February ___, 1999
Board of Trustees
The Troy Savings Bank
32 Second Street
Troy, New York 12180
Board of Trustees:
The notice of intent to convert from mutual to stock form filed on behalf of The Troy Savings Bank, Troy, New York ("Troy"), has been reviewed by the Federal Deposit Insurance Corporation ("FDIC") pursuant to section 303.160 of the FDIC Rules and Regulations.
This notice was filed in connection with the "The Troy Savings Bank Plan of Conversion From Mutual to Stock Form of Organization" (the "Plan"). Pursuant to the Plan, Troy will convert to a New York-chartered stock savings bank and become a wholly-owned subsidiary of the newly formed Troy Financial Corporation ("TFC"), a Delaware corporation. Concurrently, with the reorganization, TFC intends to offer for sale its common stock on a priority basis to qualifying depositors and to an employee stock ownership plan. In addition, TFC will fund a charitable foundation to be known as The Troy Savings Bank Community Foundation, Inc. (the "Community Foundation") in the conversion. The Community Foundation will receive an amount of TFC's common stock equal to the difference between eight percent of the gross proceeds from the sale of stock in the conversion and $5,300,000. This is the amount of funds already committed to the existing foundation known as The Troy Savings Bank Charitable Foundation, Inc. (the "Charitable Foundation").
The FDIC has relied on information provided in Troy's notice of conversion and the accompanying business plan in reaching its decision regarding that notice. It is anticipated that notification of any planned material deviations from the business plan that will result in a return of capital will be provided to the FDIC in advance of such an event.
Based on the information and representations presented, the FDIC plans to issue a letter of non-objection to the proposed conversion transaction provided that the bank satisfies the following conditions:
1) The Community Foundation's board of directors shall commit to the following oversight provisions:
a) Common stock of TFC held by the Community Foundation shall be voted by the Community Foundation at the same ratio as the shares voted on each and every proposal considered by the stockholders of TFC;
b) The Community Foundation shall be subject to examination by the FDIC;
c) The Community Foundation shall comply with all supervisory directives imposed by the FDIC;
d) The Community Foundation shall operate in accordance with written policies adopted by the Community Foundation's board of trustees, including adopting a conflict of interest policy acceptable to the FDIC; and
e) The Community Foundation shall provide a proposed operating plan prior to conversion and annual reports to the FDIC describing the grants made and grant recipients.
2) Troy must submit final disclosure materials acceptable to the FDIC Division of Supervision, Registration, Disclosure and Securities Operations Unit;
3) Troy must provide written evidence that its Plan of Conversion 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 voting participants;
4) Troy must advise this office of the results of the subscription offering and deliver an updated appraisal that:
(a) takes the results of the subscription offering into account;
(b) discusses any material occurrences during the subscription period; and
(c) explains any orders that may have been rejected.
5) Troy must receive final approval from the appropriate State of New York officials for its establishment as a stock savings bank. TFC must receive final approval from the appropriate Federal Reserve System officials for the establishment of the bank holding company.
6) The Charitable Foundation's board of directors shall commit to the following oversight
provisions:
a) Common stock of TFC held by the Charitable Foundation shall be voted by the
Charitable Foundation at the same ratio as the shares voted on each and every
proposal considered by the stockholders of TFC;
b) The Charitable Foundation shall be subject to examination by the FDIC;
c) The Charitable Foundation shall comply with all supervisory directives imposed by
the FDIC;
d) The Charitable Foundation shall operate in accordance with written policies
adopted by the Charitable Foundation's board of directors, including adopting a
conflict of interest policy acceptable to the FDIC; and
e) The Charitable Foundation shall provide a proposed operating plan prior to
conversion and annual reports to the FDIC describing the grants made and grant
recipients.
Provided that Troy 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 the fair value for Troy, the FDIC will issue a letter of non-objection to the proposed conversion transaction.
Sincerely,
James L. Sexton
Director
