RP FINANCIAL, LC.
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Financial Services Industry Consultants
November 7, 2003
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 Stock Issuance
K-Fed Mutual Holding Company
K-Fed Bancorp
Kaiser Federal Bank
Members of the Board:
All capitalized terms not otherwise defined in this letter have the
meanings given such terms in the Plan of Stock Issuance (the "Plan") adopted by
the Board of Directors of K-Fed Mutual Holding Company (the "MHC"), K-Fed
Bancorp (the "Company"), and Kaiser Federal Bank (the "Bank"). Pursuant to the
Plan, the Company will sell a minority interest in its common stock to the
public while K-Fed Mutual Holding Company will retain a majority ownership
interest.
We understand that in accordance with the Plan, subscription rights to
purchase shares of common stock in the Company are to be issued to: (1) Eligible
Account Holders; (2) the Tax-Qualified Employee Stock Benefit Plans; (3)
Supplemental Eligible Account Holders; and (4) Other Members. If the above
persons do not subscribe for all of the shares offered, the Company will offer
the remaining shares to the general public.
Based solely upon our observation that the subscription rights will be
available to such parties without cost, will be legally non-transferable and of
short duration, and will afford such parties the right only to purchase shares
of common stock at the same price as will be paid by members of the general
public in the community offering, but without undertaking any independent
investigation of state or federal law or the position of the Internal Revenue
Service with respect to this issue, we are of the belief that, as a factual
matter:
(1) the subscription rights will have no ascertainable market value; and,
(2) the price at which the subscription rights are exercisable will not be
more or less than the pro forma market value of the shares upon
issuance.
Changes in the local and national economy, the legislative and regulatory
environment, the stock market, interest rates, and other external forces (such
as natural disasters or significant world events) may occur from time to time,
often with great unpredictability and may materially impact the value of thrift
stocks as a whole or the Company's value alone. Accordingly, no assurance can be
given that persons who subscribe to shares of common stock in the subscription
offering will thereafter be able to buy or sell such shares at the same price
paid in the subscription offering.
Sincerely,
/s/ RP FINANICAL, LC.
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WASHINGTON HEADQUARTERS
Rosslyn Center Telephone: (703) 528-1700
1700 North Moore Street, Suite 2210 Fax No. (703) 528-1788
Arlington, VA 22203 E-Mail: mail@rpfinancial.com
RP FINANCIAL, LC.
BOARD OF DIRECTORS
NOVEMBER 7, 2003
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RP FINANCIAL, LC.