RP® FINANCIAL, LC. Serving the Financial Services Industry Since 1988 May 4, 2010
Exhibit 99.1
RP® FINANCIAL, LC.
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Serving the Financial Services Industry Since 1988 |
| May 4, 2010 |
Xx. Xxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
Standard Mutual Holding Company
Standard Bank, PaSB
0000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000
President and Chief Executive Officer
Standard Mutual Holding Company
Standard Bank, PaSB
0000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000
Dear Xx. Xxxxxxxxx:
This letter sets forth the agreement between Standard Mutual Holding Company (the “MHC”) and
Standard Bank, PaSB, Monroeville, Pennsylvania (collectively, the “Bank”), and RP®
Financial, LC. (“RP Financial”) for independent conversion appraisal services pertaining to the
Bank’s simultaneous holding company formation and mutual-to-stock conversion. The specific
appraisal services to be rendered by RP Financial are described below. These services will be
conducted by our senior consulting staff and will be directed by the undersigned.
Description of Appraisal Services
Prior to preparing the conversion appraisal report, RP Financial will conduct a financial
due diligence, including on-site interviews of senior management and reviews of financial and other
documents and records, to gain insight into the Bank’s operations, financial condition,
profitability, market area, risks and various internal and external factors which impact the pro
forma market value of the Bank.
RP Financial will prepare a detailed written valuation report of the Bank which will be fully
consistent with applicable federal regulatory guidelines and standard pro forma valuation
practices. The appraisal report will include an analysis of the Bank’s financial condition and
operating results, as well as an assessment of the Bank’s interest rate risk, credit risk and
liquidity risk. The appraisal report will describe the Bank’s business strategies, market area,
prospects for the future and the intended use of proceeds. A peer group analysis relative to
comparable publicly-traded savings institutions will be conducted for the purpose of determining
appropriate valuation adjustments for the Bank relative to the peer group.
We will review pertinent sections of the Bank’s regulatory applications and offering documents
and hold discussions with the Bank to obtain necessary data and information for the appraisal
report, including the impact of key deal elements on the pro forma market value, such as dividend
policy, use of proceeds and reinvestment rate, tax rate, conversion expenses and characteristics of
stock plans.
| Washington Headquarters | ||
| Three Ballston Plaza | Direct: (703) 647-6546 | |
| 0000 Xxxxx Xxxxx Xxxx, Xxxxx 0000 | Telephone: (000) 000-0000 | |
| Arlington, VA 22201 | Fax No.: (000) 000-0000 | |
| E-Mail: xxxxxxxxxxxx@xxxxxxxxxxx.xxx | Toll-Free No.: (000) 000-0000 |
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The appraisal report will establish a midpoint pro forma market value. The appraisal report
may be periodically updated throughout the conversion process as appropriate. The conversion
appraisal guidelines require at least one updated valuation immediately prior to the closing of the
stock offering.
RP Financial agrees to deliver the appraisal report and subsequent updates, in writing, to the
Bank at the above address in conjunction with the filing of the regulatory application. Subsequent
updates will be filed promptly as certain events occur which would warrant the preparation and
filing of such valuation updates. Further, RP Financial agrees to perform such other services as
are necessary or required in connection with the regulatory review of the appraisal and respond to
the regulatory comments, if any, regarding the valuation appraisal and subsequent updates. RP
Financial expects to formally present the appraisal report, including the appraisal methodology,
peer group selection and assumptions, to the Board of Directors for review and acceptance.
Fee Structure
The Bank agrees to pay RP Financial fees for preparation and delivery of the original
appraisal report and required appraisal updates as shown in the detail below, plus reimbursable
expenses. Payment of these fees shall be made according to the following schedule:
| • | $5,000 upon execution of the letter of agreement engaging RP Financial’s appraisal services; | ||
| • | $45,000 upon delivery of the completed original appraisal report; and | ||
| • | $5,000 upon completion of each required update appraisal report. There will be at least one appraisal update report, to be filed immediately prior to the completion of the stock offering. |
The Bank will reimburse RP Financial for reasonable out-of-pocket expenses incurred in
preparation of the valuation reports. Such out-of-pocket expenses will likely include travel,
printing, telephone, facsimile, shipping, computer and data services. RP Financial will agree to
limit reimbursable expenses to $7,500 subject to written authorization from the Bank to exceed such
level.
In the event the Bank shall, for any reason, discontinue the proposed conversion prior to
delivery of the completed documents set forth above and payment of the respective progress payment
fees, the Bank agrees to compensate RP Financial according to RP Financial’s standard billing rates
for consulting services based on accumulated and verifiable time expenses, not to exceed the
respective fee caps noted above, after giving full credit to the initial retainer fee. RP
Financial’s standard billing rates range from $75 per hour for research associates to $400 per hour
for managing directors.
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
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terms of said contract shall be subject to renegotiation by the Bank and RP Financial. 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 RP Financial of a new appraisal.
Representations and Warranties
The Bank and RP Financial agree to the following:
1. The Bank agrees to make available or to supply to RP Financial such information with
respect to its business and financial condition as RP Financial may reasonably request in order to
provide the aforesaid valuation. Such information heretofore or hereafter supplied or made
available to RP Financial shall include: annual financial statements, periodic regulatory filings
and material agreements, debt instruments, off balance sheet assets or liabilities, commitments and
contingencies, unrealized gains or losses and corporate books and records. All information
provided by the Bank to RP Financial shall remain strictly confidential (unless such information is
otherwise made available to the public), and if the conversion is not consummated or the services
of RP Financial are terminated hereunder, RP Financial shall upon request promptly return to the
Bank the original and any copies of such information.
2. The Bank hereby represents and warrants to RP Financial that any information provided to RP
Financial does not and will not, to the best of the Bank’s knowledge, at the times it is provided
to RP Financial, 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 RP Financial, any affiliates
of RP Financial, the respective directors, officers, agents and employees of RP Financial or their
successors and assigns who act for or on behalf of RP Financial in connection with the services
called for under this agreement (hereinafter referred to as “RP Financial”), 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) attributable to (i) any
untrue statement or alleged untrue statement of a material fact contained in the financial
statements or other information furnished or otherwise provided by the Bank to RP Financial, either
orally or in writing; (ii) the omission or alleged omission of a material fact from the financial
statements or other information furnished or otherwise made available by the Bank to RP Financial;
or (iii) any action or omission to act by the Bank, or the Bank’s respective officers, directors,
employees or agents which action or omission is willful or negligent. The Bank will be under no
obligation to indemnify RP Financial hereunder if a court determines that RP Financial was
negligent or acted in bad faith with respect to any actions or omissions of RP Financial related to
a matter for which indemnification is sought hereunder. Any time devoted by employees of RP
Financial to situations for which indemnification is provided hereunder, shall be an indemnifiable
cost payable by the Bank at the normal hourly professional rate chargeable by such employee.
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(b) RP Financial shall give written notice to the Bank of such claim or facts within ten days
of the assertion of any claim or discovery of material facts upon which the RP Financial intends to
base a claim for indemnification hereunder. In the event the Bank elects, within seven days of the
receipt of the original notice thereof, to contest such claim by written notice to RP Financial, RP
Financial 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 annual rate of prime plus two percent within
five days after the final determination of such contest either by written acknowledgement of the
Bank or a final judgment of a court of competent jurisdiction. If the Bank does not so elect, RP
Financial shall be paid promptly and in any event within thirty days after receipt by the Bank of
the notice of the claim. Under no circumstances will the Bank be required to indemnify RP
Financial for the cost of more than one law firm for a claim as to which indemnification is sought.
Furthermore, the Bank may reserve the right to assume the defense of any claim against RP
Financial, unless there is a conflict of interest between the Bank and RP Financial as to the
matters for which indemnification is sought.
(c) The Bank shall pay for or reimburse the reasonable expenses, including attorneys’ fees,
incurred by RP Financial in advance of the final disposition of any proceeding within thirty days
of the receipt of such request if RP Financial furnishes the Bank: (1) a written statement of RP
Financial’s good faith belief that it is entitled to indemnification hereunder; and (2) a written
undertaking to repay the advance if it ultimately is determined in a final adjudication of such
proceeding that it or he is not entitled to such indemnification.
(d) 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, RP Financial shall have all remedies
available at law or in equity to enforce such obligation.
It is understood that, in connection with RP Financial’s above-mentioned engagement, RP
Financial 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 RP Financial’s
engagement(s). This agreement constitutes the entire understanding of the Bank and RP Financial
concerning the subject matter addressed herein, and such contract shall be governed and construed
in accordance with the laws of the Commonwealth of Virginia. This agreement may not be modified,
supplemented or amended except by written agreement executed by both parties.
The Bank and RP Financial are not affiliated, and neither the Bank nor RP Financial 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.
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Please acknowledge your agreement to the foregoing by signing as indicated below and returning
to RP Financial a signed copy of this letter, together with the initial retainer fee of $5,000.
| Sincerely, |
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| /s/ Xxxxxxx X. Xxxxxxxxxxx | ||||
| Xxxxxxx X. Xxxxxxxxxxx | ||||
| Managing Director and Chief Executive Officer | ||||
| Agreed To and Accepted By: | /s/ Xxxxxxx X. Xxxxxxxxx | |||
| Xxxxxxx X. Xxxxxxxxx | ||||
| President and Chief Executive Officer | ||||
| Upon Authorization by the Boards of Directors For: | Standard Mutual Holding Company Standard Bank, PaSB Monroeville, Pennsylvania |
Date Executed: 5-6-10
