Board of Trustees
Peoples Home Savings Bank
1427 Seventh Avenue
Beaver Falls, Pennsylvania 15010
Board of Trustees:
The notice of intent to convert from mutual to stock form and related application for approval of
a merger transaction, filed on behalf of Peoples Home Savings Bank, Beaver Falls, Pennsylvania
("PHSB" or "the Bank") has been reviewed by the Federal Deposit Insurance Corporation
("FDIC") pursuant to section 303.15 of the FDIC Rules and Regulations and Section 18(c) of the
FDI Act. These filings were made in connection with PHSB's proposal to convert to a
Pennsylvania-chartered stock savings bank and become a majority-owned subsidiary of a newly-
formed Pennsylvania-chartered mutual holding company, PHS Bancorp, M.H.C. In connection
with the reorganization, a minority stock offering will be initiated.
Based upon the information and representations presented, the FDIC plans to issue a letter of
nonobjection to the proposed conversion transaction, provided that the Bank satisfies the
following conditions:
1. The Bank must execute the enclosed Tolling Agreement and deliver it to this office no
later than Friday, June 6, 1997
2. The Bank must provide written evidence that its Plan of Reorganization has been
approved by the affirmative vote of a majority of the votes eligible to be cast at a special
meeting of the Bank's members.
3. The Bank must advise this office of the results of the subscription offering and deliver an
updated appraisal that:
(i) takes into account the results of the subscription offering;
(ii) discusses any material occurrences during the subscription period; and
(iii) explains any orders that may have been rejected.
4. The Bank must receive final approval from the Pennsylvania Department of Banking
("State Authority") for its establishment as a stock savings bank and the Bank must
receive final approval from the Federal Reserve Bank of Cleveland and from the State
Authority for PHS Bancorp, MHC to acquire a majority of the Bank.
Provided that the Bank meets the foregoing conditions and that the FDIC is satisfied with the
appraiser's determination in the updated appraisal that the results of the subscription offering
represent fair value for the Bank, the FDIC will issue a letter of nonobjection to the proposed
conversion transaction.
Enclosed is our Order and Basis for the merger application filed on behalf of PHSB in connection
with the conversion transaction.
Please furnish the FDIC's New York Regional Office with satisfactory evidence of the Bank's
compliance with the conditions stated in the enclosed Order, and notify that office in writing when
the proposed transaction has been consummated. If an extension of the time limitation included in
the Order is necessary, please submit to the New York Regional Office a letter requesting a specific
extension of the limitation, including the reasons for the requested extension.
Sincerely,
Steven K. Scholzen
Acting Associate Director
Enclosures
cc: Gregory A. Gehlmann
Malizia, Spidi, Sloane, and Fisch, P.C.
1301 K Street, N.W., Suite 700 East
Washington, D.C. 20005
FEDERAL DEPOSIT INSURANCE CORPORATION
Peoples Home Savings Bank
Beaver Falls, Beaver County, New Jersey
Application for Consent to Merge
ORDER AND BASIS FOR CORPORATION APPROVAL
Pursuant to Section 18(c) and other provisions of the Federal Deposit Insurance Act ("FDI Act"), an
application has been filed on behalf of Peoples Home Savings Bank, Beaver Falls, Pennsylvania
("Mutual Institution"), currently a mutually-owned Savings Association Insurance Fund ("SAIF")
member, state-chartered institution with total resources of $202,220,000 and total deposits of
$176,547,000 as of December 31, 1996, for the FDIC's consent to merge with Peoples Home
Interim Savings Bank, Beaver Falls, Pennsylvania ("Interim Bank"), a proposed new interim state-
chartered stock savings bank.
This transaction is the result of the Mutual Institution's Plan of Mutual Holding Company
Reorganization and Stock Issuance ("Plan") which includes the formation of a Pennsylvania-chartered
mutual holding company, PHS Bancorp, MHC, Beaver Falls, Pennsylvania ("MHC"), which will be capitalized
with $1,000,000. An application for the establishment of MHC as a bank holding company has been filed
with the Federal Reserve Bank of Cleveland. A Notice of Mutual Holding Company Reorganization has been filed
with the Pennsylvania Department of Banking. The Plan describes the structure of the proposed transaction as follows:
Mutual Institution will organize an interim stock savings bank as its wholly-owned subsidiary. This bank will then
organize another interim stock savings bank ("Interim Bank") as its wholly-owned subsidiary. The Mutual
Institution will exchange its charter for a Pennsylvania stock savings bank charter, and the first interim bank
formed will cancel its outstanding stock charter for the charter of a mutual holding company. Interim Bank will
merge with and into Mutual Institution, with the resulting institution having Mutual Institution's newly acquired
stock savings bank charter. A majority of the initially issued stock of the resulting bank will be transferred to MHC.
The resulting bank will operate with the title of Peoples Home Savings Bank, Beaver Falls, Pennsylvania
("PHSB" or "the Bank"). Following consummation of the merger, PHSB will operate the same banking business
with the same management at the same locations now being served by Mutual Institution. The proposed transaction,
per se, will not alter the structure of banking in the market currently served by Mutual Institution. PHSB's principal office
will be at 1427 Seventh Avenue, Beaver Falls, Pennsylvania. Notice of the proposed transaction, in a form
approved by the FDIC, has been published pursuant to the FDI Act.
A review of available information, including the Community Reinvestment Act ("CRA") Statement
of Mutual Institution discloses no inconsistencies with the purposes of the CRA. The Bank is
expected to continue to meet the credit needs of its entire community, consistent with the safe and
sound operation of the institution
In connection with the application, the FDIC has taken into consideration the financial and managerial
resources and future prospects of the resultant Bank, and the convenience and needs of the community
to be served. Having found favorably on these statutory factors and having
considered other relevant information, including any report on the competitive factors furnished by
the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Office
of Thrift Supervision, or the Attorney General of the United States, it is the FDIC's judgement that
the application should be and hereby is approved, subject to the following conditions:
1. That the transaction may not be consummated unless the Plan receives prior approval by an
affirmative vote of at least a majority of the total votes eligible to be cast by the Mutual Institution's depositors,
2. That the proposed transaction may not be consummated unless and until the FDIC issues a
nonobjection letter to the Notice filed on behalf of the applicant pursuant to section 303.15 of the
FDIC's Rules and Regulations concerning the mutual-to-stock conversion portion of this transaction,
3. That any dividends waived by MHC must be retained by PHSB and segregated, earmarked, or
otherwise identified on its books and records, such amounts must be taken into account in any
valuation of the institution and factored into the calculation used in establishing a fair and
reasonable basis for exchanging shares in any subsequent conversion of MHC to stock form; such
amounts shall not be available for payment to or the value thereof transferred to minority shareholders,
by any means including through dividend payments or at liquidation;
4. That within three years from the date of conversion, any stock option plan or management or
employee stock benefit plan, prior to establishment and implementation, must be approved by an
affirmative vote of at least a majority of the total votes eligible to be cast by the Bank's shareholders,
other than the shares owned by the parent mutual holding company;
5. That any changes in proposed management, including the board of directors or proposed ownership
(ten per cent or more of the stock and new acquisitions of or subscriptions to ten percent or more of
the stock), will render this approval null and void unless such proposal is approved by the Regional Director
(Supervision) of the FDIC's New York Regional Office prior to the consummation of the proposed transaction;
6. That the proposed transactions may not be consummated unless and until the resultant Bank has
authority to conduct a banking business, and that its establishment and operation as a stock savings bank
have been fully approved by the Pennsylvania Department of Banking and that its holding company, PHS
Bancorp, MHC is granted approval to become a bank holding company by the Board of Governors of the
Federal Reserve System;
7. That the transaction shall not be consummated less than fifteen calendar days after the date of
this Order or later than six months after the date of this Order, unless such period is extended for
good cause by the FDIC; and
8. That until the proposed transaction is consummated, the FDIC shall have the night to alter,
suspend, or withdraw its approval should any interim development be deemed to warrant such
action.
Pursuant to delegated authority.
Dated at Washington, D. C., this 12th day of May, 1997.
Steven K. Scholzen
Acting Associate Director
Division of Supervision
