8-K 1 alleg8k.txt ALLEGIANT BANCORP, INC. FORM 8-K ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 -------------------------------------------------------------------------------- Date of Report (Date of earliest event reported): April 30, 2001 ------------------------- ALLEGIANT BANCORP, INC. --------------------------------- (Exact Name of Registrant as Specified in Its Charter) MISSOURI --------------------------------- (State or Other Jurisdiction of Incorporation) 0-26350 43-1519382 ------------------------ ------------------------------------ (Commission File Number) (I.R.S. Employer Identification No.) 2122 Kratky Road, St. Louis, Missouri 63114 ---------------------------------------------------------- (Address of principal executive offices) (Zip Code) 314-692-8200 ---------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable ------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) ================================================================================ ITEMS 1. - 4. NOT APPLICABLE. ITEM 5. OTHER EVENTS. (a) Allegiant Bancorp, Inc., a Missouri corporation organized and a registered bank holding company under the Bank Holding Company Act of 1956, as amended ("Allegiant"), and Southside Bancshares Corp., a Missouri corporation and a registered bank holding company under the Bank Holding Company Act of 1956, as amended ("Southside"), entered into an Agreement and Plan of Merger, dated as of April 30, 2001 (the "Merger Agreement"), pursuant to which Allegiant will be merged (the "Merger") with and into Southside and Southside will be the surviving corporation (the "Surviving Corporation") in the Merger. In accordance with the terms of the Merger Agreement in connection with the Merger: * each share of Southside common stock, par value $1.00 per share, and the associated preferred share purchase rights under Southside's Rights Agreement, dated May 27, 1993 (together, the "Southside Common Stock"), issued and outstanding immediately prior to the effective time of the Merger (the "Effective Time") shall be converted into the right to receive either: (1) $14.00 in cash; (2) 1.39 shares of common stock in the Surviving Corporation, par value $0.01 per share ("Surviving Corporation Common Stock"); or (3) a combination of cash and shares of Surviving Corporation Common Stock (collectively, the "Southside Merger Consideration"); and * each share of Allegiant common stock, par value $0.01 per share (the "Allegiant Common Stock"), issued and outstanding immediately prior to the Effective Time shall be converted into one share of Surviving Corporation Common Stock. Pursuant to the terms of the Merger Agreement, each shareholder of Southside will have the opportunity to elect what proportion of cash and Surviving Corporation Common Stock such shareholder desires to receive in exchange for such shareholder's shares of Southside Common Stock (the "Shareholder Election"); provided that each such Shareholder Election is subject to reallocation in accordance with the procedure set forth in the Merger Agreement to ensure that the aggregate Southside Merger Consideration payable to Southside shareholders will be comprised of 50% cash and 50% stock. Consummation of the Merger is subject to various conditions, including: (1) approval of the Merger Agreement and the Merger by the shareholders of Southside and Allegiant; (2) receipt of requisite regulatory approvals from the Board of Governors of the Federal Reserve System and other federal and state regulatory authorities as necessary; (3) receipt by each of Southside and Allegiant of an opinion of counsel in reasonably satisfactory form as to the tax treatment of certain aspects of the Merger; (4) the registration pursuant to the Securities Act of 1933, as amended (the "Act"), of the shares of Surviving Corporation Common Stock to be issued in the Merger; and (5) satisfaction of other customary conditions included in the Merger Agreement. The Merger Agreement and the transactions contemplated thereby will be submitted for approval at meetings of the shareholders of Southside and Allegiant, respectively. Southside will file a registration statement with the Securities and Exchange Commission registering under the Act the shares of Surviving Corporation Common Stock to be issued in the Merger. The shares of Surviving 2 Corporation Common Stock will be offered to Southside shareholders pursuant to a prospectus that will also serve as a proxy statement for the shareholders' meetings. The foregoing description of the Merger Agreement is qualified in its entirety by reference to the Merger Agreement which is attached as Exhibit 2 hereto and is incorporated herein by reference. (b) As an inducement to Allegiant to enter into the Merger Agreement, each director and/or executive officer of Southside in their respective capacities as shareholders of Southside, has agreed to enter into voting agreements with Allegiant and Southside (collectively, the "Southside Voting Agreements") pursuant to which, among other things, each such shareholder of Southside will agree to vote in favor of the Merger Agreement, the Merger and the transactions contemplated thereby. As an inducement to Southside to enter into the Merger Agreement, each director and/or executive officer of Allegiant, in their respective capacities as shareholders of Allegiant, has agreed to enter into voting agreements with Southside and Allegiant (collectively, the "Allegiant Voting Agreements" and, together with the Southside Voting Agreements, the "Voting Agreements") pursuant to which, among other things, each such shareholder of Allegiant will agree to vote in favor of the Merger Agreement, the Merger and the transactions contemplated thereby. The foregoing description of the Voting Agreements is qualified in its entirety by reference to the forms of the Voting Agreements which are attached hereto and incorporated herein by this reference as Exhibits 99(a) and 99(b). (c) The joint press release of Southside and Allegiant, issued May 1, 2001, announcing the Merger is attached hereto as Exhibit 99(c) and is incorporated herein by reference. ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS. Not applicable. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) - (b) Not applicable. (c) Exhibits Required by Item 601 of Regulation S-K: 2 Agreement and Plan of Merger, dated as of April 30, 2001, between Southside Bancshares Corp. and Allegiant Bancorp, Inc. 99(a) Form of Voting Agreement among each director and/or executive officer of Southside Bancshares Corp., in their respective capacities as shareholders of Southside Bancshares Corp., Allegiant Bancorp, Inc. and Southside Bancshares Corp. 99(b) Form of Voting Agreement among each director and/or executive officer of Allegiant Bancorp, Inc., in their respective capacities as shareholders of Allegiant Bancorp, Inc., Southside Bancshares Corp. and Allegiant Bancorp, Inc. 3 99(c) Joint Press Release of Southside Bancshares Corp. and Allegiant Bancorp, Inc., issued May 1, 2001. ITEM 8. CHANGE IN FISCAL YEAR. Not applicable. ITEM 9. REGULATION FD DISCLOSURE. Not applicable. 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: May 3, 2001. ALLEGIANT BANCORP, INC. By /s/ Shaun R. Hayes ---------------------------------------- Shaun R. Hayes President and Chief Executive Officer (Principal Executive Officer) 5 EXHIBIT INDEX ------------- Exhibit No. Description ----------- ----------- 2 Agreement and Plan of Merger, dated April 30, 2001, between Southside Bancshares Corp. and Allegiant Bancorp, Inc. 99(a) Form of Voting Agreement among each director and/or executive officer of Southside Bancshares Corp., in their respective capacities as shareholders of Southside Bancshares Corp., Allegiant Bancorp, Inc. and Southside Bancshares Corp. 99(b) Form of Voting Agreement among each director and/or executive officer of Allegiant Bancorp, Inc., in their respective capacities as shareholders of Allegiant Bancorp, Inc., Southside Bancshares Corp. and Allegiant Bancorp, Inc. 99(c) Joint Press Release of Southside Bancshares Corp. and Allegiant Bancorp, Inc., issued May 1, 2001. 6

MARCH 31, --------------------------- 2000 1999 ------------ ----------- ASSETS Cash, primarily interest-bearing demand accounts.................. $ 9,080,509 6,449,613 Interest-bearing deposits......................................... 198,000 1,085,000 Investment securities: Available for sale, at fair value........................... 120,575,542 81,635,339 Held to maturity, at amortized cost (fair value of $548,000 at March 31, 2000 and $531,000 at March 31, 1999)........ 600,000 600,000 Mortgage-backed securities available for sale, at fair value...... 64,137,674 90,810,783 Loans receivable, net............................................. 105,315,729 90,230,677 Investment in real estate......................................... 58,054 58,054 Stock in Federal Home Loan Bank................................... 7,987,100 6,911,100 Mortgage servicing rights......................................... 1,273,768 1,479,631 Office properties and equipment, net.............................. 6,935,115 6,451,357 Deferred tax asset................................................ 2,775,937 -- Accrued interest receivable and other assets...................... 4,397,879 2,725,620 ------------ ----------- $323,335,307 288,437,174 ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY Savings deposits.................................................. $140,885,244 128,953,826 Accrued interest payable on savings deposits...................... 147,711 200,280 Borrowed money.................................................... 161,435,160 132,010,050 Advance payments by borrowers for taxes and insurance............. 35,800 69,634 Income taxes payable.............................................. 276,568 203,588 Deferred income taxes............................................. -- 873,343 Accrued expenses and other liabilities............................ 629,822 518,723 ------------ ----------- Total liabilities........................................ 303,410,305 262,829,444 ------------ ----------- Commitments and contingencies Stockholders' equity: Preferred stock, $1 par value per share; 1,000,000 shares authorized; none issued and outstanding........... -- -- Common stock, $.01 par value per share; 4,000,000 shares authorized; 2,544,094 shares and 2,519,793 shares issued at March 31, 2000 and 1999, respectively................................... 25,441 25,198 Additional paid-in capital.................................. 16,192,342 16,108,269 Retained earnings........................................... 11,849,449 11,255,324 Accumulated other comprehensive income (loss)............... (5,447,058) 139,464 Treasury stock, at cost; 158,055 shares and 18,500 shares at March 31, 2000 and 1999, respectively................. (1,233,799) (166,431) Unearned Employee Stock Ownership Plan shares............... (989,864) (1,134,769) Unamortized restricted stock awards......................... (471,509) (619,325) ------------ ----------- Total stockholders' equity............................... 19,925,002 25,607,730 ------------ ----------- $323,335,307 288,437,174 ============ =========== See accompanying notes to consolidated financial statements.

YEARS ENDED MARCH 31, ----------------------------------------- 2000 1999 1998 ----------- ---------- ---------- INTEREST INCOME Loans receivable.................................... $ 7,753,559 7,703,347 8,103,429 Investment securities and interest-bearing deposits......................................... 8,214,465 4,121,848 5,163,526 Mortgage-backed securities.......................... 4,570,590 5,321,365 1,153,512 Other............................................... 504,838 411,861 259,843 ----------- ---------- ---------- Total interest income............................ 21,043,452 17,558,421 14,680,310 ----------- ---------- ---------- INTEREST EXPENSE Savings deposits.................................... 5,596,459 5,458,146 5,633,692 Advances from Federal Home Loan Bank................ 8,694,309 6,821,775 4,031,314 Other borrowed money................................ 70,382 71,507 60,376 ----------- ---------- ---------- Total interest expense........................ 14,361,150 12,351,428 9,725,382 ----------- ---------- ---------- Net interest income........................... 6,682,302 5,206,993 4,954,928 Provision for losses on loans....................... -- -- 115,513 ----------- ---------- ---------- Net interest income after provision for losses on loans........................ 6,682,302 5,206,993 4,839,415 ----------- ---------- ---------- NONINTEREST INCOME Gain on sales of mortgage loans..................... 771,172 1,994,800 1,349,712 Loan servicing fees and late charges................ 1,253,125 1,289,571 919,884 Gain on sale of mortgage servicing rights........... 451,298 -- -- Gain (loss) on sale of investment and mortgage- backed securities available for sale, net........ (43,016) 166,388 41,044 Equity in loss of joint venture..................... -- (54,430) (44,109) Rental income....................................... 189,470 142,802 126,811 Gain on sale of real estate......................... -- 148,391 1,154 Other............................................... 684,616 549,710 486,988 ----------- ---------- ---------- Total noninterest income...................... 3,306,665 4,237,232 2,881,484 ----------- ---------- ---------- NONINTEREST EXPENSE Salaries and employee benefits...................... 4,502,096 4,531,202 3,399,859 Occupancy........................................... 851,325 598,632 533,378 Data processing..................................... 441,995 332,438 261,397 Advertising......................................... 359,607 282,103 123,707 Federal insurance premiums.......................... 70,150 72,422 81,428 Other............................................... 1,873,340 1,790,501 1,304,296 ----------- ---------- ---------- Total noninterest expense..................... 8,098,513 7,607,298 5,704,065 ----------- ---------- ---------- Income before income tax expense.............. 1,890,454 1,836,927 2,016,834 Income tax expense.................................. 738,544 707,647 777,668 ----------- ---------- ---------- Net income.................................... $ 1,151,910 1,129,280 1,239,166 =========== ========== ========== EARNINGS PER SHARE Basic............................................... $ 0.50 0.48 0.51 Diluted............................................. 0.49 0.47 0.51 =========== ========== ========== See accompanying notes to consolidated financial statements.

UNEARNED ACCUMULATED EMPLOYEE OTHER COM- STOCK UNAMORTIZED TOTAL COMMON STOCK ADDITIONAL PREHENSIVE OWNERSHIP RESTRICTED STOCK- --------------------- PAID-IN RETAINED INCOME TREASURY PLAN STOCK HOLDERS' SHARES AMOUNT CAPITAL EARNINGS (LOSS) STOCK SHARES AWARDS EQUITY --------- --------- ---------- ---------- ----------- ---------- --------- ----------- ---------- Balance, March 31, 1997 836,400 $ 836,400 2,768,548 9,674,676 (509,523) -- (135,840) -- 12,634,261 Net income............. -- -- -- 1,239,166 -- -- -- -- 1,239,166 Net proceeds from sale of common stock of Equality Bancorp, Inc. ................ 1,322,500 13,225 12,297,206 -- -- -- (1,198,060) -- 11,112,371 Cancellation of Equality Bancorp Savings and Loan Association, F.A. Common stock owned by First Missouri Financial, M.H.C. ... (445,000) (445,000) 445,000 -- -- -- -- -- -- Cancellation of Equality Bancorp Savings and Loan Association, F.A. common stock owned by minority stockholders......... (391,400) (391,400) 391,400 -- -- -- -- -- -- Issuance of common stock of Equality Bancorp, Inc. to minority stockholders of Equality Bancorp Savings and Loan Association, F.A. ... 1,163,402 11,634 (11,634) -- -- -- -- -- -- Capital contribution from First Missouri Financial, M.H.C. ... -- -- -- 50,000 -- -- -- -- 50,000 Exercise of stock options........ 19,953 200 68,716 -- -- -- -- -- 68,916 Tax benefit of stock options exercised.... -- -- 10,328 -- -- -- -- -- 10,328 Amortization of Employee Stock Ownership Plan awards.......... -- -- 27,677 -- -- -- 56,796 -- 84,473 - 7 - UNEARNED ACCUMULATED EMPLOYEE OTHER COM- STOCK UNAMORTIZED TOTAL COMMON STOCK ADDITIONAL PREHENSIVE OWNERSHIP RESTRICTED STOCK- --------------------- PAID-IN RETAINED INCOME TREASURY PLAN STOCK HOLDERS' SHARES AMOUNT CAPITAL EARNINGS (LOSS) STOCK SHARES AWARDS EQUITY --------- --------- ---------- ---------- ----------- ---------- --------- ----------- ---------- Dividend declared on nonmutual holding company owned common stock at $.34 per share...... -- -- -- (128,322) -- -- -- -- (128,322) Dividend declared on common stock of Equality Bancorp, Inc. at $.06 per share............... -- -- -- (141,120) -- -- -- -- (141,120) Other comprehensive Income (loss), net of tax.......... -- -- -- -- 907,742 -- -- -- 907,742 --------- --------- ---------- ---------- ---------- ---------- ---------- -------- ---------- Balance, March 31, 1998................ 2,505,855 25,059 15,997,241 10,694,400 398,219 -- (1,277,104) -- 25,837,815 Net income............ -- -- -- 1,129,280 -- -- -- -- 1,129,280 Exercise of stock options....... 13,938 139 60,594 -- -- -- -- -- 60,733 Tax benefit of stock options exercised... -- -- 4,247 -- -- -- -- -- 4,247 Purchase of stock for restricted stock awards........ -- -- -- -- -- -- -- (739,456) (739,456) Purchase of treasury stock............... -- -- -- -- -- (166,431) -- -- (166,431) Amortization of stock awards.............. -- -- -- -- -- -- -- 120,131 120,131 Amortization of Employee Stock Ownership Plan awards.............. -- -- 46,187 -- -- -- 142,335 -- 188,522 Dividend declared on common stock of Equality Bancorp, Inc. at $.24 per share............... -- -- -- (568,356) -- -- -- -- (568,356) Other comprehensive income (loss), net of tax.............. -- -- -- -- (258,755) -- -- -- (258,755) --------- --------- ---------- ---------- ---------- ---------- ---------- -------- ---------- Balance, March 31, 1999................ 2,519,793 25,198 16,108,269 11,255,324 139,464 (166,431) (1,134,769) (619,325) 25,607,730 Net income............ -- -- -- 1,151,910 -- -- -- -- 1,151,910 Exercise of stock options............. 24,301 243 81,818 -- -- -- -- -- 82,061 - 8- UNEARNED ACCUMULATED EMPLOYEE OTHER COM- STOCK UNAMORTIZED TOTAL COMMON STOCK ADDITIONAL PREHENSIVE OWNERSHIP RESTRICTED STOCK- --------------------- PAID-IN RETAINED INCOME TREASURY PLAN STOCK HOLDERS' SHARES AMOUNT CAPITAL EARNINGS (LOSS) STOCK SHARES AWARDS EQUITY --------- --------- ---------- ---------- ----------- ---------- --------- ----------- ---------- Dividends paid on Unvested stock awards............... -- -- 14,184 -- -- -- -- -- 14,184 Purchase of treasury stock................ -- -- -- -- -- (1,067,368) -- -- (1,067,368) Amortization of stock awards......... -- -- -- -- -- -- -- 147,816 147,816 Amortization of Employee Stock Ownership Plan awards............... -- -- (11,929) -- -- -- 144,905 -- 132,976 Dividend declared on common stock of Equality Bancorp, Inc. at $.24 per share................ -- -- -- (557,785) -- -- -- -- (557,785) Other comprehensive income (loss), net of tax............... -- -- -- -- (5,586,522) -- -- -- (5,586,522) --------- --------- ---------- ---------- ---------- ---------- ---------- -------- ---------- Balance, March 31, 2000................. 2,544,094 $ 25,441 16,192,342 11,849,449 (5,447,058) (1,233,799) (989,864) (471,509) 19,925,002 ========= ========= ========== ========== ========== ========== ========== ======== ========== See accompanying notes to consolidated financial statements.

YEARS ENDED MARCH 31, ------------------------------------------ 2000 1999 1998 ------------ ------------ ------------ Cash flows from operating activities: Net income......................................... $ 1,151,910 1,129,280 1,239,166 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization: Office properties and equipment........... 441,029 237,834 272,470 Real estate investments................... -- 7,508 11,261 Premiums and discounts, net............... (1,266,977) (366,626) 26,339 Mortgage servicing rights................. 632,055 680,338 383,812 Stock awards.............................. 147,816 120,131 -- (Increase) decrease in accrued interest receivable................................ (726,157) (291,773) 52,687 Provision for losses on loans................ -- -- 115,513 Gain on sale of mortgage loans............... (771,172) (2,673,260) (1,722,985) Increase (decrease) in valuation reserve on loans held for sale....................... -- (10,517) 53,652 Gain on sale of mortgage servicing rights.... (451,298) -- -- Gain on sale of real estate.................. -- (148,391) (1,154) Gain (loss) on the sale of investment and mortgage-backed securities available for sale, net............................. 43,016 (166,388) (41,044) (Decrease) increase in accrued interest payable on savings deposits............... (52,569) 66,077 (396) Change in income taxes payable............... 72,980 (492,604) 596,329 Equity in loss of joint venture.............. -- 54,430 44,109 Other, net................................... (815,950) (2,429,385) 2,735,473 Origination and purchases of loans held for sale... (87,659,092) (177,318,757) (115,459,407) Proceeds from sales of loans held for sale......... 92,810,614 187,521,731 107,056,970 ------------ ------------ ------------ Net cash provided by (used in) operating activities................... 3,556,205 5,919,628 (4,637,205) ------------ ------------ ------------ Cash flows from investing activities: Net (increase) decrease in loans receivable........ (19,418,651) 10,711,331 (2,546,296) Decrease in interest-bearing deposits.............. 887,000 293,000 2,441,744 Principal repayments on investment securities available for sale.............................. 13,742 40,641 -- Principal repayments on mortgage-backed securities available for sale.............................. 18,301,427 33,071,367 3,134,164 Proceeds from maturities of investment securities available for sale.............................. 21,190,000 67,770,704 66,524,057 Proceeds from the sale of investment securities available for sale.............................. 27,014,541 41,459,748 50,716,621 Proceeds from the sale of mortgage-backed securities available for sale................... 10,517,271 26,459,805 10,035,942 Proceeds from maturities of investment securities held to maturity................................ -- 2,000,000 2,250,000 Purchase of investment securities available for sale............................................ (91,934,130) (120,808,643) (114,672,471) Purchase of mortgage-backed securities available for sale........................................ (5,300,430) (92,917,447) (56,569,108) Net increase in mortgage servicing rights.......... (181,181) (1,322,372) (708,134) Proceeds from the sale of mortgage servicing rights 206,287 -- -- Proceeds from the sale of real estate acquired through foreclosure............................. -- -- 83,995 - 10 - YEARS ENDED MARCH 31, ------------------------------------------ 2000 1999 1998 ------------ ------------ ------------ Proceeds from the sale of real estate held for investment.............................. -- 344,290 -- Decrease in joint venture borrowings........... -- 649,047 13,865 Purchase of stock in Federal Home Loan Bank System................................. (1,076,000) (1,711,100) (1,850,000) Purchase of office properties and equipment, net......................................... (924,787) (1,114,904) (2,913,166) ------------ ------------ ------------ Net cash used in investing activities. (40,704,911) (35,074,533) (44,058,787) ------------ ------------ ------------ Cash flows from financing activities: Net increase (decrease) in savings deposits.... 11,931,418 9,652,450 (3,681,578) Proceeds from Federal Home Loan Bank System advances............................. 30,000,000 36,500,000 106,500,000 Repayment of Federal Home Loan Bank System advances............................. (443,641) (10,315,733) (65,500,000) Proceeds from other borrowed money............. -- 147,089 565,730 Repayment of other borrowed money.............. (131,249) -- (135,840) (Decrease) increase in advance payments by borrowers for taxes and insurance........... (33,834) (36,316) 19,174 Cash dividends paid............................ (557,785) (568,356) (269,442) Proceeds from sale of common stock............. -- -- 11,112,371 Capital contribution from First Missouri Financial, M.H.C. .......................... -- -- 50,000 Proceeds from exercise of stock options........ 82,061 60,733 68,916 Purchase of stock for restricted stock awards.. -- (739,456) -- Purchase of treasury stock..................... (1,067,368) (166,431) -- ------------ ------------ ------------ Net cash provided by financing activities.......................... 39,779,602 34,533,980 48,729,331 ------------ ------------ ------------ Net increase in cash and cash equivalents......................... 2,630,896 5,379,075 33,339 Cash and cash equivalents, beginning of year......... 6,449,613 1,070,538 1,037,199 ------------ ------------ ------------ Cash and cash equivalents, end of year............... $ 9,080,509 6,449,613 1,070,538 ============ ============ ============ Supplemental disclosure of cash flow information: Interest paid.................................. $ 14,329,859 12,285,351 9,725,778 Income taxes paid.............................. 680,660 1,030,012 75,958 Noncash transfers of loans to real estate acquired through foreclosure................ -- -- 19,674 ============ ============ ============ See accompanying notes to consolidated financial statements.

YEARS ENDED MARCH 31, ----------------------------------------- 2000 1999 1998 ----------- --------- --------- Net income.................................................. $ 1,151,910 1,129,280 1,239,166 Other comprehensive income (loss): Net unrealized gain (loss) on investment and mortgage-backed securities available for sale, net of tax................................... (5,612,762) (157,258) 932,779 Less adjustment for loss (gain) on sale of Investment and mortgage-backed securities available for sale realized in net income, net of tax (credit) of $(16,776), $64,891, and $16,007 in 2000, 1999, and 1998, respectively.............. 26,240 (101,497) (25,037) ----------- --------- --------- Total other comprehensive income (loss)......... (5,586,522) (258,755) 907,742 ----------- --------- --------- Comprehensive income (loss)................................. $(4,434,612) 870,525 2,146,908 =========== ========= ========= See accompanying notes to consolidated financial statements.

2000 --------------------------------------------------------------------------------- TO BE WELL CAPITALIZED UNDER CAPITAL PROMPT CORRECTIVE ACTUAL REQUIREMENTS ACTION PROVISION --------------------- --------------------- --------------------- AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO ------ ----- ------ ----- ------ ----- (DOLLARS IN THOUSANDS) Total capital (to risk-weighted assets).......... $24,508 15.17% $12,928 8.00% $16,160 10.00% Tier 1 capital (to risk-weighted assets).......... 24,144 14.94 6,464 4.00 9,696 6.00 Tier 1 capital (to adjusted average assets)....... 24,144 7.27 13,292 4.00 16,615 5.00 ======= ===== ======= ===== ======= =====

1999 -------------------------------------------------------------------------- MINIMUM FOR TO BE WELL OTS CAPITAL CAPITALIZED FOR ADEQUACY PROMPT CORRECTIVE ACTUAL PURPOSES ACTION PROVISIONS -------------------- ---------------------- ----------------------- RATIO AMOUNT RATIO AMOUNT RATIO AMOUNT ----- ------ ----- ------ ----- ------ (DOLLARS IN THOUSANDS) Stockholders' equity ratio to total assets.............. 8.51% $ 24,290 Unrealized gain on investment and mortgage-backed securities available for sale, net of tax......... (139) ----- -------- Tangible capital, and ratio to adjusted total assets..... 8.39 24,151 1.50% $ 4,319 Tier 1 (core) capital, and ratio to adjusted assets..... 8.39 24,151 3.00 8,637 5.00% $ 14,395 Tier 1 capital, and ratio to risk-weighted assets......... 24.77 24,151 6.00 5,849 Allowance for loan losses (general valuation allowance.................... 366 ----- -------- 25.15% $ 24,517 8.00 7,799 10.00 9,748 ===== ======== Total assets............... $288,129 Adjusted total assets............ 287,900 Risk-weighted assets............. 97,483

2000 ------------------------------------------------------------------------ GROSS GROSS AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE -------------- ------------ ------------ -------------- U.S. Government and agency obligations..................... $ 68,716,508 33,780 3,944,668 64,805,620 Corporate obligations............... 58,012,955 -- 2,330,763 55,682,192 -------------- ------------ ------------ -------------- Total debt securities........ 126,729,463 33,780 6,275,431 120,487,812 Marketable equity securities........ 87,730 -- -- 87,730 -------------- ------------ ------------ -------------- $ 126,817,193 33,780 6,275,431 120,575,542 ============== ============ ============ ==============

1999 ------------------------------------------------------------------------ GROSS GROSS AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE -------------- ------------ ------------ -------------- U.S. Government and agency obligations..................... $ 59,922,329 663,274 85,362 60,500,241 Corporate obligations............... 21,068,452 4,558 25,642 21,047,368 -------------- ------------ ------------ -------------- Total debt securities........ 80,990,781 667,832 111,004 81,547,609 Marketable equity securities........ 87,730 -- -- 87,730 -------------- ------------ ------------ -------------- $ 81,078,511 667,832 111,004 81,635,339 ============== ============ ============ ==============

AMORTIZED FAIR COST VALUE -------------- -------------- Due in one year or less................................... $ 4,213,761 4,181,558 Due after one year through five years..................... 56,419,506 54,184,533 Due after five years through ten years.................... 40,434,621 38,889,389 Due after ten years....................................... 25,661,575 23,232,332 -------------- -------------- $ 126,729,463 120,487,812 ============== ==============

GROSS GROSS AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE -------------- ------------ ------------ -------------- U.S. Government and agency obligations 2000............................ $ 600,000 -- 52,000 548,000 1999............................ 600,000 -- 69,000 531,000 ============== ============ ============ ==============

2000 ------------------------------------------------------------------------ GROSS GROSS AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE -------------- ------------ ------------ -------------- Federal National Mortgage Association............ $ 37,872,779 -- 1,532,626 36,340,153 Federal Home Loan Mortgage Corporation............ 12,108,350 -- 422,130 11,686,220 Government National Mortgage Association............ 16,844,498 -- 733,197 16,111,301 -------------- ------------ ------------ -------------- $ 66,825,627 -- 2,687,953 64,137,674 ============== ============ ============ ==============

1999 ------------------------------------------------------------------------ GROSS GROSS AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE -------------- ------------ ------------ -------------- Federal National Mortgage Association............ $ 49,511,993 84,140 231,294 49,364,839 Federal Home Loan Mortgage Corporation............ 17,203,265 8,191 91,914 17,119,542 Government National Mortgage Association............ 24,423,724 51,481 148,803 24,326,402 -------------- ------------ ------------ -------------- $ 91,138,982 143,812 472,011 90,810,783 ============== ============ ============ ==============

AMORTIZED FAIR COST VALUE -------------- -------------- Due in one year or less................................... $ 29,253 28,933 Due after one year through five years..................... 3,930,427 3,764,578 Due after five years through ten years.................... 5,644,233 5,439,493 Due after ten years....................................... 57,221,714 54,904,670 -------------- -------------- $ 66,825,627 64,137,674 ============== ==============

2000 1999 -------------- -------------- Loans secured by real estate: Residential: One- to four-family: Conventional.................................... $ 68,183,215 54,525,316 Federal Housing Administration and Veterans Administration.................. 10,758,016 10,629,163 Multi-family....................................... 1,342,797 1,429,600 Commercial:........................................... 4,096,761 4,381,981 Loans held for sale................................... 2,640,972 7,021,322 -------------- -------------- Total loans secured by real estate....... $ 87,021,761 77,987,382 Commercial business................................... 14,475,913 9,642,046 Loans secured by savings deposits..................... 256,856 254,014 Property improvement.................................. 1,633,263 1,481,520 Automobiles........................................... 1,762,952 1,042,031 Other................................................. 562,905 267,739 -------------- -------------- Total loans.............................. 105,713,650 90,674,732 Less: Deferred loan fees, net............................ 20,809 25,086 Unearned discounts................................. 13,065 4,999 Allowance for loan losses.......................... 364,047 366,032 Valuation reserve on loans held for sale........... -- 47,938 -------------- -------------- $ 105,315,729 90,230,677 ============== ============== Weighted average interest rate at March 31................ 7.77% 7.63% ============== ==============

2000 1999 1998 ----------- ----------- ----------- Balance, beginning of year........................... $ 366,032 374,200 283,000 Provision charged to expense......................... -- -- 115,513 Charge-offs.......................................... (3,206) (8,168) (24,313) Recoveries........................................... 1,221 -- -- ----------- ----------- ----------- Balance, end of year................................. $ 364,047 366,032 374,200 =========== =========== ===========

2000 1999 1998 ------------ ------------ ------------ Mortgage servicing rights: Balance at beginning of year................. $ 1,689,595 977,433 592,444 Purchases.................................... 466,253 -- -- Originated................................... 290,858 1,392,501 768,801 Amortization................................. (632,055) (680,339) (383,812) Sales........................................ (540,883) -- -- ------------ ------------ ------------ Balance at end of year, before allowance..... 1,273,768 1,689,595 977,433 ------------ ------------ ------------ Allowance for impairment of mortgage servicing rights: Balance at beginning of year................. (209,964) (139,836) (66,022) Reductions (additions)....................... 209,964 (70,128) (73,814) ------------ ------------ ------------ Balance at end of year....................... -- (209,964) (139,836) ------------ ------------ ------------ Mortgage servicing rights, net............... $ 1,273,768 1,479,631 837,597 ============ ============ ============ Fair value of mortgage servicing rights...... $ 2,654,000 2,597,000 1,513,000 ============ ============ ============

2000 1999 -------------- -------------- Land...................................................... $ 1,885,358 1,583,358 Office buildings and improvements......................... 5,070,900 4,427,565 Furniture and equipment................................... 2,820,069 2,449,769 Automobiles............................................... 63,365 63,365 Property held for future expansion........................ 742,726 1,133,574 -------------- -------------- 10,582,418 9,657,631 Less accumulated depreciation and amortization............ 3,647,303 3,206,274 -------------- -------------- $ 6,935,115 6,451,357 ============== ==============

2000 1999 ------------ ----------- Accrued interest receivable: Loans receivable...................................... $ 611,426 461,779 Interest-bearing deposits............................. -- 4,008 Investment securities................................. 1,605,505 927,600 Mortgage-backed securities............................ 497,096 594,483 ------------ ----------- Total accrued interest receivable.................. 2,714,027 1,987,870 Accounts receivable....................................... 1,090,011 296,977 Prepaid expenses.......................................... 233,022 164,946 Other ................................................... 360,819 275,827 ------------ ----------- $ 4,397,879 2,725,620 ============ ===========

2000 1999 ---------------------------------------- ------------------------------------ WEIGHTED WEIGHTED AVERAGE PERCENT AVERAGE PERCENT INTEREST OF TOTAL INTEREST OF TOTAL AMOUNT RATE SAVINGS AMOUNT RATE SAVINGS ------ ---- ------- ------ ---- ------- Demand deposits: Checking............... $ 19,054,570 1.23% 13.6% $ 16,082,858 1.13% 12.5% Passbook savings....... 20,073,849 2.51 14.2 20,766,651 2.51 16.1 Money market........... 12,459,248 4.34 8.8 8,236,660 4.31 6.4 ------------ ------- ------ ------------ ----- ------ Total demand deposits...... 51,587,667 2.44 36.6 45,086,169 2.34 35.0 ------------ ------- ------ ------------ ----- ------ Certificates of deposit: Negotiated rate ($100,000 or more).. 1,598,807 5.84 1.1 2,111,581 5.79 1.6 Other.................. 87,698,770 5.51 62.3 81,756,076 5.45 63.4 ------------ ------- ------ ------------ ----- ------ Total certificates of deposit................ 89,297,577 5.52 63.4 83,867,657 5.46 65.0 ------------ ------- ------ ------------ ----- ------ $140,885,244 4.39% 100.0% $128,953,826 4.37% 100.0% ============ ======= ====== ============ ===== ======

2000 1999 ------------------------------- ------------------------------- WEIGHTED WEIGHTED AVERAGE AVERAGE AMOUNT RATE AMOUNT RATE -------------- -------- ------------ -------- 3.00% to 3.99%...................... $ 16,680 3.00% $ 16,307 3.00% 4.00% to 4.99%...................... 24,331,202 4.62 17,288,243 4.59 5.00% to 5.99%...................... 35,357,419 5.48 49,392,324 5.40 6.00% to 6.99%...................... 28,850,239 6.23 13,634,306 6.26 7.00% to 7.99%...................... 164,269 7.00 2,981,837 7.00 8.00% and greater................... 577,768 9.74 554,640 9.75 -------------- ------ ------------ ----- $ 89,297,577 5.52% $ 83,867,657 5.46% ============== ====== ============ =====

2000 1999 ------------------------------- ------------------------------- PERCENT PERCENT AMOUNT OF TOTAL AMOUNT OF TOTAL -------------- ------------ -------------- ------------- Within one year..................... $ 34,466,576 38.6% $ 46,478,826 55.4% Second year......................... 25,803,920 28.9 12,329,265 14.7 Third year.......................... 14,419,530 16.1 4,943,112 5.9 Fourth year......................... 7,312,317 8.2 13,108,564 15.6 Thereafter.......................... 7,295,234 8.2 7,007,890 8.4 -------------- ----- -------------- ----- $ 89,297,577 100.0% $ 83,867,657 100.0% ============== ===== ============== =====

2000 1999 1998 ------------ ---------- ---------- Checking and money market demand................. $ 648,195 431,004 342,468 Passbook savings................................. 522,725 506,352 663,498 Certificates of deposit.......................... 4,425,539 4,520,790 4,627,726 ------------ --------- --------- $ 5,596,459 5,458,146 5,633,692 ============ ========= =========

2000 1999 ------------------------------- ------------------------------- WEIGHTED WEIGHTED AVERAGE AVERAGE INTEREST INTEREST AMOUNT RATE AMOUNT RATE -------------- ------------- -------------- ------------- Note payable to bank................ $ 1,694,534 2.25% $ 1,825,783 2.25% Advances from the Federal Home Loan Bank System: Due in 2000......................... 76,000,000 6.08 -- -- Due in 2001......................... 25,000,000 6.88 -- -- Due in 2003, repaid................. -- -- 71,000,000 5.35 Due in 2008......................... 49,500,000 5.28 23,000,000 5.22 Due in 2009, repaid................. -- -- 26,500,000 5.22 Due in 2013......................... 9,240,626 6.00 9,684,267 6.00 -------------- ---- -------------- ---- $ 161,435,160 5.91% $ 132,010,050 5.35% ============== ==== ============== ====

2000 1999 1998 ------------ ------------ ------------ Current: Federal.......................................... $ 737,870 499,690 613,427 State............................................ 78,244 45,397 69,277 ------------ ------------ ------------ Total current.................................... 816,114 545,087 682,704 Deferred......................................... (77,570) 162,560 94,964 ------------ ------------ ------------ Total income tax expense......................... $ 738,544 707,647 777,668 ============ ============ ============

2000 1999 1998 ------------ ------------ ------------ Tax at statutory federal income tax rate......... $ 642,754 624,555 685,724 State income tax, net of federal tax benefit..... 51,641 29,962 45,723 Other, net....................................... 44,149 53,130 46,221 ------------ ------------ ------------ $ 738,544 707,647 777,668 ============ ============ ============

2000 1999 ------------ ----------- Deferred tax assets: Available for sale securities........................ $ 3,482,546 -- General loan loss allowance.......................... 135,134 135,871 Deferred compensation................................ 86,329 72,871 Excess servicing gains............................... 8,747 11,605 Other................................................ 890 1,553 ------------ ----------- Total deferred tax assets............................ 3,713,646 221,900 ------------ ----------- Deferred tax liabilities: Tax depreciation in excess of that recorded for book purposes...................................... 237,309 221,266 Federal Home Loan Bank System stock dividends........ 154,162 154,162 Allowance for loan losses in excess of base-year reserve............................... 55,437 69,296 Mortgage servicing rights............................ 469,337 545,057 Available for sale securities........................ -- 89,165 Other................................................ 21,464 16,297 ------------ ----------- Total deferred tax liabilities....................... 937,709 1,095,243 ------------ ----------- Net deferred tax asset (liability)................... $ 2,775,937 (873,343) ============ ===========

AVERAGE PER SHARE PRICE OPTION SHARES PER SHARE PRICE RANGE ------ --------- ----------- Outstanding and exercisable at March 31, 1997................................... 112,951 $ 3.73 3.36-4.37 Exercised............................................ 19,953 3.45 3.36-4.37 Outstanding and exercisable at March 31, 1998................................... 92,998 3.79 3.36-4.37 Exercised............................................ 13,938 3.61 3.36-4.37 Outstanding and exercisable at March 31, 1999................................... 79,060 3.82 3.36-4.37 Exercised............................................ 24,301 3.43 3.36-4.37 Forfeitures.......................................... (551) 3.91 3.36-4.37 Options granted...................................... 26,850 13.02 8.00-13.90 -------- -------- ---------- Outstanding and exercisable at March 31, 2000................................... 81,058 $ 7.00 3.36-13.90 ======== ======== ==========

2000 1999 ------------------------------- ------------------------------ CARRYING FAIR CARRYING FAIR AMOUNT VALUE AMOUNT VALUE ------ ----- ------ ----- ASSETS Cash, primarily interest- bearing demand deposits......... $ 9,080,509 9,080,509 6,449,613 6,449,613 Interest-bearing deposits........... 198,000 197,427 1,085,000 1,105,697 Investment securities............... 121,175,542 121,123,542 82,235,339 82,166,339 Mortgage-backed securities.......... 64,137,674 64,137,674 90,810,783 90,810,783 Loans receivable.................... 105,315,729 103,618,960 90,230,677 90,929,267 Stock in Federal Home Loan Bank............................ 7,987,100 7,987,100 6,911,100 6,911,100 Accrued interest receivable......... 2,714,027 2,714,027 1,987,870 1,987,870 -------------- ----------- ----------- ----------- $ 310,608,581 308,859,239 279,710,382 280,360,669 ============== =========== =========== =========== LIABILITIES Savings deposits.................... $ 140,885,244 140,885,244 128,953,826 131,196,066 Accrued interest payable on savings deposits............. 147,711 147,711 200,280 200,280 Borrowed money...................... 161,435,160 160,145,915 132,010,050 133,302,453 Advance payments by borrowers for taxes and insurance................... 35,800 35,800 69,634 69,634 -------------- ----------- ----------- ----------- $ 302,503,915 301,214,670 261,233,790 264,768,433 ============== =========== =========== ===========

2000 -------------------------------------------------------------------------- EQUALITY EQUALITY SAVINGS MORTGAGE CORPORATE BANK CORPORATION AND OTHERS TOTAL --------------- ----------- ---------- ----- Balance sheet information: Investment and mortgage- backed securities.......... $ 185,225,486 -- 87,730 185,313,216 Loans receivable, net........ 103,756,961 2,627,907 (1,069,139) 105,315,729 Total assets................. 320,923,750 5,420,707 (3,009,150) 323,335,307 Savings deposits............. 141,725,442 -- (840,198) 140,885,244 Stockholders' equity......... 18,857,512 2,374,382 (1,306,892) 19,925,002 =============== =========== =========== =========== - 32 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONT'D Statement of income information: Total interest income...... $ 20,603,889 532,011 (92,448) 21,043,452 Total interest expense..... 14,404,790 352,869 (396,509) 14,361,150 --------------- ----------- ----------- ----------- Net interest income........ 6,199,099 179,142 304,061 6,682,302 Provision for losses on loans -- -- -- -- Noninterest income........... 367,152 2,672,139 267,374 3,306,665 Noninterest expense.......... 4,718,057 2,673,927 706,529 8,098,513 Income tax expense........... 685,245 69,168 (15,869) 738,544 --------------- ----------- ----------- ----------- Net income (loss).......... $ 1,162,949 108,186 (119,225) 1,151,910 =============== =========== =========== =========== Capital expenditures......... $ 908,206 9,355 7,226 924,787 =============== =========== =========== =========== 1999 --------------------------------------------------------------------------- EQUALITY EQUALITY SAVINGS MORTGAGE CORPORATE BANK CORPORATION AND OTHERS TOTAL --------------- ----------- ---------- ----- Balance sheet information: Investment and mortgage- backed securities.......... $ 172,985,392 -- 87,730 173,046,122 Loans receivable, net........ 87,676,452 6,968,384 (4,414,159) 90,230,677 Total assets................. 285,539,615 9,243,476 (6,345,917) 288,437,174 Savings deposits............. 130,028,064 -- (1,074,238) 128,953,826 Stockholders' equity......... 24,290,744 2,272,196 (955,210) 25,607,730 =============== =========== =========== =========== Statement of income information: Total interest income...... $ 17,012,620 924,685 (378,884) 17,558,421 Total interest expense..... 12,417,420 635,835 (701,827) 12,351,428 --------------- ----------- ----------- ----------- Net interest income........ 4,595,200 288,850 322,943 5,206,993 Provision for losses on loans -- -- -- -- Noninterest income........... 863,796 3,477,136 (103,700) 4,237,232 Noninterest expense.......... 3,949,862 3,066,286 591,150 7,607,298 Income tax expense........... 406,449 272,823 28,375 707,647 --------------- ----------- ----------- ----------- Net income (loss).......... $ 1,102,685 426,877 (400,282) 1,129,280 =============== =========== =========== =========== Capital expenditures......... $ 1,010,704 104,200 -- 1,114,904 =============== =========== =========== =========== - 33 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONT'D 1998 ----------------------------------------------------------------------------- EQUALITY EQUALITY SAVINGS MORTGAGE CORPORATE BANK CORPORATION AND OTHERS TOTAL --------------- ----------- ---------- ----- Statement of income Information Total interest income...... $ 14,345,013 810,591 (475,294) 14,680,310 Total interest expense..... 9,707,997 530,656 (513,271) 9,725,382 --------------- ------------ ----------- ------------- Net interest income........ 4,637,016 279,935 37,977 4,954,928 Provision for losses on loans 115,513 -- -- 115,513 Noninterest income........... 554,469 2,489,439 (162,424) 2,881,484 Noninterest expense.......... 3,209,980 2,407,612 86,473 5,704,065 Income tax expense........... 635,257 141,087 1,324 777,668 Net income (loss).......... $ 1,230,735 220,675 (212,244) 1,239,166 =============== ============ =========== ============= Capital expenditures......... $ 2,790,356 122,810 -- 2,913,166 =============== ============ =========== =============

QUARTER ENDED ------------------------------------------------------------------------ JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, 1999 1999 1999 2000 ----------- ------------------ ------------------ ------------- (THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA) Total interest income......... $ 4,814 5,247 5,486 5,497 Total interest expense........ 3,206 3,500 3,673 3,982 ----------- -------- --------- -------- Net interest income...... 1,608 1,747 1,813 1,515 Provision for losses on loans. -- -- -- -- Noninterest income............ 851 758 665 1,033 Noninterest expense........... 2,044 2,068 2,038 1,949 ----------- -------- --------- -------- Income before income tax expense................ 415 437 440 599 Income tax expense............ 170 167 175 227 ----------- -------- --------- -------- Net income............... $ 245 270 265 372 =========== ======== ========= ======== Earnings per share: Basic...................... $ 0.10 0.12 0.11 0.17 Diluted.................... 0.10 0.11 0.11 0.17 =========== ======== ========= ======== - 34 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONT'D QUARTER ENDED ------------------------------------------------------------------------ JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, 1998 1998 1998 1999 ----------- ------------------ ------------------ ------------- (THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA) Total interest income......... $ 4,361 4,343 4,426 4,428 Total interest expense........ 2,881 3,087 3,221 3,162 ----------- -------- ----------- ---------- Net interest income........ 1,480 1,256 1,205 1,266 Provision for losses on loans. -- -- -- -- Noninterest income............ 836 970 1,273 1,158 Noninterest expense........... 1,736 1,909 2,009 1,953 ----------- -------- ----------- ---------- Income before income tax expense............... 580 317 469 471 Income tax expense............ 229 120 180 179 ----------- -------- ----------- ---------- Net income............ $ 351 197 289 292 =========== ======== =========== ========== Earnings per share: Basic...................... $ 0.15 0.08 0.12 0.13 Diluted.................... 0.15 0.08 0.12 0.12 =========== ======== =========== ==========

2000 1999 ------------ ----------- ASSETS Cash............................................... $ 763,939 995,648 Investment in subsidiary........................... 18,857,512 24,290,744 Other assets....................................... 429,763 497,290 ---------------- ----------- Total assets.............................. $ 20,051,214 25,783,682 ================ =========== LIABILITIES AND STOCKHOLDERS' EQUITY Other liabilities.................................. $ 126,212 175,952 Stockholders' equity............................... 19,925,002 25,607,730 ---------------- ----------- Total liabilities and stockholders' equity $ 20,051,214 25,783,682 ================ ===========

YEAR ENDED MARCH 31, FOUR MONTHS -------------------- ENDED MARCH 31, 2000 1999 1998 ------------- ------------- ------------- REVENUE Interest income.................................. $ 112,480 134,243 34,007 Rental income.................................... 70,750 46,800 -- Dividends from subsidiary........................ 1,000,000 1,000,000 -- Other............................................ 7,767 817 -- ------------- ------------- ------------ 1,190,997 1,181,860 34,007 ------------- ------------- ------------ EXPENSES Legal............................................ 57,277 81,193 12,183 Other............................................ 135,101 74,072 13,393 ------------- ------------- ------------ 192,378 155,265 25,576 ------------- ------------- ------------ Income before equity in undistributed income of subsidiary... 998,619 1,026,595 8,431 Equity in undistributed income of subsidiary..... 153,291 102,685 486,138 ------------- ------------- ------------ Net income.............................. $ 1,151,910 1,129,280 494,569 ============= ============= ============

SEPTEMBER 30, 2000 --------------- ASSETS Cash, primarily interest-bearing demand accounts......................... $ 24,286,095 Interest-bearing deposits................................................ 99,000 Investment securities: Available for sale, at fair value.................................... 22,927,755 Held to maturity, at amortized cost.................................. 600,000 Mortgage-backed securities available for sale, at fair value.............................................. 58,914,090 Loans receivable, net.................................................... 173,342,296 Investment in real estate................................................ 58,054 Stock in Federal Home Loan Bank.......................................... 4,527,400 Mortgage servicing rights................................................ -- Office properties and equipment, net..................................... 6,937,840 Deferred tax asset....................................................... 998,075 Accrued interest receivable and other assets............................. 5,046,087 --------------- Total assets...................................................... $ 297,736,692 =============== LIABILITIES AND STOCKHOLDERS' EQUITY Savings deposits......................................................... $ 183,636,320 Accrued interest payable on savings deposits............................. 113,291 Federal Home Loan Bank advances.......................................... 90,508,648 Other borrowed money..................................................... 1,157,799 Advance payments by borrowers for taxes and insurance............................................................ 51,375 Income tax payable....................................................... -- Accrued expenses and other liabilities................................... 658,809 --------------- Total liabilities................................................. 276,126,242 --------------- COMMITMENTS AND CONTINGENCIES Stockholders' equity Preferred stock, $.01 par value per share; 200,000 shares authorized; none issued............................ -- Common stock, $.01 par value per share; 4,000,000 shares authorized; 2,546,411 shares issued..................................................... 25,464 Additional paid-in capital........................................... 16,202,266 Retained earnings.................................................... 10,612,294 Accumulated other comprehensive loss................................. (2,666,300) Treasury stock, at cost, 160,105 shares.............................. (1,246,136) Unamortized restricted stock awards.................................. (400,451) Unearned ESOP shares................................................. (916,687) --------------- Total stockholders' equity........................................ 21,610,450 --------------- Total liabilities and stockholders' equity........................ $ 297,736,692 =============== See accompanying note to consolidated financial statements.

THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------- ------------------------------- 2000 1999 2000 1999 ------------- -------------- ------------- -------------- INTEREST INCOME Loans receivable........................... $ 2,407,879 $ 1,913,816 $ 4,589,682 $ 3,738,333 Investment securities...................... 1,937,901 2,027,868 4,172,480 3,642,154 Mortgage-backed securities................. 1,013,363 1,159,389 2,109,872 2,415,132 Interest-bearing deposits.................. 95,116 22,112 130,695 32,032 Other...................................... 117,793 123,826 247,555 233,459 ------------- -------------- ------------- -------------- Total interest income................... 5,572,052 5,247,011 11,250,284 10,061,110 ------------- -------------- ------------- -------------- INTEREST EXPENSE Savings deposits........................... 2,105,297 1,364,772 3,818,995 2,738,455 Advances from the Federal Home Loan Bank... 1,937,941 2,117,622 4,210,997 3,938,599 Other borrowed money....................... 14,158 17,423 25,400 29,225 ------------- -------------- ------------- -------------- Total interest expense.................. 4,057,396 3,499,817 8,055,392 6,706,279 ------------- -------------- ------------- -------------- Net interest income..................... 1,514,656 1,747,194 3,194,892 3,354,831 Provision for losses on loans.................. 631,000 -- 631,000 -- ------------- -------------- ------------- -------------- Net interest income after provision for losses on loans.............. 883,656 1,747,194 2,563,892 3,354,831 ------------- -------------- ------------- -------------- NONINTEREST INCOME Gain on sale of mortgage loans............. 1,921,536 264,088 2,165,880 595,221 Loan servicing fees and late charges....... 190,152 303,735 439,304 614,858 Gain (loss) on sale of investment and mortgage-backed securities available for sale................................ (2,716,878) (21,807) (2,716,704) 8,896 Rental income.............................. 41,877 45,490 84,103 81,816 Other...................................... 192,531 166,258 422,213 307,864 ------------- -------------- ------------- -------------- Total noninterest income (expense)...... (370,782) 757,764 394,796 1,608,655 ------------- -------------- ------------- -------------- NONINTEREST EXPENSE Salaries and employee benefits............. 1,124,067 1,162,692 2,249,816 2,322,558 Occupancy.................................. 220,248 237,034 416,428 420,646 Data processing............................ 120,824 120,817 220,430 211,948 Advertising................................ 37,720 76,835 169,700 156,371 Federal insurance premiums................. 8,038 18,783 15,245 37,295 Other...................................... 547,817 451,725 1,055,348 962,830 ------------- -------------- ------------- -------------- Total noninterest expense............... 2,058,714 2,067,886 4,126,967 4,111,648 ------------- -------------- ------------- -------------- Income (loss) before income tax expense (benefit)............................... (1,545,840) 437,072 (1,168,279) 851,838 Income tax expense (benefit)............... (346,348) 166,865 (202,867) 336,305 ------------- -------------- ------------- -------------- Net income (loss).................... (1,199,492) 270,207 (965,412) 515,533 ============= ============== ============= ============== Basic earnings (loss) per share................ $ (.53) $ .12 $ (.42) $ .22 ============= ============== ============= ============== Diluted earnings (loss) per share.............. $ (.52) $ .11 $ (.42) $ .22 ============= ============== ============= ============== See accompanying note to consolidated financial statements.

COMMON STOCK ADDITIONAL ---------------------- PAID-IN RETAINED SHARES AMOUNT CAPITAL EARNINGS ---------- --------- ------------- ------------ Balance, March 31, 2000 ..... 2,544,094 $25,441 $ 16,192,342 $ 11,849,449 Net loss .................... -- -- -- (965,412) Dividend paid on invested stock options ........... -- -- 6,318 -- Exercise of stock options ... 2,317 23 8,377 -- Purchase of treasury stock, at cost ................. -- -- -- -- Amortization of restricted stock awards ............ -- -- -- -- Amortization of ESOP awards . -- -- (4,771) -- Dividend declared on common stock at $.12 per share ....... -- -- -- (271,743) Other comprehensive income (loss), net of tax .................. -- -- -- -- --------- ------- ------------ ------------ Balance September 30, 2000 .. 2,546,411 $25,464 $ 16,202,266 $ 10,612,294 ========= ======= ============ ============ ACCUMULATED OTHER COM- UNAMORTIZED TOTAL PREHENSIVE RESTRICTED UNEARNED STOCK- INCOME TREASURY STOCK ESOP HOLDERS' (LOSS) STOCK AWARDS SHARES EQUITY ----------- ----------- ------------ ------------ ------------ Balance, March 31, 2000 ..... $(5,447,058) $(1,233,799) $ (471,509) $ (989,864) $ 19,925,002 Net loss .................... -- -- -- -- (965,412) Dividend paid on invested stock options ........... -- -- -- -- 6,318 Exercise of stock options ... -- -- -- -- 8,400 Purchase of treasury stock, at cost ................. -- (12,337) -- -- (12,337) Amortization of restricted stock awards ............ -- -- 71,058 -- 71,058 Amortization of ESOP awards . -- -- -- 73,177 68,406 Dividend declared on common stock at $.12 per share ....... -- -- -- -- (271,743) Other comprehensive income (loss), net of tax .................. 2,780,758 -- -- -- 2,780,758 ----------- ------------ ------------ ----------- ------------ Balance September 30, 2000 .. $(2,666,300) $ (1,246,136) $ (400,451) $ (916,687) $ 21,610,450 =========== ============ ============ =========== ============

SIX MONTHS ENDED SEPTEMBER 30, ------------------------------------- 2000 1999 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)..................................... $ (965,412) 515,533 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization: Office properties and equipment................. 202,691 209,815 Premiums and discounts, net..................... (691,924) (589,215) Mortgage servicing rights....................... 197,461 322,508 Restricted stock awards......................... 71,058 76,373 Decrease (increase) in accrued interest receivable. 1,117,913 (737,632) Provision for losses on loans...................... 631,000 -- Loss (gain) on sale of investment and mortgage- backed securities available-for-sale............ 2,716,704 (8,896) Decrease in accrued interest payable on savings deposits........................................ (34,420) (41,981) Change in income tax payable....................... (276,568) (37,634) Other, net......................................... (1,686,068) (63,825) Origination and purchase of loans held for sale....... (40,855,946) (58,485,155) Proceeds from sales of loans held for sale............ 40,298,106 58,589,886 ------------- ------------- Net cash provided by (used in) operating activities............................... 724,594 (250,223) ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Net change in loans receivable........................ (67,015,268) (8,506,253) Decrease in interest-bearing deposits................. 99,000 590,000 Principal repayments on investment securities, AFS.... 1,609 9,114 Principal repayments on mortgage-backed securities, AFS.................................... 4,639,744 12,582,326 Proceeds from the sale of investment securities, AFS................................................ 99,494,298 5,013,280 Proceeds from the maturity of investment securities, AFS.................................... 3,650,000 20,190,000 Proceeds from the sale of mortgage-backed securities, AFS.................................... 1,510,847 5,650,348 Purchase of investment securities, AFS................ (3,875,780) (60,884,425) Purchase of mortgage-backed securities, AFS........... -- (5,300,430) Sale (purchase) of stock in Federal Home Loan Bank............................................... 3,459,700 (1,089,100) Purchase of office properties and equipment, net...... (205,416) (748,254) ------------- ------------- Net cash provided by (used in) investing activities.................................. 41,758,734 (32,493,394) ------------- ------------- - 41 - (CONTINUED) SIX MONTHS ENDED SEPTEMBER 30, ------------------------------------- 2000 1999 ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in savings deposits...................... $ 42,751,076 $ 1,374,328 Proceeds from Federal Home Loan Bank advances......... -- 30,000,000 Repayment of Federal Home Loan Bank advances........................................... (69,231,978) (218,502) Proceeds from (repayment of) other borrowed money..................................... (536,735) 1,555,115 Increase in advance payments by borrowers for taxes and insurance............................ 15,575 16,253 Cash dividends paid................................... (271,743) (280,318) Purchase of treasury stock............................ (12,337) (423,935) Proceeds from exercise of stock options............... 8,400 3,300 ------------- ------------- Net cash provided by (used in) financing activities.................................... (27,277,742) 32,026,241 ------------- ------------- Net increase (decrease) in cash and cash equivalents.............................. 15,205,586 (717,376) Cash and cash equivalents, beginning of period............ 9,080,509 6,449,613 ------------- ------------- Cash and cash equivalents, end of period.................. $ 24,286,095 5,732,237 ============= ============= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest paid......................................... $ 8,173,672 6,726,010 Income taxes paid, net................................ 518,606 360,660 See accompanying note to consolidated financial statements.

SIX MONTHS ENDED SEPTEMBER 30, ---------------------------------------------- 2000 1999 ---------------------- -------------------- Net income (loss).................................. $ (965,412) 515,533 Other comprehensive income (loss): Net unrealized gain (loss) on investment and mortgage-backed securities available-for- sale, net of tax............................ 1,123,569 (1,517,979) Less adjustment for gain (loss) on sale of investment and mortgage-backed securities available-for-sale realized in net income, net of tax credit of $1,059,515 and tax of $3,469 for the six months ended September 30, 2000 and 1999, respectively................. (1,657,189) 5,427 --------------- -------------- Total other comprehensive income (loss).. 2,780,758 (1,523,406) --------------- -------------- Comprehensive income (loss)........................ $ 1,815,346 (1,007,873) =============== =============== See accompanying note to consolidated financial statements.

PRO FORMA ALLEGIANT EQUALITY PRO FORMA COMBINED BANCORP, INC. BANCORP, INC. ADJUSTMENTS CONSOLIDATED ------------- ------------- ----------- ------------ ASSETS Cash and due from banks....................... $ 17,422 $ 24,286 $ (2,547)(a) $ 39,161 Money market investments...................... 15,632 99 15,731 Investment securities Available-for-sale......................... 58,365 86,369 144,734 Held-to-maturity........................... 5,410 600 6,010 ----------- ----------- ----------- ------------ Total securities........................... 63,775 86,969 150,744 Loans Commercial loans........................... 133,387 71,748 (51,800)(b) 153,335 Real estate loans.......................... 579,647 96,888 (1,500)(c) 675,035 Retail loans............................... 27,636 5,698 33,334 ----------- ----------- ----------- ------------ Total loans.............................. 740,670 174,334 (53,300) 861,704 Allowance for loan losses.............. 10,013 992 11,005 ----------- ----------- ----------- ------------ Net loans................................ 730,657 173,342 (53,300) 850,699 Premises and equipment........................ 9,827 6,938 1,400 (c) 18,165 Intangible assets............................. 11,012 -- 11,012 Other assets.................................. 27,923 6,103 34,026 ----------- ----------- ----------- ------------ Total assets............................. $ 876,248 $ 297,737 $ (54,447) $ 1,119,538 =========== =========== =========== ============ LIABILITIES Deposits Non-interest-bearing deposits.............. $ 68,918 $ 10,400 $ $ 79,318 Interest-bearing deposits.................. 588,790 173,236 300 (c) 762,326 ----------- ----------- ----------- ------------ Total deposits........................... 657,708 183,636 300 841,644 Short-term borrowings......................... 112,529 33,643 (51,800)(b) 94,372 Long-term debt................................ 30,859 58,023 (1,400)(c) 87,482 Guaranteed preferred beneficial interests in subordinated debentures................. 17,250 -- 17,250 Other liabilities............................. 5,502 825 (1,174)(d) 5,153 ----------- ----------- ----------- ------------ Total liabilities........................ 823,848 276,127 (54,074) 1,045,901 ----------- ----------- ----------- ------------ SHAREHOLDERS' EQUITY Common stock.................................. 67 25 2 (e) 94 Surplus....................................... 43,686 16,202 (607)(f) 59,281 Retained earnings............................. 14,427 10,612 (10,612)(g) 14,427 ESOP and MRP.................................. -- (1,317) 1,317 (h) -- Treasury stock, at cost....................... (5,615) (1,246) 6,861 (i) -- Accumulated other comprehensive income (loss). (165) (2,666) 2,666 (j) (165) ----------- ----------- ----------- ------------ Total shareholders' equity............... 52,400 21,610 (373) 73,637 ----------- ----------- ----------- ------------ Total liabilities and shareholders' equity.............................. $ 876,248 $ 297,737 $ (54,447) $ 1,119,538 =========== =========== =========== ============ The accompanying notes are an integral part of the unaudited pro forma combined consolidated financial information.

PRO FORMA ALLEGIANT EQUALITY PRO FORMA COMBINED BANCORP, INC. BANCORP, INC. ADJUSTMENTS CONSOLIDATED ------------- ------------- ----------- ------------ INTEREST INCOME Interest and fees on loans................... $ 47,948 $ 4,590 $ 375 (k) $ 52,913 Interest on investment securities............ 2,881 6,530 9,411 Interest on money market investments......... 73 130 203 ----------- ----------- --------- ------------ Total interest income..................... 50,902 11,250 375 62,527 INTEREST EXPENSE Interest on deposits......................... 21,803 3,819 (75)(k) 25,547 Interest on borrowings....................... 6,626 4,236 350 (k) 11,212 ----------- ----------- --------- ------------ Total interest expense.................... 28,429 8,055 275 36,759 ----------- ----------- --------- ------------ Net interest income..................... 22,473 3,195 100 25,768 Provision for loan losses.................... 2,300 631 2,931 ----------- ----------- --------- ------------ Net interest income after provision for loan losses....................... 20,173 2,564 100 22,837 NON-INTEREST INCOME Mortgage banking income...................... 255 2,605 2,860 Service charges on deposits.................. 920 132 1,052 All other income............................. 3,066 375 3,441 Investment securities gains/(losses)--net..... 205 (2,717) (2,512) ----------- ----------- --------- ------------ Total non-interest income................. 4,446 395 4,841 NON-INTEREST EXPENSE Salaries and other employee benefits......... 8,075 2,250 10,325 Occupancy and equipment expense.............. 2,429 416 35 (k) 2,880 All other expense............................ 5,796 1,461 7,257 ----------- ----------- --------- ------------ Total non-interest expense................ 16,300 4,127 35 20,462 ----------- ----------- --------- ------------ Income before tax............................ 8,319 (1,168) 65 7,216 Income tax................................... 3,394 (203) 26 (l) 3,217 ----------- ----------- --------- ------------ NET INCOME................................... $ 4,925 $ (965) $ 39 $ 3,999 =========== =========== ========= ============ PER SHARE Basic earnings per common share.............. $ 0.81 $ (0.42) $ 0.46 Diluted earnings per common share............ 0.80 (0.42) 0.46 Average common shares-basic.................. 6,105,821 2,285,705 8,661,239 Average common shares-diluted................ 6,133,655 2,370,419 8,783,783 The accompanying notes are an integral part of the unaudited pro forma combined consolidated financial information.

PRO FORMA ALLEGIANT EQUALITY PRO FORMA COMBINED BANCORP, INC. BANCORP, INC. ADJUSTMENTS CONSOLIDATED ------------- ------------- ----------- ------------ INTEREST INCOME Interest and fees on loans................... $ 48,604 $ 7,754 $ 500 (k) $ 56,858 Interest on investment securities............ 3,361 12,785 16,146 Interest on money market investments......... 147 504 651 ----------- ----------- ----------- ------------ Total interest income..................... 52,112 21,043 500 73,655 INTEREST EXPENSE Interest on deposits......................... 20,595 5,596 (100)(k) 26,091 Interest on short-term borrowings............ 6,006 8,765 467 (k) 15,238 ----------- ----------- ----------- ------------ Total interest expense.................... 26,601 14,361 367 41,329 ----------- ----------- ----------- ------------ Net interest income..................... 25,511 6,682 133 32,326 Provision for loan losses.................... 2,546 -- 2,546 ----------- ----------- ----------- ------------ Net interest income after provision for loan losses....................... 22,965 6,682 133 29,780 NON-INTEREST INCOME Mortgage banking income...................... 944 2,476 3,420 Service charges on deposits.................. 1,888 37 1,925 All other income............................. 2,011 837 2,848 Investment securities gains/(losses)--net..... -- (43) (43) ----------- ----------- ----------- ------------ Total non-interest income................. 4,843 3,307 8,150 NON-INTEREST EXPENSE Salaries and other employee benefits......... 9,717 4,502 14,219 Occupancy and equipment...................... 2,994 851 47 (k) 3,892 All other expense............................ 6,051 2,746 8,797 ----------- ----------- ----------- ------------ Total non-interest expense................ 18,762 8,099 47 26,908 Income before tax............................ 9,046 1,890 86 11,022 Income tax................................... 3,644 738 34 (l) 4,416 ----------- ----------- ----------- ------------ NET INCOME................................... $ 5,402 $ 1,152 $ 52 $ 6,606 =========== =========== =========== ============ PER SHARE Basic earnings per common share.............. $ 0.84 $ 0.50 $ 0.73 Diluted earnings per common share............ 0.83 0.49 0.72 Average common shares-basic.................. 6,450,639 2,328,762 9,054,195 Average common shares-diluted................ 6,510,045 2,349,442 9,136,721 The accompanying notes are an integral part of the unaudited pro forma combined consolidated financial information.

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