and (iv)), and (v) the gross margin ((11) minus (v)).

Instruction. As an example of the calculation of the weighted average rate, the following method should be used to calculate the weighted average interest rate on savings:

1. Determine the percentage of total savings represented by each type of savings instrument.

2. Multiply these percentages by the contractual interest rate the applicant is committed to pay on such instruments.

3. The resulting percentages are totalled, giving the weighted rate.

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(7) As of the end of each of the periods covered by the statements of operations required by Item 15(b) (1) and as of the date of the latest statement of financial condition required by Item 15(a), set forth in tabular form loan origination fees charged to borrowers expressed as a percentage of the total amount of loans originated.

(8) Describe briefly the applicant's method of loan origination fee and discount amortization and the total of such balances deferred by the applicant as of the date of the latest statement of financial condition required by Item 15(a). Describe briefly the normally volatile nature of loan fee income.

(9) Describe briefly the regulatory classifications of scheduled items and the applicant's customary procedures regarding delinquent loans. As of the end of each of the periods covered by the statements of operations required by Item 15(b) (1) and as of the date of the latest statement of financial condition required by Item 15(a), set forth in tabular form the amounts and categories (slow loans, real estate owned, loans to facilitate, and others) of scheduled items and the ratio of such scheduled items to specified assets and to total assets. Where real estate owned is a significant portion of scheduled items, include a brief description of the major properties included therein and a statement as to the applicant's probable loss, if any, upon disposition of such properties.

(e) Savings Activities. (1) As of the date of the latest statement of financial condition required by Item 15(a), set forth in tabular form the amounts and percentages of savings accounts by categories of interest rate. As to certificates of deposit, indicate the term and minimum balances required for each. As of the date of the latest statement of financial condition required by Item 15 (a), set forth in tabular form the amounts of such certificates maturing by quarter during the three years following such date and the total maturing thereafter, the percentage of such amounts to total savings.

(2) Describe the applicant's methods of computing and paying interest for both passbook savings accounts and certificates of deposit. State that the maximum rate of interest which the applicant may pay is established by the Board. State that in the event of liquidation of the applicant after

conversion, savings account holders will be entitled to full payment of their accounts prior to payment to shareholders. Also, indicate the percentage of total savings accounts which are from out-of-state sources, if such total is significant.

(f) Insurance of Accounts. (1) Describe briefly insurance of accounts and the general regulatory authority of the Corporation.

(2) Describe briefly the Federal insurance reserve requirements, the results of failure to meet those requirements, and the applicant's Federal insurance reserve account position in relation to those requirements. Also describe the annual insurance premium payment and prepayment requirements.

(g) Federal Home Loan Bank System. (1) Describe briefly the Federal Home Loan Bank System and state that the applicant is a member. Such description shall include (1) limitations on borrowings, (11) recent loan policies of the applicant's Federal Home Loan Bank and current interest rates, and (iii) Federal Home Loan Bank stock purchase requirements and the applicant's position with respect to those requirements.

(2) Describe briefly applicable liquidity requirements under section 5A of the Federal Home Loan Bank Act, as amended, the regulations thereunder, and State law. State the applicant's position with respect to those requirements.

(h) State Savings and Loan Association Law. Describe briefly applicable provisions of State law which have a material effect on the business of the applicant.

(1) Federal and State Taxation. Describe briefly the Federal income tax laws applicable to the applicant including (1) permissible bad debt reserves, (2) the applicant's position with respect to the maximum bad debt reserve limitations as of the date of the latest statement of financial condition required under Item 15(a), (3) future increases in the effective income tax rate, (4) the date through which the applicant's Federal income tax returns have been audited by the Internal Revenue Service, and (5) the tax effect to the applicant of the payment of cash dividends on capital stock of the applicant after conversion. Also describe briefly the State taxation of the applicant.

(1) Competition. Describe the material sources of competition for savings and loan associations generally and indicate to the extent practicable the applicant's position in its principal lending and savings markets.

(k) Office and Other Material Properties. (1) Furnish the location of the applicant's home office and each existing and approved branch office and other office facilities (such as mobile or satellite offices). State the total net book value of all such offices as of the date of the latest statement of financial condition required by Item 15(a). If any such office is leased, state the expiration dates of such leases.

(2) Describe briefly undeveloped land owned by the applicant, including location.

(1) Employees. State the number of persons employed fulltime by the applicant including executive officers listed under Item 5. State whether employees are represented by a collective bargaining group and whether the applicant's relations with its employees is satisfactory. Summarize briefly any loans, profit sharing, retirement, medical, hospitalization or other remuneration plans provided for employees not already included pursuant to Item 6.

(m) Service Corporations. Describe briefly the applicant's investment in any subsidiary and the major lines of business (including any joint ventures) of the subsidiary which are material to its operations.

(n) Pending Legal Proceedings. Briefly describe any material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the applicant or any of its subsidiaries is a party or of which any of their property is the subject. Include the name of the court or agency in which the proceedings are pending, the date instituted, the principal parties thereto, a description of the factual basis alleged to underly the proceeding, the relief sought and counsel's opinion as to the merits of the applicant's position in each such matter. Include similar information as to any such proceedings known to be contemplated by governmental authorities.

(0) Additional Information. The Corporation may, upon the request of the applicant, and where consistent with the protection of eligible account holders and others, permit the omission of any of the information required by this Item or the furnishing in substitution therefor of appropriate information of comparable character. The Corporation may also require the furnishing of other information in addition to, or in substitution for, the information required by this Item in any case where such information is necessary or appropriate for an adequate description of the applicant's business done or intended to be done.

Item 8. Description of the Plan of Conversion. (a) A statement to the following effect shall be inserted in the proxy statement immediately preceding the information required by this Item: The Federal Home Loan Bank Board has given preliminary approval to the plan of conversion. However, such preliminary approval does not constitute a recommendation or endorsement of the plan. Final approval of the plan will not be given by the Federal Home Loan Bank Board unless at least a majority of the outstanding votes of association members are cast in favor of the plan and certain other conditions are satisfied by the insured institution.

(b) The proxy statement shall contain a description of the plan of conversion. Such description shall contain the information required by paragraphs (c) through (1) of this Item and such additional information as may be necessary to accurately describe the material provisions of the plan.

(c) Briefly describe the effects of conversion from a mutual institution to a stock institution including the following information: (1) state that savings accounts of the applicant will not be affected by the conversion with respect to such matters as balances in the accounts and the extent of insurance of savings accounts by the Corporation; (2) state whether savings and borrowing members of the applicant will continue to have voting rights in the applicant after conversion, and describe any voting rights they will have; (3) state the present liquidation rights of account holders and describe the liquidation account to be established and maintained by the applicant, including the conditions under which such account will be paid, the interest of eligible account holders in such account and the formula by which such account will be adjusted; (4) state that the rights and obligations of borrowers from the applicant will not be changed in any manner; (5) state that capital stock to be sold by the applicant will not be insured by the Corporation; (6) state that none of the assets of the applicant will be distributed in order to effect the conversion other than to pay expenses incident thereto; and (7) state briefly the reasons why management is recommending the conversion, including any advantages to the community served by the applicant.

(d) With respect to the sale of capital stock of the applicant to eligible account holders and others, furnish the following information: (1) the formula to be used for determining the subscription rights of eligible account holders to purchase entitlement shares pursuant to § 563b.3 (c) (2); (2) any minimum share purchase requirements. pursuant to § 563b.3 (d) (1); (3) with respect to eligible account holders, the percentage of any discount on the purchase of such entitlement shares and the conditions under which the discount is available, including the holding period, pursuant to § 563b.3(d) (2); (4) the rights and conditions for purchase by eligible account holders without any discount of shares remaining after (1) above, pursuant to § 563b.3 (c) (3); (5) any provision pursuant to § 563b.3(d) (3) for purchase with or without a discount of unsubscribed shares by other account holders and borrowing members, including the conditions under which any discount is available and the method of allocating such shares among such classes of persons; (6) with respect to directors, officers and employees pursuant to § 563b.3(d) (4), the percentage of any discount on the purchase of shares of capital stock and the conditions under which the discount is available, including the holding

period, the percentage of the total issue subject to such discount, the allocation of such shares among such classes of persons and the formula for such allocation; (7) the purchase priorities under the plan of conversion; and (8) the use and timing of the order forms with respect to the subscription rights.

(e) (1) Set forth on a per share basis the estimated public offering or other price or price range (before any discount) of the shares of capital stock to be sold pursuant to the plan of conversion; (2) state that the actual public offering or other price will be the pro forma market value of such shares based on an independent valuation, less any applicable discounts; (3) state that all of the shares are required to be sold; and (4) describe briefly the results of the appraisal of the association made by an independent appraiser for the purpose of determining the estimated purchase price or price range.

(f) Set forth in tabular form (1) the earnings per share on a pro forma basis of the capital stock to be sold as of the end of each of the periods covered by the statements of operation required by Item 15(b) (2) and as of the latest statement of financial condition required by Item 15(a); and (2) the book value per share on a pro forma basis as of the date of the latest statement of financial condition required by Item 15(a).

Instruction. Earnings and book value per share shall be furnished without giving effect to the estiinated net proceeds from the sale of the capital stock, and then after giving effect to such proceeds with all assumptions used clearly stated.

(g) With respect to the subscription offering, state the proposed commencement and expiration dates of the subscription period and describe any provisions in the plan of conversion related to the timing of the subscription offering or extension of the subscription period. Also, state (1) that a maximum subscription price will be set forth in the offering circular used for the subscription offering, (2) that the actual subscription price will be the public offering or other price less the specified discount but in no event more than such maximum subscription price, and (3) that any difference between the maximum and actual subscription prices will be refunded.

(h) Furnish the following information: (1) State that the converted insured institution will enter into an agreement with the Corporation in accordance with § 563b.3 (1) and briefly describe the material terms of such agreement; (2) describe to the extent practicable the applicant's present intentions with respect to listing the capital stock on an exchange or otherwise providing a market for the purchase and sale of the capital stock in the future; (3) describe briefly the tax effect of the conversion both to the applicant and to eligible account holders; and (4) state that the plan of conversion is attached as an exhibit to the proxy statement

and should be consulted for further information.

(1) State whether the plan of conversion provides for the capital stock not purchased in the subscription offering to be offered to the public through underwriters. If such is the case, provide the information to the extent known required by Items 6(b) and (c) of Form OC and indicate the proposed timing of the underwritten offering.

(1) Furnish the following information in tabular form regarding proposed purchases of capital stock involving directors and officers of the applicant:

(1) State the total number of shares proposed to be purchased by all directors and officers as a group without naming them.

(2) As to each officer and director named in Item 6(a)(1), name him, state his position, and the number of shares proposed to be purchased by him.

(3) As to any director and officer who proposes to purchase 1 percent or more of the total number of shares of capital stock of the applicant to be outstanding, name him, state his position, and the number of shares proposed to be purchased by him.

(4) With respect to the information required by (1), (2) and (3) above, indicate separately the number of shares proposed to be purchased with and without any discount and the number of shares proposed to be purchased as an eligible account holder and as a director or officer.

Item 9. Description of Capital Stock. Furnish the following information concerning the capital stock of the applicant to be sold upon conversion:

(a) Outline briefly (1) dividend rights and restrictions; (2) voting rights; (3) liquidation rights; (4) pre-emptive rights; (5) liability to further calls or to assessment by the applicant; and (6) other material provisions.

(b) If the rights of holders of such capital stock may be modified otherwise than by a vote of a majority or more of the capital stock outstanding, voting as a class, so state and explain briefly.

(c) Outline briefly any restrictions on the repurchase or redemption of, and payment of dividends on, capital stock, or any part thereof, by the applicant.

Instructions. 1. This Item requires only a brief summary of the provisions which are pertinent from an investment standpoint. A complete legal description of the provisions referred to is not required and should not be given. Do not set forth the provisions of the governing instruments verbatim; only a succinct résumé is required.

2. If the rights evidenced by the capital stock will be materially limited or qualified by the rights of savings account holders or borrowers, include such information regarding such limitation or qualification as will evidenced by the capital stock.

Item 10. Capitalization. Set forth in substantially the tabular form indicated below

Instructions. 1. With respect to capital stock, indicate in the table or in a footnote the total number of shares to be authorized, the par or stated value of such shares, and the number of shares to be sold as part of the conversion.

2. With respect to the funds to be received by the applicant from the sale of its capital stock, indicate in the table the estimated total amount of funds to be obtained and in a footnote state the price per share used in making such estimate. Such total amount and price per share shall be clearly identified as being estimates.

Item 11. Use of New Capital. State the principal purposes for which the net proceeds to the applicant from the capital stock to be sold are intended to be invested or otherwise used, and the approximate amount intended for each such purpose.

Instruction. Details of proposed investments are not to be given. There need be furnished, for example, only a brief statement of any investment or other activity of the applicant which will be affected materially by availability of the proceeds. Examples of such activities may include reserve support for future savings growth, expanded secondary market activities, larger scale lending projects, loan portfolio diversification, increased liquidity investments, repayment of debt, additional branch offices and other facilities, service corporation investments, and acquisitions.

Item 12. Qualified Stock Options.

If action is to be taken with respect to the granting to officers and employees of any

"qualified" options to purchase capital sk of the applicant to take effect after conve sion, furnish the following information:

(a) State (1) the title and number shares to be called for by such options, the prices, expiration dates and other terial conditions upon which the options ar be exercised; (3) the consideration to received by the applicant for the grante of the options and (4) the Federal incor tax consequences of the issuance and ere cise of such options to the recipient and: the applicant.

(b) State separately the amount of optim to be received by the following persons, ing each such person: (1) Each director officer named in answer to Item 6(a): 1 each associate of such directors of officer and (3) each other person who is to rec five percent or more of such options to > received by all directors and officers of the applicant as a group, without naming them

(c) Furnish such information, in additi to that required by Item 6, as may be neces sary to describe adequately the provisions & ready made pursuant to all bonus, prod sharing, pension, retirement, deferred copensation or other remuneration or inces tive plans, now in effect or in effect with: the past five years, for (1) each director a officer named in answer to Item 6(a) may participate in the qualified stock optic plan to be acted upon; (11) all directors a officers of the applicant as a group, if a director or officer may participate in the plaz and (iii) all employees, if employees may par ticipate in the plan.

Instructions. 1. The term "qualified" refes to options meeting the requirements of Se tion 422 of the Internal Revenue Code 1954, as amended.

2. The term "plan" as used in paragrap (c) of this Item means any plan as definet in Instruction 1 to Item 6(b).

Item 13. New Charter, Bylaws or Othe Documents. Describe briefly any material di ferences between the provisions of existing charter, bylaws and any similar documen of the applicant and those which will take effect after conversion, including, if appli cable, the optional charter provisions pr vided for in § 563b.3(1) (3).

Instruction. This Item requires only brief summary of the provisions which ar pertinent from both an investment standpoint and a voting standpoint. A complete legal description of the provisions referred to is not required and should not be give Do not set forth the provisions verbatim only a succinct resume is required.

Item 14. Other Matters. State when the applicant will be required to register f capital stock under section 12(g) of the Securities Exchange Act of 1934, as amended and that upon such registration the pro rules, insider trading reporting and restric tions, annual and periodic reporting and other requirements of that Act will be ap plicable.

Item 15. Financial Statements. NOTES: 1 The following instructions specify the state

ments of financial condition, the statement of operations and statements of stockholders' equity required to be included in the proxy statement. Section 563c.1 governs the certification, form and content of such financial statements including the basis of consolidation.

2. If the applicant has previously used an audit period in connection with its certified financial statements which does not coincide with its fiscal year, such audit period may be used in place of any fiscal year requirement provided it covers a full twelve months' operations and is used consistently. The Board understands that this procedure is also acceptable to the Securities and Exchange Commission in fulfilling the requirements of the Commission's Form 10 for registration of the applicant's capital stock under section 12(g) of the Securities Exchange Act of 1934.

(a) Statements of Financial Condition of the Applicant. (1) Furnish certified statements of financial condition as of the close of the applicant's latest fiscal year and as of the close of the preceding fiscal year. (2) If the latest statement furnished under (1) is in excess of 120 days from the date of filing for preliminary approval, furnish an additional statement of financial condition as of a date within 120 days of such filing. This additional statement need not be certified.

(b) Statements of Operations and Statements of Stockholders' Equity. Furnish in comparative columnar form statements of operations and statements of stockholders' equity of the applicant (1) for each of the five fiscal years preceding the date of the statement of financial condition as of the close of the applicant's latest fiscal year filed under paragraph (a) and (2) for the period, if any, between the close of the latest of such fiscal years and the date of the statement of financial condition filed under paragraph (a). Furnish a statement of operations for the period comparable to (b) (2) in the immediately preceding fiscal year. Statements for the three latest fiscal years under (b) (1) shall be certified.

Instructions. 1. Reflect information or explanation of material significance to investors in appraising the results shown, or refer to such information or explanation set forth elsewhere in the proxy statement. Include comparable data for any additional fiscal years necessary to keep the statements from being misleading. The statements shall reflect the retroactive adjustment of any material items affecting the comparability of the results.

2. In connection with capital stock sold pursuant to the plan of conversion, the statements shall reflect earnings that would have been applicable to such outstanding stock.

(c) Statements of Changes in Financial Position. Furnish certified statements of changes in financial position (1) for each of the three fiscal years preceding the date of the latest statement of financial condition

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filed under paragraph (a) and (2) for the period, if any, between the close of the latest of such fiscal years and the date of the latest statement of financial condition filed under paragraph (a).

(d) Omission of Applicant's Statements in Certain Cases. Notwithstanding paragraphs (a), (b), and (c), the individual financial statements of the applicant may be omitted if (1) the conditions specified in either of the following paragraphs are met, and (2) the Corporation is advised as to the reasons for such omission.

(1) The applicant is primarily an operating company and all subsidiaries included in the consolidated financial statements filed are totally-held subsidiaries; or

(2) The applicant's total assets, exclusive of investments in and advances to the consolidated subsidiaries, constitute 85% or more of the total assets shown by the consolidated statement of financial condition filed and the applicant's total gross revenues for the period for which its statements of operations would be filed, exclusive of interest and dividends received from the consolidated subsidiaries, constitute 85% or more of the total gross revenue shown by the consolidated statements of operations filled.

(e) (1) Consolidated Statements. Furnish consolidated statements for the same periods and as of the same dates as would be required for the applicant. These statements shall be certified as would be required for the applicant's statements. (Paragraphs (a), (b), and (c) above).

(2) Unconsolidated Subsidiaries and Other Persons. Subject to 563c.1(q)(2) regarding group statements of unconsolidated subsidlaries, there shall be set forth for each majority-owned subsidiary of the applicant not consolidated the financial statements which would be required if the subsidiary were itself an applicant. Insofar as practicable, these financial statements shall be as of the same dates or for the same periods as those of the applicant.

Persons and

(3) Fifty-Percent-Owned Other Persons. If the applicant owns directly or indirectly approximately 50 per cent of the voting securities of any person and approximately 50 per cent of the voting securities of such person is owned directly or indirectly by another single interest, or if the applicant takes up the equity in undistributed earnings of any other unconsolidated person, there shall be set forth for each such person the financial statements which would be required if it were an applicant, subject to 563c.1(q) (2) regarding group statements. The statements set forth for each person shall identify the other single interest, or other interests in any person operated jointly.

(4) Omission of Statements Required by Paragraphs (2) and (3). Notwithstanding paragraphs (2) and (3), there may be omitted from the proxy statement all financial statements of any one or more unconsolidated subsidiaries or 50-percent-owned