Filed by Chester Valley Bancorp Inc.
Pursuant to Rule 425 under the Securities Act of
1933 and Deemed Filed under Rule 14a-12 of the
Securities Exchange Act of 1934
Subject Company: Chester Valley Bancorp Inc.
Commission File No. 0-18833
[GRAPHIC OMITTED] WILLOW GROVE
BANCORP, INC.
DISCUSSION OF STRATEGIC
ALLIANCE WITH
[GRAPHIC OMITTED] CHESTER VALLEY BANCORP INC.
FEBRUARY 2005
DISCLAIMER
================================================================================
FORWARD LOOKING STATEMENTS. A number of the matters discussed in this message
that are not historical or current facts deal with potential future
circumstances and developments, in particular, information regarding the
combined company, including expected synergies resulting from the merger of
Chester Valley Bancorp and Willow Grove Bancorp, combined operating and
financial data, future banking plans, and whether and when the transactions
contemplated by the merger agreement will be consummated. The discussion of such
matters is qualified by the inherent risks and uncertainties surrounding future
expectations generally, and also may materially differ from actual future
experience involving any one or more of such matters. Such risks and
uncertainties include: the failure to realize anticipated capital, operating
expense and other synergies; the result of the review of the proposed merger by
various regulatory agencies, and any conditions imposed on the combined company
by such regulatory agencies in connection with consummation of the merger;
difficulties in obtaining approval of the merger by the shareholders of Chester
Valley Bancorp and Willow Grove Bancorp and satisfaction of various other
conditions to the closing of the merger contemplated by the merger agreement;
difficulties relating to the completion of the merger or the integration of the
businesses of Willow Grove and Chester Valley; and the risks that are described
from time to time in Chester Valley Bancorp's and Willow Grove Bancorp's
respective reports filed with the SEC, including each company's annual report on
Form 10-K for the year ended June 30, 2004 and quarterly report on Form 10-Q for
the quarter ended September 30, 2004. This message speaks only as of its date,
and Chester Valley Bancorp and Willow Grove Bancorp each disclaims any duty to
update the information herein.
ADDITIONAL INFORMATION AND WHERE TO FIND IT. In connection with the proposed
merger, a registration statement on Form S-4 will be filed with the SEC. CHESTER
VALLEY BANCORP AND WILLOW GROVE BANCORP SHAREHOLDERS ARE ENCOURAGED TO READ THE
REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC,
INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE
REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE MERGER. The final joint proxy statement/prospectus will be mailed to
shareholders of Chester Valley Bancorp and Willow Grove Bancorp. Shareholders
will be able to obtain the documents free of charge at the SEC's website,
www.sec.gov, from Chester Valley Bancorp by calling Joseph T. Crowley, or from
Willow Grove Bancorp by calling Christopher E. Bell.
PARTICIPANTS IN SOLICITATION. Chester Valley Bancorp, Willow Grove Bancorp and
their respective directors and executive officers and other members of
management and employees may be deemed to be participants in the solicitation of
proxies in respect of the merger. Information concerning persons who may be
considered participant's in the solicitation of Chester Valley Bancorp's
shareholders is set forth in the proxy statement dated September 10, 2004, for
Chester Valley Bancorp's 2004 annual meeting of shareholders as filed with the
SEC on Schedule 14A. Information concerning persons who may be considered
participant's in the solicitation of Willow Grove Bancorp's shareholders is set
forth in the proxy statement dated October 8, 2004, for Willow Grove Bancorp's
2004 annual meeting of shareholders as filed with the SEC on Schedule 14A.
Additional information regarding the interests of participants of Chester Valley
Bancorp and Willow Grove Bancorp in the solicitation of proxies in respect of
the merger will be included in the registration statement and joint proxy
statement/prospectus to be filed with the SEC.
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[GRAPHIC OMITTED] INTRODUCTION
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TRANSACTION OVERVIEW
================================================================================
* Alliance of Willow Grove and Chester Valley will create a super community
bank with a retail and commercial franchise in three of the most affluent
and expanding counties in the Southeastern Pennsylvania region. The
combined bank:
* Will operate in three of the most attractive target markets in
Southeast Pennsylvania
* Will create a deep and talented management team with the ability to
complete the transformation of the balance sheet and income statement
to that of a commercial bank
* Is expected to produce cost savings that drive significant accretion
in Year 1
* Will cross-sell an expanded product set to a larger geographic
footprint of affluent customers
* Will be in a position to benefit from customer dissatisfaction with
mega bank mergers and takeovers of community banks during the past
three years
[ARROW GRAPHIC OMITTED] The acquisition of Chester Valley is the best use of
Willow Grove's capital today
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TARGET MARKETS FOR COMBINED BANK
================================================================================
* Target markets are an ideal demographic market for banking
-----
** Affluent
** Educated
** Growing
* Willow Grove: strong market position in Montgomery and Bucks Counties (note:
with a presence in Northeast Philadelphia)
* Chester Valley: Strong market position in Chester County
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TARGET MARKET POPULATION
================================================================================
--------------------------------------------------------------------------------
POPULATION RANK IN RANK IN
U.S. (1) STATE (2)
--------------------------------------------------------------------------------
MONTGOMERY COUNTY 770,747 66 3
--------------------------------------------------------------------------------
BUCKS COUNTY 613,110 93 4
--------------------------------------------------------------------------------
CHESTER COUNTY 457,393 136 7
--------------------------------------------------------------------------------
Source: STATS Indiana, Indiana University (2000 Census Data Annualized Growth
Rates)
(1) Total counties in the United States are 3,141.
(2) Total counties in Pennsylvania are 67.
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TARGET MARKET POPULATION GROWTH
================================================================================
--------------------------------------------------------------------------------
PROJECTED
POPULATION RANK IN GROWTH THRU
GROWTH STATE (1) 2009
--------------------------------------------------------------------------------
MONTGOMERY COUNTY 13.6% 11 4.55%
--------------------------------------------------------------------------------
BUCKS COUNTY 13.3% 13 4.58%
--------------------------------------------------------------------------------
CHESTER COUNTY 21.5% 5 7.81%
--------------------------------------------------------------------------------
Source: STATS Indiana, Indiana University (2000 Census Data Annualized Growth
Rates)
(1) Total counties in Pennsylvania are 67.
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TARGET MARKET INCOME DEMOGRAPHICS
================================================================================
--------------------------------------------------------------------------------
MEDIAN PROJECTED
HOUSEHOLD RANK IN RANK IN GROWTH THRU
INCOME U.S. (1) STATE (2) 2009
--------------------------------------------------------------------------------
MONTGOMERY COUNTY $64,808 53 2 10.80%
--------------------------------------------------------------------------------
BUCKS COUNTY $61,230 78 3 11.83%
--------------------------------------------------------------------------------
CHESTER COUNTY $67,790 35 1 14.46%
--------------------------------------------------------------------------------
Source: STATS Indiana, Indiana University (2000 Census Data Annualized Growth
Rates)
(1) Total counties in the United States are 3,141.
(2) Total counties in Pennsylvania are 67.
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TARGET MARKET EDUCATION LEVEL
================================================================================
--------------------------------------------------------------------------------
BACHELORS RANK IN RANK IN
DEGREE U.S. (1) STATE (2)
--------------------------------------------------------------------------------
MONTGOMERY COUNTY 38.7% 76 2
--------------------------------------------------------------------------------
BUCKS COUNTY 31.2% 179 4
--------------------------------------------------------------------------------
CHESTER COUNTY 42.5% 45 1
--------------------------------------------------------------------------------
Source: STATS Indiana, Indiana University (2000 Census Data)
(1) Total counties in the United States are 3,141.
(2) Total counties in Pennsylvania are 67.
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THE COMBINED FRANCHISE
================================================================================
------------------------------------------------------------------
A $1.5 BILLION COMPANY WITH 27 EXISTING BRANCH OFFICES IN
MONTGOMERY, CHESTER, BUCKS AND PHILADELPHIA COUNTIES
------------------------------------------------------------------
[MAP GRAPHIC OMITTED]
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COMBINED BANK: DEEP MANAGEMENT TEAM, TRACK RECORD OF SUCCESS
=============================================================================================================
-------------------------------------------------------------------------------------------------------------
YEARS IN
CURRENT FINANCIAL
NAME FUNCTION INSTITUTION AGE SERVICES PRIOR INSTITUTIONS
-------------------------------------------------------------------------------------------------------------
Donna M. Coughey President & CEO CVAL 54 33 Mellon, Marine Midland
Joseph T. Crowley, CPA CFO CVAL 42 20 Crusader Holding Co.,
Applied Card, KPMG
Jerome P. Arrison Treasurer WGBC 53 32 Delaware First Financial
Christopher E. Bell Chief Operating Officer WGBC 47 26 Sellersville Savings,
Hamilton-Reliance
Matthew D. Kelly Chief Wealth PCIS 40 18 PNC Advisors, Mellon
Management Officer
Ammon J. Baus Chief Credit Officer WGBC 55 34 Fleet, PNC, First Fidelity
G. Richard Bertolet Chief Lending and CVAL 57 36 Mellon
Sales Office
-------------------------------------------------------------------------------------------------------------
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WILLOW GROVE RESULTS
================================================================================
-----------------------------------------------------
Loan Growth (Dollars 06/30/01 09/30/04
in thousands)
-----------------------------------------------------
Residential $198,310 $176,113
CAGR -3.59%
-----------------------------------------------------
Construction $ 27,724 $ 65,400
CAGR 30.22%
-----------------------------------------------------
Commercial R.E $128,613 $190,812
CAGR 12.91%
-----------------------------------------------------
Commercial Business $ 19,925 $ 15,476
CAGR -7.48%
-----------------------------------------------------
Consumer $ 84,748 $ 96,478
CAGR 4.07%
-----------------------------------------------------
Total Loans $459,320 $544,279
CAGR 5.36%
-----------------------------------------------------
-----------------------------------------------------
Core Deposit Growth 06/30/01 09/30/04
(Dollars in thousands)
-----------------------------------------------------
DDA $ 82,318 $190,163
CAGR 29.39%
-----------------------------------------------------
Savings $ 58,566 $ 87,307
CAGR 13.07%
-----------------------------------------------------
Money Market $ 34,788 $ 50,150
CAGR 11.91%
-----------------------------------------------------
Total Core Deposits $175,672 $327,620
CAGR 21.14%
-----------------------------------------------------
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WILLOW GROVE RESULTS
================================================================================
(DOLLARS IN THOUSANDS)
DEPOSIT AND LOAN FEES
[GRAPHIC OMITTED]
-------------------------------------------------------
PLOT POINTS:
Jun-01 Jun-02 Jun-03 Jun-04
Deposit and Loan Fees $1,340 $1,572 $1,823 $2,322
-------------------------------------------------------
NON-INTEREST INCOME
(Excludes Security Gains or (Losses))
[GRAPHIC OMITTED]
-----------------------------------------------------
PLOT POINTS:
Jun-01 Jun-02 Jun-03 Jun-04
Non-Interest Income $1,802 $2,151 $1,780 $3,187
-----------------------------------------------------
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CHESTER VALLEY'S TRANSITION TO A COMMERCIAL BANK
================================================================================
Donna Coughey assumed leadership of Chester Valley in November 2000 and
successfully led transformation from a thrift to a commercial bank. Main drivers
were:
* Built "big bank" commercial lending team with community bank touch
** Diversified and grew loan portfolio
* Instilled sales-focused culture in the branch network
** Expanded business and retail core deposits
* Developed professionally-managed trust and wealth management departments
** Increased non-interest revenue
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CHESTER VALLEY RESULTS
================================================================================
-----------------------------------------------------
Loan Growth (Dollars 06/30/01 09/30/04
in thousands)
-----------------------------------------------------
Residential $145,805 $ 65,090
CAGR -22.46%
-----------------------------------------------------
Construction $ 46,243 $ 71,231
CAGR 14.22%
-----------------------------------------------------
Commercial R.E $ 81,304 $134,594
CAGR 16.78%
-----------------------------------------------------
Commercial Bus. $ 26,068 $ 53,456
CAGR 24.73%
-----------------------------------------------------
Small Business $ 3,171 $ 22,621
CAGR 83.05%
-----------------------------------------------------
Consumer $ 64,756 $124,624
CAGR 22.32%
-----------------------------------------------------
Total Loans $370,347 $471,616
CAGR 7.72%
-----------------------------------------------------
-----------------------------------------------------
Core Deposit Growth 06/30/01 09/30/04
(Dollars in thousands)
-----------------------------------------------------
DDA $ 82,307 $134,672
CAGR 16.36%
-----------------------------------------------------
Savings $ 26,414 $ 32,745
CAGR 6.83%
-----------------------------------------------------
Money Market $ 60,430 $148,232
CAGR 31.80%
-----------------------------------------------------
Total Core Deposits $169,151 $315,649
CAGR 21.16%
-----------------------------------------------------
Business Repo $ 2,428 $18,265
CAGR 86.06%
-----------------------------------------------------
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CHESTER VALLEY RESULTS
================================================================================
(DOLLARS IN THOUSANDS)
DEPOSIT AND LOAN FEES
[GRAPHIC OMITTED]
-------------------------------------------------------
PLOT POINTS:
Jun-01 Jun-02 Jun-03 Jun-04
Deposit and Loan Fees $1,723 $1,911 $2,837 $3,073
-------------------------------------------------------
NON-INTEREST INCOME
(Excludes Security Gains or (Losses))
[GRAPHIC OMITTED]
-----------------------------------------------------
PLOT POINTS:
Jun-01 Jun-02 Jun-03 Jun-04
Non-Interest Income $5,733 $6,010 $7,092 $8,018
-----------------------------------------------------
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CHESTER VALLEY WEALTH MANAGEMENT
================================================================================
ASSETS UNDER MANAGEMENT & CUSTODY (DOLLARS IN MILLIONS)
[GRAPHIC OMITTED]
---------------------------------------------
PLOT POINTS:
Jun-03 Jun-04
PCIS 766 844
Trust 50 60
Uvest 10 23
---------------------------------------------
UVEST PROGRAM
(DOLLARS IN THOUSANDS)
--------------------------------------------------
Jun 02 Jun 03 Jun 04
--------------------------------------------------
Uvest Investment $ 2,262 $ 6,285 $12,012
Sales
--------------------------------------------------
Gross revenue $ 103 $ 217 $ 422
--------------------------------------------------
Number of trades 157 400 1,218
--------------------------------------------------
Average sale per $ 14 $ 15 $ 10
trade
--------------------------------------------------
Appointments closed N/A 50% 44%
--------------------------------------------------
Assets under $ 3,200 $10,200 $22,613
management
--------------------------------------------------
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CHESTER VALLEY FINANCIAL HIGHLIGHTS
================================================================================
RETURN ON AVERAGE EQUITY
[GRAPHIC OMITTED]
--------------------------------------------------------
PLOT POINTS:
Jun-00 Jun-01 Jun-02 Jun-03 Jun-04
Peer 12.60% 10.11% 12.20% 11.80% 11.41%
CVAL 13.34% 10.50% 13.24% 12.28% 12.09%
--------------------------------------------------------
RETURN ON AVERAGE ASSETS
[GRAPHIC OMITTED]
--------------------------------------------------------
PLOT POINTS:
Jun-00 Jun-01 Jun-02 Jun-03 Jun-04
Peer 1.12% 0.91% 1.02% 0.98% 0.96%
CVAL 0.94% 0.76% 1.02% 0.98% 1.03%
--------------------------------------------------------
Peer Group is defined as all commercial banks with assets between $300 million
and $900 million headquartered in Southeastern Pennsylvania.
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OUR OPPORTUNITY
================================================================================
* As a $1.5 billion institution we have the opportunity to increase our
long-term growth rate by acquiring larger lending and deposit relationships.
* We know long-term shareholder value is created through core banking and
attractive branch networks. We will seek to thoughtfully expand the branch
system.
* Though we view ourselves as builders in the shorter term, we will continue to
do so as long as our strategy continues to create shareholder value.
[GRAPHIC OMITTED]==============================================[GRAPHIC OMITTED]
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COMBINED COMPANY STRATEGIC PLAN
================================================================================
* Apply Willow Grove and Chester Valley best practice strategies to the
Combined Company
** Commercial lending infrastructure to facilitate balance sheet and income
statement or revenue diversification
** Branch based small business lending
** Sales-focused culture to promote core deposit growth and enhance
cross-selling of multiple bank products
** Sell Chester Valley trust/investment products to the affluent and growing
Willow Grove markets
** Expand cash management product line sales to increase core deposits and
fee income.
* Expand branch network
** Fill in Montgomery County gaps
*** Acquisitions
*** De Novo's
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[GRAPHIC OMITTED] COMBINED COMPANY PRO FORMA FINANCIAL HIGHLIGHTS
================================================================================
[GRAPHIC OMITTED]
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SUMMARY BALANCE SHEET IMPACT
================================================================================
WILLOW GROVE CHESTER VALLEY PRO FORMA (1)
------------ -------------- -------------
($ in thousands) 9/30/04 9/30/04 9/30/04
----------------------------------------------
ASSETS $975,585 $644,693 $1,530,031
INVESTMENT SECURITIES (2) 385,297 190,524 376,012
NET LOANS 537,675 400,129 939,320
DEPOSITS 592,825 429,049 1,022,766
BORROWINGS (3) 270,182 158,814 296,375
(1) Pro Forma includes estimated purchase accounting adjustments and assumes
certain assets are liquidated to retire borrowings or to fund the cash
consideration and upfront costs associated with this transaction.
(2) Excludes interest earning cash.
(3) Includes trust preferred securities.
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LOAN PORTFOLIO DIVERSIFICATION
================================================================================
--------------------------------------------------------------
THE COMBINED ENTITY WILL HAVE A MORE DIVERSIFIED LOAN
PORTFOLIO WITH AN EMPHASIS ON COMMERCIAL LOANS
--------------------------------------------------------------
($ in thousands) WILLOW GROVE CHESTER VALLEY (1) PRO FORMA
------------ ------------------ ---------
9/30/04 Mix 9/30/04 9/30/04 Mix
--------------------------------------------------
COMMERCIAL REAL ESTATE $190,812 35.0% $57,062 $247,874 25.3%
CONSTRUCTION 65,400 12.0% 52,078 117,478 12.0%
COMMERCIAL & INDUSTRIAL 15,476 2.8% 139,312 154,788 15.8%
HOME EQUITY & CONSUMER 96,478 17.7% 116,116 212,594 21.7%
RESIDENTIAL REAL ESTATE 176,113 32.4% 69,658 245,771 25.1%
======== ===== ======== ======== =====
TOTAL $544,279 100.0% $434,226 $978,505 100.0%
(1) Chester Valley's portfolio is adjusted for the split in loans made between
Commercial & Industrial Owner-occupied Real Estate and Commercial Real
Estate.
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ENHANCED DEPOSIT PORTFOLIO
================================================================================
-----------------------------------------------------------
CORE DEPOSITS FOR THE COMBINED ENTITY
WILL AMOUNT TO 63% OF TOTAL DEPOSITS
-----------------------------------------------------------
($ in thousands) WILLOW GROVE CHESTER VALLEY PRO FORMA
------------- -------------- ---------
9/30/04 Mix 9/30/04 9/30/04 Mix
----------------------------------------------------
DDA $128,288 21.6% $133,915 $262,203 25.7%
Savings 87,307 14.7% 32,745 120,052 11.7%
MMDA 107,762 18.2% 148,989 256,751 25.1%
CDs 269,468 45.5% 113,400 382,868 37.5%
======== ===== ======== ========== =====
Total $592,825 100.0% $429,049 $1,021,874 100.0%
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COMBINED COMPANY'S INTEREST RATE SENSITIVITY
================================================================================
--------------------------------------------------------------------------------
WILLOW GROVE BANCORP, INC.
--------------------------------------------------------------------------------
ONE YEAR GAP THREE YEAR GAP
--------------------------------------------------------------------------------
09/30/04 COMBINED (1) 09/30/04 COMBINED (1)
--------------------------------------------------------------------------------
CUMULATIVE EXCESS OF
INTEREST-EARNING ASSETS TO $ (146,566) $ (51,528) $ (135,478) $17,730
INTEREST-BEARING LIABILITIES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CUMULATIVE DIFFERENCE AS A (15.0%) (3.4%) (13.9%) 1.2%
PERCENTAGE OF TOTAL ASSETS
--------------------------------------------------------------------------------
(1) Assumes the sale of $200 million of investment securities and repayment of
approximately $140 million in FHLB borrowings with the balance of cash used
to fund the transaction.
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CAPITAL RATIOS
================================================================================
--------------------------------------------------------------------------------
THE COMBINED COMPANY'S BALANCE SHEET WILL REMAIN WELL CAPITALIZED
--------------------------------------------------------------------------------
WILLOW GROVE PRO FORMA
9/30/04 9/30/04 (1)
------------ -----------
Equity / Assets 10.70% 13.07%
Tangible Equity / 10.62% 7.59%
Tangible Assets
(1) Ratios assume the sale of $200 million of investment securities and
repayment of approximately $140 million in FHLB borrowings with the balance
of cash used to fund the transaction.
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PRO FORMA FY 9/30/04 LTM EARNINGS
================================================================================
($ in millions, except per share data) PRO FORMA LTM 9/30/04
---------------------
AMOUNT PER SHARE
------ ---------
WILLOW GROVE STAND-ALONE NET INCOME $6.29 $0.65
CHESTER VALLEY STAND-ALONE NET INCOME 6.32 1.19
POST TAX ADJUSTMENTS(1):
-----------------------
PLUS: COST EFFICIENCIES, NET (2) $1.46 $0.10
MINUS: OPPORTUNITY COST OF CAPITAL(3) (2.71) (0.18)
MINUS: CDI AMORTIZATION (1.08) (0.07)
------ -----
PRO FORMA COMBINED, POST ADJUSTMENTS $10.28 $0.69
-------
ESTIMATED GAAP EPS ACCRETION BEFORE MARK-TO-MARK. ADJS. 6.2%
-------
-------
ESTIMATED GAAP EPS ACCRETION(4) 12.3%
-------
-------
ESTIMATED CASH EPS ACCRETION 16.9%
-------
(1) Assumes a tax rate of 34%.
(2) Cost savings are net of costs to hire additional sales personnel.
(3) Assumes (i) the capital used to fund the transaction would have yielded
4.25% and (ii) borrowings paid down in connection with the transaction
would have been invested in assets that would have earned a 125bps
spread.
(4) Includes mark-to-market adjustments of $0.65 million or $0.04 per share.
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ACHIEVABLE COST SYNERGIES
================================================================================
--------------------------------------------------------------------------------
EXPECTED FIRST YEAR COMBINED PRE-TAX COST SAVINGS OF $3.1 MILLION OR
APPROXIMATELY 7.8% OF THE COMBINED COMPANY'S LAST TWELVE MONTHS
9/30/04 OPERATING EXPENSE (DESPITE NO OVERLAPPING MARKETS)(1)
--------------------------------------------------------------------------------
Personnel Expense(2) $2.0
Data Processing 0.4
Legal and consulting 0.2
Insurance 0.1
Other, Net 0.4
----
TOTAL PRE-TAX COST SAVINGS $3.1
(1) Cost savings are for the first twelve months of combined operations. Cost
savings increase to $3.8 million annually thereafter.
(2) Does not include the costs of hiring additional sales personnel of
approximately $850 thousand.
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SIGNIFICANT GROWTH OPPORTUNITIES
================================================================================
---------------------------------------------------------------------
EPS AND CASH EPS FOR THE FIRST TWELVE MONTHS OF COMBINED
OPERATIONS ARE EXPECTED TO BE IN THE RANGE OF $0.95 TO $1.00 AND
$1.07 TO $1.12, RESPECTFULLY
---------------------------------------------------------------------
* No revenue enhancements assumed
* However, there are several potential long-term growth opportunities:
** Strong demographic profile of combined communities allows for more
meaningful loan and deposit growth
** Higher legal lending limit with local lending decisions
** Availability of additional lending products
** Alignment of investment portfolio strategies
** Cross-selling opportunities between combined branch network with Chester
Valley's Wealth Management Division
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OUR FINANCIAL GOALS
================================================================================
* ROE of 11 -- 13% consistently
* ROTE of 18 -- 20%
* ROA of 1.2 -- 1.5% consistently
* Maintain tangible capital at well capitalized levels
* Loan growth of approximately 11% annually
* Core deposit growth of approximately 10% annually
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-30-
SUMMARY
================================================================================
* Application of Willow Grove and Chester Valley's best practices will propel
the combined company's profitability
* Montgomery, Chester, and Bucks County target markets provide strong
foundation for organic growth
* Creation of a deep and talented management team with experience to complete
the transformation of the balance sheet and income statement to that of a
commercial bank
* Increasing need for locally-focused, community based banking in the Southeast
Pennsylvania region
* Combined Company's interest rate sensitivity will be significantly better
[ARROW GRAPHIC OMITTED} The acquisition of Chester Valley is the best use of
Willow Grove's capital today
[GRAPHIC OMITTED]==============================================[GRAPHIC OMITTED]
-31-