|
|
|
|
4.58
|
|
Investment securities(4)
|
|
|
58,383
|
|
|
|
2,638
|
|
|
|
4.52
|
|
|
|
59,568
|
|
|
|
2,851
|
|
|
|
4.79
|
|
|
|
64,983
|
|
|
|
3,333
|
|
|
|
5.13
|
|
Other interest-earning assets
|
|
|
44,065
|
|
|
|
199
|
|
|
|
0.45
|
|
|
|
36,021
|
|
|
|
712
|
|
|
|
1.98
|
|
|
|
46,200
|
|
|
|
2,225
|
|
|
|
4.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets
|
|
|
415,081
|
|
|
|
21,091
|
|
|
|
5.08
|
|
|
|
399,979
|
|
|
|
22,542
|
|
|
|
5.64
|
|
|
|
398,000
|
|
|
|
24,340
|
|
|
|
6.12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-earning assets
|
|
|
25,774
|
|
|
|
|
|
|
|
|
|
|
|
23,028
|
|
|
|
|
|
|
|
|
|
|
|
22,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
440,855
|
|
|
|
|
|
|
|
|
|
|
$
|
423,007
|
|
|
|
|
|
|
|
|
|
|
$
|
420,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
$
|
332,795
|
|
|
$
|
7,257
|
|
|
|
2.18
|
|
|
$
|
310,023
|
|
|
|
9,267
|
|
|
|
2.99
|
|
|
$
|
307,096
|
|
|
|
11,618
|
|
|
|
3.79
|
|
FHLB advances and other borrowings
|
|
|
37,880
|
|
|
|
2,252
|
|
|
|
5.95
|
|
|
|
42,249
|
|
|
|
2,434
|
|
|
|
5.76
|
|
|
|
40,372
|
|
|
|
2,381
|
|
|
|
5.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities
|
|
|
370,675
|
|
|
|
9,509
|
|
|
|
2.57
|
|
|
|
352,272
|
|
|
|
11,701
|
|
|
|
3.32
|
|
|
|
347,468
|
|
|
|
13,999
|
|
|
|
4.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest-bearing liabilities
|
|
|
21,331
|
|
|
|
|
|
|
|
|
|
|
|
20,883
|
|
|
|
|
|
|
|
|
|
|
|
24,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
392,006
|
|
|
|
|
|
|
|
|
|
|
|
373,155
|
|
|
|
|
|
|
|
|
|
|
|
372,268
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
48,849
|
|
|
|
|
|
|
|
|
|
|
|
49,852
|
|
|
|
|
|
|
|
|
|
|
|
48,473
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
440,855
|
|
|
|
|
|
|
|
|
|
|
$
|
423,007
|
|
|
|
|
|
|
|
|
|
|
$
|
420,741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest-earning assets
|
|
$
|
44,406
|
|
|
|
|
|
|
|
|
|
|
$
|
47,707
|
|
|
|
|
|
|
|
|
|
|
$
|
50,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income/interest rate spread
|
|
|
|
|
|
$
|
11,582
|
|
|
|
2.51
|
%
|
|
|
|
|
|
$
|
10,841
|
|
|
|
2.32
|
%
|
|
|
|
|
|
$
|
10,341
|
|
|
|
2.09
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin(3)
|
|
|
|
|
|
|
|
|
|
|
2.79
|
%
|
|
|
|
|
|
|
|
|
|
|
2.71
|
%
|
|
|
|
|
|
|
|
|
|
|
2.60
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of interest-earning assets to interest-bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
111.98
|
%
|
|
|
|
|
|
|
|
|
|
|
113.54
|
%
|
|
|
|
|
|
|
|
|
|
|
114.54
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes loans held for sale. |
|
(2) |
|
Nonaccrual loans and loan fees have been included. |
|
(3) |
|
Net interest income divided by average interest-earning assets. |
|
(4) |
|
Indicated yields are not reflected on a tax equivalent basis. |
Rate/Volume Analysis. The following table
describes the extent to which changes in interest rates and
changes in volume of interest-related assets and liabilities
have affected our interest income and expense during the periods
indicated. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes
attributable to (i) changes in volume (change in volume
multiplied by prior year rate), (ii) changes in rate
(change in rate multiplied by prior year volume), and
(iii) total change in rate
65
and volume. The combined effect of changes in both rate and
volume has been allocated proportionately to the change due to
rate and the change due to volume.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009 vs. 2008
|
|
|
2008 vs. 2007
|
|
|
|
Increase
|
|
|
Increase
|
|
|
|
(Decrease) Due To
|
|
|
(Decrease) Due To
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Increase
|
|
|
|
|
|
|
|
|
Increase
|
|
|
|
Rate
|
|
|
Volume
|
|
|
(Decrease)
|
|
|
Rate
|
|
|
Volume
|
|
|
(Decrease)
|
|
|
|
(Dollars in thousands)
|
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable
|
|
$
|
(1,079
|
)
|
|
$
|
618
|
|
|
$
|
(461
|
)
|
|
$
|
(1,368
|
)
|
|
$
|
1,887
|
|
|
$
|
519
|
|
Mortgage-backed securities
|
|
|
(102
|
)
|
|
|
(161
|
)
|
|
|
(263
|
)
|
|
|
4
|
|
|
|
(327
|
)
|
|
|
(323
|
)
|
Investment securities
|
|
|
(160
|
)
|
|
|
(54
|
)
|
|
|
(214
|
)
|
|
|
(211
|
)
|
|
|
(270
|
)
|
|
|
(481
|
)
|
Other interest-earning assets
|
|
|
(498
|
)
|
|
|
(15
|
)
|
|
|
(513
|
)
|
|
|
(1,233
|
)
|
|
|
(280
|
)
|
|
|
(1,513
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-earning assets
|
|
|
(1,839
|
)
|
|
|
387
|
|
|
|
(1,451
|
)
|
|
|
(2,808
|
)
|
|
|
1,010
|
|
|
|
(1,798
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
(2,444
|
)
|
|
|
434
|
|
|
|
(2,010
|
)
|
|
|
(2,437
|
)
|
|
|
86
|
|
|
|
(2,351
|
)
|
FHLB advances and other borrowings
|
|
|
67
|
|
|
|
(249
|
)
|
|
|
(182
|
)
|
|
|
(48
|
)
|
|
|
101
|
|
|
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest-bearing liabilities
|
|
|
(2,377
|
)
|
|
|
185
|
|
|
|
(2,192
|
)
|
|
|
(2,485
|
)
|
|
|
188
|
|
|
|
(2,298
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in net interest income
|
|
$
|
538
|
|
|
$
|
202
|
|
|
$
|
741
|
|
|
$
|
(324
|
)
|
|
$
|
822
|
|
|
$
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income. Interest expense
decreased $2.2 million or 18.7% in 2009 compared to 2008
which more than offset a decrease of $1.5 million or 6.4%
in interest income. Net interest income increased $741,000 or
6.8% to $11.6 million for the year ended December 31,
2009 compared to 2008. This increase was primarily due to a
decrease in rates paid on interest bearing deposits, which was
partially offset by reductions in interest income on loans,
investment securities on balances from depository institutions.
In December 2008, the FHLB of Pittsburgh notified member banks
that it was suspending dividend payments and the repurchase of
capital stock. At December 31, 2009, our investment in FHLB
stock amounted to $2.4 million. We received $53,000 in
dividends on our FHLB stock during the year ended
December 31, 2008.
Interest Income. Interest income decreased
$1.5 million or 6.4% to $21.1 million for the year
ended December 31, 2009, compared to the same period in
2008. The decrease was primarily due to a $513,000 or 72.1%
decrease in interest income on balances due from depository
institutions, a $213,000 or 7.5% decrease in interest income on
investment securities, a $264,000 or 17.7% decrease in interest
income earned on mortgage backed securities, and a $461,000 or
2.6% decrease in interest income earned on loans. The decrease
in interest due from depository institutions was due to a
153 basis point or 77.3% decrease in the average yield
earned on balances due from depository institutions, which was
partially offset by an $8.0 million or 22.3% increase in
the average balance of balances due from depository
institutions. The decrease in interest income on investment
securities was due to a $1.2 million or 2.0% decrease in
average balance of investment securities and a 27 basis
point or 5.6% decrease in the average yield earned on investment
securities. The decrease in interest income on mortgage backed
securities was primarily due to a $3.6 million or 11.2%
decrease in the average balance of mortgage backed securities
and a 33 basis point or 7.2% decrease in the average yield
earned on mortgage backed securities. The decrease in interest
income on loans was primarily due to a 43 basis point or
6.7% decrease in the average yield earned on loans, partially
offset by a $11.9 million or 4.4% increase in the average
balance of loans outstanding.
Interest Expense. Interest expense decreased
$2.2 million or 18.7% to $9.5 million for the year
ended December 31, 2009, compared to the same period in
2008. This decrease was primarily due to a decrease of $2.0
million or 21.9% in interest expense on deposits and a decrease
of $182,000 or 7.5% in interest expense on FHLB advances and
other borrowings. The decrease in interest expense on deposits
was primarily due to a 81 basis point or 27.0% decrease in
the average rate paid, which was partially offset by a
$22.8 million or 7.4% increase in the average balance
outstanding. The decrease in interest expense on FHLB advances
and other
66
borrowings was due to a $4.4 million or 10.3% decrease in
the average balance outstanding, which was partially offset by
an 19 basis point or 3.3% increase in the average rates
paid on FHLB advances and other borrowings.
Provision for Loan Losses. The provision for
loan losses amounted to $528,000 and $585,000 for the years
ended December 31, 2009 and 2008, respectively.
Other Income. Total other income increased
$923,000 or 383.0% to $1.2 million for the year ended
December 31, 2009, compared to 2008. This increase is
primarily attributable to the prior year $882,000 impairment
charge on certain mutual funds and a $157,000 loss on the sale
of certain mutual funds recorded during 2008. Alliance Bank has
collected a management fee from Alliance Mutual Holding Company
which reimburses Alliance Bank for certain salary and overhead
costs Alliance Bank incurs on behalf of the mutual holding
company. The management fees for 2009 and 2008 were $360,000 and
$384,000, respectively.
Other Expenses. Our other expenses amounted to
$10.9 million and $10.3 million for the years ended
December 31, 2009 and 2008, respectively. This increase is
primarily due to increases in salaries and employee benefits
expense of $213,000, an increase in FDIC deposit insurance
premiums of $563,000, and an increase in provision for loss on
OREO of $107,000 when comparing 2009 to 2008. The increase in
salaries and employee benefits was primarily attributed to a
higher level of staff members and modest annual increases in
employees salaries. The increase in FDIC deposit insurance
premiums included a $195,000 charge for the FDIC special
assessment we recorded in the second quarter of 2009. The
increase in the provision for loss on OREO is the result of our
analysis of the value of the subject real estate. As of
December 31, 2009, we had $3.0 million in OREO
compared to no OREO at December 31, 2008.
Income Tax Benefit. Income tax benefit
amounted to $41,000 and $411,000 for the years ended
December 31, 2009 and 2008, respectively, resulting in
effective tax rates of (3.1)% and (211.6)%, respectively. The
decrease in income tax benefit for the year ended
December 31, 2009 was primarily due to higher pre-tax
income in 2009 compared to 2008. The tax benefit primarily
resulted from tax exempt income from bank owned life insurance
and certain tax-exempt securities purchased by Alliance Bancorp.
Liquidity
and Capital Resources
Alliance Bancorps liquidity, represented by cash and cash
equivalents, is a product of cash flows from operations. Our
primary sources of funds are deposits, borrowings, amortization,
prepayments and maturities of outstanding loans and
mortgage-backed securities, sales of loans, maturities and calls
of investment securities and other short-term investments and
income from operations. Changes in the cash flows of these
instruments are greatly influenced by economic conditions and
competition. The 2007 reorganization to the two tier holding
company structure and related stock offering resulted in
$16.5 million in net proceeds, which further strengthened
our liquidity and capital position. We attempt to balance supply
and demand by managing the pricing of its loan and deposit
products while maintaining a level of growth consistent with the
conservative operating philosophy of the management and board of
directors. Any excess funds are invested in overnight and other
short-term interest-earning accounts. Alliance Bancorp generates
cash flow through the retail deposit market, its traditional
funding source, for use in investing activities. In addition, we
may utilize borrowings such as FHLB advances for liquidity or
profit enhancement. At June 30, 2010, we had
$5.0 million of outstanding advances and
$135.0 million of additional borrowing capacity from the
FHLB of Pittsburgh. We are reviewing our continued utilization
of advances from the FHLB as a source of funding based upon
decisions by the FHLB to suspend the dividend on, and restrict
the repurchase of, FHLB stock. The $5.0 million in FHLB
advances is due in the third quarter of 2010. Management intends
to repay the remaining $5.0 million with cash on hand. FHLB
stock is required to be held when advances from the FHLB are
taken. Further, we have access to the Federal Reserve Bank
discount window. At June 30, 2010, we had no such funds
outstanding from the Federal Reserve Bank.
The primary use of funds is to meet ongoing loan and investment
commitments, to pay maturing savings certificates and savings
withdrawals and expenses related to general operations of
Alliance Bancorp. At June 30, 2010, the total approved loan
commitments outstanding amounted to $9.1 million. At the
same date, commitments under unused lines of credit amounted to
$29.4 million. Certificates of deposit scheduled to mature
in one year or less at June 30, 2010, totaled
$198.6 million. Management believes that a significant
67
portion of maturing deposits will remain with Alliance Bancorp.
Investment and mortgage-backed securities totaled
$41.6 million at June 30, 2010, of which
$12.1 million are scheduled to mature or reprice in one
year or less. We anticipate that we will continue to have
sufficient cash flows to meet our current and future commitments.
Regulatory
Capital Requirements
The following table summarizes Alliance Banks total
stockholders equity, FDIC regulatory capital, total FDIC
risk-based assets, leverage and risk-based regulatory ratios at
the date indicated.
|
|
|
|
|
|
|
June 30, 2010
|
|
|
|
(Dollars in thousands)
|
|
|
Total stockholders equity or GAAP capital
|
|
$
|
46,795
|
|
FDIC adjustment for securities
available-for-sale
|
|
|
(781
|
)
|
FDIC adjustment for retirement plans
|
|
|
1,102
|
|
|
|
|
|
|
FDIC tier 1 capital
|
|
|
47,116
|
|
Plus: FDIC tier 2 capital(1)
|
|
|
3,673
|
|
|
|
|
|
|
Total FDIC risk-based capital
|
|
$
|
50,789
|
|
|
|
|
|
|
FDIC quarterly average total assets for leverage ratio
|
|
$
|
468,873
|
|
FDIC net risk-weighted assets
|
|
|
293,199
|
|
|
|
|
|
|
FDIC leverage capital ratio
|
|
|
10.05
|
%
|
Minimum requirement(2)
|
|
|
4.00% to 5.00
|
%
|
|
|
|
|
|
FDIC risk-based capital tier 1
|
|
|
16.06
|
%
|
Minimum requirement
|
|
|
4.00
|
%
|
|
|
|
|
|
FDIC total risk based capital (tier 1 & 2)
|
|
|
17.32
|
%
|
Minimum requirement
|
|
|
8.00
|
%
|
|
|
|
|
|
|
|
|
(1) |
|
Tier 2 capital consists entirely of the allowable portion
of the allowance for loan losses, which is limited to 1.25% of
total risk-weighted assets as detailed under regulations of the
FDIC. |
|
(2) |
|
The FDIC has indicated that most highly rated institutions which
meet certain criteria will be required to maintain a ratio of
3%, and all other institutions will be required to maintain an
additional cushion of 100 to 200 basis points. As of
June 30, 2010, Alliance Bank had not been advised of any
additional requirements in this regard. |
Payments
Due Under Contractual Obligations
The following table presents information relating to Alliance
Bancorps payments due under contractual obligations as of
June 30, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
Less Than One
|
|
|
One to Three
|
|
|
Three to Five
|
|
|
More Than
|
|
|
|
|
|
|
Year
|
|
|
Years
|
|
|
Years
|
|
|
Five Years
|
|
|
Total
|
|
|
|
(Dollars in thousands)
|
|
|
FHLB Advances
|
|
$
|
5,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
5,000
|
|
Other Borrowings
|
|
|
8,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,112
|
|
Certificates of deposit
|
|
|
198,570
|
|
|
|
53,130
|
|
|
|
2,378
|
|
|
|
1,022
|
|
|
|
255,100
|
|
Operating lease obligations
|
|
|
390
|
|
|
|
518
|
|
|
|
481
|
|
|
|
841
|
|
|
|
2,230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual obligations
|
|
$
|
212,072
|
|
|
$
|
53,648
|
|
|
$
|
2,859
|
|
|
$
|
1,863
|
|
|
$
|
270,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68
Off-Balance
Sheet Arrangements
In the normal course of operations, we engage in a variety of
financial transactions that, in accordance with accounting
principles generally accepted in the United States of America,
are not recorded in our financial statements. These transactions
involve, to varying degrees, elements of credit, interest rate,
and liquidity risk. Such transactions are used primarily to
manage customers requests for funding and take the form of
loan commitments, lines of credit and letters of credit.
The contractual amounts of commitments to extend credit
represent the amounts of potential accounting loss should the
contract be fully drawn upon, the customer defaults and the
value of any existing collateral becomes worthless. We use the
same credit policies in making commitments and conditional
obligations as we do for on-balance sheet instruments. Financial
instruments whose contract amounts represent credit risk at the
dates indicated are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30,
|
|
|
At December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(Dollars in thousands)
|
|
|
Commitments to extend credit:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Future loan commitments
|
|
$
|
9,106
|
|
|
$
|
7,838
|
|
|
$
|
6,419
|
|
Undisbursed construction loans
|
|
|
10,878
|
|
|
|
10,745
|
|
|
|
15,333
|
|
Undisbursed home equity lines of credit
|
|
|
5,851
|
|
|
|
6,380
|
|
|
|
6,430
|
|
Undisbursed commercial lines of credit
|
|
|
11,580
|
|
|
|
11,759
|
|
|
|
8,272
|
|
Overdraft protection lines
|
|
|
244
|
|
|
|
245
|
|
|
|
252
|
|
Standby letters of credit
|
|
|
849
|
|
|
|
1,420
|
|
|
|
1,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Commitments
|
|
$
|
38,508
|
|
|
$
|
38,387
|
|
|
$
|
38,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
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 may require payment of
a fee and generally have fixed expiration dates or other
termination clauses. |
We anticipate that we will continue to have sufficient funds and
alternative funding sources to meet our current commitments.
Recent
Accounting Pronouncements
The FASB has issued ASU
2010-06,
Fair Value Measurements and Disclosures (Topic 820): Improving
Disclosures about Fair Value Measurements. This ASU requires
some new disclosures and clarifies some existing disclosure
requirements about fair value measurement as set forth in
Codification Subtopic
820-10. The
FASBs objective is to improve these disclosures and, thus,
increase the transparency in financial reporting. Specifically,
ASU 2010-06
amends Codification Subtopic
820-10 to
now require: a reporting entity to disclose separately the
amounts of significant transfers in and out of Level 1 and
Level 2 fair value measurements and describe the reasons
for the transfers; and in the reconciliation for fair value
measurements using significant unobservable inputs, a reporting
entity should present separately information about purchases,
sales, issuances, and settlements. In addition, ASU
2010-06
clarifies the requirements of the following existing
disclosures: for purposes of reporting fair value measurement
for each class of assets and liabilities, a reporting entity
needs to use judgment in determining the appropriate classes of
assets and liabilities; and a reporting entity should provide
disclosures about the valuation techniques and inputs used to
measure fair value for both recurring and nonrecurring fair
value measurements. ASU
2010-06 is
effective for interim and annual reporting periods beginning
after December 15, 2009, except for the disclosures about
purchases, sales, issuances, and settlements in the roll forward
of activity in Level 3 fair value measurements. Those
disclosures are effective for fiscal years beginning after
December 15, 2010, and for interim periods within those
fiscal years. Early adoption is permitted. Alliance Bancorp is
currently reviewing the effect this new pronouncement will have
on its consolidated financial statements.
69
In April 2010, the FASB issued ASU
2010-18,
Receivables (Topic 310): Effect of a Loan Modification When the
Loan Is Part of a Pool That Is Accounted for as a Single Asset,
codifies the consensus reached in EITF Issue
No. 09-I,
Effect of a Loan Modification When the Loan Is Part of a
Pool That Is Accounted for as a Single Asset. The
amendments to the Codification provide that modifications of
loans that are accounted for within a pool under Subtopic
310-30 do
not result in the removal of those loans from the pool even if
the modification of those loans would otherwise be considered a
troubled debt restructuring. An entity will continue to be
required to consider whether the pool of assets in which the
loan is included is impaired if expected cash flows for the pool
change. ASU
2010-18 does
not affect the accounting for loans under the scope of Subtopic
310-30 that
are not accounted for within pools. Loans accounted for
individually under Subtopic
310-30
continue to be subject to the troubled debt restructuring
accounting provisions within Subtopic
310-40. ASU
2010-18 is
effective prospectively for modifications of loans accounted for
within pools under Subtopic
310-30
occurring in the first interim or annual period ending on or
after July 15, 2010. Early application is permitted. Upon
initial adoption of ASU
2010-18, an
entity may make a one-time election to terminate accounting for
loans as a pool under Subtopic
310-30. This
election may be applied on a
pool-by-pool
basis and does not preclude an entity from applying pool
accounting to subsequent acquisitions of loans with credit
deterioration. The implementation of this standard did not have
an impact on Alliance Bancorps consolidated financial
position or results of operations.
In July 2010, the FASB issued ASU
2010-20,
Receivables (Topic 310): Disclosures about the Credit Quality of
Financing Receivables and the Allowance for Credit Losses, will
help investors assess the credit risk of a companys
receivables portfolio and the adequacy of its allowance for
credit losses held against the portfolios by expanding credit
risk disclosures. This ASU requires more information about the
credit quality of financing receivables in the disclosures to
financial statements, such as aging information and credit
quality indicators. Both new and existing disclosures must be
disaggregated by portfolio segment or class. The disaggregation
of information is based on how a company develops its allowance
for credit losses and how it manages its credit exposure. The
amendments in this Update apply to all public and nonpublic
entities with financing receivables. Financing receivables
include loans and trade accounts receivable. However, short-term
trade accounts receivable, receivables measured at fair value or
lower of cost or fair value, and debt securities are exempt from
these disclosure amendments. Alliance Bancorp is currently
reviewing the effect this new pronouncement will have on its
consolidated financial statements.
For public companies, the amendments that require disclosures as
of the end of a reporting period are effective for periods
ending on or after December 15, 2010. The amendments that
require disclosures about activity that occurs during a
reporting period are effective for periods beginning on or after
December 15, 2010.
Impact of
Inflation and Changing Prices
The consolidated financial statements and related financial data
presented herein have been prepared in accordance with
accounting principles generally accepted in the United States of
America, which require the measurement of financial position and
operating results in terms of historical dollars, without
considering changes in relative purchasing power over time due
to inflation. Unlike most industrial companies, virtually all of
our assets and liabilities are monetary in nature. As a result,
interest rates generally have a more significant impact on a
financial institutions performance than does the effect of
inflation.
70
BUSINESS
Business
of Alliance Bancorp New
Alliance Bancorp New is a Pennsylvania corporation
which was organized in August 2010. Upon completion of the
conversion and offering, Alliance Bancorp New will
become the holding company of Alliance Bank and will succeed to
all of the business and operations of Alliance Bancorp, and each
of Alliance Bancorp and Alliance Mutual Holding Company will
cease to exist.
Initially following the completion of the conversion and
offering, Alliance Bancorp New will have no
significant assets other than owning 100% of the outstanding
common stock of Alliance Bank, the net proceeds it retains from
the offering, part of which will be used to make a loan to the
Alliance Bank employee stock ownership plan, and will have no
significant liabilities. See How our Net Proceeds Will Be
Used. Alliance Bancorp New intends to use the
support staff and offices of Alliance Bank. If Alliance
Bancorp New expands or changes its business in the
future, it may hire its own employees. In the future, we may
pursue other business activities, including mergers and
acquisitions, investment alternatives and diversification of
operations. There are, however, no current understandings or
agreements with respect to these activities.
Alliance
Bancorp General
Alliance Bancorp is a federally chartered savings and loan
holding company which owns 100% of the capital stock of Alliance
Bank, which is a Pennsylvania chartered community oriented
savings bank headquartered in Broomall, Pennsylvania. On
January 30, 2007, Alliance Bank completed a reorganization
to a mid-tier holding company structure. In the 2007
reorganization and offering, Alliance Bancorp sold
1,807,339 shares of common stock at a purchase price of
$10.00 per share and issued 5,417,661 shares of common
stock in exchange for former outstanding shares of Alliance
Bank. Each share of Alliance Banks common stock was
converted into 2.09945 shares of common stock of Alliance
Bancorp. The offering resulted in approximately
$16.5 million in net proceeds to Alliance Bancorp. The
significant asset of Alliance Bancorp is the capital stock of
Alliance Bank.
Alliance Bank operates a total of nine banking offices located
in Delaware and Chester Counties, which are suburbs of
Philadelphia. Our primary business consists of attracting
deposits from the general public and using those funds, together
with funds we borrow, to originate loans to our customers and
invest in securities such as U.S. Government and agency
securities, mortgage-backed securities and municipal
obligations. At June 30, 2010, we had $448.4 million
of total assets, $381.2 million of total deposits and
stockholders equity of $48.6 million.
Alliance Bancorp is subject to supervision and regulation by the
OTS. Alliance Bank is subject to regulation by the Pennsylvania
Department of Banking, as its chartering authority, and by the
FDIC, which insures Alliance Banks deposits up to
applicable limits.
Market
Area and Competition
We are headquartered in Broomall, Pennsylvania and conduct our
business through eight offices located in Delaware County,
Pennsylvania, and one office in Chester County, Pennsylvania.
The primary market areas we serve are Bucks, Chester, Delaware,
Montgomery and Philadelphia Counties in Pennsylvania. To a
lesser extent, we also service the southern New Jersey market
area. Our primary market areas economy is diverse and
contains a highly-educated and skilled labor force. The most
prominent sectors include manufacturing, financial services,
pharmaceutical, health care, aviation, information technology
and higher education. According to the Delaware County Chamber
of Commerce, there are more than 65 degree-granting institutions
in the Delaware Valley region, representing a higher density of
colleges and universities than any other area in the United
States. In addition, our primary market areas central
location in the Northeast corridor, with its infrastructure, and
other factors have made it attractive to many large corporate
employers, including Comcast, Boeing, State Farm Insurance,
United Parcel Service, PECO Energy, SAP America, Inc. and Wawa.
Crozer/Keystone Health System, Main Line Health, Jefferson
Health System, Mercy Health Corp., Johnson & Johnson
and Astra-Zeneca are among the larger health care employers
within our market area.
71
Our primary market area has many large and small to mid-sized
businesses that support the local economy. Our primary market
area had a total population of 3.9 million and total
households of 1.5 million according to SNL Financial. Since
2000, our primary market area has experienced population growth
at rates that ranged from 4.8% to 16.5%, which exceeded the
Commonwealth of Pennsylvanias average of 2.39%, with the
exception of Delaware County, which grew at 1.3%, and
Philadelphia County which experienced a population decline of
5.0% according to SNL Financial.
In view of the current economic downturn, our primary market
area has remained a relatively stable banking environment. As of
July 2010, the unemployment rates in Bucks, Chester, Delaware,
Montgomery and Philadelphia Counties were 8.3%, 7.6%, 9.2%, 8.0%
and 12.1% compared to the Pennsylvania unemployment rate of
9.3%, according to the U.S. Department of Labor. The
unemployment rates in all of the counties in our primary market
area, with the exception of Bucks County which improved 9.8%
from the prior year, have exhibited a 20% or greater improvement
according to data from the U.S. Department of Labor. As of
June 30, 2010, median household income levels ranged from
$41,221 to $87,078 in our primary market area according to SNL
Financial. With the exception of Philadelphia County, the other
counties in which we conduct business significantly exceeded the
United States and Commonwealth of Pennsylvania median household
income level averages of $54,442 and $52,723, respectively,
according to data provided by SNL Financial.
We face strong competition, both in attracting deposits and
making real estate and commercial loans. Our most direct
competition for deposits has historically come from other
savings banks, credit unions and commercial banks located in our
market area. This includes many large regional financial
institutions and internet banks which have even greater
financial and marketing resources available to them. Our ability
to attract and retain core deposits depends on our ability to
provide a competitive rate of return, liquidity, and service
convenience comparable to those offered by competing investment
opportunities. Management remains focused on attracting core
deposits through our branch network, business development
efforts and commercial business relationships.
Lending
Activities
General. At June 30, 2010, Alliance
Bancorps total portfolio of loans receivable amounted to
$287.5 million, or 64.1%, of the $448.4 million of
total assets at such time. Alliance Bancorp has traditionally
concentrated its lending activities on first mortgage loans
secured by residential property. Such loans amounted to
$110.4 million or 38.4% of the total loan portfolio at
June 30, 2010. Alliance Bancorp also places an emphasis on
loans secured by commercial real estate properties. Consistent
with such approach, commercial real estate loans amounted to
$136.9 million or 47.6% of the total loan portfolio at
June 30, 2010. Alliance Bancorp intends to continue its
emphasis on single-family residential mortgage loans and
commercial real estate loans. To a significantly lesser extent,
Alliance Bancorp also originates multi-family loans, land and
construction loans, consumer loans and commercial business
loans. At June 30, 2010, such loan categories amounted to
$1.2 million, $24.1 million, $7.4 million and
$7.5 million, respectively, or 0.4%, 8.4%, 2.6% and 2.6% of
the total loan portfolio, respectively.
72
Loan Portfolio Composition. The following
table sets forth the composition of Alliance Bancorps loan
portfolio by type of loan at the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
|
(Dollars in thousands)
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family(1)(2)
|
|
$
|
110,388
|
|
|
|
38.40
|
%
|
|
$
|
114,953
|
|
|
|
39.82
|
%
|
|
$
|
116,683
|
|
|
|
41.43
|
%
|
|
$
|
111,499
|
|
|
|
42.92
|
%
|
|
$
|
108,551
|
|
|
|
45.48
|
%
|
|
$
|
104,020
|
|
|
|
45.79
|
%
|
Multi-family
|
|
|
1,208
|
|
|
|
0.42
|
|
|
|
1,231
|
|
|
|
0.43
|
|
|
|
1,282
|
|
|
|
0.46
|
|
|
|
1,673
|
|
|
|
0.64
|
|
|
|
2,088
|
|
|
|
0.87
|
|
|
|
2,221
|
|
|
|
0.98
|
|
Commercial
|
|
|
136,933
|
|
|
|
47.63
|
|
|
|
131,874
|
|
|
|
45.68
|
|
|
|
123,465
|
|
|
|
43.84
|
|
|
|
122,703
|
|
|
|
47.24
|
|
|
|
108,339
|
|
|
|
45.39
|
|
|
|
105,687
|
|
|
|
46.53
|
|
Land and construction:(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
12,456
|
|
|
|
4.33
|
|
|
|
12,284
|
|
|
|
4.25
|
|
|
|
16,372
|
|
|
|
5.81
|
|
|
|
6,034
|
|
|
|
2.32
|
|
|
|
6,700
|
|
|
|
2.81
|
|
|
|
3,520
|
|
|
|
1.55
|
|
Commercial
|
|
|
11,628
|
|
|
|
4.05
|
|
|
|
12,297
|
|
|
|
4.26
|
|
|
|
8,889
|
|
|
|
3.16
|
|
|
|
8,557
|
|
|
|
3.29
|
|
|
|
5,074
|
|
|
|
2.13
|
|
|
|
3,876
|
|
|
|
1.70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loans
|
|
|
272,613
|
|
|
|
94.83
|
|
|
|
272,639
|
|
|
|
94.44
|
|
|
|
266,691
|
|
|
|
94.70
|
|
|
|
250,466
|
|
|
|
96.41
|
|
|
|
230,752
|
|
|
|
96.68
|
|
|
|
219,324
|
|
|
|
96.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Student
|
|
|
6,902
|
|
|
|
2.40
|
|
|
|
7,077
|
|
|
|
2.45
|
|
|
|
5,455
|
|
|
|
1.94
|
|
|
|
1,782
|
|
|
|
0.69
|
|
|
|
1,779
|
|
|
|
0.74
|
|
|
|
2,440
|
|
|
|
1.07
|
|
Savings account
|
|
|
430
|
|
|
|
0.15
|
|
|
|
482
|
|
|
|
0.17
|
|
|
|
430
|
|
|
|
0.15
|
|
|
|
477
|
|
|
|
0.18
|
|
|
|
561
|
|
|
|
0.24
|
|
|
|
566
|
|
|
|
0.25
|
|
Other
|
|
|
60
|
|
|
|
0.02
|
|
|
|
55
|
|
|
|
0.01
|
|
|
|
51
|
|
|
|
0.02
|
|
|
|
109
|
|
|
|
0.04
|
|
|
|
103
|
|
|
|
0.04
|
|
|
|
88
|
|
|
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consumer loans
|
|
|
7,392
|
|
|
|
2.57
|
|
|
|
7,614
|
|
|
|
2.63
|
|
|
|
5,936
|
|
|
|
2.11
|
|
|
|
2,368
|
|
|
|
0.91
|
|
|
|
2,443
|
|
|
|
1.02
|
|
|
|
3,094
|
|
|
|
1.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business loans
|
|
|
7,462
|
|
|
|
2.60
|
|
|
|
8,458
|
|
|
|
2.93
|
|
|
|
8,985
|
|
|
|
3.19
|
|
|
|
6,924
|
|
|
|
2.68
|
|
|
|
5,485
|
|
|
|
2.30
|
|
|
|
4,745
|
|
|
|
2.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable
|
|
|
287,467
|
|
|
|
100.00
|
%
|
|
|
288,711
|
|
|
|
100.00
|
%
|
|
|
281,612
|
|
|
|
100.00
|
%
|
|
|
259,758
|
|
|
|
100.00
|
%
|
|
|
238,680
|
|
|
|
100.00
|
%
|
|
|
227,163
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred costs (fees)
|
|
|
262
|
|
|
|
|
|
|
|
165
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
|
|
75
|
|
|
|
|
|
|
|
199
|
|
|
|
|
|
Allowance for loan losses
|
|
|
4,185
|
|
|
|
|
|
|
|
3,538
|
|
|
|
|
|
|
|
3,169
|
|
|
|
|
|
|
|
2,831
|
|
|
|
|
|
|
|
2,719
|
|
|
|
|
|
|
|
2,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable, net
|
|
$
|
283,020
|
|
|
|
|
|
|
$
|
285,008
|
|
|
|
|
|
|
$
|
278,436
|
|
|
|
|
|
|
$
|
256,932
|
|
|
|
|
|
|
$
|
235,886
|
|
|
|
|
|
|
$
|
224,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
At December 31, 2006, includes $125,000 of loans held for
sale. No loans were held for sale at any of the other dates
indicated. |
|
(2) |
|
At June 30, 2010, includes $20.0 million of home
equity loans. At December 31, 2009, 2008, 2007, 2006, and
2005, includes $21.4 million, $25.6 million,
$29.5 million, $28.9 million, and $22.8 million,
respectively, of home equity loans and lines |
|
(3) |
|
At June 30, 2010, excludes $10.9 million of
undisbursed funds on land and construction loans. At
December 31, 2009, 2008, 2007, 2006, and 2005, excludes
$10.7 million, $15.3 million, $10.8 million,
$9.7 million, and $2.9 million, respectively, of
undisbursed funds on land and construction loans. |
73
Contractual Maturities. The following table
sets forth the scheduled contractual maturities of Alliance
Bancorps loans receivable at the dates indicated. Demand
loans, loans having no stated schedule of repayments and no
stated maturity and overdraft loans are reported as due in one
year or less. Adjustable-rate loans are reported on a
contractual basis rather than on a repricing basis. The amounts
shown for each period do not take into account loan prepayments
and normal amortization of the loan portfolio.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2010
|
|
|
|
Real Estate Loans
|
|
|
Consumer
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land and
|
|
|
and Other
|
|
|
Business
|
|
|
|
|
|
|
Single-Family
|
|
|
Multi-Family
|
|
|
Commercial
|
|
|
Construction
|
|
|
Loans
|
|
|
Loans
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Amounts due in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One year or less
|
|
$
|
973
|
|
|
$
|
137
|
|
|
$
|
12,882
|
|
|
$
|
24,084
|
|
|
$
|
548
|
|
|
$
|
2,582
|
|
|
$
|
41,206
|
|
After one year through three years
|
|
|
2,702
|
|
|
|
848
|
|
|
|
18,216
|
|
|
|
|
|
|
|
45
|
|
|
|
2,315
|
|
|
|
24,126
|
|
After three years through five years
|
|
|
5,445
|
|
|
|
133
|
|
|
|
14,894
|
|
|
|
|
|
|
|
393
|
|
|
|
2,474
|
|
|
|
23,339
|
|
After five years through fifteen years
|
|
|
43,452
|
|
|
|
90
|
|
|
|
65,848
|
|
|
|
|
|
|
|
6,369
|
|
|
|
91
|
|
|
|
115,850
|
|
Over fifteen years
|
|
|
57,816
|
|
|
|
|
|
|
|
25,093
|
|
|
|
|
|
|
|
37
|
|
|
|
|
|
|
|
82,946
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total(1)
|
|
$
|
110,388
|
|
|
$
|
1,208
|
|
|
$
|
136,933
|
|
|
$
|
24,084
|
|
|
$
|
7,392
|
|
|
$
|
7,462
|
|
|
$
|
287,467
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate terms on amounts due after one year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
|
|
$
|
52,112
|
|
|
$
|
1,071
|
|
|
$
|
52,554
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
4,880
|
|
|
$
|
110,617
|
|
Adjustable
|
|
$
|
57,303
|
|
|
$
|
|
|
|
$
|
71,497
|
|
|
$
|
|
|
|
$
|
6,844
|
|
|
$
|
|
|
|
$
|
135,644
|
|
|
|
|
(1) |
|
Does not include the effects relating to the allowance for loan
losses and unearned income. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2009
|
|
|
|
Real Estate Loans
|
|
|
Consumer
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land and
|
|
|
and Other
|
|
|
Business
|
|
|
|
|
|
|
Single-Family
|
|
|
Multi-Family
|
|
|
Commercial
|
|
|
Construction
|
|
|
Loans
|
|
|
Loans
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Amounts due in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One year or less
|
|
$
|
270
|
|
|
$
|
143
|
|
|
$
|
12,558
|
|
|
$
|
24,581
|
|
|
$
|
70
|
|
|
$
|
3,316
|
|
|
$
|
40,938
|
|
After one year through three years
|
|
|
2,494
|
|
|
|
859
|
|
|
|
10,818
|
|
|
|
|
|
|
|
105
|
|
|
|
2,032
|
|
|
|
16,308
|
|
After three years through five years
|
|
|
7,221
|
|
|
|
137
|
|
|
|
20,387
|
|
|
|
|
|
|
|
369
|
|
|
|
2,488
|
|
|
|
30,602
|
|
After five years through fifteen years
|
|
|
37,367
|
|
|
|
92
|
|
|
|
57,967
|
|
|
|
|
|
|
|
7,015
|
|
|
|
622
|
|
|
|
103,063
|
|
Over fifteen years
|
|
|
67,601
|
|
|
|
|
|
|
|
30,144
|
|
|
|
|
|
|
|
55
|
|
|
|
|
|
|
|
97,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total(1)
|
|
$
|
114,953
|
|
|
$
|
1,231
|
|
|
$
|
131,874
|
|
|
$
|
24,581
|
|
|
$
|
7,614
|
|
|
$
|
8,458
|
|
|
$
|
288,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate terms on amounts due after one year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
|
|
$
|
45,497
|
|
|
$
|
1,088
|
|
|
$
|
49,388
|
|
|
|
|
|
|
|
|
|
|
$
|
5,142
|
|
|
$
|
101,115
|
|
Adjustable
|
|
$
|
69,186
|
|
|
|
|
|
|
$
|
69,928
|
|
|
|
|
|
|
$
|
7,544
|
|
|
|
|
|
|
$
|
146,658
|
|
|
|
|
(1) |
|
Does not include the effects relating to the allowance for loan
losses and unearned income. |
Scheduled contractual amortization of loans does not reflect the
expected term of the loan portfolio. The average life of loans
is substantially less than their contractual terms because of
prepayments and
due-on-sale
clauses, which gives Alliance Bancorp the right to declare a
conventional loan immediately due and payable in the event,
among other things, that the borrower sells the real property
subject to the mortgage and the loan is not repaid. The average
life of mortgage loans tends to increase when current mortgage
loan rates are higher than rates on existing mortgage loans and,
conversely, decrease when rates on existing mortgage loans
74
are lower than current mortgage loan rates (due to refinancings
of adjustable-rate and fixed-rate loans at lower rates). Under
the latter circumstance, the weighted average yield on the loan
portfolio decreases as higher-yielding loans are repaid or
refinanced at lower rates.
The following table shows origination, purchase and sale
activity of Alliance Bancorp with respect to its loans during
the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
June 30,
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Real estate loan originations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family(1)
|
|
$
|
6,009
|
|
|
$
|
4,625
|
|
|
$
|
12,215
|
|
|
$
|
24,541
|
|
|
$
|
28,601
|
|
Multi-family
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120
|
|
|
|
980
|
|
Commercial
|
|
|
10,011
|
|
|
|
16,400
|
|
|
|
37,910
|
|
|
|
26,873
|
|
|
|
32,913
|
|
Land and construction:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
2,000
|
|
|
|
1,301
|
|
|
|
3,114
|
|
|
|
4,525
|
|
|
|
6,770
|
|
Commercial
|
|
|
2,043
|
|
|
|
1,525
|
|
|
|
3,628
|
|
|
|
6,536
|
|
|
|
2,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loan originations
|
|
|
20,063
|
|
|
|
23,851
|
|
|
|
56,867
|
|
|
|
62,595
|
|
|
|
72,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer originations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Student
|
|
|
|
|
|
|
2,135
|
|
|
|
2,147
|
|
|
|
4,202
|
|
|
|
582
|
|
Savings account
|
|
|
89
|
|
|
|
339
|
|
|
|
557
|
|
|
|
310
|
|
|
|
330
|
|
Other
|
|
|
|
|
|
|
180
|
|
|
|
|
|
|
|
4
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consumer loan originations
|
|
|
89
|
|
|
|
2,654
|
|
|
|
2,704
|
|
|
|
4,516
|
|
|
|
919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business originations
|
|
|
450
|
|
|
|
|
|
|
|
1,966
|
|
|
|
1,475
|
|
|
|
3,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loan originations
|
|
|
20,602
|
|
|
|
26,505
|
|
|
|
61,537
|
|
|
|
68,586
|
|
|
|
76,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-family
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential construction
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
44
|
|
|
|
43
|
|
|
|
3,090
|
|
|
|
175
|
|
|
|
113
|
|
Commercial construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total real estate loan purchases
|
|
|
44
|
|
|
|
43
|
|
|
|
4,090
|
|
|
|
6,475
|
|
|
|
113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loan originations and purchases(2)
|
|
|
20,646
|
|
|
|
26,548
|
|
|
|
65,627
|
|
|
|
75,061
|
|
|
|
77,033
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal loan repayments
|
|
|
(20,750
|
)
|
|
|
(23,247
|
)
|
|
|
(54,264
|
)
|
|
|
(51,643
|
)
|
|
|
(51,002
|
)
|
Transfers to OREO
|
|
|
(669
|
)
|
|
|
(2,100
|
)
|
|
|
(3,764
|
)
|
|
|
|
|
|
|
|
|
Loans and participations sold
|
|
|
|
|
|
|
|
|
|
|
(500
|
)
|
|
|
(1,335
|
)
|
|
|
(4,762
|
)
|
Other, net(3)
|
|
|
(1,215
|
)
|
|
|
1,304
|
|
|
|
(527
|
)
|
|
|
(578
|
)
|
|
|
(223
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease)
|
|
$
|
(1,988
|
)
|
|
$
|
2,505
|
|
|
$
|
6,572
|
|
|
$
|
21,505
|
|
|
$
|
21,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes $1.9 million and $2.0 million of home equity
loans and lines of credit originated during the six month
periods ended June 30, 2010 and 2009, respectively, and
$4.9 million, $5.1 million and $9.9 million of
home equity loans and lines of credit originated during the
years ended December 31, 2009, 2008 and 2007, respectively. |
|
(2) |
|
Includes originations of loans held for sale and subsequently
sold in the secondary market. |
|
(3) |
|
Includes gains on the sale of loans, amortization of deferred
loan fees and provisions for loan losses. |
75
Origination, Purchase and Sale of Loans. Our
lending activities are subject to the written,
non-discriminatory, underwriting standards and loan origination
procedures established by the board of directors and management.
Loan originations are obtained by a variety of sources,
including referrals from real estate brokers, builders, existing
customers, advertising, walk-in customers and, to a significant
extent, mortgage brokers who obtain credit reports, appraisals
and other documentation involved with a loan. Property
valuations are always performed by independent outside
appraisers. Title and hazard insurance are generally required on
all security property other than property securing a home equity
loan, in which case we obtain a title opinion. The majority of
our loans are secured by property located in our primary lending
area.
Real estate loans up to $500,000 must be approved by the loan
officer and the Chief Lending Officer. Commercial real estate
loans between $500,001 and $1,000,000 must be approved by the
Chief Executive Officer and one member of the Senior Loan
Committee. Commercial real estate loans between $1,000,001 and
$2,000,000 must be approved by the Senior Loan Committee.
Commercial real estate loans over $2,000,001 must be approved by
the board of directors.
Any commercial loan which is not secured by real estate up to
$250,000 must be approved by the loan officer and the Chief
Lending Officer. Secured commercial loans between $250,001 and
$500,000 must be approved by the Chief Executive Officer and one
member of the Senior Loan Committee. Secured commercial loans
between $500,001 and $2,000,000 must be approved by the Senior
Loan Committee. Secured commercial loans over $2,000,001 must be
approved by the board of directors.
Unsecured commercial loans up to $100,000 must be approved by
the loan officer and the Chief Lending Officer. Unsecured
commercial loans between $100,001 and $500,001 must be approved
by the Chief Executive Officer and one member of the Senior Loan
Committee. Unsecured commercial loans between $500,001 and
$750,000 must be approved by the Senior Loan Committee.
Unsecured commercial loans over $750,001 must be approved by the
board of directors.
Residential real estate loans up to $250,000 must be approved by
the loan officer and an Assistant Vice President. Residential
real estate loans between $250,001 and $500,000 must be approved
by the loan officer and a Senior Vice President. Residential
real estate loans between $500,001 and $1,000,000 must be
approved by the loan officer and the Chief Lending Officer.
Residential real estate loans between $1,000,001 and $2,000,000
must be approved by the Senior Loan Committee. Residential real
estate loans over $2,000,001 must be approved by the board of
directors.
Home equity loans up to $100,000 must be approved by the loan
officer and an Assistant Vice President. Home equity loans
between $100,001 and $250,000 must be approved by the loan
officer and a Senior Vice President. Home equity loans between
$250,001 and $750,000 must be approved by the loan officer and
the Chief Lending Officer. Home equity loans between $750,001
and $2,000,000 must be approved by the Senior Loan Committee.
Home equity loans over $2,000,001 must be approved by the board
of directors.
Other consumer loan types up to $100,000 must be approved by the
loan officer and the Chief Lending Officer. Consumer loans
between $100,001 and $2,000,000 must be approved by the Senior
Loan Committee. Consumer loans over $2,000,001 must be approved
by the board of directors.
Alliance Bancorps single-family loan originations amounted
to $6.0 million during the six months ended June 30,
2010 and $12.2 million and $24.5 million during 2009
and 2008, respectively. When possible, we emphasize the
origination of single-family residential adjustable-rate
mortgage loans (ARMs). Originations of such loans
amounted to $2.0 million, $3.1 million and
$10.3 million during the six months ended June 30,
2010 and during 2009 and 2008, respectively. We also originate
fixed-rate single-family residential real estate loans with
terms of five, ten, 15, 20, 25 and 30 years. Generally, as
part of our asset/liability strategies, fixed-rate residential
mortgage loans with terms greater than 15 years have been
originated pursuant to commitments to sell such loans to
correspondent mortgage-banking institutions in order to reduce
the proportion of the loan portfolio comprised of such assets
and reduce interest rate risk. Loans are sold without any
recourse to Alliance Bancorp by the purchaser in the event of
default on the loan by the borrower and are sold with servicing
released. Alliance Bancorp sold $1.4 million of long-term
(generally over 15 years) fixed-rate residential loans during
the year ended December 31, 2008. We had no sales of
residential mortgage loans
76
during the six months ended June 30, 2010 or the year ended
December 31, 2009. At June 30, 2010, December 31,
2009 and 2008 there were no loans held for sale.
In recent years we have increased our emphasis on commercial
real estate loan originations. Such originations amounted to
$10.0 million during the six months ended June 30,
2010 and $37.9 million and $26.9 million during 2009
and 2008, respectively. Commercial real estate loans generally
have higher average yields and shorter terms to maturity
compared to single-family residential mortgage loans. Land and
construction loan originations amounted to $4.0 million
during the six months ended June 30, 2010 and
$6.7 million and $11.1 million during 2009 and 2008,
respectively.
Since 1999, we have provided single-family residential loan
products to borrowers that did not meet the underwriting
criteria of the Federal Home Loan Mortgage Corporation
(FHLMC) and the Federal National Mortgage
Association (FNMA). These loans, which are known as
non-conforming loans, are generally not saleable in
the secondary market due to the credit risk characteristics of
the borrower, the underlying documentation, the
loan-to-value
ratio, or the size of the loan, among other factors. We
recognize that these loans have additional risk factors as
compared to typical single-family residential lending. At
June 30, 2010, December 31, 2009 and 2008, our
non-conforming single-family loan portfolio included
$23.2 million or 21.1%, $21.9 million or 19.1%, and
$24.1 million or 20.6% of loans which are considered to be
subprime loans due to the credit score of the borrowers and, to
a lesser extent, the underlying loan documentation. Alliance
Bancorp reported $1.2 million or 5.4% of these loans as
non-performing at June 30, 2010. Alliance Bancorp
recognizes the additional risk associated with subprime lending
and utilizes a higher risk-weighting factor in maintaining its
allowance for loan losses with respect to these loans. In
addition, management calculates and reports the delinquency
ratio of its subprime loan portfolio to the board of directors
on a monthly basis and provides reports to the board of
directors on the profitability of its subprime portfolio on a
quarterly basis.
Historically, we have not been an active purchaser of loans. We
purchased no loans during the six months ended June 30,
2010. We did, however, purchase $4.1 million and
$6.5 million in real estate loans during the years ended
December 31, 2009 and 2008, respectively. With the
exception of a $6.1 million participation interest in a
commercial construction loan for a development located in
Florida, at June 30, 2010, substantially all of our
purchased loans were secured by properties located in
Pennsylvania. As of June 30, 2010, the outstanding balance
of our purchased loans amounted to $13.6 million and
included $2.9 million of residential construction loans,
$465,000 of single-family residential real estate loans,
$4.2 million of commercial real estate loans and
$6.1 million of commercial construction loans. At
June 30, 2010, one of these loans in the amount of
$6.1 million was reported as non-performing. See
Asset Quality Delinquent
Loans.
As a Pennsylvania-chartered savings bank, Alliance Bank is not
subject to any specific regulatory limits on the size of the
loans that it may originate. However, we generally have adhered
to an in-house policy limit that no loans to any one
borrower and such borrowers affiliates will not exceed 15%
of the banks capital. At June 30, 2010, our five
largest loan relationships amounted to $6.8 million,
$6.5 million, $6.1 million, $5.7 million and
$4.8 million.
Single-Family Residential Real Estate
Loans. We have historically concentrated our
lending activities on the origination of loans secured primarily
by first mortgage liens on existing single-family residences and
we intend to continue to originate permanent loans secured by
first mortgage liens on single-family residential properties in
the future. At June 30, 2010, $110.4 million or 38.4%
of our total loan portfolio consisted of single-family
residential real estate loans. Our single-family residential
real estate loan portfolio included approximately
$19.8 million of loans secured by non-owner occupied
residences at June 30, 2010. Typically, the borrowers for
these types of loans are individuals who invest in multiple
properties. At June 30, 2010, $57.3 million or 51.9%
of our single-family residential real estate loans had
adjustable rates of interest and $53.1 million or 48.1% had
fixed rates of interest.
Our ARMs typically provide for an interest rate which adjusts
every year after an initial period of three, five, seven or ten
years in accordance with a designated index (the national
monthly median cost of funds or the weekly average yield on
U.S. Treasury securities adjusted to a constant comparable
maturity of one year) plus a margin. Such loans are typically
based on a
30-year
amortization schedule. The amount of any increase
77
or decrease in the interest rate is presently limited to
200 basis points per year, with a limit of 600 basis
points over the life of the loan. We have not engaged in the
practice of using a cap on the payments that could allow the
loan balance to increase rather than decrease, resulting in
negative amortization. The adjustable-rate loans offered by
Alliance Bancorp, like many other financial institutions,
provide for initial rates of interest below the rates which
would prevail when the index used for repricing is applied.
However, we underwrite loans on the basis of the borrowers
ability to pay at the initial rate which would be in effect
without the discount. Although we continue to offer ARMs, such
loan products have not been as attractive due to the lower
interest rate environment which has recently prevailed resulting
in a decrease in the spread between the rates offered on fixed
and adjustable rate loans.
Adjustable-rate loans decrease the risks to Alliance Bancorp
that are associated with changes in interest rates but involve
other risks, primarily because as interest rates rise, the
payment by the borrower rises to the extent permitted by the
terms of the loan, thereby increasing the potential for default.
At the same time, the marketability of the underlying property
may be adversely affected by higher interest rates. We believe
that these risks, which have not had a material adverse effect
on us to date, generally are less than the risks associated with
holding fixed-rate loans in an increasing interest rate
environment.
We have continued to originate a limited amount of fixed-rate
mortgage loans with terms up to 30 years. Prior to 2010, we
generally sold fixed-rate residential mortgage loans with terms
greater than 15 years into the secondary market. In
addition, while we offer balloon loans with five, seven and ten
year terms based on a 20 to 30 year amortization
schedule, we have only originated a small amount of such loans.
We also offer home equity loans with fixed rates of interest and
terms of 15 years or less. We do not require that we hold
the first mortgage on the secured property; however, the balance
on all mortgages on the secured property cannot exceed 90% of
the value of the secured property. At June 30, 2010,
approximately $7.9 million of our home equity loans were
secured by a first lien held by us on the property securing the
loan. At June 30, 2010, home equity loans and lines
amounted to $20.0 million or 8.1% of the total loan
portfolio, which are included in single family loans.
We are permitted to lend up to 100% of the appraised value of
the real property securing a residential loan; however, if the
amount of a residential loan originated or refinanced exceeds
90% of the appraised value, we are required by federal
regulations to obtain private mortgage insurance on the portion
of the principal amount that exceeds 80% of the appraised value
of the security property. Pursuant to underwriting guidelines
adopted by our board of directors, we may lend up to an 80%
loan-to-value
ratio without private mortgage insurance unless it is determined
that additional collateral in the form of private mortgage
insurance or other acceptable collateral is needed. We may lend
up to a 90%
loan-to-value
ratio on a one or two family owner-occupied residential property
as long as additional collateral in the form of private mortgage
insurance or other acceptable collateral enhancements are
obtained. Exceptions to this policy may be made to assist in our
community outreach efforts if deemed prudent by management and
with additional collateral enhancements to reduce the risk
inherent in the loan(s).
Commercial Real Estate Loans and Multi-Family Residential
Loans. We originate and, to a lesser extent,
purchase mortgage loans for the acquisition and refinancing of
existing commercial real estate properties and multi-family
(over four units) residential properties. At June 30, 2010,
$136.9 million or 47.6% of the loan portfolio consisted of
loans secured by existing commercial real estate properties and
$1.2 million or 0.4% of the total loan portfolio consisted
of loans secured by multi-family residential properties. Our
holdings of commercial real estate loans have increased steadily
over the past five years. Such increase was due to our strategy
to increase such lending due to the higher average yields and
shorter terms to maturity provided by commercial real estate
loans compared to single-family residential mortgage loans. We
intend to continue to emphasize commercial real estate lending.
The majority of commercial real estate loans are primarily
secured by office buildings, small retail establishments,
restaurants and other facilities. These types of properties
constitute the majority of our commercial real estate loan
portfolio. The majority of the multi-family residential and
commercial real estate loan portfolio at June 30, 2010 was
secured by properties located in our primary market area. The
five largest commercial real estate loan relationships or loan
balances outstanding to one borrower at June 30, 2010
78
amounted to $6.8 million, $6.5 million,
$5.7 million, $4.8 million and $4.8 million,
respectively, all of which were performing in accordance with
their terms and were current at such date.
Commercial real estate and multi-family residential mortgage
loans are made on terms up to 30 years, some of which
include call or balloon provisions ranging from five to
15 years. We will originate and purchase these loans either
with fixed interest rates or with interest rates which adjust in
accordance with a designated index. Loan to value ratios on
commercial real estate loans and multi-family residential
mortgage loans are typically limited to 80% of appraised value
at the time the loan is granted. As part of the criteria for
underwriting commercial real estate and multi-family residential
mortgage loans, Alliance Bancorp generally imposes a minimum
debt coverage ratio (the ratio of net cash from operations
before payment of debt service to debt service) of not less than
1.15 times. It is also Alliance Bancorps policy to obtain
corporate or personal guarantees, as applicable, on its
multi-family residential and commercial real estate loans from
the principals of the borrower.
Commercial real estate lending and multi-family residential
lending entails significant additional risks as compared with
single-family residential property lending. Such loans typically
involve large loan balances to single borrowers or groups of
related borrowers. The payment experience on such loans is
typically dependent on the successful operation of the real
estate project. The success of such projects is sensitive to
changes in supply and demand conditions in the market for
commercial real estate as well as economic conditions generally.
At June 30, 2010, Alliance Bancorp had no non-performing
multi-family loans and nine non-performing commercial real
estate loans with an aggregate outstanding balance of
$1.4 million at such date.
Construction Loans. We also originate
residential and commercial construction loans, and to a limited
degree, land acquisition and development loans. Construction
loans are classified as either residential construction loans or
commercial real estate construction loans at the time of
origination, depending on the nature of the property securing
the loan. Alliance Bancorps construction lending
activities generally are limited to our primary market area. At
June 30, 2010, construction loans amounted to
$24.1 million or 8.4% of the total loan portfolio, and
consisted of $12.5 million of residential and
$11.6 million of commercial real estate construction loans.
Our residential construction loans are primarily made to local
real estate builders and developers for the purpose of
constructing single-family homes and single-family residential
developments. Upon successful application, credit review and
analysis of personal and corporate financial statements, we will
grant local builders lines of credit up to designated amounts.
Once approved for a construction loan or credit line, a
developer submits a progress report and a request for payment.
Alliance Bancorp makes payments using the stage of completion
method or the voucher method. Prior to making payment, Alliance
Bancorp inspects all construction sites and verifies that the
work being submitted for payment has been performed.
Our commercial construction loans are generally made to local
developers and others for the purpose of developing commercial
real estate properties such as small office buildings and
hotels, storage facilities and commercial building renovations.
The application, credit review and disbursement process are
similar to those mentioned above for our residential
construction loans. The five largest real estate construction
loans had outstanding balances of $6.1 million,
$3.7 million, $2.9 million, $2.0 million, and
$1.7 million as of June 30, 2010. The
$6.1 million loan is a land and development loan for a
mixed use commercial real estate project located in Bradenton,
Florida, and was classified as substandard and placed on
non-accrual status during the first quarter 2010. The
$6.1 million loan was restructured in June 2010, and was
classified as non-accruing as of June 30, 2010. The
$3.7 million loan was restructured in December of 2009, and
was classified as non-accruing as of December 31, 2009 and
June 30, 2010. The $2.9 million loan is a performing
residential construction project located in Philadelphia,
Pennsylvania and was designated as special mention due to slower
than anticipated sales. The $2.0 million loan is a
performing commercial construction loan located in Philadelphia,
Pennsylvania. The $1.7 million loan is a performing
commercial construction loan located in Oaks, Pennsylvania and
was designated as special mention due to the borrowers
financial condition as payments are being received directly from
the tenant.
Our construction loans generally have maturities of 12 to
36 months, with payments being made monthly on an
interest-only basis. These interest payments are generally paid
out of an interest reserve, which is
79
established in connection with the origination of the loan.
Generally, such loans adjust monthly based on the prime rate
plus a margin of up to 2.0%. Residential and commercial real
estate construction loans are generally made with maximum loan
to value ratios of 80% and 75%, respectively, on an as completed
basis. We utilize interest rate floors on commercial loans and
lines of credit whenever possible.
Construction lending is generally considered to involve a higher
level of risk as compared to single-family residential lending,
due to the concentration of principal in a limited number of
loans and borrowers and the effects of general economic
conditions on developers and builders. Moreover, a construction
loan can involve additional risks because of the inherent
difficulty in estimating both a propertys value at
completion of the project and the estimated cost (including
interest) of the project. The nature of these loans is such that
they are generally more difficult to evaluate and monitor. Our
construction loans include loans to a builder to construct homes
which are not pre-sold. These loans are considered speculative
and thus pose a greater potential risk to Alliance Bancorp than
construction loans to individuals on their personal residences.
We have limited the amount of our speculative construction
lending based on current market conditions.
We have attempted to minimize the foregoing risks by, among
other things, limiting the number of units built to one to three
sample units plus any under agreement of sale and limiting the
extent of our construction lending and have adopted underwriting
guidelines which impose stringent
loan-to-value,
debt service and other requirements for loans which are believed
to involve higher elements of credit risk, by generally limiting
the geographic area in which we will do business and by working
with builders with whom we have established relationships. At
June 30, 2010, we had two non-performing construction loans
which had an outstanding aggregate balance of $9.8 million
as discussed below. See Asset Quality
Delinquent Loans.. We encourage our borrower builders to
lease any completed unsold homes in order to generate cash flow
to support the projects carrying costs.
Consumer Loans. We offer consumer loans in
order to provide a full range of financial services to our
customers and because such loans generally have shorter terms
and higher interest rates than mortgage loans. The consumer
loans presently offered by Alliance Bancorp include student
loans, deposit account secured loans and lines of credit.
Consumer loans amounted to $7.4 million or 2.6% of the
total loan portfolio at June 30, 2010. Student loans, which
we are not currently originating, amounted to $6.9 million
or 2.4% of the total loan portfolio at June 30, 2010. Such
loans are made to local students for a term of ten years,
presently with adjustable interest rates. The interest rate is
determined by the U.S. Department of Education. Loan
repayment obligations do not begin until the student has
completed his or her education. The principal and interest on
such loans is guaranteed by the U.S. Government. Loans
secured by deposit accounts amounted to $430,000 or 0.2% of the
total loan portfolio at June 30, 2010. Such loans are
originated for up to 90% of the account balance, with a hold
placed on the account restricting the withdrawal of the account
balance.
Consumer loans generally have shorter terms and higher interest
rates than mortgage loans but generally involve more credit risk
than mortgage loans because of the type and nature of the
collateral and, in certain cases, the absence of collateral. In
addition, consumer lending collections are dependent on the
borrowers continuing financial stability, and thus are
more likely to be adversely effected by job loss, divorce,
illness and personal bankruptcy. In most cases, any repossessed
collateral for a defaulted consumer loan will not provide an
adequate source of repayment of the outstanding loan balance
because of improper repair and maintenance of the underlying
collateral. The remaining deficiency often does not warrant
further substantial collection efforts against the borrower. We
believe that the generally higher yields earned on consumer
loans compensate for the increased credit risk associated with
such loans and that consumer loans are important to its efforts
to provide a full range of services to its customers. At
June 30, 2010, there were 78 non-performing student loans
which amounted to $207,000, compared to 68 non-performing
student loans which amounted to $153,000 at December 31,
2009.
Commercial Business Loans. Alliance Bank has a
commercial loan department to provide a full range of commercial
loan products to small business customers in its primary
marketing area. These loans generally have shorter terms and
higher interest rates as compared to mortgage loans. Such loans
amounted to $7.5 million or 2.6% of the total loan
portfolio at June 30, 2010 and were primarily secured by
inventories
80
and other business assets. During the six months ended
June 30, 2010, we had $305,000 in charge-offs that related
to two former commercial business loan relationships.
Although commercial business loans generally are considered to
involve greater credit risk than other certain types of loans,
management intends to continue to offer commercial business
loans to small businesses located in its primary market area. At
June 30, 2010, we had one non-performing commercial
business loan which amounted to $74,000.
Loan Fee Income. In addition to interest
earned on loans, we receive income from fees in connection with
loan originations, loan modifications, late payments,
prepayments and for miscellaneous services related to our loans.
Income from these activities varies from period to period with
the volume and type of loans made and competitive conditions. We
charge loan origination fees which are calculated as a
percentage of the amount borrowed. Loan origination and
commitment fees and all incremental direct loan origination
costs are deferred and recognized over the contractual remaining
lives of the related loans on a level yield basis. Discounts and
premiums on loans purchased are amortized in the same manner.
Asset
Quality
Loans are placed on non-accrual status when, in the judgment of
management, the probability of collection of interest is deemed
to be insufficient to warrant further accrual. When a loan is
placed on non-accrual status, previously accrued but unpaid
interest is deducted from interest income. We do not accrue
interest on real estate loans past due 90 days or more
unless, in the opinion of management, the value of the property
securing the loan exceeds the outstanding balance of the loan
(principal, interest and escrows) and collection is in process.
Alliance Bancorp provides an allowance for accrued interest
deemed uncollectible. Such allowance amounted to approximately
$147,000 at June 30, 2010. Accrued interest receivable is
reported net of the allowance for uncollected interest. Loans
may be reinstated to accrual status when all payments are
brought current and, in the opinion of management, collection of
the remaining balance can be reasonably expected.
Real estate acquired by Alliance Bancorp as a result of
foreclosure or by
deed-in-lieu
of foreclosure is classified as OREO until sold and is initially
recorded at the fair value at the date of acquisition. After the
date of acquisition, all costs incurred in maintaining the
property are expensed and costs incurred for the improvement or
development of such property are capitalized up to the extent of
their fair value.
Under accounting principles generally accepted in the United
States of America, we are required to account for certain loan
modifications or restructurings as troubled debt
restructurings. In general, the modification or
restructuring of a debt constitutes a troubled debt
restructuring if Alliance Bancorp, for economic or legal reasons
related to the borrowers financial difficulties, grants a
concession, such as a reduction in the effective interest rate,
to the borrower that Alliance Bancorp would not otherwise
consider. Debt restructurings or loan modifications for a
borrower do not necessarily always constitute troubled debt
restructurings, however, and troubled debt restructurings do not
necessarily result in non-accrual loans. At June 30, 2010,
we had two troubled debt restructured construction loans which
had an aggregate outstanding balance of $9.8 million and
which were on non-accrual status at such date. At
December 31, 2009, we had one troubled debt restructured
construction loan which had an outstanding balance of
$3.7 million and which was on non-accrual status at such
date. We did not have any troubled debt restructurings as of
December 31, 2008. Management will continue to include
these loans on non-accrual in accordance with generally accepted
accounting principles.
81
Delinquent Loans. The following table sets
forth information concerning delinquent loans at the indicated
dates, in dollar amounts and as a percentage of each category of
our total loan portfolio. The amounts presented represent the
total outstanding principal balances of the related loans,
rather than the actual payment amounts which are past due.
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|
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|
|
|
|
|
|
At June 30, 2010
|
|
|
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30 - 59 Days
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|
|
60 - 89 Days
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90 or More Days
|
|
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|
|
|
|
Percent of
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|
|
|
Percent of
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|
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|
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Percent of
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|
|
|
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|
|
Loan
|
|
|
|
|
|
Loan
|
|
|
|
|
|
Loan
|
|
|
|
Amount
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|
|
Category
|
|
|
Amount
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|
|
Category
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|
|
Amount
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|
|
Category
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|
|
|
(Dollars in thousands)
|
|
|
Real estate:
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family
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|
$
|
457
|
|
|
|
0.41
|
%
|
|
$
|
1,094
|
|
|
|
0.99
|
%
|
|
$
|
1,714
|
|
|
|
1.55
|
%
|
Multi-family
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Commercial
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|
|
1,108
|
|
|
|
0.81
|
|
|
|
976
|
|
|
|
0.71
|
|
|
|
1,363
|
|
|
|
0.85
|
|
Land and construction
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|
|
950
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|
|
|
3.94
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|
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|
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|
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|
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|
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|
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Commercial business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74
|
|
|
|
0.99
|
|
Consumer
|
|
|
159
|
|
|
|
2.15
|
|
|
|
69
|
|
|
|
0.93
|
|
|
|
206
|
|
|
|
2.79
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,674
|
|
|
|
|
|
|
$
|
2,139
|
|
|
|
|
|
|
$
|
3,357
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|
|
|
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|
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|
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|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2009
|
|
|
|
30 - 59 Days
|
|
|
60 - 89 Days
|
|
|
90 or More Days
|
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
|
Loan
|
|
|
|
|
|
Loan
|
|
|
|
|
|
Loan
|
|
|
|
Amount
|
|
|
Category
|
|
|
Amount
|
|
|
Category
|
|
|
Amount
|
|
|
Category
|
|
|
|
(Dollars in thousands)
|
|
|
Real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family
|
|
$
|
1,302
|
|
|
|
1.13
|
%
|
|
$
|
15
|
|
|
|
0.01
|
%
|
|
$
|
1,706
|
|
|
|
1.48
|
%
|
Multi-family
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
4,098
|
|
|
|
3.11
|
|
|
|
10
|
|
|
|
0.01
|
|
|
|
1,768
|
|
|
|
1.34
|
|
Land and construction
|
|
|
1,310
|
|
|
|
5.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business
|
|
|
25
|
|
|
|
0.30
|
|
|
|
50
|
|
|
|
0.59
|
|
|
|
422
|
|
|
|
4.99
|
|
Consumer
|
|
|
143
|
|
|
|
1.88
|
|
|
|
94
|
|
|
|
1.23
|
|
|
|
153
|
|
|
|
2.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,878
|
|
|
|
|
|
|
$
|
169
|
|
|
|
|
|
|
$
|
4,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82
The following table sets forth the amounts and categories of our
non-performing assets at the dates indicated. We had no troubled
debt restructurings at any of the dates indicated, other than
those included in non-accruing loans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Dollars in thousands)
|
|
|
Non-accruing loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family
|
|
$
|
76
|
|
|
$
|
479
|
|
|
$
|
762
|
|
|
$
|
1,086
|
|
|
$
|
874
|
|
|
$
|
762
|
|
Multi-family
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
1,363
|
|
|
|
1,778
|
|
|
|
3,551
|
|
|
|
416
|
|
|
|
|
|
|
|
222
|
|
Land and construction
|
|
|
9,767
|
|
|
|
3,728
|
|
|
|
896
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business
|
|
|
74
|
|
|
|
472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-accruing loans
|
|
|
11,280
|
|
|
|
6,457
|
|
|
|
5,209
|
|
|
|
1,502
|
|
|
|
874
|
|
|
|
984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accruing loans 90 days or more delinquent:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family
|
|
|
1,638
|
|
|
|
1,227
|
|
|
|
1,712
|
|
|
|
563
|
|
|
|
649
|
|
|
|
942
|
|
Multi-family
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land and construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
206
|
|
|
|
153
|
|
|
|
75
|
|
|
|
32
|
|
|
|
36
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accruing loans 90 days or more delinquent
|
|
|
1,844
|
|
|
|
1,380
|
|
|
|
1,787
|
|
|
|
595
|
|
|
|
685
|
|
|
|
956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing loans
|
|
|
13,124
|
|
|
|
7,837
|
|
|
|
6,996
|
|
|
|
2,097
|
|
|
|
1,559
|
|
|
|
1,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate owned
|
|
|
3,026
|
|
|
|
2,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing assets
|
|
$
|
16,150
|
|
|
$
|
10,805
|
|
|
$
|
6,996
|
|
|
$
|
2,097
|
|
|
$
|
1,559
|
|
|
$
|
3,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing loans as a percentage of total loans
|
|
|
4.57
|
%
|
|
|
2.71
|
%
|
|
|
2.48
|
%
|
|
|
0.81
|
%
|
|
|
0.65
|
%
|
|
|
0.85
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-performing assets as a percentage of total assets
|
|
|
3.60
|
%
|
|
|
2.33
|
%
|
|
|
1.65
|
%
|
|
|
0.49
|
%
|
|
|
0.38
|
%
|
|
|
0.96
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming assets, which consist of nonaccruing loans,
accruing loans 90 days or more delinquent and OREO (which
includes real estate acquired through, or in lieu of,
foreclosure) increased to $16.1 million or 3.60% of total
assets at June 30, 2010 from $10.8 million or 2.33% of
total assets at December 31, 2009. This increase was
primarily due to the placement of a $6.1 million land and
development loan for a mixed use commercial real estate project
located in Bradenton, Florida, as non-performing during the
first quarter of 2010.
At June 30, 2010, 60.9% of our nonperforming assets
consisted of two loan relationships, with an aggregate
outstanding balance of $9.8 million at such date, which are
described below.
|
|
|
|
|
A $6.1 million participation interest was made in a
$13.7 million acquisition and development loan of an
approximately 150 acre parcel of ground located in
Bradenton, Florida. The developers, which included a former
director of Alliance Bancorp and Alliance Bank, designed,
developed and received all municipal and governmental approvals
necessary for a planned mixed use development which will include
an apartment complex, senior housing, hotel and commercial lots.
Alliance Bank acquired its
|
83
|
|
|
|
|
$6.1 million participation interest in the loan in July
2008, at which time the
loan-to-value
ratio, based on an independent appraisal was approximately 55%.
The primary purpose of the loan was to provide funding for all
necessary site improvements in order that the development could
advance to the next stage, building construction. The borrowers
filed applications with the U.S. Department of Housing and
Urban Development (HUD) to obtain guarantees as a
form of credit support with respect to construction loans for
the residential portions of the development. In late 2009, HUD
determined to suspend its credit support program in the state of
Florida. While the developers are continuing their efforts to
obtain construction financing without any credit support from
HUD, they have begun to market the various individual
parcels within the site for sale. The interest reserve funded by
the ground development loan ultimately was exhausted. In June
2010, Alliance Bank along with the co-lender entered into a
forbearance and extension agreement with the borrower, which
extended the loan maturity date for one year from June 30,
2010 to June 30, 2011. This agreement was subject to
certain conditions including the contemporaneous payment due at
execution of the agreement of all past due interest. An
additional cash payment was required to be paid during the third
quarter of 2010 of an amount sufficient to cover all interest on
the loan and all real estate taxes which will become due during
the 12-month
period ending June 30, 2011. We made an additional
provision to the allowance for loan losses with respect to this
loan during the quarter ended September 30, 2010 due to,
among other things, the fact that we did not receive the
additional cash payment as required. See Recent
Developments.
|
|
|
|
|
|
All site improvements have been completed. An updated appraisal
received in January 2010 reflected a
loan-to-value
ratio of approximately 102%. We placed the loan on non-accrual
status during the first quarter of 2010. The loan remains on
non-accrual status given the lack of signed agreements of sale.
We have no obligation to advance any additional funds with
respect to this loan. At June 30, 2010, we have allocated
$890,000 of our allowance for loan losses to this loan. Since
the execution of the forbearance and extension agreement in June
2010, all cash payments received have been reported as a
reduction of the outstanding principal balance.
|
|
|
|
A $4.7 million acquisition, renovation and construction
loan originated in August of 2006 for a mixed-use building
consisting of 18 residential units and one commercial unit
located in Center City, Philadelphia. This loan, which had an
outstanding balance of $3.7 million at June 30, 2010,
was placed on non-accrual status in the first quarter of 2010
due to a combination of very slow sales and construction delays.
In addition, the project encountered cost overruns resulting
from structural engineering defects discovered during the
renovation. These issues resulted in costly changes and
modifications required by the City of Philadelphia. In December
2009, we entered into an extension and forbearance agreement
with the borrowers, which extends the term of the loan until
February 2011, and provides interest and construction funding to
complete all units. In connection with the extension and
forbearance agreement, the borrowers made a cash payment, which
will serve as an interest reserve, and pledged additional
collateral to support the loan.
|
|
|
|
An appraisal dated November 2009 states a valuation of
$3.6 million on a fully completed basis. To date, three of
the residential units have been sold. Seven residential units
are rented, with all rental payments being made directly to
Alliance Bank. All units are being marketed and are scheduled to
be 100% complete by November 15, 2010. As of June 30,
2010, we have allocated $265,000 of our allowance for loan
losses to this loan. All cash payments received are being
deferred and are reported as a reduction of the outstanding
principal balance.
|
At June 30, 2010, in addition to the $9.8 million of
non-accruing construction loans described above, we had
$1.5 million of non-accruing loans consisting of one single
family real estate loan in the amount of $76,000, nine
commercial real estate loans totaling $1.4 million, and one
commercial business loan in the amount of $74,000. The aggregate
amount of our allowance for loan losses allocated to non-accrual
loans was $1.2 million as of June 30, 2010. Management
continues to aggressively pursue the collection and resolution
of all delinquent loans.
84
If the $11.3 million of non-accruing loans at June 30,
2010 had been current in accordance with their terms during the
six-month period ended June 30, 2010, the gross income on
such loans would have been approximately $227,000 for the
six-month period ended June 30, 2010. We actually recorded
$13,000 in interest income on such loans for the period. If the
$6.5 million of non-accruing loans at December 31,
2009 had been current in accordance with their terms during
2009, the gross income on such loans would have been
approximately $335,000 for 2009. We actually recorded $136,000
in interest income on such loans for 2009. If the
$5.2 million of non-accruing loans at December 31,
2008 had been current in accordance with their terms during
2008, the gross income on such loans would have been
approximately $347,000 for 2008. We actually recorded $121,000
in interest income on such loans for 2008.
Our non-performing assets also include OREO. As of June 30,
2010, we had approximately $3.0 million in OREO. The
$3.0 million consists of two commercial properties totaling
$965,000, three improved building lots totaling
$1.0 million, and four single family properties totaling
$1.1 million, including one single-family property with a
carrying value of $898,000. All of the properties are located
within our market area except one of the single family
residences which is located in Tampa, Florida with a carrying
value of $25,000.
Classified and Criticized Assets. Under
applicable banking regulations and policies, each insured
savings banks assets are subject to classification on a
regular basis. In addition, in connection with examinations of
insured institutions, federal examiners have authority to
identify problem assets and, if appropriate, classify them.
There are three regulatory classifications for problem assets:
substandard, doubtful and
loss. Substandard assets have one or more defined
weaknesses and are characterized by the distinct possibility
that the insured institution will sustain some loss if the
deficiencies are not corrected. Doubtful assets have the
weaknesses of substandard assets with the additional
characteristic that the weaknesses make collection or
liquidation in full on the basis of currently existing facts,
conditions and values questionable, and there is a high
possibility of loss. An asset classified loss is considered
uncollectible and of such little value that continuance as an
asset of the institution is not warranted. Another category
designated special mention also must be established
and maintained for assets which have a weakness but do not
currently expose an insured institution to a sufficient degree
of risk to warrant classification as substandard, doubtful or
loss.
At June 30, 2010, we had $16.0 million of assets
classified as substandard and no assets classified as doubtful
or loss. All of our classified assets at June 30, 2010 were
also deemed to be non-performing assets and are included in the
non-performing assets table on page 83 at such date. At
June 30, 2010 our assets classified as substandard included
$12.9 million of loans and $3.0 million of OREO. In
addition, at June 30, 2010, we had $9.7 million of
loans designated special mention, which consisted of
$3.8 million in commercial real estate loans and
$5.9 million in real estate construction loans. All of
these loans are located in our primary market area. The
$12.9 million of loans designated as substandard at
June 30, 2010 consisted of $1.7 million of
single-family real estate loans, $1.4 million in commercial
real estate loans, $9.8 million in construction real estate
loans, and $74,000 in commercial business loans. The
$9.8 million in construction real estate loans consists of
the two non-accruing construction loans described above. See
Delinquent Loans.
Allowance for Loan Losses. The allowance for
loan losses is increased by charges to income and decreased by
charge-offs (net of recoveries). Allowances are provided for
specific loans when losses are probable and can be estimated.
When this occurs, management considers the remaining principal
balance, fair value and estimated net realizable value of the
property collateralizing the loan. Current and future operating
and/or sales
conditions are also considered. These estimates are susceptible
to changes that could result in material adjustments to results
of operations. Recovery of the carrying value of such loans is
dependent to a great extent on economic, operating and other
conditions that may be beyond managements control.
General loan loss allowances are established as an allowance for
losses based on inherent probable risk of loss in the loan
portfolio. In assessing risk, management considers historical
experience, volume and composition of lending conducted,
industry standards, status of non-performing loans, general
economic conditions as they relate to the market area and other
factors related to the collectibility of the loan portfolio.
Impaired loans are predominantly measured based on the fair
value of the collateral. The provision for loan losses charged
to expense is based upon past loan loss experience and an
evaluation of probable losses
85
and impairment existing in the current loan portfolio. A loan is
considered to be impaired when, based upon current information
and events, it is probable that Alliance Bancorp will be unable
to collect all amounts due according to the original contractual
terms of the loan. An insignificant delay or insignificant
shortfall in amounts of payments does not necessarily result in
the loan being identified as impaired. For this purpose, delays
less than 90 days are considered to be insignificant. Large
groups of smaller balance homogeneous loans, including
residential real estate and consumer loans, are collectively
evaluated for impairment, except for loans restructured under a
troubled debt restructuring.
Although management uses the best information available to make
determinations with respect to the provisions for loan losses,
additional provisions for loan losses may be required to be
established in the future should economic or other conditions
change substantially. In addition, the Pennsylvania Department
of Banking and the FDIC, as an integral part of their
examination process, periodically review Alliance Banks
allowance for loan losses. Such agencies may require Alliance
Bank to recognize additions to such allowance based on their
judgments about information available to them at the time of
their examination.
86
The following table summarizes changes in the allowance for loan
losses and selected ratios for the periods presented.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
June 30,
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(Dollars in thousands)
|
|
|
Average loans receivable, net(1)
|
|
$
|
288,503
|
|
|
$
|
282,827
|
|
|
$
|
283,736
|
|
|
$
|
271,849
|
|
|
$
|
247,157
|
|
|
$
|
232,520
|
|
|
$
|
218,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses, beginning of year
|
|
$
|
3,538
|
|
|
$
|
3,169
|
|
|
$
|
3,169
|
|
|
$
|
2,831
|
|
|
$
|
2,720
|
|
|
$
|
2,671
|
|
|
$
|
2,608
|
|
Provision for loan losses
|
|
|
1,170
|
|
|
|
150
|
|
|
|
528
|
|
|
|
585
|
|
|
|
120
|
|
|
|
60
|
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family residential
|
|
|
(81
|
)
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
Multi-family residential
|
|
|
|
|
|
|
(6
|
)
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
(137
|
)
|
|
|
(56
|
)
|
|
|
(153
|
)
|
|
|
(350
|
)
|
|
|
|
|
|
|
|
|
|
|
(86
|
)
|
Land and construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
(1
|
)
|
|
|
(13
|
)
|
|
|
(11
|
)
|
|
|
(14
|
)
|
|
|
(9
|
)
|
Commercial business
|
|
|
(305
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total charge-offs
|
|
|
(523
|
)
|
|
|
(62
|
)
|
|
|
(160
|
)
|
|
|
(366
|
)
|
|
|
(14
|
)
|
|
|
(14
|
)
|
|
|
(95
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoveries:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-family residential
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114
|
|
|
|
|
|
|
|
|
|
|
|
37
|
|
Land and construction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
5
|
|
|
|
5
|
|
|
|
3
|
|
|
|
1
|
|
Commercial business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recoveries
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
119
|
|
|
|
5
|
|
|
|
3
|
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses, end of year
|
|
$
|
4,185
|
|
|
$
|
3,257
|
|
|
$
|
3,538
|
|
|
$
|
3,169
|
|
|
$
|
2,831
|
|
|
$
|
2,720
|
|
|
$
|
2,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to average loans receivable, net
|
|
|
0.18
|
%
|
|
|
0.02
|
%
|
|
|
0.06
|
%
|
|
|
0.09
|
%
|
|
|
0.00
|
%
|
|
|
0.01
|
%
|
|
|
0.03
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses to total loans receivable
|
|
|
1.46
|
%
|
|
|
1.15
|
%
|
|
|
1.23
|
%
|
|
|
1.13
|
%
|
|
|
1.09
|
%
|
|
|
1.14
|
%
|
|
|
1.18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan losses to total non-performing loans
|
|
|
31.89
|
%
|
|
|
35.71
|
%
|
|
|
45.14
|
%
|
|
|
45.30
|
%
|
|
|
135.00
|
%
|
|
|
174.39
|
%
|
|
|
137.63
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to allowance for loan losses
|
|
|
12.47
|
%
|
|
|
1.90
|
%
|
|
|
4.49
|
%
|
|
|
7.79
|
%
|
|
|
0.32
|
%
|
|
|
0.40
|
%
|
|
|
2.13
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes mortgage loans held for sale. |
87
The following table presents the allocation of the allowance for
loan losses to the total amount of loans in each category listed
at the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
|
|
|
% of Loans
|
|
|
|
|
|
% of Loans
|
|
|
|
|
|
% of Loans
|
|
|
|
|
|
% of Loans
|
|
|
|
|
|
% of Loans
|
|
|
|
|
|
% of Loans
|
|
|
|
|
|
|
in Each
|
|
|
|
|
|
in Each
|
|
|
|
|
|
in Each
|
|
|
|
|
|
in Each
|
|
|
|
|
|
in Each
|
|
|
|
|
|
in Each
|
|
|
|
|
|
|
Category to
|
|
|
|
|
|
Category to
|
|
|
|
|
|
Category to
|
|
|
|
|
|
Category to
|
|
|
|
|
|
Category to
|
|
|
|
|
|
Category to
|
|
|
|
Amount
|
|
|
Total Loans
|
|
|
Amount
|
|
|
Total Loans
|
|
|
Amount
|
|
|
Total Loans
|
|
|
Amount
|
|
|
Total Loans
|
|
|
Amount
|
|
|
Total Loans
|
|
|
Amount
|
|
|
Total Loans
|
|
|
|
(Dollars in thousands)
|
|
|
Single-family residential
|
|
$
|
377
|
|
|
|
38.40
|
%
|
|
$
|
588
|
|
|
|
39.82
|
%
|
|
$
|
322
|
|
|
|
41.43
|
%
|
|
$
|
391
|
|
|
|
42.92
|
%
|
|
$
|
445
|
|
|
|
45.48
|
%
|
|
$
|
462
|
|
|
|
45.79
|
%
|
Multi-family residential
|
|
|
16
|
|
|
|
0.42
|
|
|
|
16
|
|
|
|
0.43
|
|
|
|
16
|
|
|
|
0.46
|
|
|
|
17
|
|
|
|
0.64
|
|
|
|
25
|
|
|
|
0.87
|
|
|
|
28
|
|
|
|
0.98
|
|
Commercial real estate
|
|
|
1,942
|
|
|
|
47.63
|
|
|
|
1,985
|
|
|
|
45.68
|
|
|
|
1,786
|
|
|
|
43.84
|
|
|
|
1,713
|
|
|
|
47.24
|
|
|
|
1,691
|
|
|
|
45.39
|
|
|
|
1,698
|
|
|
|
46.52
|
|
Land and construction
|
|
|
1,672
|
|
|
|
8.38
|
|
|
|
735
|
|
|
|
8.51
|
|
|
|
856
|
|
|
|
8.97
|
|
|
|
556
|
|
|
|
5.61
|
|
|
|
416
|
|
|
|
4.94
|
|
|
|
322
|
|
|
|
3.26
|
|
Consumer
|
|
|
33
|
|
|
|
2.60
|
|
|
|
27
|
|
|
|
2.63
|
|
|
|
16
|
|
|
|
2.11
|
|
|
|
8
|
|
|
|
0.91
|
|
|
|
9
|
|
|
|
1.02
|
|
|
|
12
|
|
|
|
1.36
|
|
Commercial business
|
|
|
145
|
|
|
|
2.57
|
|
|
|
187
|
|
|
|
2.93
|
|
|
|
173
|
|
|
|
3.19
|
|
|
|
146
|
|
|
|
2.67
|
|
|
|
134
|
|
|
|
2.30
|
|
|
|
149
|
|
|
|
2.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,185
|
|
|
|
100.00
|
%
|
|
$
|
3,538
|
|
|
|
100.00
|
%
|
|
$
|
3,169
|
|
|
|
100.00
|
%
|
|
$
|
2,831
|
|
|
|
100.00
|
%
|
|
$
|
2,720
|
|
|
|
100.00
|
%
|
|
$
|
2,671
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88
Investment
Activities
Mortgage-Backed Securities. Mortgage-backed
securities (which also are known as mortgage participation
certificates or pass-through certificates) represent a
participation interest in a pool of single-family or
multi-family mortgages, the principal and interest payments on
which are passed from the mortgage originators, through
intermediaries (generally U.S. Government agencies and
government sponsored enterprises) that pool and repackage the
participation interests in the form of securities, to investors
such as Alliance Bancorp. Such U.S. Government agencies and
government sponsored enterprises, which guarantee the payment of
principal and interest to investors, primarily include the
FHLMC, the FNMA and the Government National Mortgage Association
(GNMA).
The FHLMC is a public corporation chartered by the
U.S. Government. The FHLMC issues participation
certificates backed principally by conventional mortgage loans.
The FHLMC guarantees the timely payment of interest and the
ultimate return of principal within one year. The FNMA is a
private corporation chartered by the U.S. Congress with a
mandate to establish a secondary market for conventional
mortgage loans. Because the FHLMC, the FNMA and the GNMA were
established to provide support for low- and middle-income
housing, there are limits to the maximum size of loans that
qualify for these programs. To accommodate larger-sized loans,
and loans that, for other reasons, do not conform to the agency
programs, a number of private institutions have established
their own home-loan origination and securitization programs.
Mortgage-backed securities typically are issued with stated
principal amounts, and the securities are backed by pools of
mortgages that have loans with interest rates that are within a
range and have varying maturities. The cash flow associated with
the underlying pool of mortgages, i.e., fixed rate or adjustable
rate, as well as prepayment risk, are passed on to the
certificate holder. The life of a mortgage-backed pass-through
security thus approximates the life of the underlying mortgages.
The following table sets forth the fair value of Alliance
Bancorps mortgage-backed securities portfolio designated
as available for sale at the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FNMA pass-through securities
|
|
$
|
10,139
|
|
|
$
|
12,336
|
|
|
$
|
16,788
|
|
|
$
|
21,060
|
|
FHLMC pass-through securities
|
|
|
7,293
|
|
|
|
8,798
|
|
|
|
12,641
|
|
|
|
10,872
|
|
GNMA pass-through securities
|
|
|
2,119
|
|
|
|
2,221
|
|
|
|
2,492
|
|
|
|
3,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mortgage-backed securities
|
|
$
|
19,551
|
(1)
|
|
$
|
23,355
|
|
|
$
|
31,921
|
|
|
$
|
35,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
At June 30, 2010, gross unrealized gains on such securities
amounted to $966,000 and gross unrealized losses amounted to
$8,000. |
The following table sets forth the purchases, sales and
principal repayments of Alliance Bancorps mortgage-backed
securities for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
June 30,
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Mortgage-backed securities purchased
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
4,340
|
|
|
$
|
|
|
Mortgage-backed securities sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal repayments
|
|
|
(3,870
|
)
|
|
|
(4,840
|
)
|
|
|
(8,876
|
)
|
|
|
(8,258
|
)
|
|
|
(8,959
|
)
|
Other, net
|
|
|
66
|
|
|
|
214
|
|
|
|
310
|
|
|
|
207
|
|
|
|
955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease
|
|
$
|
(3,804
|
)
|
|
$
|
(4,626
|
)
|
|
$
|
(8,566
|
)
|
|
$
|
(3,711
|
)
|
|
$
|
(8,004
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities generally increase the quality of
Alliance Bancorps assets by virtue of the insurance or
guarantees that back them, are more liquid than individual
mortgage loans and may be used to
89
collateralize borrowings or other obligations of Alliance
Bancorp. At June 30, 2010, $5.9 million or 30.2% of
our mortgage-backed securities were pledged to secure various
obligations of Alliance Bancorp. See Note 4 to the
consolidated financial statements contained elsewhere in this
prospectus. Alliance Bancorp does not knowingly invest in
subprime mortgage-backed securities, and has not been materially
impacted by the current subprime crisis as of June 30, 2010.
Information regarding the contractual maturities and weighted
average yield of Alliance Bancorps mortgage-backed
securities portfolio, stated at amortized cost, at the indicated
dates is presented below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010
|
|
|
|
One Year
|
|
|
After One to
|
|
|
After Five
|
|
|
Over 15
|
|
|
|
|
|
|
or Less
|
|
|
Five Years
|
|
|
to 15 Years
|
|
|
Years
|
|
|
Total
|
|
|
|
(Dollars in thousands)
|
|
|
FHLMC securities pass-through securities
|
|
$
|
|
|
|
$
|
2,439
|
|
|
$
|
2,157
|
|
|
$
|
2,255
|
|
|
$
|
6,851
|
|
FNMA securities pass-through securities
|
|
|
|
|
|
|
3,675
|
|
|
|
4,721
|
|
|
|
1,310
|
|
|
|
9,706
|
|
GNMA securities pass-through securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,036
|
|
|
|
2,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
6,114
|
|
|
$
|
6,878
|
|
|
$
|
5,601
|
|
|
$
|
18,593
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average yield
|
|
|
|
|
|
|
4.25
|
%
|
|
|
5.20
|
%
|
|
|
4.26
|
%
|
|
|
4.61
|
%
|
|
|
|
(1) |
|
All mortgage-backed securities were designated as available for
sale. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
|
One Year
|
|
|
After One to
|
|
|
After Five
|
|
|
Over 15
|
|
|
|
|
|
|
or Less
|
|
|
Five Years
|
|
|
to 15 Years
|
|
|
Years
|
|
|
Total
|
|
|
|
(Dollars in thousands)
|
|
|
FHLMC pass-through certificates
|
|
$
|
|
|
|
$
|
2,678
|
|
|
$
|
3,033
|
|
|
$
|
2,668
|
|
|
$
|
8,379
|
|
FNMA pass-through certificates
|
|
|
456
|
|
|
|
1,902
|
|
|
|
7,919
|
|
|
|
1,666
|
|
|
|
11,943
|
|
GNMA pass-through certificates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,142
|
|
|
|
2,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
456
|
|
|
$
|
4,580
|
|
|
$
|
10,952
|
|
|
$
|
6,476
|
|
|
$
|
22,464
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average yield
|
|
|
2.08
|
%
|
|
|
4.18
|
%
|
|
|
5.07
|
%
|
|
|
3.49
|
%
|
|
|
4.76
|
%
|
|
|
|
(1) |
|
All mortgage-backed securities are designated as available for
sale. |
The actual maturity of a mortgage-backed security is typically
less than its stated maturity due to prepayments of the
underlying mortgages. Prepayments that are faster than
anticipated may shorten the life of the security and increase or
decrease its yield to maturity if the security was purchased at
a discount or premium, respectively. The yield is based upon the
interest income and the amortization of any premium or discount
related to the mortgage-backed security. In accordance with
accounting principles generally accepted in the United States of
America, premiums and discounts are amortized over the estimated
lives of the loans, which decrease and increase interest income,
respectively. The prepayment assumptions used to determine the
amortization period for premiums and discounts can significantly
affect the yield of the mortgage-backed security, when premiums
or discounts are involved, and these assumptions are reviewed
periodically to reflect actual prepayments. Although prepayments
of underlying mortgages depend on many factors, including the
type of mortgages, the coupon rate, the age of mortgages, the
geographical location of the underlying real estate
collateralizing the mortgages and general levels of market
interest rates, the difference between the interest rates on the
underlying mortgages and the prevailing mortgage interest rates
generally is the most significant determinant of the rate of
prepayments. During periods of falling mortgage interest rates,
if the coupon rate of the underlying mortgages exceeds the
prevailing market interest rates offered for mortgage loans,
refinancing generally increases and accelerates the prepayment
of the underlying mortgages and the related security. Under such
circumstances, Alliance Bancorp may be subject to reinvestment
risk because to the extent that the mortgage-backed securities
amortize or prepay faster than anticipated, Alliance Bancorp
90
may not be able to reinvest the proceeds of such repayments and
prepayments at a comparable rate. During periods of rising
interest rates, prepayment of the underlying mortgages generally
slow down when the coupon rate of such mortgages is less than
the prevailing market rate. We may be subject to extension risk
when this occurs.
Investment Securities. The investment policy
of Alliance Bancorp, as established by the board of directors,
is designed primarily to provide and maintain liquidity and to
generate a favorable return on investments without incurring
undue interest rate risk, credit risk, or investment portfolio
asset concentrations. Our investment policy takes into account
our business plan, interest rate management, the current
economic environment, the types of securities to be held and
other safety and soundness considerations. Our investment policy
is currently implemented by the Chief Executive Officer and
reviewed and evaluated by the Asset Liability Committee. The
Asset Liability Committee is required to issue a written
compliance report to the board of directors at least quarterly.
Alliance Bancorp is authorized to invest in obligations issued
or fully guaranteed by the U.S. Government, certain federal
agency obligations, insured municipal obligations, certain
mutual funds, investment grade corporate debt securities and
other specified investments. At June 30, 2010, our
investment securities amounted to $50.3 million, of which
$28.2 million was designated as available for sale and
$22.1 million was designated as held to maturity. The
securities designated as held to maturity represent municipal
obligations which are guaranteed by the issuer and further
guaranteed and supported by private insurance companies. They
consist of $20.7 million in general obligation bonds and
$1.4 million in revenue bonds. One of the revenue
obligations amounting to $1.0 million is secured by first
mortgage bonds on properties owned by the issuing company and
does not have any private insurance. Municipal bond investments
are not backed by the U.S. Government or related agencies
and therefore carry a higher degree of risk than investments in
U.S. Government or related agencies. Alliance Bancorp has
designated the majority of its investment securities as
available for sale in order to be more able to respond to
changes in market rates, increases in loan demand, and changes
in liquidity needs.
The following table sets forth certain information relating to
Alliance Bancorps investment securities portfolio at the
dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
Amortized
|
|
|
Fair
|
|
|
Amortized
|
|
|
Fair
|
|
|
Amortized
|
|
|
Fair
|
|
|
Amortized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Value
|
|
|
Cost
|
|
|
Value
|
|
|
Cost
|
|
|
Value
|
|
|
Cost
|
|
|
Value
|
|
|
|
(In thousands)
|
|
|
U.S. Government and agency securities
|
|
$
|
27,990
|
|
|
$
|
28,216
|
|
|
$
|
28,995
|
|
|
$
|
28,890
|
|
|
$
|
37,448
|
|
|
$
|
37,814
|
|
|
$
|
26,335
|
|
|
$
|
26,472
|
|
Municipal obligations
|
|
|
22,075
|
|
|
|
22,582
|
|
|
|
23,446
|
|
|
|
23,796
|
|
|
|
24,256
|
|
|
|
23,958
|
|
|
|
22,247
|
|
|
|
22,827
|
|
Investment in mutual funds(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,142
|
|
|
|
19,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
50,065
|
(1)
|
|
$
|
50,798
|
(1)
|
|
$
|
52,441
|
(1)
|
|
$
|
52,686
|
(1)
|
|
$
|
61,704
|
|
|
$
|
61,772
|
|
|
$
|
67,724
|
|
|
$
|
68,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
At June 30, 2010, investment securities totaling
$28.2 million were designated as available for sale. At
June 30, 2010, gross unrealized losses amounted to zero and
there were $226,000 in unrealized gains. At June 30, 2010,
$11.3 million or 23.2% of Alliance Bancorps
investment securities were pledged to secure various obligations
of Alliance Bancorp. See Note 3 to the consolidated
financial statements contained elsewhere in this prospectus. |
|
|
|
(2) |
|
During 2008, Alliance Bancorp recognized $882,000 in impairment
charges on these mutual funds compared to an $860,000 impairment
in 2007. Alliance Bancorp attributes the lower valuations of
these mutual funds to a significant widening of spreads
primarily due to the mortgage-related securities underlying
these funds. This spread differential was primarily due to the
general lack of investor interest for these type of securities
in the market environment at the time. On August 20, 2008,
subsequent to recording the |
91
|
|
|
|
|
impairment charges, Alliance Bancorp sold these mutual funds to
Alliance Mutual Holding Company at fair value. Alliance Mutual
Holding Company subsequently sold all of its holdings of such
mutual funds. |
Information regarding the contractual maturities and weighted
average yield of Alliance Bancorps investment securities
portfolio at the dates indicated is presented below. Actual
maturities may differ from contractual maturities because
issuers may have the right to call or prepay obligations with or
without call or prepayment penalties. Amounts are reflected at
amortized cost.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2010
|
|
|
|
One Year or
|
|
|
After One to
|
|
|
After Five to
|
|
|
Over
|
|
|
|
|
|
|
Less
|
|
|
Five Years
|
|
|
10 Years
|
|
|
10 Years
|
|
|
Total
|
|
|
|
(Dollars in thousands)
|
|
|
U.S. Government and agency securities
|
|
$
|
3,003
|
|
|
$
|
2,008
|
|
|
$
|
14,173
|
|
|
$
|
9,032
|
|
|
$
|
28,216
|
(1)
|
Municipal obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,075
|
|
|
|
22,075
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,003
|
|
|
$
|
2,008
|
|
|
$
|
14,173
|
|
|
$
|
31,107
|
|
|
$
|
50,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average yield
|
|
|
0.83
|
%
|
|
|
2.00
|
%
|
|
|
3.77
|
%
|
|
|
4.30
|
%
|
|
|
3.78
|
%
|
|
|
|
(1) |
|
The $28.2 million of U.S. Government agency securities are
designated as available for sale. |
|
(2) |
|
The $22.1 million of municipal obligations are designated
as held to maturity. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2009
|
|
|
|
One Year or
|
|
|
After One to
|
|
|
After Five to
|
|
|
Over
|
|
|
|
|
|
|
Less
|
|
|
Five Years
|
|
|
10 Years
|
|
|
10 Years
|
|
|
Total
|
|
|
|
(Dollars in thousands)
|
|
|
U.S. Government and agency securities
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
$
|
10,996
|
|
|
$
|
15,999
|
|
|
$
|
28,995
|
(1)
|
Municipal obligations
|
|
|
|
|
|
|
|
|
|
|
4,316
|
|
|
|
19,130
|
|
|
|
23,446
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
|
$
|
15,312
|
|
|
$
|
35,129
|
|
|
$
|
52,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average yield
|
|
|
1.20
|
%
|
|
|
2.00
|
%
|
|
|
4.13
|
%
|
|
|
4.47
|
%
|
|
|
4.26
|
%
|
|
|
|
(1) |
|
The $29.0 million of U.S. Government agency securities are
designated as available for sale. |
|
(2) |
|
The $23.4 million of municipal obligations are designated
as held to maturity and are tax exempt. |
Sources
of Funds
General. Deposits are the primary source of
Alliance Bancorps funds for lending and other investment
purposes. In addition to deposits, Alliance Bancorp derives
funds from loan principal repayments, prepayments and advances
from the FHLB of Pittsburgh and proceeds from sales of
investment securities. Loan repayments are a relatively stable
source of funds, while deposit inflows and outflows are
significantly influenced by general interest rates and money
market conditions. Borrowings may be used on a short-term basis
to compensate for reductions in the availability of funds from
other sources. They may also be used on a longer term basis for
general business purposes.
Deposits. Our deposit products include a broad
selection of deposit instruments, including NOW accounts, money
market accounts, regular savings accounts and term certificate
accounts. Deposit account terms vary, with the principal
difference being the minimum balance required, the time periods
the funds must remain on deposit and the interest rate.
We consider our primary market area to be Delaware and Chester
counties, Pennsylvania. We attract deposit accounts by offering
a wide variety of accounts, competitive interest rates, and
convenient office locations and service hours. In addition, we
maintain automated teller machines at our Broomall,
Concordville, Havertown, Springfield, Lansdowne, Paoli, and
Secane offices. We utilize traditional marketing methods to
attract new customers and savings deposits, including print
media advertising and direct mailings. We do not advertise for
deposits outside of our primary market area or utilize the
services of deposit brokers, and
92
management believes that an insignificant number of deposit
accounts were held by non-residents of Pennsylvania at
June 30, 2010.
We have been competitive in the types of accounts and in
interest rates we have offered on our deposit products but do
not necessarily seek to match the highest rates paid by
competing institutions. Although market demand generally
dictates which deposit maturities and rates will be accepted by
the public, we intend to continue to promote longer term
deposits to the extent possible and consistent with our asset
and liability management goals.
The following table shows the distribution of, and certain other
information relating to, Alliance Bancorps deposits by
type of deposit as of the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
|
(Dollars in thousands)
|
|
|
Passbook and statement savings accounts
|
|
$
|
42,864
|
|
|
|
11.2
|
%
|
|
$
|
40,892
|
|
|
|
10.9
|
%
|
|
$
|
39,378
|
|
|
|
12.0
|
%
|
|
$
|
38,223
|
|
|
|
11.7
|
%
|
Money market accounts
|
|
|
21,921
|
|
|
|
5.8
|
|
|
|
18,664
|
|
|
|
5.0
|
|
|
|
18,067
|
|
|
|
5.5
|
|
|
|
22,089
|
|
|
|
6.7
|
|
Certificates of deposit
|
|
|
255,100
|
|
|
|
66.9
|
|
|
|
251,583
|
|
|
|
67.0
|
|
|
|
207,943
|
|
|
|
63.3
|
|
|
|
201,860
|
|
|
|
61.6
|
|
NOW accounts
|
|
|
48,112
|
|
|
|
12.6
|
|
|
|
48,609
|
|
|
|
13.0
|
|
|
|
48,269
|
|
|
|
14.7
|
|
|
|
48,760
|
|
|
|
14.9
|
|
Non-interest bearing accounts
|
|
|
13,213
|
|
|
|
3.5
|
|
|
|
15,506
|
|
|
|
4.1
|
|
|
|
13,610
|
|
|
|
4.2
|
|
|
|
16,840
|
|
|
|
5.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits at end of period
|
|
$
|
381,210
|
|
|
|
100.0
|
%
|
|
$
|
375,254
|
|
|
|
100.0
|
%
|
|
$
|
327,267
|
|
|
|
100.0
|
%
|
|
$
|
327,772
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth the net deposit flows of Alliance
Bancorp during the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
|
|
|
|
|
|
|
|
|
|
Ended June 30,
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(In thousands)
|
|
|
Increase (decrease) before interest credited
|
|
$
|
2,021
|
|
|
$
|
38,480
|
|
|
$
|
(12,194
|
)
|
|
$
|
(14,632
|
)
|
Interest credited
|
|
|
3,935
|
|
|
|
9,507
|
|
|
|
11,689
|
|
|
|
11,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deposit increase (decrease)
|
|
$
|
5,956
|
|
|
$
|
47,987
|
|
|
$
|
(505
|
)
|
|
$
|
(3,014
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth maturities of Alliance
Bancorps certificates of deposit of $100,000 or more at
the dates indicated by time remaining to maturity.
|
|
|
|
|
|
|
|
|
|
|
At June 30,
|
|
|
At December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(In thousands)
|
|
|
Three months or less
|
|
$
|
13,478
|
|
|
$
|
12,059
|
|
Over three months through six months
|
|
|
10,671
|
|
|
|
19,695
|
|
Over six months through 12 months
|
|
|
24,511
|
|
|
|
14,395
|
|
Over 12 months
|
|
|
13,965
|
|
|
|
10,867
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
62,625
|
|
|
$
|
57,016
|
|
|
|
|
|
|
|
|
|
|
93
The following table presents the average balance of each deposit
type and the average rate paid on each deposit type for the
periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
June 30,
|
|
|
Year Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
|
|
|
|
Average
|
|
|
Rate
|
|
|
Average
|
|
|
Rate
|
|
|
Average
|
|
|
Rate
|
|
|
Average
|
|
|
Rate
|
|
|
Average
|
|
|
Rate
|
|
|
|
Balance
|
|
|
Paid
|
|
|
Balance
|
|
|
Paid
|
|
|
Balance
|
|
|
Paid
|
|
|
Balance
|
|
|
Paid
|
|
|
Balance
|
|
|
Paid
|
|
|
|
(Dollars in thousands)
|
|
|
Passbook and statement savings accounts
|
|
$
|
41,844
|
|
|
|
0.49
|
%
|
|
$
|
40,142
|
|
|
|
0.49
|
%
|
|
$
|
40,412
|
|
|
|
0.55
|
%
|
|
$
|
39,155
|
|
|
|
0.55
|
%
|
|
$
|
38,212
|
|
|
|
0.75
|
%
|
Money market accounts
|
|
|
23,151
|
|
|
|
0.68
|
|
|
|
16,792
|
|
|
|
0.75
|
|
|
|
17,604
|
|
|
|
0.76
|
|
|
|
18,545
|
|
|
|
1.63
|
|
|
|
20,663
|
|
|
|
3.16
|
|
Certificates of deposit
|
|
|
257,531
|
|
|
|
2.10
|
|
|
|
214,252
|
|
|
|
3.28
|
|
|
|
227,821
|
|
|
|
2.93
|
|
|
|
203,122
|
|
|
|
3.94
|
|
|
|
201,860
|
|
|
|
4.73
|
|
NOW and Super NOW
|
|
|
48,174
|
|
|
|
0.49
|
|
|
|
47,058
|
|
|
|
0.52
|
|
|
|
46,958
|
|
|
|
0.50
|
|
|
|
49,201
|
|
|
|
1.50
|
|
|
|
48,771
|
|
|
|
2.66
|
|
Non-interest bearing accounts
|
|
|
16,817
|
|
|
|
|
|
|
|
14,565
|
|
|
|
|
|
|
|
14,797
|
|
|
|
|
|
|
|
15,731
|
|
|
|
|
|
|
|
16,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total average deposits(1)
|
|
$
|
387,517
|
|
|
|
1.62
|
%
|
|
$
|
332,809
|
|
|
|
2.39
|
%
|
|
$
|
347,592
|
|
|
|
2.18
|
%
|
|
$
|
325,754
|
|
|
|
2.99
|
%
|
|
$
|
326,346
|
|
|
|
3.79
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Reflects average rate paid on total interest bearing deposits. |
The following table sets forth the amount and remaining
maturities of Alliance Bancorps certificates of deposit at
June 30, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over Six
|
|
|
Over One
|
|
|
Over Two
|
|
|
|
|
|
|
|
|
|
Six
|
|
|
Months
|
|
|
Year
|
|
|
Years
|
|
|
|
|
|
|
|
|
|
Months
|
|
|
Through
|
|
|
Through
|
|
|
Through
|
|
|
Over Three
|
|
|
|
|
|
|
and Less
|
|
|
One Year
|
|
|
Two Years
|
|
|
Three Years
|
|
|
Years
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
2.00% or less
|
|
$
|
70,925
|
|
|
$
|
81,051
|
|
|
$
|
27,282
|
|
|
$
|
815
|
|
|
$
|
|
|
|
$
|
180,073
|
|
2.01% to 3.00%
|
|
|
27,817
|
|
|
|
9,376
|
|
|
|
8,026
|
|
|
|
8,088
|
|
|
|
2,483
|
|
|
|
55,790
|
|
3.01% to 4.00%
|
|
|
1,627
|
|
|
|
1,407
|
|
|
|
2,610
|
|
|
|
647
|
|
|
|
699
|
|
|
|
6,990
|
|
4.01% to 6.00%
|
|
|
1,850
|
|
|
|
4,517
|
|
|
|
5,381
|
|
|
|
281
|
|
|
|
218
|
|
|
|
12,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
102,219
|
|
|
$
|
96,351
|
|
|
$
|
43,299
|
|
|
$
|
9,831
|
|
|
$
|
3,400
|
|
|
$
|
255,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings. Alliance Bancorp may obtain
advances from the FHLB of Pittsburgh upon the security of the
common stock it owns in that bank and certain of its loans,
provided certain standards related to creditworthiness have been
met. Such advances are made pursuant to several credit programs,
each of which has its own interest rate and range of maturities.
Such advances are generally available to meet seasonal and other
withdrawals of deposit accounts and to permit increased lending.
At December 31, 2009, we had $32.0 million of advances
from the FHLB of Pittsburgh. Of the $32.0 million of FHLB
advances at December 31, 2009, $6.0 million was repaid
in February 2010, $11.0 million was repaid in May 2010,
$10.0 million was repaid in June 2010. As a result, our
outstanding FHLB advances amounted to $5.0 million at
June 30, 2010, all of which mature in the third quarter of
2010. The weighted average interest rate of our FHLB advances
was 6.10% at June 30, 2010. We are reviewing our continued
utilization of advances from the FHLB as a source of funding
based upon decisions by the FHLB to suspend the dividend on, and
restrict the repurchase of, FHLB stock. FHLB stock is required
to be held when advances from the FHLB are taken. At
June 30, 2010, we had $2.4 million of FHLB stock.
94
The following table sets forth certain information regarding
borrowed funds at or for the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At or for the Six
|
|
|
|
|
|
|
|
|
Months Ended
|
|
|
|
|
|
|
|
|
June 30,
|
|
At or for the Year Ended December 31,
|
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
|
|
(Dollars in thousands)
|
|
FHLB of Pittsburgh advances:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average balance outstanding
|
|
$
|
24,193
|
|
|
$
|
34,767
|
|
|
$
|
37,000
|
|
|
$
|
37,153
|
|
Maximum amount outstanding at any month-end during the period
|
|
|
32,000
|
|
|
|
37,000
|
|
|
|
37,100
|
|
|
|
37,170
|
|
Balance outstanding at end of period
|
|
|
5,000
|
|
|
|
32,000
|
|
|
|
37,000
|
|
|
|
37,000
|
|
Weighted average interest rate during the period
|
|
|
6.20
|
%
|
|
|
6.39
|
%
|
|
|
6.30
|
%
|
|
|
6.37
|
%
|
Weighted average interest rate at end of period
|
|
|
6.10
|
%
|
|
|
6.31
|
%
|
|
|
6.30
|
%
|
|
|
6.30
|
%
|
Total borrowings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average balance outstanding
|
|
$
|
25,369
|
|
|
$
|
34,811
|
|
|
$
|
37,815
|
|
|
$
|
37,356
|
|
Maximum amount outstanding at any month-end during the period
|
|
|
35,238
|
|
|
|
37,082
|
|
|
|
39,812
|
|
|
|
38,975
|
|
Balance outstanding at end of period
|
|
|
13,112
|
|
|
|
35,090
|
|
|
|
41,632
|
|
|
|
40,058
|
|
Weighted average interest rate during the period
|
|
|
5.91
|
%
|
|
|
5.95
|
%
|
|
|
5.76
|
%
|
|
|
5.90
|
%
|
Weighted average interest rate at end of period
|
|
|
5.81
|
%
|
|
|
5.87
|
%
|
|
|
5.76
|
%
|
|
|
5.83
|
%
|
Employees
Alliance Bancorp had 73 full-time employees and
30 part-time employees at June 30, 2010. None of these
employees is represented by a collective bargaining agent, and
Alliance Bancorp believes that it enjoys good relations with its
personnel.
Subsidiaries
Presently, Alliance Bank has three wholly-owned subsidiaries,
Alliance Delaware Corp., which holds and manages certain
investment securities, Alliance Financial and Investment
Services LLC, which participates in commission fees, and 908
Hyatt Street LLC which owns and manages commercial real estate
properties. Alliance Delaware Corp. was formed in 1999 to
accommodate the transfer of certain assets that are legal
investments for the Bank and to provide for a greater degree of
protection to claims of creditors. The laws of the State of
Delaware and the court system create a more favorable
environment for the business affairs of the subsidiary. Alliance
Delaware Corp. currently manages certain investments for the
Bank, which, as of June 30, 2010 amounted to
$57.5 million. Alliance Financial and Investment Services
LLC was established in 2003 to share in commission fees from
non-insured alternative investment products. 908 Hyatt Street
was established in June 2010 to hold certain properties acquired
through foreclosure.
Offices
and Properties
At June 30, 2010, Alliance Bancorp conducted its business
from its executive offices in Broomall, Pennsylvania and nine
full service offices, all of which are located in southeastern
Pennsylvania.
95
The following table sets forth certain information with respect
to the office and other properties of Alliance Bancorp at
June 30, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Book
|
|
|
|
|
|
|
Value of
|
|
|
|
|
|
|
Premises and
|
|
Amount of
|
Description/Address
|
|
Leased/Owned
|
|
Fixed Assets
|
|
Deposits
|
|
|
|
|
(In thousands)
|
|
MAIN OFFICE
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence Park
|
|
|
Owned
|
|
|
$
|
1,368
|
|
|
$
|
82,855
|
|
541 Lawrence Road
Broomall, PA 19008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BRANCH OFFICES
|
|
|
|
|
|
|
|
|
|
|
|
|
Upper Darby
|
|
|
Leased
|
(1)
|
|
|
226
|
|
|
|
41,410
|
|
69th and Walnut Sts
Upper Darby, PA 19082
|
|
|
|
|
|
|
|
|
|
|
|
|
Secane
|
|
|
Leased
|
(2)
|
|
|
125
|
|
|
|
63,999
|
|
925 Providence Road
Secane, PA 19018
|
|
|
|
|
|
|
|
|
|
|
|
|
Newtown Square
|
|
|
Leased
|
(3)
|
|
|
21
|
|
|
|
32,721
|
|
252 & West Chester Pike
Newtown Square, PA 19073
|
|
|
|
|
|
|
|
|
|
|
|
|
Havertown
|
|
|
Leased
|
(4)
|
|
|
87
|
|
|
|
53,740
|
|
500 E. Township Line Road
Havertown, PA 19083
|
|
|
|
|
|
|
|
|
|
|
|
|
Lansdowne
|
|
|
Owned
|
|
|
|
208
|
|
|
|
25,368
|
|
9 E. Baltimore Pike
Lansdowne, PA 19050
|
|
|
|
|
|
|
|
|
|
|
|
|
Springfield
|
|
|
Leased
|
(5)
|
|
|
402
|
|
|
|
42,428
|
|
153 Saxer Avenue
Springfield, PA 19064
|
|
|
|
|
|
|
|
|
|
|
|
|
Shoppes at Britton Lake
|
|
|
Leased
|
(6)
|
|
|
106
|
|
|
|
27,323
|
|
979 Baltimore Pike
Glen Mills, PA 19342
|
|
|
|
|
|
|
|
|
|
|
|
|
Paoli Shopping Center
|
|
|
Leased
|
(7)
|
|
|
29
|
|
|
|
11,366
|
|
82 E. Lancaster Ave.
Paoli, PA 19301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The lease expires in February 2017 with two successive options
to extend the lease for five years each. |
|
(2) |
|
The lease expires in April 2011 with one remaining option to
extend the lease for ten years. We currently intend to exercise
this option. |
|
(3) |
|
The building is owned but the ground is leased. The lease
expires in June 2011 with one remaining option to extend the
lease for five years each. We currently intend to exercise this
option. |
|
(4) |
|
The lease expires in January 2011 with two successive options to
extend the lease for five years each. We currently intend to
exercise this option. |
|
(5) |
|
Property is owned by Alliance Mutual Holding Company. The lease
expires in September 2015. |
|
(6) |
|
The lease expires in January 2021 with two successive options to
extend the lease for five years each. |
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The lease expires May 2012. |
In addition to the Springfield branch office of Alliance Bank,
Alliance Mutual Holding Company owns an approximate 10 acre
parcel of land located in Chester County, Pennsylvania, which
had a carrying value of $1.6 million June 30, 2010,
and which is expected to be sold to a third party within the
next six to 12 months.
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Legal
Proceedings
On May 14, 2010, Alliance Bank filed a complaint against
New Century Bank in the United States District Court for the
Eastern District of Pennsylvania claiming trademark
infringement, false designation of origin and unfair competition
due to New Century Banks unauthorized adoption and use of
Alliance Banks registered trademark of Customer
First®
in connection with providing banking and financial services,
including doing business under the name Customer
1st Bank. Alliance Bank sought to enjoin New Century
Bank from the use of its trademark as well as unspecified
monetary damages. In its answer to the complaint, New Century
Bank filed a counterclaim against Alliance Bank alleging that
the trademark is invalid.
On July 27, 2010, the District Court, following an
evidentiary hearing and oral argument, found that Alliance Bank
was likely to succeed on the merits of the trademark
infringement case at trial and granted Alliance Banks
motion for a preliminary injunction against New Century Bank
prohibiting its use of the name Customer First or any similar
name and requiring New Century Bank to immediately modify its
signage and cease using the name Customer
1st Bank
in its branches or otherwise using or disseminating marketing
and promotional materials that uses or features the mark
Customers
1st and/or
Customers 1st Bank or any logo, trade name or trademark
which incorporates such mark. Following entry of the preliminary
injunction, the parties entered into a settlement agreement
whereby New Century Bank agreed to permanently cease all use of
the Customer First name or any similar name, withdraw its
trademark applications for use of such names and transfer the
registration of all related domain names to Alliance Bank, and
Alliance Bank agreed to withdraw all other claims under the
lawsuit.
REGULATION
General
Alliance Bancorp and Alliance Mutual Holding Company, as
federally-chartered savings and loan holding companies, are
required to file certain reports with, and are subject to
examination by, and otherwise must comply with the rules and
regulations of the OTS. Alliance Bancorp is also subject to the
rules and regulations of the SEC under the federal securities
laws.
Alliance Bank is a Pennsylvania-chartered savings bank and is
subject to extensive regulation and examination by the
Pennsylvania Department of Banking and by the FDIC, and is also
subject to certain requirements established by the Federal
Reserve Board. The federal and state laws and regulations which
are applicable to banks regulate, among other things, the scope
of their business, their investments, their reserves against
deposits, the payment of dividends, the timing of the
availability of deposited funds and the nature and amount of and
collateral for certain loans. There are periodic examinations by
the Pennsylvania Department of Banking and the FDIC to test
Alliance Banks compliance with various regulatory
requirements. This regulation and supervision establishes a
comprehensive framework of activities in which an institution
can engage and 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 with respect to the
classification of assets and the establishment of adequate loan
loss reserves for regulatory purposes. Any change in such
regulation, whether by the Pennsylvania Department of Banking,
the FDIC or the Congress could have a material adverse impact on
Alliance Bancorp, Alliance Bank and Alliance Mutual Holding
Company and their operations.
Under the recently enacted Dodd-Frank Wall Street Reform and
Consumer Protection Act, the powers of the Office of Thrift
Supervision regarding Alliance Mutual Holding Company and
Alliance Bancorp will transfer to other federal financial
institution regulatory agencies on July 21, 2011, unless
extended up to an additional six months. See
Recently Enacted Regulatory Reform. All
of the regulatory functions related to Alliance Bancorp and
Alliance Mutual Holding Company, as savings and loan holding
companies that are currently under the jurisdiction of the
Office of Thrift Supervision, will transfer to the Federal
Reserve Board.
Certain of the regulatory requirements that are or will be
applicable to Alliance Bank, Alliance Bancorp and Alliance
Mutual Holding Company are described below. This description of
statutes and regulations is not
97
intended to be a complete explanation of such statutes and
regulations and their effects on Alliance Bank, Alliance Bancorp
and Alliance Mutual Holding Company and is qualified in its
entirety by reference to the actual statutes and regulations.
Recently
Enacted Regulatory Reform
On July 21, 2010, the President signed into law the
Dodd-Frank Wall Street Reform and Consumer Protection Act. The
financial reform and consumer protection act imposes new
restrictions and an expanded framework of regulatory oversight
for financial institutions, including depository institutions.
In addition, the new law changes the jurisdictions of existing
bank regulatory agencies and in particular transfers the
regulation of federal savings associations from the Office of
Thrift Supervision to the Office of Comptroller of the Currency,
effective one year from the effective date of the legislation,
with a potential extension up to six months. Savings and loan
holding companies will be regulated by the Federal Reserve
Board. The new law also establishes an independent federal
consumer protection bureau within the Federal Reserve Board. The
following discussion summarizes significant aspects of the new
law that may affect Alliance Bank, Alliance Mutual Holding
Company and Alliance Bancorp. Regulations implementing these
changes have not been promulgated, so we cannot determine the
full impact on our business and operations at this time.
The following aspects of the financial reform and consumer
protection act are related to the operations of Alliance Bank:
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A new independent consumer financial protection bureau will be
established within the Federal Reserve Board, empowered to
exercise broad regulatory, supervisory and enforcement authority
with respect to both new and existing consumer financial
protection laws. Smaller financial institutions, like Alliance
Bank, will be subject to the supervision and enforcement of
their primary federal banking regulator with respect to the
federal consumer financial protection laws.
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Tier 1 capital treatment for hybrid capital
items like trust preferred securities is eliminated subject to
various grandfathering and transition rules.
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The current prohibition on payment of interest on demand
deposits was repealed, effective July 21, 2011.
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Deposit insurance is permanently increased to $250,000 and
unlimited deposit insurance for non-interest-bearing transaction
accounts extended through January 1, 2013.
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The deposit insurance assessment base calculation will equal the
depository institutions total assets minus the sum of its
average tangible equity during the assessment period.
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The minimum reserve ratio of the Deposit Insurance Fund
increased to 1.35 percent of estimated annual insured
deposits or assessment base; however, the Federal Deposit
Insurance Corporation is directed to offset the
effect of the increased reserve ratio for insured
depository institutions with total consolidated assets of less
than $10 billion.
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The following aspects of the financial reform and consumer
protection act are related to the operations of Alliance Bancorp
and Alliance Mutual Holding Company:
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Authority over savings and loan holding companies will transfer
to the Federal Reserve Board.
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Leverage capital requirements and risk based capital
requirements applicable to depository institutions and bank
holding companies will be extended to thrift holding companies.
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The Federal Deposit Insurance Act was amended to direct federal
regulators to require depository institution holding companies
to serve as a source of strength for their depository
institution subsidiaries.
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The Securities and Exchange Commission is authorized to adopt
rules requiring public companies to make their proxy materials
available to shareholders for nomination of their own candidates
for election to the board of directors.
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Public companies will be required to provide their shareholders
with a non-binding vote: (i) at least once every three
years on the compensation paid to executive officers, and
(ii) at least once every six years on whether they should
have a say on pay vote every one, two or three years.
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A separate, non-binding shareholder vote will be required
regarding golden parachutes for named executive officers when a
shareholder vote takes place on mergers, acquisitions,
dispositions or other transactions that would trigger the
parachute payments.
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Securities exchanges will be required to prohibit brokers from
using their own discretion to vote shares not beneficially owned
by them for certain significant matters, which
include votes on the election of directors, executive
compensation matters, and any other matter determined to be
significant.
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Stock exchanges will be prohibited from listing the securities
of any issuer that does not have a policy providing for
(i) disclosure of its policy on incentive compensation
payable on the basis of financial information reportable under
the securities laws, and (ii) the recovery from current or
former executive officers, following an accounting restatement
triggered by material noncompliance with securities law
reporting requirements, of any incentive compensation paid
erroneously during the three-year period preceding the date on
which the restatement was required that exceeds the amount that
would have been paid on the basis of the restated financial
information.
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Disclosure in annual proxy materials will be required concerning
the relationship between the executive compensation paid and the
financial performance of the issuer.
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Item 402 of
Regulation S-K
will be amended to require companies to disclose the ratio of
the Chief Executive Officers annual total compensation to
the median annual total compensation of all other employees.
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Smaller reporting companies are exempt from complying with the
internal control auditor attestation requirements of
Section 404(b) of the Sarbanes-Oxley Act.
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Regulation
of Alliance Bank
Pennsylvania Banking Law. The Pennsylvania
Banking Code of 1965 (the Banking Code) contains
detailed provisions governing the organization, location of
offices, rights and responsibilities of directors, officers,
employees and members, as well as corporate powers, savings and
investment operations and other aspects of Alliance Bank and its
affairs. The Banking Code delegates extensive rulemaking power
and administrative discretion to the Pennsylvania Department of
Banking so that the supervision and regulation of
state-chartered savings banks may be flexible and readily
responsive to changes in economic conditions and in savings and
lending practices.
One of the purposes of the Banking Code is to provide savings
banks with the opportunity to be competitive with each other and
with other financial institutions existing under other
Pennsylvania laws and other state, federal and foreign laws. A
Pennsylvania savings bank may locate or change the location of
its principal place of business and establish an office anywhere
in the Commonwealth, with the prior approval of the Pennsylvania
Department of Banking.
The Pennsylvania Department of Banking generally examines each
savings bank not less frequently than once every two years. The
Pennsylvania Department of Banking may accept the examinations
and reports of the FDIC in lieu of its own examination, the
present practice is for the Pennsylvania Department of Banking
to alternate with the FDIC. The Pennsylvania Department of
Banking may order any savings bank to discontinue any violation
of law or unsafe or unsound business practice and may direct any
director, trustee, officer, attorney or employee of a savings
bank engaged in an objectionable activity, after the
Pennsylvania Department of Banking has ordered the activity to
be terminated, to show cause at a hearing before the
Pennsylvania Department of Banking why such person should not be
removed.
Insurance of Accounts. The deposits of
Alliance Bank are insured to the maximum extent permitted by the
Deposit Insurance Fund and are backed by the full faith and
credit of the U.S. Government. As insurer, the Federal
Deposit Insurance Corporation is authorized to conduct
examinations of, and to require reporting
99
by, insured institutions. It also may prohibit any insured
institution from engaging in any activity determined by
regulation or order to pose a serious threat to the Federal
Deposit Insurance Corporation. The Federal Deposit Insurance
Corporation also has the authority to initiate enforcement
actions against savings institutions.
The recently enacted financial institution reform legislation
permanently increased deposit insurance on most accounts to
$250,000. In addition, pursuant to Section 13(c)(4)(G) of
the Federal Deposit Insurance Act, the Federal Deposit Insurance
Corporation has implemented two temporary programs to provide
deposit insurance for the full amount of most non-interest
bearing transaction deposit accounts through the end of 2013 and
to guarantee certain unsecured debt of financial institutions
and their holding companies through December 2012. For
non-interest bearing transaction deposit accounts, including
accounts swept from a non-interest bearing transaction account
into a non-interest bearing savings deposit account, a
10 basis point annual rate surcharge will be applied to
deposit amounts in excess of $250,000. Financial institutions
could have opted out of either or both of these programs. We did
not opt out of the temporary liquidity guarantee program;
however, we do not expect that the assessment surcharge will
have a material impact on our results of operations.
The Federal Deposit Insurance Corporations risk-based
premium system provides for quarterly assessments. Each insured
institution is placed in one of four risk categories depending
on supervisory and capital considerations. Within its risk
category, an institution is assigned to an initial base
assessment rate which is then adjusted to determine its final
assessment rate based on its brokered deposits, secured
liabilities and unsecured debt. Assessment rates range from
seven to 77.5 basis points, with less risky institutions
paying lower assessments.
In 2009, the Federal Deposit Insurance Corporation collected a
five basis point special assessment on each insured depository
institutions assets minus its Tier 1 capital as of
June 30, 2009. The amount of our special assessment, which
was paid on September 30, 2009, was an additional expense
of $195,000.
In 2009, the Federal Deposit Insurance Corporation also required
insured deposit institutions on December 30, 2009 to prepay
13 quarters of estimated insurance assessments. Our prepayment
totaled approximately $2.3 million. Unlike a special
assessment, this prepayment did not immediately affect bank
earnings. Banks will book the prepaid assessment as a
non-earning asset and record the actual risk-based premium
payments at the end of each quarter.
In addition, all institutions with deposits insured by the
Federal Deposit Insurance Corporation are required to pay
assessments to fund interest payments on bonds issued by the
Financing Corporation, a mixed-ownership government corporation
established to recapitalize the predecessor to the Deposit
Insurance Fund. These assessments will continue until the
Financing Corporation bonds mature in 2019.
The FDIC may terminate the deposit insurance of any insured
depository institution, including the Bank, if it determines
after a hearing that the institution has engaged or is engaging
in unsafe or unsound practices, is in an unsafe or unsound
condition to continue operations, or has violated any applicable
law, regulation, order or any condition imposed by an agreement
with the FDIC. It also may suspend deposit insurance temporarily
during the hearing process for the permanent termination of
insurance, if the institution has no tangible capital. If
insurance of accounts is terminated, the accounts at the
institution at the time of the termination, less subsequent
withdrawals, shall continue to be insured for a period of six
months to two years, as determined by the FDIC. Management is
not aware of any existing circumstances which could result in
termination of the Banks deposit insurance.
Capital Requirements. The FDIC has promulgated
regulations and adopted a statement of policy regarding the
capital adequacy of state-chartered banks which, like Alliance
Bank, are not members of the Federal Reserve System. These
requirements are substantially similar to those adopted by the
Federal Reserve Board regarding bank holding companies.
The FDICs capital regulations establish a minimum 3.0%
Tier I leverage capital requirement for the most
highly-rated state-chartered, non-member banks. An additional
cushion of at least 100 basis points is required for all
other state-chartered, non-member banks, which effectively
increases their minimum Tier I
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leverage ratio to 4.0% or more. Under the FDICs
regulation, the most highly-rated banks are those that the FDIC
determines are not anticipating or experiencing significant
growth and have well diversified risk, including no undue
interest rate risk exposure, excellent asset quality, high
liquidity, good earnings and, in general, which are considered a
strong banking organization and are rated composite 1 under the
Uniform Financial Institutions Rating System. Leverage or core
capital is defined as the sum of common stockholders
equity (including retained earnings), noncumulative perpetual
preferred stock and related surplus, and minority interests in
consolidated subsidiaries, minus all intangible assets other
than certain qualifying supervisory goodwill and certain
purchased mortgage servicing rights.
The FDIC also requires that savings banks meet a risk-based
capital standard. The risk-based capital standard for savings
banks requires the maintenance of total capital (which is
defined as Tier I capital and supplementary
(Tier 2) capital) to risk weighted assets of 8%. In
determining the amount of risk-weighted assets, all assets, plus
certain off balance sheet assets, are multiplied by a
risk-weight of 0% to 100%, based on the risks the FDIC believes
are inherent in the type of asset or item. The components of
Tier I capital are equivalent to those discussed above
under the 3% leverage capital standard. The components of
supplementary capital include certain perpetual preferred stock,
certain mandatory convertible securities, certain subordinated
debt and intermediate preferred stock and general allowances for
loan and lease losses. Allowance for loan and lease losses
includable in supplementary capital is limited to a maximum of
1.25% of risk-weighted assets. Overall, the amount of capital
counted toward supplementary capital cannot exceed 100% of core
capital.
Alliance Bank is also subject to more stringent Pennsylvania
Department of Banking capital guidelines. Although not adopted
in regulation form, the Department utilizes capital standards
requiring a minimum of 6% leverage capital and 10% risk-based
capital. The components of leverage and risk-based capital are
substantially the same as those defined by the FDIC. At
June 30, 2010, Alliance Banks capital ratios exceeded
each of its capital requirements.
Prompt Corrective Action. The following table
shows the amount of capital associated with the different
capital categories set forth in the prompt corrective action
regulations.
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Total
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Tier 1
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Tier 1
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Capital Category
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Risk-based Capital
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Risk-based Capital
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Leverage Capital
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Well capitalized
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10% or more
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6% or more
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5% or more
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Adequately capitalized
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8% or more
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4% or more
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4% or more
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Undercapitalized
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Less than 8%
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Less than 4%
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Less than 4%
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Significantly undercapitalized
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Less than 6%
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Less than 3%
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Less than 3%
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In addition, an institution is critically
undercapitalized if it has a ratio of tangible equity to
total assets that is equal to or less than 2.0%. Under specified
circumstances, a federal banking agency may reclassify a well
capitalized institution as adequately capitalized and may
require an adequately capitalized institution or an
undercapitalized institution to comply with supervisory actions
as if it were in the next lower category (except that the
Federal Deposit Insurance Corporation may not reclassify a
significantly undercapitalized institution as critically
undercapitalized).
An institution generally must file a written capital restoration
plan which meets specified requirements within 45 days of
the date that the institution receives notice or is deemed to
have notice that it is undercapitalized, significantly
undercapitalized or critically undercapitalized. A federal
banking agency must provide the institution with written notice
of approval or disapproval within 60 days after receiving a
capital restoration plan, subject to extensions by the agency.
An institution which is required to submit a capital restoration
plan must concurrently submit a performance guaranty by each
company that controls the institution. In addition,
undercapitalized institutions are subject to various regulatory
restrictions, and the appropriate federal banking agency also
may take any number of discretionary supervisory actions.
At June 30, 2010, Alliance Bank was deemed a well
capitalized institution for purposes of the prompt corrective
action regulations and as such is not subject to the above
mentioned restrictions.
101
Activities and Investments of Insured State-Chartered
Banks. The activities and equity investments of
FDIC-insured, state-chartered banks are generally limited to
those that are permissible for national banks. Under regulations
dealing with equity investments, an insured state bank generally
may not directly or indirectly acquire or retain any equity
investment of a type, or in an amount, that is not permissible
for a national bank. An insured state bank is not prohibited
from, among other things:
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acquiring or retaining a majority interest in a subsidiary;
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investing as a limited partner in a partnership the sole purpose
of which is direct or indirect investment in the acquisition,
rehabilitation or new construction of a qualified housing
project, provided that such limited partnership investments may
not exceed 2% of the banks total assets;
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acquiring up to 10% of the voting stock of a company that solely
provides or reinsures directors, trustees and
officers liability insurance coverage or bankers
blanket bond group insurance coverage for insured depository
institutions; and
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acquiring or retaining the voting shares of a depository
institution if certain requirements are met.
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The FDIC has adopted regulations pertaining to the other
activity restrictions imposed upon insured state banks and their
subsidiaries. Pursuant to such regulations, insured state banks
engaging in impermissible activities may seek approval from the
FDIC to continue such activities. State banks not engaging in
such activities but that desire to engage in otherwise
impermissible activities either directly or through a subsidiary
may apply for approval from the FDIC to do so; however, if such
bank fails to meet the minimum capital requirements or the
activities present a significant risk to the FDIC insurance
funds, such application will not be approved by the FDIC.
Pursuant to this authority, the FDIC has determined that
investments in certain majority-owned subsidiaries of insured
state banks do not represent a significant risk to the deposit
insurance funds. Investments permitted under that authority
include real estate activities and securities activities.
Restrictions on Capital Distributions. Office
of Thrift Supervision regulations govern capital distributions
by savings institutions, which include cash dividends, stock
repurchases and other transactions charged to the capital
account of a savings institution to make capital distributions.
These regulations apply to Alliance Mutual Holding Company and
Alliance Bancorp. Under applicable regulations, a savings
institution must file an application for Office of Thrift
Supervision approval of the capital distribution if:
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the total capital distributions for the applicable calendar year
exceed the sum of the institutions net income for that
year to date plus the institutions retained net income for
the preceding two years;
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the institution would not be at least adequately capitalized
following the distribution;
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the distribution would violate any applicable statute,
regulation, agreement or Office of Thrift Supervision-imposed
condition; or
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the institution is not eligible for expedited treatment of its
filings with the Office of Thrift Supervision.
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If an application is not required to be filed, savings
institutions such as Alliance Bank which are a subsidiary of a
holding company (as well as certain other institutions) must
still file a notice with the Office of Thrift Supervision at
least 30 days before the board of directors declares a
dividend or approves a capital distribution.
An institution that either before or after a proposed capital
distribution fails to meet its then applicable minimum capital
requirement or that has been notified that it needs more than
normal supervision may not make any capital distributions
without the prior written approval of the Office of Thrift
Supervision. In addition, the Office of Thrift Supervision may
prohibit a proposed capital distribution, which would otherwise
be permitted by Office of Thrift Supervision regulations, if the
Office of Thrift Supervision determines that such distribution
would constitute an unsafe or unsound practice.
Under federal rules, an insured depository institution may not
pay any dividend if payment would cause it to become
undercapitalized or if it is already undercapitalized. In
addition, federal regulators have the authority to restrict or
prohibit the payment of dividends for safety and soundness
reasons. The FDIC also
102
prohibits an insured depository institution from paying
dividends on its capital stock or interest on its capital notes
or debentures (if such interest is required to be paid only out
of net profits) or distributing any of its capital assets while
it remains in default in the payment of any assessment due the
FDIC. Alliance Bank is currently not in default in any
assessment payment to the FDIC. Pennsylvania law also restricts
the payment and amount of dividends, including the requirement
that dividends be paid only out of accumulated net earnings.
Privacy Requirements of the Gramm-Leach-Bliley
Act. Federal law places limitations on financial
institutions like Alliance Bank regarding the sharing of
consumer financial information with unaffiliated third parties.
Specifically, these provisions require all financial
institutions offering financial products or services to retail
customers to provide such customers with the financial
institutions privacy policy and provide such customers the
opportunity to opt out of the sharing of personal
financial information with unaffiliated third parties. Alliance
Bank currently has a privacy protection policy in place and
believes such policy is in compliance with the regulations.
Anti-Money Laundering. Federal anti-money
laundering rules impose various requirements on financial
institutions intends to prevent the use of the
U.S. financial system to fund terrorist activities. These
provision include a requirement that financial institutions
operating in the United States have anti-money laundering
compliance programs, due diligence policies and controls to
ensure the detection and reporting of money laundering. Such
compliance programs supplement existing compliance requirements,
also applicable to financial institutions, under the Bank
Secrecy Act and the Office of Foreign Assets Control
Regulations. Alliance Bank has established policies and
procedures to ensure compliance with the federal anti-laundering
provisions.
Regulatory Enforcement Authority. Applicable
banking laws include substantial enforcement powers available to
federal banking regulators. This enforcement authority includes,
among other things, the ability to assess civil money penalties,
to issue
cease-and-desist
or removal orders and to initiate injunctive actions against
banking organizations and institution-affiliated parties, as
defined. In general, these enforcement actions may be initiated
for violations of laws and regulations and unsafe or unsound
practices. Other actions or inactions may provide the basis for
enforcement action, including misleading or untimely reports
filed with regulatory authorities.
Community Reinvestment Act. All insured
depository institutions have a responsibility under the
Community Reinvestment Act and related regulations to help meet
the credit needs of their communities, including low- and
moderate-income neighborhoods. An institutions failure to
comply with the provisions of the Community Reinvestment Act
could result in restrictions on its activities. Alliance Bank
received a satisfactory Community Reinvestment Act
rating in its most recently completed examination.
Federal Home Loan Bank System. Alliance Bank
is a member of the Federal Home Loan Bank of Pittsburgh, which
is one of 12 regional Federal Home Loan Banks. Each Federal Home
Loan Bank serves as a reserve or central bank for its members
within its assigned region. It is funded primarily from proceeds
from the sale of consolidated obligations of the Federal Home
Loan Bank System. It makes loans to members (i.e., advances) in
accordance with policies and procedures established by the board
of directors of the Federal Home Loan Bank.
As a member, Alliance Bank is required to purchase and maintain
stock in the Federal Home Loan Bank of Pittsburgh in an amount
in accordance with the Federal Home Loan Banks capital
plan and sufficient to ensure that the Federal Home Loan Bank
remains in compliance with its minimum capital requirements. At
June 30, 2010, Alliance Bank was in compliance with this
requirement.
Federal Reserve Board System. The Federal
Reserve Board requires all depository institutions to maintain
non-interest bearing reserves at specified levels against their
transaction accounts, which are primarily checking and NOW
accounts, and non-personal time deposits. The balances
maintained to meet the reserve requirements imposed by the
Federal Reserve Board may be used to satisfy the liquidity
requirements that are imposed by the Pennsylvania Department of
Banking. At June 30, 2010, Alliance Bank was in compliance
with these reserve requirements.
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Regulation
of Alliance Bancorp and Alliance Mutual Holding
Company
General. Alliance Bancorp and Alliance Mutual
Holding Company are subject to regulation as savings and loan
holding companies under the Home Owners Loan Act, as
amended, instead of being subject to regulation as bank holding
companies under the Bank Holding Company Act of 1956 because
Alliance Bank has made an election under Section 10(l) of
the Home Owners Loan Act to be treated as a savings
association for purposes of Section 10 of the Home
Owners Loan Act. As a result, Alliance Bancorp and
Alliance Mutual Holding Company registered with the Office of
Thrift Supervision and are subject to Office of Thrift
Supervision regulations, examinations, supervision and reporting
requirements relating to savings and loan holding companies. As
a subsidiary of a savings and loan holding company, Alliance
Bank is subject to certain restrictions in its dealings with
Alliance Bancorp and Alliance Mutual Holding Company and
affiliates thereof.
Federal Securities Laws. Alliance
Bancorps common stock is registered with the Securities
and Exchange Commission under Section 12(g) of the
Securities Exchange Act of 1934. Alliance Bancorp is subject to
the proxy and tender offer rules, insider trading reporting
requirements and restrictions, and certain other requirements
under the Securities Exchange Act of 1934. As part of the
conversion, Alliance Bancorp New will register under
the Exchange Act and be subject to the same Exchange Act rules
currently applicable to Alliance Bancorp. Alliance
Bancorp New has filed a registration statement with
the Securities and Exchange Commission under the Securities Act
of 1933 for its common stock to be issued in the conversion and
offering. If our new common stock is listed on the Nasdaq Global
Market, our common stock will be deemed registered under
Section 12(b) of the Securities and Exchange Act of 1934.
Pursuant to Office of Thrift Supervision regulations and our
plan of conversion and reorganization, we have agreed to
maintain such registration for a minimum of three years
following the conversion and offering.
The Sarbanes-Oxley Act. As a public company,
Alliance Bancorp is subject to the Sarbanes-Oxley Act of 2002
which addresses, among other issues, corporate governance,
auditing and accounting, executive compensation, and enhanced
and timely disclosure of corporate information. As directed by
the Sarbanes-Oxley Act, our principal executive officer and
principal financial officer are required to certify that our
quarterly and annual reports do not contain any untrue statement
of a material fact. The rules adopted by the Securities and
Exchange Commission under the Sarbanes-Oxley Act have several
requirements, including having these officers certify that: they
are responsible for establishing, maintaining and regularly
evaluating the effectiveness of our internal control over
financial reporting; they have made certain disclosures to our
auditors and the audit committee of the Board of Directors about
our internal control over financial reporting; and they have
included information in our quarterly and annual reports about
their evaluation and whether there have been changes in our
internal control over financial reporting or in other factors
that could materially affect internal control over financial
reporting.
Restrictions Applicable to Alliance Bancorp and Alliance
Mutual Holding Company. Because Alliance Bancorp
and Alliance Mutual Holding Company operate under federal
charters issued by the Office of Thrift Supervision under
Section 10(o) of the Home Owners Loan Act, they are
permitted to engage only in the following activities:
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investing in the stock of a savings institution;
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acquiring a mutual association through the merger of such
association into a savings institution subsidiary of such
holding company or an interim savings institution subsidiary of
such holding company;
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merging with or acquiring another holding company, one of whose
subsidiaries is a savings institution;
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investing in a corporation, the capital stock of which is
available for purchase by a savings institution under federal
law or under the law of any state where the subsidiary savings
institution or association is located; and
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the permissible activities described below for non-grandfathered
savings and loan holding companies.
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104
Generally, companies that become savings and loan holding
companies following the May 4, 1999 grandfather date in the
Gramm-Leach-Bliley Act of 1999 may engage only in the
activities permitted for financial institution holding companies
or for multiple savings and loan holding companies.
If a mutual holding company or a mutual holding company
subsidiary holding company acquires, is acquired by, or merges
with another holding company that engages in any impermissible
activity or holds any impermissible investment, it has a period
of two years to cease any non-conforming activities and divest
any non-conforming investments. As of the date hereof, neither
Alliance Mutual Holding Company nor Alliance Bank was engaged in
any non-conforming activities and neither had any non-conforming
investments.
All savings associations subsidiaries of savings and loan
holding companies are required to meet a qualified thrift
lender, or QTL, test to avoid certain restrictions on their
operations. If the subsidiary savings institution fails to meet
the QTL, as discussed below, then the savings and loan holding
company must register with the Federal Reserve Board as a bank
holding company, unless the savings institution requalifies as a
QTL within one year thereafter.
Qualified Thrift Lender Test. A savings
association can comply with the QTL test by either qualifying as
a domestic building and loan association as defined in the
Internal Revenue Code or meeting the Office of Thrift
Supervision QTL test. A savings bank subsidiary of a savings and
loan holding company that does not comply with the QTL test must
comply with the following restrictions on its operations:
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the institution may not engage in any new activity or make any
new investment, directly or indirectly, unless such activity or
investment is permissible for a national bank;
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the branching powers of the institution shall be restricted to
those of a national bank; and
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payment of dividends by the institution shall be subject to the
rules regarding payment of dividends by a national bank.
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Upon the expiration of three years from the date the institution
ceases to meet the Qualified Thrift Lender test, it must cease
any activity and not retain any investment not permissible for a
national bank (subject to safety and soundness considerations).
Under the Dodd-Frank Wall Street Reform and Consumer Protection
Act, a savings institution not in compliance with the QTL test
is also prohibited from paying dividends and is subject to an
enforcement action for violation of the Home Owners Loan
Act, as amended.
Alliance Bank believes that it meets the provisions of the
Qualified Thrift Lender test.
Limitations on Transactions with
Affiliates. Transactions between savings
institutions and any affiliate are governed by Sections 23A
and 23B of the Federal Reserve Act. An affiliate of a savings
institution is any company or entity which controls, is
controlled by or is under common control with the savings
institution. In a mutual holding company context, the mutual
holding company and mid-tier holding company of a savings
institution (such as Alliance Bancorp and Alliance Mutual
Holding Company) and any companies which are controlled by such
holding companies are affiliates of the savings institution.
Generally, Section 23A limits the extent to which the
savings institution or its subsidiaries may engage in
covered transactions with any one affiliate to an
amount equal to 10% of such institutions capital stock and
surplus, and contains an aggregate limit on all such
transactions with all affiliates to an amount equal to 20% of
such capital stock and surplus. Section 23B applies to
covered transactions as well as certain other
transactions and requires that all transactions be on terms
substantially the same, or at least as favorable, to the savings
institution as those provided to a non-affiliate. The term
covered transaction includes the making of loans to,
purchase of assets from and issuance of a guarantee to an
affiliate and similar transactions. Section 23B
transactions also include the provision of services and the sale
of assets by a savings institution to an affiliate. In addition
to the restrictions imposed by Sections 23A and 23B,
Section 11 of the Home Owners Loan Act prohibits a
savings institution from (i) making a loan or other
extension of credit to an affiliate, except for any affiliate
which engages only in certain activities which are permissible
for bank holding companies, or (ii) purchasing or investing
in any stocks, bonds, debentures, notes or similar obligations
of any affiliate, except for affiliates which are subsidiaries
of the savings institution.
105
In addition, Sections 22(g) and (h) of the Federal
Reserve Act place restrictions on loans to executive officers,
directors and principal stockholders. Under Section 22(h),
loans to a director, an executive officer and to a greater than
10% stockholder of a savings institution, and certain affiliated
interests of either, may not exceed, together with all other
outstanding loans to such person and affiliated interests, the
savings institutions loans to one borrower limit
(generally equal to 15% of the institutions unimpaired
capital and surplus). Section 22(h) 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 unless the loans are
made pursuant to a benefit or compensation program that
(i) is widely available to employees of the institution and
(ii) does not give preference to any director, executive
officer or principal stockholder, or certain affiliated
interests of either, over other employees of the savings
institution. Section 22(h) also requires prior board
approval for certain loans. In addition, the aggregate amount of
extensions of credit by a savings institution to all insiders
cannot exceed the institutions unimpaired capital and
surplus. Furthermore, Section 22(g) places additional
restrictions on loans to executive officers. At June 30,
2010, Alliance Bank was in compliance with the above
restrictions.
Restrictions on Acquisitions. Except under
limited circumstances, savings and loan holding companies are
prohibited from acquiring, without prior approval of the
Director of the Office of Thrift Supervision, (i) control
of any other savings institution or savings and loan holding
company or substantially all the assets thereof or
(ii) more than 5% of the voting shares of a savings
institution or holding company thereof which is not a
subsidiary. Except with the prior approval of the Director, no
director or officer of a savings and loan holding company or
person owning or controlling by proxy or otherwise more than 25%
of such companys stock, may acquire control of any savings
institution, other than a subsidiary savings institution, or of
any other savings and loan holding company.
The Director of the Office of Thrift Supervision may only
approve acquisitions resulting in the formation of a multiple
savings and loan holding company which controls savings
institutions in more than one state if (i) the multiple
savings and loan holding company involved controls a savings
institution which operated a home or branch office located in
the state of the institution to be acquired as of March 5,
1987; (ii) the acquirer is authorized to acquire control of
the savings institution pursuant to the emergency acquisition
provisions of the Federal Deposit Insurance Act ; or
(iii) the statutes of the state in which the institution to
be acquired is located specifically permit institutions to be
acquired by the state-chartered institutions or savings and loan
holding companies located in the state where the acquiring
entity is located (or by a holding company that controls such
state-chartered savings institutions).
TAXATION
General. Alliance Bancorp, Alliance Mutual
Holding Company and Alliance Bank are subject to federal income
tax provisions of the Internal Revenue Code of 1986, as amended,
in the same general manner as other corporations with some
exceptions listed below. For federal income tax purposes,
Alliance Bancorp files a consolidated federal income tax return
with its wholly owned subsidiaries on a fiscal year basis. The
applicable federal income tax expense or benefit will be
properly allocated to each subsidiary based upon taxable income
or loss calculated on a separate company basis.
Method of Accounting. For federal income tax
purposes, income and expenses are reported on the accrual method
of accounting and Alliance Bancorp files its federal income tax
return using a December 31 calendar year end.
Bad Debt Reserves. The Small Business Job
Protection Act of 1996 eliminated the use of the reserve method
of accounting for bad debt reserves by savings institutions,
effective for taxable years beginning after 1995. Prior to that
time, Alliance Bank was permitted to establish a reserve for bad
debts and to make additions to the reserve. These additions
could, within specified formula limits, be deducted in arriving
at taxable income. As a result of the Small Business Job
Protection Act, savings associations must use the specific
chargeoff method in computing their bad debt deduction beginning
with their 1996 federal tax return.
106
Taxable Distributions and Recapture. Prior to
the Small Business Job Protection Act, bad debt reserves created
prior to January 1, 1988 were subject to recapture into
taxable income if Alliance Bank failed to meet certain thrift
asset and definitional tests. New federal legislation eliminated
these thrift related recapture rules. However, under current
law, pre-1988 reserves remain subject to recapture should
Alliance Bank make certain non-dividend distributions or cease
to maintain a savings bank charter.
At June 30, 2010, Alliance Banks total federal
pre-1988 reserve was approximately $7.1 million. The
reserve reflects the cumulative effects of federal tax
deductions for which no federal income tax provisions have been
made.
Minimum Tax. The Internal Revenue Code imposes
an alternative minimum tax (AMT) at a rate of 20% on
a base of regular taxable income plus certain tax preferences
(alternative minimum taxable income or
AMTI). The AMT is payable to the extent such AMTI is
in excess of an exemption amount. Net operating losses can
offset no more than 90% of AMTI. Certain payments of alternative
minimum tax may be used as credits against regular tax
liabilities in future years. Alliance Bank has been subject to
the AMT and as of June 30, 2010, had $1.3 million of
AMT available as credit for carryover purposes.
Net Operating Loss Carryovers. Net operating
losses incurred in taxable years beginning before August 6,
1997 may be carried back to the three preceding taxable
years and forward to the succeeding 15 taxable years. For
net operating losses in years beginning after August 5,
1997, other than 2001 and 2002, such net operating losses can be
carried back to the two preceding taxable years and forward to
the succeeding 20 taxable years. Net operating losses arising in
2001 or 2002 may be carried back five years and may be
carried forward 20 years. Special rules enacted in 2009
permit certain electing small business taxpayers to carryback a
2008 net operating loss for a period of three, four or five
years to offset taxable income in those preceding taxable years.
At June 30, 2010, Alliance Bank had no net operating loss
carryforwards respectively, for federal income tax purposes.
Corporate Dividends-Received
Deduction. Alliance Bancorp may exclude from
income 100% of dividends received from a member of the same
affiliated group of corporations. The corporate dividends
received deduction is 80% in the case of dividends received from
corporations, which a corporate recipient owns less than 80%,
but at least 20% of the distribution corporation. Corporations
which own less than 20% of the stock of a corporation
distributing a dividend may deduct only 70% of dividends
received.
Pennsylvania Taxation. Alliance Bancorp is
subject to the Pennsylvania Corporate Net Income Tax and Capital
Stock and Franchise Tax. The Corporation Net Income Tax rate for
fiscal 2009, 2008, and 2007 is 9.99% and is imposed on
unconsolidated taxable income for federal purposes with certain
adjustments. In general, the Capital Stock Tax is a property tax
imposed at the rate of approximately 0.289% (for 2009) of a
corporations capital stock value, which is determined in
accordance with a fixed formula based upon average net income
and net worth.
Alliance Bank is subject to tax under the Pennsylvania Mutual
Thrift Institutions Tax Act (the MTIT), as amended
to include thrift institutions having capital stock. Pursuant to
the MTIT, the tax rate is 11.5%. The MTIT exempts Alliance Bank
from other taxes imposed by the Commonwealth of Pennsylvania for
state income tax purposes and from all local taxation imposed by
political subdivisions, except taxes on real estate and real
estate transfers. The MTIT is a tax upon net earnings,
determined in accordance with U.S. generally accepted
accounting principles with certain adjustments. The MTIT, in
computing income under U.S. generally accepted accounting
principles, allows for the deduction of interest earned on state
and federal obligations, while disallowing a percentage of a
thrifts interest expense deduction in the proportion of
interest income on those securities to the overall interest
income of Alliance Bank. Net operating losses, if any,
thereafter can be carried forward three years for MTIT purposes.
At December 31, 2009, the Bank had approximately $790,000,
$1.4 million, and $772,000 in NOL carryforwards expiring in
2010, 2011 and 2012, respectively, for state tax purposes.
107
MANAGEMENT
Management
of Alliance Bancorp New and Alliance Bank
Board of Directors. The board of directors of
Alliance Bancorp New will be divided into three
classes, each of which will contain one-third of the board. The
directors will be elected by our shareholders for staggered
three-year terms, or until their successors are elected and
qualified. One class of directors, consisting of
Messrs. Stonier, Flatley and Meier, will have a term of
office expiring at the first annual meeting of shareholders
after the conversion and reorganization, a second class,
consisting of Messrs. Cotter, Hecht and Raggi, will have a
term of office expiring at the second annual meeting of
shareholders and a third class, consisting of
Messrs. Cirucci, Rainer and Woolard will have a term of
office expiring at the third annual meeting of shareholders.
The following table sets forth certain information regarding the
persons who serve as directors of Alliance Bancorp
New, all of whom currently serve as directors of Alliance
Bancorp and Alliance Bank. Ages are reflected as of
June 30, 2010.
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Principal Occupation During
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Year Term
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Director
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Name
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Age
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the Past Five Years/Public Directorships
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Expires
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Since(1)
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J. William Cotter, Jr.
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67
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Chairman and a partner in Title Alliance, Ltd., a management
company located in Media, Pennsylvania. Also the owner of Real
Alliances, LLC, a consulting company located in Media,
Pennsylvania, and a Director of J.M. Oliver Heating and Air
Conditioning Company, Morton, Pennsylvania. Also serves as a
director of Aklero, Radnor, Pennsylvania, a company which
reviews and reports on the accuracy of mortgage files.
Previously, Mr. Cotter served as Chief Executive Officer of T.A.
Title Insurance Co., Media, Pennsylvania from 1979 until his
retirement in December 2006.
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2012
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1986
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Dennis D. Cirucci
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59
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President and Chief Executive Officer of Alliance Bancorp since
January 2007 and Chief Executive Officer of Alliance Bank since
April 2005 and President of Alliance Bank since April 2003. Also
the Chief Operating Officer of Alliance Bank between April 1997
and April 2005 and Executive Vice President of Alliance Bank
between April 1997 and April 2003. Between January 1993 and
April 1997, served as Executive Vice President, Treasurer and
Chief Financial Officer of Alliance Bank. Between 1983 and 1993,
served as Alliance Banks Treasurer and Chief Financial
Officer. Prior thereto, employed as a certified public
accountant with the accounting firm of Deloitte & Touche
LLP.
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2013(2)
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1995
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Timothy E. Flatley
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51
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President, Owner and Founder of Sterling Investment Advisors,
Ltd. since 2000.
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2011
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2005
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William E. Hecht
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63
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Chairman of the Board of Alliance Bancorp since April 2000.
Served as Chief Executive Officer of Alliance Bank between
January 1990 and April 2005. Also, served as President of
Alliance Bank between January 1, 1990 and April 2003. Prior
thereto, was Senior Vice President and served Alliance Bank in
various positions beginning in 1972.
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2012
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1988
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108
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Principal Occupation During
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Year Term
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Director
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Name
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Age
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the Past Five Years/Public Directorships
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Expires
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Since(1)
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Peter J. Meier
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55
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Executive Vice President and Chief Financial Officer of Alliance
Bancorp since January 2007 and Executive Vice President of
Alliance Bank since April 2003 and Chief Financial Officer
of Alliance Bank since April 1997. Also served as Senior Vice
President of Alliance Bank between April 1997 and April 2003.
Joined Alliance Bank in 1995 as Vice President of Finance. Prior
to joining Alliance Bank, employed by other financial
institutions and also worked at Deloitte & Touche LLP in
public accounting specializing in financial institutions.
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2011
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2005
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G. Bradley Rainer
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63
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Partner in the law firm of Reger Rizzo & Darnall LLP,
Philadelphia, Pennsylvania. Mr. Rainer chairs the Estates and
Trusts Department of the firm and practices primarily in the
estate planning and business areas. From 1993 until 2007, was a
principal in the law firm of Eckell Sparks Levy Auerbach Monte
Rainer & Sloane, P.C., Media, Pennsylvania. Also is an
adjunct professor at Temple University School of Law, where he
teaches Transactional Practice, a seminar course integrating
business law, trusts and estates law and professional
responsibility and Planning for the Family that Owns and
Operates a Business, a Masters program course.
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2013
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2003
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John A. Raggi
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67
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Vice President of Sales, Alcom Printing Group, Broomall,
Pennsylvania, since 1962.
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2012
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1992
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Philip K. Stonier
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70
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Self-employed as an Individual Practitioner Business Consultant
and Tax Preparer since June 2000. Prior thereto, the Treasurer,
Financial Vice President and Chief Operating Officer for
A&L Handles, Inc., Pottstown, Pennsylvania since 1981.
A&L Handles, Inc. develops and manufactures caps and
handles for tools. Prior to 1981, Mr. Stonier served as a
partner in a small accounting firm.
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2011
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2002
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R. Cheston Woolard
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57
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Managing partner of Woolard, Krajnik, Masciangelo, LLP, a
certified public accounting firm with offices in Montgomery and
Chester Counties, Pennsylvania. Member of the American and
Pennsylvania Institutes of Certified Public Accountants and the
Affordable Housing Association of Certified Public Accountants.
Also Chairman of the West Whiteland Municipal Services
Commission and Treasurer of the Downingtown Area Regional
Authority.
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2013
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2004
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(1) |
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Includes service as a director of Alliance Bank. |
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(2) |
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Mr. Cirucci currently serves as a director of Alliance
Bancorp in the class whose terms are scheduled to expire in
2011. In order to make the number of directors in each class of
Alliance Bancorp New as nearly equal as possible, as
required by the bylaws, Mr. Cirucci has been appointed to
the class of 2013. |
Director Compensation. During the year ended
December 31, 2009 each non-employee member of the board of
directors of Alliance Bancorp received $900 for each meeting
attended. In addition, Mr. Hecht, as Chairman of the Board,
received an annual retainer of $60,000 and each non-employee
director, including Mr. Hecht, received an annual retainer
of $11,000. The committee chairman and non-employee board
109
members received an additional fee of $600 and $500,
respectively, for each committee meeting attended in 2009,
except that the chairman of the audit committee received $750
for each meeting attended. The Chairman of the Board receives no
committee fees.
The table below summarizes the total compensation paid to the
non-employee directors of Alliance Bancorp for the fiscal year
ended December 31, 2009.
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Fees Earned
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or Paid in
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All Other
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Name
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Cash
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Compensation(1)
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Total
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James S. Carr(2)
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$
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24,500
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$
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1,800
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$
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26,300
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J. William Cotter, Jr.
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25,500
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1,800
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27,300
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Timothy E. Flatley
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23,900
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1,800
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25,700
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William E. Hecht
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81,800
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134,451
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(3)
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216,251
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John A. Raggi
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22,800
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1,800
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24,600
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G. Bradley Rainer
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25,600
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1,800
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27,400
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Philip K. Stonier
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26,400
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1,800
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28,200
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R. Cheston Woolard
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24,300
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1,800
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26,100
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(1) |
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Includes an allocation to each non-employee director of $1,800
under the Alliance Mutual Holding Company Directors
Retirement Plan. |
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(2) |
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Mr. Carr resigned as a director in June 2010. |
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(3) |
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Includes the annual payment of $104,016 pursuant to
Mr. Hechts supplemental executive retirement plan,
post-retirement health insurance premiums of $14,745, life
insurance premiums, club dues and automobile expenses. |
Directors Retirement Plan. The Alliance
Mutual Holding Company Directors Retirement Plan and
Trust Agreement was adopted in order to provide retirement
benefits to non-employee directors who have provided expertise
in enabling Alliance Mutual Holding Company, Alliance Bank and
Alliance Bancorp to experience successful growth and development.
Each current and future non-employee member of the board of
directors of Alliance Mutual Holding Company, Alliance Bank and
Alliance Bancorp is eligible to participate in the
Directors Retirement Plan, which provides directors with
an accrued benefit in an amount equal to the number of months
served as a director multiplied by $150. For purposes of
determining a directors accrued benefit, months of service
prior to the adoption of the Directors Retirement Plan
were recognized. The Directors Retirement Plan provides
that trust may be used to fund its obligations. The amount of
the retirement benefit actually received under the
Directors Retirement Plan shall equal the value of the
investments on behalf of such individual as reflected in his
account balance.
Under the Directors Retirement Plan Trust, the trustee is
given limited investment choices. Specifically, the trustee may
invest trust assets in common stock of Alliance Bancorp,
interest bearing accounts at Alliance Bank, including
certificates of deposit with Alliance Bank,
U.S. governmental securities and agencies thereof and funds
that invest in such securities. The trust also allows the
trustee to establish investment options consistent with the
foregoing investment authority which Alliance Mutual Holding
Company may provide to its directors so that they may express
their investment preferences. The trustee, however, retains
ultimate investment authority over trust assets. The trustee is
an independent third party trustee with respect to Alliance
Mutual Holding Company.
A director shall receive his retirement benefit in the form of a
lump sum payment on his retirement date, which is the first day
of the quarter following the date of his retirement from service
as a member of the board of directors. The Directors
Retirement Plan provides that if a director dies prior to his
retirement date, the directors retirement benefit shall be
paid to the directors designated beneficiary, and in the
absence of such designated beneficiary, to the directors
estate. Following consummation of the conversion and offering,
Alliance Bancorp-New will adopt and continue the Directors
Retirement Plan.
110
Retirement Agreement. Alliance Bank entered
into a Retirement Agreement with William E. Hecht, the former
Chief Executive Officer of Alliance Bank. The terms of the
retirement agreement provide that Alliance Bank will maintain
$300,000 in life insurance coverage until age 85, provide
Mr. Hecht and his spouse with medical coverage to
age 65 unless he should obtain other employment which
provides similar medical coverage. In addition, so long as
Mr. Hecht serves as Chairman of the Board of Directors,
Alliance Bank will continue to provide certain perquisites,
including an office at Alliance Banks headquarters, club
membership and an automobile.
Committees of the Board of Directors. In
connection with the completion of the conversion and
reorganization, Alliance Bancorp New will establish
a nominating and corporate governance committee, a compensation
committee and an audit committee, similar to those of Alliance
Bancorp discussed below. All of the members of the audit
committee, the nominating and corporate governance committee and
the compensation committee will be independent directors as
defined in the listing standards of the Nasdaq Stock Market.
Such committees will operate in accordance with written charters
which we expect to have available on our website at
www.allianceanytime.com.
A majority of our directors are independent directors as defined
in the rules of the Nasdaq Stock Market. The board of directors
has determined that all of our directors except for
Messrs. Cirucci and Meier are independent directors.
Board
Meetings and Committees of the Board of Directors of Alliance
Bancorp
Regular meetings of the board of directors of Alliance Bancorp
are held on a monthly basis and special meetings of the board of
directors are held from
time-to-time
as needed. There were 12 meetings of the board of directors of
Alliance Bancorp held during 2009. No director attended fewer
than 75% of the total number of meetings of the board of
directors of Alliance Bancorp held during 2009 and the total
number of meetings held by all committees of the board on which
the director served during such year. During 2009, the board of
directors of Alliance Bancorp held four separate executive
sessions of solely independent directors in accordance with the
listing requirements of the Nasdaq Stock Market.
The board of directors of Alliance Bancorp have established
various committees, including audit, corporate governance,
nominating, compensation and forward planning committees.
Audit Committee. The audit committee engages
Alliance Bancorps external auditor and reviews with
management, the internal auditor and the external auditors
Alliance Bancorps systems of internal control. In
addition, the audit committee reviews with the external auditors
and management the annual audited consolidated financial
statements (including the
Form 10-K),
the quarterly
Form 10-Q
and monitors Alliance Bancorps adherence to accounting
principles generally accepted in the United States of America
for financial reporting. The audit committee currently consists
of Messrs. Stonier (Chairman), Cotter, Rainer and Woolard.
All of the members of the audit committee are independent as
determined by the board of directors and as defined in the
Nasdaq Stock Markets listing standards and the regulations
of the SEC. Based upon its charter, the audit committee meets a
minimum of four times each year. In 2009, the audit committee
met in regular session four times. The audit committee reviews
and reassesses this charter annually. A copy of the audit
committee charter can be viewed on our website at
www.allianceanytime.com.
The board of directors have determined that Mr. Stonier,
the chairman of the audit committee, meets the requirements
adopted by the SEC for qualification as an audit committee
financial expert. An audit committee financial expert is defined
as a person who has the following attributes: (i) an
understanding of accounting principles generally accepted in the
United States of America and financial statements; (ii) the
ability to assess the general application of such principles in
connection with the accounting for estimates, accruals and
reserves; (iii) experience preparing, auditing, analyzing
or evaluating financial statements that present a breadth and
level of complexity or accounting issues that are generally
comparable to the breadth and complexity of issues that can
reasonably be expected to be raised by the registrants
financial statements, or experience actively supervising one or
more persons engaged in such activities; (iv) an
understanding of
111
internal controls and procedures for financial reporting; and
(v) an understanding of audit committee functions.
The identification of a person as an audit committee financial
expert does not impose on such person any duties, obligations or
liability that are greater than those that are imposed on such
person as a member of the audit committee and the board of
directors in the absence of such identification. Moreover, the
identification of a person as an audit committee financial
expert for purposes of the regulations of the SEC does not
affect the duties, obligations or liability of any other member
of the audit committee or the board of directors. Finally, a
person who is determined to be an audit committee financial
expert will not be deemed an expert for purposes of
Section 11 of the Securities Act of 1933.
Corporate Governance Committee. Alliance
Bancorp has established a corporate governance committee to,
among other things, review the composition of the board,
evaluate and make recommendations to the board of directors for
the election of directors, recommend to the board and monitor
compliance with the corporate governance guidelines established
by the board and review Alliance Bancorps ethics and
compliance program. Currently, the members of this committee are
Messrs. Rainer (Chairman), Hecht and Stonier. Each of these
persons is independent within the meaning of the rules of the
Nasdaq Stock Market. The corporate governance committee operates
pursuant to a written charter, which can be viewed on our
website at www.allianceanytime.com. During 2009, the
corporate governance committee met three times.
The corporate governance committee considers candidates for
director suggested by its members and other directors, as well
as management and shareholders. The corporate governance
committee also may solicit prospective nominees identified by
it. A shareholder who desires to recommend a prospective nominee
for the board should notify Alliance Bancorps Corporate
Secretary or any member of the corporate governance committee in
writing with supporting material the shareholder considers
appropriate.
The charter of the corporate governance committee sets forth
certain criteria the committee may consider when recommending
individuals for nomination as director including:
(a) ensuring that the board of directors, as a whole, is
diverse and consists of individuals with various and relevant
career experience, relevant technical skills, industry knowledge
and experience, financial expertise (including expertise that
could qualify a director as a financial expert, as
that term is defined by the rules of the SEC), local or
community ties and (b) minimum individual qualifications,
including strength of character, mature judgment, familiarity
with our business and industry, independence of thought and an
ability to work collegially. The committee also may consider the
extent to which the candidate would fill a present need on the
board of directors.
Once the corporate governance committee has identified a
prospective nominee, the committee makes an initial
determination as to whether to conduct a full evaluation of the
candidate. This initial determination is based on the
information provided to the committee with the recommendation of
the prospective candidate, as well as the committees own
knowledge of the prospective candidate, which may be
supplemented by inquiries to the person making the
recommendation or others.
Nominating Committee. The nominating committee
of the board of Alliance Bancorp is appointed at the January
board meeting to serve for a one-year period. The nominating
committee considers recommendations of the corporate governance
committee for board nominees and vacancies. The nominating
committee also considers whether to nominate any person
nominated pursuant to the provision of the bylaws of relating to
shareholder nominations. The nominating committee charter
requires that each member must be independent within the meaning
of the listing standards of the Nasdaq Stock Market. In
addition, only those directors who are not eligible to be
re-elected at an upcoming annual meeting are eligible to serve
on the nominating committee. The current members of the
nominating committee are Messrs. Cotter (Chairman), Hecht
and Raggi. The nominating committee met one time in 2009.
Forward Planning Committee. The forward
planning committee of the board of Alliance Bancorp meets to
discuss long-range planning considerations. The forward planning
committee, which currently consists of Messrs. Stonier
(Chairman), Cirucci, Cotter, Flatley, Meier and Hecht, met two
times during 2009.
Compensation Committee. The compensation
committee of the board of Alliance Bancorp meets on a periodic
basis to review senior executive compensation including
salaries, bonuses, perquisites, and deferred/
112
retirement compensation. In addition, the compensation committee
assists the board of directors in carrying out its
responsibilities with respect to overseeing the compensation
policies and practices of Alliance Bancorp. The compensation
committee currently consists of Messrs. Cotter (Chairman),
Raggi, Rainer and Woolard. The compensation committee met two
times in 2009. All of the current members of the committee are
independent within the meaning of the listing standards of the
Nasdaq Stock Market. No member of the compensation committee is
a current or former officer or employee of Alliance Bancorp,
Alliance Bank or Alliance Mutual Holding Company.
The compensation committees charter sets forth the
responsibilities of the compensation committee and reflects such
committees commitment to create a compensation structure
that incentivizes senior management and aligns the interests of
senior management with those of our shareholders. The
compensation committee and the board periodically review and
revise the compensation committee charter, as appropriate. The
full text of the compensation committee charter is available on
our website at www.allianceanytime.com. The compensation
committees membership is determined by the board.
The compensation committee has exercised exclusive authority
over the compensation paid to the President and Chief Executive
Officer of Alliance Bancorp and reviews and approves salary
increases and bonuses for all of the corporations officers
as prepared and submitted to the compensation committee by the
President and Chief Executive Officer. The types of compensation
we offer our executives remain within the traditional
categories: salary, short and long-term incentive compensation
(cash bonus and stock-based awards), standard executive
benefits, and retirement and severance benefits.
Although the compensation committee does not delegate any of its
authority for determining executive compensation, the
compensation committee has the authority under its charter to
engage the services of outside advisors, experts and others to
assist the compensation committee.
Compensation
Committee Interlocks and Insider Participation
Messrs. Cotter (Chairman), Raggi, Rainer and Woolard, serve
as members of the Compensation Committee. None of the members of
the Compensation Committee during 2009 was a current or former
officer or employee of Alliance Bancorp or Alliance Bank. Nor
did any member engage in certain transactions with Alliance
Bancorp or Alliance Bank required to be disclosed by regulations
of the SEC. Additionally, there were no compensation committee
interlocks during 2009, which generally means that
no executive officer of Alliance Bancorp served as a director or
member of the compensation committee of another entity, one of
whose executive officers served as a director or member of the
Compensation Committee of Alliance Bancorp.
Compensation
Policies and Practices as They Relate to Risk
Management
The compensation committee of the board of directors of Alliance
Bancorp has reviewed the policies and practices applicable to
employees, including Alliance Bancorps benefit plans,
arrangements and agreements, and do not believe that they are
reasonably likely to have a material adverse effect on Alliance
Bancorp. The committee does not believe that Alliance
Bancorps policies and practices encourage officers or
employees to take unnecessary or excessive risks or behavior
focused on short-term results rather than the creation of
long-term value.
Code of
Ethics for Directors, Executive Officers and Financial
Professionals
The board of directors of Alliance Bancorp has adopted a code of
ethics for its directors, executive officers, including the
chief executive officer and the chief financial officer, and
financial professionals. Directors and officers are expected to
adhere at all times to this code of ethics. Failure to comply
with this code of ethics is a serious offense and will result in
appropriate disciplinary action. Alliance Bancorp has posted
this code of ethics on its Internet website at
www.allianceanytime.com.
Alliance Bancorp will disclose on its Internet website at
www.allianceanytime.com, to the extent and in the manner
permitted by Item 5.05 of
Form 8-K,
the nature of any amendment to this code of ethics (other than
technical, administrative, or other non-substantive amendments),
the approval of any material departure
113
from a provision of this code of ethics, and the failure to take
action within a reasonable period of time regarding any material
departure from a provision of this code of ethics that has been
made known to any of its executive officers.
Board
Leadership Structure and the Boards Role in Risk
Oversight
Mr. Dennis Cirucci serves as the President and Chief
Executive Officer of Alliance Bancorp and Mr. William E.
Hecht serves as Chairman of the Board. The board of directors
has determined that that separation of the offices of Chairman
of the Board and President enhances board independence and
oversight. Further, the separation of the Chairman of the Board
permits the President and Chief Executive Officer to better
focus on his responsibilities on managing the daily operations
of the corporation, enhancing shareholder value and expanding
and strengthening the franchise while allowing the Chairman to
lead the board of directors in its fundamental role of providing
independent oversight and advice to management. Mr. Hecht
is an independent director under the rules of the Nasdaq Stock
Market.
Risk is inherent with every business, particularly financial
institutions. Alliance Bancorp faces a number of risks,
including credit risk, interest rate risk, liquidity risk,
operational risk, strategic risk and reputational risk.
Management is responsible for the
day-to-day
management of the risks Alliance Bancorp faces, while the board,
as a whole and through its committees, has responsibility for
the oversight of risk management. In its risk oversight role,
the board of directors has the responsibility to ensure that the
risk management processes designed and implemented by management
are adequate and functioning as designed. In this regard, the
Chairman of the Board meets regularly with management to discuss
strategy and risks facing the Corporation. Members of senior
management regularly attend the board meetings and are available
to address any questions or concerns raised by the board on risk
management or other matters. The Chairman of the Board and
independent directors work together to provide strong,
independent oversight of Alliance Bancorps management and
affairs though its committees and meetings of independent
directors.
Directors
Attendance at Annual Meetings
Although Alliance Bancorp does not have a formal policy
regarding attendance by members of its board of directors at
annual meetings of shareholders, Alliance Bancorp expects that
its directors will attend, absent a valid reason for not doing
so. In 2009, all of the directors of Alliance Bancorp attended
its annual meeting of shareholders.
Director
Nominations
The Charter of the Nominating and Corporate Governance Committee
of Alliance Bancorp sets forth certain criteria the committee
may consider when recommending individuals for nomination of
director including: ensuring that the board of directors, as a
whole, is diverse and consists of individuals with various and
relevant career experience, relevant technical skills, industry
knowledge and experience, financial expertise (including
expertise that could qualify a director as a financial
expert, as that term is defined by the rules of the SEC),
local or community ties, minimum individual qualifications,
including strength of character, mature judgment, familiarity
with our business and industry, independence of thought and an
ability to work collegially. The committee also may consider the
extent to which the candidate would fill a present need on the
board of directors. The committee does not have a separate
diversity policy for selecting nominees for director. However,
the compensation committee charter sets forth criteria for
selecting nominees which is designed to provide that the board
of directors is diverse. We expect that the charter of Alliance
Bancorp New will be substantially similar. The
Nominating and Corporate Governance Committee will also consider
candidates for director suggested by other directors, as well as
management and shareholders.
Any shareholder wishing to make a nomination must follow our
procedures for shareholder nominations, which are set forth in
the bylaws of Alliance Bancorp and Alliance Bancorp
New. Article II, Section 14 of the bylaws of Alliance
Bancorp governs nominations for election to the board of
directors, and requires all nominations for election to the
board other than those made by the board to be made by a
shareholder who has complied with the notice provisions in that
section. Written notice of a shareholder nomination must be
114
delivered to the Secretary of Alliance Bancorp not later than
five days prior to the annual meeting of our shareholders. The
bylaws of Alliance Bancorp New provide that written
notice of a shareholder nomination generally must be
communicated to the attention of the Corporate Secretary and
either delivered to, or mailed and received at, our principal
executive offices not later than, with respect to an annual
meeting of shareholders, 120 days prior to the anniversary
date of the mailing of proxy materials by us in connection with
the immediately preceding annual meeting of shareholders. If, as
expected, we complete our second step conversion prior to the
next annual meeting of shareholders the bylaws of Alliance
Bancorp New provide that nominations must be
received by January 31, 2011. Each written notice of a
shareholder nomination is required to set forth certain
information specified in Section 3.12 of the bylaws of
Alliance Bancorp New.
Executive Officers Who Are Not Directors. The
following individuals currently serve as executive officers of
Alliance Bancorp and Alliance Bank and will serve in the same
positions with Alliance Bancorp New following the
conversion and reorganization. Ages are as of June 30, 2010.
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Name
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Age
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Principal Occupation During the Past Five Years
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William T. McGrath
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52
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Senior Vice President and Chief Lending Officer of Alliance
Bancorp and Alliance Bank since September 2008. Prior to joining
Alliance, employed by First Priority Bank in Malvern as a
Managing Director and Wachovia Bank, N.A. in Philadelphia as a
Senior Vice President. Also previously employed by the Federal
Reserve Bank of Philadelphia as a bank examiner.
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Suzanne J. Ricci
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42
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Senior Vice President of Alliance Bancorp since January 2007
and the Chief Technology Officer and Senior Vice President of
Alliance Bank since April 2004. Also served as a Vice
President of Alliance Bank and served Alliance Bank in various
positions beginning in 1990.
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In accordance with the bylaws of Alliance Bancorp
New, our executive officers will be elected annually and hold
office until their respective successors have been elected and
qualified or until death, resignation or removal by the board of
directors.
Summary
Compensation Table
The following table sets forth a summary of certain information
concerning the compensation awarded to or paid by Alliance
Bancorp or its subsidiaries for services rendered in all
capacities during the last two fiscal years to its principal
executive officer and its two other highest compensated
executive officers. We refer to these individuals as the
named executive officers.
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Nonqualified
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Non-Equity
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Deferred
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Incentive Plan
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Compensation
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All Other
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Name and Principal Position
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Year
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Salary(1)
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Bonus
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Compensation(2)
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Earnings(3)
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Compensation(4)
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Total
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Dennis D. Cirucci
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2009
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$
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280,327
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$
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60,951
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$
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$
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26,493
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$
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367,771
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President and Chief
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2008
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267,900
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40,233
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25,168
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333,301
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Executive Officer
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Peter J. Meier
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2009
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176,269
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30,662
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23,047
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229,978
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Executive Vice
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2008
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171,269
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20,570
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22,199
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214,038
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President and Chief
Financial Officer
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William T. McGrath(5)
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2009
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161,659
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28,112
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22,521
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212,292
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Senior Vice
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2008
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50,400
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5,000
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2,887
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58,287
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President and Chief
Lending Officer
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(Footnotes on next page)
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(1) |
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We periodically review, and may increase, base salaries in
accordance with the terms of employment agreements or Alliance
Bancorps normal annual compensation review for each of the
named executive officers. |
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(2) |
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Reflects bonuses for the indicated year which were paid in
January of the next year under Alliance Bancorps incentive
bonus program. |
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(3) |
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None of the named executive officers received any above
market or preferential earnings on compensation that is deferred
on a basis that is not tax-qualified. |
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(4) |
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Includes club dues, automobile expenses, allocations under the
Alliance Bancorp employee stock ownership plan
(ESOP), allocations under the Profit Sharing and
401(k) Plan, tax reimbursements related to the executives
supplemental executive retirement plan and, with respect to
Messrs. Cirucci and Meier, life insurance premiums paid by
Alliance Bancorp under the endorsement split dollar agreements
with such executive officers. |
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(5) |
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Mr. McGrath commenced employment with Alliance Bancorp in
September 2008. |
Outstanding
Equity Awards at Fiscal Year-End
None of the named executive officers had any outstanding equity
awards as of December 31, 2009.
Option
Exercises and Stock Vested
None of the named executive officers exercised any outstanding
options or had any restricted stock vest during 2009.
Employment
Agreements
Alliance Bank has entered into amended employment agreements
with Messrs. Cirucci and Meier. The employment agreements
with Messrs. Cirucci and Meier have a term of two years.
The terms are extended annually unless either Alliance Bank or
the executive gives notice at least 60 days prior to the
annual anniversary date that the agreement shall not be
extended. Under the terms of the employment agreements, the
executives receive an initial annual base salary which is
reviewed from time to time by the board of directors. The
executives are entitled to participate in Alliance Banks
benefit plans and programs and receive reimbursement for
reasonable business expenses. Each of the employment agreements
is terminable with or without cause by Alliance Bank. The
executives have no right to compensation or other benefits
pursuant to the employment agreements for any period after
voluntary termination by the executive or termination by
Alliance Bank for cause other than for disability, retirement,
death or good reason, as defined in the agreement. In the event
of the officers termination due to retirement or
disability, Alliance Bank will continue to provide life,
medical, dental and disability coverage for the remaining term
of the agreement. In the event of the officers death
during the term of the agreement, Alliance Bank will continue to
provide medical and dental coverage to the officers
surviving spouse until age 65.
In the event that (1) the executive terminates his or her
employment because of failure to comply with any material
provision of the employment agreement by Alliance Bank or
(2) the employment agreement is terminated by Alliance Bank
other than for cause, disability, retirement or death, the
executive will be entitled to the payment of two times the
executives average annual compensation, as defined in the
agreement as cash severance. In addition, the executive would
continue to receive benefits under all employee plans for the
remainder of the term of the agreement, or until the
executives full time employment with another employer. In
the event that the executives employment is terminated in
connection with a change in control, as defined, for other than
cause, disability, retirement or death or the executive
terminates his or her employment as a result of certain adverse
actions which are taken with respect to the executives
employment following a change in control, as defined, the
executive will be entitled to a cash severance amount equal to
two times his or her average annual compensation, as defined,
and the maintenance, as described above, of the employee benefit
plans for the remainder of the term of the agreement or until
the executives full-time employment with another employer
that provides similar benefits.
116
A change in control generally is defined in the agreements to
include any change in control of Alliance Bank required to be
reported under the federal securities laws, as well as
(i) the acquisition by any person, other than Alliance
Mutual Holding Company, of 20% or more of Alliance Banks
outstanding voting securities and (ii) a change in a
majority of our directors during any three-year period without
the approval of at least two-thirds of the persons who were
directors at the beginning of such period.
The agreements with Messrs. Cirucci and Meier also provide
that in the event that any of the payments to be made thereunder
or otherwise upon termination of employment are deemed to
constitute excess parachute payments within the
meaning of Section 280G of the Internal Revenue Code, and
such payments will cause the executive officer to incur an
excise tax under the Internal Revenue Code, Alliance Bank shall
pay the executive officer an amount such that after payment of
all federal, state and local income tax and any additional
excise tax, the executive will be fully reimbursed for the
amount of such excise tax.
Benefit
Plans
Retirement Income Plan. Alliance Bank
maintains the Alliance Bank Retirement Income Plan, a
non-contributory defined benefit pension plan qualified under
the Employee Retirement Income Security Act of 1974, as amended.
Employees became eligible to participate in the retirement plan
upon the attainment of age 21 and the completion of one
year of eligibility service. For purposes of the retirement
plan, an employee earns one year of eligibility service upon the
completion of 1,000 hours of service within a one-year
eligibility computation period. An employees first
eligibility computation period is the one-year period beginning
on the employees date of hire. In June 2008, Alliance Bank
closed the Retirement Income Plan to new participants.
The retirement plan provides for a monthly benefit upon a
participants retirement at the age of 65. A participant
may also receive a benefit on his or her early retirement date,
which is the date on which he or she attains age 55,
completes ten years of vesting service and such early retirement
is approved by the board. Benefits received prior to a
participants normal retirement date are reduced by certain
factors set forth in the retirement plan. Participants become
fully vested in their benefits under the retirement plan upon
the completion of five years of vesting service as well as upon
the attainment of normal retirement age (age 65). Following
consummation of the conversion and offering, Alliance
Bancorp New will adopt and continue the retirement
plan.
Supplemental Executive Retirement
Plan. Alliance Bank currently maintains a
supplemental executive retirement plan for Messrs. Cirucci
and Meier. The supplemental retirement plan provides
supplemental annual payments for the life of the participant
commencing upon retirement. The supplemental annual payments
under this plan are $108,261 and $72,263 for
Messrs. Cirucci and Meier, respectively. If an executive
has less than 18 years of service at the time of
retirement, the annual payments are pro-rated.
Messrs. Cirucci and Meier had 26 and 14 years of
service, respectively, at December 31, 2009.
Endorsement Split Dollar Agreements. Alliance
Bank has purchased insurance policies on the lives of
Messrs. Cirucci and Meier, and has entered into endorsement
split dollar agreements with each of those officers. The
policies are owned by Alliance Bank. Under the agreements with
the named executive officers, upon an officers death while
he or she remains employed by Alliance Bank or after a
termination of employment, the death benefits under the
insurance policies on the officers life in excess of the
cash surrender value will be paid to the officers
beneficiary. Alliance Bank will receive the full cash surrender
value, which is expected to reimburse Alliance Bank in full for
its life insurance investment.
The endorsement split dollar agreements may be terminated at any
time by Alliance Bank. Upon termination, Alliance Bank may
surrender the policy and collect the cash surrender value,
substitute a new officer under the policy or, with the
officers consent, transfer the policy to the officer.
Incentive Bonus Program. Alliance Bancorp has
maintained a practice of paying incentive cash bonuses to its
executive officers based on specific performance criteria as set
forth in its annual budget. Target bonuses, expressed as a
percentage of salary and category weights assigned to each
performance component, are set by the board of directors based
on recommendations by the compensation committee. The
compensation committee uses various outside sources such as
salary surveys and other statistical data in setting the target
117
incentive rate. Individual components are reviewed annually
along with the target bonus amounts. The weights assigned to
each performance category may be adjusted from year to year to
challenge the executives in the areas considered by the board of
directors to be more important. Performance payments are capped
at 120% of performance category and no bonuses are paid for a
performance category unless 60% of the targeted goal is met.
For 2009, the incentive bonus program components consisted of
budgeted targets for net income, net interest income,
noninterest income, noninterest expense, deposit growth and loan
production. Each program component was assigned a weight factor
and the actual bonus assigned to that component was driven by
the percent by which the target was exceeded or missed. The
target bonus for 2009 was 25.00% of the chief executive
officers salary and 20.00% of the other named executive
officers salary and the actual bonus paid for 2009 was
21.70% for the chief executive officer and 17.39% for the other
named executive officers.
Related
Party Transactions
Alliance Bancorps policy provides that all loans made by
Alliance Bank to its directors and officers are made in the
ordinary course of business, are made on substantially the same
terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other
persons and do not involve more than the normal risk of
collectibility or present other unfavorable features. As of
December 31, 2009, Alliance Bancorps directors and
executive officers or their affiliates had loans outstanding
totaling $6.9 million in the aggregate. All such loans were
made by Alliance Bank 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 Alliance Bank, and did not
involve more than the normal risk of collectability or present
other unfavorable features. However, a $6.1 million land
and development loan for a mixed use commercial real estate
project located in Bradenton, Florida, which was originated by
Alliance Bank in July 2008 to an entity affiliated with James
Carr, a former director of Alliance Bancorp, was placed on
non-accrual status during the first quarter of 2010. See
Business Asset Quality-Delinquent Loans.
Under Alliance Bancorps audit committee charter, the audit
committee is required to review and approve all related party
transactions, as described in Item 404 of
Regulation S-K
of the SECs rules. To the extent such transactions are
ongoing business relationships with Alliance Bancorp or Alliance
Bank, such transactions shall be reviewed annually and such
relationships shall be on terms not materially less favorable
than what would be usual and customary in similar transactions
between unrelated persons dealing at arms length.
New Stock
Benefit Plans
Employee Stock Ownership Plan. Alliance
Bancorp has established an employee stock ownership plan for its
employees which previously acquired a total of
283,219 shares of Alliance Bancorps common stock on
behalf of participants (as adjusted for the 2007 organization
and offering). Employees, other than those paid solely on a
retainer or fee basis, who have been credited with at least
1,000 hours of service during a
12-month
period, have completed six months of employment and who have
attained age 21 are eligible to participate in Alliance
Bancorps employee stock ownership plan.
As part of the conversion and reorganization, the employee stock
ownership plan intends to purchase a number of shares of
Alliance Bancorp New common stock equal to 4.63% of
the shares sold in the offering, or 122,100 shares and
189,975 shares based on the minimum and 15% above the
maximum of the offering range, respectively. When combined with
the shares previously acquired by the employee stock ownership
plan, as adjusted for the exchange ratio, the employee stock
ownership plan will have acquired an aggregate of 7.0% of the
shares of Alliance Bancorp-New to be outstanding after the
conversion and offering. We anticipate that the employee stock
ownership plan will borrow funds from Alliance
Bancorp New, and that such loan will equal 100% of
the aggregate purchase price of the common stock acquired by the
employee stock ownership plan. Alliance Bancorp New
has agreed to loan the employee stock ownership plan the funds
necessary to purchase shares. The employee stock ownership plan
may purchase shares in the subscription offering or, subject to
prior approval of the OTS, in the open market after the offering
is completed at a price which may be more or less than $10.00
per share. The loan to the employee stock
118
ownership plan will be repaid principally from contributions by
Alliance Bank to the employee stock ownership plan and the
collateral for the loan will be the common stock purchased by
the employee stock ownership plan. The interest rate for the
employee stock ownership plan loan will be fixed and is expected
to be at Alliance Banks prime rate at the date the
employee stock ownership plan enters into the loan. Alliance
Bancorp New may, in any plan year, make additional
discretionary contributions for the benefit of plan participants
in either cash or shares of common stock, which may be acquired
through the purchase of outstanding shares in the market or from
individual shareholders, upon the original issuance of
additional shares by Alliance Bancorp New or upon
the sale of treasury shares by Alliance Bancorp New.
Such purchases, if made, would be funded through additional
borrowings by the employee stock ownership plan or additional
contributions from Alliance Bancorp New or from
Alliance Bank. The timing, amount and manner of future
contributions to the employee stock ownership plan will be
affected by various factors, including prevailing regulatory
policies, the requirements of applicable laws and regulations
and market conditions.
Shares purchased by the employee stock ownership plan with the
loan proceeds will be held in a suspense account and released
for allocation to participants on a pro rata basis as debt
service payments are made. Shares released from the employee
stock ownership plan will be allocated to each eligible
participants plan account based on the ratio of each such
participants base compensation to the total base
compensation of all eligible employee stock ownership plan
participants. Forfeitures may be used for several purposes such
as the payment of expenses or be reallocated among remaining
participating employees. Upon the completion of five years of
service, the account balances of participants within the
employee stock ownership plan becomes 100% vested. In the case
of a change in control, as defined in the plan,
however, participants will become immediately fully vested in
their account balances. Participants also become fully vested in
their account balances upon death, disability or retirement.
Benefits may be payable upon retirement or separation from
service.
Generally accepted accounting principles require that any third
party borrowing by the employee stock ownership plan of Alliance
Bancorp New be reflected as a liability on its
statement of financial condition. Since the employee stock
ownership plan is borrowing from Alliance Bancorp
New, the loan will not be treated as a liability but instead
will be a reduction of shareholders equity. If the
employee stock ownership plan purchases newly issued shares from
Alliance Bancorp New, total shareholders
equity would neither increase nor decrease, but per share
shareholders equity and per share net earnings would
decrease as the newly issued shares are allocated to the
employee stock ownership plan participants.
Alliance Bancorps employee stock ownership plan is subject
to the requirements of the Employee Retirement Income Security
Act of 1974, as amended, and the applicable regulations of the
IRS and the Department of Labor.
Stock Option Plan. Following consummation of
the conversion and reorganization, Alliance Bancorp
New intends to adopt a new stock option plan, which will be
designed to attract and retain qualified personnel in key
positions, provide directors, officers and key employees with a
proprietary interest in Alliance Bancorp New as an
incentive to contribute to its success and reward key employees
for outstanding performance. The new stock option plan will
provide for the grant of incentive stock options, intended to
comply with the requirements of Section 422 of the Internal
Revenue Code, and non-incentive or compensatory stock options.
Options may be granted to our directors and key employees. The
new stock option plan will be administered and interpreted by a
committee of the board of directors. Unless sooner terminated,
the new stock option plan shall continue in effect for a period
of 10 years from the date the stock option plan is adopted
by the board of directors.
Under the new stock option plan, the committee will determine
which directors, officers and key employees will be granted
options, whether options will be incentive or compensatory
options, the number of shares subject to each option, the
exercise price of each option, whether options may be exercised
by delivering other shares of common stock and when such options
become exercisable. The per share exercise price of an incentive
stock option must at least equal the fair market value of a
share of common stock on the
119
date the option is granted (110% of fair market value in the
case of incentive stock options granted to employees who are 5%
shareholders).
At a meeting of the shareholders of Alliance Bancorp
New after the conversion and reorganization, which under
applicable Office of Thrift Supervision policies may be held no
earlier than six months after the completion of the conversion
and reorganization, Alliance Bancorp New intends to
present the stock option plan to shareholders for approval and
to reserve an amount equal to 10.0% of the shares sold in the
offering, or 263,500 shares or 409,975 shares based on
the minimum and 15% above the maximum of the offering range,
respectively. Alliance Bank previously reserved an aggregate of
143,287 shares of common stock under its 1996 stock option
plan. While the prior plan has expired by its terms and no
options remain outstanding under the 1996 stock option plan, the
aggregate amount of shares previously reserved under the 1996
stock option plan plus the number of shares to be reserved under
the proposed new stock option plan will be equal to
approximately 8.1% of the shares of common stock of Alliance
Bancorp-New to be outstanding upon consummation of the
conversion and reorganization. Office of Thrift Supervision
regulations provide that, in the event such plan is implemented
within one year after the conversion and reorganization, no
individual officer or employee of Alliance Bancorp
New may receive more than 25% of the options granted under the
new stock option plan and non-employee directors may not receive
more than 5% individually, or 30% in the aggregate of the
options granted under the new stock option plan. Office of
Thrift Supervision regulations also provide that the exercise
price of any options granted under any such plan must be at
least equal to the fair market value of the common stock as of
the date of grant. Further, options under such plan generally
are required to vest over a five-year period at 20% per year.
Each stock option or portion thereof will be exercisable at any
time on or after it vests and will be exercisable until
10 years after its date of grant or for periods of up to
five years following the death, disability or other termination
of the optionees employment or service as a director.
However, failure to exercise incentive stock options within
three months after the date on which the optionees
employment terminates may result in the loss of incentive stock
option treatment. We currently anticipate that the new stock
option plan will be submitted to shareholders of Alliance
Bancorp New within one year, but not earlier than
six months from, the date of completion of the conversion and
reorganization and the offering. Accordingly, we expect that the
above described limitations imposed by regulations of the Office
of Thrift Supervision would be applicable. However, we reserve
the right to submit the new stock option plan to shareholders
more than one year from the date of the conversion and
reorganization, in which event the above-described Office of
Thrift Supervision regulations may not be fully applicable. The
Office of Thrift Supervision requires that stock option plans
implemented by institutions within one year of a conversion and
reorganization must be approved by a majority of the outstanding
shares of voting stock. Stock option plans implemented more than
one year after a conversion and reorganization could be approved
by the affirmative vote of the shares present and voting at the
meeting of shareholders.
At the time an option is granted pursuant to the new stock
option plan, the recipient will not be required to make any
payment in consideration for such grant. With respect to
incentive or compensatory stock options, the optionee will be
required to pay the applicable exercise price at the time of
exercise in order to receive the underlying shares of common
stock. The shares reserved for issuance under the new stock
option plan may be authorized but previously unissued shares,
treasury shares, or shares purchased by Alliance
Bancorp New on the open market or from private
sources. In the event of a stock split, reverse stock split or
stock dividend, the number of shares of common stock under the
new stock option plan, the number of shares to which any option
relates and the exercise price per share under any option shall
be adjusted to reflect such increase or decrease in the total
number of shares of common stock outstanding.
Under current provisions of the Internal Revenue Code, the
federal income tax treatment of incentive stock options and
compensatory stock options is different. A holder of incentive
stock options who meets certain holding period requirements will
not recognize income at the time the option is granted or at the
time the option is exercised, and a federal income tax deduction
generally will not be available to Alliance Bancorp
New at any time as a result of such grant or exercise. With
respect to compensatory stock options, the difference between
the fair market value on the date of exercise and the option
exercise price generally will be treated as compensation income
upon exercise, and Alliance Bancorp New will be
entitled to a deduction in the amount of income so recognized by
the optionee.
120
Recognition Plan. After the conversion and
reorganization, Alliance Bancorp New intends to
adopt a stock recognition and retention plan for its directors,
officers and employees. The objective of the stock recognition
and retention plan will be to enable Alliance
Bancorp New to provide directors, officers and
employees with a proprietary interest in Alliance
Bancorp New as an incentive to contribute to its
success. Alliance Bancorp New intends to present the
stock recognition and retention plan to its shareholders for
their approval at a meeting of shareholders which, pursuant to
applicable Office of Thrift Supervision regulations, may be held
no earlier than six months after the offering.
The recognition plan will be administered by a committee of the
board of directors of Alliance Bancorp New, which
will have the responsibility to invest all funds contributed to
the trust created for the stock recognition and retention plan.
Alliance Bancorp New will contribute sufficient
funds to the trust so that it can purchase, following the
receipt of shareholder approval, a number of shares equal to
6.72% of the shares sold in the offering, or 177,087 shares
or 275,527 shares based on the minimum and 15% above the
maximum of the offering range, respectively. The amount of
shares in the proposed stock recognition and retention plan will
equal 4.0% of the shares of Alliance Bancorp-New to be
outstanding upon completion of the conversion and offering.
Given that neither Alliance Bank nor Alliance Bancorp ever
implemented a recognition and retention plan, management and the
board of directors of Alliance Bancorp-New believes that the
proposed size of the recognition and retention plan is
appropriate. Shares of common stock granted pursuant to the
recognition plan generally will be in the form of restricted
stock vesting at a rate to be determined by the board of
directors of Alliance Bancorp New or a board
committee. Currently, Alliance Bancorp New expects
that shares granted under the recognition plan will vest over a
five-year period at a rate no faster than 20% per year. For
accounting purposes, compensation expense in the amount of the
fair market value of the common stock at the date of the grant
to the recipient will be recognized pro rata over the period
during which the shares vest. A recipient will be entitled to
all voting and other shareholder rights, except that the shares,
while restricted, may not be sold, pledged or otherwise disposed
of and are required to be held in the trust. Under the terms of
the recognition plan, recipients of awards will be entitled to
instruct the trustees of the recognition plan as to how the
underlying shares should be voted, and the trustees will be
entitled to vote all unallocated shares in their discretion. If
a recipients employment is terminated as a result of death
or disability, all restrictions will expire and all allocated
shares will become unrestricted. Alliance Bancorp
New will be able to terminate the recognition plan at any time,
and if it did so, any shares not allocated will revert to
Alliance Bancorp New. Recipients of grants under the
recognition plan will not be required to make any payment at the
time of grant or when the underlying shares of common stock
become vested, other than payment of withholding taxes.
We currently anticipate that the stock recognition and retention
plan will be submitted to shareholders of Alliance
Bancorp New within one year, but not earlier than
six months from, the date of completion of the conversion and
reorganization. Accordingly, we expect that the above described
limitations imposed by regulations of the Office of Thrift
Supervision would be applicable. However, we reserve the right
to submit the stock recognition and retention plan to
shareholders more than one year from the date of the conversion
and reorganization, in which event the above-described Office of
Thrift Supervision regulations may not be fully applicable.
121
BENEFICIAL
OWNERSHIP OF COMMON STOCK
The following table sets forth as
of ,
2010, certain information as to the common stock beneficially
owned by (a) each person or entity, including any
group as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934, who or which was known
to us to be the beneficial owner of more than 5% of the issued
and outstanding common stock, (b) the directors of Alliance
Bancorp, (c) the executive officers of Alliance Bancorp
named in the Summary Compensation Table (the named
executive officers) who do not serve as directors; and
(d) all directors and executive officers of Alliance
Bancorp as a group.
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
|
|
of Beneficial
|
|
|
|
|
Ownership at ,
|
|
|
Beneficial Owner
|
|
2010(1)
|
|
Percent of Class
|
|
Alliance Mutual Holding Company
|
|
|
3,973,750
|
|
|
|
59.5
|
%
|
541 Lawrence Road
Broomall, Pennsylvania
19008-3599
|
|
|
|
|
|
|
|
|
PL Capital Group
|
|
|
547,465
|
(2)
|
|
|
8.2
|
|
20 East Jefferson Avenue, Suite 22
Naperville, Illinois 60540
|
|
|
|
|
|
|
|
|
Joseph Stilwell
|
|
|
440,093
|
(3)
|
|
|
6.6
|
|
26 Broadway,
23rd
Floor
New York, New York 10004
|
|
|
|
|
|
|
|
|
Directors:
|
|
|
|
|
|
|
|
|
J. William Cotter, Jr.
|
|
|
30,327
|
(4)
|
|
|
*
|
|
Dennis D. Cirucci
|
|
|
48,749
|
(5)
|
|
|
*
|
|
Timothy E. Flatley
|
|
|
6,138
|
(6)
|
|
|
*
|
|
William E. Hecht
|
|
|
60,416
|
(7)
|
|
|
*
|
|
Peter J. Meier
|
|
|
24,069
|
(8)
|
|
|
*
|
|
G. Bradley Rainer
|
|
|
8,445
|
(9)
|
|
|
*
|
|
John A. Raggi
|
|
|
9,791
|
(10)
|
|
|
*
|
|
Philip K. Stonier
|
|
|
5,343
|
(11)
|
|
|
*
|
|
R. Cheston Woolard
|
|
|
5,248
|
(12)
|
|
|
*
|
|
Named Executive Officers:
|
|
|
|
|
|
|
|
|
William T. McGrath
|
|
|
578
|
(13)
|
|
|
*
|
|
All Directors and Executive Officers as a Group (11 persons)
|
|
|
212,658
|
(14)
|
|
|
3.2
|
|
(Footnotes on next page)
|
|
|
* |
|
Represents less than 1% of our outstanding common stock. |
|
(1) |
|
Based upon filings made pursuant to the Securities Exchange Act
of 1934, as amended (the Exchange Act) and
information furnished by the respective individuals. Under
regulations promulgated pursuant to the Exchange Act, shares of
common stock are deemed to be beneficially owned by a person if
he or she directly or indirectly has or shares (i) voting
power, which includes the power to vote or to direct the voting
of the shares, or (ii) investment power, which includes the
power to dispose or to direct the disposition of the shares.
Unless otherwise indicated, the named beneficial owner has sole
voting and dispositive power with respect to the shares and none
of the shares are pledged. |
|
(2) |
|
According to filings under the Exchange Act, PL Capital Group
consists of the following persons and entities which share
beneficial ownership of certain of the shares: Financial Edge
Fund, LP; Financial Edge-Strategic Fund, LP; PL Capital
Offshore, Ltd.; PL Capital, LLC, general partner of Financial
Edge Fund and Financial Edge Strategic Fund; PL Capital
Advisors, LLC, the investment advisor to PL Capital Offshore,
Financial Edge Fund, Financial Edge Strategic and Goodbody/PL
Capital LP; Goodbody/PL Capital, LP; Goodbody/PL Capital LLC;
general partner of Goodbody/PL Capital, LP; John W. Palmer,
individually and as managing member of PL Capital, PL Capital
Advisors and Goodbody/PL Capital, and a member of the board of
directors of PL Capital Offshore; Beth Lashley, as trustee of
the Doris Lashley testamentary trust; |
122
|
|
|
|
|
Richard Lashley, individually and as a managing member of PL
Capital, PL Capital Advisors and Goodbody/PL Capital, a
member of the board of directors of PL Capital Offshore, and as
holder of certain discretionary authority over an account held
by Dr. Robin Lashley, his sister; and Dr. Robin
Lashley, individually. |
|
(3) |
|
According to filings under the Exchange Act, Joseph Stilwell
beneficially owns 440,093 shares of common stock, including
shares which Joseph Stilwell has voting and dispositive power
over and are held in the names of Stilwell Value Partners VI,
L.P., Stilwell Associates, L.P., and Stilwell Offshore Ltd., in
Joseph Stilwells capacity as the managing and sole member
of Stilwell Value LLC, which is the general partner of Stilwell
Value Partners VI, and Stilwell Associates, and as the managing
and sole member of Stilwell Management LLC, which is the manager
of Stillwell Offshore. |
|
(4) |
|
Includes 1,049 shares held for Mr. Cotters
children under the Pennsylvania Uniform Gift to Minors Act,
661 shares held in a simplified employee pension program,
5,679 shares held in an IRA for the benefit of
Mr. Cotter, 7,991 shares held in the trust established
pursuant to the Directors Retirement Plan,
2,099 shares held in Mr. Cotters family living
trust, 661 shares held in an IRA for the benefit of
Mrs. Cotter and 12,187 shares held jointly with
Mrs. Cotter. |
|
(5) |
|
Includes 18,635 shares held in the ESOP and
30,114 shares held in the Profit Sharing and 401(k) Plan. |
|
(6) |
|
Includes 1,549 shares held jointly with
Mr. Flatleys spouse, 3,629 shares held in an IRA
for the benefit of Mr. Flatley, 661 shares held in a
simplified employee pension program and 910 shares held in
the trust established pursuant to the Directors Retirement
Plan. |
|
(7) |
|
Includes 16,610 shares held in the ESOP, 899 shares
held in the trust established pursuant to the Directors
Retirement Plan and 42,907 shares held jointly with
Mr. Hechts spouse. |
|
(8) |
|
Includes 2,754 shares held jointly with
Mr. Meiers spouse, 10,939 shares held in the
ESOP and 10,376 shares held in the Profit Sharing and
401(k) Plan. |
|
(9) |
|
Includes 719 shares held jointly with
Mr. Rainers spouse, 2,099 shares held by
Mr. Rainers spouse, 4,443 shares held in an IRA
for the benefit of Mr. Rainer and 1,184 shares held in
the trust established pursuant to the Directors Retirement
Plan. |
|
(10) |
|
Includes 2,099 shares held in an IRA for the benefit of
Mr. Raggi, 5,231 shares held in the trust established
pursuant to the Retirement Plan and 2,000 shares held
jointly with Mr. Raggis spouse. |
|
(11) |
|
Includes 2,099 shares held in an IRA for the benefit of
Mr. Stonier and 1,244 shares held in the trust
established pursuant to the Directors Retirement Plan. |
|
(12) |
|
Includes 4,215 shares held jointly with
Mr. Woolards spouse and 1,033 shares held in the
trust established pursuant to the Directors Retirement
Plan. |
|
(13) |
|
The indicated shares are held in the ESOP. |
|
(14) |
|
Includes, in the case of all directors and executive officers of
Alliance Bancorp as a group, 54,133 shares of common stock
which are held in the ESOP, 46,473 shares of common stock
held in the Profit Sharing and 401(k) Plan and
21,766 shares of common stock held in the Directors
Retirement Plan, which have been allocated to the accounts of
participating employees. |
123
PROPOSED
MANAGEMENT PURCHASES
The following table sets forth, for each of our directors and
for all of our directors and executive officers as a group,
(1) the number of exchange shares to be held upon
consummation of the conversion, based upon their beneficial
ownership of shares of common stock of Alliance Bancorp as of
the date of this prospectus, (2) the proposed purchases of
subscription shares, assuming sufficient shares are available to
satisfy their subscriptions, and (3) the total amount of
Alliance Bancorp New common stock to be held upon
consummation of the conversion, in each case assuming that
3,100,000 shares of our stock are sold, which is the
midpoint of the offering range. The shares being acquired by
these directors and executive officers are being acquired for
investment and not for re-sale.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Alliance
|
|
|
|
|
|
|
|
|
Total Shares of
|
|
|
|
Bancorp-New
|
|
|
|
|
|
|
|
|
Alliance Bancorp-
|
|
|
|
Shares to be
|
|
|
Proposed Purchase of
|
|
|
New Common Stock
|
|
|
|
Received in
|
|
|
Alliance Bancorp-
|
|
|
to be Held
|
|
|
|
Exchange for
|
|
|
New Stock
|
|
|
|
|
|
|
|
|
Percentage
|
|
|
|
Shares of Alliance
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
of Shares
|
|
Name
|
|
Bancorp(1)
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Outstanding(2)
|
|
|
Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. William Cotter, Jr.
|
|
|
23,658
|
|
|
$
|
30,000
|
|
|
|
3,000
|
|
|
$
|
266,580
|
|
|
|
26,658
|
|
|
|
*
|
|
Dennis D. Cirucci
|
|
|
38,029
|
|
|
|
100,000
|
|
|
|
10,000
|
|
|
|
480,290
|
|
|
|
48,029
|
|
|
|
*
|
|
Timothy E. Flatley
|
|
|
4,787
|
|
|
|
|
|
|
|
|
|
|
|
47,870
|
|
|
|
4,787
|
|
|
|
*
|
|
William E. Hecht
|
|
|
47,130
|
|
|
|
50,000
|
|
|
|
5,000
|
|
|
|
521,300
|
|
|
|
52,130
|
|
|
|
1.0
|
%
|
Peter J. Meier
|
|
|
18,776
|
|
|
|
100,000
|
|
|
|
10,000
|
|
|
|
287,760
|
|
|
|
28,776
|
|
|
|
*
|
|
G. Bradley Rainer
|
|
|
6,587
|
|
|
|
20,000
|
|
|
|
2,000
|
|
|
|
85,870
|
|
|
|
8,587
|
|
|
|
*
|
|
John A. Raggi
|
|
|
7,637
|
|
|
|
10,000
|
|
|
|
1,000
|
|
|
|
86,370
|
|
|
|
8,637
|
|
|
|
*
|
|
Philip K. Stonier
|
|
|
4,168
|
|
|
|
10,000
|
|
|
|
1,000
|
|
|
|
51,680
|
|
|
|
5,168
|
|
|
|
*
|
|
R. Cheston Woolard
|
|
|
4,093
|
|
|
|
10,000
|
|
|
|
1,000
|
|
|
|
50,930
|
|
|
|
5,093
|
|
|
|
*
|
|
Other Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William T. McGrath
|
|
|
450
|
|
|
|
15,000
|
|
|
|
1,500
|
|
|
|
19,500
|
|
|
|
1,950
|
|
|
|
*
|
|
Suzanne J. Ricci
|
|
|
10,573
|
|
|
|
10,000
|
|
|
|
1,000
|
|
|
|
115,730
|
|
|
|
11,573
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Directors and Executive Officers as a Group (11 persons)
|
|
|
165,888
|
|
|
$
|
355,000
|
|
|
|
35,500
|
|
|
$
|
2,013,880
|
|
|
|
201,388
|
|
|
|
3.87
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
Less than 1%. |
|
(1) |
|
Excludes stock options and awards that may be granted under the
proposed new stock option plan and recognition and retention
plan if such plans are approved by shareholders at an annual or
special meeting of shareholders at least six months following
the conversion and reorganization. See
Management New Stock Benefit Plans. With
respect to Messrs. Cirucci, Meier, and McGrath and
Ms. Ricci, includes shares to be purchased in Profit
Sharing and 401(k) Plan of Alliance Bank. |
|
(2) |
|
Based on 5,208,449 shares outstanding. |
124
THE
CONVERSION AND OFFERING
The Boards of Directors of Alliance Bancorp, Alliance
Bancorp New, Alliance Mutual Holding Company and
Alliance Bank all have approved the plan of conversion and
reorganization. The plan of conversion and reorganization also
has been conditionally approved by the Office of Thrift
Supervision, and the Pennsylvania Department of Banking has
approved the application of Alliance Bancorp New in
connection with the conversion and reorganization, subject in
each case to approval of the plan of conversion and
reorganization by the depositors of Alliance Bank and the
shareholders of Alliance Bancorp. Such approvals by the Office
of Thrift Supervision and the Pennsylvania Department of
Banking, however, do not constitute a recommendation or
endorsement of the plan of conversion and reorganization by such
agency.
General
The boards of directors of Alliance Mutual Holding Company,
Alliance Bancorp and Alliance Bank unanimously adopted the plan
of conversion and reorganization on August 11, 2010. The
plan of conversion and reorganization has been approved by the
Office of Thrift Supervision and the Pennsylvania Department of
Banking, subject to, among other things, approval of the plan of
conversion and reorganization by the depositors of Alliance Bank
and the shareholders of Alliance Bancorp. The special meetings
of depositors and of shareholders have been called for this
purpose
on ,
2010.
The second-step conversion that we are now undertaking involves
a series of transactions by which we will convert our
organization from the partially public mutual holding company
form to the fully public stock holding company structure. Under
the plan of conversion and reorganization, Alliance Bank will
convert from the mutual holding company form of organization to
the stock holding company form of organization and become a
wholly owned subsidiary of Alliance Bancorp New, a
newly formed Pennsylvania corporation. Shareholders of Alliance
Bancorp, other than Alliance Mutual Holding Company, will
receive shares of common stock of the new holding company, also
using the corporate title Alliance Bancorp, Inc. of
Pennsylvania, in exchange for their existing shares of
Alliance Bancorp common stock. Following the conversion and
offering, Alliance Bancorp and Alliance Mutual Holding Company
will no longer exist.
The following is a brief summary of the conversion and offering
and is qualified in its entirety by reference to the provisions
of the plan of conversion and reorganization. A copy of the plan
of conversion and reorganization is available for inspection at
each branch office of Alliance Bank and at the Northeast
Regional (in Jersey City, New Jersey) and Washington D.C.
offices of the Office of Thrift Supervision. The plan of
conversion and reorganization also is filed as an exhibit to the
registration statement of which this document is a part, copies
of which may be obtained from the Securities and Exchange
Commission. See Where You Can Find Additional
Information.
Purposes
of the Conversion and Offering
Alliance Mutual Holding Company, as a mutual holding company,
does not have shareholders and has no authority to issue capital
stock. As a result of the conversion and offering, Alliance Bank
will be structured in the form used by holding companies of
commercial banks, most business entities and most stock savings
institutions. The conversion to the fully public form of
ownership will remove the uncertainties associated with the
mutual holding company structure created by the recently enacted
financial reform legislation. The conversion and offering will
also be important to our future growth and performance by
providing a larger capital base to support our operations and by
enhancing our future access to capital markets, ability to
continue to grow our asset base, through additional new
branches, further acquisitions or otherwise, and enhancing our
ability to diversify into other financial services related
activities and to provide additional services to the public.
Although Alliance Bancorp currently has the ability to raise
additional capital through the sale of additional shares of
Alliance Bancorp common stock, that ability is limited by the
mutual holding company structure which, among other things,
requires that Alliance Mutual Holding Company always hold a
majority of the outstanding shares of Alliance Bancorps
common stock.
125
The conversion and offering also will result in an increase in
the number of shares of common stock held by public
shareholders, as compared to the current number of outstanding
shares of Alliance Bancorp common stock, which we expect will
facilitate development of a more active and liquid trading
market for our common stock. See Market for Our Common
Stock.
Alliance Bank remains committed to controlled growth and
diversification. The additional funds received in the offering
will facilitate Alliance Banks ability to continue to grow
in accordance with its business plan, through both internal
growth and possible acquisitions of other institutions or
through the expansion of its branch office network. We believe
that the conversion and reorganization will enhance Alliance
Banks ability to continue its growth through possible
acquisitions and will support its ability to more fully serve
the borrowing and other financial needs of the communities it
serves.
There are also certain disadvantages to undertaking the
conversion and offering at this time, although our board of
directors concluded that the disadvantages did not outweigh the
reasons for converting. The board of directors specifically
considered that current shareholders of Alliance Bancorp will
receive a lower exchange ratio for their existing shares
compared to second-step transactions that take place when market
and economic conditions are more favorable. However, the board
of directors concluded that there is no way to know when market
and economic conditions may change and whether they will change
for the better in this regard. The board of directors concluded
that, in light of the reasons for the conversion and offering,
that it was better to proceed at this time with the transaction
as it believes that the exchange ratio is fair to existing
shareholders of Alliance Bancorp-New and that the offering price
will be attractive to new investors, rather than waiting for
market conditions to improve, which may result in a higher
exchange ratio for existing shareholders of Alliance Bancorp-New
but may be a less attractive valuation for new investors. In
addition, our board of directors considered that, in the initial
period following the conversion and offering, the additional
capital generated from the conversion and offering will likely
result in a lower return on equity for Alliance Bancorp-New
compared to many of its peers. Finally, given the current
economic slowdown and the reduced demand for new originations of
loans meeting our underwriting standards, our board of directors
considered that it may be a challenge for us to deploy the net
proceeds from the conversion and offering as quickly as we would
like. However, as previously indicated, our board of directors
concluded that the reasons for undertaking the conversion and
offering at this time outweighed the potential disadvantages.
In light of the foregoing, the boards of directors of Alliance
Mutual Holding Company, Alliance Bancorp and Alliance Bank as
well as Alliance Bancorp New believe that it is in
the best interests of such companies, the depositors of Alliance
Bank and shareholders of Alliance Bancorp to continue to
implement our strategic business plan, and that the most
feasible way to do so is through the conversion and offering.
Description
of the Conversion and Offering
The conversion and offering will result in the elimination of
the mutual holding company, the creation of a new stock holding
company which will own all of the outstanding shares of Alliance
Bank, the exchange of shares of common stock of Alliance Bancorp
by public shareholders for shares of the new stock form holding
company, the issuance and sale of shares of common stock to
depositors of Alliance Bank and others in the offering. The
conversion and offering will be accomplished through a series of
substantially simultaneous and interdependent transactions as
follows:
|
|
|
|
|
Alliance Mutual Holding Company will convert from mutual to
stock form and simultaneously merge with and into Alliance
Bancorp, pursuant to which the mutual holding company will cease
to exist and the shares of Alliance Bancorp common stock held by
the mutual holding company will be canceled; and
|
|
|
|
Alliance Bancorp then will merge with and into the Alliance
Bancorp New with Alliance Bancorp New
being the survivor of such merger.
|
As a result of the above transactions, Alliance Bank will become
a wholly owned subsidiary of the new holding company, and the
outstanding shares of Alliance Bancorp common stock will be
converted into shares of Alliance Bancorp New common
stock pursuant to the exchange ratio, which will result in the
public
126
shareholders owning in the aggregate approximately the same
percentage of the Alliance Bancorp New common stock
to be outstanding upon the completion of the conversion and
offering as the percentage of Alliance Bancorp common stock
owned by them in the aggregate immediately prior to consummation
of the conversion and offering before giving effect to
(a) the payment of cash in lieu of issuing fractional
exchange shares, and (b) any shares of common stock
purchased by public shareholders in the offering.
Consummation of the conversion and offering is conditioned upon
the approval of the plan of conversion and reorganization by
(1) the Office of Thrift Supervision, (2) the
Pennsylvania Department of Banking, (3) at least a majority
of the total number of votes eligible to be cast by depositors
of Alliance Bank at the special meeting of depositors,
(4) holders of at least two-thirds of the shares of the
outstanding Alliance Bancorp common stock at the special meeting
of shareholders and (5) at least a majority of the
outstanding shares of Alliance Bancorp common stock, excluding
shares owned by Alliance Mutual Holding Company, at the special
meeting of shareholders.
Effect of
the Conversion and Offering on Public Shareholders
Federal regulations provide that in a conversion of a mutual
holding company to stock form, the public shareholders of
Alliance Bancorp will be entitled to exchange their shares of
common stock for common stock of the converted holding company,
provided that Alliance Bank and Alliance Mutual Holding Company
demonstrate to the satisfaction of the Office of Thrift
Supervision that the basis for the exchange is fair and
reasonable. Each publicly held share of Alliance Bancorp common
stock will, on the date of completion of the conversion and
offering, be automatically converted into and become the right
to receive a number of shares of common stock of the new holding
company determined pursuant to the exchange ratio, which we
refer to as the exchange shares. The public
shareholders of Alliance Bancorp common stock will own the same
percentage of common stock in the new holding company after the
conversion and offering as they held in Alliance Bancorp prior
to completion of the conversion, subject to any additional
shares purchased by them in the offering and their receipt of
cash in lieu of fractional exchange shares.
Based on the independent valuation, the 59.5% of the outstanding
shares of Alliance Bancorp common stock held by Alliance Mutual
Holding Company as of the date of the independent valuation and
the 40.5% public ownership interest of Alliance Bancorp, the
following table sets forth, at the minimum, midpoint, maximum,
and adjusted maximum of the offering range:
|
|
|
|
|
the total number of shares of common stock to be issued in the
conversion and offering;
|
|
|
|
the total shares of common stock outstanding after the
conversion and offering;
|
|
|
|
the exchange ratio; and
|
|
|
|
the number of shares an owner of 100 shares of Alliance
Bancorp common stock will receive in the exchange, adjusted for
the number of shares sold in the offering, and the assumed value
of each of such shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 Shares of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliance Bancorp
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shares
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
Shares of Alliance
|
|
of Alliance
|
|
|
|
would be
|
|
|
|
|
|
|
|
|
Bancorp-New stock
|
|
Bancorp-New
|
|
|
|
Exchanged for
|
|
|
|
|
Shares to be
|
|
to be Exchanged
|
|
Common Stock
|
|
|
|
the Following
|
|
|
|
|
Sold in the
|
|
for Current
|
|
to be Outstanding
|
|
|
|
Number of Shares
|
|
|
|
|
Offering
|
|
Common Stock
|
|
after the
|
|
Exchange
|
|
of Alliance
|
|
Equivalent per
|
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Conversion
|
|
Ratio
|
|
Bancorp-New(1)
|
|
Share Value(2)
|
|
Minimum
|
|
|
2,635,000
|
|
|
|
59.5
|
%
|
|
|
1,792,183
|
|
|
|
40.5
|
%
|
|
|
4,427,183
|
|
|
|
0.6631
|
|
|
|
66
|
|
|
$
|
6.63
|
|
Midpoint
|
|
|
3,100,000
|
|
|
|
59.5
|
|
|
|
2,108,449
|
|
|
|
40.5
|
|
|
|
5,208,449
|
|
|
|
0.7801
|
|
|
|
78
|
|
|
|
7.80
|
|
Maximum
|
|
|
3,565,000
|
|
|
|
59.5
|
|
|
|
2,424,717
|
|
|
|
40.5
|
|
|
|
5,989,717
|
|
|
|
0.8971
|
|
|
|
89
|
|
|
|
8.97
|
|
15% above the maximum
|
|
|
4,099,750
|
|
|
|
59.5
|
|
|
|
2,788,424
|
|
|
|
40.5
|
|
|
|
6,888,174
|
|
|
|
1.0317
|
|
|
|
103
|
|
|
|
10.32
|
|
|
|
|
(1) |
|
Cash will be paid instead of issuing any fractional shares. |
127
|
|
|
(2) |
|
Represents the value of shares of Alliance Bancorp-New to be
received by a holder of one share of Alliance Bancorp common
stock at the exchange ratio, assuming a value of $10.00 per
share. |
As indicated in the table above, the exchange ratio ranges from
a minimum of 0.6631 to a maximum of 0.8971 shares of
Alliance Bancorp New common stock for each share of
Alliance Bancorp common stock. Under certain circumstances, the
pro forma market value may be adjusted upward to reflect changes
in market conditions, and, at the adjusted maximum, the exchange
ratio would be 1.0317 shares of Alliance
Bancorp New common stock for each share of Alliance
Bancorp common stock. Shares of Alliance Bancorp New
common stock issued in the share exchange will have an initial
value of $10.00 per share. Depending on the exchange ratio and
the market value of Alliance Bancorp common stock at the time of
the exchange, the initial market value of the Alliance
Bancorp New common stock that Alliance Bancorp
shareholders receive in the share exchange could be less than
the market value of the Alliance Bancorp common stock that such
persons currently own. If the conversion and offering is
completed at the minimum of the offering range, each share of
Alliance Bancorp would be converted into 0.6631 shares of
Alliance Bancorp New common stock with an initial
value of $6.63 based on the $10.00 offering price in the
conversion. This compares to the closing sale price of
$ per share price for Alliance
Bancorp common stock
on ,
2010, as reported on the Nasdaq Global Market. In addition, as
discussed in Effect on Shareholders
Equity per Share of the Shares Exchanged below, pro
forma stockholders equity following the conversion and
offering will range between $17.30 and $14.10 at the minimum and
the maximum of the offering range, respectively.
Ownership
of Alliance Bancorp New After the Conversion and
Offering
The following table shows information regarding the shares of
common stock that Alliance Bancorp New will issue in
the conversion and offering. The table also shows the number of
shares that will be owned by Alliance Bancorp public
shareholders at the completion of the conversion and offering
who will receive the new holding companys common stock in
exchange for their shares of Alliance Bancorp common stock. The
number of shares of common stock to be issued is based, in part,
on our independent appraisal.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,099,750 Shares
|
|
|
|
2,635,000 Shares
|
|
|
3,100,000 Shares
|
|
|
3,565,000 Shares
|
|
|
Issued at Adjusted
|
|
|
|
Issued at Minimum of
|
|
|
Issued at Midpoint of
|
|
|
Issued at Maximum of
|
|
|
Maximum of
|
|
|
|
Offering Range
|
|
|
Offering Range
|
|
|
Offering Range
|
|
|
Offering Range(1)
|
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
Percent of
|
|
|
|
Amount
|
|
|
Total
|
|
|
Amount
|
|
|
Total
|
|
|
Amount
|
|
|
Total
|
|
|
Amount
|
|
|
Total
|
|
|
Purchasers in the stock offering
|
|
|
2,635,000
|
|
|
|
40.5
|
%
|
|
|
3,100,000
|
|
|
|
40.5
|
%
|
|
|
3,565,000
|
|
|
|
40.5
|
%
|
|
|
4,099,750
|
|
|
|
40.5
|
%
|
Alliance Bancorp public shareholders in the exchange
|
|
|
1,792,183
|
|
|
|
59.5
|
|
|
|
2,108,449
|
|
|
|
59.5
|
|
|
|
2,424,717
|
|
|
|
59.5
|
|
|
|
2,788,424
|
|
|
|
59.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shares outstanding after the conversion and offering
|
|
|
4,427,183
|
|
|
|
100.0
|
%
|
|
|
5,208,449
|
|
|
|
100.0
|
%
|
|
|
5,989,717
|
|
|
|
100.0
|
%
|
|
|
6,888,174
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
As adjusted to give effect to an increase in the number of
shares that could occur due to an increase in the offering range
up to approximately 15% to reflect changes in market and
financial conditions before the conversion and offering is
completed. |
Effects
of the Conversion and Offering on Depositors and
Borrowers
General. Prior to the conversion and offering,
each depositor of Alliance Bank has both a deposit account in
the institution and a pro rata ownership interest in the net
worth of Alliance Bank based upon the balance in his account,
which interest may only be realized in the event of a
liquidation of Alliance Bank. However, this ownership interest
is tied to the depositors account and has no tangible
market value separate from such deposit account. A depositor who
reduces or closes his account receives a portion or all of the
balance in the account but nothing for his ownership interest in
the net worth of Alliance Bank, which is lost to the extent that
the balance in the account is reduced or closed.
128
Consequently, the depositors in a stock subsidiary of a mutual
holding company normally have no way to realize the value of
their ownership interest, which has realizable value only in the
unlikely event that Alliance Bank is liquidated. In such event,
the depositors of record at that time, as owners, would share
pro rata in any residual surplus and reserves of Alliance Bank
after other claims are paid.
Continuity. While the conversion and offering
are being accomplished, the normal business of Alliance Bank of
accepting deposits and making loans will continue without
interruption. Alliance Bank will continue to be subject to
regulation by the Federal Deposit Insurance Corporation and the
Pennsylvania Department of Banking. After the conversion and
offering, Alliance Bank will continue to provide services for
depositors and borrowers under current policies by its present
management and staff.
The current board of directors of Alliance Bancorp is composed
of the same individuals who serve on the boards of directors of
Alliance Mutual Holding Company and Alliance Bank. The directors
of the new holding company after the conversion and offering
will be the current directors of Alliance Bancorp. The senior
management of Alliance Bancorp New after the
conversion and offering will consist of the current members of
Alliance Bancorps senior management
Effect on Deposit Accounts. Under the plan of
conversion and reorganization, each depositor in Alliance Bank
at the time of the conversion and offering will automatically
continue as a depositor after the conversion and offering, and
each of the deposit accounts will remain the same with respect
to deposit balance, interest rate and other terms, except to the
extent that funds in the accounts are withdrawn to purchase
common stock to be issued in the offering. Each account will be
insured by the Federal Deposit Insurance Corporation to the same
extent as before the conversion and offering. Depositors will
continue to hold their existing certificates, passbooks and
other evidences of their accounts.
Effect on Loans. No loan outstanding from
Alliance Bank will be affected by the conversion and offering,
and the amount, interest rate, maturity and security for each
loan will remain as they were contractually fixed prior to the
conversion and offering.
Tax Effects. We have received an opinion of
counsel or tax advisor with regard to federal and state income
taxation which indicates that the adoption and implementation of
the plan of conversion and reorganization described herein will
not be taxable for federal or state income tax purposes to
Alliance Bancorp, Alliance Mutual Holding Company, the
public shareholders, or the eligible account holders,
supplemental eligible account holders or other depositors,
except as discussed below. See Tax
Aspects below and Risk Factors beginning on
page .
Effect on Liquidation Rights. If Alliance
Mutual Holding Company was to liquidate, all claims of Alliance
Federal Mutual Holding Companys creditors would be paid
first. Thereafter, if there were any assets remaining,
depositors of Alliance Bank would receive such remaining assets,
pro rata, based upon the deposit balances in their deposit
accounts at Alliance Bank immediately prior to liquidation. In
the unlikely event that Alliance Bank was to liquidate after the
conversion and offering, all claims of creditors (including
those of depositors, to the extent of their deposit balances)
also would be paid first, followed by distribution of the
liquidation account to certain depositors (see
Liquidation Rights below), with any
assets remaining thereafter distributed to Alliance
Bancorp New as the holder of Alliance Banks
capital stock. Pursuant to the rules and regulations of the
Office of Thrift Supervision, a merger, consolidation, sale of
bulk assets or similar combination or transaction with another
insured institution would not be considered a liquidation for
this purpose and, in such a transaction, the liquidation account
would be required to be assumed by the surviving institution.
The
Offering
Subscription Offering. In accordance with the
plan of conversion and reorganization, non-transferable rights
to subscribe for common stock in the subscription offering have
been granted under the plan of conversion and reorganization to
the following persons in the following order of descending
priority:
|
|
|
|
|
eligible account holders,
|
|
|
|
Alliance Banks employee stock ownership plan,
|
129
|
|
|
|
|
supplemental eligible account holders, and
|
|
|
|
other depositors, that is depositors of Alliance Bank as of the
close of business
on ,
2010 who are not eligible account holders or supplemental
eligible account holders.
|
All subscriptions received will be subject to the availability
of common stock after satisfaction of subscriptions of all
persons having prior rights in the subscription offering and to
the maximum and minimum purchase limitations set forth in the
plan of conversion and reorganization and as described below
under Limitations on Common Stock
Purchases. We sometimes refer to the shares of the new
holding company common stock sold in this offering at the $10.00
per share purchase price as the subscription shares.
Priority 1: Eligible Account Holders. Each
Alliance Bank depositor with aggregate account balances of at
least $50 (a qualifying deposit) at the close of
business on June 30, 2009 will receive, without payment
therefor, first priority, nontransferable subscription rights to
subscribe for, in the subscription offering, up to the greater
of:
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$500,000 (50,000 shares) of common stock; or
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15 times the product, rounded down to the next whole number,
obtained by multiplying the total number of shares of common
stock offered in the subscription offering by a fraction, of
which the numerator is the amount of the eligible account
holders qualifying deposits and the denominator of which
is the total amount of qualifying deposits of all eligible
account holders, in each case as of the close of business on the
eligibility record date, June 30, 2009, subject to the
overall purchase limitations. See Limitations
on Common Stock Purchases.
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If there are not sufficient shares available to satisfy all
subscriptions, shares first will be allocated so as to permit
each subscribing eligible account holder to purchase a number of
shares sufficient to make his total allocation equal to the
lesser of the number of shares subscribed for or
100 shares. Thereafter, unallocated shares will be
allocated to subscribing eligible account holders whose
subscriptions remain unfilled in the proportion that the amount
of their respective qualifying deposit bears to the total amount
of qualifying deposits of all subscribing eligible account
holders whose subscriptions remain unfilled, provided that no
fractional shares shall be issued. The subscription rights of
eligible account holders who are also directors or officers of
Alliance Mutual Holding Company, Alliance Bancorp or Alliance
Bank and their associates will be subordinated to the
subscription rights of other eligible account holders to the
extent attributable to their increased deposits in the year
preceding June 30, 2009.
To ensure proper allocation of shares of our 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 June 30, 2009. In the event of an
oversubscription, failure to list an account or providing
incomplete or incorrect information could result in fewer shares
being allocated than if all information had been properly
disclosed. In the event of an oversubscription, the subscription
rights of eligible account holders who are also our directors or
executive officers and their associates will be subordinated to
the subscription rights of other eligible account holders to the
extent attributable to their increased deposits during the year
preceding June 30, 2009.
Priority 2: Employee Stock Ownership Plan. The
employee stock ownership plan will receive, without payment
therefor, second priority, nontransferable subscription rights
to purchase, in the aggregate, up to 8.0% of the common stock of
Alliance Bancorp New to be outstanding after the
conversion and offering, less the number of shares previously
acquired by the employee stock ownership plan, as adjusted. The
employee stock ownership plan intends to purchase a number of
shares of Alliance Bancorp New equal to 4.63% of the
shares sold in the offering, or 143,652 shares based on the
midpoint of the offering range. When combined with shares
previously acquired by the employee stock ownership plan, as
adjusted for the exchange ratio, the employee stock ownership
plan will have acquired a number of shares equal to 7.0% of the
to be outstanding shares of common stock of Alliance
Bancorp New. Subscriptions by the employee stock
ownership plan will not be aggregated with shares of common
stock purchased directly by or which are otherwise attributable
to any other participants in the subscription and community
offering, including subscriptions of any of Alliance Banks
directors, officers, employees or associates. See
Management New Stock Benefit Plans
Employee Stock Ownership Plan. In the event that the total
number of shares of common stock sold in the
130
offering is increased to an amount greater than the number of
shares representing the maximum of the offering range, the
employee stock ownership plan will have a priority right to
purchase any such shares exceeding the maximum of the offering
range. Alternatively, our employee stock ownership plan may
purchase some or all of the shares of Alliance
Bancorp New common stock that it intends to purchase
in the open market after the offering is completed, subject to
approval of the Office of Thrift Supervision.
Priority 3: Supplemental Eligible Account
Holders. Each Alliance Bank depositor with an
account balance of at least $50 at the close of business
on ,
2010 will receive, without payment therefor, third priority,
nontransferable subscription rights to subscribe for, in the
subscription offering, up to the greater of:
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$500,000 (50,000 shares) of common stock; or
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15 times the product, rounded down to the next whole number,
obtained by multiplying the total number of shares of common
stock offered in the subscription offering by a fraction, of
which the numerator is the amount of the supplemental eligible
account holders qualifying deposit and the denominator of
which is the total amount of qualifying deposits of all
supplemental eligible account holders, in each case as of the
close of business on the supplemental eligibility record
date, ,
2010, subject to the overall purchase limitations. See
Limitations on Common Stock Purchases.
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If there are not sufficient shares available to satisfy all
subscriptions of supplemental eligible account holders, shares
first will be allocated so as 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 the number of shares subscribed for or
100 shares. Thereafter, unallocated shares will be
allocated to subscribing supplemental eligible account holders
whose subscriptions remain unfilled in the proportion that the
amounts of their respective qualifying deposit bears to the
total amount of qualifying deposits of all such subscribing
supplemental eligible account holders whose subscriptions remain
unfilled, provided that no fractional shares shall be issued.
To ensure proper allocation of common stock, each supplemental
eligible account holder must list on the stock order form all
deposit accounts in which he or she has an ownership interest
at ,
2010. In the event of oversubscription, failure to list an
account or providing incorrect or incomplete information could
result in fewer shares being allocated than if all information
had been properly disclosed.
Priority 4: Other Depositors. To the extent
that there are shares remaining after satisfaction of
subscriptions by eligible account holders, the employee stock
ownership plan and supplemental eligible account holders, each
depositor of Alliance Bank as of the close of business
on ,
2010 will receive, without payment therefor, fourth priority,
nontransferable subscription rights to subscribe for, in the
subscription offering, up to $500,000 (50,000 shares) of
common stock, subject to the overall purchase limitations. See
Limitations on Common Stock Purchases.
In the event the other depositors subscribe for a number of
shares which, when added to the shares subscribed for by
eligible account holders, the employee stock ownership plan and
supplemental eligible account holders, is in excess of the total
number of shares of common stock offered, shares first will be
allocated so as to permit each subscribing other depositor to
purchase a number of shares sufficient to make his total
allocation equal to the lesser of the number of shares
subscribed for or 100 shares. Thereafter, any remaining
shares will be allocated among subscribing other depositors
whose subscriptions remain unfilled on a pro rata basis in the
same proportion as each such other depositors subscription
bears to the total subscriptions of all such other depositors,
provided that no fractional shares shall be issued.
To ensure proper allocation of common stock, each other
depositor must list on the stock order form all deposit accounts
in which he or she had an ownership interest
at ,
2010. In the event of an oversubscription, failure to list an
account could result in fewer shares being allocated than if all
accounts had been disclosed.
Expiration Date for the Subscription
Offering. The subscription offering will expire
at 2:00 p.m., Eastern Time,
on ,
20 , unless we extend the offering up to 45 days
or additional periods, with the
131
approval of the Office of Thrift Supervision. We may extend the
subscription offering
until ,
2010, without additional notice to you.
Community Offering. To the extent that shares
remain available for purchase after satisfaction of all
subscriptions of eligible account holders, the employee stock
ownership plan, supplemental eligible account holders and other
depositors, we may elect to offer shares pursuant to the plan of
conversion and reorganization to certain members of the general
public, with preference given first to natural persons and
trusts of natural persons who are residents of Delaware County
and Chester County, Pennsylvania (community
residents), then to public shareholders of Alliance
Bancorp as
of ,
2009 and finally to members of the general public. Such persons
may purchase up to $500,000 (50,000 shares) of common
stock, subject to the overall purchase limitations. See
Limitations on Common Stock Purchases.
This amount may be increased at our sole discretion. The
opportunity to subscribe for shares of common stock in the
community offering will be subject to our right in our sole
discretion, 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.
If there are not sufficient shares available to fill the orders
of community residents in the community offering, available
shares will be allocated first to each community resident whose
order is accepted by us, in an amount equal to the lesser of
100 shares or the number of shares subscribed for by each
such subscriber, if possible. Thereafter, unallocated shares
will be allocated among the community residents whose orders
remain unsatisfied on an equal number of shares per order basis
until all available shares have been allocated. If
oversubscription is due to orders of public shareholders or the
general public, shares will be allocated by applying the same
allocation described above.
The community offering, if any, may commence simultaneously
with, during or subsequent to the completion of the subscription
offering and is expected to conclude at the same time as the
subscription offering. The community offering must be completed
within 45 days after the completion of the subscription
offering unless otherwise extended, with the approval of the
Office of Thrift Supervision.
We, in our absolute discretion, reserve the right to reject any
orders in whole or in part which are received in the community
offering, at the time of receipt or as soon as practicable
following the completion of the community offering. Furthermore,
in determining whether a person is a resident of a particular
county and thus is eligible for priority treatment, we will
consider whether he or she occupies a dwelling in the county,
has the intent to remain for a period of time, and manifests the
genuineness of that intent by establishing an ongoing physical
presence together with an indication that such presence is
something other than merely transitory in nature. We may utilize
deposit or loan records or other evidence provided to us to make
a determination as to a persons resident status. In all
cases, the determination of residence status will be made by us
in our sole discretion.
Syndicated Community Offering. The plan of
conversion and reorganization provides that, if feasible, shares
of common stock not purchased in the subscription and community
offerings may be offered for sale to the general public in a
syndicated community offering through a syndicate of registered
broker-dealers managed by Stifel, Nicolaus & Company,
Incorporated. In the syndicated community offering, investors
will be permitted to place orders for $500,000
(50,000 shares) of common stock, subject to the overall
purchase limitations. See Limitations on
Common Stock Purchases. We have the right to reject orders
in whole or part in our sole discretion in the syndicated
community offering. The syndicated community offering will
terminate no more than 45 days following the completion of
the subscription offering, unless we extend the offering with
the approval of the Office of Thrift Supervision. We may begin
the syndicated community offering at any time following the
commencement of the subscription offering.
Orders received in connection with the syndicated community
offering, if any, will receive a lower priority than orders
received in the subscription offering and community offering.
Common stock sold in the syndicated community offering will be
sold at the same price as all other shares in the offering. A
syndicated community offering would be open to the general
public, however, we have the right to reject orders, in whole or
in part, in our sole discretion in the syndicated community
offering.
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If a syndicated community offering is held, Stifel,
Nicolaus & Company, Incorporated will serve as sole
book running manager. In such capacity, Stifel,
Nicolaus & Company, Incorporated may form a syndicate
of other broker-dealers who are Financial Industry Regulatory
Authority member firms. Neither Stifel, Nicolaus &
Company, Incorporated nor any registered broker-dealer will have
any obligation to take or purchase any shares of the common
stock in the syndicated community offering. The syndicated
community offering will be conducted in accordance with certain
Securities and Exchange Commission rules applicable to best
efforts offerings. Under these rules, Stifel,
Nicolaus & Company, Incorporated or the other
broker-dealers participating in the syndicated community
offering generally will accept payment for shares of common
stock to be purchased in the syndicated community offering
through a sweep arrangement, provided we have received
subscriptions to meet the minimum of the offering range, under
which a customers brokerage account at the applicable
participating broker-dealer will be debited in the amount of the
purchase price for the shares of common stock that such customer
wishes to purchase in the syndicated community offering on the
settlement date. Customers who authorize participating
broker-dealers to debit their brokerage accounts are required to
have the funds for the payment in their accounts on, but not
before, the settlement date. The sweep arrangements will meet
the following conditions: (i) shares will only be sold to
customers with accounts at Stifel, Nicolaus & Company,
Incorporated or at another participating broker-dealer, and
(ii) accounts will not be swept until the settlement date,
which will occur only after the minimum number of shares are
sold. Institutional investors will pay Stifel,
Nicolaus & Company, Incorporated, in its capacity as
sole book running manager, for shares purchased in the
syndicated community offering on the settlement date through the
services of the Depository Trust Company on a delivery
versus payment basis. The closing of the syndicated community
offering is subject to conditions set forth in an agency
agreement among Alliance Bancorp, Alliance Bancorp
New, Alliance Mutual Holding Company and Alliance Bank on one
hand and Stifel, Nicolaus & Company, Incorporated on
the other hand. If and when all the conditions for the closing
are met, funds for common stock sold in the syndicated community
offering, less fees and commission payable by us, will be
delivered promptly to us. If the offering is consummated, but
some or all of an interested investors funds are not
accepted by us, those funds will be returned to the interested
investor promptly after closing, without interest. If the
offering is not consummated, funds in the account will be
returned promptly, without interest, to the potential investor.
Normal customer ticketing will be used for order placement. In
the syndicated community offering, order forms will not be used.
If we are unable to find purchasers from the general public to
reach the minimum of the offering range, we may make other
purchase arrangements, if feasible. Other purchase arrangements
must be approved by the Office of Thrift Supervision and may
provide for purchases for investment purposes by directors,
officers, their associates and other persons in excess of the
limitations provided in the plan of conversion and
reorganization, and in excess of the proposed director and
executive officer purchases discussed in this prospectus,
although no such purchases are currently intended. If other
purchase arrangements cannot be made, we may either: terminate
the offering and promptly return all funds; promptly return all
funds, set a new offering range and give all subscribers the
opportunity to place a new order for shares of
Alliance Bancorp New common stock; or take such
other actions as may be permitted by the Office of Thrift
Supervision and the Securities and Exchange Commission. If such
other arrangements are approved by the Office of Thrift
Supervision, we will be required to submit a post-effective
amendment with the Securities and Exchange Commission and the
Financial Industry Regulatory Authority, who must review and
approve such other arrangements.
Execution of Orders. We will not execute
orders until at least the minimum number of shares of common
stock (2,635,000 shares) have been subscribed for or
otherwise sold. If the minimum number of shares have not been
subscribed for or sold
by ,
2010, unless such period is extended with the consent of the
Office of Thrift Supervision, all funds received in the offering
will be returned promptly to the subscribers with interest, and
all withdrawal authorizations will be canceled. If an extension
beyond ,
2010 is granted, we will notify subscribers of the extension of
time and subscribers will have the right to confirm, modify or
rescind their subscriptions. If we do not receive a response
from a subscriber to any resolicitation, the subscribers
order will be rescinded and all funds received will be returned
promptly with interest, or withdrawal authorizations will be
cancelled.
133
How We
Determined the Price Per Share, the Offering Range and the
Exchange Ratio
The plan of conversion and reorganization requires that the
aggregate purchase price of our common stock must be based on
the appraised pro forma market value of the common stock, as
determined on the basis of an independent valuation. We have
retained RP Financial, LC. to make such valuation. For its
services in making such appraisal and any expenses incurred in
connection therewith, RP Financial will receive a fee of $50,000
(plus an additional $5,000 for each appraisal update), plus
reasonable
out-of-pocket
expenses. We have agreed to indemnify RP Financial and its
employees and affiliates against certain losses, arising out of
its services as appraiser.
Consistent with Office of Thrift Supervision appraisal
guidelines, the independent appraisal applied three primary
methodologies to estimate the pro forma market value of our
common stock: the pro forma
price-to-book
value approach applied to both reported book value and tangible
book value; the pro forma
price-to-earnings
approach applied to reported earnings; and the pro forma
price-to-assets
approach. The market value ratios applied in the three
methodologies were based upon the current market valuations of a
peer group of companies considered by RP Financial to be
comparable to us, subject to valuation adjustments applied by RP
Financial to account for differences between ourselves and the
peer group. The peer group analysis conducted by RP Financial
included a total of 10 publicly traded financial institutions
with assets averaging $556 million and market
capitalizations of at least $1.7 million and averaging
$40 million as of August 20, 2010. The peer group is
comprised of publicly traded thrifts all selected based on asset
size, market area and operating strategy. In preparing its
appraisal, RP Financial considered both the
price-to-earnings
approach and the
price-to-book
and
price-to-tangible
book value approaches and placed a lesser emphasis on the
price-to-assets
approaches in estimating pro forma market value. RP
Financials appraisal report is filed as an exhibit to the
registration statement that we have filed with the Securities
and Exchange Commission. See Where You Can Find Additional
Information.
The appraisal has been prepared by RP Financial in reliance upon
the information contained in this prospectus, including the
financial statements. RP Financial also considered the following
factors, among others:
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our present and projected operating results and financial
condition and the economic and demographic conditions in
Alliance Banks existing market area;
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certain historical, financial and other information;
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a comparative evaluation of our operating and financial
statistics compared to with those of other similarly situated
publicly-traded companies located in Pennsylvania and the
Mid-Atlantic and New England regions of the United States;
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the aggregate size of the offering of Alliance
Bancorp New common stock;
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the impact of the conversion on our net worth and earnings
potential;
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our proposed dividend policy; and
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the trading market for our common stock and securities of
comparable companies and general conditions in the market for
such securities.
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In determining the amount of the appraisal, RP Financial
reviewed Alliance Bancorps price/earnings, price/book and
price/assets ratios on a pro forma basis giving effect to the
net conversion proceeds to the comparable ratios for a peer
group consisting of 10 holding companies of thrift institutions.
The peer group included companies with:
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assets averaging $556 million;
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non-performing assets averaging 1.18% of total assets;
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equity equal to 10.1% of assets; and
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price/earnings ratios equal to an average of 16.11x and ranging
from 6.42x to 34.94x.
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134
RP Financials independent valuation also utilized certain
assumptions as to our pro forma earnings after the conversion
and offering. These assumptions included estimated expenses, an
assumed after-tax rate of return on the net offering proceeds,
and expenses related to our stock-based benefit plans, including
the employee stock ownership plan, the recognition and retention
plan and the stock option plan. See Pro Forma Data
for additional information concerning these assumptions. The use
of different assumptions may yield different results.
RP Financial prepared a valuation dated August 20, 2010. RP
Financial has advised us that, as of August 20, 2010, the
estimated pro forma market value, or valuation range, of our
common stock, including subscription shares and exchange shares
issued to shareholders of Alliance Bancorp, ranged from a
minimum of $44.3 million to a maximum of
$59.9 million, with a midpoint of $52.0 million. The
boards of directors of Alliance Bancorp, Alliance
Bancorp New and Alliance Bank have decided to offer
the shares for a price of $10.00 per share. RP Financial has
advised us that, based on the board establishing the parameters
that the ownership interests of public shareholders be preserved
in the second step transaction that as of August 20, 2010,
the exchange ratio ranged from a minimum of 0.6631 to a maximum
of 0.8971 with a midpoint of 0.7801 shares of the new
holding companys common stock per share of currently
issued Alliance Bancorp common stock. The number of shares
offered will be equal to the aggregate offering price divided by
the price per share. Based on the valuation range, the
percentage of Alliance Bancorp common stock owned by Alliance
Mutual Holding Company and the $10.00 price per share, the
minimum of the offering range is 2,635,000 shares, the
midpoint of the offering range is 3,100,000 shares, the
maximum of the offering range is 3,565,000 shares and 15%
above the maximum of the offering range is
4,099,750 shares. RP Financials independent valuation
will be updated before we complete our conversion and offering.
The following table presents a summary of selected pricing
ratios for Alliance Bancorp New, for the peer group
and for all fully converted publicly traded savings banks and
savings associations. The figures for Alliance
Bancorp New are from RP Financials appraisal
report and they thus do not correspond exactly to the ratios
presented in the Pro Forma Data section of this
prospectus. Compared to the average pricing ratios of the peer
group, our pro forma pricing ratios at the maximum of the
offering range indicate a premium of 375.2% on a
price-to-earnings
basis and a discount of 12.7% and 22.0%, respectively, on a
price-to-book
basis and
price-to-tangible
book basis.
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Price to
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Price to
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Price to
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Earnings
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Book Value
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Tangible Book
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Multiple(1)
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Ratio(2)
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Value Ratio(2)
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Alliance Bancorp New (pro forma):
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Minimum
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55.53
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57.80
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57.80
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Midpoint
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65.94
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64.72
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64.72
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Maximum
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76.55
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x
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70.97
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70.97
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Maximum, as adjusted
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89.00
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x
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77.40
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77.40
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Peer group companies as of August 20, 2010:
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Average
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16.11
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x
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81.26
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%
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90.93
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%
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Median
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14.55
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x
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81.87
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86.75
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All publicly-traded savings banks:
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Average
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18.54
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70.74
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%
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78.82
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Median
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15.93
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68.12
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75.42
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Ratios are based on earnings for twelve months ended
June 30, 2010, and share prices as of August 20, 2010. |
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Ratios are based on book value as of June 30, 2010 and
share prices as of August 20, 2010. |
At the midpoint of the appraisal, our pro forma price to
earnings and price to book ratios as of or for the twelve months
ended June 30, 2010 were 65.94x and 64.72%, respectively,
compared to average ratios for the peer group of 16.11x and
81.26%, respectively.
135
The boards of directors of Alliance Bancorp, Alliance Mutual
Holding Company and Alliance Bank reviewed RP Financials
appraisal report, including the methodology and the assumptions
used by RP Financial, and determined that the offering range was
reasonable and adequate. Our boards of directors also
established the formula for determining the exchange ratio.
Based upon such formula and the offering range, the exchange
ratio ranged from a minimum of 0.6631 to a maximum of 0.8971
exchange shares for each current share of Alliance Bancorp
common stock, with a midpoint of 0.7801. Based upon this
exchange ratio, we expect to issue between 1,792,183 and
2,424,717 exchange shares to the current holders of Alliance
Bancorp common stock outstanding immediately prior to the
completion of the conversion and offering. The estimated
offering range and the exchange ratio may be amended with the
approval of the Office of Thrift Supervision, if required, or if
necessitated by subsequent developments in our financial
condition or market conditions generally. In the event the
appraisal is updated so that our estimated pro forma market
value is below $44.3 million or above $68.9 million,
the maximum of the offering range, as adjusted by 15%, such
appraisal will be filed with the Securities and Exchange
Commission by post-effective amendment.
In the event we receive orders for common stock in excess of
$35.7 million, the maximum of the valuation, and up to
$41.0 million, the maximum of the estimated valuation, as
adjusted by 15%, we may be required by the Office of Thrift
Supervision to accept all such orders. No assurances, however,
can be made that we will receive orders for common stock in
excess of the maximum of the offering range or that, if such
orders are received, that all such orders will be accepted
because the final valuation and number of shares to be issued
are subject to the receipt of an updated appraisal from RP
Financial which reflects such an increase in the valuation and
the approval of such increase by the Office of Thrift
Supervision.
RP Financials valuation is not intended, and must not
be construed, as a recommendation of any kind as to the
advisability of purchasing our common stock. RP Financial did
not independently verify the financial statements and other
information provided by us, nor did RP Financial value
independently our assets or liabilities. The valuation considers
us as a going concern and should not be considered as an
indication of our liquidation value. Moreover, because such
valuation 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 purchasing
our common stock or receiving exchange shares will thereafter be
able to sell such shares at prices at or above the purchase
price of $10.00 per share or in the range of the foregoing
valuation of the pro forma market value thereof.
We will not make any sale of shares of common stock or issue any
exchange shares unless prior to such sale or exchange, RP
Financial confirms that nothing of a material nature has
occurred which, taking into account all relevant factors, would
cause it to conclude that the pro forma market value of our
common stock as of the consummation of the conversion and
offering is materially incompatible with the estimated pro forma
market value of Alliance Bancorp New common stock
reflected in the valuation prepared by RP Financial, LC as of
August 20, 2010. If such is not the case, a new offering
range may be set, a new exchange ratio may be determined based
upon the new offering range, a new subscription and community
offering
and/or
syndicated community offering may be held or such other action
may be taken as we determine and the Office of Thrift
Supervision may permit or require.
Depending upon market or financial conditions, the total number
of shares of common stock to be issued may be increased or
decreased without a resolicitation of subscribers, provided that
the product of the total number of shares times the purchase
price of $10.00 per share is not below the minimum or more than
15% above the maximum of the offering range. In the event market
or financial conditions change so as to cause the aggregate
purchase price of the shares to be below the minimum of the
offering range or more than 15% above the maximum of such range,
purchasers will be resolicited. In such instance, we will notify
subscribers and return the amount they have submitted with their
orders, with interest at our passbook savings rate of interest,
or cancel their withdrawal authorization and we will resolicit
orders from subscribers. Any change in the offering range must
be approved by the Office of Thrift Supervision. Any change in
the number of shares of common stock will result in a
corresponding change in the number of exchange shares, so that
upon completion of the conversion and offering the exchange
shares will represent approximately 59.5% of our total
outstanding shares of common stock.
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An increase in the number of shares of common stock as a result
of an increase in the offering range would decrease both a
subscribers ownership interest and our pro forma net
earnings and stockholders equity on a per share basis
while increasing pro forma net earnings and stockholders
equity on an aggregate basis. A decrease in the number of shares
of common stock would increase both a subscribers
ownership interest and our pro forma net earnings and
stockholders equity on a per share basis while decreasing
pro forma net earnings and stockholders equity on an
aggregate basis.
Limitations
on Common Stock Purchases
The plan of conversion and reorganization includes the following
limitations on the number of shares of common stock which may be
purchased:
(1) No less than 25 shares of common stock may be
purchased;
(2) Each eligible account holder may subscribe for and
purchase in the subscription offering up to the greater of
(a) $500,000 (50,000 shares) of common stock or
(b) 15 times the product, rounded down to the next whole
number, obtained by multiplying the total number of shares of
common stock to be issued by a fraction, of which the numerator
is the amount of the qualifying deposits of the eligible account
holder and the denominator is the total amount of qualifying
deposit of all eligible account holders, in each case as of the
close of business on the eligibility record date, June 30,
2009, subject to the overall limitations in clauses 7 and 8
below;
(3) The employee stock ownership plan may purchase in the
aggregate up to 8.0% of the shares of common stock to be sold in
the offering, including any additional shares issued in the
event of an increase in the offering range;
(4) Each supplemental eligible account holder may subscribe
for and purchase in the subscription offering up to the greater
of (a) $500,000 (50,000 shares) of common stock or
(b) 15 times the product, rounded down to the next whole
number, obtained by multiplying the total number of shares of
common stock to be issued by a fraction, of which the numerator
is the amount of 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 as of the close of business on the
supplemental eligibility record
date, ,
20 , subject to the overall limitations in
clauses 7 and 8 below;
(5) Each other depositor, that is any depositor of Alliance
Bank as of the close of business
on ,
2010, may subscribe for and purchase in the subscription
offering up to $500,000 (50,000 shares) of common stock,
subject to the overall limitations in clauses 7 and 8 below;
(6) Each person purchasing shares in the community offering
or syndicated community offering may subscribe for and purchase
up to $500,000 (50,000 shares) of common stock, subject to
the overall limitations in clauses 7 and 8 below;
(7) Except for the employee stock ownership plan, the
maximum number of shares of common stock subscribed for or
purchased in all categories of the offering by any person,
together with associates of and groups of persons acting in
concert with such persons, shall not exceed $1.0 million
(100,000 shares);
(8) In addition, the maximum number of shares of common
stock that may be subscribed for or purchased in all categories
of the offering by any public shareholder of Alliance Bancorp,
together with associates of and groups of persons acting in
concert with such shareholder, when combined with any exchange
shares to be received by existing shareholder and his associates
may not exceed 5.0% of the total shares of common stock
outstanding upon completion of the conversion and offering.
However, existing shareholders will not be required to sell any
shares of Alliance Bancorp common stock or be limited from
receiving any exchange shares or have to divest themselves of
any exchange shares or shares as a result of this limitation.
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(9) No more than 27% of the total number of shares sold in
the offering may be purchased by directors and officers of
Alliance Bank and their associates in the aggregate, excluding
purchases by the employee stock ownership plan.
We may, in our sole discretion, increase the individual or
aggregate purchase limitations to up to 5.0% of the shares of
common stock sold in the offering or we may decrease the
individual or aggregate purchase limitations. We do not intend
to increase the maximum purchase limitation unless market
conditions warrant. If we decide to increase the purchase
limitations, persons who subscribed for the maximum number of
shares of common stock in the subscription offering and who
indicated a desire on their stock order form a desire to be
resolicited will be given the opportunity to increase their
subscriptions accordingly, subject to the rights and preferences
of any person who has priority subscription rights. Such
subscribers who wish to increase their orders will be required
to pay for the additional shares requested by wire transfer.
In the event that we increase the maximum purchase limitation to
5.0% of the shares of common stock sold in the offering, we may
further increase the maximum purchase limitation to 9.99%,
provided that orders for common stock exceeding 5.0% of the
shares of common stock sold in the offering may not exceed in
the aggregate 10.0% of the total shares of common stock sold in
the offering.
In the event of an increase in the total number of shares of
Alliance Bancorp New common stock due to an increase
in the offering range of up to 15%, the additional shares will
be allocated in the following order of priority in accordance
with the plan of conversion and reorganization:
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to fill the subscription of the employee stock ownership plan;
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in the event that there is an oversubscription by eligible
account holders, to fill unfulfilled subscriptions of eligible
account holders;
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in the event that there is an oversubscription by supplemental
eligible account holders, to fill unfulfilled subscriptions of
supplemental eligible account holders;
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in the event that there is an oversubscription by other
depositors, to fill unfulfilled subscriptions of other
depositors; and
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to fill unfulfilled subscriptions in the community offering.
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No person, together with associates of, and those acting in
concert with, such person, may purchase more than the overall
maximum purchase limit of $1.0 million of the shares of our
common stock to be sold in the offering, which equals
100,000 shares. The term acting in concert is
defined in the plan of conversion and reorganization to mean
(1) knowing participation in a joint activity or
interdependent conscious parallel action towards a common goal
whether or not pursuant to an express agreement, or (2) a
combination or pooling of voting or other interest in the
securities of an issuer for a common purpose pursuant to any
contract, understanding, relationship, agreement or other
arrangement, whether written or otherwise. In general, a person
who acts in concert with that other party will be deemed to be
acting in concert with any person who is also acting in concert
with that other party. We may presume that certain persons are
acting in concert based upon, among other things, joint account
relationships, the fact that persons reside at the same address
or that such persons have filed joint Schedules 13D or 13G with
the Securities and Exchange Commission with respect to other
companies. For purposes of the plan of conversion and
reorganization, our directors are not deemed to be acting in
concert solely by reason of their board membership.
The term associate of a person is defined to mean
(a) any corporation or other organization, other than
Alliance Mutual Holding Company, Alliance Bancorp or Alliance
Bank or a majority-owned subsidiary of Alliance Bank or Alliance
Bancorp, of which such person is a director, officer or partner
or is directly or indirectly the beneficial owner of 10% or more
of any class of equity securities; (b) any trust or other
estate in which such person has a substantial beneficial
interest or as to which such person serves as trustee or in a
similar fiduciary capacity, provided, however, that such term
shall not include any of our tax-qualified employee stock
benefit plans in which such person has a substantial beneficial
interest or serves as a trustee or in a similar fiduciary
capacity; and (c) any relative or spouse of such person, or
any relative of such spouse, who either has the same home as
such person or who is a director or officer of us or any of our
subsidiaries.
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In addition, joint account relationships and common addresses
will be taken into account in applying the overall purchase
limitations. Persons having the same address or exercising
subscription rights through qualifying deposit accounts
registered to the same address will be assumed to be associates
of, and acting in concert with, each other. We have the right to
determine, in our sole discretion, whether purchasers are
associates or acting in concert. Furthermore, we have the right,
in our sole discretion, to reject any order submitted by a
person whose representations we believe to be false or who we
believe, either alone or acting in concert with others, is
violating or circumventing, or intends to violate or circumvent
the terms and conditions of the plan of conversion and
reorganization.
Marketing
Arrangements
To assist in the marketing of our common stock, we have retained
Stifel, Nicolaus & Company, Incorporated, which is a
broker-dealer registered with the Financial Industry Regulatory
Authority. Stifel, Nicolaus & Company, Incorporated
will assist us on a best efforts basis in the offering by:
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acting as our financial advisor for the conversion and offering;
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providing administrative services and managing the Stock
Information Center;
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educating our employees regarding the offering;
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targeting our sales efforts, including assisting in the
preparation of marketing materials; and
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soliciting orders for common stock.
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For these services, Stifel, Nicolaus & Company,
Incorporated will receive an advisory and administrative fee of
$30,000 and 1.0% of the dollar amount of all shares of common
stock sold in the subscription and community offering. The sales
fee will be reduced by the advisory and administrative fee. No
sales fee will be payable to Stifel, Nicolaus &
Company, Incorporated with respect to shares purchased by
officers, directors and employees or their immediate families
and shares purchased by our tax-qualified and non-qualified
employee benefit plans. In the event that Stifel,
Nicolaus & Company, Incorporated sells common stock
through a group of broker-dealers in a syndicated community
offering, it will be paid a fee equal to 1.0% of the dollar
amount of total shares sold in the syndicated community
offering, which fee along with the fee payable to selected
dealers (which may include Stifel, Nicolaus & Company,
Incorporated) shall not exceed 6.0% in the aggregate. Stifel,
Nicolaus & Company, Incorporated also will be
reimbursed for allocable expenses in amounts not to exceed
$30,000 for the subscription offering and community offering and
not to exceed an additional $50,000 for the syndicated offering,
and for attorneys fees in an amount not to exceed $75,000.
In the event that we are required to resolicit subscribers for
shares of our common stock in the subscription and community
offerings, Stifel, Nicolaus & Company, Incorporated
will be required to provide significant additional services in
connection with the resolicitation (including repeating the
services described above), and we may pay Stifel,
Nicolaus & Company, Incorporated an additional fee for
those services that will not exceed $30,000. Under such
circumstances, with our consent, Stifel, Nicolaus &
Company, Incorporated may be reimbursed for additional allowable
expenses not to exceed $10,000 and additional reimbursable
attorneys fees not to exceed $20,000, provided that the
aggregate of all reimbursable expenses and legal fees shall not
exceed $185,000.
We will indemnify Stifel, Nicolaus & Company,
Incorporated 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
amended.
Some of our directors and executive officers may participate in
the solicitation of offers to purchase common stock. These
persons will be reimbursed for their reasonable
out-of-pocket
expenses incurred in connection with the solicitation. Other
regular employees of Alliance 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. No sales activity
will be conducted in any Alliance Bank banking
139
office. Investment-related questions of prospective purchasers
will be directed to executive officers or registered
representatives of Stifel, Nicolaus & Company,
Incorporated. 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, as amended, 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.
In addition, we have engaged Stifel, Nicolaus &
Company, Incorporated to act as our records management agent in
connection with the conversion and offering. In its role as
records management agent, Stifel, Nicolaus & Company,
Incorporated will coordinate with our data processing contacts
and interface with the Stock Information Center to provide the
records processing and the proxy and stock order services,
including but not limited to: (1) consolidation of deposit
accounts and vote calculation; (2) preparation of
information for order forms and proxy cards;
(3) interfacing with our financial printer;
(4) recording stock order information; and
(5) tabulating proxy votes. For these services, Stifel,
Nicolaus & Company, Incorporated will receive a fee of
$30,000 and we will have made an advance payment of $5,000 with
respect to this fee. Additional fees may be negotiated if
significant additional work is required due to unexpected
circumstances, provided, however, that any such fee shall not
exceed $5,000. We will also reimburse Stifel,
Nicolaus & Company, Incorporated for its reasonable
out-of-pocket
expenses associated with its acting as records management agent
in an amount not to exceed $5,000.
Stifel, Nicolaus & Company, Incorporated has not
prepared any report or opinion constituting a recommendation or
advice to us or to persons who subscribe for common stock, nor
has it 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 conversion and offering. Stifel, Nicolaus &
Company, Incorporated expresses no opinion as to the prices at
which common stock to be issued may trade.
Lock-up
Agreements
We and our directors and executive officers have agreed not to,
directly or indirectly, offer, sell, transfer, pledge, assign,
hypothecate or otherwise encumber any shares of our common stock
or options, warrants or other securities exercisable,
convertible or exchangeable for our common stock during the
period commencing with the filing of the registration statement
for the offering and conversion and ending 90 days after
completion of the conversion and offering without the prior
written consent of Stifel, Nicolaus & Company,
Incorporated. In addition, except for securities issued pursuant
to existing employee benefit plans in accordance with past
practices or securities issued in connection with a merger or
acquisition by us, we have agreed not to issue, offer to sell or
sell any shares of our common stock or options, warrants or
other securities exercisable, convertible or exchangeable for
our common stock without the prior written consent of Stifel,
Nicolaus & Company, Incorporated for a period of
90 days after completion of the conversion and offering.
Prospectus
Delivery
To ensure that each purchaser in the subscription and community
offerings receives a prospectus at least 48 hours before
the expiration date of the offering in accordance with
Rule 15c2-8
of the Securities Exchange Act of 1934, we may not mail a
prospectus any later than five days prior to the expiration date
or hand deliver a prospectus any later than two days prior to
that date. We are not obligated to deliver a prospectus or order
form by means other than U.S. Mail. Execution of an order
form will confirm receipt of delivery of a prospectus in
accordance with
Rule 15c2-8.
Stock order forms will be distributed only if preceded or
accompanied by a prospectus.
In the syndicated community offering or any stand by
underwritten public offering, a prospectus in electronic format
may be made available on the Internet sites or through other
online services maintained by Stifel, Nicolaus &
Company, Incorporated or one or more other members of the
syndicate, or by their respective affiliates. In those cases,
prospective investors may view offering terms online and,
depending upon the syndicate member, prospective investors may
be allowed to place orders online. The members of the
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syndicate may agree with us to allocate a specific number of
shares for sale to online brokerage account holders. Any such
allocation for online distributions will be made on the same
basis as other allocations.
Other than the prospectus in electronic format, the information
on the Internet sites referenced in the preceding paragraph and
any information contained in any other Internet site maintained
by any member of the syndicate is not part of this prospectus or
the registration statement of which this prospectus forms a
part, has not been approved
and/or
endorsed by us or by Stifel, Nicolaus & Company,
Incorporated or any other member of the syndicate in its
capacity as selling agent or syndicate member and should not be
relied upon by investors.
Procedure
for Purchasing Shares in the Subscription and Community
Offerings
Use of Order Forms. In order to purchase
shares of common stock in the subscription offering or community
offering, you must submit a properly completed original stock
order form and remit full payment. Incomplete stock order forms
or stock order forms that are not signed are not required to be
accepted. We are not required to accept stock orders submitted
on photocopied or facsimiled stock order forms. All stock
order forms must be received (not postmarked) prior to
2:00 p.m. Eastern Time,
on ,
20 . We are not required to accept stock order
forms that are not received by that time, are executed
defectively or are received without submitting full payment or
without appropriate deposit account withdrawal instructions. We
are not required to notify purchasers of incomplete or
improperly executed stock order forms. We have the right to
waive or permit the correction of incomplete or improperly
executed stock order forms, but we do not represent that we will
do so.
You may submit your stock order form and payment by mail using
the stock order reply envelope provided; by overnight delivery
to our Stock Information Center at the indicated address on the
order form; or by hand- delivering your stock order form to
Alliance Banks main office, located at 541 Lawrence Road,
Broomall, Pennsylvania. We will not accept stock order forms at
other Alliance Bank offices. Once tendered, a stock order form
cannot be modified or revoked without our consent. We reserve
the absolute right, in our sole discretion, to reject orders
received in the community offering, in whole or in part, at the
time of receipt or at any time prior to completion of the
offering.
If you are ordering shares in the subscription offering, by
signing the stock order form you are representing 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.
By signing the stock 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 Alliance Bank or
any federal or state government, and that you received a copy of
this prospectus. However, signing the stock order form will not
cause you to waive your rights under the Securities Act of 1933
or the Securities Exchange Act of 1934. 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 conversion
and reorganization. Our interpretation of the terms and
conditions of the plan of conversion and reorganization and of
the acceptability of stock order forms will be final.
Payment for Shares. Payment for all shares of
common stock will be required to accompany all completed order
forms for the purchase to be valid. Payment for shares may be
made only by:
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Personal check, bank check or money order made payable directly
to Alliance Bancorp, Inc.; or
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Authorization of withdrawal from the types of Alliance Bank
deposit accounts identified on the stock order form.
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If you wish to pay by cash rather than by the above recommended
methods, you must deliver your stock order form and payment in
person to Alliance Banks main office located at 541
Lawrence Road, Broomall, Pennsylvania. Appropriate means for
designating withdrawals from deposit accounts at Alliance Bank
are provided on the order forms. The funds designated must be
available in the account(s) at the time the stock
141
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 applicable contract rate until the offering is completed, at
which time the designated withdrawal will be made. Interest
penalties for early withdrawal applicable to certificate of
deposit accounts will not apply to withdrawals authorized for
the purchase of shares of common stock during the offering;
however, if a withdrawal results in a certificate of deposit
account with a balance less than the applicable minimum balance
requirement, the certificate of deposit will be cancelled at the
time of withdrawal without penalty and the remaining balance
will earn interest calculated at Alliance Banks passbook
rate subsequent to the withdrawal.
If payment is made by personal check, funds must be available in
the account. Payments made by check or money order will be
immediately cashed and placed in a segregated account at
Alliance Bank and will earn interest calculated at Alliance
Banks passbook rate from the date payment is received
until the offering is completed, at which time a subscriber will
be issued a check for interest earned.
You may not remit Alliance Bank line of credit checks, and we
will not accept wire transfers or third-party checks, including
those payable to you and endorsed over to Alliance Bancorp, Inc.
You may not designate on your stock order form a direct
withdrawal from an Alliance Bank retirement account. See
Using Retirement Account Funds to Purchase
Shares for information on using such funds. Additionally,
you may not designate on your stock order form a direct
withdrawal from Alliance Bank deposit accounts with
check-writing privileges. Please provide a check instead. If you
request direct withdrawal, we reserve the right to interpret
that as your authorization to treat those funds as if we had
received a check for the designated amount, and we will
immediately withdraw the amount from your checking account(s).
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 ,
20 , in which event subscribers may be given the
opportunity to increase, decrease or rescind their orders for a
specified period of time.
Regulations prohibit Alliance Bank from lending funds or
extending credit to any persons to purchase shares of common
stock in the offering.
We may, in our sole discretion, permit institutional investors
to submit irrevocable orders together with a legally binding
commitment for payment and to thereafter pay for such shares of
common stock for which they subscribe in the community offering
at any time prior to the 48 hours before the completion of
the offering. This payment may be made by wire transfer.
Our employee stock ownership plan will not be required to pay
for any shares purchased in the offering until consummation of
the offering, provided there is a loan commitment from an
unrelated financial institution or Alliance Bancorp
New to lend to the employee stock ownership plan the necessary
amount to fund the purchase.
Using Retirement Account Funds To Purchase
Shares. A depositor interested in using funds in
his or her individual retirement account(s) (IRAs) or any other
retirement account at Alliance Bank to purchase common stock
must do so through a self-directed retirement account. Since
Alliance Bank does not offer self-directed accounts, before
placing a stock order, a depositor must make a transfer of funds
from Alliance Bank to a trustee (or custodian) offering a
self-directed retirement account program (such as a brokerage
firm). There will be no early withdrawal or Internal Revenue
Service interest penalties for such transfers. The new trustee
would hold the common stock in a self-directed account in the
same manner as we now hold the depositors retirement
funds. An annual administrative fee may be payable to the new
trustee. Subscribers interested in using funds in a
retirement account held at Alliance Bank or elsewhere to
purchase common stock should contact the Stock Information
Center for assistance, preferably at least two weeks before
the ,
20 offering expiration date, because processing such
transactions takes additional time. Whether or not you may
use retirement funds for the purchase of shares in the offering
depends on timing constraints and, possibly, limitations imposed
by the institution where the funds are held.
Termination of Offering. We reserve the right
in our sole discretion to terminate the offering at any time and
for any reason, in which case we will cancel any deposit account
withdrawal authorizations and promptly return all funds
submitted, with interest calculated at Alliance Banks
passbook rate from the date of processing.
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Persons
in Non-qualified States or Foreign Countries
We will make reasonable efforts to comply with the securities
laws of all states in the United States in which persons
entitled to subscribe for stock pursuant to the plan of
conversion and reorganization reside. However, we are not
required to offer stock in the subscription offering to any
person who resides in a foreign country or resides in a state of
the United States with respect to which:
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the number of persons otherwise eligible to subscribe for shares
under the plan of conversion and reorganization who reside in
such jurisdiction is small;
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the granting of subscription rights or the offer or sale of
shares of common stock to such persons would require any of us
or our officers, directors or employees, under the laws of such
jurisdiction, to register as a broker, dealer, salesman or
selling agent or to register or otherwise qualify our securities
for sale in such jurisdiction or to qualify a foreign
corporation or file a consent to service of process in such
jurisdiction; or
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such registration, qualification or filing in our judgment would
be impracticable or unduly burdensome for reasons of costs or
otherwise.
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Where the number of persons eligible to subscribe for shares in
one state is small, we will base our decision as to whether or
not to offer our common stock in such state on a number of
factors, including but not limited to the size of accounts held
by account holders in the state, the cost of registering or
qualifying the shares or the need to register us or our
officers, directors or employees as brokers, dealers or salesmen.
Restrictions
on Transfer of Subscription Rights and Shares
You may not transfer or enter into any agreement or
understanding to transfer the legal or beneficial ownership of
your subscription rights issued under the plan of conversion and
reorganization or the shares of common stock to be issued upon
their exercise. Such rights may be exercised only by you and
only your account. If you exercise your such subscription
rights, you will be required to certify that you are purchasing
shares in the subscription offering solely for your own account
and that you have no agreement or understanding regarding the
sale or transfer of such shares. Federal regulations also
prohibit any person from offering or making an announcement of
an offer or intent to make an offer to purchase such
subscription rights or shares of common stock prior to the
completion of the conversion and offering.
We will pursue any and all legal and equitable remedies in
the event we become aware of the transfer of subscription rights
and will not honor orders known by us to involve the transfer of
such rights.
Delivery
and Exchange of Stock Certificates
Subscription and Community
Offerings. Certificates representing shares
issued in connection with the subscription and community
offerings will be mailed by our transfer agent to the persons
entitled thereto at the addresses designated by such persons on
the stock order form as soon as practicable following completion
of the conversion and offering. Any certificates returned as
undeliverable will be held by our transfer agent until claimed
by persons legally entitled thereto or otherwise disposed of in
accordance with applicable law. Until certificates for
subscription shares are available and delivered to subscribers,
subscribers may not be able to sell such shares, even though
trading of the common stock of Alliance Bancorp New
will have commenced.
We will not execute orders until at least the minimum number of
shares of common stock (2,635,000 shares) have been
subscribed for or otherwise sold. If the minimum number of
shares have not been subscribed for or sold within 45 days
after the expiration date
or ,
20 , unless such period is extended with the consent
of the Office of Thrift Supervision, all funds received in the
offering will be returned promptly to the subscribers, with
interest, and all withdrawal authorizations will be canceled. If
an extension
beyond ,
20 is granted, we will notify subscribers of the
extension of time and subscribers will have the right to
confirm, modify or rescind their stock orders. If we do not
receive an affirmative response from a subscriber to any
resolicitation, the subscribers order will be rescinded
and all funds received will be returned promptly with interest,
or withdrawal authorizations will be cancelled.
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Exchange Shares. After completion of the
conversion and reorganization, each holder of a certificate or
certificates theretofore evidencing issued and outstanding
shares of Alliance Bancorp common stock, other than Alliance
Mutual Holding Company, upon surrender of the same to the
exchange agent, which is anticipated to be the transfer agent
for our common stock, will receive a certificate or certificates
representing the number of full shares of Alliance
Bancorp New common stock for which the shares of the
Alliance Bancorp common stock theretofore represented by the
certificate or certificates so surrendered shall have been
converted based on the exchange ratio. The exchange agent will
promptly mail to each such holder of record of an outstanding
certificate which immediately prior to the consummation of the
conversion and offering evidenced shares of Alliance Bancorp and
which is to be exchanged for Alliance Bancorp New
common stock based on the exchange ratio as provided in the plan
of conversion and reorganization, a form of letter of
transmittal, which shall specify that delivery shall be
effected, and risk of loss and title to such certificate shall
pass, only upon delivery of such certificate to the exchange
agent, advising such holder of the terms of the exchange and of
the procedure for surrendering to the exchange agent such
certificate in exchange for a certificate or certificates
evidencing Alliance Bancorp common stock. Shareholders of
Alliance Bancorp should not forward common stock certificates to
us or the exchange agent until they have received the
transmittal letter.
No holder of a certificate theretofore representing shares of
Alliance Bancorp common stock will be entitled to receive any
dividends in respect of the common stock into which such shares
shall have been converted until the certificate representing
such shares of Alliance Bancorp common stock is surrendered in
exchange for certificates representing shares of Alliance
Bancorp New common stock. In the event that we
declare dividends after the conversion and offering but prior to
surrender of certificates representing shares of Alliance
Bancorp common stock, dividends payable in respect of shares of
Alliance Bancorp New common stock not then issued
shall accrue, without interest. Any such dividends shall be
paid, without interest, upon surrender of the certificates
representing such shares of Alliance Bancorp common stock. We
will be entitled, after the completion of the conversion and
offering, to treat certificates representing shares of Alliance
Bancorp common stock as evidencing ownership of the number of
full shares of Alliance Bancorp New common stock
into which the shares of common stock represented by such
certificates shall have been converted, notwithstanding the
failure on the part of the holder thereof to surrender such
certificates.
We will not be obligated to deliver a certificate or
certificates representing shares of the new holding
companys common stock to which a holder of Alliance
Bancorp common stock would otherwise be entitled as a result of
the conversion and offering until such holder surrenders the
certificate or certificates representing the shares of Alliance
Bancorp common stock for exchange as provided above, or, in
default thereof, an appropriate affidavit of loss and indemnity
agreement
and/or a
bond as may be required in each case by us. If any certificate
evidencing shares of common stock is to be issued in a name
other than that in which the certificate surrendered in exchange
therefor is registered, it shall be a condition of the issuance
thereof that the certificate so surrendered shall be properly
endorsed and otherwise in proper form for transfer and that the
person requesting such exchange pay to the exchange agent any
transfer or other tax required by reason of the issuance of a
certificate for shares of common stock in any name other than
that of the registered holder of the certificate surrendered or
otherwise establish to the satisfaction of the exchange agent
that such tax has been paid or is not payable.
Required
Approvals
Pursuant to Office of Thrift Supervision regulations, the plan
of conversion and reorganization must be approved by (1) at
least a majority of the total number of votes eligible to be
cast by depositors of Alliance Bank at the special meeting of
depositors, (2) holders of at least two-thirds of the
outstanding shares of Alliance Bank common stock at the special
meeting of shareholders and (3) at least a majority of the
outstanding shares of Alliance Bancorp common stock, excluding
the shares of Alliance Bancorp held by Alliance Mutual Holding
Company, at the special meeting of shareholders. In addition, we
must receive the final approval of the Office of Thrift
Supervision and the Pennsylvania Department of Banking to
complete the conversion and offering.
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Certain
Restrictions on Purchase or Transfer of Shares After the
Conversion and Offering
All shares of common stock purchased in connection with the
conversion and offering by our directors or executive officers
will be subject to a restriction that the shares not be sold for
a period of one year following the conversion and offering,
except in the event of the death of such director or executive
officer or pursuant to a merger or similar transaction approved
by the Office of Thrift Supervision. Each certificate for
restricted shares will bear a legend giving notice of this
restriction on transfer, and appropriate stop-transfer
instructions will be issued to our transfer agent. Any shares of
common stock issued within this one-year period as a stock
dividend, stock split or otherwise with respect to such
restricted stock will be subject to the same restrictions. Our
directors and executive officers will also be subject to the
insider trading rules promulgated pursuant to the Securities
Exchange Act of 1934, as amended.
Purchases of our common stock by our directors, executive
officers and their associates during the three-year period
following completion of the conversion and 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 Office of Thrift Supervision. This restriction does not
apply, however, to negotiated transactions involving more than
1% of our outstanding common stock or to the purchase of stock
pursuant to any tax-qualified employee stock benefit plan, such
as the employee stock ownership plan, or by any
non-tax-qualified employee stock benefit plan, such as a
recognition and retention plan.
How You
Can Obtain Additional Information 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 toll-free telephone number is
( ) .
The Stock Information Center is open Monday through Friday, from
10:00 a.m. to 4:00 p.m., Eastern Time. The Stock
Information Center will be closed weekends and bank holidays.
Liquidation
Rights
Liquidation Prior to the Conversion. In the
unlikely event of a complete liquidation of Alliance Mutual
Holding Company or Alliance Bancorp prior to the conversion, all
claims of creditors of Alliance Bancorp, including those of
depositors of Alliance Bank (to the extent of their deposit
balances), would be paid first. Thereafter, if there were any
assets of Alliance Bancorp remaining, these assets would be
distributed to shareholders, including Alliance Mutual Holding
Company. Then, if there were any assets of Alliance Mutual
Holding Company remaining, depositors of Alliance Bank would
receive those remaining assets, pro rata, based upon the deposit
balances in their deposit account in Alliance Bank immediately
prior to liquidation.
Liquidation Following the Conversion. In the
unlikely event that Alliance Bancorp New and
Alliance Bank were to liquidate after the conversion, all claims
of creditors, including those of depositors, would be paid
first, followed by distribution of the liquidation
account maintained by Alliance Bancorp New
pursuant to the plan of conversion to certain depositors, with
any assets remaining thereafter distributed to Alliance
Bancorp New as the holder of Alliance Bank capital
stock.
The plan of conversion and reorganization, provides for the
establishment, upon the completion of the conversion, of a
liquidation account by Alliance Bancorp New for the
benefit of eligible account holders and supplemental eligible
account holders in an amount equal to Alliance Mutual Holding
Companys ownership interest in the stockholders
equity of Alliance Bancorp as of the date of its latest balance
sheet contained in this prospectus. The plan of conversion and
reorganization also provides that Alliance Bancorp
New shall cause the establishment of a bank liquidation account.
The liquidation account established by Alliance
Bancorp New is designed to provide payments to
depositors of their liquidation interests in the event of a
liquidation of Alliance Bancorp New and Alliance
Bank or of Alliance Bank. Specifically, in the unlikely event
that Alliance Bancorp New and Alliance Bank were to
completely liquidate after the conversion, all claims of
creditors, including those of depositors, would be paid first,
followed by distribution to depositors as of June 30, 2009
and ,
2010 of the liquidation
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account maintained by Alliance Bancorp New. In a
liquidation of both entities, or of Alliance Bank, when Alliance
Bancorp New has insufficient assets to fund the
distribution due to eligible account holders and Alliance Bank
has positive net worth, Alliance Bank will pay amounts necessary
to fund Alliance Bancorp News remaining
obligations under the liquidation account. The plan of
conversion and reorganization also provides that if Alliance
Bancorp New is sold or liquidated apart from a sale
or liquidation of Alliance Bank, then the rights of eligible
account holders in the liquidation account maintained by
Alliance Bancorp New will be surrendered and treated
as a liquidation account in Alliance Bank. Depositors will have
an equivalent interest in the bank liquidation account and the
bank liquidation account will have the same rights and terms as
the liquidation account.
Pursuant to the plan of conversion and reorganization, after two
years from the date of conversion and upon the written request
of the Office of Thrift Supervision, Alliance
Bancorp New will eliminate or transfer the
liquidation account and the interests in such account to
Alliance Bank and the liquidation account shall thereupon become
the liquidation account of Alliance Bank and not be subject in
any manner or amount to creditors of Alliance
Bancorp New.
Also, under the rules and regulations of the Office of Thrift
Supervision, no post-conversion merger, consolidation, or
similar combination or transaction with another depository
institution in which Alliance Bancorp New or
Alliance Bank is not the surviving institution would be
considered a liquidation and, in such a transaction, the
liquidation account would be assumed by the surviving
institution.
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 $50.00 or more held in Alliance Bank
on June 30, 2009
or ,
2010, as applicable. Each eligible account holder and
supplemental eligible account holder would have a pro rata
interest in the total liquidation account for each such deposit
account, based on the proportion that the balance of each such
deposit account on June 30, 2009
or ,
2010 bears to the balance of all deposit accounts in Alliance
Bank on such date.
If, however, on any December 31 annual closing date commencing
after the effective date of the conversion, the amount in any
such deposit account is less than the amount in the deposit
account on June 30, 2009
or ,
2010 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 Alliance Bancorp New as the
sole shareholder of Alliance Bank.
Tax
Aspects
We believe that the summary of the tax opinions presented below
addresses all material federal income tax consequences that are
generally applicable to us and the persons receiving
subscription rights. One of the conditions to the completion of
the conversion and offering is the receipt of either a ruling or
an opinion of counsel with respect to federal tax laws, and
either a ruling or an opinion with respect to Pennsylvania tax
laws, to the effect that the conversion and offering will not
result in a taxable reorganization under the provisions of the
applicable codes or otherwise result in any adverse tax
consequences to Alliance Mutual Holding Company, Alliance
Bancorp, Alliance Bancorp New, Alliance Bank, or to
account holders receiving subscription rights, except to the
extent, if any, that subscription rights are deemed to have fair
market value on the date such rights are issued. This condition
may not be waived by us.
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Elias, Matz, Tiernan & Herrick L.L.P.,
Washington, D.C., has issued an opinion to Alliance Mutual
Holding Company, Alliance Bancorp, Alliance Bancorp
New and Alliance Bank to the effect that, for federal income tax
purposes:
1. The conversion of Alliance Mutual Holding Company to
stock form will constitute a mere change in identity, form or
place of organization within the meaning of Section 368(a)(1)(F)
of the Code and therefore will qualify as a tax-free
reorganization within the meaning of Section 368(a)(1)(F)
of the Code.
2. Alliance Mutual Holding Company will not recognize any
gain or loss as a result of its conversion to stock form. (See
Sections 361(a), 361(c) and 357(a) of the Code.)
3. The basis of the assets of Alliance Mutual Holding
Company immediately following its conversion to stock form will
be the same as the basis of such assets immediately prior to its
conversion. (See Section 362(b) of the Code.)
4. The holding period of the assets of Alliance Mutual
Holding Company immediately following its conversion to stock
form will include the holding period of those assets immediately
prior to its conversion. (See Section 1223(2) of the Code.)
5. The merger of Alliance Mutual Holding Company with and
into Alliance Bancorp with Alliance Bancorp being the surviving
institution (the mutual holding company merger), will qualify as
a tax-free reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code.
(Section 368(a)(1)(A) of the Internal Revenue Code.)
6. The constructive exchange of the eligible account
holders and supplemental eligible account holders
liquidation interests in Alliance Mutual Holding Company for
liquidation interests in Alliance Bancorp in the mutual holding
company merger will satisfy the continuity of interest
requirement of
Section 1.368-1(b)
of the Income Tax Regulations. (Rev. Rul.
69-3,
1969-1 C.B.
103, and Rev. Rul.
69-646,
1969-2 C.B.
54.)
7. Alliance Mutual Holding Company will not recognize any
gain or loss on the transfer of its assets to Alliance Bancorp
and Alliance Bancorps assumption of its liabilities, if
any, in constructive exchange for liquidation interests in
Alliance Bancorp or on the constructive distribution of such
liquidation interest to Alliance Mutual Holding Companys
persons who are eligible account holders or supplemental
eligible account holders. (Sections 361(a), 361(c), and
357(a) of the Internal Revenue Code.)
8. No gain or loss will be recognized by Alliance Bancorp
upon the receipt of the assets of Alliance Mutual Holding
Company in the mutual holding company merger in exchange for the
constructive transfer to eligible account holders and
supplemental eligible account holders of liquidation interests
in Alliance Bancorp. (Section 1032(a) of the Internal
Revenue Code.)
9. Eligible account holders and supplemental eligible
account holders will recognize no gain or loss upon the
constructive receipt of liquidation interests in Alliance
Bancorp in exchange for their liquidation interests in Alliance
Mutual Holding Company. (Section 354(a) of the Internal
Revenue Code.)
10. The basis of the assets of Alliance Mutual Holding
Company (other than the stock in Alliance Bancorp which will be
cancelled) to be received by Alliance Bancorp will be the same
as the basis of such assets in the hands of Alliance Mutual
Holding Company immediately prior to the transfer.
(Section 362(b) of the Internal Revenue Code.)
11. The holding period of the assets of Alliance Mutual
Holding Company in the hands of Alliance Bancorp will include
the holding period of those assets in the hands of Alliance
Mutual Holding Company. (Section 1223(2) of the Internal
Revenue Code.)
12. The merger of Alliance Bancorp with and into Alliance
Bancorp New (the mid-tier holding company merger)
will constitute a mere change in identity, form or place of
organization within the meaning of Section 368(a)(1)(F) of
the Internal Revenue Code and therefore will qualify as a
tax-free reorganization within the meaning of
Section 368(a)(1)(F) of the Internal Revenue Code.
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13. Alliance Bancorp will not recognize any gain or loss on
the transfer of its assets to Alliance Bancorp New
and Alliance Bancorp News assumption of its
liabilities in the mid-tier holding company merger, pursuant to
which shares of Alliance Bancorp New common stock
will be received in exchange for shares of Alliance
Bancorps common stock, and eligible account holders and
supplemental eligible account holders will receive liquidation
interests in Alliance Bancorp New in exchange for
their liquidation interests in Alliance Bancorp.
14. No gain or loss will be recognized by Alliance
Bancorp New upon the receipt of the assets of
Alliance Bancorp in the mid-tier holding company merger.
(Section 1032(a) of the Internal Revenue Code.)
15. The basis of the assets of Alliance Bancorp (other than
stock in Alliance Bank) to be received by Alliance
Bancorp New will be the same as the basis of such
assets in the hands of Alliance Bancorp immediately prior to the
transfer. (Section 362(b) of the Internal Revenue Code.)
16. The holding period of the assets of Alliance Bancorp in
the hands of Alliance Bancorp New will include the
holding period of those assets in the hands of Alliance Bancorp.
(Section 1223(2) of the Internal Revenue Code.)
17. Alliance Bancorp shareholders will not recognize any
gain or loss upon their exchange of Alliance Bancorp common
stock for Alliance Bancorp New common stock, except
for cash paid in lieu of fractional shares. (Section 354 of
the Internal Revenue Code.)
18. The payment of cash to shareholders of Alliance Bancorp
in lieu of fractional shares of Alliance Bancorp New
common stock will be treated as though the fractional shares
were distributed as part of the mid-tier holding company merger
and then redeemed by Alliance Bancorp New. The cash
payments will be treated as distributions in full payment for
the fractional shares deemed redeemed under Section 302(a)
of the Internal Revenue Code, with the result that such
shareholders will have short-term or long-term capital gain or
loss to the extent that the cash they receive differs from the
basis allocable to such fractional shares. (Rev. Rul.
66-365,
1966-2 C.B.
116 and Rev. Proc.
77-41,
1977-2 C.B.
574.)
19. Eligible account holders and supplemental eligible
account holders will not recognize any gain or loss upon their
constructive exchange of their liquidation interests in Alliance
Bancorp for the liquidation accounts in Alliance
Bancorp New. (Section 354 of the Internal
Revenue Code.)
20. It is more likely than not that the fair market value
of the nontransferable subscription rights to purchase Alliance
Bancorp New common stock is zero. Accordingly, it is
more likely than not that no gain or loss will be recognized by
eligible account holders, supplemental eligible account holders
and other members upon distribution to them of nontransferable
subscription rights to purchase shares of Alliance
Bancorp New common stock. (Section 356(a) of
the Internal Revenue Code.) It is more likely than not that
eligible account holders, supplemental eligible account holders
and other members will not realize any taxable income as the
result of the exercise by them of the nontransferable
subscriptions rights. (Rev. Rul.
56-572,
1956-2 C.B.
182.)
21. It is more likely than not that the fair market value
of the benefit provided by the bank liquidation account
supporting the payment of the liquidation account in the event
Alliance Bancorp New lacks sufficient net assets is
zero. Accordingly, it is more likely than not that no gain or
loss will be recognized by eligible account holders and
supplemental eligible account holders upon the constructive
distribution to them of interests in the bank liquidation
account as of the effective date of the conversion and
reorganization. (Section 356(a) of the Internal Revenue
Code.)
22. It is more likely than not that the basis of common
stock purchased in the offering by the exercise of the
nontransferable subscription rights will be the purchase price
thereof. (Section 1012 of the Internal Revenue Code.)
23. Each shareholders holding period in his or her
Alliance Bancorp New common stock received in the
exchange will include the period during which the common stock
surrendered was held,
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provided that the common stock surrendered is a capital asset in
the hands of the shareholder on the date of the exchange.
(Section 1223(1) of the Internal Revenue Code.)
24. The holding period of the common stock purchased
pursuant to the exercise of subscriptions rights shall commence
on the date on which the right to acquire such stock was
exercised. (Section 1223(5) of the Internal Revenue Code.)
25. No gain or loss will be recognized by Alliance
Bancorp New on the receipt of money in exchange for
common stock sold in the offering. (Section 1032 of the
Internal Revenue Code.)
In reaching their conclusions under items 20 and 22 above,
Elias, Matz, Tiernan & Herrick L.L.P. has noted that
the subscription rights will be granted at no cost to the
recipients, will be legally nontransferable and of short
duration, and will provide the recipients 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.
ParenteBeard LLC has issued an opinion to Alliance Mutual
Holding Company, Alliance Bancorp and Alliance Bank to the
effect that, more likely than not, the income tax consequences
under Pennsylvania law of the conversion and offering are not
materially different than for federal tax purposes.
We received a letter from RP Financial dated August 20,
2010, which letter is not binding on the Internal Revenue
Service, stating their belief that the subscription rights do
not have any value, based on the fact that such rights are
acquired by the recipients without cost, are nontransferable and
of short duration, and afford the recipients the right only to
purchase our common stock at a price equal to its estimated fair
market value, which will be the same price as the purchase price
for the unsubscribed shares of common stock. In addition, no
cash or property will be given to recipients of the subscription
rights in lieu of such rights or to those recipients who fail to
exercise such rights. Furthermore, the Internal Revenue Service
was requested in 1993 in a private letter ruling to address the
federal tax treatment of the receipt and exercise of
nontransferable subscription rights in a standard conversion but
declined to express any opinion. Elias, Matz,
Tiernan & Herrick L.L.P. believes, due to the factors
discussed in this paragraph, that it is more likely than not
that the subscription rights have no value. If the
nontransferable subscription rights to purchase common stock are
subsequently found to have an ascertainable market value greater
than zero, income may be recognized by various recipients of the
nontransferable subscription rights (in certain cases, whether
or not the rights are exercised) and Alliance
Bancorp New may be taxed on the distribution of the
nontransferable subscription rights under Section 311 of
the Internal Revenue Code. In this event, the nontransferable
subscription rights may be taxed partially or entirely at
ordinary income tax rates.
Unlike private rulings, an opinion is not binding on the
Internal Revenue Service and the Internal Revenue Service could
disagree with the conclusions reached therein. In the event of
such disagreement, there can be no assurance that the Internal
Revenue Service would not prevail in a judicial or
administrative proceeding. If the Internal Revenue Service
determines that the tax effects of the transactions contemplated
by the plan of conversion and reorganization are to be treated
differently from those presented in the opinion, Alliance
Bancorp New may be subject to adverse tax
consequences as a result of the conversion and offering.
Eligible subscribers are encouraged to consult with their own
tax advisor as to the tax consequences in the event that such
subscription rights are deemed to have an ascertainable value.
149
RESTRICTIONS
ON ACQUISITIONS OF ALLIANCE BANCORP NEW AND
ALLIANCE BANK AND RELATED ANTI-TAKEOVER PROVISIONS
Restrictions
in the Articles of Incorporation and Bylaws of Alliance
Bancorp New and Pennsylvania Law
Certain provisions of the articles of incorporation and bylaws
of Alliance Bancorp New and Pennsylvania law which
deal with matters of corporate governance and rights of
shareholders might be deemed to have a potential anti-takeover
effect. Provisions in the articles of incorporation and bylaws
of Alliance Bancorp New provide, among other things:
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that our board of directors shall be divided into classes with
only one-third of its directors standing for reelection each
year;
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that special meetings of shareholders may only be called by our
board of directors;
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that shareholders generally must provide Alliance
Bancorp New advance notice of shareholder proposals
and nominations for director and provide certain specified
related information in the proposal;
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that any merger or similar transaction be approved by a
super-majority vote (75%) of shareholders entitled to vote
unless it has previously been approved by at least two-thirds of
our directors;
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that no person may acquire or offer to acquire more than 10% of
the issued and outstanding shares of any class of equity
securities of Alliance Bancorp New; and
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the board of directors shall have the authority to issue shares
of authorized but unissued common stock and preferred stock and
to establish the terms of any one or more series of preferred
stock, including voting rights.
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Provisions of the Pennsylvania Business Corporation Law of 1988,
which is referred to as the PBCL in this document, applicable to
Alliance Bancorp New provide, among other things,
that
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Alliance Bancorp New may not engage in a
business combination with an interested shareholder,
generally defined as a holder of 20% of a corporations
voting stock, during the five-year period after the interested
shareholder became such except under certain specified
circumstances;
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holders of common stock may object to a control
transaction involving Alliance Bancorp New (a
control transaction is defined as the acquisition by a person or
group of persons acting in concert of at least 20% of the
outstanding voting stock of a corporation), and demand that they
be paid a cash payment for the fair value of their
shares from the controlling person or group; and
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any profit, as defined, realized by any person or
group who is or was a controlling person or group
with respect to Alliance Bancorp New from the
disposition of any equity securities of Alliance
Bancorp New to any person shall belong to and be
recoverable by Alliance Bancorp New when the profit
is realized in a specified manner.
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Pennsylvania-chartered corporations may exempt themselves from
these anti-takeover provisions. Our articles of incorporation do
not provide for exemption from the applicability of these
provisions. The PBCL includes additional anti-takeover
provisions from which Alliance Bancorp New has
elected to exempt itself from as provided in its articles of
incorporation.
The provisions noted above as well as others discussed below may
have the effect of discouraging a future takeover attempt which
is not approved by the board of directors of Alliance
Bancorp New but which individual shareholders may
consider to be in their best interests or in which shareholders
may receive a substantial premium for their shares over the then
current market price. As a result, shareholders who might wish
to participate in such a transaction may not have an opportunity
to do so. The provisions may also render the removal of our
board of directors or management more difficult. Furthermore,
such provisions could render Alliance Bancorp New
being deemed less attractive to a potential acquiror
and/or could
result in our
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shareholders receiving a lesser amount of consideration for
their shares of our common stock than otherwise could have been
available either in the market generally
and/or in a
takeover.
A more detailed discussion of these and other provisions of our
articles of incorporation and bylaws and the PBCL is set forth
below.
Board of Directors. The articles of
incorporation and bylaws of Alliance Bancorp New
require the board of directors to be divided into three classes
as nearly equal in number as possible and that the members of
each class will be elected for a term of three years and until
their successors are elected and qualified, with one class being
elected annually. Holders of the common stock of Alliance
Bancorp New will not have cumulative voting in the
election of directors.
Under our articles of incorporation, any vacancy occurring in
our board of directors, including any vacancy created by reason
of an increase in the number of directors, may be filled by a
majority vote of the remaining directors, whether or not a
quorum is present, or by a sole remaining director. Any director
so chosen shall hold office for the remainder of the term to
which the director has been elected and until his or her
successor is elected and qualified.
The articles of incorporation of Alliance Bancorp
New provide that any director may be removed by shareholders
only for cause at a duly constituted meeting of shareholders
called expressly for that purpose upon the vote of the holders
of not less than a majority of the total votes eligible to be
cast by shareholders. Cause for removal shall exist only if the
director whose removal is proposed has been either declared
incompetent by order of a court, convicted of a felony or an
offense punishable by imprisonment for a term of more than one
year by a court of competent jurisdiction, or deemed liable by a
court of competent jurisdiction for gross negligence or
misconduct in the performance of such directors duties to
Alliance Bancorp New.
Consideration of Interests. The PBCL provides
that in discharging the duties of their respective positions,
including in the context of evaluating an offer to acquire
Alliance Bancorp New, the board of directors,
committees of the board and individual directors of a business
corporation may consider the following:
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the effects of any action upon any and all groups affected by
such action, including shareholders, employees, suppliers,
customers and creditors of the corporation and upon communities
in which offices or other establishments of the corporation are
located;
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the short-term and long-term interests of the corporation,
including benefits that may accrue to the corporation from its
long-term plans and the possibility that these interests may be
best served by the continued independence of the corporation;
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the resources, intent and conduct (past, stated and potential)
or any person seeking to acquire control of the
corporation; and
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all other pertinent factors.
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The board of directors, committees of the board and individual
directors shall not be required, in considering the best
interests of the corporation or the effects of any such action,
to regard any corporate interest or the interests of any
particular group affected by such action as a dominant or
controlling interest or factor.
Limitations on Liability. The articles of
incorporation of Alliance Bancorp New provide that
the personal liability of our directors and officers for
monetary damages shall be eliminated to the fullest extent
permitted by the PBCL as it exists on the effective date of the
articles of incorporation or as such law may be thereafter in
effect. Section 1713 of the PBCL currently provides that
directors, but not officers, of corporations that have adopted
such a provision will not be so liable, unless:
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the director has breached or failed to perform the duties of his
office in accordance with the PBCL; and
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the breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness.
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This provision would absolve directors of personal liability for
monetary damages for negligence in the performance of their
duties, including gross negligence. It would not permit a
director to be exculpated, however, for liability for actions
involving conflicts of interest or breaches of the traditional
duty of loyalty to Alliance Bancorp New
and its shareholders, and it would not affect the availability
of injunctive or other equitable relief as a remedy.
If Pennsylvania law is amended in the future to provide for
greater limitations on the personal liability of directors or to
permit corporations to limit the personal liability of officers,
the provision in our articles of incorporation limiting the
personal liability of directors and officers would automatically
incorporate such amendments to the law without further action by
shareholders. Similarly, if Pennsylvania law is amended in the
future to restrict the ability of a corporation to limit the
personal liability of directors, our articles of incorporation
would automatically incorporate such restrictions without
further action by shareholders.
The provision limiting the personal liability of our directors
does not eliminate or alter the duty of our directors; it merely
limits personal liability for monetary damages to the extent
permitted by the PBCL. Moreover, it applies only to claims
against a director arising out of his role as a director; it
currently does not apply to claims arising out of his role as an
officer, if he is also an officer, or arising out of any other
capacity in which he serves because the PBCL does not authorize
such a limitation of liability. Such limitation also does not
apply to the responsibility or liability of a director pursuant
to any criminal statute, or the liability of a director for the
payment of taxes pursuant to federal, state or local law.
The provision in our articles of incorporation which limits the
personal liability of directors is designed to ensure that the
ability of our directors to exercise their best business
judgment in managing our affairs is not unreasonably impeded by
exposure to the potentially high personal costs or other
uncertainties of litigation. The nature of the tasks and
responsibilities undertaken by directors of publicly held
corporations often require such persons to make difficult
judgments of great importance which can expose such persons to
personal liability, but from which they will acquire no personal
benefit. In recent years, litigation against publicly-held
corporations and their directors and officers challenging good
faith business judgments and involving no allegations of
personal wrongdoing has become common. Such litigation regularly
involves damage claims which bear no relationship to the amount
of compensation received by the directors or officers,
particularly in the case of directors who are not employees of
the corporation. Such litigation, whether it is well-founded or
not, can be very costly. The provision of our articles of
incorporation relating to director liability is intended to
reduce, in appropriate cases, the risk incident to serving as a
director and to enable Alliance Bancorp New to elect
and retain the persons most qualified to serve as directors.
Indemnification of Directors, Officers, Employees and
Agents. The bylaws of Alliance
Bancorp New provide that we shall indemnify any
person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, because such person is or was a director,
officer, or agent of Alliance Bancorp New.
Indemnification will be furnished against expenses (including
attorneys fees), judgments, fines, and amounts paid in
settlement, actually and reasonably incurred in connection with
such threatened, pending or completed action, suit or
proceeding. In particular, indemnification will be made against
judgments and settlements in derivative suits. Indemnification
will be made unless a judgment or other final adjudication
establishes that the act or failure to act giving rise to the
claim for indemnification constituted willful misconduct or
recklessness. The indemnification provisions also require us to
pay reasonable expenses in advance of the final disposition of
any action, suit or proceeding, provided that the indemnified
person undertakes to repay us if it is ultimately determined
that such person was not entitled to indemnification. The rights
of indemnification provided in our bylaws are not exclusive of
any other rights which may be available under any insurance or
other agreement, by vote of shareholders or directors or
otherwise. In addition, our bylaws authorize us to maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of Alliance Bancorp New,
whether or not we would have the power to provide
indemnification to such person. By action of the Alliance
Bancorp New board, we may create and fund a trust
fund or fund of any nature, and may enter into agreements with
our officers and directors, for securing or insuring in any
manner our obligation to indemnify or advance expenses provided
for in the provisions in our bylaws regarding indemnification.
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Special Meetings of Shareholders. The articles
of incorporation of Alliance Bancorp New contain a
provision pursuant to which, except as otherwise provided by
law, special meetings of its shareholders may be called only by
the board of directors pursuant to a resolution approved by a
majority of the directors then in office.
Shareholder Nominations and Proposals. The
bylaws of Alliance Bancorp New provide that, subject
to the rights of the holders of any class or series of stock
having a preference over the common stock as to dividends or
upon liquidation, all nominations for election to the board of
directors, other than those made by the board or a committee
thereof, shall be made by a shareholder who has complied with
the notice provisions in the bylaws. Written notice of a
shareholder nomination must be communicated to the attention of
the secretary and either delivered to, or mailed and received
at, our principal executive offices not later than (a) with
respect to an annual meeting of shareholders, 120 days
prior to the anniversary date of the mailing of proxy materials
by Alliance Bancorp New in connection with the
immediately preceding annual meeting of shareholders, or in the
case of the first annual meeting following the conversion and
the reorganization, by January 31, 2011.
Our bylaws also provide that only such business as shall have
been properly brought before an annual meeting of shareholders
shall be conducted at the annual meeting. To be properly brought
before an annual meeting, business must be specified in the
notice of the meeting, or any supplement thereto, given by or at
the direction of the board of directors, or otherwise properly
brought before the meeting by a shareholder. For business to be
properly brought before an annual meeting by a shareholder, the
shareholder must have given timely notice thereof in writing to
our secretary. To be timely, a shareholders notice must be
delivered to or mailed and received at our principal executive
offices not later than 120 days prior to the anniversary
date of the mailing of proxy materials by Alliance
Bancorp New in connection with the immediately
preceding annual meeting of shareholders, or, in the case of the
first annual meeting of shareholders following the conversion
and reorganization, by January 31, 2011. Our bylaws also
require that the notice must contain certain information in
order to be considered. The board of directors may reject any
shareholder proposal not made in accordance with the bylaws. The
presiding officer of an annual meeting shall, if the facts
warrant, determine and declare to the meeting that business was
not properly brought before the meeting in accordance with our
bylaws, and if he should so determine, he shall so declare to
the meeting and any such business not properly brought before
the meeting shall not be transacted.
The procedures regarding shareholder proposals and nominations
are intended to provide the board of directors of Alliance
Bancorp New with the information deemed necessary to
evaluate a shareholder proposal or nomination and other relevant
information, such as existing shareholder support, as well as
the time necessary to consider and evaluate such information in
advance of the applicable meeting. The proposed procedures,
however, will give incumbent directors advance notice of a
business proposal or nomination. This may make it easier for the
incumbent directors to defeat a shareholder proposal or
nomination, even when certain shareholders view such proposal or
nomination as in the best interests of Alliance
Bancorp New or its shareholders.
Shareholder Action Without a Meeting. The
articles of incorporation of Alliance Bancorp New
provide that any action permitted to be taken by the
shareholders at a meeting may be taken without a meeting if a
written consent setting forth the action so taken is signed by
all of the shareholders entitled to vote.
Limitations on Acquisitions of Voting Stock and Voting
Rights. The articles of incorporation of Alliance
Bancorp New provide that no person shall directly or
indirectly offer to acquire or acquire the beneficial ownership
of (a) more than 10% of the issued and outstanding shares
of any class of our equity securities or (b) any securities
convertible into, or exercisable for, any equity securities of
Alliance Bancorp New if, assuming conversion or
exercise by such person of all securities of which such person
is the beneficial owner which are convertible into, or
exercisable for such equity securities, such person would be the
beneficial owner of more than 10% of any class of our equity
securities. The term person is broadly defined in
our articles of incorporation to prevent circumvention of this
restriction.
The foregoing restrictions do not apply to (a) any offer
with a view toward public resale made exclusively to Alliance
Bancorp New by underwriters or a selling group
acting on its behalf, (b) any employee benefit
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plan established by Alliance Bancorp New or Alliance
Bank or any trustees of such plan and (c) any other offer
or acquisition approved in advance by the affirmative vote of
80% of our board of directors. In the event that shares are
acquired in violation of this restriction, all shares
beneficially owned by any person in excess of 10% will not be
counted as shares entitled to vote and will not be voted by any
person or counted as voting shares in connection with any
matters submitted to shareholders for a vote, and our board of
directors may cause the excess shares to be transferred to an
independent trustee for sale.
Mergers, Consolidations and Sales of
Assets. For a merger, consolidation, sale of
assets or other similar transaction to occur, the PBCL generally
requires the approval of the board of directors and the
affirmative vote of the holders of a majority of the votes cast
by all shareholders entitled to vote thereon. The articles of
incorporation of Alliance Bancorp New provide that
any merger, consolidation, share exchange, sale of assets,
division or voluntary dissolution shall require approval of 75%
of the eligible voting shares unless the transaction has been
previously approved by at least two-thirds of its board of
directors, in which case the majority of the votes cast standard
would apply. In addition, if any class or series of shares is
entitled to vote thereon as a class, the PBCL requires the
affirmative vote of a majority of the votes cast in each class
for any plan of merger or consolidation. The PBCL also provides
that unless otherwise required by a corporations governing
instruments, a plan of merger or consolidation shall not require
the approval of the shareholders if:
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whether or not the constituent corporation, in this
case, Alliance Bancorp New, is the surviving
corporation (a) the surviving or new corporation is a
Pennsylvania business corporation and the articles of the
surviving or new corporation are identical to the articles of
the constituent corporation, except for specified changes which
may be adopted by a board of directors without shareholder
action, (b) each share of the constituent corporation
outstanding immediately prior to the effective date of the
merger or consolidation is to continue as or to be converted
into, except as may be otherwise agreed by the holder thereof,
an identical share of the surviving or new corporation after the
effective date of the merger or consolidation, and (c) the
plan provides that the shareholders of the constituent
corporation are to hold in the aggregate shares of the surviving
or new corporation to be outstanding immediately after the
effectiveness of the plan entitled to cast at least a majority
of the votes entitled to be cast generally for the election of
directors;
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immediately prior to adoption of the plan and at all times prior
to its effective date, another corporation that is a party to
the merger or consolidation owns directly or indirectly 80% or
more of the outstanding shares of each class of the constituent
corporation; or
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no shares of the constituent corporation have been issued prior
to the adoption of the plan of merger or consolidation by the
board of directors.
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As holder of all of the outstanding Alliance Bank common stock
after consummation of the conversion, Alliance
Bancorp New generally will be able to authorize a
merger, consolidation or other business combination involving
Alliance Bank without any additional approval being required of
the shareholders of Alliance Bancorp New.
Business Combinations with Interested
Shareholders. Under the PBCL, a registered
corporation may not engage in a business combination with an
interested shareholder except for certain types of business
combinations as enumerated under Pennsylvania law. The PBCL
defines a business combination generally to include,
with respect to a corporation, certain sales, purchases,
exchanges, leases, mortgages, pledges, transfers or dispositions
of assets, mergers or consolidations, certain issuances or
reclassifications of securities, liquidations or dissolutions or
certain loans, guarantees or financial assistance, pursuant to
an agreement or understanding between such corporation or any
subsidiaries, on the one hand, and an interested shareholder or
an affiliate or associate thereof, on
the other hand. An interested shareholder is defined
generally to include any individual, partnership, association or
corporation which is the beneficial owner, as defined, of at
least 20% of the outstanding voting stock of the corporation or
which is an affiliate or associate of such corporation and at
any time within the five-year period prior to the date in
question was the beneficial owner of at least 20% of the
outstanding voting stock.
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Control Transactions. The PBCL includes
provisions which allow holders of voting shares of a registered
corporation that becomes the subject of a control
transaction to object to such transaction and demand that
they be paid a cash payment for the fair value of
their shares from the controlling person or group. A
control transaction for purposes of these provisions
means the acquisition by a person or group of persons acting in
concert of at least 20% of the outstanding voting stock of the
registered corporation, subject to certain limited exceptions.
Fair value for purposes of these provisions means an
amount not less than the highest price per share paid by the
controlling person or group at any time during the
90-day
period ending on and including the date of the control
transaction, plus an increment representing any value, including
without limitation any proportion of any value payable for
acquisition of control of the corporation, that may not be
reflected in such price.
Disgorgement by Certain Controlling
Shareholders. The PBCL includes provisions which
generally provide that any profit realized by any
person or group who is or was a controlling person or
group with respect to a registered corporation from the
disposition of any equity security of the corporation to any
person shall belong to and be recoverable by the corporation
where the profit is realized by such person or group:
(1) from the disposition of the equity security within
18 months after the person or group attained the status of
a controlling person or group; and (2) the equity security
had been acquired by the controlling person or group within
24 months prior to or 18 months subsequent to the
attaining by the person or group of the status of a controlling
person or group.
A controlling person or group for purposes of these
provisions of the PBCL is defined to mean (1) a person or
group who has acquired, offered to acquire or, directly or
indirectly, publicly disclosed or caused to be disclosed the
intention of acquiring voting power over voting shares of a
registered corporation that would entitle the holder thereof to
cast at least 20% of the votes that all shareholders would be
entitled to cast in an election of directors of the corporation
or (2) a person or group who has otherwise, directly or
indirectly, publicly disclosed or caused to be disclosed that it
may seek to acquire control of a corporation through any means.
The definition of controlling person or group also
includes terms which are designed to facilitate a
corporations determination of the existence of a group and
members of a controlling group.
The PBCL excludes certain persons and holders from the
definition of a controlling person or group, absent
significant other activities indicating that a
person or group should be deemed a controlling person or group.
The PBCL similarly provides that, absent a person or
groups direct or indirect disclosure or causing to be
disclosed that it may seek to acquire control of the corporation
through any means, a person or group will not be deemed to be a
controlling person or group if such person or group holds voting
power, among other ways, as a result of the solicitation of
proxies or consents if such proxies or consents are
(a) given without consideration in response to a
solicitation pursuant to the Securities Exchange Act of 1934 and
the regulations thereunder and (b) do not empower the
holder thereof to vote such shares except on the specific
matters described in such proxy or consent and in accordance
with the instructions of the giver of such proxy or consent. The
disgorgement provisions of the PBCL applicable to registered
corporations also do not apply to certain specified transfers of
equity securities, including certain acquisitions and
dispositions which are approved by a majority vote of both the
board of directors and shareholders of the corporation in the
prescribed manner.
Actions to recover any profit due to a registered corporation
under the disgorgement provisions of the PBCL may be commenced
by the corporation in any court of competent jurisdiction within
two years from the date any recoverable profit was realized.
Such an action also may be commenced by a shareholder on behalf
of the corporation if the corporation refuses to bring the
action within 60 days after written request by a
shareholder or the corporations fail to prosecute the action
diligently. Although any recovery of profits would be due the
corporation, the shareholder would be entitled to reimbursement
of all costs incurred in connection with the bringing of any
such action in the event that such action results in a judgment
recovering profits for the corporation.
Control-Share Acquisitions. The PBCL includes
provisions which generally require that shareholders of a
registered corporation approve a control-share
acquisition, as defined therein. Pursuant to authority
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contained in the PBCL, our articles of incorporation contain a
provision which provides that the control-share acquisition
provisions of the PBCL shall not be applicable to Alliance
Bancorp New.
Amendment of Governing Instruments. The
articles of incorporation of Alliance Bancorp New
generally provide that no amendment of the articles of
incorporation may be made unless it is first approved by its
board of directors and thereafter approved by the holders of a
majority of the shares entitled to vote generally in an election
of directors, voting together as a single class, as well as such
additional vote of the preferred stock as may be required by the
provisions of any series thereof, provided, however, any
amendment which is inconsistent with Articles VI
(directors), VII (meetings of shareholders, actions without a
meeting), VIII (liability of directors and officers), IX
(restrictions on offers and acquisitions), XI (shareholder
approval of mergers and other actions) and XII (amendments to
the articles of incorporation and bylaws) must be approved by
the affirmative vote of the holders of not less than 75% of the
voting power of the shares entitled to vote thereon unless
approved by the affirmative vote of 80% of the directors of
Alliance Bancorp New then in office.
Our bylaws may be amended by the majority vote of the full board
of directors at a regular or special meeting of the board of
directors or by a majority vote of the shares entitled to vote
generally in an election of directors, voting together as a
single class, as well as such additional vote of the preferred
stock as may be required by the provisions of any series
thereof, provided, however, that the shareholder vote
requirement for any amendment to the bylaws which is
inconsistent with Sections 2.10 (shareholder proposals),
3.1 (number of directors and powers), 3.2 (classifications and
terms of directors), 3.3 (director vacancies), 3.4 (removal of
directors) and 3.12 (director nominations) and Article VI
(indemnification) is the affirmative vote of the holders of not
less than 75% of the voting power of the shares entitled to vote
thereon.
Authorized Capital Stock. The authorized
capital stock of Alliance Bancorp New consists of
50,000,000 shares of common stock and
10,000,000 shares of preferred stock. The number of
authorized stock is greater than what we will issue in the
conversion and reorganization. This will provide our board of
directors with greater flexibility to effect, among other
things, financings, acquisitions, stock dividends, stock splits
and employee stock options.
Issuance of Capital Stock to Directors, Officers and
Controlling Persons. Our articles of
incorporation do not contain restrictions on the issuance of
shares of capital stock to our directors, officers or
controlling persons. Thus, Alliance Bancorp New
could adopt stock-related compensation plans such as stock
option plans without shareholder approval and shares of Alliance
Bancorp New capital stock could be issued directly
to directors or officers without shareholder approval. The
Marketplace Rules of the Nasdaq Stock Market, however, generally
require corporations like Alliance Bancorp New with
securities which will be listed on the Nasdaq Stock Market to
obtain shareholder approval of most stock compensation plans for
directors, officers and key employees of the corporation.
Moreover, although generally not required, shareholder approval
of stock-related compensation plans may be sought in certain
instances in order to qualify such plans for favorable federal
income tax law treatment under current laws and regulations. We
plan to submit the proposed stock option plan and stock
recognition and retention plan discussed herein to our
shareholders for their approval.
The foregoing provisions of our article of incorporation and
bylaws and Pennsylvania law could have the effect of
discouraging an acquisition of Alliance Bancorp New
or stock purchases in furtherance of an acquisition, and could
accordingly, under certain circumstances, discourage
transactions which might otherwise have a favorable effect on
the price of the common stock.
In addition, certain provisions expected to be included in the
proposed stock option plan and stock recognition and retention
plan, each of which will not be implemented prior to the receipt
of shareholder approval, provide for accelerated benefits to
participants in the event of a change in control of Alliance
Bancorp New or Alliance Bank, as applicable. See
Management New Stock Benefit Plans. In
addition, certain employment agreements to which Alliance Bank
is a party provide for specified benefits in the event of a
change in control. See Management Employment
Agreements. The foregoing provisions and limitations may
make it more costly for companies or persons to acquire control
of Alliance Bancorp New.
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The board of directors of Alliance Bancorp New
believes that the provisions described above are prudent and
will reduce vulnerability to takeover attempts and certain other
transactions that are not negotiated with and approved by its
board of directors. Our board of directors believes that these
provisions are in the best interests of Alliance
Bancorp New and its future shareholders. In the
board of directors judgment, our board of directors is in
the best position to determine the true value of Alliance
Bancorp New and to negotiate more effectively for
what may be in the best interests of shareholders. Accordingly,
our board of directors believes that it is in the best interests
and the best interests of our future shareholders to encourage
potential acquirers to negotiate directly with the board of
directors and that these provisions will encourage such
negotiations and discourage hostile takeover attempts. It is
also the board of directors view that these provisions
should not discourage persons from proposing a merger or other
transaction at prices reflective of the true value of Alliance
Bancorp New and where the transaction is in the best
interests of all shareholders.
Regulatory
Restrictions
The Change in Bank Control Act provides that no person, acting
directly or indirectly or through or in concert with one or more
other persons, may acquire control of a savings institution
unless the Office of Thrift Supervision has been given
60 days prior written notice. The Home Owners
Loan Act provides that no company may acquire
control of a savings institution without the prior
approval of the Office of Thrift Supervision. Any company that
acquires such control becomes a thrift holding company subject
to registration, examination and regulation by the Office of
Thrift Supervision. Pursuant to federal regulations, control of
a savings institution is conclusively deemed to have been
acquired by, among other things, the acquisition of more than
25% of any class of voting stock of the institution or the
ability to control the election of a majority of the directors
of an institution. Moreover, control is presumed to have been
acquired, subject to rebuttal, upon the acquisition of more than
10% of any class of voting stock, or of more than 25% of any
class of stock, of a savings institution where certain
enumerated control factors are also present in the
acquisition. The Office of Thrift Supervision may prohibit an
acquisition if (a) it would result in a monopoly or
substantially lessen competition, (b) the financial
condition of the acquiring person might jeopardize the financial
stability of the institution, or (c) the competence,
experience or integrity of the acquiring person indicates that
it would not be in the interest of the depositors or of the
public to permit the acquisition of control by such person. The
foregoing restrictions do not apply to the acquisition of a
savings institutions capital stock by one or more
tax-qualified employee stock benefit plans, provided that the
plan or plans do not have beneficial ownership in the aggregate
of more than 25% of any class of equity security of the savings
institution.
During the conversion and for three years following the
conversion and reorganization, Office of Thrift Supervision
regulations prohibit any person from acquiring, either directly
or indirectly, or making an offer to acquire more than 10% of
the stock of any converted savings institution, such as Alliance
Bank, without the prior written approval of the Office of Thrift
Supervision, except for
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any offer with a view toward public resale made exclusively to
the institution or to underwriters or a selling group acting on
its behalf;
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offers that if consummated would not result in the acquisition
by such person during the preceding
12-month
period of more than 1% of such stock;
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offers in the aggregate for up to 24.9% by the employee stock
ownership plan or other tax-qualified plans of us or Alliance
Bank; and
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an offer to acquire or acquisition of beneficial ownership of
more than 10% of the common stock of the savings institution by
a corporation whose ownership is or will be substantially the
same as the ownership of the savings institution, provided that
the offer or acquisition is made more than one year following
the date of completion of the conversion and reorganization.
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Such prohibition also is applicable to the acquisition of our
common stock. In the event that any person, directly or
indirectly, violates this regulation, the securities
beneficially owned by such person in excess of
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10% 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 a vote of shareholder.
The definition of beneficial ownership for this regulation
extends to persons holding revocable or irrevocable proxies for
an institutions stock under circumstances that give rise
to a conclusive or rebuttable determination of control under
Office of Thrift Supervision regulations.
In addition, provisions of the Pennsylvania Banking Code
prohibit any person from acquiring or making a proposal to
acquire the voting rights of more than 10% of the issued and
outstanding shares of the voting stock of Alliance
Bancorp New without filing an application with, and
receiving prior approval from, the Pennsylvania Department of
Banking.
In addition to the foregoing, the plan of conversion prohibits
any person, prior to the completion of the conversion and
reorganization, from offering, or making an announcement of an
intent to make an offer, to purchase subscription rights or
common stock. See The Conversion and Offering
Restrictions on Transfer of Subscription Rights and Shares.
DESCRIPTION
OF OUR CAPITAL STOCK
General
We are authorized to issue 50,000,000 shares of common
stock and 10,000,000 shares of preferred stock. We
currently expect to issue up to a maximum of 6.0 million
shares of common stock, including 3.6 million shares sold
in the offering and 2.4 million shares exchanged for the
outstanding shares of Alliance Bancorp common stock, and no
shares of preferred stock in the conversion and reorganization.
Each share of common stock of Alliance Bancorp New
will have the same relative rights as, and will be identical in
all respects with, each other share of common stock. Upon
payment of the purchase price for the Subscription Shares and
the issuance of the Exchange Shares in accordance with the plan
of conversion and reorganization, all such stock will be duly
authorized, fully paid and nonassessable.
The common stock of Alliance Bancorp New will
represent nonwithdrawable capital, will not be an account of an
insurable type and will not be insured by the Federal Deposit
Insurance Corporation or any other governmental authority.
Common
Stock
Dividends. We can pay dividends if, as and
when declared by our board of directors, subject to compliance
with limitations which are imposed by law. See Our
Dividend Policy. The holders of common stock will be
entitled to receive and share equally in such dividends as may
be declared by our board of directors out of funds legally
available therefor. If we issue preferred stock, the holders
thereof may have a priority over the holders of the common stock
with respect to dividends.
Voting Rights. Upon completion of the
conversion and reorganization, the holders of our common stock
will possess exclusive voting rights in Alliance
Bancorp New. They will elect our board of directors
and act on such other matters as are required to be presented to
them under Pennsylvania law or our articles of incorporation or
as are otherwise presented to them by the board of directors.
Except as discussed in Restrictions on Acquisitions of
Alliance Bancorp New and Alliance Bank and Related
Anti-Takeover Provisions Limitations on Acquisitions
of Voting Stock and Voting Rights, 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. If we
issue preferred stock, holders of the preferred stock may also
possess voting rights.
Liquidation. In the event of any liquidation,
dissolution or winding up of Alliance Bancorp New,
the holders of the then-outstanding common stock would be
entitled to receive, after payment or provision for payment of
all its debts and liabilities (including with respect to the
liquidation account of Alliance Bancorp New), all of
our assets available for distribution. If preferred stock is
issued, the holders thereof may have a priority over the holders
of the common stock in the event of liquidation or dissolution.
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Preemptive Rights. Holders of the common stock
will not be entitled to preemptive rights with respect to any
shares which may be issued in the future. The common stock is
not subject to redemption.
Preferred
Stock
None of the shares of our authorized preferred stock will be
issued in the conversion and reorganization. Such stock may be
issued with such preferences and designations as the board of
directors may from time to time determine. The board of
directors can, without shareholder approval, issue preferred
stock with voting, dividend, liquidation and conversion rights
which 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.
EXPERTS
The consolidated financial statements as of December 31,
2009 and 2008 and for each of the years in the two-year period
ended December 31, 2009 included in this prospectus and in
the registration statement have been so included in reliance on
the report of ParenteBeard LLC, an independent registered public
accounting firm, appearing elsewhere herein, given on the
authority of said firm as experts in auditing and accounting.
RP Financial LC. has consented to the summary
in this prospectus of its report to us setting forth its opinion
as to our estimated pro forma market value and to the use of its
name and statements with respect to it appearing in this
prospectus.
TRANSFER
AGENT, EXCHANGE AGENT AND REGISTRAR
The transfer agent and registrar and exchange agent for the
common stock of Alliance Bancorp New is Registrar
and Transfer Company.
LEGAL AND
TAX OPINIONS
The legality of our common stock has been passed upon for us by
Elias, Matz, Tiernan & Herrick L.L.P.,
Washington, D.C. The federal income tax consequences of the
conversion have been opined upon by Elias, Matz,
Tiernan & Herrick L.L.P. ParenteBeard LLC has provided
an opinion to us regarding the Pennsylvania income tax
consequences of the conversion. Elias, Matz, Tiernan &
Herrick L.L.P. and ParenteBeard LLC have consented to the
references to their opinions in this prospectus. Certain legal
matters will be passed upon for Stifel, Nicolaus &
Company, Incorporated by Malizia Spidi &
Fisch, P.C.
REGISTRATION
REQUIREMENTS
In connection with the conversion and offering, Alliance
Bancorp New will register its common stock with the
Securities and Exchange Commission under Section 12(b) of
the Securities Exchange Act of 1934, and, upon such
registration, Alliance Bancorp New and the holders
of its stock will become subject to the proxy solicitation
rules, reporting requirements and restrictions on stock
purchases and sales by directors, officers and greater than 10%
shareholders, the annual and periodic reporting requirements and
certain other requirements of the Securities Exchange Act of
1934. Alliance Bancorp New has undertaken that it
will not terminate such registration for a period of at least
three years following the conversion and offering.
WHERE YOU
CAN FIND ADDITIONAL INFORMATION
Alliance Bancorp New has filed with the Securities
and Exchange Commission a registration statement on
Form S-1
under the Securities Act of 1933 with respect to the shares of
its common stock offered in this document. 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 can be examined
without charge at the public reference facilities of the
Securities and Exchange Commission located
159
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 public may
obtain more information on the operations of the public
reference room by calling
1-800-SEC-0330.
The registration statement also is available through the
Securities and Exchange Commissions world wide web site on
the Internet at
http://www.sec.gov.
Alliance Bancorp New has filed an application
with respect to the conversion and offering with the Office of
Thrift Supervision. This prospectus omits certain information
contained in that application. The application may be examined
at the principal office of the Office of Thrift Supervision,
1700 G Street, N.W., Washington, D.C. 20552, and
at the Northeast Regional Office of the Office of Thrift
Supervision located at Harborside Financial Center Plaza Five,
Suite 1600, Jersey City, New Jersey 07311. Alliance
Bancorp New also has filed an application with the
Pennsylvania Department of Banking with respect to the
reorganization. The application may be examined at the principal
office of the Pennsylvania Department of Banking at 17 North
Second Street, 11th Floor, Harrisburg, Pennsylvania. This
prospectus omits certain information included in that
application.
160
INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS
Financial
Statements of Alliance Bancorp, Inc. of Pennsylvania and
Subsidiaries
|
|
|
|
|
Page No.
|
|
|
|
F-2
|
|
|
F-3
|
|
|
F-4
|
|
|
F-5
|
|
|
F-7
|
|
|
F-8
|
All financial statement schedules are omitted because the
required information either is not applicable or is shown in the
financial statements or in the notes thereto.
The registrant, Alliance Bancorp-New, is in organization and has
not yet commenced operations to date; accordingly, the financial
statements of the registrant have been omitted because of their
immateriality.
F-1
Report of
Independent Registered Public Accounting Firm
To the Board of Directors and
Stockholders of Alliance Bancorp, Inc. of Pennsylvania
We have audited the accompanying consolidated statements of
financial condition of Alliance Bancorp, Inc. of Pennsylvania
and subsidiaries (the Company) as of
December 31, 2009 and 2008, and the related consolidated
statements of income, changes in stockholders equity, and
cash flows for each of the years in the two-year period ended
December 31, 2009. Alliance Bancorp, Inc. of
Pennsylvanias management is responsible for these
consolidated financial statements. Our responsibility is to
express an opinion on these consolidated financial statements
based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included
consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Companys internal control over
financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Alliance Bancorp, Inc. of Pennsylvania and
subsidiaries as of December 31, 2009 and 2008, and the
results of their operations and their cash flows for each of the
years in the two-year period ended December 31, 2009, in
conformity with accounting principles generally accepted in the
United States of America.
Malvern, Pennsylvania
March 16, 2010
F-2
ALLIANCE
BANCORP, INC. OF PENNSYLVANIA AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
(In thousands, except per share and share amounts)
|
|
|
ASSETS:
|
Cash and cash equivalents
|
|
$
|
5,548
|
|
|
$
|
5,710
|
|
|
$
|
7,849
|
|
Interest-bearing deposits with depository institutions
|
|
|
60,908
|
|
|
|
69,226
|
|
|
|
20,459
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents
|
|
|
66,456
|
|
|
|
74,936
|
|
|
|
28,308
|
|
Investment securities available for sale
|
|
|
28,216
|
|
|
|
28,890
|
|
|
|
37,814
|
|
Mortgage-backed securities available for sale
|
|
|
19,551
|
|
|
|
23,355
|
|
|
|
31,921
|
|
Investment securities held to maturity (fair
value 2010, $22,582 (unaudited); 2009, $23,797;
2008, $23,958)
|
|
|
22,075
|
|
|
|
23,446
|
|
|
|
24,256
|
|
Loans receivable net of allowance for loan
losses 2010, $4,185 (unaudited); 2009, $3,538; 2008,
$3,169
|
|
|
283,020
|
|
|
|
285,008
|
|
|
|
278,436
|
|
Accrued interest receivable
|
|
|
1,963
|
|
|
|
2,045
|
|
|
|
2,028
|
|
Premises and fixed assets net
|
|
|
2,572
|
|
|
|
2,531
|
|
|
|
2,764
|
|
Other real estate owned (OREO)
|
|
|
3,026
|
|
|
|
2,968
|
|
|
|
0
|
|
Bank owned life insurance
|
|
|
11,360
|
|
|
|
11,185
|
|
|
|
10,830
|
|
Federal Home Loan Bank (FHLB) stock at cost
|
|
|
2,439
|
|
|
|
2,439
|
|
|
|
2,439
|
|
Deferred tax
asset-net
|
|
|
4,676
|
|
|
|
4,546
|
|
|
|
4,328
|
|
Prepaid FDIC premium assessment
|
|
|
1,877
|
|
|
|
2,034
|
|
|
|
|
|
Prepaid expenses and other assets
|
|
|
1,215
|
|
|
|
833
|
|
|
|
985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
448,446
|
|
|
$
|
464,216
|
|
|
$
|
424,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing deposits
|
|
$
|
13,213
|
|
|
$
|
15,506
|
|
|
$
|
13,610
|
|
Interest bearing deposits
|
|
|
367,997
|
|
|
|
359,748
|
|
|
|
313,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits
|
|
|
381,210
|
|
|
|
375,254
|
|
|
|
327,267
|
|
FHLB Advances
|
|
|
5,000
|
|
|
|
32,000
|
|
|
|
37,000
|
|
Other Borrowings
|
|
|
8,112
|
|
|
|
3,090
|
|
|
|
4,632
|
|
Accrued expenses and other liabilities
|
|
|
5,557
|
|
|
|
5,427
|
|
|
|
6,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
399,879
|
|
|
|
415,771
|
|
|
|
375,210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 10)
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS EQUITY:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $.01 par value; 15,000,000 shares
authorized; 7,225,000 shares issued; outstanding, 2010,
6,696,476; 2009; 6,729,676 2008, 6,957,676
|
|
|
72
|
|
|
|
72
|
|
|
|
72
|
|
Additional paid-in capital
|
|
|
24,015
|
|
|
|
24,015
|
|
|
|
24,029
|
|
Retained earnings partially restricted
|
|
|
29,948
|
|
|
|
29,848
|
|
|
|
28,836
|
|
Unearned shares held by Employee Stock Ownership Plan (ESOP)
|
|
|
(565
|
)
|
|
|
(602
|
)
|
|
|
(722
|
)
|
Accumulated other comprehensive loss
|
|
|
(321
|
)
|
|
|
(583
|
)
|
|
|
(930
|
)
|
Treasury stock, at cost: 2010, 528,524 shares; 2009, 495,
324 shares; 2008, 267,324 shares
|
|
|
(4,582
|
)
|
|
|
(4,305
|
)
|
|
|
(2,386
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
48,567
|
|
|
|
48,445
|
|
|
|
48,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
448,446
|
|
|
$
|
464,216
|
|
|
$
|
424,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements
F-3
ALLIANCE
BANCORP, INC. OF PENNSYLVANIA AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
|
|
|
For the Year
|
|
|
|
Ended June 30,
|
|
|
Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
(In thousands, except per share amounts)
|
|
|
INTEREST AND FEES AND DIVIDEND INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
$
|
8,475
|
|
|
$
|
8,530
|
|
|
$
|
17,024
|
|
|
$
|
17,485
|
|
Mortgage-backed securities
|
|
|
450
|
|
|
|
674
|
|
|
|
1,230
|
|
|
|
1,494
|
|
Investment securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable
|
|
|
526
|
|
|
|
731
|
|
|
|
1,467
|
|
|
|
1,379
|
|
Tax-exempt
|
|
|
531
|
|
|
|
601
|
|
|
|
1,171
|
|
|
|
1,091
|
|
Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
381
|
|
Balances due from depository institutions
|
|
|
150
|
|
|
|
68
|
|
|
|
199
|
|
|
|
712
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest and fees and dividend income
|
|
|
10,132
|
|
|
|
10,604
|
|
|
|
21,091
|
|
|
|
22,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
3,001
|
|
|
|
3,798
|
|
|
|
7,257
|
|
|
|
9,267
|
|
FHLB Advances and other borrowed money
|
|
|
786
|
|
|
|
1,185
|
|
|
|
2,252
|
|
|
|
2,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest expense
|
|
|
3,787
|
|
|
|
4,983
|
|
|
|
9,509
|
|
|
|
11,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME
|
|
|
6,345
|
|
|
|
5,621
|
|
|
|
11,582
|
|
|
|
10,841
|
|
PROVISION FOR LOAN LOSSES
|
|
|
1,170
|
|
|
|
150
|
|
|
|
528
|
|
|
|
585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME AFTER
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR LOAN LOSSES
|
|
|
5,175
|
|
|
|
5,471
|
|
|
|
11,054
|
|
|
|
10,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts
|
|
|
149
|
|
|
|
145
|
|
|
|
293
|
|
|
|
352
|
|
Management fees
|
|
|
168
|
|
|
|
180
|
|
|
|
360
|
|
|
|
384
|
|
Other fee income
|
|
|
87
|
|
|
|
82
|
|
|
|
170
|
|
|
|
169
|
|
Gain on sale of loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
Loss on sale of securities, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(157
|
)
|
Loss on sale of OREO, net
|
|
|
(20
|
)
|
|
|
|
|
|
|
(15
|
)
|
|
|
|
|
Impairment charge on investment securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(882
|
)
|
Portion of loss recognized in other comprehensive loss, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net impairment loss recognized in earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(882
|
)
|
Increase in cash surrender value of life insurance
|
|
|
175
|
|
|
|
182
|
|
|
|
355
|
|
|
|
367
|
|
Other
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income
|
|
|
559
|
|
|
|
590
|
|
|
|
1,164
|
|
|
|
241
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits
|
|
|
3,049
|
|
|
|
2,926
|
|
|
|
5,929
|
|
|
|
5,716
|
|
Occupancy and equipment
|
|
|
969
|
|
|
|
954
|
|
|
|
1,801
|
|
|
|
1,968
|
|
FDIC deposit insurance premiums
|
|
|
328
|
|
|
|
450
|
|
|
|
756
|
|
|
|
193
|
|
Advertising and marketing
|
|
|
145
|
|
|
|
145
|
|
|
|
308
|
|
|
|
466
|
|
Professional fees
|
|
|
287
|
|
|
|
277
|
|
|
|
501
|
|
|
|
438
|
|
Loan and OREO expense
|
|
|
64
|
|
|
|
54
|
|
|
|
116
|
|
|
|
38
|
|
Directors fees
|
|
|
140
|
|
|
|
128
|
|
|
|
255
|
|
|
|
250
|
|
Provision for loss on OREO
|
|
|
135
|
|
|
|
|
|
|
|
107
|
|
|
|
|
|
Other noninterest expense
|
|
|
557
|
|
|
|
561
|
|
|
|
1,127
|
|
|
|
1,234
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expenses
|
|
|
5,674
|
|
|
|
5,495
|
|
|
|
10,900
|
|
|
|
10,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAX BENEFIT
|
|
|
60
|
|
|
|
566
|
|
|
|
1,318
|
|
|
|
194
|
|
INCOME TAX BENEFIT
|
|
|
(205
|
)
|
|
|
(59
|
)
|
|
|
(41
|
)
|
|
|
(411
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
265
|
|
|
$
|
625
|
|
|
$
|
1,359
|
|
|
$
|
605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER SHARE
|
|
$
|
0.04
|
|
|
$
|
0.09
|
|
|
$
|
0.20
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements
F-4
ALLIANCE
BANCORP, INC. OF PENNSYLVANIA AND SUBSIDIARIES
FOR
THE YEARS ENDED DECEMBER 31, 2009, and 2008, AND FOR THE SIX
MONTHS ENDED JUNE 30, 2010 (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Earnings -
|
|
|
Unearned
|
|
|
Other
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
Common
|
|
|
Paid-in
|
|
|
Partially
|
|
|
Shares Held
|
|
|
Comprehensive
|
|
|
Treasury
|
|
|
Stockholders
|
|
|
Comprehensive
|
|
|
|
Stock
|
|
|
Capital
|
|
|
Restricted
|
|
|
by ESOP
|
|
|
Loss
|
|
|
Stock
|
|
|
Equity
|
|
|
Income
|
|
|
|
(In thousands, except per share and share amounts)
|
|
|
Balance, January 1, 2008
|
|
|
72
|
|
|
|
24,041
|
|
|
|
28,975
|
|
|
|
(843
|
)
|
|
|
(787
|
)
|
|
|
|
|
|
|
51,458
|
|
|
|
|
|
ESOP shares committed to be released
|
|
|
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
121
|
|
|
|
|
|
|
|
|
|
|
|
109
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
605
|
|
|
|
605
|
|
Dividends declared-$0.24 per share
|
|
|
|
|
|
|
|
|
|
|
(744
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(744
|
)
|
|
|
|
|
Acquisition of treasury stock (267,324 shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,386
|
)
|
|
|
(2,386
|
)
|
|
|
|
|
Change in liability for retirement plans, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(655
|
)
|
|
|
|
|
|
|
(655
|
)
|
|
|
(655
|
)
|
Change in net unrealized gains on securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
available for sale, net of tax of(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
512
|
|
|
|
|
|
|
|
512
|
|
|
|
512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2008
|
|
|
72
|
|
|
|
24,029
|
|
|
|
28,836
|
|
|
|
(722
|
)
|
|
|
(930
|
)
|
|
|
(2,386
|
)
|
|
|
48,899
|
|
|
|
462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESOP shares committed to be released
|
|
|
|
|
|
|
(14
|
)
|
|
|
|
|
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
106
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
1,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,359
|
|
|
|
1,359
|
|
Dividends declared-$0.12 per share
|
|
|
|
|
|
|
|
|
|
|
(347
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(347
|
)
|
|
|
|
|
Acquisition of treasury stock (228,000 shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,919
|
)
|
|
|
(1,919
|
)
|
|
|
|
|
Change in liability for retirement plans, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
453
|
|
|
|
|
|
|
|
453
|
|
|
|
453
|
|
Change in net unrealized losses on securities available for
sale, net of tax(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(106
|
)
|
|
|
|
|
|
|
(106
|
)
|
|
|
(106
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2009
|
|
|
72
|
|
|
|
24,015
|
|
|
|
29,848
|
|
|
|
(602
|
)
|
|
|
(583
|
)
|
|
|
(4,305
|
)
|
|
|
48,445
|
|
|
|
2,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESOP shares committed to be released
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
37
|
|
|
|
|
|
Net income (unaudited)
|
|
|
|
|
|
|
|
|
|
|
265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
265
|
|
|
|
265
|
|
Dividends declared $0.03 per share
|
|
|
|
|
|
|
|
|
|
|
(165
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(165
|
)
|
|
|
|
|
Acquisition of treasury stock (33,200 shares)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(277
|
)
|
|
|
(277
|
)
|
|
|
|
|
Other comprehensive income net of tax expense of $135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
262
|
|
|
|
|
|
|
|
262
|
|
|
|
262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2010 (unaudited)
|
|
$
|
72
|
|
|
$
|
24,015
|
|
|
$
|
29,948
|
|
|
$
|
(565
|
)
|
|
$
|
(321
|
)
|
|
$
|
(4,582
|
)
|
|
$
|
48,567
|
|
|
$
|
527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-5
ALLIANCE
BANCORP, INC. OF PENNSYLVANIA AND SUBSIDIARIES
CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS
EQUITY (Continued)
|
|
|
(1) |
|
Disclosure of reclassification amount, net of tax, for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-Months Ended
|
|
|
Year Ended December 31,
|
|
|
|
June 30, 2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Net unrealized gains (losses) arising during the year
|
|
$
|
262
|
|
|
$
|
(106
|
)
|
|
$
|
(174
|
)
|
Add: reclassification adjustment for impairment charge included
in net income (net of tax benefit of $-0-, $-0-, and $299,949,
respectively)
|
|
|
|
|
|
|
|
|
|
|
582
|
|
Add: reclassification adjustment for net losses included in net
income (net of tax benefit of $-0-, $-0-, and $53,499,
respectively)
|
|
|
|
|
|
|
|
|
|
|
104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in net unrealized gains (losses) on securities available
for sale
|
|
$
|
262
|
|
|
$
|
(106
|
)
|
|
$
|
512
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements
F-6
ALLIANCE
BANCORP, INC. OF PENNSYLVANIA AND SUBSIDIARIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
|
|
|
For the Year
|
|
|
|
Ended June 30,
|
|
|
Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
265
|
|
|
$
|
625
|
|
|
$
|
1,359
|
|
|
$
|
605
|
|
Adjustments to reconcile net income to cash provided by (used
in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for loan losses
|
|
|
1,170
|
|
|
|
150
|
|
|
|
528
|
|
|
|
585
|
|
Depreciation and amortization
|
|
|
247
|
|
|
|
284
|
|
|
|
512
|
|
|
|
686
|
|
Write down on OREO
|
|
|
135
|
|
|
|
|
|
|
|
107
|
|
|
|
|
|
ESOP shares committed to be released
|
|
|
37
|
|
|
|
52
|
|
|
|
106
|
|
|
|
109
|
|
Gain (loss) on sale of loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7
|
)
|
Deferred tax benefit
|
|
|
(265
|
)
|
|
|
6
|
|
|
|
(397
|
)
|
|
|
(666
|
)
|
Loss on sale of securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
157
|
|
Impairment charge on investment securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
882
|
|
Loss (gain) on sale of OREO
|
|
|
20
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
Origination of loans held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,328
|
)
|
Proceeds from loans sold in the secondary market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,335
|
|
Changes in assets and liabilities which provided (used) cash:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses and other liabilities
|
|
|
130
|
|
|
|
160
|
|
|
|
(197
|
)
|
|
|
140
|
|
Prepaid expenses and other assets
|
|
|
(225
|
)
|
|
|
(377
|
)
|
|
|
(1,882
|
)
|
|
|
(227
|
)
|
Increase in cash surrender value of bank owned life insurance
|
|
|
(175
|
)
|
|
|
(182
|
)
|
|
|
(355
|
)
|
|
|
(367
|
)
|
Accrued interest receivable
|
|
|
82
|
|
|
|
76
|
|
|
|
(17
|
)
|
|
|
(96
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) provided by operating activities
|
|
|
1,421
|
|
|
|
794
|
|
|
|
(221
|
)
|
|
|
1,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of investment securities available for sale
|
|
|
(12,000
|
)
|
|
|
(14,000
|
)
|
|
|
(31,000
|
)
|
|
|
(29,500
|
)
|
Purchase of investment securities held to maturity
|
|
|
|
|
|
|
(2,585
|
)
|
|
|
(4,085
|
)
|
|
|
(4,000
|
)
|
Purchase of mortgage-backed securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,340
|
)
|
Loans originated and acquired
|
|
|
(20,601
|
)
|
|
|
(28,002
|
)
|
|
|
(65,628
|
)
|
|
|
(73,733
|
)
|
Proceeds from maturities and calls of investment securities
|
|
|
14,376
|
|
|
|
24,421
|
|
|
|
44,348
|
|
|
|
20,675
|
|
Proceeds from sale of investment securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,145
|
|
Proceeds from loans sold
|
|
|
|
|
|
|
|
|
|
|
500
|
|
|
|
|
|
Purchase of FHLB stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(129
|
)
|
Principal repayments of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
|
|
|
20,750
|
|
|
|
23,247
|
|
|
|
54,264
|
|
|
|
51,643
|
|
Mortgage-backed securities
|
|
|
3,870
|
|
|
|
4,840
|
|
|
|
8,876
|
|
|
|
8,258
|
|
Investment in OREO
|
|
|
(70
|
)
|
|
|
|
|
|
|
(34
|
)
|
|
|
|
|
Purchase of premises and equipment
|
|
|
(288
|
)
|
|
|
(88
|
)
|
|
|
(278
|
)
|
|
|
(540
|
)
|
Proceeds from sale of OREO
|
|
|
526
|
|
|
|
|
|
|
|
707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
6,563
|
|
|
|
7,833
|
|
|
|
7,670
|
|
|
|
(13,521
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid
|
|
|
(165
|
)
|
|
|
(177
|
)
|
|
|
(347
|
)
|
|
|
(744
|
)
|
Increase (decrease) in deposits
|
|
|
5,956
|
|
|
|
14,045
|
|
|
|
47,987
|
|
|
|
(3,520
|
)
|
Purchase of treasury stock
|
|
|
(277
|
)
|
|
|
(905
|
)
|
|
|
(1,919
|
)
|
|
|
(2,386
|
)
|
Increase (decrease) in other borrowed money
|
|
|
5,022
|
|
|
|
(1,531
|
)
|
|
|
(1,542
|
)
|
|
|
4,590
|
|
Repayment of FHLB borrowings
|
|
|
(27,000
|
)
|
|
|
|
|
|
|
(5,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(16,464
|
)
|
|
|
11,432
|
|
|
|
39,179
|
|
|
|
(2,060
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
(8,480
|
)
|
|
|
20,059
|
|
|
|
46,628
|
|
|
|
(13,773
|
)
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
74,936
|
|
|
|
28,308
|
|
|
|
28,308
|
|
|
|
42,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
66,456
|
|
|
$
|
48,367
|
|
|
$
|
74,936
|
|
|
$
|
28,306
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (credited and paid)
|
|
$
|
3,935
|
|
|
$
|
4,991
|
|
|
$
|
9,537
|
|
|
$
|
11,752
|
|
Income taxes
|
|
$
|
350
|
|
|
$
|
100
|
|
|
$
|
300
|
|
|
$
|
400
|
|
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING ACTIVITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other real estate acquired in settlement of loans
|
|
$
|
669
|
|
|
$
|
2,100
|
|
|
$
|
3,764
|
|
|
$
|
|
|
See notes to consolidated financial statements
F-7
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial Statements
for the six months ended June 30, 2010 and 2009
(unaudited)
and for the years ended December 31, 2009 and 2008.
|
|
1.
|
Organizational
Structure and Nature of Operations
|
On January 30, 2007, Alliance Bank (the Bank)
completed its reorganization to a mid-tier holding company
structure and the sale by the mid-tier company, Alliance
Bancorp, Inc. of Pennsylvania (Alliance Bancorp or
the Company) of shares of its common stock. In the
reorganization and offering, the Company sold
1,807,339 shares of common stock at a purchase price of
$10.00 per share and issued 5,417,661 shares of common
stock in exchange for former outstanding shares of the Bank.
Each share of the Banks common stock was converted into
2.09945 shares of the Companys common stock. The
offering resulted in approximately $16.5 million in net
proceeds to the Company.
As a result of the reorganization and offering, Alliance Mutual
Holding Company (the Holding Company) owned 55% of
the outstanding common stock of Alliance Bancorp and minority
public stockholders owned the remaining 45% of the outstanding
common stock of Alliance Bancorp. Following purchases of
treasury stock, at June 30, 2010, the Holding Company owns
59.3% of the outstanding common stock of Alliance Bancorp and
the minority public shareholders own the remaining 40.7%. The
Holding Company is a federally chartered mutual holding company.
The Holding Company and the Company are subject to regulation
and supervision of the Office of Thrift Supervision.
The Bank is a community oriented savings bank headquartered in
Broomall, Pennsylvania. The Bank operates a total of nine
banking offices located in Delaware and Chester Counties, which
are suburbs of Philadelphia. The Bank is primarily engaged in
attracting deposits from the general public through its branch
offices and using such deposits primarily to (i) originate
and purchase loans secured by first liens on single-family
(one-to-four
units) residential and commercial real estate properties and
(ii) invest in securities issued by the
U.S. Government and agencies thereof, municipal and
corporate debt securities and certain mutual funds. The Bank
derives its income principally from interest earned on loans,
mortgage-backed securities and investments and, to a lesser
extent, from fees received in connection with the origination of
loans and for other services. The Banks primary expenses
are interest expense on deposits and borrowings and general
operating expenses.
The Bank is subject to regulation by the Pennsylvania Department
of Banking (the Department), as its chartering
authority and primary regulator, and by the Federal Deposit
Insurance Corporation (the FDIC), which insures the
Banks deposits up to applicable limits.
Nature of Operations The Bank is principally
in the business of attracting deposits through its branch
offices and investing those deposits together with funds from
borrowings and operations in single-family residential,
commercial real estate, commercial business and consumer loans.
The Bank is primarily supervised by the Federal Deposit
Insurance Corporation (FDIC) and the Pennsylvania
Department of Banking. The Company and the Holding Company are
supervised by the Office of Thrift Supervision.
|
|
2.
|
Summary
of Significant Accounting Policies
|
Basis of Presentation and Consolidation The
consolidated financial statements of the Company include the
accounts of the Bank, Alliance Delaware Corporation, which holds
and manages certain investment and mortgage-backed securities,
Alliance Financial and Investment Services LLC, which
participates in commission fees from non-insured alternative
investment products, and 908 Hyatt Street LLC, which owns and
manages certain real estate properties, all are wholly owned
subsidiaries of the Bank. All significant intercompany balances
and transactions have been eliminated in consolidation.
Unaudited Interim Financial Data The interim
financial data is unaudited. However, in the opinion of
management, the interim data as of June 30, 2010 and for
the six months ended June 30, 2010 and 2009 includes all
adjustments, consisting of only normal recurring adjustments,
necessary for a fair statement of the
F-8
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
results of the interim periods. The results of operations for
the interim periods are not necessarily indicative of the
results of operations to be expected for a full year or any
period.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities. It also requires the disclosure of contingent
assets and liabilities as of the date of the financial
statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from
those estimates. Material estimates that are particularly
susceptible to significant change in the near term relate to the
determination of the allowance for loan losses, the potential
impairment of FHLB stock, the valuation of deferred tax assets,
liability and expense of employee benefit obligations, and
evaluation of investment securities for other than temporary
impairment.
Segment Information The Company has no
reportable segments. All of the Banks activities are
interrelated, and each activity is dependent and assessed based
on how each of the activities of the Bank supports the others.
For example, lending is dependent upon the ability of the Bank
to fund itself with deposits and other borrowings and manage
interest rate and credit risk.
The Company operates only in the U.S. domestic market,
primarily in Pennsylvanias Delaware and Chester Counties.
For the six months ended June 30, 2010 and for the years
ended December 31, 2009 and 2008, there is no one customer
that accounted for more than 10% of the Banks revenue.
Cash and Cash Equivalents For purposes of
reporting cash flows, cash and cash equivalents include cash and
amounts due from depository institutions and interest-bearing
deposits with depository institutions. As of June 30, 2010,
December 31, 2009 and December 30, 2008, the
Banks minimum reserve balance with the Federal Reserve
Bank was approximately $1.5 million (unaudited),
$2.0 million, and $2.3 million, respectively.
Investment and Mortgage-Backed Securities
The Bank classifies and accounts for debt and equity securities
as follows:
|
|
|
|
|
Securities Held to Maturity Securities held
to maturity are stated at cost, adjusted for unamortized
purchase premiums and discounts, based on the positive intent
and the ability to hold these securities to maturity considering
all reasonably foreseeable conditions and events.
|
|
|
|
Securities Available for Sale Securities
available for sale, carried at fair value, are those securities
management might sell in response to changes in market interest
rates, increases in loan demand, changes in liquidity needs and
other conditions. Unrealized gains and losses, net of tax, are
reported as a net amount in other comprehensive income (loss)
until realized.
|
Purchase premiums and discounts are amortized to income over the
life of the related security using the interest method. The
adjusted cost of a specific security sold is the basis for
determining the gain or loss on the sale.
F-9
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
The following table shows the fair value and unrealized losses
on investments, aggregated by investment category and the length
of time that individual securities have been in a continuous
unrealized loss position.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010
|
|
|
|
|
|
|
|
|
|
Less than 12 Months
|
|
|
12 Months or Longer
|
|
|
Total
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
Unrealized
|
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
Securities Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government obligations
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Mortgage-backed securities
|
|
|
|
|
|
|
|
|
|
|
189
|
|
|
|
8
|
|
|
|
189
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available for sale
|
|
$
|
|
|
|
$
|
|
|
|
$
|
189
|
|
|
$
|
8
|
|
|
$
|
189
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal obligations
|
|
$
|
|
|
|
$
|
|
|
|
$
|
4,464
|
|
|
$
|
81
|
|
|
$
|
4,464
|
|
|
$
|
81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
|
|
|
|
|
|
|
Less than 12 Months
|
|
|
12 Months or Longer
|
|
|
Total
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
Unrealized
|
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
|
(In thousands)
|
|
|
Securities Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government obligations
|
|
$
|
19,784
|
|
|
$
|
215
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
19,784
|
|
|
$
|
215
|
|
Mortgage-backed securities
|
|
|
|
|
|
|
|
|
|
|
669
|
|
|
|
15
|
|
|
|
699
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available for sale
|
|
$
|
19,784
|
|
|
$
|
215
|
|
|
$
|
699
|
|
|
$
|
15
|
|
|
$
|
20,483
|
|
|
$
|
230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal obligations
|
|
$
|
2,060
|
|
|
$
|
20
|
|
|
$
|
3,904
|
|
|
$
|
141
|
|
|
$
|
5,964
|
|
|
$
|
161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
|
|
|
|
|
|
|
Less than 12 Months
|
|
|
12 Months or Longer
|
|
|
Total
|
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
Gross
|
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
Unrealized
|
|
|
|
|
|
Unrealized
|
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
Fair Value
|
|
|
Losses
|
|
|
|
(In thousands)
|
|
|
Securities Available for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government obligations
|
|
$
|
1,987
|
|
|
$
|
13
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,987
|
|
|
$
|
13
|
|
Mortgage-backed securities
|
|
|
2,594
|
|
|
|
70
|
|
|
|
4,407
|
|
|
|
86
|
|
|
|
7,001
|
|
|
|
156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities available for sale
|
|
$
|
4,581
|
|
|
$
|
83
|
|
|
$
|
4,407
|
|
|
$
|
86
|
|
|
$
|
8,988
|
|
|
$
|
169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal obligations
|
|
$
|
9,192
|
|
|
$
|
443
|
|
|
$
|
1,559
|
|
|
$
|
162
|
|
|
$
|
10,751
|
|
|
$
|
605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management evaluates securities for
other-than-temporary
impairment at least on a quarterly basis, and more frequently
when economic or market conditions warrant such evaluation.
Consideration is given to (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, and (3) whether or not the Bank intends to sell or
expects that it is more likely than not that it will be required
to sell the security prior to an anticipated recovery in fair
value. Once a decline in value for a debt security is determined
to be
other-than-temporary,
the
other-than-temporary
F-10
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
impairment is separated into (a) the amount of total
other-than-temporary
impairment related to a decrease in cash flows expected to be
collected from debt security (the credit loss) and (b) the
amount of
other-than-temporary
impairment related to all other factors. The amount of the total
other-than-temporary
impairment related to credit loss is recognized in earnings. The
amount of
other-than-temporary
impairment related to other factors is recognized in other
comprehensive income (loss).
As of June 30, 2010, management believes that the estimated
fair value of the securities disclosed above is primarily
dependent upon the movement in market interest rates
particularly given the negligible inherent credit risk
associated with these securities. These investment securities
are comprised of securities that are rated investment grade by
at least one bond credit rating service. Although the fair value
will fluctuate as the market interest rates move, management
believes that these fair values will recover as the underlying
portfolios mature and are reinvested in market rate yielding
investments. As of June 30, 2010, there were no
U.S. government obligations in unrealized loss positions,
no mortgage backed securities in a unrealized loss position for
less than twelve months and 3 in a unrealized loss position
greater than twelve months, and no municipal obligations in a
unrealized loss position for less than twelve months and 6 in a
unrealized loss position greater than twelve months. The Company
does not intend to sell these securities and it is not more
likely than not that we will be required to sell these
securities before recovery. Management does not believe any
individual unrealized loss as of June 30, 2010 represents
an
other-than-temporary
impairment.
During 2008, due to a decline in the fair value of the
Companys investment in an $18.0 million mutual fund
portfolio, the Company identified the impairment of these
securities as other than temporary and recorded a loss of
$882,000 as a charge against operating results. In April and
July of 2008, the Company sold approximately $15.5 million
and $254,000, respectively, of the mutual funds and recorded
pretax losses on the sale of securities of $153,000 and $4,000,
respectively. In August of 2008, the remaining $2.7 million
of mutual funds were sold at fair value to Alliance Mutual
Holding Company, with no gain or loss realized from such sale.
Alliance Mutual Holding Company subsequently sold all of its
holdings of such mutual funds.
Federal Home Loan Bank Stock Federal Home
Loan Bank (FHLB) Stock, which represents the
required investment in the common stock of a correspondent bank,
is carried at cost. In December 2008, the FHLB of Pittsburgh
notified member banks that it was suspending dividend payments
and the repurchase of capital stock.
Managements determination of whether this investment is
impaired is based on their assessment of the ultimate
recoverability of its cost rather than by recognizing temporary
declines in value. The determination of whether a decline
affects the ultimate recoverability of its cost is influenced by
criteria such as (1) the significance of the decline in net
assets of the FHLB as compared to the capital stock amount for
the FHLB and the length of time this situation has persisted,
(2) commitments by the FHLB to make payments required by
law or regulation and the level of such payments in relation to
the operating performance of the FHLB, and (3) the impact
of legislative and regulatory changes on institutions and,
accordingly, on the customer base of the FHLB.
Management believes no impairment charge is necessary related to
the FHLB stock as of June 30, 2010.
Loans The Bank grants mortgage, commercial
and consumer loans to customers. A substantial portion of the
loan portfolio is represented by mortgage loans in southeastern
Pennsylvania. The ability of the Banks debtors to honor
their contract is dependent upon real estate and general
economic conditions. Loans originated and intended for sale in
the secondary market are carried at the lower of cost or
estimated fair value in aggregate. Net unrealized losses, if
any, are recognized through a valuation allowance by charges to
income. The Bank defers all loan fee income, net of certain
direct loan origination costs. The balance is accreted into
income as a yield adjustment over the contractual life of the
loan on a level yield basis.
Allowance for Loan Losses The allowance for
loan losses is increased by charges to income and decreased by
chargeoffs (net of recoveries). Allowances are provided for
specific loans when losses are
F-11
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
probable and can be estimated. When this occurs, management
considers the remaining principal balance, fair value and
estimated net realizable value of the property collateralizing
the loan. Current and future operating
and/or sales
conditions are also considered. These estimates are susceptible
to changes that could result in material adjustments to results
of operations. Recovery of the carrying value of such loans is
dependent to a great extent on economic, operating and other
conditions that may be beyond managements control.
General loan loss reserves are established as an allowance for
losses based on inherent probable risk of loss in the loan
portfolio. In assessing risk, management considers historical
experience, volume and composition of lending conducted by the
Bank, industry standards, status of nonperforming loans, general
economic conditions as they relate to the market area and other
factors related to the collectibility of the Banks loan
portfolio.
Impaired loans are predominantly measured based on the fair
value of the collateral. The provision for loan losses charged
to expense is based upon past loan loss experience and an
evaluation of probable losses and impairment existing in the
current loan portfolio. A loan is considered to be impaired
when, based upon current information and events, it is probable
that the Bank will be unable to collect all amounts due
according to the original contractual terms of the loan. An
insignificant delay or insignificant shortfall in amounts of
payments does not necessarily result in the loan being
identified as impaired. For this purpose, delays less than
90 days are considered to be insignificant. Large groups of
smaller balance homogeneous loans, including residential real
estate and consumer loans, are collectively evaluated for
impairment, except for loans restructured under a troubled debt
restructuring.
Accrued Interest Receivable Interest on
loans is recognized as earned. When a loan becomes 90 days
or more past due, accrual of loan interest is discontinued and a
reserve established on existing accruals if management believes
that after considering collateral value, economic and business
conditions and collection efforts, the borrowers financial
condition is such that collection of interest is doubtful.
Purchase Discounts and Premiums Purchase
discounts and premiums on loans and investment and
mortgage-backed securities purchased are amortized over the
expected average life of the loans and securities using the
interest method.
Other Real Estate Owned Other real
estate acquired through, or in lieu of, foreclosure is initially
recorded at fair value at the date of acquisition, establishing
a new cost basis through a charge to the allowance for loan
losses, if necessary. Revenues and expenses from operations are
included in other income and other expense. Additions to the
valuation allowance are included in other expense. Subsequent to
foreclosure, valuations are periodically performed by management
and an allowance for losses is established, if necessary, by a
charge to operations if the carrying value of a property exceeds
its estimated fair value less estimated costs to sell.
Bank-Owned Life Insurance The Bank is the
beneficiary of insurance policies on the lives of certain
officers of the Bank. The Bank has recognized the amount that
could be realized under the insurance policies as an asset in
the consolidated statements of financial condition. In
accordance with FDIC guidelines, the Company annually reviews
and monitors its investment in bank-owned life insurance, which
includes an evaluation of the financial condition of the
insurance carriers. The Bank does not plan to purchase any
additional amounts of such insurance if the amount owned would
exceed 25% of the Banks Tier 1 regulatory capital.
Premises and Equipment Land is carried at
cost. Premises and equipment are recorded at cost, less
accumulated depreciation. Depreciation is computed using the
straight-line method over the expected useful lives of the
related assets which range from two to 40 years.
Amortization of leasehold improvements is computed using the
straight-line method over the shorter of the useful lives of the
improvements or the remaining lease term. The costs of
maintenance and repairs are expensed as they are incurred, and
renewals and betterments are capitalized.
F-12
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
Income Taxes The Bank accounts for
Income Taxes in accordance with the guidance set forth in FASB
ASC Topic 740, Income Taxes. The income tax accounting guidance
results in two components of income tax expense: current and
deferred. Current income tax expense reflects taxes to be paid
or refunded for the current period by applying the provisions of
the enacted tax law to the taxable income or excess of
deductions over revenues. The Bank determines deferred income
taxes using the liability (or balance sheet) method. Under this
method, the net deferred tax asset or liability is based on the
tax effects of the differences between the book and tax bases of
assets and liabilities, and enacted changes in tax rates and
laws are recognized in the period in which they occur. Deferred
income tax expense results from changes in deferred tax assets
and liabilities between periods. Deferred tax assets are
recognized if it is more likely than not, based on the technical
merits, that the tax position will be realized or sustained upon
examination. The term more likely than not means a likelihood of
more than 50 percent; the terms examined and upon
examination also include resolution of the related appeals or
litigation processes, if any. A tax position that meets the
more-likely-than-not recognition threshold is initially and
subsequently measured as the largest amount of tax benefit that
has a greater than 50 percent likelihood of being realized
upon settlement with a taxing authority that has full knowledge
of all relevant information. The determination of whether or not
a tax position has met the more-likely-than-not recognition
threshold considers the facts, circumstances, and information
available at the reporting date and is subject to
managements judgment. Deferred tax assets are reduced by a
valuation allowance if, based on the weight of evidence
available, it is more likely than not that some portion or all
of a deferred tax asset will not be realized.
The Bank recognizes interest and penalties on income taxes as a
component of income tax expense. The Companys federal
income and state tax returns for taxable years through
December 31, 2006 have been closed for purposes of
examination by the Internal Revenue Service and Pennsylvania
Department of Revenue.
The Bank has also entered into a tax sharing agreement (under
the Internal Revenue Section 1552) with the Company
and Alliance Delaware Corporation. The agreement provides that
the tax liability shall be apportioned among the members of the
group in accordance with the ratio which that portion of the
consolidated taxable income attributed to each member of the
group having taxable income bears to the consolidated taxable
income. The Bank had $-0-(unaudited), $-0-, and $3,600 due to
the Company at June 30, 2010, December 31, 2009, and
2008, respectively.
Transfers of Financial Assets Transfers
of financial assets are accounted for as sales, when control
over the assets has been surrendered. Control over transferred
assets is deemed to be surrendered when (1) the assets have
been isolated from the Bank, (2) the transferee obtains the
right (free of conditions that constrain it from taking
advantage of that right) to pledge or exchange the transferred
assets, and (3) the Bank does not maintain effective
control over the transferred assets through an agreement to
repurchase them before their maturity.
Employee Benefit Plans The Banks
401(k) plan allows eligible participants to set aside a certain
percentage of their salaries before taxes. The Bank may elect to
match employee contributions, as a profit sharing payment, up to
a specified percentage of their respective salaries in an amount
determined annually by the Board of Directors. The
Companys profit sharing contribution related to the plan
resulted in expenses of $60,000 (unaudited), $50,000
(unaudited), $110,000, and $100,000, for the six months ended
June 30, 2010 and 2009 and years ended December 31,
2009, and 2008, respectively.
The Bank also maintains a Supplemental Executive Plan and a
Retirement Income Plan (the Plans). The accrued
amount for the Plans included in other liabilities was
$3.1 million at June 30, 2010 and $3.5 million,
and $3.4 million at December 31, 2009, and 2008,
respectively. The expense associated with the Plans for the six
months ended June 30, 2010 and June 30, 2009 was
$150,000 (unaudited) and $144,000 (unaudited), respectively. The
expense associated with the Plans for the years ended
December 31, 2009 and 2008 was $290,000 and $521,000,
respectively.
F-13
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
Advertising Costs The Bank follows the
policy of charging the costs of advertising to expense as
incurred. Advertising costs were $145,000 (unaudited) and
$145,000 (unaudited) for the six months ended June 30, 2010
and June 30, 2009, respectively. Advertising costs were
$308,000, and $466,000, for the years ended December 31,
2009 and 2008, respectively.
Earnings per Share There are no
convertible securities which would affect the net income
(numerator) in calculating earnings per share. Basic earnings
per share data are based on the weighted-average number of
shares outstanding during each period. The Companys
capital structure has no potential dilutive securities.
The following table sets forth the composition of the weighted
average shares (denominator) used in the basic earnings per
share computation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
|
|
|
For the Years
|
|
|
|
Ended June 30,
|
|
|
Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
265,000
|
|
|
$
|
625,000
|
|
|
$
|
1,359,000
|
|
|
$
|
605,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
6,709,075
|
|
|
|
6,908,427
|
|
|
|
6,854,361
|
|
|
|
7,045,768
|
|
Average unearned ESOP shares
|
|
|
(58,371
|
)
|
|
|
(68,859
|
)
|
|
|
(65,980
|
)
|
|
|
(78,289
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding basic
|
|
|
6,650,704
|
|
|
|
6,839,568
|
|
|
|
6,788,381
|
|
|
|
6,967,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.04
|
|
|
$
|
0.09
|
|
|
$
|
0.20
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income The Bank is required to
present, as a component of comprehensive income, the amounts
from transactions and other events which currently are excluded
from the statement of income and are recorded directly to
stockholders equity.
The components of accumulated other comprehensive income (loss)
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
|
|
|
For the Years Ended December 31,
|
|
|
|
Ended June 30, 2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Net unrealized gain on securities
|
|
$
|
781,316
|
|
|
$
|
519,070
|
|
|
$
|
625,436
|
|
Net unrealized loss on retirement plans
|
|
|
(1,101,813
|
)
|
|
|
(1,101,813
|
)
|
|
|
(1,555,480
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total accumulated other comprehensive income (loss)
|
|
$
|
(320,497
|
)
|
|
$
|
(582,743
|
)
|
|
$
|
(930,044
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend Restriction The Holding Company held
3,973,750 shares, or 59.3%, of the Companys
outstanding common stock, and the minority public shareholders
held 40.7% of outstanding stock at June 30, 2010. The
Holding Company has filed a notice with the Office of Thrift
Supervision (OTS) to waive its right to receive cash
dividends during the 2010 calendar year. The Company paid a
third quarter cash dividend on August 20, 2010 to all
minority public shareholders.
The Holding Company has waived receipt of past dividends paid by
the Company. The dividends waived are considered as a
restriction on the retained earnings of the Company. As of
June 30, 2010, December 31, 2009, and
December 31, 2008, the aggregate retained earnings
restricted for cash dividends waived were $2,423,988,
$2,185,563, and $1,708,713, respectively.
F-14
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
The following table shows the amount of dividends paid to
minority public shareholders, the amount of dividends waived by
the Holding Company, and the pro forma amount of dividends that
would have been paid if the Holding Company had not waived the
receipt of dividends for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
|
|
|
For the Years
|
|
|
|
Ended June 30,
|
|
|
Ended December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
Dividends paid to minority public shareholders
|
|
$
|
164,456
|
|
|
$
|
177,311
|
|
|
$
|
347,736
|
|
|
$
|
743,167
|
|
Dividends waived by the Holding Company
|
|
|
238,425
|
|
|
|
238,425
|
|
|
|
476,850
|
|
|
|
953,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma amounts
|
|
$
|
402,881
|
|
|
$
|
415,736
|
|
|
$
|
824,586
|
|
|
$
|
1,696,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recent
Accounting Pronouncements
The FASB has issued ASU
2010-06,
Fair Value Measurements and Disclosures (Topic 820): Improving
Disclosures about Fair Value Measurements. This ASU requires
some new disclosures and clarifies some existing disclosure
requirements about fair value measurement as set forth in
Codification Subtopic
820-10. The
FASBs objective is to improve these disclosures and, thus,
increase the transparency in financial reporting. Specifically,
ASU 2010-06
amends Codification Subtopic
820-10 to
now require: a reporting entity to disclose separately the
amounts of significant transfers in and out of Level 1 and
Level 2 fair value measurements and describe the reasons
for the transfers; and in the reconciliation for fair value
measurements using significant unobservable inputs, a reporting
entity should present separately information about purchases,
sales, issuances, and settlements. In addition, ASU
2010-06
clarifies the requirements of the following existing
disclosures: for purposes of reporting fair value measurement
for each class of assets and liabilities, a reporting entity
needs to use judgment in determining the appropriate classes of
assets and liabilities; and a reporting entity should provide
disclosures about the valuation techniques and inputs used to
measure fair value for both recurring and nonrecurring fair
value measurements. ASU
2010-06 is
effective for interim and annual reporting periods beginning
after December 15, 2009, except for the disclosures about
purchases, sales, issuances, and settlements in the roll forward
of activity in Level 3 fair value measurements. Those
disclosures are effective for fiscal years beginning after
December 15, 2010, and for interim periods within those
fiscal years. Early adoption is permitted. The Company is
currently reviewing the effect this new pronouncement will have
on its consolidated financial statements.
In April 2010, the FASB issued ASU
2010-18,
Receivables (Topic 310): Effect of a Loan Modification When the
Loan Is Part of a Pool That Is Accounted for as a Single Asset,
which codifies the consensus reached in EITF Issue
No. 09-I,
Effect of a Loan Modification When the Loan Is Part of a
Pool That Is Accounted for as a Single Asset. The
amendments to the Codification provide that modifications of
loans that are accounted for within a pool under Subtopic
310-30 do
not result in the removal of those loans from the pool even if
the modification of those loans would otherwise be considered a
troubled debt restructuring. An entity will continue to be
required to consider whether the pool of assets in which the
loan is included is impaired if expected cash flows for the pool
change. ASU
2010-18 does
not affect the accounting for loans under the scope of Subtopic
310-30 that
are not accounted for within pools. Loans accounted for
individually under Subtopic
310-30
continue to be subject to the troubled debt restructuring
accounting provisions within Subtopic
310-40. ASU
2010-18 is
effective prospectively for modifications of loans accounted for
within pools under Subtopic
310-30
occurring in the first interim or annual period ending on or
after July 15, 2010. Early application is permitted. Upon
initial adoption of ASU
2010-18, an
entity may make a one-time election to terminate accounting for
loans as a pool under Subtopic
310-30. This
election may be applied on a
pool-by-pool
basis and does not preclude an entity from applying pool
accounting to subsequent acquisitions of loans with credit
deterioration. The implementation of this standard is not
expected to have an impact on the Companys consolidated
financial position or results of operations.
F-15
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
In July 2010, the FASB issued ASU
2010-20,
Receivables (Topic 310): Disclosures about the Credit Quality of
Financing Receivables and the Allowance for Credit Losses, which
will help investors assess the credit risk of a companys
receivables portfolio and the adequacy of its allowance for
credit losses held against the portfolios by expanding credit
risk disclosures. This ASU requires more information about the
credit quality of financing receivables in the disclosures to
financial statements, such as aging information and credit
quality indicators. Both new and existing disclosures must be
disaggregated by portfolio segment or class. The disaggregation
of information is based on how a company develops its allowance
for credit losses and how it manages its credit exposure. The
amendments in this Update apply to all public and nonpublic
entities with financing receivables. Financing receivables
include loans and trade accounts receivable. However, short-term
trade accounts receivable, receivables measured at fair value or
lower of cost or fair value, and debt securities are exempt from
these disclosure amendments. The Company is currently reviewing
the effect this new pronouncement will have on its consolidated
financial statements.
The effective date of ASU
2010-20
differs for public and nonpublic companies. For public
companies, the amendments that require disclosures as of the end
of a reporting period are effective for periods ending on or
after December 15, 2010. The amendments that require
disclosures about activity that occurs during a reporting period
are effective for periods beginning on or after
December 15, 2010. For nonpublic companies, the amendments
are effective for annual reporting periods ending on or after
December 15, 2011.
|
|
3.
|
Investment
Securities Available for Sale and Held to Maturity
|
The amortized cost, gross unrealized gains and losses, and the
fair values of investment securities available for sale and held
to maturity are shown below. Where applicable, the maturity
distribution and the fair value of investment securities, by
contractual maturity, are shown. Actual maturities may differ
from contractual maturities because issuers may have the right
to call or prepay obligations with or without call or prepayment
penalties.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 (Unaudited)
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Available for Sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of the Federal Home Loan Bank:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due 1 year or less
|
|
$
|
3,000,000
|
|
|
$
|
2,500
|
|
|
$
|
|
|
|
$
|
3,002,500
|
|
Due 1 year through 5 years
|
|
|
1,000,000
|
|
|
|
2,500
|
|
|
|
|
|
|
|
1,002,500
|
|
Due after 5 years through 10 years
|
|
|
2,996,022
|
|
|
|
86,478
|
|
|
|
|
|
|
|
3,082,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,996,022
|
|
|
$
|
91,478
|
|
|
$
|
|
|
|
$
|
7,087,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 (Unaudited)
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Obligations of Freddie Mac:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after 5 years through 10 years
|
|
$
|
6,994,200
|
|
|
$
|
82,630
|
|
|
$
|
|
|
|
$
|
7,076,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,994,200
|
|
|
$
|
82,630
|
|
|
$
|
|
|
|
$
|
7,076,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-16
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 (Unaudited)
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Obligations of Fannie Mae:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after 1 years through 5 years
|
|
$
|
1,000,000
|
|
|
$
|
4,690
|
|
|
$
|
|
|
|
$
|
1,004,690
|
|
Due after 5 years through 10 years
|
|
|
4,000,000
|
|
|
|
14,690
|
|
|
|
|
|
|
|
4,014,690
|
|
Due after 10 years
|
|
|
9,000,000
|
|
|
|
31,890
|
|
|
|
|
|
|
|
9,031,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
14,000,000
|
|
|
$
|
51,270
|
|
|
$
|
|
|
|
$
|
14,051,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 (Unaudited)
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after 5 years through 10 years
|
|
$
|
4,315,846
|
|
|
$
|
162,154
|
|
|
$
|
|
|
|
$
|
4,478,000
|
|
Due after 10 years
|
|
|
17,759,550
|
|
|
|
425,627
|
|
|
|
(80,996
|
)
|
|
|
18,104,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
22,075,396
|
|
|
$
|
587,781
|
|
|
$
|
(80,996
|
)
|
|
$
|
22,582,181
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Available for Sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of the Federal Home Loan Bank:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due 1 year or less
|
|
$
|
1,000,000
|
|
|
$
|
4,690
|
|
|
|
|
|
|
$
|
1,004,690
|
|
Due after 5 years through 10 years
|
|
|
4,995,699
|
|
|
|
100,251
|
|
|
|
(16,870
|
)
|
|
|
5,079,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,995,699
|
|
|
$
|
104,941
|
|
|
$
|
(16,870
|
)
|
|
$
|
6,083,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Obligations of Freddie Mac:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after 1 year through 5 years
|
|
$
|
1,000,000
|
|
|
$
|
|
|
|
|
(15,310
|
)
|
|
$
|
984,690
|
|
Due after 10 years
|
|
|
1,000,000
|
|
|
|
|
|
|
|
(5,000
|
)
|
|
|
995,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,000,000
|
|
|
$
|
|
|
|
$
|
(20,310
|
)
|
|
$
|
1,979,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Obligations of Fannie Mae:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after 5 years through 10 years
|
|
$
|
6,000,000
|
|
|
$
|
2,190
|
|
|
$
|
(41,250
|
)
|
|
$
|
5,960,940
|
|
Due after 10 years
|
|
|
14,999,122
|
|
|
|
2,820
|
|
|
|
(136,492
|
)
|
|
|
14,865,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
20,999,122
|
|
|
$
|
5,010
|
|
|
$
|
(177,742
|
)
|
|
$
|
20,826,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-17
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after 5 years through 10 years
|
|
$
|
4,315,560
|
|
|
$
|
169,914
|
|
|
|
|
|
|
$
|
4,485,474
|
|
Due after 10 years
|
|
|
19,130,243
|
|
|
|
341,992
|
|
|
$
|
(161,285
|
)
|
|
|
19,310,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
23,445,803
|
|
|
$
|
511,906
|
|
|
$
|
(161,285
|
)
|
|
$
|
23,796,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Available for Sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of the Federal Home Loan Bank:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after 1 year through 5 years
|
|
$
|
1,000,000
|
|
|
$
|
22,190
|
|
|
|
|
|
|
$
|
1,022,190
|
|
Due after 5 years through 10 years
|
|
|
3,995,054
|
|
|
|
159,956
|
|
|
|
|
|
|
|
4,155,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,995,054
|
|
|
$
|
182,146
|
|
|
$
|
|
|
|
$
|
5,177,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Obligations of Freddie Mac:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after 5 years through 10 years
|
|
$
|
10,993,236
|
|
|
$
|
35,785
|
|
|
$
|
|
|
|
$
|
11,029,021
|
|
Due after 10 years
|
|
|
7,493,482
|
|
|
|
25,383
|
|
|
|
(1,820
|
)
|
|
|
7,517,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
18,486,718
|
|
|
$
|
61,168
|
|
|
$
|
(1,820
|
)
|
|
$
|
18,546,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Obligations of Fannie Mae:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due 1 year or less
|
|
$
|
998,087
|
|
|
$
|
33,793
|
|
|
$
|
|
|
|
$
|
1,031,880
|
|
Due after 10 years
|
|
|
9,967,932
|
|
|
|
58,958
|
|
|
|
|
|
|
|
10,026,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
10,966,019
|
|
|
$
|
92,751
|
|
|
$
|
|
|
|
$
|
11,058,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Obligations of Federal Farm Credit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after 5 years through 10 years
|
|
$
|
3,000,000
|
|
|
$
|
43,130
|
|
|
$
|
(10,940
|
)
|
|
$
|
3,032,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,000,000
|
|
|
$
|
43,130
|
|
|
$
|
(10,940
|
)
|
|
$
|
3,032,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-18
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
Held to Maturity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal Obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due after 5 years through 10 years
|
|
$
|
7,638,991
|
|
|
$
|
100,336
|
|
|
$
|
(68,254
|
)
|
|
$
|
7,671,073
|
|
Due after 10 years
|
|
|
16,616,771
|
|
|
|
207,481
|
|
|
|
(536,999
|
)
|
|
|
16,287,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
24,255,762
|
|
|
$
|
307,817
|
|
|
$
|
(605,253
|
)
|
|
$
|
23,958,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in obligations of U.S. Government agencies at
June 30, 2010, December 31, 2009 and December 31,
2008, were $23.1 (unaudited), $19.8 and $17.0 million,
respectively, of structured notes. These structured notes were
comprised of
step-up
bonds that provide the U.S. Government agency with the
right, but not the obligation, to call the bonds on certain
dates.
For the six months ended June 30, 2010, June 30, 2009
and the years ended December 31, 2009, and 2008, proceeds
from sales of investment securities available for sale amounted
to $-0- (unaudited), $-0- (unaudited), $-0-, and
$18.1 million, respectively. For such periods, gross
realized gains on sales amounted to $-0- (unaudited),
$-0-(unaudited), $-0-, and $-0-, respectively, while gross
realized losses amounted to $0 (unaudited), $-0- (unaudited),
$-0-, and $157,349, respectively. The tax provision applicable
to the net realized gain (loss) amounted to $-0- (unaudited),
$-0-(unaudited), $-0-, and $(53,499), for the six months ended
June 30, 2010 and 2009 and the years ended
December 31, 2009, and 2008, respectively. Investment
securities with an aggregate carrying value of
$11.4 million (unaudited), $12.0 million and
$4.0 million were pledged as collateral for certain
deposits at June 30, 2010, December 31, 2009 and
December 31, 2008, respectively.
|
|
4.
|
Mortgage-Backed
Securities Available for Sale
|
The amortized cost, gross unrealized gains and losses, and the
fair values of mortgage-backed securities available for sale are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
GNMA pass-through certificates
|
|
$
|
2,035,935
|
|
|
$
|
83,364
|
|
|
|
|
|
|
$
|
2,119,299
|
|
FHLMC pass-through certificates
|
|
|
6,850,457
|
|
|
|
442,217
|
|
|
|
|
|
|
|
7,292,674
|
|
FNMA pass-through certificates
|
|
|
9,706,064
|
|
|
|
441,196
|
|
|
$
|
(8,344
|
)
|
|
|
10,138,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
18,592,456
|
|
|
$
|
966,777
|
|
|
$
|
(8,344
|
)
|
|
$
|
19,550,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
GNMA pass-through certificates
|
|
$
|
2,141,689
|
|
|
$
|
79,369
|
|
|
|
|
|
|
$
|
2,221,058
|
|
FHLMC pass-through certificates
|
|
|
8,379,078
|
|
|
|
418,743
|
|
|
|
|
|
|
|
8,797,821
|
|
FNMA pass-through certificates
|
|
|
11,942,817
|
|
|
|
408,396
|
|
|
$
|
(15,067
|
)
|
|
|
12,336,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
22,463,584
|
|
|
$
|
906,508
|
|
|
$
|
(15,067
|
)
|
|
$
|
23,355,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-19
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008
|
|
|
|
Amortized
|
|
|
Gross Unrealized
|
|
|
Fair
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Value
|
|
|
GNMA pass-through certificates
|
|
$
|
2,541,324
|
|
|
$
|
30,113
|
|
|
$
|
(79,638
|
)
|
|
$
|
2,491,799
|
|
FHLMC pass-through certificates
|
|
|
12,292,382
|
|
|
|
352,651
|
|
|
|
(3,968
|
)
|
|
|
12,641,065
|
|
FNMA pass-through certificates
|
|
|
16,505,855
|
|
|
|
354,950
|
|
|
|
(72,912
|
)
|
|
|
16,787,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
31,339,561
|
|
|
$
|
737,714
|
|
|
$
|
(156,518
|
)
|
|
$
|
31,920,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At June 30, 2010, December 31, 2009 and 2008, the Bank
had $4.6 million (unaudited), $3.1 million and
$5.6 million, respectively, in mortgage-backed securities
pledged as collateral for the treasury, tax and loan account and
certain deposits. There were no sales of mortgage-backed
securities in 2010, 2009 or 2008.
|
|
5.
|
Loans
Receivable Net
|
Loans receivable consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
Single-family
|
|
$
|
110,388,291
|
|
|
$
|
114,953,350
|
|
|
$
|
116,682,502
|
|
Multi-family
|
|
|
1,208,419
|
|
|
|
1,231,148
|
|
|
|
1,281,274
|
|
Commercial
|
|
|
136,933,291
|
|
|
|
131,873,637
|
|
|
|
123,465,061
|
|
Land and construction
|
|
|
24,083,808
|
|
|
|
24,580,893
|
|
|
|
25,260,812
|
|
Commercial business
|
|
|
7,461,864
|
|
|
|
8,457,702
|
|
|
|
8,985,325
|
|
Consumer and other loans
|
|
|
7,391,676
|
|
|
|
7,613,968
|
|
|
|
5,936,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans receivable
|
|
|
287,467,349
|
|
|
|
288,710,698
|
|
|
|
281,611,795
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred fees
|
|
|
(261,845
|
)
|
|
|
(165,384
|
)
|
|
|
(6,123
|
)
|
Allowance for loan losses
|
|
|
(4,185,376
|
)
|
|
|
(3,537,736
|
)
|
|
|
(3,169,118
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans receivable net
|
|
|
283,020,128
|
|
|
|
285,007,578
|
|
|
|
278,436,554
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Bank originates loans to customers located primarily in
Southeastern Pennsylvania. This geographic concentration of
credit exposes the Bank to a higher degree of risk associated
with this economic region. In addition, the Bank participated in
the origination and sale of fixed-rate single-family residential
mortgage loans in the secondary market. The Bank recognized a
gain from the sale of such loans of $-0- (unaudited), $-0-
(unaudited), $-0-, and $7,000 for the six months ended
June 30, 2010 and June 30, 2009 and years ended
December 31, 2009 and 2008, respectively.
F-20
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
Following is a summary of changes in the allowance for loan
losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Balance, beginning of period
|
|
$
|
3,537,736
|
|
|
$
|
3,169,118
|
|
|
$
|
3,169,118
|
|
|
$
|
2,831,065
|
|
Provision charged to operations
|
|
|
1,170,000
|
|
|
|
150,000
|
|
|
|
528,215
|
|
|
|
585,000
|
|
Charge-offs
|
|
|
(522,616
|
)
|
|
|
(61,868
|
)
|
|
|
(160,661
|
)
|
|
|
(365,823
|
)
|
Recoveries
|
|
|
256
|
|
|
|
319
|
|
|
|
1,064
|
|
|
|
118,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
4,185,376
|
|
|
$
|
3,257,569
|
|
|
$
|
3,537,736
|
|
|
$
|
3,169,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-performing loans amounted to $13.1 million,
$7.8 million, and $7.0 million at June 30, 2010,
December 31, 2009 and December 31, 2008, respectively.
Interest income that would have been recorded during the six
months ended June 30, 2010, the twelve months ended
December 31, 2009 and the twelve months ended
December 31, 2008, if the Banks nonperforming loans
at the end of the year had been performing in accordance with
their terms was $227,000, $335,000 and $347,000, respectively.
The amount of interest income that was actually recorded during
2009 and 2008 with respect to such nonperforming loans amounted
to approximately $136,000 and $121,000, respectively. Loans
90 days past due and still accruing were $1.8 million,
$1.4 million and $1.8 million at June 30, 2010,
December 31, 2009, and December 31, 2008,
respectively. Non-accrual loans were $11.3 million,
$6.4 million and $5.2 million at June 30, 2010,
December 31, 2009, and December 31, 2008,
respectively. OREO was $3.0 million, $3.0 million and
$-0- at June 30, 2010, December 31, 2009 and
December 31, 2008, respectively.
At June 30, 2010, December 31, 2009, and
December 31, 2008, 100% of impaired loan balances were
measured for impairment based on the fair value of the
loans collateral. With respect to impaired loans without a
valuation allowance, management determined that the fair value
measurement of the underlying collateral was sufficient.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Impaired loans without a valuation allowance
|
|
$
|
1,231,928
|
|
|
$
|
1,543,035
|
|
|
$
|
1,603,076
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired loans with a valuation allowance
|
|
$
|
9,971,620
|
|
|
$
|
4,435,158
|
|
|
$
|
2,844,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impaired loans
|
|
$
|
11,203,548
|
|
|
$
|
5,978,193
|
|
|
$
|
4,447,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance related to impaired loans
|
|
$
|
1,171,054
|
|
|
$
|
107,903
|
|
|
$
|
225,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2010
|
|
2009
|
|
|
(Unaudited)
|
|
Average impaired loans
|
|
$
|
9,029,500
|
|
|
$
|
4,682,183
|
|
Interest income recognized on impaired loans
|
|
|
311,076
|
|
|
|
43,345
|
|
Interest income recognized on a cash basis on impaired loans
|
|
|
311,076
|
|
|
|
43,345
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
2009
|
|
2008
|
|
Average impaired loans
|
|
$
|
4,687,791
|
|
|
$
|
1,234,174
|
|
Interest income recognized on impaired loans
|
|
|
18,798
|
|
|
|
35,437
|
|
Interest income recognized on a cash basis on impaired loans
|
|
|
18,798
|
|
|
|
35,437
|
|
F-21
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
From time to time the Bank will grant loans to directors and
executive officers of the Bank and Company. These loans are made
under the same terms and underwriting standards as any other
customer. There were outstanding balances of $1.1 million
(unaudited), $6.9 million, and $5.5 million of these
loans at June 30, 2010, December 31, 2009, and
December 31, 2008, respectively. During 2010, there were no
new loans and lines of credit issued to directors and executive
officers, $42,000 in principal repayments, $109,000 of draws on
existing lines of credit, and due to the resignation of a
director in the second quarter of 2010, $6.1 million that
was classified as a insider loan at December 31, 2009 was
no longer classified as such at June 30, 2010. During 2009,
there were no new loans and lines of credit issued, $92,000 in
principal repayments, and $1.4 million of draws on existing
lines of credit by directors and executive officers. At
December 31, 2009, there was $173,000 in unused lines of
credit to directors and executive officers. As of June 30,
2010, all loans to directors and executive officers of the Bank
and Company were current in accordance with their terms.
However, the $6.1 million loan to a former director of the
Company was placed on non-accrual status during the first
quarter of 2010 and was impaired at June 30, 2010.
|
|
6.
|
Premises
and Equipment
|
Premises and equipment are summarized by major classifications
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Useful
|
|
June 30,
|
|
|
December 31,
|
|
|
|
Life in Years
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Land and buildings
|
|
Indefinite/40
|
|
$
|
4,512,173
|
|
|
$
|
4,320,486
|
|
|
$
|
4,187,686
|
|
Furniture and fixtures
|
|
2-7
|
|
|
5,603,793
|
|
|
|
5,507,255
|
|
|
|
5,476,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
10,115,966
|
|
|
|
9,827,741
|
|
|
|
9,664,633
|
|
Accumulated depreciation
|
|
|
|
|
(7,543,932
|
)
|
|
|
(7,297,191
|
)
|
|
|
(6,900,280
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
$
|
2,572,034
|
|
|
$
|
2,530,550
|
|
|
$
|
2,764,353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense for the six months ended June 30, 2010
and 2009 and for the years ended December 31, 2009 and 2008
amounted to $247,000 (unaudited), $284,000 (unaudited),
$512,000, and $686,000, respectively.
Deposits consist of the following major classifications:
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010 (Unaudited)
|
|
|
|
Amount
|
|
|
Percent
|
|
|
|
(Unaudited)
|
|
|
Money market deposit accounts
|
|
$
|
21,921,302
|
|
|
|
5.8
|
%
|
Other savings deposits
|
|
|
42,863,636
|
|
|
|
11.2
|
|
Certificates of less than $100,000
|
|
|
192,475,185
|
|
|
|
50.5
|
|
Certificates of $100,000 or more
|
|
|
62,625,385
|
|
|
|
16.4
|
|
NOW accounts
|
|
|
48,111,793
|
|
|
|
12.6
|
|
Non-interest bearing accounts
|
|
|
13,212,877
|
|
|
|
3.5
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
381,210,178
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
F-22
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
Money market deposit accounts
|
|
$
|
18,663,769
|
|
|
|
5.0
|
%
|
|
$
|
18,066,675
|
|
|
|
5.5
|
%
|
Passbook and statement savings accounts
|
|
|
40,891,707
|
|
|
|
10.9
|
|
|
|
39,378,369
|
|
|
|
12.0
|
|
Certificates of less than $100,000
|
|
|
194,567,026
|
|
|
|
51.8
|
|
|
|
167,750,651
|
|
|
|
51.3
|
|
Certificates of $100,000 or more
|
|
|
57,016,155
|
|
|
|
15.2
|
|
|
|
40,192,189
|
|
|
|
12.3
|
|
NOW accounts
|
|
|
48,609,281
|
|
|
|
13.0
|
|
|
|
48,269,172
|
|
|
|
14.7
|
|
Non-interest bearing accounts
|
|
|
15,506,305
|
|
|
|
4.1
|
|
|
|
13,609,911
|
|
|
|
4.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
375,254,243
|
|
|
|
100.0
|
%
|
|
$
|
327,266,967
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average cost of interest bearing deposits was 1.62%
(unaudited), 2.17% and 2.97% at June 30, 2010,
December 31, 2009, and December 31, 2008,
respectively. Included in non-interest bearing deposits are the
deposits of Alliance Mutual Holding Company, a related party, of
$-0- (unaudited), $3,627,000 and $2,945,000 at June 30,
2010, December 31, 2009 and December 31, 2008,
respectively.
A summary of certificates by scheduled maturity was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010
|
|
|
December 31, 2009
|
|
|
|
Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
2010
|
|
$
|
103,310,516
|
|
|
|
40.50
|
%
|
|
$
|
200,111,806
|
|
|
|
79.50
|
%
|
2011
|
|
|
124,456,891
|
|
|
|
48.79
|
%
|
|
|
43,059,886
|
|
|
|
17.10
|
%
|
2012
|
|
|
21,091,517
|
|
|
|
8.27
|
%
|
|
|
5,231,595
|
|
|
|
2.10
|
%
|
2013
|
|
|
5,184,764
|
|
|
|
2.02
|
%
|
|
|
1,417,480
|
|
|
|
0.60
|
%
|
2014
|
|
|
121,399
|
|
|
|
0.05
|
%
|
|
|
948,222
|
|
|
|
0.40
|
%
|
Thereafter
|
|
|
1,935,483
|
|
|
|
0.37
|
%
|
|
|
814,192
|
|
|
|
0.30
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
256,100,570
|
|
|
|
100.00
|
%
|
|
$
|
251,583,181
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A summary of interest expense on deposits was as follows:
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
Money market deposit accounts
|
|
$
|
79,070
|
|
|
$
|
62,533
|
|
Other savings deposits
|
|
|
103,051
|
|
|
|
98,899
|
|
Certificates of less than $100,000
|
|
|
2,171,153
|
|
|
|
2,856,617
|
|
Certificates of $100,000 or more
|
|
|
529,814
|
|
|
|
655,901
|
|
NOW accounts
|
|
|
117,421
|
|
|
|
123,546
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,000,509
|
|
|
$
|
3,797,496
|
|
|
|
|
|
|
|
|
|
|
F-23
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
Twelve Months December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Money market deposit accounts
|
|
$
|
133,897
|
|
|
$
|
303,070
|
|
Other savings deposits
|
|
|
200,760
|
|
|
|
215,242
|
|
Certificates of less than $100,000
|
|
|
5,403,356
|
|
|
|
6,852,213
|
|
Certificates of $100,000 or more
|
|
|
1,282,717
|
|
|
|
1,159,037
|
|
NOW accounts
|
|
|
235,983
|
|
|
|
738,616
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
7,256,713
|
|
|
$
|
9,268,178
|
|
|
|
|
|
|
|
|
|
|
Deposit accounts are federally insured up to $250,000. Deposits
in excess of this amount are generally not federally insured.
FHLB Advances were summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
June 30,
|
|
|
|
Due
|
|
|
Rate
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
FHLB convertible advance
|
|
|
09/22/10
|
|
|
|
6.10
|
%
|
|
$
|
5,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
5,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
Interest
|
|
|
|
|
|
|
Due
|
|
Rate
|
|
2009
|
|
2008
|
|
FHLB convertible advance
|
|
07/22/09
|
|
|
6.19
|
%
|
|
$
|
|
|
|
$
|
5,000,000
|
|
FHLB convertible advance
|
|
02/03/10
|
|
|
6.05
|
|
|
|
6,000,000
|
|
|
|
6,000,000
|
|
FHLB convertible advance
|
|
05/17/10
|
|
|
6.44
|
|
|
|
11,000,000
|
|
|
|
11,000,000
|
|
FHLB convertible advance
|
|
06/28/10
|
|
|
6.44
|
|
|
|
10,000,000
|
|
|
|
10,000,000
|
|
FHLB convertible advance
|
|
09/22/10
|
|
|
6.10
|
|
|
|
5,000,000
|
|
|
|
5,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
$
|
32,000,000
|
|
|
$
|
37,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The FHLB has an option, beginning at a predetermined date and
quarterly thereafter, to convert certain advances to a floating
rate advance, generally at three-month LIBOR. However, the Bank
may, at its option and without any penalty, put back the advance
or a portion thereof to the FHLB prior to conversion.
The FHLB offers an alternative to regular repurchase agreements.
The term is variable from overnight to one year and utilizes
mortgage loans as collateral in lieu of liquidity items such as
government securities for collateral.
The Banks unused credit line with the FHLB amounted to
approximately $20,000,000 at June 30, 2010 (unaudited),
December 31, 2009 and December 31, 2008, respectively.
The weighted average rate on FHLB advances was 6.20%
(unaudited), 6.31% and 6.30% at June 30, 2010,
December 31, 2009 and December 31, 2008, respectively.
The advances are collateralized by FHLB stock owned by the Bank
in addition to a blanket pledge of eligible assets in an amount
required to be maintained so that the estimated fair value of
such eligible assets exceeds, at all times, 110% of the
outstanding advances.
F-24
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
The following table sets forth certain information regarding
borrowed funds at or for the dates indicated:
|
|
|
|
|
|
|
At or for the Six Months
|
|
|
Ended June 30, 2010
|
|
|
(Unaudited)
|
|
FHLB of Pittsburgh advances:
|
|
|
|
|
Average balance outstanding
|
|
$
|
24,193
|
|
Maximum amount outstanding at any month-end during the period
|
|
|
32,000
|
|
Balance outstanding at end of period
|
|
|
5,000
|
|
Weighted average interest rate during the period
|
|
|
6.20
|
%
|
Weighted average interest rate at end of the period
|
|
|
6.10
|
%
|
Total borrowings:
|
|
|
|
|
Average balance outstanding
|
|
$
|
25,369
|
|
Maximum amount outstanding at any month-end during the period
|
|
|
35,238
|
|
Balance outstanding at end of period
|
|
|
13,112
|
|
Weighted average interest rate during the period
|
|
|
6.20
|
%
|
Weighted average interest rate at end of period
|
|
|
6.10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
At or for the Year Ended December 31,
|
|
|
2009
|
|
2008
|
|
|
(Dollars in Thousands)
|
|
FHLB of Pittsburgh advances:
|
|
|
|
|
|
|
|
|
Average balance outstanding
|
|
$
|
34,767
|
|
|
$
|
37,000
|
|
Maximum amount outstanding at any month-end during the year
|
|
|
37,000
|
|
|
|
37,100
|
|
Balance outstanding at end of year
|
|
|
32,000
|
|
|
|
37,000
|
|
Weighted average interest rate during the year
|
|
|
6.39
|
%
|
|
|
6.30
|
%
|
Weighted average interest rate at end of year
|
|
|
6.31
|
%
|
|
|
6.30
|
%
|
Total borrowings:
|
|
|
|
|
|
|
|
|
Average balance outstanding
|
|
$
|
34,811
|
|
|
$
|
37,815
|
|
Maximum amount outstanding at any month-end during the year
|
|
|
37,082
|
|
|
|
39,812
|
|
Balance outstanding at end of year
|
|
|
32,021
|
|
|
|
37,198
|
|
Weighted average interest rate during the year
|
|
|
6.38
|
%
|
|
|
6.27
|
%
|
Weighted average interest rate at end of year
|
|
|
6.31
|
%
|
|
|
6.30
|
%
|
The Bank uses the experience method in computing reserves for
bad debts. The bad debt deduction allowable under this method is
available to small banks with assets less than
$500 million. Generally, this method allows the Bank to
deduct an annual addition to the reserve for bad debts equal to
the increase in the balance of the Banks reserve for bad
debts at the end of the year to an amount equal to the
percentage of total loans at the end of the year, computed using
the ratio of the previous six years net chargeoffs divided
by the sum of the previous six years total outstanding
loans at year end.
Retained earnings at June 30, 2010 (unaudited),
December 31, 2009 and 2008 included approximately
$7.1 million, representing bad debt deductions, for which
no deferred income taxes have been provided.
The Company has no liability recorded related to unrecognized
tax positions. No expense has been recorded or accrued for
interest or penalties.
F-25
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
The Company files income tax returns in the U.S. Federal
jurisdiction and in Pennsylvania. With limited exception, the
Company is no longer subject to U.S. Federal and
Pennsylvania examinations by tax authorities before 2006.
The tax effect of temporary differences that give rise to
significant portions of the deferred tax accounts, calculated at
34%, is as follows:
|
|
|
|
|
|
|
June 30, 2010
|
|
|
|
(Unaudited)
|
|
|
Deferred tax assets:
|
|
|
|
|
Depreciation and amortization
|
|
$
|
128,180
|
|
Allowance for loan losses
|
|
|
1,422,900
|
|
Additional minimum liability for retirement plans
|
|
|
567,601
|
|
Securities impairment
|
|
|
317,900
|
|
Supplemental retirement benefits
|
|
|
1,226,040
|
|
Capital loss carryforward
|
|
|
327,760
|
|
Alternative minimum tax
|
|
|
1,347,000
|
|
State tax loss carryforwards
|
|
|
336,776
|
|
Other
|
|
|
213,192
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
5,887,349
|
|
Valuation allowance
|
|
|
(336,776
|
)
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
Deferred loan fees
|
|
|
(88,060
|
)
|
Pension Plan
|
|
|
(383,860
|
)
|
Net unrealized gain on securities available for sale
|
|
|
(402,496
|
)
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(874,416
|
)
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
4,676,157
|
|
|
|
|
|
|
F-26
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
|
121,380
|
|
|
$
|
52,020
|
|
Allowance for loan losses
|
|
|
1,202,580
|
|
|
|
1,077,460
|
|
Additional minimum liability for retirement plans
|
|
|
567,601
|
|
|
|
801,309
|
|
Securities impairment
|
|
|
317,900
|
|
|
|
317,900
|
|
Supplemental retirement benefits
|
|
|
1,201,900
|
|
|
|
1,157,360
|
|
Capital loss carryforward
|
|
|
327,760
|
|
|
|
327,760
|
|
Alternative minimum tax
|
|
|
1,347,000
|
|
|
|
1,216,000
|
|
State tax loss carryforwards
|
|
|
336,776
|
|
|
|
316,225
|
|
Other
|
|
|
197,752
|
|
|
|
106,854
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
5,620,649
|
|
|
|
5,372,888
|
|
|
|
|
|
|
|
|
|
|
Valuation allowance
|
|
|
(336,776
|
)
|
|
|
(316,225
|
)
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Deferred loan fees
|
|
|
(94,860
|
)
|
|
|
(103,020
|
)
|
Pension Plan
|
|
|
(375,360
|
)
|
|
|
(303,280
|
)
|
Net unrealized gain on securities available for sale
|
|
|
(267,399
|
)
|
|
|
(322,196
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(737,619
|
)
|
|
|
(728,496
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
4,546,254
|
|
|
$
|
4,328,167
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2010 (unaudited), December 31, 2009,
and December 31, 2008, the Bank had approximately
$2.9 million of State NOL carryforwards expiring through
2012. The Company has recorded a full valuation allowance for
these carryforwards as projected State income at the Bank is not
anticipated to be sufficient to realize these benefits.
The consolidated benefit for income taxes consisted of the
following for the six months ended June 30:
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
Current, federal
|
|
$
|
(75,000
|
)
|
|
$
|
(67,000
|
)
|
Deferred, federal
|
|
|
(130,000
|
)
|
|
|
8,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(205,000
|
)
|
|
$
|
(59,000
|
)
|
|
|
|
|
|
|
|
|
|
The consolidated benefit for income taxes consisted of the
following for the years ended December 31:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Current, federal
|
|
$
|
356,000
|
|
|
$
|
255,076
|
|
Deferred, federal
|
|
|
(397,000
|
)
|
|
|
(665,676
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(41,000
|
)
|
|
$
|
(410,600
|
)
|
|
|
|
|
|
|
|
|
|
F-27
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
The Banks federal income tax benefit differs from that
computed at the statutory tax rate as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
Percentage
|
|
|
|
|
|
Percentage
|
|
|
|
|
|
|
of Pretax
|
|
|
|
|
|
of Pretax
|
|
|
|
Amount
|
|
|
Income
|
|
|
Amount
|
|
|
Income
|
|
|
|
(Unaudited)
|
|
|
Expense at statutory rate
|
|
$
|
89,949
|
|
|
|
34.0
|
%
|
|
$
|
212,416
|
|
|
|
34.0
|
%
|
Adjustments resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax-exempt income
|
|
|
(180,511
|
)
|
|
|
(68.2
|
)
|
|
|
(204,423
|
)
|
|
|
(32.7
|
)
|
Increase in cash surrender value
|
|
|
(59,263
|
)
|
|
|
(22.4
|
)
|
|
|
(62,144
|
)
|
|
|
(9.9
|
)
|
Other
|
|
|
(55,175
|
)
|
|
|
(20.9
|
)
|
|
|
(4,849
|
)
|
|
|
(0.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit per consolidated statements of income
|
|
$
|
(205,000
|
)
|
|
|
(77.5
|
)%
|
|
$
|
(59,000
|
)
|
|
|
(9.4
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
Percentage
|
|
|
|
|
|
Percentage
|
|
|
|
|
|
|
of Pretax
|
|
|
|
|
|
of Pretax
|
|
|
|
Amount
|
|
|
Income
|
|
|
Amount
|
|
|
Income
|
|
|
Expense at statutory rate
|
|
$
|
448,017
|
|
|
|
34.0
|
%
|
|
$
|
65,972
|
|
|
|
34.0
|
%
|
Adjustments resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax-exempt income
|
|
|
(398,121
|
)
|
|
|
(30.2
|
)
|
|
|
(355,300
|
)
|
|
|
(183.1
|
)
|
Increase in cash surrender value
|
|
|
(120,783
|
)
|
|
|
(9.2
|
)
|
|
|
(124,753
|
)
|
|
|
(64.3
|
)
|
Other
|
|
|
29,887
|
|
|
|
2.3
|
|
|
|
3,481
|
|
|
|
1.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit per consolidated statements of income
|
|
$
|
(41,000
|
)
|
|
|
(3.1
|
)%
|
|
$
|
(410,600
|
)
|
|
|
(211.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.
|
Commitments
and Contingencies
|
The Bank had approximately $9.1 million (unaudited),
$7.8 million and $6.4 million in outstanding loan
commitments, excluding unused lines of credit and the
undisbursed portion of loans in process, at June 30, 2010,
December 31, 2009 and December 31, 2008, respectively,
which were expected to fund within the next three months. Unused
commitments under unused lines of credit amounted to
$29.4 million (unaudited), $30.5 million and
$31.6 million at June 30, 2010, December 31,
2009, and December 31, 2008, respectively. In addition, the
Bank had $849,000 (unaudited), $1.4 million, and
$1.3 million in standby letters of credit at June 30,
2010, December 31, 2009 and December 31, 2008,
respectively, which were secured by cash, marketable securities
and real estate. All commitments are issued using the
Banks current loan policies and underwriting guidelines
and the breakdown between fixed-rate and adjustable-rate loans
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Fixed-rate (ranging from 5.25% to 8.00)%
|
|
$
|
1,826,750
|
|
|
$
|
7,455,322
|
|
|
$
|
3,179,750
|
|
Adjustable-rate
|
|
|
7,279,600
|
|
|
|
382,250
|
|
|
|
3,239,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
9,106,350
|
|
|
$
|
7,837,572
|
|
|
$
|
6,419,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-28
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
Depending on cash flow, interest rate risk, risk management and
other considerations, longer term fixed-rate residential loans
are sold in the secondary market. There were no outstanding
commitments to sell loans at June 30, 2010 (unaudited) and
December 31, 2009.
On May 14, 2010, Alliance Bank, a wholly owned subsidiary
of the Company, filed a complaint against New Century Bank in
the United States District Court for the Eastern District of
Pennsylvania claiming trademark infringement, false designation
of origin and unfair competition due to New Century Banks
unauthorized adoption and use of Alliance Banks registered
trademark of Customer First in connection with
providing banking and financial services, including doing
business under the name Customer 1st Bank.
Alliance Bank is seeking to enjoin New Century Bank from the use
of its trademark as well as unspecified monetary damages. In its
answer to the complaint, New Century Bank filed a counterclaim
against Alliance Bank alleging that the trademark is invalid.
On July 27, 2010, the District Court, following evidentiary
hearing and oral argument, found that Alliance Bank was likely
to succeed on the merits of the trademark infringement case at
trial and granted Alliance Banks motion for a preliminary
injunction against New Century Bank prohibiting its use of the
name Customer First or any similar name, requiring New Century
Bank to immediately modify its signage and cease using the name
Customer 1st Bank in its branches or otherwise using or
disseminating marketing and promotional materials that uses or
features the mark Customers
1st and/or
Customers 1st Bank or any logo, trade name or trademark
which incorporates such a mark. New Century Bank has
30 days to appeal the order for a preliminary junction from
Alliance Banks posting a security bond on August 2,
2010. Following entry of the preliminary injunction, the parties
entered into a settlement agreement whereby New Century Bank
agreed to permanently cease all use of the Customer First name
or any similar name, withdraw its trademark applications for use
of such names and transfer the registration of all related
domain names to Alliance Bank, and Alliance Bank agreed to
withdraw all other claims under the lawsuit.
Expenses related to rent for office buildings for the six months
ended June 30, 2010 and 2009 and the years ended
December 31, 2009 and 2008 were $211,000 (unaudited),
$217,000 (unaudited), $438,000, and $434,000, respectively. The
Bank maintains offices at nine locations, including seven bank
offices which it rents under leases expiring over the next
13 years. The following is a summary of future minimum
rental payments required under all operating leases as of
December 31, 2009:
|
|
|
|
|
|
|
Year Ending December 31,
|
|
|
2010
|
|
$
|
429,063
|
|
2011
|
|
|
326,317
|
|
2012
|
|
|
252,970
|
|
2013
|
|
|
230,123
|
|
2014
|
|
|
230,870
|
|
Thereafter
|
|
|
1,077,690
|
|
|
|
|
|
|
Total minimum rental payments
|
|
$
|
2,547,033
|
|
|
|
|
|
|
The Bank has a defined benefit pension plan, a profit-sharing
plan and a defined contribution plan under Section 401(k)
of the Internal Revenue Code, all of which cover all full-time
employees meeting certain eligibility requirements. The plans
may be terminated at any time at the discretion of the
Banks Board of Directors.
Pension expense was $152,000 (unaudited), $216,000 (unaudited),
$388,265, and $299,506 for the six month periods ended
June 30, 2010 and 2009 and the years ended 2009 and 2008,
respectively. The contribution for the profit-sharing plan was
$60,000 (unaudited), $50,000 (unaudited), $110,000, and
$100,000
F-29
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
for the six month periods ended June 30, 2010 and 2009 and
the years ended December 31, 2009 and 2008, respectively.
There were no employer contributions to the 401(k) plan in 2010
(unaudited), 2009, and 2008.
The net pension costs for the six month periods ended
June 30, 2010 and 2009 included the following components:
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
|
June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
Net Periodic Benefit Cost
|
|
|
|
|
|
|
|
|
Service Cost
|
|
$
|
147,174
|
|
|
$
|
147,938
|
|
Interest Cost
|
|
|
133,708
|
|
|
|
122,880
|
|
Expected Return on Plan Assets
|
|
|
(169,350
|
)
|
|
|
(114,146
|
)
|
Amortization of Prior Service Cost
|
|
|
6,342
|
|
|
|
6,342
|
|
Amortization of Loss
|
|
|
19,874
|
|
|
|
52,986
|
|
|
|
|
|
|
|
|
|
|
Net Periodic Benefit Cost
|
|
$
|
137,748
|
|
|
$
|
216,000
|
|
|
|
|
|
|
|
|
|
|
The net pension costs for the years ended December 31, 2009
and 2008 included the following components:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Net Periodic Benefit Cost
|
|
|
|
|
|
|
|
|
Service Cost
|
|
$
|
297,641
|
|
|
$
|
295,877
|
|
Interest Cost
|
|
|
264,737
|
|
|
|
245,762
|
|
Expected Return on Plan Assets
|
|
|
(288,812
|
)
|
|
|
(330,789
|
)
|
Amortization of Transition Obligation/(Asset)
|
|
|
|
|
|
|
|
|
Amortization of Prior Service Cost
|
|
|
12,685
|
|
|
|
12,685
|
|
Amortization of Loss
|
|
|
102,014
|
|
|
|
5,971
|
|
|
|
|
|
|
|
|
|
|
Net Periodic Benefit Cost
|
|
$
|
388,265
|
|
|
$
|
229,506
|
|
|
|
|
|
|
|
|
|
|
Other changes in plan assets and benefit obligations
recognized in other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
Net loss/(gain)
|
|
$
|
(561,200
|
)
|
|
$
|
1,264,076
|
|
Amortization of net loss
|
|
|
(102,014
|
)
|
|
|
(5,971
|
)
|
Amortization of prior service cost
|
|
|
(12,685
|
)
|
|
|
(12,685
|
)
|
Amortization of transition obligation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recognized in other comprehensive income (loss)
|
|
$
|
(675,899
|
)
|
|
$
|
1,245,420
|
|
|
|
|
|
|
|
|
|
|
Total recognized in net periodic benefit cost and other
comprehensive income (loss)
|
|
$
|
(287,634
|
)
|
|
$
|
1,474,926
|
|
|
|
|
|
|
|
|
|
|
The estimated net loss and prior service cost for the defined
benefit pension plan that will be amortized from accumulated
other comprehensive income (loss) into net periodic benefit cost
over the next fiscal year are $49,837 and $12,685, respectively.
F-30
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
Key Assumptions
|
|
|
|
|
|
|
|
|
Discount Rate for Net Periodic Benefit Cost
|
|
|
6.00
|
%
|
|
|
6.00
|
%
|
Salary Scale for Net Periodic Benefit Cost
|
|
|
4.00
|
%
|
|
|
4.00
|
%
|
Expected Return on Plan Assets
|
|
|
8.00
|
%
|
|
|
8.00
|
%
|
Discount Rate for Plan Obligations
|
|
|
6.00
|
%
|
|
|
6.00
|
%
|
Salary Scale for Plan Obligations
|
|
|
4.00
|
%
|
|
|
4.00
|
%
|
A summary of reconciliation and disclosure information required
under FASB ASC Topic 715, Compensation-Retirement Benefits, for
the defined benefit pension plan is as follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Change in Projected Benefit Obligation
|
|
|
|
|
|
|
|
|
Projected Benefit Obligation at Beginning of Year
|
|
$
|
4,439,594
|
|
|
$
|
4,354,167
|
|
Service Cost
|
|
|
297,641
|
|
|
|
295,877
|
|
Interest Cost
|
|
|
264,737
|
|
|
|
245,762
|
|
Benefits paid
|
|
|
(406,277
|
)
|
|
|
(494,381
|
)
|
Actuarial Loss
|
|
|
68,021
|
|
|
|
38,169
|
|
|
|
|
|
|
|
|
|
|
Projected Benefit Obligation at End of Year
|
|
|
4,663,716
|
|
|
|
4,439,594
|
|
|
|
|
|
|
|
|
|
|
Change in Plan Assets During Year
|
|
|
|
|
|
|
|
|
Fair Value of Plan Assets at Beginning of Year
|
|
|
3,193,874
|
|
|
|
4,183,373
|
|
Actual Return on Plan Assets
|
|
|
918,033
|
|
|
|
(895,118
|
)
|
Employer Contributions
|
|
|
600,000
|
|
|
|
400,000
|
|
Benefits Paid
|
|
|
(406,277
|
)
|
|
|
(494,381
|
)
|
|
|
|
|
|
|
|
|
|
Fair Value of Plan Assets at End of Year
|
|
|
4,305,630
|
|
|
|
3,193,874
|
|
|
|
|
|
|
|
|
|
|
Funded Status at End of Year, included in other liabilities
|
|
$
|
(358,086
|
)
|
|
$
|
(1,245,720
|
)
|
|
|
|
|
|
|
|
|
|
Benefit Obligations at End of Year
|
|
|
|
|
|
|
|
|
Accumulated Benefit Obligation
|
|
$
|
3,742,316
|
|
|
$
|
3,293,549
|
|
|
|
|
|
|
|
|
|
|
Amounts Recognized in Accumulated Other Comprehensive Loss
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
1,082,363
|
|
|
$
|
1,745,577
|
|
Prior service cost
|
|
|
114,167
|
|
|
|
126,852
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,196,530
|
|
|
$
|
1,872,429
|
|
|
|
|
|
|
|
|
|
|
Expected
Contributions to the Trust
The Bank plans to contribute $400,000 to the pension plan in
2010.
F-31
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
Expected
Benefit Payments From the Trust
|
|
|
|
|
2010
|
|
$
|
90,201
|
|
2011
|
|
|
199,605
|
|
2012
|
|
|
422,517
|
|
2013
|
|
|
144,917
|
|
2014
|
|
|
761,928
|
|
2015-2019
|
|
|
3,533,845
|
|
Asset allocation for the pension plan includes equity securities
ranging from 55% to 75%, debt securities ranging from 25% to 45%
and cash and cash equivalents ranging from 0% to 10%. The
following table shows the asset allocation as of
December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage
|
|
Investment Class
|
|
|
|
|
of Assets
|
|
|
Fixed Income Investments
|
|
$
|
1,256,648
|
|
|
|
29.2
|
%
|
Equity Investments
|
|
|
2,648,074
|
|
|
|
61.5
|
%
|
Cash and Cash Equivalents
|
|
|
400,908
|
|
|
|
9.3
|
%
|
|
|
|
|
|
|
|
|
|
Fair Value as of December 31, 2009
|
|
$
|
4,305,630
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
The Fixed income investments is 50.9% invested in a total return
bond fund and 49.1% invested in a short term investment grade
fund. The Equity investments consist of 10.0% small-cap mutual
funds, 10.2% mid-cap mutual funds, 65.2% large-cap mutual funds,
and 14.6% international mutual funds.
The following table summarizes assets measured at fair value on
a recurring basis as of December 31, 2009, segregated by
the level of the valuation inputs within the fair value
hierarchy utilized to measure fair value (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Significant
|
|
|
(Level 3)
|
|
|
|
|
|
|
Active Markets
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
for Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
Description
|
|
Total
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
Cash
|
|
$
|
400,908
|
|
|
$
|
400,908
|
|
|
$
|
|
|
|
$
|
|
|
Mutual Funds
|
|
|
3,904,722
|
|
|
|
3,904,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,305,630
|
|
|
$
|
4,305,630
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair value measurements by level within the fair value
hierarchy as of at December 31, 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Significant
|
|
|
(Level 3)
|
|
|
|
|
|
|
Active Markets
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
for Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
Description
|
|
Total
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
Cash
|
|
$
|
422,930
|
|
|
$
|
422,930
|
|
|
$
|
|
|
|
$
|
|
|
Mutual Funds
|
|
|
2,770,944
|
|
|
|
2,770,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,193,874
|
|
|
$
|
3,193,874
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In July 2000, the Bank entered into a Nonqualified Retirement
and Death Benefit Agreement (the Agreement) with
certain officers of the Bank. The purpose of the Agreement is to
provide the officers with supplemental retirement benefits equal
to a specified percentage of final composition and a
pre-retirement death benefit if the officer does not attain the
specific age requirement. A summary of the reconciliation and
F-32
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
disclosure information required under FASB Topic ASC 715,
Compensation-Retirement Benefits, for the Agreement is as
follows:
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
Net Periodic Benefit Cost
|
|
|
|
|
|
|
|
|
Service Cost
|
|
$
|
19,730
|
|
|
$
|
17,558
|
|
Interest Cost
|
|
|
118,246
|
|
|
|
110,588
|
|
Amortization of Loss
|
|
|
12,024
|
|
|
|
15,854
|
|
|
|
|
|
|
|
|
|
|
Net Periodic Benefit Cost
|
|
$
|
150,000
|
|
|
$
|
144,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
Change in benefit obligation during year
|
|
|
|
|
|
|
|
|
Benefit obligation at beginning of year
|
|
$
|
3,888,031
|
|
|
$
|
3,778,374
|
|
Service cost
|
|
|
37,228
|
|
|
|
35,116
|
|
Interest cost
|
|
|
228,518
|
|
|
|
221,939
|
|
Benefit payments
|
|
|
(158,792
|
)
|
|
|
(158,792
|
)
|
Actuarial loss
|
|
|
12,413
|
|
|
|
11,394
|
|
|
|
|
|
|
|
|
|
|
Benefit obligation at end of year
|
|
|
4,007,398
|
|
|
|
3,888,031
|
|
|
|
|
|
|
|
|
|
|
Change in plan assets during year
|
|
|
|
|
|
|
|
|
Fair value of plan assets at beginning of year
|
|
|
|
|
|
|
|
|
Employer contributions
|
|
|
158,792
|
|
|
|
158,792
|
|
Benefit payments
|
|
|
(158,792
|
)
|
|
|
(158,792
|
)
|
|
|
|
|
|
|
|
|
|
Fair value of plan assets at end of year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded status
|
|
|
|
|
|
|
|
|
Funded status (included in other liabilities)
|
|
|
(4,007,398
|
)
|
|
|
(3,888,031
|
)
|
Unrecognized net loss
|
|
|
472,884
|
|
|
|
484,360
|
|
Unrecognized prior service cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net liability recognized
|
|
$
|
(3,534,514
|
)
|
|
$
|
(3,403,671
|
)
|
|
|
|
|
|
|
|
|
|
Change in accumulated other comprehensive income
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income at beginning of year
|
|
$
|
484,360
|
|
|
$
|
737,068
|
|
Amortization of net loss
|
|
|
(23,889
|
)
|
|
|
(31,710
|
)
|
Actuarial gain
|
|
|
12,413
|
|
|
|
11,654
|
|
Amortization of prior service cost
|
|
|
|
|
|
|
(232,652
|
)
|
|
|
|
|
|
|
|
|
|
Net change in other comprehensive income (loss)
|
|
|
(11,476
|
)
|
|
|
(252,708
|
)
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income at end of year
|
|
$
|
472,884
|
|
|
$
|
484,360
|
|
|
|
|
|
|
|
|
|
|
Expected cash-flow information for years after current fiscal
year
|
|
|
|
|
|
|
|
|
2010
|
|
|
|
|
|
$
|
167,814
|
|
2011
|
|
|
|
|
|
|
267,053
|
|
2012
|
|
|
|
|
|
|
267,053
|
|
2013
|
|
|
|
|
|
|
287,501
|
|
2014
|
|
|
|
|
|
|
338,059
|
|
2015-2019
|
|
|
|
|
|
|
1,901,060
|
|
F-33
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Net periodic benefit cost
|
|
|
|
|
|
|
|
|
Service cost
|
|
$
|
37,228
|
|
|
$
|
35,116
|
|
Interest cost
|
|
|
228,518
|
|
|
|
221,939
|
|
Amortization of prior service cost
|
|
|
|
|
|
|
232,652
|
|
Amortization of net loss
|
|
|
23,889
|
|
|
|
31,710
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost
|
|
$
|
289,635
|
|
|
$
|
521,417
|
|
|
|
|
|
|
|
|
|
|
Key Assumptions
|
|
|
|
|
|
|
|
|
Discount rate during the year
|
|
|
6.00
|
%
|
|
|
6.00
|
%
|
Discount rate at end of year
|
|
|
6.00
|
%
|
|
|
6.00
|
%
|
Employee
Stock Ownership Plan
The Bank has an Employee Stock Ownership Plan (ESOP)
for the benefit of employees who meet the eligibility
requirements as defined in the plan. The ESOP trust purchased
90,333 shares of common stock using proceeds of a loan from
the Company. The Bank makes cash contributions to the ESOP on an
annual basis sufficient to enable the ESOP to make the required
loan payments to the Company. The loan bears an interest rate of
8.25% with principal and interest payable quarterly in equal
installments over eight years. The loan is secured by the shares
of the stock purchased.
As the debt is repaid, shares are released from the collateral
and allocated to qualified employees. Accordingly, the shares
pledged as collateral are reported as unearned ESOP shares in
the Consolidated Statements of Financial Condition. As shares
are released from collateral, the Bank reports compensation
expense equal to the current market price of the shares, and the
shares become outstanding for earnings per share computations.
The compensation expense is recorded on a monthly basis. The
Companys expense for the ESOP was $37,000 (unaudited),
$52,000 (unaudited), $99,435 and $102,344 for the six months
ended June 30, 2010 and 2009, and the years ended
December 31, 2009 and 2008, respectively.
The following table presents the components of the ESOP shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
Twelve Months Ended
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Shares released for allocation
|
|
|
33,814
|
|
|
|
7,528
|
|
|
|
30,110
|
|
|
|
18,066
|
|
Unreleased shares
|
|
|
56,519
|
|
|
|
82,805
|
|
|
|
60,223
|
|
|
|
72,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total ESOP shares
|
|
|
90,333
|
|
|
|
90,333
|
|
|
|
90,333
|
|
|
|
90,333
|
|
|
|
12.
|
Regulatory
Capital Requirements
|
The Bank is subject to various regulatory capital requirements
administered by the 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
Banks financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective
action, the Bank must meet specific capital guidelines that
involve quantitative measures of the Banks assets,
liabilities and certain off-balance-sheet items as calculated
under regulatory accounting practices. The Banks capital
amounts and classification are also subject to qualitative
judgments by the regulators about components, risk weightings
and other factors. Qualitative measures established by
regulation to ensure capital adequacy require the Bank to
maintain minimum amounts and ratios (set forth in the following
table) of Total
F-34
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
and Tier 1 capital (as defined in the regulations) to risk
weighted assets (as defined), and of Tier 1 capital (as
defined) to average assets (as defined). Management believes, as
of June 30, 2010, that the Bank meets all capital adequacy
requirements to which it is subject.
As of June 30, 2010, the most recent notification from the
FDIC categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be
categorized as well capitalized, the Bank must maintain minimum
total risk-based, Tier 1 risk-based, and Tier 1
leverage ratios as set forth in the table. There are no
conditions or events since that notification that management
believes have changed the Banks category.
The Banks actual capital amounts and ratios are presented
in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To be Well
|
|
|
|
|
|
|
|
|
For Capital
|
|
Capitalized Under
|
|
|
|
|
|
|
|
|
Adequacy
|
|
Prompt Corrective
|
|
|
|
|
|
|
Actual
|
|
Purposes
|
|
Action Provisions
|
|
|
|
|
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
Amount
|
|
Ratio
|
|
|
|
|
|
|
(Dollars in thousands)
|
|
As of June 30, 2010 (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital
|
|
$
|
47,116
|
|
|
|
10.05
|
%
|
|
$
|
18,755
|
|
|
|
4.00
|
%
|
|
$
|
23,444
|
|
|
|
5.00
|
%
|
|
|
|
|
|
|
|
|
(to average assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital
|
|
|
47,116
|
|
|
|
16.06
|
|
|
|
11,733
|
|
|
|
4.00
|
|
|
|
17,599
|
|
|
|
6.00
|
|
|
|
|
|
|
|
|
|
(to risk-weighted assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital
|
|
|
50,788
|
|
|
|
17.32
|
|
|
|
23,465
|
|
|
|
8.00
|
|
|
|
29,332
|
|
|
|
10.00
|
|
|
|
|
|
|
|
|
|
(to risk-weighted assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital
|
|
$
|
46,815
|
|
|
|
10.17
|
%
|
|
$
|
18,415
|
|
|
|
4.00
|
%
|
|
$
|
23,019
|
|
|
|
5.00
|
%
|
|
|
|
|
|
|
|
|
(to average assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital
|
|
|
46,815
|
|
|
|
15.97
|
|
|
|
11,728
|
|
|
|
4.00
|
|
|
|
17,592
|
|
|
|
6.00
|
|
|
|
|
|
|
|
|
|
(to risk-weighted assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital
|
|
|
50,353
|
|
|
|
17.17
|
|
|
|
23,456
|
|
|
|
8.00
|
|
|
|
29,320
|
|
|
|
10.00
|
|
|
|
|
|
|
|
|
|
(to risk-weighted assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital
|
|
$
|
45,349
|
|
|
|
10.67
|
%
|
|
$
|
17,007
|
|
|
|
4.00
|
%
|
|
$
|
21,259
|
|
|
|
5.00
|
%
|
|
|
|
|
|
|
|
|
(to average assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital
|
|
|
45,349
|
|
|
|
16.33
|
|
|
|
11,107
|
|
|
|
4.00
|
|
|
|
16,660
|
|
|
|
6.00
|
|
|
|
|
|
|
|
|
|
(to risk-weighted assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Capital
|
|
|
48,518
|
|
|
|
17.47
|
|
|
|
22,214
|
|
|
|
8.00
|
|
|
|
27,767
|
|
|
|
10.00
|
|
|
|
|
|
|
|
|
|
(to risk-weighted assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Banks capital at June 30, 2010, December 31,
2009 and 2008 for financial statement purposes differs from
Tier 1 capital amounts by $321,000 (unaudited), $519,000
and $625,000, respectively, representing the exclusion for
regulatory purposes of unrealized gains and losses on securities
available for sale, and $781,000 (unaudited), $1.1 million
and $1.6 million, respectively, representing the exclusion
of amounts in accumulated other comprehensive loss from the
application of FASB ASC Topic 715, Compensation-Retirement
Benefits.
F-35
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
|
|
13.
|
Related
Party Transactions
|
The Bank maintains a lease agreement with the Holding Company
for one of its office locations. The initial lease term expires
in September 2015 and the Bank has paid $21,000 (unaudited) for
both the six months ended June 30, 2010 and 2009 and
$42,000 each year for the years ended December 31, 2009 and
2008. In addition, the Bank maintains a management fee agreement
with the Holding Company which provides for the sharing of
certain company related expenses. Such expenses include salaries
and benefits, insurance expenses, professional fees and
directors fees. The Bank has received management fees amounting
to $168,000 (unaudited), $180,000 (unaudited), $360,000, and
$384,000, for the six months ended June 30, 2010 and 2009
and years ended December 31, 2009 and 2008, respectively.
These transactions were made on substantially the same terms
that would be usual and customary in similar transactions
between unrelated persons dealing at arms length.
|
|
14.
|
Fair
Value Measurements and Fair Values of Financial
Instruments
|
Management uses its best judgment in estimating the fair value
of the Company financial instruments; however, there are
inherent weaknesses in any estimation technique. Therefore, for
substantially all financial instruments, the fair value
estimates herein are not necessarily indicative of the amounts
the Company could have realized in a sales transaction on the
dates indicated. The estimated fair value amounts have been
measured as of their respective year-ends and have not been
re-evaluated or updated for purposes of these financial
statements subsequent to those respective dates. As such, the
estimated fair values of these financial instruments subsequent
to the respective reporting dates may be different than the
amounts reported at each year-end.
FASB ASC Topic 820, Fair Value Measurements and Disclosures,
establishes a fair value hierarchy that prioritizes the inputs
to validation methods used to measure fair value. The hierarchy
gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to unobservable inputs
(Level 3 measurements). The three levels of fair value
hierarchy under FASB ASC Topic 820 are as follows:
Level 1: Unadjusted quoted prices in
active markets that are accessible at the measurement date for
identical, unrestricted assets or liabilities.
Level 2: Quoted prices in markets that
are not active, or inputs that are observable either directly or
indirectly, for substantially the full term of the asset or
liability.
Level 3: Prices or valuation techniques
that require inputs that are both significant to fair value
measurement and unobservable (i.e. support with little or no
market value activity).
An asset or liabilitys level within the fair value
hierarchy is based on the lowest level of input that is
significant to the fair value measurement.
The following methods and assumptions were used to estimate the
fair value of certain Company assets and liabilities:
Cash and Cash Equivalents (Carried at
Cost), The carrying amounts reported in the
consolidated statements of financial condition for cash and
short-term instruments approximate those assets fair
values.
Investment and Mortgage-Backed Securities, The
fair value of securities available for sale (carried at fair
value) and held to maturity (carried at amortized cost) are
determined by obtaining quoted market prices on nationally
recognized securities exchanges (Level 1), or matrix
pricing (Level 2), which is a mathematical technique used
widely in the industry to value debt securities without relying
exclusively on quoted market prices for the specific securities
but rather by relying on the securities relationship to
other benchmark quoted prices. For certain securities which are
not traded in active markets or are subject to transfer
restrictions,
F-36
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
valuations are adjusted to reflect illiquidity
and/or
non-transferability, and such adjustments are generally based on
available market evidence (Level 3). In the absence of such
evidence, managements best estimate is used.
Managements best estimate consists of both internal and
external support on certain Level 3 investments. Internal
cash flow models using a present value formula that includes
assumptions market participants would use along with indicative
exit pricing obtained from broker/dealers (where available) were
used to support fair values of certain Level 3 investments.
Loans Receivable (Carried at Cost), The fair
values of loans are estimated using discounted cash flow
analyses, using market rates at the balance sheet date that
reflect the credit and interest rate-risk inherent in the loans.
Projected future cash flows are calculated based upon
contractual maturity or call dates, projected repayments and
prepayments of principal. Generally, for variable rate loans
that reprice frequently and with no significant change in credit
risk, fair values are based on carrying values.
Impaired Loans (Generally Carried at Fair
Value), Impaired loans are those in which the
Bank has measured impairment generally based on the fair value
of the loans collateral. Fair value is generally
determined based upon independent third-party appraisals of the
properties, or discounted cash flows based upon the expected
proceeds.
These assets are included as Level 3 fair values, based
upon the lowest level of input that is significant to the fair
value measurements. The fair value consists of the loan
balances, net of any valuation allowance.
Other Real Estate Owned, OREO assets are
adjusted to fair value less estimated selling costs upon
transfer of the loans to OREO. Subsequently, OREO assets are
carried at the lower of carrying value or fair value. Fair value
is based upon independent market prices, appraised values of the
collateral or managements estimation of the value of the
collateral. There assets are included as Level 3 fair
values.
FHLB Stock (Carried at Cost), The carrying
amount of FHLB stock approximates fair value, and considers the
limited marketability of such securities.
Accrued Interest Receivable and Payable (Carried at
Cost), The carrying amount of accrued interest
receivable and accrued interest payable approximates its fair
value.
Deposits (Carried at Cost), The fair values
disclosed for demand deposits (e.g., interest and noninterest
checking, passbook savings and money market accounts) are, by
definition, equal to the amount payable on demand at the
reporting date (i.e., their carrying amounts). Fair values for
fixed-rate certificates of deposit are estimated using a
discounted cash flow calculation that applies interest rates
currently being offered in the market on certificates to a
schedule of aggregated expected monthly maturities on time
deposits.
FHLB Advances and Other Borrowed Money (Carried at
Cost), Fair values of FHLB advances and other
borrowed money are estimated using discounted cash flow
analysis, based on quoted prices for new FHLB advances
and/or other
borrower money with similar credit risk characteristics, terms
and remaining maturity. These prices obtained from this active
market represent a market value that is deemed to represent the
transfer price if the liability were assumed by a third party.
Off-Balance Sheet Financial Instruments, Fair
values for the Companys off-balance sheet financial
instruments (lending commitments and letters of credit) are
based on fees currently charged in the market to enter into
similar agreements, taking into account, the remaining terms of
the agreements and the counterparties credit standing.
F-37
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
The following table summarizes assets measured at fair value on
a recurring basis as of June 30, 2010 (unaudited),
segregated by the level of the valuation inputs within the fair
value hierarchy utilized to measure fair value (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Significant
|
|
|
(Level 3)
|
|
|
|
|
|
|
Active Markets
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
for Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
Description
|
|
Total
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
Investment securities available for sale
|
|
$
|
28,216
|
|
|
$
|
|
|
|
$
|
28,216
|
|
|
$
|
|
|
Mortgage backed securities available for sale
|
|
|
19,551
|
|
|
|
|
|
|
|
19,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
47,767
|
|
|
$
|
|
|
|
$
|
47,767
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For assets measured at fair value on a nonrecurring basis, the
fair value measurements by level within the fair value hierarchy
used at June 30, 2010 (unaudited) are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Level 2)
|
|
|
|
|
|
|
|
|
|
(Level 1)
|
|
|
Significant
|
|
|
(Level 3)
|
|
|
|
|
|
|
Prices in Active
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
Markets for
|
|
|
Observable
|
|
|
Unobservable
|
|
Description
|
|
Total
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
Impaired loans
|
|
$
|
8,801
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
8,801
|
|
Other real estate owned
|
|
|
3,026
|
|
|
|
|
|
|
|
|
|
|
|
3,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
11,827
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
11,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes assets measured at fair value on
a recurring basis as of December 31, 2009, segregated by
the level of the valuation inputs within the fair value
hierarchy utilized to measure fair value (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Significant
|
|
|
(Level 3)
|
|
|
|
|
|
|
Active Markets
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
for Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
Description
|
|
Total
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
Obligations of FHLB
|
|
$
|
6,084
|
|
|
$
|
|
|
|
$
|
6,084
|
|
|
$
|
|
|
Obligations of Freddie Mac
|
|
|
1,980
|
|
|
|
|
|
|
|
1,980
|
|
|
|
|
|
Obligations of Fannie Mae
|
|
|
20,826
|
|
|
|
|
|
|
|
20,826
|
|
|
|
|
|
Mortgage backed securities available for sale
|
|
|
23,355
|
|
|
|
|
|
|
|
23,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
52,245
|
|
|
$
|
|
|
|
$
|
52,245
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For assets measured at fair value on a nonrecurring basis, the
fair value measurements by level within the fair value hierarchy
used at December 31, 2009 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Level 2)
|
|
|
|
|
|
|
|
|
|
(Level 1)
|
|
|
Significant
|
|
|
(Level 3)
|
|
|
|
|
|
|
Prices in Active
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
Markets for
|
|
|
Observable
|
|
|
Unobservable
|
|
Description
|
|
Total
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
Impaired loans
|
|
$
|
4,327
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
4,327
|
|
Other real estate owned
|
|
|
2,968
|
|
|
|
|
|
|
|
|
|
|
|
2,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
7,295
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
7,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-38
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
For assets measured at fair value on a recurring basis, the fair
value measurements by level within the fair value hierarchy used
at December 31, 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Significant
|
|
|
(Level 3)
|
|
|
|
|
|
|
Active Markets
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
for Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
Description
|
|
Total
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
Investment securities available for sale
|
|
$
|
37,814
|
|
|
$
|
|
|
|
$
|
37,814
|
|
|
$
|
|
|
Mortgage backed securities available for sale
|
|
|
31,921
|
|
|
|
|
|
|
|
31,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
69,735
|
|
|
$
|
|
|
|
$
|
69,735
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For assets measured at fair value on a nonrecurring basis, the
fair value measurements by level within the fair value hierarchy
used at December 31, 2008 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Significant
|
|
|
(Level 3)
|
|
|
|
|
|
|
Active Markets
|
|
|
Other
|
|
|
Significant
|
|
|
|
|
|
|
for Identical
|
|
|
Observable
|
|
|
Unobservable
|
|
Description
|
|
Total
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
Impaired loans
|
|
$
|
2,619
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The carrying amounts and estimated fair values of the
Companys assets and liabilities were as follows at
June 30, 2010, December 31, 2010 and 2009.
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010
|
|
|
Carrying
|
|
Estimated
|
|
|
Amount
|
|
Fair Value
|
|
|
(In thousands) (Unaudited)
|
|
Assets:
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
5,548
|
|
|
$
|
5,548
|
|
Interest bearing deposits at banks
|
|
|
60,908
|
|
|
|
60,908
|
|
Investment securities
|
|
|
50,291
|
|
|
|
50,798
|
|
Mortgage-backed securities
|
|
|
19,551
|
|
|
|
19,511
|
|
Loans receivable
|
|
|
283,020
|
|
|
|
282,893
|
|
FHLB stock
|
|
|
2,439
|
|
|
|
2,439
|
|
Accrued interest receivable investment securities
|
|
|
435
|
|
|
|
435
|
|
Accrued interest receivable mortgage-backed
securities
|
|
|
72
|
|
|
|
72
|
|
Accrued interest receivable loans receivable(2)
|
|
|
1,456
|
|
|
|
1,456
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
NOW and MMDA deposits(1)
|
|
$
|
83,247
|
|
|
$
|
83,247
|
|
Other savings deposits
|
|
|
42,863
|
|
|
|
42,863
|
|
Certificate accounts
|
|
|
255,100
|
|
|
|
257,198
|
|
FHLB advances & other borrowed money
|
|
|
13,112
|
|
|
|
13,182
|
|
Accrued interest payable
|
|
|
44
|
|
|
|
44
|
|
Off balance sheet instruments
|
|
|
|
|
|
|
|
|
F-39
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2009
|
|
December 31, 2008
|
|
|
Carrying
|
|
Estimated
|
|
Carrying
|
|
Estimated
|
|
|
Amount
|
|
Fair Value
|
|
Amount
|
|
Fair Value
|
|
|
(In thousands)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks
|
|
$
|
5,710
|
|
|
$
|
5,710
|
|
|
$
|
7,849
|
|
|
$
|
7,849
|
|
Interest bearing deposits at banks
|
|
|
69,226
|
|
|
|
69,226
|
|
|
|
20,459
|
|
|
|
20,459
|
|
Investment securities
|
|
|
52,336
|
|
|
|
52,686
|
|
|
|
62,070
|
|
|
|
61,773
|
|
Mortgage-backed securities
|
|
|
23,355
|
|
|
|
23,355
|
|
|
|
31,921
|
|
|
|
31,921
|
|
Loans receivable
|
|
|
285,008
|
|
|
|
285,105
|
|
|
|
278,437
|
|
|
|
275,903
|
|
FHLB stock
|
|
|
2,439
|
|
|
|
2,439
|
|
|
|
2,439
|
|
|
|
2,439
|
|
Accrued interest receivable investment securities
|
|
|
522
|
|
|
|
522
|
|
|
|
672
|
|
|
|
672
|
|
Accrued interest receivable mortgage-backed
securities
|
|
|
90
|
|
|
|
90
|
|
|
|
130
|
|
|
|
130
|
|
Accrued interest receivable loans receivable(2)
|
|
|
1,433
|
|
|
|
1,433
|
|
|
|
1,226
|
|
|
|
1,226
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOW and MMDA deposits(1)
|
|
$
|
82,779
|
|
|
$
|
82,779
|
|
|
$
|
79,946
|
|
|
$
|
79,946
|
|
Other savings deposits
|
|
|
40,892
|
|
|
|
40,892
|
|
|
|
39,378
|
|
|
|
39,378
|
|
Certificate accounts
|
|
|
251,583
|
|
|
|
253,534
|
|
|
|
207,943
|
|
|
|
210,852
|
|
FHLB advances & other borrowed money
|
|
|
35,090
|
|
|
|
32,960
|
|
|
|
41,632
|
|
|
|
47,943
|
|
Accrued interest payable
|
|
|
192
|
|
|
|
192
|
|
|
|
220
|
|
|
|
220
|
|
Off balance sheet instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes non-interest bearing accounts, totaling $13,213,
$15,056 and $13,610 at June 30, 2010, December 31,
2009 and 2008, respectively. |
|
|
|
(2) |
|
Net of reserve for uncollected accrued interest receivable,
totaling $147,000, $138,000, and $492,000 at June 30, 2010,
December 31, 2009 and 2008, respectively. |
F-40
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
|
|
15.
|
Condensed
Financial Information Parent Corporation
Only
|
CONDENSED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
ASSETS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,182,775
|
|
|
$
|
1,596,689
|
|
|
$
|
3,770,669
|
|
Loan receivable ESOP
|
|
|
588,918
|
|
|
|
616,177
|
|
|
|
722,664
|
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
3,600
|
|
Investment in Alliance Bank
|
|
|
46,795,401
|
|
|
|
46,231,757
|
|
|
|
44,419,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
48,567,094
|
|
|
$
|
48,444,623
|
|
|
$
|
48,916,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY LIABILITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
|
|
|
$
|
|
|
|
$
|
17,000
|
|
STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
48,567,094
|
|
|
|
48,444,623
|
|
|
|
48,899,038
|
|
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
|
|
$
|
48,567,094
|
|
|
$
|
48,444,623
|
|
|
$
|
48,916,038
|
|
CONDENSED
INCOME STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
For the Year Ended
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
25,503
|
|
|
$
|
29,278
|
|
|
$
|
56,381
|
|
|
$
|
68,862
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income
|
|
|
25,503
|
|
|
|
29,278
|
|
|
|
56,381
|
|
|
|
68,862
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legal Fees
|
|
|
8,000
|
|
|
|
12,000
|
|
|
|
24,000
|
|
|
|
32,000
|
|
Stock Related Expense
|
|
|
9,800
|
|
|
|
15,600
|
|
|
|
31,600
|
|
|
|
36,500
|
|
Capital stock tax
|
|
|
7,500
|
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
11,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
25,300
|
|
|
|
28,600
|
|
|
|
56,600
|
|
|
|
79,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES (BENEFIT) AND EQUITY IN
UNDISTRUBUTED NET INCOME OF SUBSIDIARY
|
|
|
203
|
|
|
|
678
|
|
|
|
(219
|
)
|
|
|
(10,638
|
)
|
EQUITY IN UNDISTRUBUTED NET INCOME OF SUBSIDIARY
|
|
|
264,351
|
|
|
|
624,075
|
|
|
|
1,358,916
|
|
|
|
611,672
|
|
Income Tax Benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,600
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
264,554
|
|
|
$
|
624,753
|
|
|
$
|
1,358,697
|
|
|
$
|
604,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-41
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
CONDENSED
STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months
|
|
|
For The Year Ended
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
264,554
|
|
|
$
|
624,753
|
|
|
$
|
1,358,697
|
|
|
$
|
604,634
|
|
Adjustments to reconcile net income to cash provided by (used
in) operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Undistributed net income of subsidiary
|
|
|
(264,351
|
)
|
|
|
(624,075
|
)
|
|
|
(1,358,916
|
)
|
|
|
(611,672
|
)
|
Decrease (increase) in other assets
|
|
|
|
|
|
|
|
|
|
|
3,600
|
|
|
|
(3,600
|
)
|
(Decrease) increase in other liabilities
|
|
|
|
|
|
|
(17,000
|
)
|
|
|
(17,000
|
)
|
|
|
17,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by operating activities
|
|
|
203
|
|
|
|
(16,322
|
)
|
|
|
(13,619
|
)
|
|
|
6,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal repayments on ESOP loan
|
|
|
27,259
|
|
|
|
52,156
|
|
|
|
106,487
|
|
|
|
120,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities
|
|
|
27,259
|
|
|
|
52,156
|
|
|
|
106,487
|
|
|
|
120,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of treasury stock
|
|
|
(276,920
|
)
|
|
|
(904,855
|
)
|
|
|
(1,919,112
|
)
|
|
|
(2,385,979
|
)
|
Dividends paid
|
|
|
(164,456
|
)
|
|
|
(177,311
|
)
|
|
|
(347,736
|
)
|
|
|
(743,168
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
(441,376
|
)
|
|
|
(1,082,166
|
)
|
|
|
(2,266,848
|
)
|
|
|
(3,129,147
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(413,914
|
)
|
|
|
(1,046,332
|
)
|
|
|
(2,173,980
|
)
|
|
|
(3,002,341
|
)
|
Cash and cash equivalents beginning of period
|
|
|
1,596,689
|
|
|
|
3,770,669
|
|
|
|
3,770,669
|
|
|
|
6,773,010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents end of period
|
|
$
|
1,182,775
|
|
|
$
|
2,724,337
|
|
|
$
|
1,596,689
|
|
|
$
|
3,770,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company has evaluated events and transactions occurring
subsequent to June 30, 2010, for items that should
potentially be recognized or disclosed in these financial
statements. The evaluation was conducted through the date these
financial statements were issued.
On August 11, 2010, the Company announced that it has
adopted a plan of conversion and reorganization (the
Plan) pursuant to which Alliance Bank will
reorganize from the two tier mutual holding company structure to
the stock holding company structure and will undertake a
second step offering of shares of common stock of a
new Pennsylvania corporation formed in connection with the
conversion.
Alliance Mutual Holding Company (the MHC), which
owns approximately 59% of the outstanding common stock of the
Company, will merge with and into the Company as part of the
reorganization and its shares in the Company will be
extinguished. The Company will then merge with and into the new
Pennsylvania corporation. The new holding company will offer and
sell shares of common stock in an amount representing the
percentage ownership interest currently held by the MHC, based
on an independent appraisal. The new holding company will offer
shares of its common stock for sale to the Banks eligible
depositors and employee stock ownership plan and to members of
the general public in a subscription and community offering in
the manner and subject to the priorities set forth in the Plan.
In addition, in connection with the conversion of the MHC,
shares of the Companys common stock held by shareholders
other than the MHC
F-42
Alliance
Bancorp, Inc. of Pennsylvania and Subsidiaries
Notes to
Consolidated Financial
Statements (Continued)
will be exchanged for shares of common stock of the new
Pennsylvania corporation pursuant to an exchange
ratio designed to preserve their aggregate percentage
ownership interest. The exchange ratio will be determined based
upon the independent appraisal of the new holding company and
the results of the offering.
At the time of the conversion and reorganization, liquidation
accounts will be established for the benefit of certain
depositors of Alliance Bank by the new holding company and
Alliance Bank in an amount equal to the percentage ownership in
the Company owned by the MHC multiplied by the Companys
shareholders equity as reflected in the latest statement
of financial condition used in the final offering prospectus for
the conversion plus the value of the net assets of the MHC as
reflected in the latest statement of financial condition of the
MHC prior to the effective date of the conversion and
reorganization. Neither the new holding company nor Alliance
Bank will be able to declare or pay a cash dividend if the
effect thereof would cause its equity to be reduced below either
the amount required for the liquidation account or the
regulatory capital requirements imposed by the Office of Thrift
Supervision.
The conversion and reorganization is subject to approval of the
Companys shareholders (including the approval of a
majority of the shares held by persons other than the MHC), the
Banks depositors and regulatory agencies.
The costs associated with the stock offering will be deferred
and will be deducted from the proceeds upon sale of the stock.
To date, no stock offering expenses have been expensed.
Approximately $87,000 of costs have been incurred and deferred.
If the stock offering is unsuccessful, these costs will be
expensed.
F-43
You should rely only on the information contained in this
prospectus. Neither Alliance Bank nor Alliance Bancorp, Inc. of
Pennsylvania has authorized anyone to provide you with different
information. This prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any of the securities
offered by this prospectus to any person or in any jurisdiction
in which an offer or solicitation is not authorized or in which
the person making an offer or solicitation is not qualified to
do so, or to any person to whom it is unlawful to make an offer
or solicitation in those jurisdictions. The information
contained in this prospectus is accurate only as of the date of
this prospectus, regardless of the time of delivery of this
prospectus or of any sale of common stock.
(Proposed Holding Company for
Alliance Bank)
Up to 3,565,000 Shares of
Common Stock
(Anticipated Maximum, Subject
to Increase)
COMMON STOCK
PROSPECTUS
Stifel Nicolaus
Weisel
Until ,
2010, or 25 days after commencement of the syndicated
community offering, if any, whichever is later, all dealers
effecting transactions in the registered securities, whether or
not participating in this distribution, may be required to
deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
,
2010
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
|
|
Item 13.
|
Other
Expenses of Issuance and Distribution.
|
|
|
|
|
|
Filing fees (OTS, Nasdaq, FINRA, Pennsylvania and SEC)*
|
|
$
|
100,000
|
|
Printing, postage, mailing and EDGAR expenses
|
|
|
250,000
|
|
Legal fees
|
|
|
400,000
|
|
Accounting fees and expenses
|
|
|
125,000
|
|
Appraisers fees and expenses
|
|
|
55,000
|
|
Business plan fees and expenses
|
|
|
45,000
|
|
Marketing agent expenses (including legal fees)(1)
|
|
|
185,000
|
|
Records agent fees and expenses
|
|
|
30,000
|
|
Transfer agent fees and expenses
|
|
|
17,500
|
|
Certificate printing
|
|
|
12,500
|
|
Miscellaneous
|
|
|
20,000
|
|
|
|
|
|
|
Total
|
|
$
|
1,240,000
|
|
|
|
|
|
|
|
|
|
* |
|
Estimated |
|
(1) |
|
In addition to the foregoing expenses, Stifel,
Nicolaus & Company, Incorporated will receive fees
based on the number of shares sold in the conversion and
offering. Based upon the assumptions and the information set
forth under Pro Forma Data and The Conversion
and Offering Marketing Arrangements in the
Prospectus, it is estimated that such fees will be
$1.0 million, $1.2 million, $1.4 million and
$1.6 million at the minimum, minimum, midpoint, maximum and
maximum, as adjusted, of the offering range, respectively. |
|
|
Item 14.
|
Indemnification
of Directors and Officers.
|
Article VI of the Registrants Bylaws provides as
follows:
6.1 Indemnification in Third Party
Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
Corporation) by reason of the fact that the person is or was a
director or officer of the Corporation, or is or was serving at
the request of the Corporation as a director, officer or
representative of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by the person in
connection with such threatened, pending or completed action,
suit or proceeding.
6.2 Indemnification in Derivative
Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or
proceeding by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that the person is
or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director, officer
or representative of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by the person in
connection with such threatened, pending or completed action or
suit.
6.3 Procedure for Effecting
Indemnification. Indemnification under
Sections 6.1 or 6.2 shall be automatic and shall not require any
determination that indemnification is proper, except that no
indemnification shall be made in any case where the act or
failure to act giving rise to the claim for
II-1
indemnification is determined by the court in which the action
was brought or by any other appropriate court to have
constituted willful misconduct or recklessness.
6.4 Advancing Expenses. Expenses
incurred by a person who may be indemnified under
Section 6.1 or 6.2 shall be paid by the Corporation in
advance of the final disposition of any action, suit or
proceeding upon receipt of an undertaking by or on behalf of
such person to repay such amount if it shall ultimately be
determined by a court of competent jurisdiction that he or she
is not entitled to be indemnified by the Corporation.
6.5 Indemnification of Employees, Agents and Other
Representatives. The Corporation may, at the
discretion and the extent determined by the Board of Directors
of the Corporation, (i) indemnify any person who neither is
nor was a director or officer of the Corporation but who is or
was a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (and
whether brought by or in the right of the Corporation), by
reason of the fact that the person is or was an employee, agent
or other representative of the Corporation, against expenses
(including attorneys fees), judgments, fines and amounts
paid in settlement, actually and reasonably incurred by the
person in connection with such threatened, pending or completed
action, suit or proceeding and (ii) pay such expenses in
advance of the final disposition of such action, suit or
proceeding, upon receipt of an undertaking of the kind described
in Section 6.4.
6.6 Other Rights. The
indemnification and advancement of expenses provided by or
pursuant to this Article VI shall not be deemed exclusive
of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any insurance or
other agreement, vote of shareholders or directors, or
otherwise, both as to actions in their official capacity and as
to actions in another capacity while holding an office, and
shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of
the heirs, executors, and administrators of such person.
6.7 Insurance. The Corporation
shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer,
employee, director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other
enterprise, against any liability asserted against such person
and incurred by such person in any such capacity, or arising out
of such persons status as such, whether or not the
Corporation would have the power to indemnify such person
against such liability under the provisions of this Article VI.
6.8 Security Fund; Indemnity
Agreements. By action of the Board of
Directors (notwithstanding their interest in the transaction),
the Corporation may create and fund a trust fund or fund of any
nature, and may enter into agreements with its officers,
directors, employees, and agents for the purpose of securing or
insuring in any manner its obligation to indemnify or advance
expenses provided for in this Article VI.
6.9 Modification. The duties of
the Corporation to indemnify and to advance expenses to any
person as provided in this Article VI shall be in the
nature of a contract between the Corporation and each such
person, and no amendment or repeal of any provision of this
Article VI, and no amendment or termination of any trust
fund or other fund created pursuant to Section 6.8 hereof,
shall alter to the detriment of such person the right of such
person to the advancement of expenses or indemnification related
to a claim based on an act or failure to act which took place
prior to such amendment, repeal, or termination.
6.10 Proceedings Initiated by Indemnified
Persons. Notwithstanding any other provision
in this Article VI, the Corporation shall not indemnify a
director, officer, employee, or agent for any liability incurred
in an action, suit, or proceeding initiated by (which shall not
be deemed to include counter-claims or affirmative defenses) or
participated in as an intervenor or amicus curiae by the person
seeking indemnification unless such initiation of or
participation in the action, suit, or proceeding is authorized,
either before or after its commencement, by the affirmative vote
of a majority of the directors then in office.
II-2
6.11 Savings Clause. If this
Article VI or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each director, officer,
employee, and agent of the Corporation as to costs, charges, and
expenses (including attorneys fees), judgments, fines, and
amounts paid in settlement with respect to any action, suit, or
proceeding, whether civil, criminal, administrative, or
investigative, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable
portion of this Article VI that shall not have been
invalidated and to the fullest extent permitted by applicable
law.
If the laws of the Commonwealth of Pennsylvania are amended to
permit further indemnification of the directors, officers,
employees, and agents of the Corporation, then the Corporation
shall indemnify such persons to the fullest extent permitted by
law. Any repeal or modification of this Article VI by the
Board of Directors or the shareholders of the Corporation shall
not adversely affect any right or protection of a director,
officer, employee, or agent existing at the time of such repeal
or modification.
Alliance Bancorp, Inc. of Pennsylvania maintains directors
and officers liability insurance policies providing for
the insurance on behalf of any person who is or was a director
or officer of Alliance Bancorp, Inc. of Pennsylvania and
subsidiary companies against any liability incurred by him or
her in any such capacity or arising out of his or her status as
such. The policy contains various reporting requirements and
exclusions.
The Federal Deposit Insurance Act (the FDI Act)
provides that the FDIC may prohibit or limit, by regulation or
order, payments by any insured depository institution or its
holding company for the benefit of directors and officers of the
insured depository institution, or others who are or were
institution-affiliated parties, as defined under the
FDI Act, in order to pay or reimburse such person for any
liability or legal expense sustained with regard to any
administrative or civil enforcement action which results in a
final order against the person. FDIC regulations prohibit,
subject to certain exceptions, insured depository institutions,
their subsidiaries and affiliated holding companies from
indemnifying officers, directors or employees from any civil
money penalty or judgment resulting from an administrative or
civil enforcement action commenced by any federal banking
agency, or for that portion of the costs sustained with regard
to such an action that results in a final order or settlement
that is adverse to the director, officer or employee.
|
|
Item 15.
|
Recent
Sales of Unregistered Securities
|
Not applicable.
|
|
Item 16.
|
Exhibits
and Financial Statement Schedules
|
The exhibits and financial statement schedules filed as a part
of this Registration Statement are as follows:
(a) List of Exhibits (filed herewith unless
otherwise noted)
|
|
|
|
|
No.
|
|
Description
|
|
|
1
|
.1
|
|
Form of Agency Agreement with Stifel, Nicolaus &
Company, Incorporated(1)
|
|
1
|
.2
|
|
Engagement Letter with Stifel, Nicolaus & Company,
Incorporated(1)
|
|
2
|
.1
|
|
Plan of Conversion and Reorganization(1)
|
|
3
|
.1
|
|
Articles of Incorporation of Alliance Bancorp, Inc. of
Pennsylvania(1)
|
|
3
|
.2
|
|
Bylaws of Alliance Bancorp, Inc. of Pennsylvania(1)
|
|
4
|
.0
|
|
Form of Stock Certificate of Alliance Bancorp, Inc. of
Pennsylvania(1)
|
|
5
|
.0
|
|
Opinion of Elias, Matz, Tiernan & Herrick L.L.P. re:
legality(1)
|
|
8
|
.1
|
|
Opinion of Elias, Matz, Tiernan & Herrick L.L.P. re:
Federal tax matters(1)
|
|
8
|
.2
|
|
Opinion of ParenteBeard LLC re: Pennsylvania tax matters(1)
|
|
10
|
.1
|
|
Alliance Mutual Holding Company Amended and Restated Directors
Retirement Plan(2)
|
|
10
|
.2
|
|
Greater Delaware Valley Savings d/b/a Alliance Bank Supplemental
Executive Retirement Plan 409A Restatement(2)
|
II-3
|
|
|
|
|
No.
|
|
Description
|
|
|
10
|
.3
|
|
Greater Delaware Valley Savings d/b/a Alliance Bank Endorsement
Split Dollar Insurance Agreement(3)
|
|
10
|
.4
|
|
Amended and Restated Employment Agreement, dated May 21,
2008, between Alliance Bank and Dennis D. Cirucci(4)
|
|
10
|
.5
|
|
Amended and Restated Employment Agreement, dated May 21,
2008, between Alliance Bank and Peter J. Meier(4)
|
|
10
|
.6
|
|
Amended and Restated Employment Agreement, dated May 21,
2008, between Alliance Bank and Suzanne J. Ricci(4)
|
|
23
|
.1
|
|
Consent of Elias, Matz, Tiernan & Herrick L.L.P.
(included in Exhibit 5.0 and Exhibit 8.1, respectively)
|
|
23
|
.2
|
|
Consent of ParenteBeard LLC
|
|
23
|
.3
|
|
Consent of RP Financial, LC(1)
|
|
24
|
.0
|
|
Power of Attorney (previously included in Signature Page of this
Registration Statement)
|
|
99
|
.1
|
|
Subscription Order Form and Instructions(1)
|
|
99
|
.2
|
|
Additional Solicitation Material(1)
|
|
99
|
.3
|
|
Appraisal Report of RP Financial, LC(1)
|
|
99
|
.4
|
|
Letter of RP Financial, LC regarding subscription rights(1)
|
|
99
|
.5
|
|
Letter of RP Financial, LC regarding liquidation rights(1)
|
|
99
|
.6
|
|
Form of proxy card for Alliance Bancorp New(1)
|
|
|
|
(1) |
|
Previously provided. |
|
(2) |
|
Incorporated herein by reference from the Current Report on
Form 8-K
of Alliance Bancorp, Inc. of Pennsylvania (File
No. 001-33189)
filed with the Securities and Exchange Commission on
December 18, 2008. |
|
(3) |
|
Incorporated herein by reference from the Registration Statement
on
Form S-1
of Alliance Bancorp, Inc. of Pennsylvania (File
No. 333-136853)
filed with the Securities and Exchange Commission filed on
August 23, 2006, as amended. |
|
(4) |
|
Incorporated herein by reference from the Current Report on
Form 8K of Alliance Bancorp, Inc. of Pennsylvania (File
No. 001-33189)
filed with the Securities and Exchange Commission on
May 23, 2008. |
(b) Financial Statement Schedules
All schedules have been omitted as not applicable or not
required under the rules of
Regulation S-X.
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 the
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 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;
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(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 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.
(5) 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.
(6) 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;
(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.
(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.
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 of 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.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 2 to the
Form S-1
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Broomall,
Pennsylvania on November 4, 2010.
ALLIANCE BANCORP, INC. OF PENNSYLVANIA
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By:
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/s/ Dennis
D. Cirucci
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Dennis D. Cirucci
President and Chief Executive Officer
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.
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Name
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Title
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Date
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/s/ Dennis
D. Cirucci
Dennis
D. Cirucci
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President and Chief Executive Officer (principal executive
officer)
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November 4, 2010
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/s/ Peter
J. Meier
Peter
J. Meier
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Executive Vice President and
Chief Financial Officer
(principal financial
and accounting officer)
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November 4, 2010
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/s/ William
E. Hecht*
William
E. Hecht
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Chairman of the Board
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November 4, 2010
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/s/ J.
William Cotter, Jr.*
J.
William Cotter, Jr.
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Director
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November 4, 2010
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/s/ John
A. Raggi*
John
A. Raggi
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Director
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November 4, 2010
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/s/ Philip
K. Stonier*
Philip
K. Stonier
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Director
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November 4, 2010
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/s/ G.
Bradley Rainer*
G.
Bradley Rainer
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Director
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November 4, 2010
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/s/ R.
Cheston Woolard*
R.
Cheston Woolard
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Director
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November 4, 2010
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/s/ Timothy
E. Flatley*
Timothy
E. Flatley
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Director
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November 4, 2010
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By Dennis D. Cirucci pursuant to
power of attorney.
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II-6