Exhibit 99.5
RP® FINANCIAL, LC. |
Serving the Financial Services Industry Since 1988 |
May 26, 2010
Boards of Directors
K-Fed Mutual Holding Company
K-Fed Bancorp
Kaiser Federal Bank
1359 North Grand Avenue, Suite 200
Covina, California 91724
Re: | Plan of Conversion and Reorganization |
K-Fed Mutual Holding Company | |
K-Fed Bancorp | |
Kaiser Federal Bank |
Members of the Boards of Directors:
All capitalized terms not otherwise defined in this letter have the meanings given such terms in the Plan of Conversion and Reorganization (the “Plan”) adopted by the Board of Directors of K-Fed Mutual Holding Company (the “MHC”), K-Fed Bancorp (the “Mid-Tier”) and Kaiser Federal Bank, all based in Covina, California. The Plan provides for the conversion of the MHC into the full stock form of organization. Pursuant to the Plan, the MHC will be merged into the Mid-Tier and the Mid-Tier will merge with Kaiser Federal Financial Group, Inc., a newly-formed Maryland corporation (the “Company”) with the Company as the resulting entity, and the MHC will no longer exist. As part of the Plan, the Company will sell shares of common stock in an offering that will re present the ownership interest in the Mid-Tier now owned by the MHC.
We understand that in accordance with the Plan, depositors will receive rights in a liquidation account maintained by the Company representing the amount of (i) the MHC’s ownership interest in the Mid-Tier’s total stockholders’ equity as of the date of the latest statement of financial condition used in the prospectus plus (ii) the value of the net assets of the MHC as of the date of the latest statement of financial condition of the MHC prior to the consummation of the conversion (excluding its ownership of the Mid-Tier). The Company shall continue to hold the liquidation account for the benefit of Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain deposits in Kaiser Federal Bank. We further understand that Kaiser Federal Bank will also establish a liquidation acco unt in an amount equal to the Company’s liquidation account, pursuant to the Plan. The liquidation accounts are designed to provide payments to depositors of their liquidation interests in the event of liquidation of Kaiser Federal Bank (or the Company and Kaiser Federal Bank).
In the unlikely event that either Kaiser Federal Bank (or the Company and Kaiser Federal Bank) were to liquidate after the conversion, all claims of creditors, including those of depositors, would be paid first, followed by distribution to depositors as of March 31, 2009, and June 30, 2010 of the liquidation account maintained by the Company. Also, in a complete liquidation of both entities, or of Kaiser Federal Bank, when the Company has insufficient assets (other than the stock of Kaiser Federal Bank), to fund the liquidation account distribution due to Eligible Account Holders and Supplemental Eligible Account Holders and Kaiser Federal Bank has positive net worth, Kaiser Federal Bank shall immediately make a distribution to fund the Company’s remaining obligations under the liquidation account. The Plan further pr ovides that if the Company is completely liquidated or sold apart from a sale or liquidation of Kaiser Federal Bank, then the rights of Eligible Account Holders and Supplemental Eligible Account Holders in the liquidation account maintained by the Company shall be surrendered and treated as a liquidation account in Kaiser Federal Bank, the bank liquidation account and depositors shall have an equivalent interest in such bank liquidation account, subject to the same rights and terms as the liquidation account.
Washington Headquarters | ||
Three Ballston Plaza | Telephone: (703) 528-1700 | |
1100 North Glebe Road, Suite 1100 | Fax No.: (703) 528-1788 | |
Arlington, VA 22201 | Toll-Free No.: (866) 723-0594 | |
www.rpfinancial.com | E-Mail: mail@rpfinancial.com |
RP Financial, LC.
Boards of Directors
May 26, 2010
Page 2
Based upon our review of the Plan and our observations that the liquidation rights become payable only upon the unlikely event of the liquidation of Kaiser Federal Bank (or the Company and Kaiser Federal Bank), that liquidation rights in the Company automatically transfer to Kaiser Federal Bank in the event the Company is completely liquidated or sold apart from a sale or liquidation of Kaiser Federal Bank, and that after two years from the date of conversion and upon written request of the OTS, the Company will transfer the liquidation account and depositors’ interest in such account to Kaiser Federal Bank and the liquidation account shall thereupon become the liquidation account of Kaiser Federal Bank no longer subject to the Company’s creditors, we are of the belief that: the benefit provided by the Kaiser Federal Bank liquidation account supporting the payment of the liquidation account in the event the Company lacks sufficient net assets does not have any economic value at the time of the transactions contemplated in the first and second paragraphs above. We note that we have not undertaken any independent investigation of state or federal law or the position of the Internal Revenue Service with respect to this issue.
Sincerely, | ||
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RP Financial, LC. |