EXHIBIT 99.1
[letterhead]
May 2, 1997
Mr. Gordon Coleman
EVP and CEO
Landmark Community Bank
26 Church Street
Canajoharie, NY 13317-1117
Dear Mr. Coleman:
FinPro, Inc. ("FinPro") is pleased to submit this proposal to assist Landmark
Community Bank ("the Bank") and a holding company formed to hold the stock of
the Bank (the "Company") in compiling a business plan and in performing an
appraisal on the Bank and the Company in connection with its mutual-to-stock
conversion (the "conversion"). Locally, FinPro has performed similar plans
and appraisals for Little Falls Savings, South Bergen Savings, Wayne Savings,
Prestige Bank, Westwood Savings, Roslyn Savings, Pulaski Savings, First
FS&LA of Carnegie and First Savings of New Jersey in the last twelve months.
The Little Falls appraisal was unique in that it was the first appraisal done
with a concurrent acquisition included in the pro-forma analysis. The
Westwood Savings appraisal was unique in that it was the first New Jersey
State Chartered thrift to undertake a second step conversion and to involve
the Federal Reserve in the appraisal process. The Roslyn Savings Bank
appraisal included a foundation. Both the Pulaski and the Carnegie
appraisals were for the formulation of MHC's.
FinPro would welcome the opportunity to meet with you to show you our work
product. We urge you to compare it with any others offered.
Landmark Community Bank
May 2, 1997 Page: 2
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Section 1: Services to be Rendered
As part of the Strategic Plan compilation, the following major tasks will be
included:
- - compile a historical trend analysis utilizing the past five year ends
of Regulatory Reports;
- - perform detailed peer analysis;
- - assess competitive situation;
- - analyze the Bank markets and customers from a demographic standpoint;
- - conduct branch market tour and identify competitive positioning,
branching opportunities and market threats;
- - assess the regulatory, social, political and economic environment;
- - document the internal situation assessment;
- - analyze the current ALM position;
- - analyze the CRA position;
- - identify and document strengths and weaknesses;
- - document the Bank's mission statement;
- - document the objectives and goals;
- - document strategies;
- - compile five year projections of performance;
- - prepare assessment of strategic alternatives;
- - conduct one or two planning retreats with the Board and Management to
review strategies;
- - map the Bank's general ledger to FinPro's planning model and to the
Regulatory Reports;
- - assess the Bank from a capital markets perspective including
comparison to national, regional, state and similar size organizations;
- - prepare a written business plan in form and substance satisfactory to
all applicable regulatory authorities for purposes of submission and
dissemination in connection with the application for conversion and
related proxy, offering circular and other documents concerning the
mutual-to-stock conversion of the Bank;
FinPro has attached a typical table of contents for its plans as an exhibit
to this proposal. -
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Landmark Community Bank
May 2, 1997 Page: 3
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Appraisal
As part of the conversion appraisal services, the following major tasks will
be included:
- - conduct financial due diligence, including on-site interviews of
senior management and reviews of financial and other records;
- - gather an understanding of the banks financial condition,
profitability, risk characteristics, operations and external factors
that might influence or impact the bank;
- - prepare a written detailed valuation report of the Bank and the
Company that is consistent with applicable regulatory guidelines and
standard valuation practices.
- - prepare and deliver an opinion, in form and substance acceptable to
legal and tax counsel of the Bank, to the effect that the subscription
rights granted to eligible account holders, the applicable stock
benefit plans and others in connection with the conversion of the Bank
from a mutual-to-stock form, have no value;
The valuation report will:
- - include an in-depth analysis of the operating results and financial
condition of the Bank;
- - assess the interest rate risk, credit risk and liquidity risk;
- - describe the business strategies of the Bank and the Company, the
market area, competition and potential for the future;
- - include a detailed peer analysis of publicly traded savings
institutions for use in determining appropriate valuation adjustments
based upon multiple factors;
- - include a midpoint proforma valuation along with a range of value
around the midpoint value;
- - comply, in form and substance to all applicable requirements of
regulatory authorities for purposes of its use to establish the
estimated pro-forma market value of the common stock of the Company
following the conversion.
The valuation report may be periodically updated throughout the conversion
process and will be updated at the time of the closing of the stock offering.
FinPro will perform such other services as are necessary or required in
connection with the regulatory review of the appraisal and will respond to
the regulatory comments, if any, regarding the valuation appraisal and any
subsequent updates.
Section 2: Information Requirements of the Bank
To accomplish the tasks set forth in Section 1 of this proposal, the
following information and work effort is expected of the Bank:
- - provide FinPro with all financial and other information, whether or
not publicly available, necessary to familiarize FinPro with the
business and operations of the Bank;
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Landmark Community Bank
May 2, 1997 Page: 4
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- - allow FinPro the opportunity, from time to time, to discuss the
operation of the Bank business with bank personnel;
- - promptly advise FinPro of any material or contemplated material
transactions which may have an effect on the day-to-day operations of
the Bank;
- - provide FinPro with all support schedules required to compile
Regulatory, Board and Management reports;
- - provide FinPro with offering circular, prospectus and all other
materials relevant to the appraisal function for the conversion;
- - have system download capability;
- - promptly review all work products of FinPro and provide necessary
sign-offs on each work product so that FinPro can move on to the next
phase;
- - provide FinPro with office space to perform its daily tasks. The
office space requirements consists of a table with at least two chairs
along with access to electrical outlets for FinPro's computers and
telephone access for modem communications.
Section 3: Project Deliverables
The following is a list of deliverables that will result from FinPro's effort:
1. Mapping of data from general ledger to plan model
2. Institution Valuation
3. Strategic Business Plan document
Section 4: Term of the Agreement and Staffing
It is anticipated that it will take approximately three weeks of elapsed time
to complete the tasks outlined in this proposal for the business plan
component. During this time, FinPro will be on-site at the Bank's facilities
on a regular basis, during normal business hours.
FinPro will assign Donald J. Musso and Steven P. Musso to this engagement.
Although some back office analytics may be performed by other FinPro staff,
Donald Musso will be the firms point man on this engagement and will be
active in all aspects of this engagement. A biographical sketch of both
Donald and Steven is attached to this proposal.
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Landmark Community Bank
May 2, 1997 Page: 5
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Section 5: Fees and Expenses
Based on FinPro's understanding of the Bank's situation, FinPro's fees for
providing the services outlined in this proposal will be:
- $6,000 for the business plan component.
- $14,000 for the appraisal
Any work done in compiling tables and schedules will be billed on an hourly
per diem basis.
This fee is payable according to the following schedule:
- prior to starting, a retainer of $3,000; plus
- upon the submission of the business plan to the regulators, a
non-refundable fee of $3,000; plus
- upon submission of the appraisal to the regulators, a
non-refundable fee of $7,000; plus
- upon completion of the offering, a non-refundable fee equal to
the remainder, unless only the plan is selected in which case the
remainder would be due upon regulatory approval of the business
plan.
In addition to any fees that may be payable to FinPro hereunder, the Bank
hereby agrees to reimburse FinPro for all of FinPro's travel and other
out-of-pocket expenses incurred in connection with FinPro's engagement up to
a limit of $1,000, excluding color copies which will be billed on an actual
per page basis. Such out-of-pocket expenses will consist of travel to and
from the Bank's facilities from FinPro's offices, normal delivery charges
such as Federal Express, and costs associated with the actual Plan document
such as black and white copying. It is FinPro policy to provide you with an
itemized accounting of the out-of-pocket expenditures so that you can control
them.
In the event that the Bank shall, for any reason, discontinue the proposed
conversion prior to delivery of the completed documents set forth above, the
Bank agrees to compensate FinPro according to FinPro's standard billing rates
for consulting services based on accumulated time and expenses, not to exceed
the respective fee caps noted above. FinPro's standard hourly rates are as
follows:
- Managing Director Level $250
- Staff Consultant Level $125
If during the course of the proposed transaction, unforeseen events occur so
as to materially change the nature or the work content of the services
described in this contract, the terms of said
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Landmark Community Bank
May 2, 1997 Page: 6
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contract shall be subject to renegotiation by the Bank and FinPro. Such
unforeseen events shall include, but not be limited to, major changes in the
conversion regulations, appraisal guidelines or processing procedures as they
relate to conversion appraisals, major changes in management or procedures,
operating policies or philosophies, and excessive delays or suspension of
processing of conversion applications by the regulators such that completion
of the conversion transaction requires the preparation by FinPro of a new
appraisal.
FinPro agrees to execute a suitable confidentiality agreement with the Bank.
The Bank acknowledges that all opinions, valuations and advice (written or
oral) given by FinPro to the Bank in connection with FinPro's engagement are
intended solely for the benefit and use of the Bank (and it's directors,
management, and attorneys) in connection with the matters contemplated hereby
and the Bank agrees that no such opinion, valuation, or advice shall be used
for any other purpose, except with respect to the opinion and valuation which
may be used for the proper corporate purposes of the client, or reproduced,
or disseminated, quoted or referred to at any time, in any manner or for any
purpose, nor shall any public references to FinPro be made by the Bank (or
such persons), without the prior written consent of FinPro, which consent
shall not be unreasonably withheld.
Section 6: Representations and Warranties
FinPro, the Bank and the Company agree to the following:
1.) The Bank agrees to make available or to supply to FinPro the
information set forth in Section 2 of this agreement.
2.) The Bank hereby represents and warrants to FinPro that any information
provided to FinPro does not and will not, to the best of the Bank's
knowledge, at the times it is provided to FinPro, contain any untrue
statement of a material fact or fail to state a material fact necessary to
make the statements therein not false or misleading in light of the
circumstances under which they were made.
3.) (a) The Bank agrees that it will indemnify and hold harmless FinPro,
its directors, officers, agents and employees of FinPro or its successors who
act for or on behalf of FinPro in connection with the services called for
under this agreement ( hereinafter referred to as "The Agreement"), from and
against any and all losses, claims, damages and liabilities (including, but
not limited to, all losses and expenses in connection with claims under the
federal securities laws) arising out of or in any way related to the services
provided by FinPro under this agreement, except to the extent arising out of
or attributable to the negligence or willful misconduct of FinPro, its
directors, officers, agents or employees.
(b) FinPro shall give written notice to the Bank of such claim or
facts within thirty days of the assertion of any claim or discovery of
material facts upon which FinPro intends to base a claim for indemnification
hereunder. In the event the Bank elects, within seven days of
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Landmark Community Bank
May 2, 1997 Page: 7
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the receipt of the original notice thereof, to contest such claim by written
notice to FinPro, FinPro will be entitled to be paid any amounts payable by
the Bank hereunder, together with interest on such costs from the date
incurred at the rate of ten percent (10%) per annum within five days after
the final determination of such contest either by written acknowledgment of
the Bank or a final judgment of a court of competent jurisdiction. If the
Bank does not so elect, FinPro shall be paid promptly and in any event within
thirty days after receipt by the bank of the notice of the claim.
(c) The Bank shall pay for or reimburse the reasonable expenses,
including attorneys' fees, incurred by FinPro in connection with the contest
of any claim subject to indemnification hereunder in advance of the final
determination of any proceeding within thirty days of the receipt of such
request if FinPro furnishes the Bank:
1. a written statement of FinPro's good faith belief that it
is entitled to indemnification hereunder; and
2. a written undertaking by FinPro to repay the advance if
its ultimately is determined in a final adjudication of
such proceeding that it or he is not entitled to such
indemnification.
(d) In the event that the Bank elects to contest the claim, (I)
FinPro will cooperate in Good Faith with the contest, (ii) FinPro will
provide the Bank with an irrevocable power-of-attorney permitting the Bank to
pursue the claim in the name of FinPro, and (iii) FinPro will be prohibited
from settling or compromising the claim without written consent of the Bank.
(e) In the event the Bank does not pay any indemnified loss or make
advance reimbursements of expenses in accordance with the terms of this
agreement, FinPro shall have all remedies available at law or in equity to
enforce such obligation.
It is understood that, in connection with FinPro's above mentioned
engagement, FinPro may also be engaged to act for the Bank in one or more
additional capacities, and that the terms of the original engagement may be
embodied in one or more separate agreements. The provisions of paragraph 3
herein shall apply to the original engagement, any such additional
engagement, any modification of the original engagement or such additional
engagement and shall remain in full force and effect following the
completion or termination of FinPro's engagement(s). This agreement
constitutes the entire understanding of the Bank and FinPro concerning the
subject matter addressed herein, and such contract shall be governed and
construed in accordance with the laws of the State of New Jersey. This
agreement may not be modified, supplemented or amended except by written
agreement executed by both parties.
The Bank and FinPro are not affiliated, and neither the Bank nor FinPro has
an economic interest in, or is held in common with, the other and has not
derived a significant portion of its gross revenues, receipts or net income
for any period from transactions with the other. Please confirm that the
foregoing is in accordance with your understanding and agreement with FinPro
by signing and returning to FinPro the duplicate of the letter enclosed
herewith.
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Landmark Community Bank
May 2, 1997 Page: 8
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Sincerely:
FinPro, Inc.
By:
/s/ Donald J. Musso /s/ Gordon E. Coleman
___________________________ __________________________________
Donald J. Musso Gordon Coleman
Managing Director EVP and CEO
5/2/97 5-7-97
___________________________ __________________________________
Date Date
c:\finproj\props\Landmark\IPOprop.doc
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