Exhibit 99.2
Proxy Statement and Form of Proxy to
be Furnished to Preferred Savings
Account Holders
PREFERRED SAVINGS BANK
4800 South Pulaski Road
Chicago, Illinois 60632-4195
(312) 376-3800
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NOTICE OF SPECIAL MEETING OF MEMBERS
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Notice is hereby given that a Special Meeting of Members (the
"Special Meeting") of Preferred Savings Bank, ("Preferred Savings" or the
"Bank"), will be held at the main office of the Bank located at 4800 South
Pulaski Road, Chicago, Illinois, on ________________, 1996 at __:__ _.m.,
Chicago, Illinois Time. The purpose of this Special Meeting is to consider and
vote upon:
A plan to convert the Bank from a federally chartered mutual savings
bank to a federally chartered stock savings bank, including the
adoption of a federal stock savings bank charter and bylaws, with the
concurrent sale of all the Bank's common stock to PS Financial, Inc.,
a Delaware corporation (the "Holding Company"), and sale by the
Holding Company of shares of its common stock; and
such other business as may properly come before the Special Meeting or any
adjournment thereof. Management is not aware of any such other business.
The members who shall be entitled to notice of and to vote at the
Special Meeting and any adjournment thereof are depositors of the Bank at the
close of business on _________________, 1996 who continue to be depositors as
of the date of the Special Meeting. In the event there are not sufficient
votes for approval of the Plan of Conversion at the time of the Special
Meeting, the Special Meeting may be adjourned from time to time in order to
permit further solicitation of proxies.
BY ORDER OF THE BOARD OF DIRECTORS
Lorraine G. Ptak
Secretary
Chicago, Illinois
________________, 1996
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YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR APPROVAL OF THE PLAN OF CONVERSION BY COMPLETING THE
ENCLOSED PROXY CARD AND RETURNING IT IN THE
ENCLOSED POSTAGE-PAID ENVELOPE AS SOON AS
POSSIBLE.
YOUR VOTE IS VERY IMPORTANT.
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SUMMARY OF PROPOSED CONVERSION
This summary does not purport to be complete and is qualified in its
entirety by the more detailed information contained in the remainder of this
Proxy Statement and the accompanying Prospectus.
Under its present "mutual" form of organization, Preferred Savings
has no stockholders. Its deposit account holders are members of the Bank and
have voting rights in that capacity. In the unlikely event of liquidation, the
Bank's deposit account holders would have the sole right to receive any assets
of the Bank remaining after payment of its liabilities (including the claims
of all deposit account holders to the withdrawal value of their deposits).
Under the Plan of Conversion (the "Plan of Conversion") to be voted on at the
Special Meeting, the Bank would be converted into a federally chartered
savings bank organized in stock form, and all of the Bank's common stock would
be sold concurrently to the Holding Company (the "Conversion"). The Holding
Company will offer and sell its common stock (the "Common Stock") in an
offering (1) to account holders with an account balance of $50 or more on
March 31, 1995 ("Eligible Account Holders"), (2) tax-qualified employee plans
of the Bank or the Holding Company ("Tax-Qualified Employee Plans"), (3)
account holders of the Bank with an account balance of $50 or more as of
September 30, 1996 ("Supplemental Eligible Account Holders"), (4) certain
other members of the Bank as of _________________, 1996 who are not Eligible
or Supplemental Eligible Account Holders ("Other Members") and (5) directors,
officers and employees of the Bank on a priority basis (the "Subscription
Offering"). Notwithstanding the foregoing, to the extent orders for shares
exceed the maximum of the appraisal range, Tax-Qualified Employee Plans shall
be afforded a first priority to purchase shares sold above the maximum of the
appraisal range. It is anticipated that Tax-Qualified Employee Plans will
purchase 8% of the Common Stock sold in the Conversion.
To the extent the Common Stock is not all sold to the persons in the
foregoing categories, the Holding Company may offer and sell the remainder of
the Common Stock in a public offering (the "Public Offering") through Charles
Webb & Company, ("Charles Webb") to selected persons to whom a prospectus (the
"Prospectus") is delivered. The Subscription Offering and the Public Offering
are referred to collectively as the "Offering." Voting and liquidation rights
with respect to the Bank would thereafter be held by the Holding Company,
except to the limited extent of the liquidation account (the "Liquidation
Account") that will be established for the benefit of Eligible and
Supplemental Eligible Account Holders of the Bank and voting and liquidation
rights in the Holding Company would be held only by those persons who become
stockholders of the Holding Company through purchase of shares of its Common
Stock. See "Description of the Plan of Conversion - Principal Effects of
Conversion Liquidation Rights of Depositor Members."
THE CONVERSION WILL NOT AFFECT THE BALANCE, INTEREST RATE OR FEDERAL
INSURANCE PROTECTION OF ANY SAVINGS DEPOSIT, AND NO PERSON WILL BE OBLIGATED
TO PURCHASE ANY STOCK IN THE CONVERSION.
Business Purposes for Conversion
Net Conversion proceeds are expected to increase the capital of Preferred
Savings, which will support the expansion of its financial services to the
public. The conversion to stock form and the use of a holding company
structure are also expected to enhance its ability to expand through possible
mergers and acquisitions (although no such transactions are contemplated at
this time) and will facilitate its future access to the capital markets. The
Bank will continue to be subject to comprehensive regulation and examination
by the Office of Thrift Supervision, Department of Treasury ("OTS") and the
Federal Deposit Insurance Corporation ("FDIC").
Subscription Offering
As part of the Conversion, Common Stock is being offered for sale in the
Subscription Offering, in the priorities summarized below, to the Bank's (1)
Eligible Account Holders, (2) Tax-Qualified Employee Plans, (3) Supplemental
Eligible Account Holders (4) Other Members, and (5) employees, officers and
directors. If necessary, all shares of Common Stock not purchased in the
Subscription Offering, if any, may be offered in
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connection with the Public Offering for sale to selected persons through
Charles Webb.
Subscription Rights of Eligible Account Holders
Each Eligible Account Holder has been given non-transferable rights to
subscribe for an amount equal to the greater of $150,000 of Common Stock,
one-tenth of one percent of the total number of shares offered in the
Subscription Offering or 15 times the product (rounded down to the whole next
number) obtained by multiplying the total number of shares to be issued by a
fraction of which the numerator is the amount of qualifying deposits of such
subscriber and the denominator is the total qualifying deposits of all account
holders in this category on the qualifying date.
Subscription Rights of Tax-Qualified Employee Plans
The Bank's Tax-Qualified Employee Plans have been given non-transferable
rights to subscribe, individually and in the aggregate, for up to 10% of the
total number of shares sold in the Conversion after satisfaction of
subscriptions of Eligible Account Holders. Notwithstanding the foregoing, to
the extent orders for shares exceed the maximum of the appraisal range,
Tax-Qualified Employee Plans shall be afforded a first priority to purchase
shares sold above the maximum of the appraisal range. It is anticipated that
Tax-Qualified Employee Plans will purchase 8% of the Common Stock sold in the
Conversion.
Subscription Rights of Supplemental Eligible Account Holders
After satisfaction of subscriptions of Eligible Account Holders and
Tax-Qualified Employee Plans, each Supplemental Eligible Account Holder (other
than directors and officers of the Bank) has been given non-transferable
rights to subscribe for an amount equal to the greater of $150,000 of Common
Stock, one-tenth of one percent of the total number of shares offered in the
Conversion or 15 times the product (rounded down to the whole next number)
obtained by multiplying the total number of shares to be issued by a fraction
of which the numerator is the amount of qualifying deposits of such subscriber
and the denominator is the total qualifying deposits of all account holders in
this category on the qualifying date. The subscription rights of each
Supplemental Eligible Account Holder shall be reduced to the extent of such
person's subscription rights as an Eligible Account Holder.
Subscription Rights of Other Members
Each Other Member has been given non-transferable
rights to subscribe for an amount equal to the greater of $150,000 of Common
Stock or one-tenth of one percent of the total number of shares offered in the
Conversion after satisfaction of the subscriptions of the Bank's Eligible
Account Holders, Tax-Qualified Employee Plans and Supplemental Eligible
Account Holders.
Subscription Rights of Bank Personnel
Each individual employee, officer and director of the Bank has been given the
right to subscribe for an amount equal to the greater of $150,000 of Common
Stock after satisfaction of the subscriptions of Eligible Account Holders,
Tax-Qualified Employee Plans, Supplemental Eligible Account Holders and Other
Members. Total shares subscribed for by the employees, officers and directors
in this category may not exceed 25% of the total shares offered in the
Conversion.
Public Offering
Subject to prior rights of holders of subscription rights, the Holding Company
may also offer the Common Stock for sale to selected persons through Charles
Webb in a Public Offering.
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Purchase Limitations
No person may purchase more than $150,000 of Common Stock in the Subscription
Offering. No person, together with associates, and persons acting in concert,
may purchase more than $900,000 of Common Stock in the Conversion. No person,
together with associates of and persons acting in concert with such person,
may purchase more than $150,000 of Common Stock in the Public Offering. The
aggregate purchases of directors and executive officers and their associates
may not exceed 35% of the total number of shares offered in the Conversion.
These purchase limitations do not apply to the Bank's Tax-Qualified Employee
Plans.
Expiration Date of the Subscription Offering
All subscriptions for Common Stock in connection with the Subscription
Offering must be received by noon, Chicago, Illinois Time on ________________,
1996.
How to Subscribe for Shares
For information on how to subscribe for Common Stock being offered in the
Subscription Offering, please read the Prospectus and the order form and
instructions accompanying this Proxy Statement. Subscriptions will not become
effective until the Plan of Conversion has been approved by the Bank's members
and all of the Common Stock offered in the Conversion has been subscribed for
or sold in the Offering or through such other means as may be approved by the
OTS.
Price of Common Stock
All sales of Common Stock in the Offering will be made at the same price per
share which is currently expected to be $10.00 per share on the basis of an
independent appraisal of the pro forma market value of the Bank and the
Holding Company upon Conversion. On the basis of a preliminary appraisal by
Keller & Company, Inc. ("Keller"), which has been reviewed by the OTS, a
minimum of 1,402,500 and a maximum of 1,897,500 shares will be offered in the
Conversion. See "The Conversion - Stock Pricing and Number of Shares to be
Issued" in the Prospectus.
Tax Consequences
The Bank has received an opinion from its special counsel, Silver, Freedman &
Taff, L.L.P., stating that the Conversion is a nontaxable reorganization under
Section 368(a)(1)(F) of the Internal Revenue Code. The Bank has also received
an opinion from Crowe Chizek and Company LLP ("Crowe Chizek") stating that the
Conversion will not be a taxable transaction for Illinois income tax purposes.
Required Vote
Approval of the Plan of Conversion will require the affirmative vote of a
majority of all votes eligible to be cast at the Special Meeting.
YOUR BOARD OF DIRECTORS URGES YOU TO VOTE FOR
THE PLAN OF CONVERSION
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PREFERRED SAVINGS BANK
PROXY STATEMENT
SPECIAL MEETING OF MEMBERS TO BE HELD ON ________________, 1996
PURPOSE OF MEETING
This Proxy Statement is being furnished to you in connection with the
solicitation on behalf of the Board of Directors of Preferred Savings Bank
("Preferred Savings" or the "Bank") of the proxies to be voted at the Special
Meeting of Members (the "Special Meeting") of the Bank to be held at the
Bank's main office located at 4800 South Pulaski Road, Chicago, Illinois
60632-4195, on ________________, 1996 at __:__ _.m., Chicago, Illinois Time,
and at any adjournments thereof. The Special Meeting is being held for the
purpose of considering and voting upon a Plan of Conversion under which the
Bank would be converted (the "Conversion") from a federally chartered mutual
savings bank into a federally chartered stock savings bank, the concurrent
sale of all the common stock of the stock savings bank to PS Financial, Inc.
(the "Holding Company"), a Delaware corporation, and the sale by the Holding
Company of shares of its common stock (the "Common Stock") and such other
business as may properly come before the meeting and any adjournment thereof.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE BANK UNANIMOUSLY RECOMMENDS THAT YOU
VOTE TO APPROVE THE PLAN OF CONVERSION.
The Bank is currently organized in "mutual" rather than "stock" form,
meaning that it has no stockholders and no authority under its federal mutual
charter to issue capital stock. The Bank's Board of Directors has adopted the
Plan of Conversion providing for the Conversion. The sale of Common Stock of
the Holding Company, which was recently formed to become the holding company
of the Bank, will substantially increase the Bank's net worth. The Holding
Company will exchange 50% of the net proceeds from the sale of the Common
Stock for the common stock of the Bank to be issued upon Conversion. The
Holding Company expects to retain the balance of the net proceeds as its
initial capitalization, a portion of which the Holding Company intends to lend
to the ESOP to fund its purchase of Common Stock. This increased capital will
support the expansion of the Bank's financial services to the public. Subject
to market conditions, the Bank intends to emphasize the origination of
commercial real estate loans in its market area and to increase the variety of
consumer loans currently offered. The Board of Directors of the Bank also
believes that the conversion to stock form and the use of a holding company
structure will enhance the Bank's ability to expand through possible mergers
and acquisitions (although no such transactions are contemplated at this time)
and will facilitate its future access to the capital markets.
The Board of Directors of the Bank believes that the Conversion will
further benefit the Bank by enabling it to attract and retain key personnel
through prudent use of stock-related incentive compensation and benefit plans.
The Board of Directors of the Holding Company intends to adopt a stock option
and incentive plan and a recognition and retention plan, subject to approval
of Holding Company stockholders following completion of the Conversion.
See "Management - Benefit Plans" in the accompanying Prospectus.
Voting in favor of the Plan of Conversion will not obligate any
person to purchase any Common Stock.
THE OFFICE OF THRIFT SUPERVISION ("OTS") HAS APPROVED THE PLAN OF
CONVERSION SUBJECT TO THE APPROVAL OF THE BANK'S MEMBERS AND THE SATISFACTION
OF CERTAIN OTHER CONDITIONS. HOWEVER, SUCH APPROVAL DOES NOT CONSTITUTE A
RECOMMENDATION OR ENDORSEMENT OF THE PLAN OF CONVERSION BY THE OTS.
INFORMATION RELATING TO VOTING AT THE SPECIAL MEETING
The Board of Directors of the Bank has fixed ________________, 1996
as the voting record date ("Voting Record Date") for the determination of
members entitled to notice of the Special Meeting. All Bank depositors are
members of the Bank under its current charter. All Bank members of record as
of the close of business on the
Voting Record Date who continue to be members as of the date of the Special
Meeting will be entitled to vote at the Special Meeting or any adjournment
thereof.
Each depositor member (including IRA and Keogh account beneficiaries)
will be entitled at the Special Meeting to cast one vote for each $100, or
fraction thereof, of the aggregate withdrawal value of all of such depositor's
accounts in the Bank as of the Voting Record Date, up to a maximum of 1,000
votes. In general, accounts held in different ownership capacities will be
treated as separate memberships for purposes of applying the 1,000 vote
limitation. For example, if two persons hold a $100,000 account in their joint
names and each of the persons also holds a separate account for $100,000 in
his own name, each person would be entitled to 1,000 votes for each separate
account and they would together be entitled to cast 1,000 votes on the basis
of the joint account. Where no proxies are received from IRA and Keogh account
beneficiaries, after due notification, the Bank, as trustee of these accounts,
is entitled to vote these accounts in favor of the Plan of Conversion.
Approval of the Plan of Conversion requires the affirmative vote of a
majority of the total outstanding votes of the Bank's members eligible to be
cast at the Special Meeting. As of ________________, 1996, the Bank had
approximately _____ members who were entitled to cast a total of approximately
_______ votes at the Special Meeting.
Bank members may vote at the Special Meeting or any adjournment
thereof in person or by proxy. Any member giving a proxy will have the right
to revoke the proxy at any time before it is voted by giving written notice to
the Secretary of the Bank, provided that such written notice is received by
the Secretary prior to the Special Meeting or any adjournment thereof, or upon
request if the member is present and chooses to vote in person.
All properly executed proxies received by the Board of Directors of
the Bank will be voted in accordance with the instructions indicated thereon
by the members giving such proxies. If no instructions are given, such proxies
will be voted in favor of the Plan of Conversion. If any other matters are
properly presented at the Special Meeting and may properly be voted on, the
proxies solicited hereby will be voted on such matters in accordance with the
best judgment of the proxy holders named thereon. Management is not aware of
any other business to be presented at the Special Meeting.
If a proxy is not executed and is returned or the member does not
vote in person, the Bank is prohibited by OTS regulations from using a
previously executed proxy to vote for the Conversion. As a result, failure to
vote may have the same effect as a vote against the Plan of Conversion.
To the extent necessary to permit approval of the Plan of Conversion,
proxies may be solicited by officers, directors or regular employees of the
Bank, in person, by telephone or through other forms of communication and, if
necessary, the Special Meeting may be adjourned to a later date. In addition,
Charles Webb will assist the Bank in the solicitation of proxies. Such persons
will be reimbursed by the Bank for their expenses incurred in connection with
such solicitation. The Bank will bear all costs of this solicitation. The
proxies solicited hereby will be used only at the Special Meeting and at any
adjournment thereof.
DESCRIPTION OF THE PLAN OF CONVERSION
The Plan of Conversion to be presented for approval at the Special
Meeting provides for the Conversion to be accomplished through adoption of
amended charter and bylaws for the Bank to authorize the issuance of capital
stock along with the concurrent formation of a holding company. As part of the
Conversion, the Plan of Conversion provides for the subscription offering (the
"Subscription Offering") of the Common Stock to the Bank's (i) Eligible
Account Holders (deposit account holders with an account balance of $50 or
more as of March 31, 1995); (ii) Tax-Qualified Employee Plans, (iii)
Supplemental Eligible Account Holders (deposit account holders with an account
balance of $50 or more as of September 30, 1996); (iv) Other Members (deposit
account holders eligible to vote at the Special Meeting who are not as
Eligible Account Holders or Supplemental Eligible Account Holders); and (v)
the Bank's employees, officers and directors. Notwithstanding the foregoing,
to the extent orders for shares exceed the maximum of the appraisal range,
Tax-Qualified Employee Plans shall be afforded a first priority to purchase
shares sold above the maximum of the appraisal range. It is anticipated that
Tax-Qualified Employee Plans will purchase 8% of the Common Stock sold in the
Conversion. If necessary, all shares of Common Stock not purchased in the
Subscription Offering, if any, may be offered to selected persons in
connection with the Public Offering through Charles Webb.
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THE SUBSCRIPTION OFFERING HAS COMMENCED AS OF THE DATE OF MAILING OF
THIS PROXY STATEMENT. A PROSPECTUS EXPLAINING THE TERMS OF THE SUBSCRIPTION
OFFERING, INCLUDING HOW TO ORDER AND PAY FOR SHARES AND DESCRIBING THE
BUSINESS OF THE BANK AND THE HOLDING COMPANY; ACCOMPANIES THIS PROXY STATEMENT
AND SHOULD BE READ BY ALL PERSONS WHO WISH TO CONSIDER SUBSCRIBING FOR COMMON
STOCK. THE SUBSCRIPTION OFFERING EXPIRES AT NOON, CHICAGO, ILLINOIS TIME ON
________________, 1996 UNLESS EXTENDED BY THE BANK AND THE HOLDING COMPANY.
The federal conversion regulations require that all stock offered in
a conversion must be sold in order for the conversion to become effective. The
conversion regulations require that the offering be completed within 45 days
after completion of the Subscription Offering period unless extended by the
Bank and the Holding Company with the approval of the OTS. This 45-day period
expires _________________, 1996 unless the Subscription Offering is extended.
If this is not possible, an occurrence that is currently not anticipated, the
Board of Directors of the Bank and the Holding Company will consult with the
OTS to determine an appropriate alternative method of selling all unsubscribed
shares offered in the Conversion. The Plan of Conversion provides that the
Conversion must be completed within 24 months after the date of the Special
Meeting.
The Public Offering or any other sale of the unsubscribed shares will
be made as soon as practicable after the completion of the Subscription
Offering. No sales of shares may be completed, either in the Subscription
Offering or otherwise, unless the Plan of Conversion is approved by the
members of the Bank.
The commencement and completion of the Offering, however, is subject
to market conditions and other factors beyond the Bank's control. Due to
adverse conditions in the stock market in the past, a number of converting
thrift institutions encountered significant delays in completing their stock
offerings or were not able to complete them at all. No assurance can be given
as to the length of time after approval of the Plan of Conversion at the
Special Meeting that will be required to complete the Public Offering or other
sale of the Common Stock to be offered in the Conversion. If delays are
experienced, significant changes may occur in the estimated pro forma market
value of the Holding Company's Common Stock, together with corresponding
changes in the offering price and the net proceeds realized by the Bank and
the Holding Company from the sale of the Common Stock. The Bank and the
Holding Company may also incur substantial additional printing, legal,
accounting and other expenses in completing the Conversion.
The following is a brief summary of the Conversion and is qualified
in its entirety by reference to the Plan of Conversion, a complete copy of
which is attached hereto. The Bank's federal stock charter and bylaws that
will become effective upon completion of the Conversion are available from the
Bank upon request. A copy of the Holding Company's articles of incorporation
and bylaws are also available from the Bank upon request.
Principal Effects of Conversion
Depositors. The Conversion will not change the amount, interest rate,
withdrawal rights or federal insurance protection of deposit accounts, or
affect deposit accounts in any way other than with respect to voting and
liquidation rights as discussed below.
Borrowers. The rights and obligations of borrowers under their loan
agreements with the Bank will remain unchanged by the Conversion. The
principal amount, interest rate and maturity date of loans will remain as they
were contractually fixed prior to the Conversion.
Voting Rights of Members. Under the Bank's current federal mutual
charter, depositors and certain borrowers have voting rights as members of the
Bank with respect to the election of directors and certain other affairs of
the Bank. After the Conversion, exclusive voting rights with respect to all
such matters will be vested in the Holding Company as the sole stockholder of
the Bank. Depositors and certain borrowers will no longer have any voting
rights, except to the extent that they become stockholders of the Holding
Company through the purchase of its Common Stock. Voting rights in the Holding
Company will be held exclusively by its stockholders.
Liquidation Rights of Depositor Members. Currently, in the unlikely
event of liquidation of the Bank, any assets remaining after satisfaction of
all creditors' claims in full (including the claims of all depositors to the
withdrawal value of their accounts) would be distributed pro rata among the
depositors of the Bank, with the pro
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rata share of each being the same proportion of all such remaining assets as
the withdrawal value of each depositor's account is of the total withdrawal
value of all accounts in the Bank at the time of liquidation. After the
Conversion, the assets of the Bank would first be applied, in the event of
liquidation, against the claims of all creditors (including the claims of all
depositors to the withdrawal value of their accounts). Any remaining assets
would then be distributed to the persons who qualified as Eligible Account
Holders or Supplemental Eligible Account Holders under the Plan of Conversion
to the extent of their interests in a "Liquidation Account" that will be
established at the time of the completion of the Conversion and then to the
Holding Company as the sole stockholder of the Bank's outstanding common
stock. The Bank's depositors who did not qualify as Eligible Account Holders
or Supplemental Eligible Account Holders would have no right to share in any
residual net worth of the Bank in the event of liquidation after the
Conversion, but would continue to have the right as creditors of the Bank to
receive the full withdrawal value of their deposits prior to any distribution
to the Holding Company as the Bank's sole stockholder. In addition, the Bank's
deposit accounts will continue to be insured by the Federal Deposit Insurance
Corporation ("FDIC") to the maximum extent permitted by law, currently up to
$100,000 per insured account. The Liquidation Account will initially be
established in an amount equal to the net worth of the Bank as of the date of
the Bank's latest statement of financial condition contained in the final
prospectus used in connection with the Conversion. Each Eligible Account
Holder and/or Supplemental Eligible Account Holder will receive an initial
interest in the Liquidation Account in the same proportion as the balance in
all of his qualifying deposit accounts was of the aggregate balance in all
qualifying deposit accounts of all Eligible Account Holders and Supplemental
Eligible Account Holders on March 31, 1995 or September 30, 1996,
respectively. For accounts in existence on both dates, separate subaccounts
shall be determined on the basis of the qualifying deposits in such accounts
on the record dates. However, if the amount in the qualifying deposit account
on any annual closing date of the Bank is less than the lowest amount in such
deposit account on the Eligibility Record Date and/or Supplemental Eligibility
Record Date, and any subsequent annual closing date, this interest in the
Liquidation Account will be reduced by an amount proportionate to such
reduction in the related deposit account and will not thereafter be increased
despite any subsequent increase in the related deposit account.
The Bank. Under federal law, the stock savings bank resulting from
the Conversion will be deemed to be a continuation of the mutual savings bank
rather than a new entity and will continue to have all of the rights,
privileges, properties, assets and liabilities of the Bank prior to the
Conversion. The Conversion will enable the Bank to issue capital stock, but
will not change the general objectives, purposes or types of business
currently conducted by the Bank, and no assets of the Bank will be distributed
in order to effect the Conversion, other than to pay the expenses incident
thereto. After the Conversion, the Bank will remain subject to examination and
regulation by the OTS and will continue to be a member of the Federal Home
Loan Bank System. The Conversion will not cause any change in the executive
officers or directors of the Bank.
Tax Consequences. Consummation of the Conversion is expressly
conditioned upon prior receipt of either a ruling of the United States
Internal Revenue Service ("IRS") or an opinion letter of the Bank's counsel
with respect to federal taxation, and either a ruling of the Illinois taxation
authorities or an opinion letter with respect to Illinois taxation, to the
effect that the Conversion will not be a taxable transaction to the Holding
Company, the Bank or the Bank's deposit account holders receiving subscription
rights.
The Bank has received an opinion of its special counsel, Silver,
Freedman & Taff, L.L.P., to the effect that (i) the Conversion will qualify as
a reorganization under Section 368(a)(1)(F) of the Internal Revenue Code of
1986, as amended, and no gain or loss will be recognized to the Bank in either
its mutual form or its stock form by reason of the proposed Conversion, (ii)
no gain or loss will be recognized to the Bank upon the receipt of money from
the Holding Company for stock of the Bank; and no gain or loss will be
recognized to the Holding Company upon the receipt of money for Common Stock
of the Holding Company; (iii) the assets of the Bank in either its mutual or
its stock form will have the same basis before and after the Conversion; (iv)
the holding period of the assets of the Bank will include the period during
which the assets were held by the Bank in its mutual form prior to conversion;
(v) gain, if any, will be realized by the Eligible Account Holders and
Supplemental Eligible Account Holders of the Bank, upon the constructive
issuance to them of withdrawable deposit accounts of the Bank immediately
after the proposed Conversion, interests in the Liquidation Account, and on
the receipt or distribution to them of the nontransferable Subscription Rights
to purchase Holding Company Common Stock (any such gain will be recognized by
such account holder, but only to the extent, if any, of an amount not in
excess of the fair market value of the Subscription Rights and Liquidation
Account interests received); (vi) the basis of the account holder's savings
accounts in the Bank after the Conversion will be the same as the basis of his
or her savings accounts in the Bank prior to the Conversion; (vii) the basis
of each account holder's interest in the Liquidation
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Account will be zero; (viii) the basis of the Holding Company Common Stock to
its shareholders will be the Purchase Price thereof and a shareholder's
holding period for Holding Company Common Stock acquired through the exercise
of Subscription Rights shall begin on the date on which the Subscription
Rights are exercised; (ix) the converted Bank, immediately after Conversion,
will succeed to the bad debt reserve accounts of the Bank, in mutual form, and
the bad debt reserves will have the same character in the hands of the Bank
after Conversion as if no distribution or transfer had occurred; and (x) the
creation of the liquidation account will have no effect on the Bank's taxable
income, deductions or addition to reserve for bad debts either in its mutual
or stock form.
The opinion from Silver, Freedman & Taff, L.L.P. is based, among
other things, on certain assumptions, including the assumptions that the
exercise price of the Subscription Rights to purchase Holding Company Common
Stock will be approximately equal to the fair market value of that stock at
the time of the completion of the proposed Conversion. With respect to the
Subscription Rights, the Bank has received the letter of Keller (the
"Appraiser Letter") which, based on certain assumptions, concludes that the
Subscription Rights to be received by Eligible Account Holders, Supplemental
Eligible Account Holders and other eligible subscribers do not have any
economic value at the time of distribution or at the time the Subscription
Rights are exercised, whether or not a public offering takes place.
The Bank has also received an opinion of Silver, Freedman & Taff,
L.L.P. to the effect that, based in part on the Appraiser Letter, no taxable
income will be realized by a stock subscriber as a result of the exercise of
non-transferable Subscription Rights to purchase shares of Holding Company
Common Stock or upon the lapse of such rights.
If it is subsequently established that the subscription rights
received by such persons have an ascertainable fair market value, or in the
case of employees, directors and officers are compensatory in nature, then, in
such event, the subscription rights will be taxable to the recipient in the
amount of their fair market value. In this regard, the subscription rights may
be taxed partially or entirely at ordinary income tax rates.
With respect to Illinois taxation, the Bank has received an opinion
from Crowe Chizek, to the effect that, assuming the Conversion does not result
in any federal taxable income, gain or loss to the Bank in its mutual or stock
form, the Holding Company, the account holders, borrowers, officers, directors
and employees and Tax-Qualified Employee Plans of the Bank, the Conversion
should not result in any Illinois income tax liability to such entities or
persons.
Unlike a private letter ruling, the opinions of Silver, Freedman &
Taff, L.L.P. and Crowe Chizek, as well as the Appraiser Letter, have no
binding effect or official status, and no assurance can be given that the
conclusions reached in any of those opinions would be sustained by a court if
contested by the IRS or the Illinois tax authorities.
Approval, Interpretation, Amendment and Termination
Under the Plan of Conversion, the letter from the OTS giving approval
thereto, and applicable regulations, consummation of the Conversion is subject
to the satisfaction of the following conditions: (a) approval of the Plan of
Conversion by members of the Bank casting at least a majority of the votes
eligible to be cast at the Special Meeting; (b) sale of all of the Common
Stock to be offered in the Conversion; and (c) receipt of favorable rulings or
opinions of counsel as to the federal and Illinois tax consequences of the
Conversion.
The Plan of Conversion may be substantively amended by the Boards of
Directors of the Bank and the Holding Company with the concurrence of the OTS.
If the Plan of Conversion is amended, proxies which have been received prior
to such amendment will not be resolicited unless otherwise required by the
OTS. Also, as required by the federal regulations, the Plan of Conversion
provides that the transactions contemplated thereby may be terminated by the
Board of Directors of the Bank alone at any time prior to the Special Meeting
and may be terminated by the Board of Directors of the Bank at any time
thereafter with the concurrence of the OTS, notwithstanding approval of the
Plan of Conversion by the members of the Bank at the Special Meeting. All
interpretations by the Bank and the Holding Company of the Plan of Conversion
and of the order forms and related materials for the Subscription Offering
will be final, except as regards or affects the OTS.
5
Judicial Review
Section 5(i)(2)(B) of the Home Owners' Loan Act, as amended, 12
U.S.C. ss.1464(i)(2)(B) and Section 563b.8(u) of the Rules and Regulations
promulgated thereunder (12 C.F.R. Section 563b.8(u)) provide: (i) that persons
aggrieved by a final action of the OTS which approves, with or without
conditions, or disapproves a plan of conversion, may obtain review of such
final action only by filing a written petition in the United States Court of
Appeals for the circuit in which the principal office or residence of such
person is located, or in the United States Court of Appeals for the District
of Columbia, requesting that the final action of the OTS be modified,
terminated or set aside, and (ii) that such petition must be filed within 30
days after publication of notice of such final action in the Federal Register,
or 30 days after the date of mailing of the notice and proxy statement for the
meeting of the converting institution's members at which the conversion is to
be voted on, whichever is later. The notice of the Special Meeting of the
Bank's members to vote on the Plan of Conversion described herein is included
at the beginning of this Proxy Statement. The statute and regulation referred
to above should be consulted for further information.
ADDITIONAL INFORMATION
The information contained in the accompanying Prospectus, including a
more detailed description of the Plan of Conversion, consolidated financial
statements of the Bank and a description of the capitalization and business of
the Bank and the Holding Company, including the Bank's directors and executive
officers and their compensation, the anticipated use of the net proceeds from
the sale of the Common Stock and a description of the Common Stock, is
intended to help you evaluate the Conversion and is incorporated by this
reference.
YOUR VOTE IS VERY IMPORTANT TO US. PLEASE TAKE A MOMENT NOW TO
COMPLETE AND RETURN YOUR PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED. YOU
MAY STILL ATTEND THE SPECIAL MEETING AND VOTE IN PERSON EVEN THOUGH YOU HAVE
VOTED YOUR PROXY. FAILURE TO SUBMIT A PROXY WILL HAVE THE SAME EFFECT AS
VOTING AGAINST THE CONVERSION.
If you have any questions, please call our Information Center at
(312) ___-____.
IMPORTANT: YOU MAY BE ENTITLED TO VOTE IN MORE THAN ONE CAPACITY.
PLEASE SIGN, DATE AND PROMPTLY RETURN EACH PROXY CARD YOU RECEIVE.
THIS PROXY STATEMENT IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY STOCK. THE OFFER WILL BE MADE ONLY BY THE PROSPECTUS.
THE COMMON STOCK IS NOT A DEPOSIT OR ACCOUNT AND IS NOT FEDERALLY
INSURED OR GUARANTEED.
6
FORM OF PROXY
-------------
REVOCABLE PROXY
PREFERRED SAVINGS BANK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PREFERRED SAVINGS BANK.
The undersigned member of Preferred Savings Bank of Chicago, Illinois
(the "Bank") hereby appoints the Board of Directors of the Bank as proxies to
cast all votes which the undersigned member is entitled to cast at a Special
Meeting of Members to be held at the Bank's office located at 4800 South
Pulaski Road, Chicago, Illinois 60631-4195, at the hour and date stated in the
Proxy Statement, and at any and all adjournments and postponements thereof,
and to act with respect to all votes that the undersigned would be entitled to
cast, if then personally present, in accordance with the instructions on the
reverse side hereof:
to vote FOR or AGAINST the adoption of the Plan of Conversion to
convert the Bank from a federally chartered mutual savings bank to a federally
chartered stock savings bank, including the adoption of a federal stock
savings bank charter and bylaws, with the simultaneous issuance of its common
stock to PS Financial, Inc.
This proxy will be voted as directed by the undersigned member.
UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ADOPTION OF
THE PLAN OF CONVERSION. In addition, this proxy will be voted at the
discretion of the Board of Directors upon any other matter as may properly
come before the Special Meeting.
The undersigned member may revoke this proxy at any time before it is
voted by delivering to the Secretary of the Bank either by a written
revocation of the proxy or a duly executed proxy bearing a later date, or by
appearing at the Special Meeting and voting in person. The undersigned member
hereby acknowledges receipt of the Notice of Special Meeting and Proxy
Statement.
(IMPORTANT: PLEASE VOTE, DATE AND SIGN ON REVERSE SIDE)
PREFERRED SAVINGS BANK
Please Mark Votes Below
Approval of the Plan of Conversion
FOR / / AGAINST / /
DATE:__________________________, 1996
X ___________________________________
X ___________________________________
IMPORTANT: Please sign your name
exactly as it appears on this
proxy. Joint accounts need only
one signature. When signing as an
attorney, administrator, agent,
corporation, officer, executor,
trustee or guardian, etc., please
add your full title to your
signature.
NOTE: IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE SIGN AND
RETURN ALL CARDS IN THE ACCOMPANYING ENVELOPE.