AMERICA’S COMMUNITY BANKERS MUTUAL COMMUNITY BANK CONFERENCE STRATEGIC PLANNING DISCUSSION

1. AMERICA’S COMMUNITY BANKERSMUTUAL COMMUNITY BANK CONFERENCESTRATEGIC PLANNING DISCUSSION Peter J. Ostrowski Ostrowski & Company, Inc. Bank & Thrift Advisors March 8, 2004

2. Thrift industry nearly failed in the 1980’s due in part to narrow powers • Legislative changes enacted to create a level playing field with commercial banks • Over last ten years, little changes in many thrifts • Commercial banks still look very different O&Co

3. Industry Comparison • Looked at mutual institutions in existence in 1993 and still in existence today • Reviewed major balance sheet components and profitability at 12/31/93 and 9/30/03 • Compared balance sheet components and profitability to stock thrifts and banks in existence over the same period • Data points are median values O&Co

4. Significant Earning Asset Composition O&Co

5. Significant Loan Composition O&Co

6. Significant Liabilities & Equity O&Co

7. Significant Deposit Composition O&Co

8. Profitability Analysis O&Co

9. Profitability Analysis O&Co

10. Significant Components of Non Int. Income O&Co

11. Profitability Analysis O&Co

12. Profitability Analysis O&Co

13. Change is what happens when the pain of holding on overcomes the fear of letting go. • Mutuals have the capability to compete effectively • Strategic planning process needs to be proactive and ongoing • All constituents – directors and management need to be “on the same page” • Conversion/MHC formation are not strategies by themselves • Creation of a process that enables you to determine what works for you O&Co

14. The Planning Process is dynamic O&Co

15. The prosaic reality: “Sustained success is largely a matter of focusing on the right things and making a lot of uncelebrated improvements every day.” O&Co

16. Traditional Profile • Mutual headquartered in nonurban market • Financial Highlights (9/30/03) • Total Assets $103 million • ROAA 1.05% • Net Int. Inc./AA 3.46% • Non Int. Inc./AA .34% • Non Int. Exp./AA 2.04% O&Co

17. Strategy: • Effective execution • Concentration in 1 – 4’s – 75% • Low cost operation – one office O&Co

18. Alternative Strategy • Mutual Bank headquartered in suburban market • Financial Highlights (9/30/03) • Total Assets $650 million • ROAA 1.24% • Net Int. Inc./AA 4.15% • Non Int. Inc./AA 1.72% O&Co

19. Strategies • Increase non-interest revenue • Expand market penetration to leverage infrastructure • Announced two acquisitions • $374 million Mutual in a contiguous market • $67 million Commercial Bank in a complementary market O&Co

20. Alternative Strategy • Mutual headquartered in non-urban market • Financial Highlights (9/30/03) • Total Assets $195 million • ROAA 0.87% • Net Int. Inc./AA 3.84% • Non Int. Inc./AA 2.49% O&Co

21. Strategies • Purchased an asset management company to improve non interest income • Net income benefit not as apparent in short term due to aggressive amortization of goodwill incurred in purchase O&Co

22. Butler Bank • Mutual Bank headquartered in Lowell, MA • Financial Highlights (9/30/03) • Total Assets $103 million • ROAA 1.19% • Net Int. Inc./AA 5.81% • Non Int. Inc./AA 0.75% O&Co

23. Significant Loan Composition O&Co

24. Significant Deposit Composition O&Co

25. Profitability Analysis O&Co

26. Profitability Analysis O&Co