EXHIBIT 99.4
RP(R) FINANCIAL, LC.
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Financial Services Industry Consultants
December 9, 2004
Boards of Directors
Alpena Bancshares, M.H.C.
Alpena Bancshares, Inc.
First Federal of Northern Michigan
100 South Second Avenue
Alpena, Michigan 49707
Re: Plan of Conversion and Reorganization
Alpena Bancshares, M.H.C.
Alpena Bancshares, Inc.
First Federal of Northern Michigan
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Members of the Board:
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 Alpena Bancshares, M.H.C. (the
"MHC") and Alpena Bancshares, Inc. (the "Company"). Pursuant to the Plan, the
Company, which owns 100% of First Federal of Northern Michigan (the "Bank"),
will be succeeded by a new Maryland corporation to be named First Federal of
Northern Michigan Bancorp, Inc. (Bancorp). As part of the conversion, Bancorp
will sell shares of common stock in an offering representing the 55.45% interest
in the Company currently owned by the MHC and contribute newly-issued shares to
a newly-formed charitable foundation. Bancorp will also issue shares of common
stock to the public stockholders of the Company pursuant to an exchange ratio
determined by the Board of Directors.
We understand that in accordance with the Plan, subscription rights to
purchase shares of common stock in Bancorp are to be issued to: (1) Eligible
Account Holders; (2) Tax-Qualified Plans; (3) Supplemental Eligible Account
Holders; and (4) Other Members. If the above entities do not subscribe for all
of the shares offered, Bancorp will offer the remaining shares to the general
public, giving preference to: (1) natural persons residing in the Michigan
counties of Alpena, Alcona, Antrim, Charlevoix, Cheboygan, Crawford, Emmet,
Iosco, Kalkaska, Montmorency, Ogemaw, Oscoda, Otsego and Presque Isle; (2) the
Company's public stockholders as of January 31, 2005; and (3) Other members of
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.
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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 22209 E-Mail: mail@rpfinancial.com
RP FINANCIAL, LC.
BOARD OF DIRECTORS
DECEMBER 9, 2004
PAGE 2
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 Bancorp'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 FINANCIAL, LC.
RP FINANCIAL, LC.