<PAGE>
As filed with the Securities and Exchange Commission on January 23, 1997
Registration No.333-17227
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
AMENDMENT NO. 1 ON FORM SB-2 TO THE
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VOLUME I
------------
VERMILION BANCORP, INC.
(Exact name of registrant as specified in its articles of incorporation)
------------
Delaware 6711 37-1363755
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Code Number)
organization)
------------
714 North Vermilion Street
Danville, Illinois 61832
(217) 442-0270
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
------------
Merrill G. Norton
President and Chief Executive Officer
Vermilion Bancorp, Inc.
714 North Vermilion Street
Danville, Illinois 61832
(217) 442-0270
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
John P. Soukenik, Esq.
Stephen M. Ege, Esq.
Elias, Matz, Tiernan & Herrick L.L.P.
734 15th Street, N.W.
12th Floor
Washington, D.C. 20005
---------------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [ X ]
================================================================================
Title of each Amount Purchase
Class of Securities to be Price Aggregate Registration
to be Registered Registered Per Share Offering Price(1) Fee
- --------------------------------------------------------------------------------
Common Stock,
$.01 par value
per share 396,750 shares(2) $10.00 $3,967,500 $1,202.27
================================================================================
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Includes shares that may be issued in the event of a 15% increase in the
maximum size of the offering.
The Registrant hereby amends this Registration Statement on such date as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that the Registration Statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said section 8(a)
may determine.
================================================================================
<PAGE>
VERMILION BANCORP, INC.
Cross Reference Sheet Showing Location in the Prospectus of Information
Required by Items of Form S-1
Registration Statement Item and Caption Prospectus Headings
- ----------------------------------------------- ------------------------
1. Forepart of the Registration Statement and Front Cover Page
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Page of Inside Front and Outside
Prospectus Back Cover Pages
3. Summary Information, Risk Factors and Ratio Summary; Risk Factors
of Earnings to Fixed Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price The Conversion -- Stock
Pricing and Number of
Shares to be Issued
6. Dilution Not applicable
7. Selling Security Holders Not applicable
8. Plan of Distribution Front Cover Page; The
Conversion -- Subscription
Offering; -- Community
Offering; -- Syndicated
Community Offering
9. Description of Securities to be Restrictions on
Registered Acquisition of the
Company and the Bank;
Description of
Capital Stock of the
Company; Description
of Capital Stock of
the Bank.
10. Interests of Named Experts and Not applicable
Counsel
<PAGE>
11. Information with Respect to the Front Cover Page;
Registrant Vermilion Bancorp,
Inc., American
Savings Bank;
Dividend Policy;
American Savings Bank
Statements of Operations;
Management's Discussion
and Analysis of Financial
Condition and Results
of Operations; Business
of the Bank; Regulation;
Management of the Company;
Management of the Bank;
The Conversion;
Description of Capital
Stock of the Company;
Financial Statements
12. Disclosure of Commission Position Not applicable
on Indemnification for Securities Act
Liabilities
<PAGE>
PROSPECTUS
VERMILION BANCORP, INC.
(Proposed Holding Company for American Savings Bank of Danville)
345,000 Shares of Common Stock (Anticipated Maximum)
$10.00 Per Share
Vermilion Bancorp, Inc. (the "Company"), a Delaware corporation, is
offering up to 345,000 shares of its common stock, par value $0.01 per share
(the "Common Stock"), in connection with the conversion of American Savings Bank
of Danville from an Illinois-chartered mutual savings bank to an
Illinois-chartered stock savings bank (in its mutual or stock form, as
applicable, "American" or the "Bank") pursuant to the Bank's plan of conversion
(the "Plan" or "Plan of Conversion"). Under certain circumstances, the Company
may increase the amount of Common Stock offered hereby to 396,750 shares. See
Note 4 to the table below. The simultaneous conversion of the Bank to stock
form, the issuance of the Bank's stock to the Company and the offer and sale of
the Common Stock by the Company are referred to herein as the "Conversion."
Nontransferable rights to subscribe for the Common Stock have been
granted, in descending order of priority, to (i) depositors of the Bank as of
July 31, 1995 ("Eligible Account Holders"), (ii) the Company's and the Bank's
Employee Stock Ownership Plan (the "ESOP"), (iii) depositors of the Bank as of
December 31, 1996 ("Supplemental Eligible Account Holders") and (iv) depositors
of the Bank as of February __, 1997 ("Other Voting Members"), all subject to the
limitations and restrictions described herein (the "Subscription Offering").
Subscription rights are not transferable. Subject to the other limitations
described herein, the Company also may offer the shares of Common Stock not
subscribed for in the Subscription Offering, if any, for sale in a community
offering ("Community Offering") and, if necessary, in a syndicated community
offering ("Syndicated Community Offering") (the Subscription Offering, Community
Offering and Syndicated Community Offering are referred to herein collectively
as the "Offerings"). All shares issued and sold in the Conversion will be sold
at the same price. Shares purchased by the ESOP will be financed from a loan
made to the ESOP by the Company, which loan will have a repayment term of [ten]
years and an interest rate of ___%.
For a discussion of certain factors that should be considered by each
prospective investor, see "Risk Factors" on page 18.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC") THE
OFFICE OF BANKS AND REAL ESTATE OF THE STATE OF ILLINOIS (THE
"COMMISSIONER"), OR ANY OTHER FEDERAL AGENCY OR STATE SECURITIES
COMMISSION, NOR HAS SUCH COMMISSION, OFFICE OR OTHER
AGENCY OR COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Subscription Offering will terminate at __________, Central Time, on
March __, 1997 (the "Subscription Expiration Date") unless extended by the Bank
and the Company, [with regulatory approval.] The Community Offering or any
Syndicated Community Offering must be completed within 45 days after the close
of the Subscription Offering, or _________ __, 1997, unless extended by the Bank
and the Company [with regulatory approval.] No single extension can exceed [90]
days. Orders submitted are irrevocable until the completion of the Conversion;
provided that, if the Conversion is not completed within the 45-day period
referred to above, unless such period has been extended, all subscribers will
have their funds returned promptly with interest, and all withdrawal
authorizations will be cancelled. Any extension of the Offerings will be
conducted in accordance with the terms described herein. See "The Conversion -
Subscription Offering and Subscription Rights." The Plan sets forth various
purchase limitations which are applicable in the Offering. See "The Conversion -
Subscription Offering and Subscription Rights," "-Community Offering" and "-
Limitations on Common Stock Purchases."
<PAGE>
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENT AGENCY. THESE SECURITIES ARE NOT GUARANTEED BY THE COMPANY OR
THE BANK OR ANY OTHER ENTITY AND NO REPRESENTATION AS TO THE FUTURE VALUE OF THE
SHARES IS MADE.
The Company intends to apply to have the Common Stock listed on the
National Daily Quotation Service "pink sheets" published by the National
Quotation Bureau, Inc. Prior to the Offerings, there has not been a public
market for the Common Stock. Moreover, because of the limited size of the
Offerings and the anticipated concentrated ownership of the Common Stock, it is
unlikely that an active and liquid trading market for the Common Stock will
develop and there can be no assurance that the Common Stock will trade at or
above the purchase price in the Offerings. See "Risk Factors - Absence of Market
For Common Stock."
For additional information on how to subscribe for Common Stock, please
call the stock conversion center at (217) ________.
<TABLE>
<CAPTION>
===============================================================================================
Estimated Fees and Other
Expenses, Including Estimated
Subscription Underwriting Net
Price(1) Commissions(2) Proceeds(3)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Minimum Per Share $10.00 $1.04 $8.96
- -----------------------------------------------------------------------------------------------
Midpoint Per Share $10.00 $0.90 $9.10
- -----------------------------------------------------------------------------------------------
Maximum Per Share $10.00 $0.81 $9.19
- -----------------------------------------------------------------------------------------------
Maximum, as adjusted, Per Share $10.00 $0.72 $9.28
- -----------------------------------------------------------------------------------------------
Total Minimum(1) $2,550,000 $264,000 $2,286,000
- -----------------------------------------------------------------------------------------------
Total Midpoint(1) $3,000,000 $271,000 $2,729,000
- -----------------------------------------------------------------------------------------------
Total Maximum(1) $3,450,000 $278,000 $3,172,000
- -----------------------------------------------------------------------------------------------
Total Maximum, as adjusted(4) $3,967,500 $287,000 $3,680,500
===============================================================================================
</TABLE>
- ----------
(1) Determined in accordance with an independent appraisal prepared by RP
Financial, LC. ("RP Financial"), dated November 15, 1996, which states
that the estimated pro forma market value of the Common Stock ranged from
$2,550,000 to $3,450,000 (the "Estimated Price Range"), or between 255,000
and 345,000 shares of Common Stock at a fixed price of $10.00 per share
("Purchase Price"). Upon conclusion of the Offerings, RP Financial will
issue an updated appraisal which will determine the final valuation of the
Common Stock and the number of shares to be issued. In the event the
aggregate Purchase Price of the shares of Common Stock is below the
minimum of the Estimated Price Range or more than 15% above the maximum of
such range, purchasers may be resolicited subject to approval of any
change in the Estimated Price Range by the Commissioner and, if required,
the FDIC. See "The Conversion - Stock Pricing and Number of Shares to be
Issued."
(2) Consists of the estimated costs to the Bank and the Company arising from
the Conversion, including expected fixed expenses of $234,000 and fees to
be paid to Trident Securities, Inc. ("Trident" or the "Agent") in
connection with the Subscription and Community Offerings. Trident is not
obligated to purchase any shares of Common Stock in the Offerings. Such
fees paid to the Agent may be deemed to be underwriting fees. See "The
Conversion - Marketing Arrangements." The actual fees and expenses may
vary from the estimates. See "Pro Forma Data."
(3) Actual net proceeds may vary substantially from estimated amounts
depending on the number of shares sold in the Offerings and other factors.
Includes the purchase of shares of Common Stock by the ESOP, which will be
funded by a loan from the Company to the ESOP and, which initially will be
deducted from the Company's stockholders' equity. For the effects of such
purchase, see "Capitalization" and "Pro Forma Data."
(4) Gives effect to a 15% increase in the Estimated Price Range. See "The
Conversion - Stock Pricing and Number of Shares to be Issued" and "-
Limitations on Common Stock Purchases."
-------------------------------------
TRIDENT SECURITIES, INC.
-------------------------------------
The date of this Prospectus is February __, 1997
<PAGE>
[MAP]
<PAGE>
SUMMARY OVERVIEW
The following is a summary of certain information contained in the
Prospectus and is qualified in its entirety by the more detailed information and
Consolidated Financial Statements and related Notes appearing elsewhere herein.
The Bank: American Savings Bank of Danville is an
Illinois-chartered mutual savings bank.
The Company: Vermilion Bancorp, Inc. is a Delaware
corporation and a proposed one-bank
holding company.
Plan of Conversion: Pursuant to the Plan of Conversion, the
Bank will convert to an
Illinois-chartered stock form savings
bank and become a subsidiary of the
Company. See "The Conversion."
The Offerings: The Company is offering a minimum of
255,000 shares and a maximum of 345,000
shares of Common Stock. The maximum
number of shares sold in the Offerings
may be increased to up to 396,750
shares without a resolicitation of
subscribers. The Subscription Offering
is expected to terminate at __________,
Central Time, on March __, 1997. See
"The Conversion - Subscription Offering
and Subscription Rights." The Community
Offering or any Syndicated Community
Offering may be commenced at any time
during the Subscription Offering and,
if commenced, must be completed within
45 days after the close of the
Subscription Offering, or ________ __,
1997, unless extended by the Bank and
the Company with regulatory approval.
Purchase Price: The shares of Common Stock are being
offered at a purchase price of $10.00
per share.
Plan of Distribution: Subject to the limitations and
restrictions described herein, shares
of Common Stock are being offered in
the Subscription Offering in descending
order of priority to (i) Eligible
Account Holders; (ii) the ESOP; (iii)
Supplemental Eligible Account Holders;
and (iv) Other Voting Members. The
Company also may offer shares of Common
Stock not subscribed for in the
Subscription Offering, if any, for sale
in a Community Offering and, if
necessary, in the Syndicated Community
Offering.
Purchase Limitations: The Plan sets forth various purchase
limitations. Generally, each Eligible
Account Holder, Supplemental Eligible
Account Holder or Other Voting Member
(or persons exercising Subscription
Rights through a single account) may
purchase up
-4-
<PAGE>
to $50,000 of Common Stock in the
Subscription Offering, provided,
however, that no person, together with
associates or persons acting in concert
with such person, may purchase in the
aggregate more than $150,000 of the
Common Stock. The minimum purchase is
25 shares. See "The Conversion
Subscription Offering and Subscription
Rights," "- Community Offering" and "-
Limitations on Common Stock Purchases."
Independent Valuation: The shares of Common Stock to be issued
in the Offering will be issued at an
aggregate Purchase Price which is
determined in accordance with an
independent appraisal prepared by RP
Financial. See "The Conversion - Stock
Pricing and Number of Shares to be
Issued."
Use of Proceeds: The Company will purchase capital stock
of the Bank in exchange for 75% of the
net proceeds. The Company intends to
use a portion of the net proceeds
retained by it to make a loan directly
to the ESOP to enable the ESOP to
purchase Common Stock. The remaining
net proceeds retained by the Company
will initially be invested primarily in
short-term deposits and investment
grade, short- to intermediate-term
marketable securities. Funds received
by the Bank from the Company's purchase
of its capital stock will be used for
general business purposes. See "Use of
Proceeds."
Market for Common Stock: Upon completion of the Offerings, the
Company intends to apply to have the
Common Stock listed on the National
Daily Quotation Service "pink sheets"
published by the National Quotation
Bureau, Inc. See "Market for the Common
Stock."
Benefits of Conversion to Management: The Company's directors and executive
officers will receive certain
additional benefits as a result of the
Conversion. See "Management -
Employment Agreements," "- Benefits -
Employee Stock Ownership Plan and
Trust," "- Stock Option Plan" and "-
Recognition and Retention Plan."
Risk Factors: See "Risk Factors" for a discussion of
certain factors that should be
considered by prospective investors.
Board of Directors' The Board of Directors unanimously
Recommendation: recommends that depositors entitled to
vote on the Plan vote "FOR" the Plan.
The Board makes no recommendations
regarding the suitability of an
investment in the Common Stock.
-5-
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial and other data of the Bank
does not purport to be complete and should be read in conjunction with, and is
qualified in its entirety by, the more detailed financial information, including
the Consolidated Financial Statements of the Bank and Notes thereto, contained
elsewhere herein.
<TABLE>
<CAPTION>
At September 30,
-------------------------------------------
1996 1995 1994 1993 1992
------- ------ ------ ------ -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Selected Financial Condition Data:
Total assets ................................... $35,459 $33,977 $33,198 $33,591 $33,904
Cash and cash equivalents ...................... 789 571 699 1,288 2,234
Interest-bearing time deposits ................. 99 99 694 1,181 2,168
Securities:(1)
Available for sale ........................... 2,222 1,486
Held to maturity ............................. 861 2,556 4,354 7,183 8,911
Mortgage-backed securities held to maturity .... 3,476 4,260 4,851 5,899 3,668
Loans, net ..................................... 26,936 23,954 21,627 18,235 18,056
Premises and equipment ......................... 467 495 468 483 500
Federal Home Loan Bank of Chicago stock,
at cost ...................................... 269 255 236 236 230
Deposits ....................................... 30,724 31,331 30,698 31,158 31,640
Federal Home Loan Bank advances ................ 2,000 -- -- -- --
Total equity capital ........................... 2,355 2,442 2,341 2,185 2,012
Full Service offices ........................... 1 1 1 1 1
<CAPTION>
Year Ended September 30,
-------------------------------------------
1996 1995 1994 1993 1992
------- ------ ------ ------ -------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Selected Operating Data:
Total interest income .......................... $ 2,634 $ 2,375 $ 2,279 $ 2,390 $ 2,724
Total interest expense ......................... 1,778 1,588 1,355 1,521 1,999
------- ------- ------- ------- -------
Net interest income .......................... 856 787 924 869 725
Provision for losses on loans .................. 80 13 105 8 49
------- ------- ------- ------- -------
Net interest income after provision
for losses on loans .......................... 776 774 819 861 676
Non-interest income ............................ 45 51 49 82 99
Non-interest expenses .......................... 889(2) 710 700 763 677
------- ------- ------- ------- -------
Income (loss) before taxes ..................... (68) 115 168 180 98
Provision for income taxes ..................... 3 15 13 59 21
------- ------- ------- ------- -------
Net income (loss) .............................. $ (71) $ 100 $ 155 $ 121 $ 77
======= ======= ======= ======= =======
</TABLE>
- ----------
(1) The Bank adopted the provisions set forth in SFAS No. 115 on October 1,
1994, which requires entities to carry securities that are available for
sale at their market value while continuing to carry securities that are
held to maturity at their amortized cost. See Note 1 to the Consolidated
Financial Statements.
(2) Includes a special assessment of $206,000 to recapitalize the SAIF.
-6-
<PAGE>
<TABLE>
<CAPTION>
At or For the Year Ended September 30,
---------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Other Data:
Profitability:
Return on average assets ..................... (0.20)%(5) 0.29% 0.46% 0.36% 0.23%
Return on average equity ..................... (2.89)(5) 4.18 6.86 5.78 3.95
Interest rate spread for period(1) ........... 2.17 2.11 2.59 2.42 1.91
Net interest margin(2) ....................... 2.48 2.39 2.83 2.64 2.16
Non-interest expenses to average assets ...... 2.49 2.08 2.13 2.26 2.00
Average interest-earning assets to
average interest-bearing liabilities ....... 106.05 104.04 104.78 104.81 104.12
Capital Ratios:
Average equity to average assets ............. 6.90 7.02 6.76 6.22 5.79
Total risk-based capital to risk-
weighted assets .......................... 15.33 15.03 16.44 16.02 14.61
Tier 1 risk based capital to risk-weighted
assets .................................. 14.45 14.59 15.98 16.32 14.73
Asset Quality:
Non-performing assets to total
assets(4) .................................. 0.93 0.64 0.26 1.64 0.54
Net chargeoffs (recoveries) to average loans . 0.04 0.03 0.76 (0.01) 0.07
Allowance for loan losses to total
loans ...................................... 0.53 0.31 0.29 0.60 0.55
Allowance for loan losses to non-
performing loans ........................... 43.60 34.26 73.26 19.78 54.40
</TABLE>
- ----------
(1) The interest rate spread represents the difference between the average
yield on interest-earning assets and the average rate paid on
interest-bearing liabilities.
(2) The net interest margin represents net interest income divided by average
interest-earning assets.
(3) The efficiency ratio is non-interest expense divided by the sum of net
interest income plus non-interest income.
(4) Non-performing assets include non-accrual loans, accruing loans delinquent
90 days or more and real estate owned.
(5) When calculated without the special SAIF assessment, the return on average
assets and the return on average equity would have been 0.24% and 3.01%,
respectively.
-7-
<PAGE>
RECENT DEVELOPMENTS
The following table sets forth certain summary historical financial
information concerning the financial position of the Bank for the periods and at
the dates indicated. The financial data is derived in part from, and should be
read in conjunction with, the Consolidated Financial Statements and Notes
thereto presented elsewhere in this Prospectus. The results of operations and
ratios and other data at or for the three months ended December 31, 1996 and
1995 are derived from unaudited financial statements. and reflect, in the
opinion of management, all adjustments (consisting only of normal recurring
adjustments) which are necessary to present fairly the results for such
periods.
At December 31,
------------------
1996(1) 1995(1)
------- -------
(In thousands)
(Unaudited)
Selected Financial Condition Data:
Total assets ......................................... $36,044 $35,501
Cash and cash equivalents ............................ 1,278 1,968
Interest-bearing time deposits ....................... 99 99
Securities:
Available for sale ................................. 2,117 2,649
Held to maturity ................................... 361 931
Mortgage-backed securities held to maturity .......... 3,349 4,042
Loans, net ........................................... 27,678 24,825
Premises and equipment ............................... 464 491
Federal Home Loan Bank of Chicago stock, at cost ..... 269 255
Deposits ............................................. 31,494 30,882
Federal Home Loan Bank advances ...................... 2,000 2,000
Total equity capital ................................. 2,391 2,450
Full Service offices ................................. 1 1
For the Three Months Ended
December 31,
--------------------------
1996 1995
----------- -----------
(In thousands)
(Unaudited)
Selected Operating Data:
Total interest income ................................ $674 $642
Total interest expense ............................... 452 444
---- ----
Net interest income ................................ 222 198
Provision for losses on loans ........................ -- --
---- ----
Net interest income after provision for
losses on loans .................................... 222 198
Non-interest income .................................. 6 10
Non-interest expenses ................................ 185 194
---- ----
Income before taxes .................................. 43 14
Provision for income taxes ........................... 6 2
---- ----
Net income ........................................... 37 12
---- ----
---- ----
-8-
<PAGE>
At or For the
Three Months Ended
December 31,
--------------------------
1996(1) 1995(1)
----------- -----------
Other Data:(2)
Profitability:
Return on average assets ........................... 0.43% 0.14%
Return on average equity ........................... 6.40 1.98
Interest rate spread for period (3) ................ 2.33 2.11
Net interest margin(4) ............................. 2.57 2.36
Non-interest expenses to average assets ............ 2.07 2.23
Average interest-earning assets to average
interest-bearing liabilities ...................... 104.58 104.68
Capital Ratios:
Average equity to average assets ................... 6.64 7.04
Total risk-based capital to risk-weighted assets ... 14.07 15.05
Tier one capital to risk-weighted assets ........... 13.31 14.61
Asset Quality:
Non-performing assets to total assets(5) ........... 0.97 1.23
Net chargeoffs (recoveries) to average loans ...... 0.09 (0.02)
Allowances for loan losses to total loans .......... 0.49 0.30
Allowance for loan losses to non-performing loans .. 39.28 17.25
- ----------
(1) The data presented for the three months ended December 31, 1996 and 1995
were derived from unaudited consolidated financial statements and reflect,
in the opinion of management, all adjustments necessary to present fairly
the results for such interim periods. Interim results at and for the three
months ended December 31, 1996 are not necessarily indicative of the
results that may be expected for the year ending September 30, 1997.
(2) Asset Quality Ratios and Capital Ratios are end of period ratios. With the
exception of end of period ratios, all ratios are based on average monthly
balances during the indicated periods and are annualized where
appropriate.
(3) The interest rate spread represents the difference between the average
yield on interst-earning assets and the average rate paid on
interest-bearing liabilities.
(4) The net interest margin represents net interest income divded by average
interest-earning assets.
(5) Non-performing assets include non-accrual loans, accruing loans delinquent
90 days or more and real estate owned.
-9-
<PAGE>
Changes in Financial Condition
General. Total assets of the Bank increased by $500,000 or 1.41%, to $36.0
million at December 31, 1996, from $35.5 million at December 31, 1995. The
increase in total assets was due primarily to a $2.9 million increase in loans
which was partially offset by a $690,000 decrease in cash and cash equivalents
and $1.8 million decrease in investment and mortgage-backed securities.
Cash and Cash Equivalents. Cash and cash equivalents, which consist of
interest-bearing demand deposits at other institutions, decreased by $690,000 or
35.1% to $1,278,000 at December 31, 1996 compared to $1,968,000 at December 31,
1995. The decrease in cash and cash equivalents is the result of its use to fund
deposit withdrawals, as a source of funds for new loan originations and for the
purchase of investment or mortgage-backed securities.
Loans. The Bank's loans, net amounted to $27.7 million at December 31,
1996, a $2.9 million or 11.7%, increase over loans, net, at December 31, 1995.
Such increase was due primarily to new originations of residential mortgage
loans and increased originations of consumer loans.
Investment Securities. The Bank's investment securities amount to $5.8
million at December 31, 1996 compared to $7.6 million at December 31, 1996. The
decrease in investment securities was due to maturities and repayments of
investment securities, the proceeds of which were used to fund growth in the
Bank's loan portfolio.
Deposits. The Bank's total deposits amounted to $31.5 million at December
31, 1996 compared to $30.9 million at December 31, 1995.
Federal Home Loan Bank Advances. The Bank's total advances from the FHLB
of Chicago amounted to $2.0 million at December 31, 1996 and at December 31,
1995. The proceeds from these advances were used to fund growth in the Bank's
loan portfolio.
Results of Operations
The Bank reported a net income of $38,000 during the quarter ended
December 31, 1996 and net income of $12,000 during the quarter ended December
31, 1995.
Net Interest Income. Net interest income increased by $25,000, or 12.63%
during the quarter ended December 31, 1996.
Interest income was $674,000 for the quarter ended December 31, 1996
compared to $642,000 for the quarter ended December 31, 1995. The 4.98% increase
in interest income was attributable to a $1.0 million or 3.02% increase in
average earning assets from the quarter ended December 31, 1995 to the same
quarter ended 1996 coupled with a 15 basis point (with 100 basis points being
equal to 1.0%) increase in the yield earned on average earning assets when
comparing the quarter ended December 31, 1995 to the same quarter ended in 1996.
Interest Expense. The primary component of interest expense for both
periods is interest on deposits. Total interest expense increased by $8,000, or
1.80%, during the quarter ended December 31, 1996 compared to the quarter ended
December 31, 1995. The increase was due entirely to a $30,000 interest expense
on FHLB advances outstanding during the quarter ended December 31, 1996 compared
to a $18,000 interest expense in FHLB advances during the quarter ended December
31, 1995. This increase was somewhat offset by a $4,000 decrease in interest
expense on deposits in the quarter ended December 31, 1996 compared to the
quarter ended December 31, 1995.
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<PAGE>
Provisions for Losses on Loans. Management reviewed the Bank's loan
portfolio at the end of each quarter and determined that the Bank's allowance
for loan losses was adequate. Accordingly, the Bank made no provisions for
loan losses in either the quarter ended December 31, 1996, or the quarter
ended December 31, 1995. At December 31, 1996, the Bank's allowance for loan
losses amounted to 39.28% of total non-performing loans and 0.49% of gross
loans receivable.
Non-interest Income. Non-interest income decreased $4,000 for the quarter
ended December 31, 1996 compared to the quarter ended December 31, 1995.
Non-interest Expenses. Total non-interest expenses were $185,000 in the
quarter ended December 31, 1996 which amounted to a $9,000, or 4.64% decrease
compared to the quarter ended December 31, 1995. The primary reason for the
decrease was a decline in deposit insurance expense from $18,000 for the quarter
ended December 31, 1995 to no such expense for the quarter ended December 31,
1996. This decline is the result of a change in the rate charged by the FDIC to
insure deposits that went into effect on September 30, 1996. The decline in
deposit insurance expense was somewhat offset by a general increase in other
non-interest expense items. Future non-interest expense may be effected by
litigation and compensation expenses. See "Risk Factors - Pending Litigation
Against Bank" and - "ESOP and Recognition Plan Expense."
Income Taxes. The Bank's income tax benefit for the quarter ended December
31, 1996 was $6,000 for an effective tax rate of 13.64% compared to income tax
expense of $2,000 which represented an effective tax rate of 14.17% in the
quarter ended December 31, 1995.
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SUMMARY
This summary is qualified in its entirety by the more detailed information
and the Consolidated Financial Statements of the Bank and Notes thereto
appearing elsewhere in this Prospectus.
Vermilion Bancorp, Inc.: The Company is a Delaware corporation organized
for the purpose of becoming the holding company
for the Bank. Immediately following the
Conversion, the only significant assets of the
Company will be the capital stock of the Bank and
the net Conversion proceeds retained by the
Company. See "Business of the Bank" and
"Regulation - The Company."
American Savings Bank of The Bank is an Illinois-chartered mutual savings
Danville: bank headquartered in Danville, Illinois. At
September 30, 1996, the Bank had $35.5 million of
total assets, $30.7 million of total deposits and
$2.4 million of equity. The Bank reported a net
loss of $71,000 during the year ended September
30, 1996, due to a $155,000, net of tax, increase
in deposit insurance expense resulting from a
special one-time assessment to recapitalize the
Savings Association Insurance Fund ("SAIF"). The
Bank reported net income of $100,000 and $155,000
during the years ended September 30, 1995 and
1994, respectively. At September 30, 1996, the
Bank exceeded all regulatory capital
requirements.
Operating characteristics of the Bank in recent
years include the following:
Profitability. For the years ended September 30,
1996 and 1995, the Bank had net income (loss) of
($71,000) and $100,000, respectively. However, if
the non-interest expense of $206,000 associated
with the special SAIF assessment is excluded, the
Bank's net income for fiscal 1996 would have been
$84,000. The Bank's net income is primarily
dependent on its net interest income, the
difference between interest income on
interest-earning assets and interest expense
noninterest- bearing liabilities. Net interest
income after provision for loan losses totalled
$776,000 and $774,000 for the years ended
September 30, 1996 and 1995, respectively. The
interest rate spreads for the years ended
September 30, 1996 and 1995 were 2.17% and 2.11%,
respectively. The Bank's return on assets has
been relatively stable during the periods
presented, amounting on an annualized basis to
(0.20)% (0.24% excluding the affect of the
special SAIF assessment) and 0.29% for the years
ended September 30, 1996 and 1995, respectively.
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Noninterest Expense. The Bank's profitability has
been enhanced by management's emphasis on
operating efficiency. The Bank's ratio of
noninterest expense (excluding the special SAIF
assessment) to average the total assets amounted
to 1.92% for the year ended September 30, 1996
and averaged 2.10% for the two years ended
September 30, 1996.
Asset Quality. Management of the Bank believes
that good asset quality is the key to long-term
financial strength and, as a result, the Bank's
loan portfolio is intended to maintain asset
quality and control credit risk. In accordance
with this approach, the Bank has predominantly
emphasized single-family residential real estate
loans, which comprised 79.1% of total loans, net
at September 30, 1996. As of such date, total
non-performing assets constituted $328,000 or
0.93% of total assets.
Strong Capital Position. At September 30, 1996,
the Bank had total retained earnings of $2.4
million and exceeded all of its regulatory
capital requirements, with tier I leverage
capital, tier I risk-based capital and total
risk-based capital ratios of 6.69%, 14.45% and
15.33%, respectively, as compared to the minimum
requirements of 4.0%, 4.0% and 8.0%,
respectively. Assuming that 345,000 shares of
Common Stock are sold in the Offerings and that
the Company retains 25% of the net proceeds after
reduction to reflect the Company's funding
obligations under the ESOP, the Bank's pro forma
tier I leverage, tier I risk-based and total
risk-based capital ratios at September 30, 1996
would be 7.50%, 20.74% and 17.56%, respectively.
See "Regulatory Capital Requirements."
Interest Rate Risk. The Bank's management
measures interest rate risk using gap and net
portfolio value analyses. As of September 30,
1996, the Bank's interest-earning assets less
interest-bearing liabilities maturing or
repricing within one year as a percentage of
total interest-earning assets was a negative
29.41%. At September 30, 1996, the Bank had a
three-year cumulative negative gap of 37.14%. As
a result, a significant increase in market
interest rates would affect the Bank's results of
operations adversely. As of September 30, 1996,
$2.8 million of the Bank's $27.1 million in loans
outstanding were to mature or reprice within one
year or less. See "Risk Factors -- Potential
Effects of Changes in Interest Rates" and
"Management's Discussion and Analysis of
Financial Condition and Operating Results --
Asset and Liability Management".
Community Orientation. The Bank historically has
been committed to meeting the financial needs of
its community. Management believes the Bank can
provide a range of personal and business
financial services, and yet at the same time
provide such services on a personalized and
efficient basis.
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<PAGE>
The Bank's deposits are insured by the SAIF,
which is administered by the FDIC, to the maximum
extent permitted by law. The Bank is subject to
examination and comprehensive regulation by the
Commissioner. The Commissioner is the Bank's
chartering authority and primary regulator. In
addition, the Bank is subject to examination and
regulation by the FDIC. The Bank is a member of
the Federal Home Loan Bank ("FHLB") of Chicago.
Dividends and Return Subject to regulatory and other considerations,
of Excess Capital: the Company intends to establish an annual cash
dividend policy following the Conversion.
Although the Board of Directors of the Company
has not made any decision as to the amount of
cash dividends it will pay, it anticipates that
the first dividend will be paid during the first
quarter of fiscal 1998. However, declarations of
dividends by the Board of Directors will depend
upon a number of factors, including investment
opportunities available to the Company or the
Bank, capital requirements, regulatory
limitations, the Company's and the Bank's
financial condition and results of operations,
tax considerations and general economic
conditions. No assurance can be given that
dividends will in fact be paid on the Common
Stock or that, if paid, such dividends will not
be reduced or eliminated in future periods. See
"Dividend Policy and Return of Excess of
Capital." As required by the FDIC as a condition
of its nonobjection to the Conversion, the
Company has agreed not to return any excess
capital to its stockholders (which does not
include dividends) for a period of one year from
the consummation of the Conversion.
The Conversion and the The Board of Directors of the Bank has
Subscription and unanimously adopted the Plan of Conversion,
Community Offerings: pursuant to which the Bank is converting from an
Illinois-chartered mutual savings bank to an
Illinois-chartered stock savings bank, all the
common stock of which will be acquired by the
Company in exchange for 75% of the net Conversion
proceeds. The Commissioner has approved the Plan
of Conversion and the FDIC has issued its
conditional non-objection thereto, in each case
subject to approval of the Bank's members at a
special meeting ("Special Meeting") to be called
for this purpose on March __, 1997. See "The
Conversion - General." In addition, the Company
has applied to the Board of Governors of the
Federal Reserve System ("Federal Reserve Board"
or "FRB") to become a bank holding company. The
Conversion will enhance the Bank's ability to
access the capital markets, its ability to engage
in acquisitions, facilitate the Bank's
traditional business as a thrift lender and
enhance its ability to increase originations of
commercial business loans and consumer loans. See
"The Conversion - Purposes of Conversion."
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<PAGE>
No Recommendation by The Board of Directors of the Bank is not making
Bank's Board of Directors: any recommendation in connection with the
purchase of the shares of Common Stock offered
hereby. Any decision made with respect to an
investment in the Common Stock should be made
only after a careful review of this Prospectus.
Common Stock is first being offered in the
Subscription Offering with nontransferable
subscription rights being granted, in the
following order of priority, to: (i) depositors
of the Bank with account balances of $50.00 or
more as of July 31, 1995 (Eligible Account
Holders); (ii) the ESOP; (iii) depositors of the
Bank with account balances of $50.00 or more as
of December 31, 1996 (Supplemental Eligible
Account Holders); and (iv) depositors of the Bank
as of March __, 1997 (Other Voting Members).
Subscription rights will expire if not exercised
by __________, Central Time, on March __, 1997,
unless extended. Subject to the prior rights of
holders of subscription rights, Common Stock not
subscribed for in the Subscription Offering also
may be offered in a Community Offering. The
Community Offering may be commenced at any time
during the Subscription Offering or subsequent
thereto. It is anticipated that any shares not
subscribed for in the Subscription and Community
Offerings will be offered in a Syndicated
Community Offering. The Company reserves the
absolute right to reject or accept any orders in
the Community Offering or the Syndicated
Community Offering, in whole or in part. See "The
Conversion - Subscription Offering and
Subscription Rights" and "- Community Offering."
The Bank has engaged Trident as a financial
advisor and marketing agent, and Trident has
agreed to use its best efforts to solicit
subscriptions and purchase orders for Common
Stock in the Offerings.
Restrictions on Transfer Prior to the completion of the Conversion, no
of Subscription Rights person may transfer or enter into any agreement
and Shares: or understanding to transfer the legal or
beneficial ownership of the subscription rights
issued under the Plan or the shares of Common
Stock to be issued upon their exercise. Each
person exercising subscription rights will be
required to certify that a purchase of Common
Stock is solely for the purchaser's own account
and that there is no agreement or understanding
regarding the sale or transfer of such shares.
The Company and the Bank will pursue any and all
legal and equitable remedies in the event of the
transfer of subscription rights and will not
honor orders known by them to involve the
transfer of such rights. See "The Conversion -
Restrictions on Transfer of Subscription Rights
and Shares."
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<PAGE>
Purchase Limitations: The minimum purchase is 25 shares. In general,
with the exception of the ESOP, each Eligible
Account Holder, Supplemental Eligible Account
Holder or Other Voting Member (or persons
exercising Subscription Rights through a single
account) may purchase in his capacity as such in
the Subscription Offering up to $50,000 of Common
Stock, and no person, together with associates of
and persons acting in concert with such person,
may purchase in the Conversion, in the aggregate,
more than $150,000 of Common Stock. Subject to
any required regulatory approval and the
requirements of applicable laws and regulations,
but without further approval of the members of
the Bank, both the individual amount permitted to
be subscribed for and the overall purchase
limitation may be increased to up to a maximum of
5% of the shares sold in the Offerings at the
sole discretion of the Company and the Bank. See
"The Conversion - Limitations on Common Stock
Purchases." In the event of an oversubscription,
shares will be allocated in accordance with the
Plan. See "The Conversion - Subscription Offering
and Subscription Rights" and "- Community
Offering."
Stock Pricing and The aggregate purchase price of the Common Stock
Number of Shares to be to be issued in the Conversion is required to be
Issued in the Conversion: consistent with an independent appraisal of the
estimated pro forma market value of the Common
Stock following Conversion. RP Financial, an
independent appraiser, has advised the Bank that
in its opinion, dated as of November 15, 1996,
the Estimated Price Range ranged from $2,550,000
to $3,450,000 with a midpoint of $3,000,000. This
appraisal of the Common Stock is not intended and
should not be construed as a recommendation of
any kind as to the advisability of purchasing
such stock nor can any assurance be given that
purchasers of the Common Stock in the Conversion
will be able to sell such shares after the
Conversion at or above the Purchase Price.
All shares of Common Stock issued in the
Conversion will be sold at the Purchase Price, as
determined by the Bank and approved by the
Company. The actual number of shares to be issued
in the Conversion will be based upon the final
updated valuation of the estimated pro forma
market value of the Common Stock, giving effect
to the Conversion, at the completion of the
Offerings. The number of shares to be issued is
expected to range from a minimum of 255,000
shares to a maximum of 345,000 shares. To the
extent that the number of shares of Common Stock
issued in the Offerings exceeds the minimum
number of shares, pro forma stockholders' equity
per share will be reduced. See "Pro Forma Data."
Subject to approval of the Commissioner and the
FDIC, the Estimated Price Range may be increased
or decreased to reflect market and economic
conditions prior to the completion of the
Conversion, and under such circumstances the
Company may increase or decrease the number of
shares of Common
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<PAGE>
Stock to be issued in the Conversion. No
resolicitation of subscribers will be made and
subscribers will not be permitted to modify or
cancel their subscriptions unless the gross
proceeds from the sale of the Common Stock are
less than the minimum or more than 15% above the
maximum of the current Estimated Price Range. See
"Pro Forma Data," and "The Conversion - Stock
Pricing and Number of Shares to be Issued."
Benefits of Conversion to General. In connection with the Conversion, the
Management: Company's directors and executive officers as a
group (including purchases by any associates of
or groups acting in concert with such persons and
purchases by such directors and executive
officers through the Bank's 401(k) profit sharing
plan ("401(k) Plan")) (5 persons) have indicated
that they intend to purchase 65,000 shares of
Common Stock, or 18.8% of the Common Stock at the
maximum of the Estimated Price Range.
The ESOP. The ESOP intends to purchase an
aggregate of 8.0% of the shares of Common Stock
offered in the Conversion ($204,000 and $276,000
of Common Stock, respectively, based on the
issuance of the minimum of 255,000 shares and the
maximum of 345,000 shares or $317,400 based on
the issuance of 396,750 shares, at 15% above the
maximum of the Estimated Price Range). For
additional information, see "Management -
Benefits - Employee Stock Ownership Plan and
Trust."
Employment Agreement. An employment agreement
with the Bank's chief executive officer provides
for benefits and cash payments in the event of a
change in control of the Company or the Bank.
These provisions may have the effect of
increasing the cost of acquiring the Company,
thereby discouraging future attempts to acquire
the Company or the Bank. See "Management -
Employment Agreement."
Stock Option Plan. Following consummation of the
Conversion, the Company intends to submit for
stockholder consideration a stock option plan for
the benefit of the directors, officers and key
employees of the Company and the Bank (the "Stock
Option Plan"), pursuant to which the Company
intends to reserve a number of authorized but
unissued shares of Common Stock equal to an
aggregate of 10% of the Common Stock issued in
the Conversion (34,500 shares at the maximum of
the Estimated Price Range, 39,675 shares at 15%
above the maximum of the Estimated Price Range)
for issuance pursuant to stock options and stock
appreciation rights. The Company currently
intends to submit the
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<PAGE>
Stock Option Plan to stockholders at a meeting to
be held not earlier than six months after the
Conversion. While no consideration has been given
to the number of shares granted to any employee
or director under the Stock Option Plan, any
allocation will be consistent with applicable
Federal regulations. Under current Federal
regulations, any plan approved by stockholders
within one year of the consummation of the
Conversion is required to limit grants (i) to any
employee to 25% or less of the shares available
under the Stock Option Plan and (ii) to any
non-employee director individually to 5% or less
and to all such non-employee directors to 30% in
the aggregate of the shares available under the
Stock Option Plan. The value of any options
granted under the Stock Option Plan will be
determined based on the increase, if any, in the
market value of the Common Stock compared over
the exercise price of the options. The exercise
price of any options granted under the Stock
Option Plan will be not less than fair market
value on the date of grant. See "Management -
Benefits - Stock Option Plan."
Recognition and Retention Plan. Following
consummation of the Conversion, the Company
intends to submit for stockholder consideration a
Recognition and Retention Plan for the benefit of
the directors and officers of the Company and the
Bank (the "Recognition Plan"). It is expected
that the Recognition Plan will be submitted to
stockholders for approval at the same time as the
Stock Option Plan.
Upon the receipt of such approval, the
Recognition Plan is expected to purchase a number
of shares of Common Stock either from the Company
or in the open market equal to an aggregate of 4%
of the Common Stock issued in the Conversion
(13,800 shares at the maximum of the Estimated
Price Range). While no consideration has been
given to the number of shares to be awarded to
any employee or director under the Recognition
Plan, any allocation will be consistent with
applicable Federal regulations. Under current
Federal regulations, any such plan approved by
stockholders within one year of the consummation
of the Conversion is required to limit grants (i)
to any employee to 25% or less of the shares
available under the Recognition Plan and (ii) to
any non-employee director individually to 5% or
less and to all such non-employee directors to
30% in the aggregate of the shares available
under the Recognition Plan.
Assuming that the Purchase Price is the value of
shares awarded under the Recognition Plan, the
maximum value of awards to an employee would be
$25,500, $30,000, $34,500 and $39,675,
respectively, assuming the issuance of shares at
the minimum, midpoint, maximum and 15% above the
maximum of the Estimated Price Range and the
maximum
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<PAGE>
value of awards to a non-employee director would
be $5,100, $6,000, $6,900 and $7,935,
respectively, at the minimum, midpoint, maximum
and 15% above the maximum of the Estimated Price
Range. The actual value of any awards made under
the Recognition Plan will depend upon, among
other factors, the market value of the Common
Stock at the time of award and upon payment. All
awards under the Recognition Plan shall vest over
a period of time, but generally not in excess of
20% per year. See "Management - Benefits -
Recognition and Retention Plan."
Federal and State Income The Company has received an opinion from its
Tax Consequences of special counsel, Elias, Matz, Tiernan & Herrick
Conversion: L.L.P., Washington, D.C., to the effect that the
Conversion will qualify as a reorganization
within the meaning of Section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended (the
"Code"). The Company has also received an opinion
from Geo. S. Olive & Co. LLC, to the effect that
the Conversion will be tax-free to the Company,
the Bank, Eligible Account Holders and
Supplemental Eligible Account Holders for
Illinois tax purposes. See "The Conversion - Tax
Aspects."
Use of Proceeds: Net proceeds from the sale of the Common Stock
are estimated to be between $2.3 million and $3.2
million, depending on the number of shares sold
and the expenses of the Conversion. See "Pro
Forma Data." The Company will purchase all of the
capital stock of the Bank to be issued upon
Conversion in exchange for 75% of the net
proceeds. The Company intends to use a portion of
the net proceeds retained by it to make a loan
directly to the ESOP to enable the ESOP to
purchase up to 8.0% of the Common Stock in the
Conversion. See "Management - Benefits - Employee
Stock Ownership Plan and Trust." The remaining
net proceeds retained by the Company will
initially be invested primarily in short-term
deposits and investment grade, short- to
intermediate-term marketable securities. Funds
received by the Bank from the Company's purchase
of its capital stock will be used for general
business purposes, including the funding of
Loans. See "Use of Proceeds."
Risk Factors: See "Risk Factors" for a discussion of certain
factors that should be considered by prospective
investors.
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RISK FACTORS
The following factors, in addition to those discussed elsewhere in this
Prospectus, should be considered by investors in deciding whether to purchase
the Common Stock offered hereby.
Dependence on Local Market Area and Economy
To date, substantially all of the Bank's lending and deposit activities
have been concentrated in the Danville, Illinois area including Vermilion
County, Illinois. The Vermilion County market has experienced stable population
over the first-half of the decade after experiencing a steady decline in its
population over the previous two decades. Vermilion County's building permits
have also increased over a similar period, averaging $27.1 million from
1990-1995 after averaging only $11.9 million annually from 1985-1989. [Income
levels in Vermilion County are lower than in Illinois and the United States,
generally, with per capita income growth less over the first five years of the
decade than Illinois or the United States and median household income declining
during such period compared to growth in Illinois and the nation.] The market is
dominated by the manufacturing industry and government, which accounts for
approximately ________ of all jobs in Vermilion County; however, unemployment
levels in Vermilion County, although stable, have exceeded state and national
levels during the 1990s. The Vermilion County market area also had a much lower
median rent level and a much lower median housing value than the rest of the
state and country.
Vermilion County has a very competitive financial institution market
dominated by commercial banks. As of June 30, 1996, the Bank's market area
included 15 commercial banks with 33 offices, [three] thrift institutions with
[four] offices and [18] credit unions with [18] offices which compete with the
Bank for deposits and loans. The Bank had a [3.2%] share of the total financial
institution deposits for Vermilion County as of [June 30, 1995.] Many of the
Bank's competitors have substantially greater resources and lending limits than
the Bank and may offer certain services that the Bank does not or cannot
provide. The profitability of the Bank depends upon its continued ability to
compete successfully in its market area. See "Business of the Bank Competition."
Potential Low Return on Equity Following Conversion; Uncertainty as to Future
Growth Opportunities.
For the years ended September 30, 1996 and 1995, the Bank's ratio of
equity to assets was 6.9% and 7.0%, respectively. The Company's equity position
will be significantly increased as a result of the Conversion. On a pro forma
basis as of September 30, 1996, assuming the sale of Common Stock at the
midpoint of the Estimated Price Range, the Company's ratio of equity to assets
would be 12.5%. The Company's ability to leverage this capital will be
significantly affected by industry competition for loans and deposits. The
Company currently anticipates that it will take time to prudently deploy such
capital. As a result, the Company's return on equity initially is expected to be
below the industry average after the Conversion, and no assurance can be given
that the Company's return on equity will achieve the industry average level at
any time in the future.
Potential Effects of Changes in Interest Rates
The operations of the Bank are substantially dependent on its net interest
income, which is the difference between the interest income earned on its
interest-earning assets and the interest expense paid on its interest-bearing
liabilities. Like most savings institutions, the Bank's earnings are affected by
changes in market interest rates and other economic factors beyond its control.
If an institution's interest-earning assets have longer effective maturities
than its interest-bearing liabilities, the yield on the institution's
interest-earning assets generally will adjust more slowly than the cost of its
interest-bearing liabilities and, as a result, the institution's net interest
income generally would be adversely affected by material and prolonged increases
in interest rates and positively affected by comparable declines in interest
rates. The Bank has sought to reduce the vulnerability of its operations to
changes in interest rates by managing the nature and composition of its interest
rate sensitive assets and liabilities. However, at September 30, 1996, the
Bank's total interest-bearing liabilities which were
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<PAGE>
estimated to mature or reprice within one year exceeded the Bank's total
interest-earning assets with the same characteristics by $10.4 million, or
29.4%, of the Bank's total assets. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Asset and Liability Management,"
"- Results of Operations Interest Expense."
The Bank's deposits have included a relatively high amount of certificates
of deposit ("certificate"), which are generally higher costing and more
interest-rate sensitive than "core" deposits. At September 30, 1996, $23.8
million, or 77.3% of the Bank's total deposits were comprised of certificates
and $17.0 million, or 55.4% of the Banks total deposits consisted of
certificates which are scheduled to mature within one year. Certificates
generally are costlier and a more volatile source of funds than transaction
accounts. In addition, certificates are more likely to be invested in other
instruments than are transaction accounts. Notwithstanding the foregoing,
management believes that most of its certificates will remain at the Bank upon
maturity. The Bank does not accept brokered deposits. See "Business of the Bank
- - Sources of Funds - Deposits."
In addition to affecting interest income and expense, changes in interest
rates also can affect the value of the Bank's interest-earning assets, which are
comprised of fixed and adjustable-rate instruments, and the ability to realize
gains from the sale of such assets. Generally, the value of fixed-rate
instruments fluctuates inversely with changes in interest rates. As of September
30, 1996, $15.8 million or 45.8% of the Bank's interest-earning assets were
one-to-four family fixed-rate residential mortgage loans.
Changes in interest rates also can affect the average life of loans and
mortgage-backed securities. Decreases in interest rates generally result in
increased prepayments of loans and mortgage-backed securities as borrowers
refinance to reduce borrowing costs, which may subject the Bank to reinvestment
risk to the extent that it is not able to reinvest such prepayments at rates
which are comparable to the rates on the maturing loans or securities. See
generally "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Asset and Liability Management."
Pending Litigation Against Bank
On December 30, 1992, Rosemary Frobose, a former officer of the Bank,
filed a lawsuit against the Bank in the United States District Court, Southern
District of Illinois, (subsequently transferred to the Central District of
Illinois, Peoria Division) alleging that she was the victim of a retaliatory
discharge based on common law rights and the federal "whistleblower statute," 12
USC ss. 1831j(a). The plaintiff seeks compensatory and punitive damages against
the Bank based upon her loss of income and employment for at least a ten-year
period. She has not sought a specific dollar amount in her complaint but at one
point made a demand of $900,000. Recently, the Court entered a summary judgment
in favor of the Bank on each count except one which was subsequently dismissed
by the Court. The Bank anticipates an appeal of the court's order against the
plaintiff. The Bank plans to continue to vigorously contest this lawsuit. In the
judgment of the Bank's litigation counsel, the likelihood that the plaintiff
will prevail in this case is remote. However, should the case be revised on
appeal and a verdict ultimately directed against the Bank by the trial court,
the Bank's litigation counsel believes that the range of potential loss is
$250,000 to $1 million.
Importance of Senior Management
The president and chief executive officer of the Bank is, and the
president and chief executive officer of the Company will be Merrill G. Norton.
Mr. Norton has served in that capacity at the Bank since 1992 and has had and,
after the consummation of the Conversion, will continue to have a significant
role in the development and management of the Bank. The loss of his services
could have an adverse effect on the Bank.
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<PAGE>
Certain Anti-Takeover Provisions
Provisions in the Company's Governing Instruments and Delaware Law.
Certain provisions of the Company's Certificate of Incorporation and Bylaws, as
well as certain provisions in Delaware law, will assist the Company in
maintaining its status as an independent publicly owned corporation. Provisions
in the Company's Certificate of Incorporation and Bylaws provide for, among
other things, supermajority voting on certain matters, a staggered board of
directors, noncumulative voting for directors, limits on the calling of special
meetings and, for a period of five years following the Conversion, limits on
acquiring voting shares in excess of 10% of the outstanding Common Stock. The
above provisions may discourage potential proxy contests and other potential
takeover attempts, particularly those which have not been negotiated with the
Board of Directors, and thus, generally may serve to perpetuate current
management. See "Restrictions on Acquisition of the Company and the Bank." In
addition, such provisions may result in the Company being deemed to be less
attractive to a potential acquirer and/or might result in stockholders receiving
a lesser amount of consideration for their shares of Common Stock than otherwise
could have been available.
Voting Control of Directors and Officers. Directors and executive officers
of the Company expect to purchase approximately 65,000 shares or 18.8% of the
shares of Common Stock outstanding based upon the maximum of the Estimated Price
Range. Three of the Company's directors will act as trustees of the ESOP and in
such capacity are also expected to immediately control the voting of the shares
of Common Stock issued in the Conversion through the ESOP, at least until an
allocation has been made under the ESOP. At the maximum of the Estimated Price
Range, the trustees of the ESOP would initially control the voting of 27,600
shares, or 8.0%, of Common Stock issued in the Conversion. Under the terms of
the ESOP, after an allocation has been made, the unallocated shares will be
voted by the trustees in the same proportion as the allocated shares are voted
by the ESOP participants. Assuming that 345,000 shares of Common Stock are
issued in the Offerings, that directors and executive officers of the Company
purchase 65,000 shares of Common Stock in the Offerings, that 27,600 unallocated
shares are held by the ESOP, that 13,800 shares of Common Stock have been
acquired by the Recognition Plan in the open market and that directors and
executive officers of the Company acquire 34,500 shares of Common Stock out of
authorized but unissued shares upon the exercise of options under the Stock
Option Plan, directors and executive officers would control 140,900 shares of
Common Stock or 37.1% of the then-outstanding shares. Management's potential
voting control could, together with additional stockholder support, preclude or
make more difficult takeover attempts that certain stockholders deem to be in
their best interest and may tend to perpetuate existing management.
Provisions of Employment Agreement. In connection with the Conversion, the
Company and the Bank plan to enter into an employment agreement with Mr. Norton
which will provide for benefits and cash payments in the event of a change in
control of the Company or the Bank and under certain other circumstances. These
provisions may have the effect of increasing the cost of acquiring the Company,
thereby discouraging future attempts to take over the Company or the Bank. Based
upon compensation levels at September 30, 1996, in the event of a termination of
employment following a change in control of the Company or the Bank, Mr. Norton
would receive $149,200 in cash severance. See "Management - Employment
Agreement."
Absence of Market For Common Stock
The Company and the Bank have never issued capital stock. The Company
intends to apply to have the Common Stock listed on the National Daily Quotation
Service "pink sheets" published by the National Quotation Bureau, Inc. The
development of a public trading market depends upon the existence of willing
buyers and sellers, the presence of which is not within the control of the
Company or the Bank. Because there can be no assurance that buyers and sellers
of the Company's Common Stock can be readily matched, investors may wish to
consider the potential illiquid and long-term nature of an investment in the
Common Stock. Because of the limited size of the Offerings and the anticipated
concentrated ownership of the Common Stock, it is unlikely that an active and
liquid trading market for the Common Stock will develop, or once developed,
-22-
<PAGE>
will continue, and there can be no assurance that purchasers of the Common Stock
will be able to sell their shares at or above the Purchase Price. The absence of
a liquid and active trading market, or the discontinuance thereof, may have an
adverse effect on both the price and the liquidity of the Common Stock. See
"Market for the Common Stock."
Increased Emphasis on Consumer and Commercial Business Lending
During fiscal 1995, the Bank implemented a policy under which it began to
increase its origination of consumer and commercial business loans. Such loans
generally have shorter terms and higher interest rates than traditional mortgage
loans. However, such lending generally involves more credit risk than
traditional single-family residential lending because of the type and nature of
the collateral. As of September 30, 1996 consumer and commercial business loans
amounted to $2.6 million or 9.5% and $334,000 or 1.23%, respectively of the
Bank's total net loan portfolio. As of September 30, 1996, $49,000 or 1.9% of
the Bank's consumer loans were non-performing and none of its commercial
business loans was non-performing. See "Business of the Bank - Lending
Activities - Consumer Loans," "-Commercial Loans" and "-Asset Quality."
Regulatory Oversight and Possible Legislation
The Bank is subject to extensive regulation, supervision and examination
by the Commissioner, as its chartering authority and by the FDIC, which is its
primary federal regulator and which insures its deposits up to applicable
limits. The Bank is a member of the FHLB System and is also subject to certain
limited regulations promulgated by the Board of Governors of the Federal Reserve
System ("Federal Reserve"). As the holding company of the Bank, the Company also
will be subject to regulation and oversight by the Federal Reserve. Such
regulation and supervision govern the activities in which an institution can
engage and are intended primarily for the protection of the insurance fund and
depositors. Regulatory authorities have been granted extensive discretion in
connection with their supervisory and enforcement activities which are intended
to strengthen the financial condition of the banking and thrift industries,
including the imposition of restrictions on the operation of an institution, the
classification of assets by the institution and the adequacy of an institution's
allowance for loan losses. Any change in such regulation and oversight, whether
by the Commissioner, the FDIC, the Federal Reserve or Congress, could have a
material impact on the Company, the Bank and their respective operations. See
"REGULATION."
On September 30, 1996, the Deposit Insurance Funds Act of 1996 ("Insurance
Act") was enacted into law. Among other things, the Insurance Act authorizes the
FDIC to impose a special assessment on each depository institution with
SAIF-assessable deposits so that the SAIF may achieve its designated reserve
ratio. The Bank's assessment was $206,000 on a pre-tax basis, and was accrued
during the quarter ended September 30, 1996. In addition, the Insurance Act
provides for the merger of the BIF and the SAIF into the Deposit Insurance Fund
on January 1, 1999, but only if no insured depository institution is a savings
association on that date. As a result of the enactment of the Insurance Act,
beginning January 1, 1997 the deposit insurance premium applicable to most
savings associations was reduced from $2.30 per $1,000 of deposits to $0.645 per
$1,000.
Legislation is proposed periodically providing for a comprehensive reform
of the banking and thrift industries. It is uncertain when or if any of this
type of legislation will be passed, and, if passed, in what form the legislation
would be passed. As a result, management cannot accurately predict the possible
impact of such legislation on the Bank.
ESOP and Recognition Plan Expense
In November 1993, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 93-6 entitled "Employers'
Accounting for Employee Stock Ownership Plans" ("SOP 93-6"). SOP 93-6, among
other things, changes the measure of compensation expense recorded by employers
for
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<PAGE>
leveraged ESOPs from the cost of ESOP shares to the fair value of ESOP shares.
Under SOP 93-6, the Company will recognize compensation cost equal to the fair
value of the ESOP shares during the periods in which they become committed to be
released. To the extent that the fair value of the Common Stock appreciates, the
Company will recognize increased compensation expense as the ESOP shares are
committed for release. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Recent Accounting Pronouncements." In
addition, it is anticipated that the Recognition Plan will purchase shares of
Common Stock equal to 4.0% of the shares issued in the Conversion. Both the ESOP
and the Recognition Plan will increase employee compensation expense in the
future. See "Pro Forma Data" and "Management - Benefits."
Possible Dilutive Effect of Issuance of Additional Shares
If the Recognition Plan is approved by stockholders of the Company, the
Recognition Plan intends to acquire an amount of Common Stock equal to 4.0% of
the shares of Common Stock issued in the Conversion. Such shares of Common Stock
may be acquired in the open market with funds provided by the Company or from
authorized but unissued shares of Common Stock. In the event that the
Recognition Plan acquires authorized but unissued shares of Common Stock from
the Company, the interests of existing stockholders will be diluted. The
issuance of authorized but unissued shares of Common Stock to such plan in an
amount equal to 4.0% of the Common Stock issued in the Conversion would dilute
the voting interests of existing stockholders by approximately 3.9%, and net
income per share and stockholders' equity per share would be decreased by a
corresponding amount. See "Pro Forma Data" and "Management - Benefits -
Recognition and Retention Plan."
If the Stock Option Plan is approved by stockholders of the Company, the
Company intends to reserve for future issuance pursuant to such plan a number of
authorized shares of Common Stock equal to an aggregate of 10.0% of the Common
Stock issued in the Conversion (34,500 shares, based on the issuance of the
maximum 345,000 shares). Shares issued under such plan could dilute the
interests of existing stockholders. The issuance of the total number of shares
available under such plan would dilute the voting interests of existing
stockholders by approximately 9.1%, and net income per share and stockholders'
equity per share would be decreased by a corresponding amount. See "Pro Forma
Data" and "Management - Benefits - Stock Option Plan."
No Opinion or Recommendation by the Agent
The Company and the Bank have engaged Trident to consult with and advise
them with respect to the Conversion and to assist, on a best efforts basis, in
connection with the solicitation of subscriptions and purchase orders for shares
of Common Stock in the Offerings. Trident has not prepared or delivered any
opinion or recommendation with respect to the suitability of the Common Stock or
the appropriateness of the amount of Common Stock to be issued in the
Conversion. The engagement of Trident by the Company and the Bank and the work
performed thereunder should not be construed by purchasers of the Common Stock
as constituting an opinion or recommendation relating to such investment and
should not be construed as a verification of the accuracy or completeness of the
information contained in this Prospectus.
VERMILION BANCORP, INC.
The Company is a Delaware corporation organized at the direction of the
Board of Directors of the Bank for the purpose of acquiring all of the capital
stock to be issued by the Bank in the Conversion. The Company has applied for
the approval of the Federal Reserve Board and the Commissioner, to be the
holding company for the Bank. Upon consummation of the Conversion, the Company's
business will consist of being the holding company for the Bank and the Company
will have no significant assets other than the shares of the Bank's common stock
acquired in the Conversion and 25% of the net proceeds of the Conversion
retained by the Company, a portion of which will be used to fund the loan to the
ESOP, and will have no significant liabilities. See "Use of Proceeds." The
management of the Company is set forth under "Management of the
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<PAGE>
Company." Initially, the Company will neither own nor lease any property, but
will instead use the premises, equipment and furniture of the Bank. At the
present time, the Company does not intend to employ any persons other than
officers who are also officers of the Bank but will utilize the support staff of
the Bank from time to time. Additional employees will be hired as appropriate to
the extent the Company expands or changes its business in the future.
Management believes that the holding company structure will provide the
Company with additional flexibility to diversify its business activities, should
it decide to do so, through existing or newly formed subsidiaries, or through
acquisitions of or mergers with other financial institutions or financial
services related companies. Although there are no current arrangements,
understandings or agreements, written or oral, regarding any such opportunities
or transactions, the Company will be in a better position after the Conversion,
subject to regulatory limitations and the Company's financial position, to take
advantage of any such opportunities that may arise. The initial activities of
the Company are anticipated to be funded by the proceeds to be retained by the
Company and earnings thereon or, alternatively, through dividends from the Bank.
See "Dividend Policy."
The Company's executive office is located at the home office of the Bank
at 714 North Vermilion Street, Danville, Illinois 61832, and its telephone
number is (217) 442-0270.
AMERICAN SAVINGS BANK
The Bank is an Illinois-chartered, SAIF-insured mutual savings bank
conducting business from a single office located in Danville, Illinois. At
September 30, 1996, the Bank had total assets of $35.5 million, total deposits
of $30.7 million and equity of $2.4 million.
The Bank's principal business has been, and continues to be, attracting
deposits from its customers and investing such funds in residential real estate
loans and other loans. At September 30, 1996, the Bank's net loan portfolio
totalled $26.9 million, or 75.8% of the Bank's assets. In addition to its
lending activities, the Bank also has a securities portfolio consisting of
mortgage-backed securities and other investment securities. The Bank's
mortgage-backed securities portfolio totalled $3.5 million, or 9.9% of the
Bank's total assets at September 30, 1996, and its other investment securities
portfolio amounted to $3.1 million, or 8.7% of total assets at such date.
Traditionally, the Bank's principal source of funds has come from deposits. At
September 30, 1996, the Bank had total deposits of $30.7 million, of which $7.0
million or 22.8% consisted of core deposits which include savings and retirement
accounts, NOW accounts and money market investment accounts ("MMIA").
The Bank and its predecessor have been serving Danville, Illinois since
1888. In 1994, the Bank converted to an Illinois-chartered savings bank from an
Illinois- chartered savings and loan association. The Bank is a
community-oriented financial institution which offers a variety of financial
services to meet the needs of its community. The existing management of the Bank
believes that it is in the best interests of the Bank as well as the Company and
its stockholders for the Bank to remain an independent financial institution.
The Bank is subject to examination and comprehensive regulation by the
Commissioner, which is the Bank's chartering authority and primary regulator.
The Bank is also subject to regulation by the FDIC, as the administrator of the
SAIF, and to certain reserve requirements established by the FRB. The Bank is a
member of the FHLB of Chicago, which is one of the 12 regional banks comprising
the FHLB System, and is subject to regulations applicable to members of the FHLB
of Chicago.
The Bank's executive office is located at 714 North Vermilion Street,
Danville, Illinois 61832 and its telephone number is (217) 442-0270.
-25-
<PAGE>
USE OF PROCEEDS
Although the actual net proceeds from the sale of the Common Stock cannot
be determined until the Conversion is completed, it is presently anticipated
that the net proceeds from the sale of the Common Stock will be between $2.3
million and $3.2 million ($3.7 million in the event of an increase in the
Estimated Price Range by 15%). See "Pro Forma Data" and "The Conversion - Stock
Pricing and Number of Shares to be Issued" as to the assumptions used to arrive
at such amounts. None of the assets of the Company or the Bank will be
distributed in order to effect the Conversion other than to pay expenses
incident thereto.
The Company will purchase all of the capital stock of the Bank to be
issued upon Conversion in exchange for 75% of the net proceeds. Based upon the
Estimated Price Range, between $1.7 million and $2.4 million ($2.8 million in
the event of an increase in the Estimated Price Range by 15%) will be received
by the Bank from the net proceeds of the Conversion in exchange for capital
stock of the Bank. The Company intends to use a portion of the net proceeds it
retains to make a loan directly to the ESOP to enable the ESOP to purchase up to
8.0% of the Common Stock in the Conversion. Based upon the issuance of 255,000
shares and 345,000 shares at the minimum and maximum of the Estimated Price
Range, respectively, the loan to the ESOP would be $204,000 and $276,000,
respectively, and $317,400 in the event of an increase in the Estimated Price
Range by 15%. See "Management - Benefits - Employee Stock Ownership Plan and
Trust." The balance of the net proceeds retained by the Company will be
initially invested primarily in short-term deposits and investment grade,
short-term marketable securities. Giving effect to the anticipated purchase of
capital stock of the Bank and the loan to the ESOP, the balance of the net
proceeds retained by the Company would be between $367,500 and $517,000
($602,850 in the event of an increase in the Estimated Price Range by 15%). Net
proceeds retained by the Company may facilitate the Company's ability to pay
dividends in the future. See "Dividend Policy."
Funds received by the Bank from the Company's purchase of its capital
stock will be used for general business purposes, including the funding of
loans. Neither the Company nor the Bank has any pending agreements or
understandings, written or oral, regarding acquisitions of any specific
financial services institutions or companies nor have criteria been established
to identify potential candidates for acquisition.
DIVIDEND POLICY AND RETURN OF EXCESS CAPITAL
Upon Conversion, the Board of Directors of the Company will have the
authority to declare dividends on the Common Stock, subject to statutory and
regulatory requirements. Declarations of dividends by the Board of Directors, if
any, will depend upon a number of factors, including investment opportunities
available to the Company or the Bank, capital requirements, regulatory
limitations, the Company's and the Bank's financial condition and results of
operations, tax considerations and general economic conditions. Subject to
regulatory and other considerations, the Company intends to establish an annual
cash dividend policy. Although the Board of Directors of the Company has not
made any decision as to the amount of cash dividends it will pay, it anticipates
that the first dividend will be paid during the first quarter of fiscal 1998.
However, no assurances can be given that any dividends will be paid or, once
commenced, will continue to be paid at the same rate.
The Company is subject to the requirements of Delaware law, which
generally permits the payment of dividends out of surplus, except when (1) the
corporation is insolvent or would thereby be made insolvent, or (2) the
declaration or payment thereof would be contrary to any restrictions contained
in the articles of incorporation. Upon consummation of the Conversion, the
Company's surplus is expected to be between $367,500 and $517,000, depending on
the number of shares issued in the Offerings. See "Capitalization." If there is
no surplus available for dividends, a Delaware corporation may pay dividends out
of its net profits for the then current or the preceding fiscal year or both,
except that no dividend may be paid if the corporation's assets are exceeded by
its liabilities or if its net assets are less than the amount which would be
needed, under certain circumstances, to satisfy any preferential rights of
stockholders.
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<PAGE>
Dividends from the Company may depend in part upon receipt of dividends
from the Bank because the Company initially will have no source of income other
than dividends from the Bank, earnings from the investment of proceeds from the
sale of Common Stock retained by the Company and interest payments with respect
to the Company's loan to the ESOP. The Bank will not be permitted to pay
dividends to the Company if its capital would be reduced below the amount
required for the liquidation account of the Bank. See "The Conversion -
Liquidation Rights." Under Illinois law, a savings bank is required to maintain
at all times total capital of not less than 3% of total assets. Prior approval
of the Commissioner is required before any dividends on capital stock that
exceed 50% of a savings bank's net profits that year may be declared in that
calendar year. Moreover, as a condition to the Commissioner's approval, the
Company is subject to a net worth maintenance agreement which requires it to
infuse equity capital into the Bank as needed to maintain the core capital of
the Bank at a level of no less than 6% of total assets. See "Regulations - The
Bank - Capital Requirements." Section 38 of the Federal Deposit Insurance Act
("FDIA") also would prohibit the Bank from making a dividend if it were
"undercapitalized" or if such dividend would result in the institution becoming
"undercapitalized."
In addition, as required by the FDIC as a condition to its nonobjection to
the Conversion, the Company has agreed not to return any excess capital to its
stockholders (which does not include dividends) for a period of one year from
the consummation of the Conversion.
MARKET FOR THE COMMON STOCK
The Company and the Bank have never issued capital stock, and,
consequently, there is no established market for the Common Stock at this time.
The Company intends to apply to have the Common Stock listed on the National
Daily Quotation Service "pink sheets" published by the National Quotations
Bureau, Inc. The development of a liquid public market depends on the existence
of willing buyers and sellers, the presence of which is not within the control
of the Company or the Bank. While the Company will use its best efforts to
encourage and assist a professional market maker in establishing and maintaining
a market for the Common Stock, the number of active buyers and sellers of the
Common Stock at any particular time may be limited, especially in view of the
limited size of the Offerings and the anticipated concentrated ownership of the
Common Stock. Under such circumstances, investors in the Common Stock could have
difficulty disposing of their shares and should not view the Common Stock as a
short-term investment. Investors should consider that it is unlikely that an
active and liquid trading market for the Common Stock will develop or that, if
developed, it will continue, and there can be no assurance that persons
purchasing shares of Common Stock will be able to sell them at or above the
Purchase Price.
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<PAGE>
CAPITALIZATION
The following table presents the historical consolidated capitalization of
the Bank at September 30, 1996, and the pro forma consolidated capitalization of
the Company after giving effect to the Conversion, based upon the sale of the
number of shares shown below and the other assumptions set forth under "Pro
Forma Data."
<TABLE>
<CAPTION>
Company - Pro Forma
Based Upon Sale at $10.00 Per Share
-----------------------------------------------------
396,750
255,000 300,000 345,000 Shares(1)
The Bank - Shares Shares Shares (15% above
Historical (Minimum of (Midpoint of (Maximum of Maximum of
Capitalization Range) Range) Range) Range)
-------------- ----------- ------------ ----------- ----------
(In Thousands)
<S> <C> <C> <C> <C> <C>
FHLB advances $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000
Deposits(2) 30,724 30,724 30,724 30,724 30,724
-------- -------- -------- -------- --------
Total deposits and
borrowings $ 32,724 $ 32,724 $ 32,724 $ 32,724 $ 32,724
======== ======== ======== ======== ========
Stockholders' equity:
Preferred Stock, $0.01
par value, 400,000
shares authorized; none
to be issued $ -- $ -- $ -- $ -- $ --
Common Stock, $0.01 par
value, 1,600,000 shares
authorized; shares to be
issued as reflected(3) -- 3 3 3 4
Additional paid-in
capital(3) -- 2,283 2,726 3,169 3,677
Retained earnings(4) 2,370 2,370 2,370 2,370 2,370
Net unrealized loss on
securities available for
sale (15) (15) (15) (15) (15)
Less:
Common Stock acquired
by the ESOP(5) -- (204) (240) (276) (317)
Common Stock acquired
by the Recognition
Plan(6) -- (102) (120) (138) (159)
-------- -------- -------- -------- --------
Total stockholders'
equity (equity at
September 30, 1996) $ 2,355 $ 4,335 $ 4,724 $ 5,113 $ 5,560
======== ======== ======== ======== ========
</TABLE>
(Footnotes on following page)
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<PAGE>
- ----------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Price Range of up to 15%
to reflect changes in market and financial conditions following the
commencement of the Subscription and Community Offerings.
(2) Does not reflect withdrawals from deposit accounts for the purchase of
Common Stock in the Conversion. Such withdrawals would reduce pro forma
deposits by the amount of such withdrawals. Total deposits and borrowings
do not reflect the anticipated loan from the Company to the ESOP, which
loan will not be reflected as a liability on the Company's consolidated
statements of financial condition.
(3) The sum of par value and additional paid-in capital accounts equals the
net Conversion proceeds. No effect has been given to the issuance of
additional shares of Common Stock pursuant to the Stock Option Plan
expected to be adopted by the Company and presented for stockholder
approval at a special meeting of stockholders to be held not earlier than
six months following the Conversion. If the plan is approved by
stockholders, an amount equal to 10% of the shares of Common Stock issued
in the Conversion will be reserved for issuance upon the exercise of
options to be granted under the Stock Option Plan. See "Pro Forma Data"
and "Management - Benefits - Stock Option Plan." The issuance of common
stock pursuant to the exercise of options under the Stock Option Plan will
result in the dilution of existing stockholders' interests by
approximately 9.1%.
(4) The retained earnings of the Bank will be substantially restricted after
the Conversion. See "The Conversion - Liquidation Rights."
(5) Assumes that 8% of the shares offered for sale in the Conversion will be
purchased by the ESOP. The Common Stock acquired by the ESOP is reflected
as a reduction of stockholders' equity. Assumes the funds used to acquire
the ESOP shares will be borrowed from the Company. See "Management -
Benefits - Employee Stock Ownership Plan and Trust."
(6) Gives effect to the Recognition Plan which is expected to be adopted by
the Company and presented to stockholders for approval at a special
meeting of stockholders to be held not earlier than six months following
the Conversion. No shares will be purchased by the Recognition Plan in the
Conversion. If the Recognition Plan is approved by stockholders, the
Recognition Plan intends to acquire an amount of Common Stock equal to 4%
of the shares of Common Stock issued in the Conversion, or 10,200, 12,000,
13,800 and 15,870 shares at the minimum, midpoint, maximum and 15% above
the maximum of the Estimated Price Range, respectively. The table assumes
that stockholder approval has been obtained and that such shares are
purchased on the open market by the Company at the Purchase Price. The
Common Stock so acquired by the Recognition Plan is reflected as a
reduction in stockholders' equity. If the shares are purchased at prices
higher or lower than the Purchase Price, such purchases would have a
greater or lesser impact, respectively, on stockholders' equity. If the
Recognition Plan purchases authorized but unissued shares from the
Company, such issuance would dilute the voting interests of existing
stockholders by approximately 3.9%. See "Pro Forma Data" and "Management -
Benefits - Recognition and Retention Plan."
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<PAGE>
PRO FORMA DATA
The actual net proceeds from the sale of the Common Stock cannot be
determined until the Conversion is completed. However, net proceeds are
currently estimated to be between $2.3 million and $3.2 million (or $3.7 million
in the event the Estimated Price Range is increased by 15%) based upon the
following assumptions: (i) 100% of the shares of Common Stock will be sold in
the Subscription Offering and Community Offering; (ii) fixed Conversion expenses
will be approximately $234,000 and (iii) Trident will be paid a variable expense
based on the number of shares sold of $29,700, $37,000, $44,200 and $52,500 at
the minimum, midpoint, maximum and maximum, as adjusted, of the Estimated Price
Range, respectively. Actual Conversion expenses may vary from those estimated.
See "The Conversion - Marketing Arrangements."
Pro forma net income and stockholders' equity have been calculated for the
year ended September 30, 1996 as if the Common Stock to be issued in the
Offerings had been sold at the beginning of the year and the net proceeds had
been invested at 5.69%, which represents the yield on one-year U.S. Government
securities at September 30, 1996. The use of this interest rate is viewed to be
more relevant in the current rate environment than the use of an arithmetic
average of the weighted average yield earned by the Bank on its interest-earning
assets and the weighted average rate paid on its deposits during such periods
(as required by Federal regulations). The effect of withdrawals from deposit
accounts for the purchase of Common Stock has not been reflected. A combined
effective Federal and state income tax rate of 34% has been assumed for the
year, resulting in an after-tax yield of 3.76% during the year ended September
30, 1996. Historical and pro forma per share amounts have been calculated by
dividing historical and pro forma amounts by the indicated number of shares of
Common Stock, as adjusted to give effect to the shares committed to be released
during the period by the ESOP, with respect to the net income per share
calculations. See footnotes 4 and 6 to the Pro Forma Data tables. No effect has
been given in the pro forma stockholders' equity calculations for the assumed
earnings on the net proceeds. As discussed under "Use of Proceeds," the Company
intends to retain 25% of the net Conversion proceeds and will use a portion of
such retained proceeds to make a loan directly to the ESOP to enable the ESOP to
purchase up to 8.0% of the Common Stock in the Conversion.
The following pro forma information may not be representative of the
financial effects of the foregoing transactions at the dates on which such
transactions actually occur and should not be taken as indicative of future
results of operations. Pro forma stockholders' equity represents the difference
between the stated amount of assets and liabilities of the Company computed in
accordance with generally accepted accounting principles ("GAAP"). The pro forma
stockholders' equity is not intended to represent the fair market value of the
Common Stock and may be different than amounts that would be available for
distribution to stockholders in the event of liquidation. No effect has been
given in the tables to the possible issuance of additional shares equal to 10%
of the Common Stock to be reserved for future issuance pursuant to the Stock
Option Plan to be adopted by the Board of Directors of the Company, nor does
book value give any effect to the liquidation account to be established for the
benefit of Eligible Account Holders and Supplemental Eligible Account Holders or
to the bad debt reserve. See "Management - Benefits - Stock Option Plan" and
"The Conversion - Liquidation Rights" and "Federal and State Taxation - Federal
Taxation." The tables below give effect to the Recognition Plan, which is
expected to be presented (together with the Stock Option Plan) to stockholders
for approval at a meeting of stockholders which is expected to be held not
earlier than six months following completion of the Conversion. If the
Recognition Plan is approved by stockholders, the Recognition Plan intends to
acquire an amount of Common Stock equal to 4% of the shares of Common Stock
issued in the Conversion, either through open market purchases or from
authorized but unissued shares of Common Stock. The tables below assume that
stockholder approval has been obtained and that the shares acquired by the
Recognition Plan are purchased in the open market at $10.00 per share. There can
be no assurance that stockholder approval of the Recognition Plan will be
obtained, that the shares will be purchased in the open market, or that the
purchase price will be $10.00 per share.
The following tables summarize historical consolidated data of the Bank
and pro forma data of the Company at the year ended September 30, 1996 based on
assumptions set forth above and in the tables and should not be used as a basis
for projections of market value of the Common Stock following the Conversion.
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<PAGE>
<TABLE>
<CAPTION>
At or For the Year Ended September 30, 1996
--------------------------------------------------------
255,000 300,000 345,000 396,750
Shares Sold Shares Sold Shares Sold Shares Sold
at $10.00 at $10.00 at $10.00 at $10.00
Per Share Per Share Per Share Per Share (15%
(Minimum (Midpoint (Maximum above Maximum
of Range) of Range) of Range) of Range)(9)
----------- ----------- ----------- --------------
(Dollars in Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Gross proceeds $ 2,550 $ 3,000 $ 3,450 $ 3,968
Less offering expenses 264 271 278 287
--------- --------- --------- ---------
Estimated net Conversion proceeds 2,286 2,729 3,172 3,681
Less: Common Stock acquired
by ESOP (204) (240) (276) (317)
Common Stock to be acquired
by the Recognition Plan (102) (120) (138) (159)
--------- --------- --------- ---------
Estimated adjusted net proceeds(1) 1,980 2,369 2,758 3,205
========= ========= ========= =========
Net income (loss):
Historical $ (71)(8) $ (71)(8) $ (71)(8) $ (71)(8)
Pro forma adjustments:
Income on adjusted net proceeds(1) 74 89 104 121
ESOP(2) (13) (16) (18) (21)
Recognition Plan(3) (13) (16) (18) (21)
--------- --------- --------- ---------
Pro forma net income (loss) $ (23) $ (14) $ (3) $ 8
========= ========= ========= =========
Net income (loss) per share(4):
Historical $ (0.30) $ (0.26) $ (0.22) $ (0.19)
Pro forma adjustments:
Income on adjusted net proceeds(1) $ 0.31 $ 0.32 $ 0.32 $ 0.33
ESOP(2) (0.05) (0.06) (0.06) (0.06)
Recognition Plan(3) (0.05) (0.06) (0.06) (0.06)
--------- --------- --------- ---------
Pro forma net income (loss) per share $ (0.09) $ (0.06) $ (0.02) $ 0.02
========= ========= ========= =========
Pro forma price/earnings ratio(9) NM NM NM 500.0x
Number of shares used in net income per
share calculations(4) 236,640 278,400 320,160 368,184
Stockholders' equity:
Historical $ 2,355 $ 2,355 $ 2,355 $ 2,355
Estimated net Conversion proceeds 2,286 2,729 3,172 3,681
Less: Common Stock acquired
by ESOP(2) (204) (240) (276) (317)
Common Stock to be acquired
by the Recognition Plan(3) (102) (120) (138) (159)
--------- --------- --------- ---------
Pro forma stockholders' equity(6) $ 4,335 $ 4,724 $ 5,113 $ 5,560
========= ========= ========= =========
Stockholders' equity per share(7):
Historical $ 9.24 $ 7.85 $ 6.83 $ 5.94
Estimated net Conversion proceeds 8.96 9.10 9.19 9.28
Less: Common Stock acquired
by ESOP(2) (0.80) (0.80) (0.80) (0.80)
Common Stock to be acquired
by the Recognition Plan(3) (0.40) (0.40) (0.40) (0.40)
--------- --------- --------- ---------
Pro forma stockholders' equity
per share(3)(5)(6) $ 17.00 $ 15.75 $ 14.82 $ 14.02
========= ========= ========= =========
Pro forma price to book ratio(7) 58.82% 63.49% 67.48% 71.33%
========= ========= ========= =========
</TABLE>
(Footnotes on following page)
-31-
<PAGE>
- ----------
(1) Estimated adjusted net proceeds consist of the estimated net Conversion
proceeds, minus (i) the proceeds attributable to the purchase by the ESOP
and (ii) the value of the shares to be purchased by the Recognition Plan,
subject to stockholder approval, after the Conversion at an assumed price
of $10.00 per share.
(2) It is assumed that 8% of the shares of Common Stock issued in the
Conversion will be purchased by the ESOP. For purposes of this table, the
funds used to acquire such shares are assumed to have been borrowed by the
ESOP from the Company. The Company intends to make quarterly contributions
to the ESOP over a ten-year period in an amount at least equal to the
principal and interest requirement (which interest rate shall be ____%) of
the debt. The pro forma net income assumes (i) that the ESOP expense for
each respective period is equivalent to the principal payment for the
respective period and was made at the end of each respective period; (ii)
that 2,040, 2,400, 2,760 and 3,174 shares were committed to be released
with respect to the year ended September 30, 1996, at the minimum,
midpoint, maximum and 15% above the maximum of the Estimated Price Range,
respectively; and (iii) in accordance with SOP 93-6, only the ESOP shares
committed to be released during the respective period were considered
outstanding for purposes of the net income per share calculations. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations -Recent Accounting Pronouncements" and "Management -
Benefits - Employee Stock Ownership Plan and Trust."
(3) The adjustment is based upon the assumed purchases by the Recognition Plan
of 10,200, 12,000, 13,800 and 15,870 shares at the minimum, midpoint,
maximum and 15% above the maximum of the Estimated Price Range, assuming
that: (i) stockholder approval of the Recognition Plan has been received;
(ii) the shares were acquired by the Recognition Plan at the beginning of
the period in open market purchases at the Purchase Price; and (iii) the
amortized expense for the year ended September 30, 1996 was 20% of the
amount contributed. If the Recognition Plan purchases authorized but
unissued shares instead of making open market purchases, the voting
interests of existing stockholders would be diluted by approximately 3.9%
and pro forma net income (loss) per share for the year ended September 30,
1996 would be $(0.08), $(0.03), $0.01 and $0.03, and pro forma
stockholders' equity per share at September 30, 1996 would be $16.73,
$15.53, $14.63 and $13.86, at the minimum, midpoint, maximum and 15% above
the maximum of the Estimated Price Range, respectively. See "Management -
Benefits - Recognition and Retention Plan."
(4) Net income per share computations are determined by taking the number of
shares assumed to be sold in the Conversion and, in accordance with SOP
93-6, subtracting the ESOP shares which have not been committed for
release during the respective period. See Note 2 above.
(5) No effect has been given to the issuance of additional shares of Common
Stock pursuant to the Stock Option Plan. If the Stock Option Plan is
approved by stockholders, an amount equal to 10% of the Common Stock
issued in the Conversion, or 25,500, 30,000, 34,500 and 39,675 shares at
the minimum, midpoint, maximum and 15% above the maximum of the Estimated
Price Range, respectively, will be reserved for future issuance upon the
exercise of options to be granted under the Stock Option Plan. The
issuance of Common Stock pursuant to the exercise of options under such
plan will result in the dilution of existing stockholders' interests.
Assuming stockholder approval of the Stock Option Plan, that all the
options were exercised at the end of the period at an exercise price of
$10.00 per share, and that the Recognition Plan purchases shares in the
open market at the Purchase Price, pro forma net income (loss) per share
for the year ended September 30, 1996 would be $(0.09), $(0.05), $(0.01)
and $0.02, and pro forma stockholders' equity per share at September 30,
1996 would be $16.36, $15.22, $14.38 and $13.65, in each case, at the
minimum, midpoint, maximum and 15% above the maximum of the Estimated
Price Range, respectively.
-32-
<PAGE>
(6) The retained earnings of the Bank will be substantially restricted after
the Conversion. See "Dividend Policy" and "The Conversion - Liquidation
Rights."
(7) Based on the number of shares sold in the Conversion.
(8) Except for the special SAIF assessment, the Bank's net income for the year
ended September 30, 1996 would have been $84,000. If the Bank's net income
for the year ended had been $84,000, pro forma net income for the year
ended September 30, 1996 would have been $132,000, $141,000, $152,000 and
$162,000 and pro forma net income per share would have been $0.56, $0.51,
$0.47 and $0.44 at the minimum, midpoint, maximum and 15% above the
maximum of the Estimated Price Range, respectively. See "Management's
Discussion and Analysis of Financial Condition and Results of Operation -
Results of Operation."
(9) The ratio is not meaningful ("NM") when there is a pro forma loss per
share.
REGULATORY CAPITAL REQUIREMENTS
Under FDIC regulations, depository institutions such as the Bank are
required to maintain a minimum ratio of qualifying total capital to total assets
and off-balance sheet instruments, as adjusted to reflect their relative credit
risks, of 8.0%. At least one-half of total capital is to be comprised of common
equity, retained earnings, non-cumulative perpetual preferred stock and a
limited amount of cumulative perpetual preferred stock, less goodwill and other
intangibles ("Tier 1 capital"). The remainder of total capital may consist of a
limited amount of subordinated debt, other preferred stock, certain other
instruments and a limited amount of general reserves for loan losses ("Tier 2
capital").
The FDIC also has established an additional capital adequacy guideline
referred to as the Tier 1 leverage capital ratio, which measures the ratio of
Tier 1 capital to total assets less goodwill. Although the most highly- rated
depository institutions will be required to maintain a minimum Tier 1 leverage
capital ratio of 3.0%, most depository institutions will be required to maintain
Tier 1 leverage capital ratios of 4.0% to 5.0% or more. The actual required
ratio will be based on the FDIC's assessment of the individual depository
institution's asset quality, earnings performance, interest-rate risk and
liquidity. Although the FDIC has not advised the Bank of a specific Tier 1
leverage capital ratio requirement, management of the Bank believes that for
purposes of complying with applicable federal regulations, the required Tier 1
leverage capital ratio for the Bank will be 4.0%, based upon published
regulatory criteria for establishing such minimum. There can be no assurance
that the Bank will not be required by the FDIC to maintain a higher Tier 1
leverage capital ratio.
The Federal Reserve Board has established guidelines regarding the capital
adequacy of bank holding companies, such as the Company. These requirements are
substantially similar to those adopted by the FDIC for depository institutions,
as set forth above. See generally "Regulation - The Company - Capital
Requirements" and "- The Bank - Capital Requirements."
Set forth below is a summary of the Bank's compliance with the applicable
capital standards as of September 30, 1996 on a historical basis and the
Company's and the Bank's compliance with applicable capital standards on a pro
forma basis assuming that the indicated number of shares were sold by the
Company as of such date and receipt by the Bank of 75% of net Conversion
proceeds. Proceeds have been assumed to be invested in interest-earning assets
which have a 50% risk-weighting.
-33-
<PAGE>
<TABLE>
<CAPTION>
Pro Forma at September 30, 1996 Based on
----------------------------------------------------------------------------------
Historical at 255,000 Shares 300,000 Shares 345,000 Shares 396,750 Shares
September 30, 1996 (Minimum of Range) (Midpoint of Range) (Maximum of Range) (Maximum As Adjusted)
------------------ ------------------ ------------------- ------------------ ---------------------
Percent Percent Percent Percent Percent
Amount of Assets(1) Amount of Assets(1) Amount of Assets(1) Amount of Assets(1) Amount of Assets(1)
------ ------------ ------ ------------ ------ ------------ ------ ------------ ------ ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Company:
Tier 1 risk-weighted level -- --% $4,351 25.01% $4,740 26.95% $5,129 28.84% $5,576 30.98%
Requirement ............ -- -- 696 4.00% 704 4.00% 711 4.00% 720 4.00%
------ ------ ------ ------ ------ ------ ------ ------
Excess ................. -- -- $3,655 21.01% $4,036 22.95% $4,418 24.84% $4,856 26.98%
====== ====== ====== ====== ====== ====== ====== ======
Tier 1 adjusted total level -- -- $4,351 11.63% $4,730 12.53% $5,129 13.42% $5,576 14.42%
Requirement ............ -- -- 1,123 3.00% 1,134 3.00% 1,146 3.00% 1,160 3.00%
------ ------ ------ ------ ------ ------ ------ ------
Excess ................. -- -- $3,228 8.63% $3,606 9.53% $3,983 10.42% $4,416 11.42%
====== ====== ====== ====== ====== ====== ====== ======
Total risk-based level .... -- -- $4,494 25.84% $4,883 27.76% $5,272 29.65% $5,718 31.76%
Requirement ............ -- -- 1,392 8.00% 1,407 8.00% 1,423 8.00% 1,440 8.00%
------ ------ ------ ------ ------ ------ ------ ------
Excess ................. -- -- $3,102 17.84% $3,476 19.76% $3,849 21.65% $4,278 23.76%
====== ====== ====== ====== ====== ====== ====== ======
The Bank:
Tier 1 risk-weighted level $2,371 14.45% $3,780 21.96% $4,058 23.36% $4,336 24.74% $4,655 26.29%
Requirement ............ 656 4.00% 688 4.00% 695 4.00% 701 4.00% 708 4.00%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Excess ................. $1,715 10.45% $3,092 17.96% $3,363 19.36% $3,635 20.74% $3,947 22.29%
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Tier 1 adjusted total level $2,371 6.69% $3,780 10.20% $4,058 10.86% $4,336 11.50% $4,655 12.24%
Requirement(2) ......... 1,418 4.00% 1,482 4.00% 1,495 4.00% 1,508 4.00% 1,522 4.00%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Excess ................. $ 953 2.69% $2,298 6.20% $2,563 6.86% $2,828 7.50% $3,133 8.24%
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total risk-based level .... $2,514 15.33% $3,923 22.79% $4,201 24.19% $4,479 25.56% $4,798 27.10%
Requirement ............ 1,312 8.00% 1,377 8.00% 1,389 8.00% 1,402 8.00% 1,416 8.00%
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Excess ................. $1,202 7.33% $2,546 14.79% $2,812 16.19% $3,077 17.56% $3,382 19.10%
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
- ----------
(1) Average or risk-weighted assets, as appropriate.
(2) Reflects the minimum FDIC requirements. The FDIC could require the Bank to
hold a Tier 1 leverage ratio of up to 5.0%.
-34-
<PAGE>
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of Common Stock of the
Company proposed to be purchased by the Company's directors and by all directors
and executive officers as a group (including purchases by any associates of or
groups acting in concert with such persons), assuming shares of Common Stock are
issued at the maximum of the Estimated Price Range and that sufficient shares
will be available to satisfy their subscriptions.
At the Maximum
of the Estimated Price Range(1)
----------------------------------------------
As a Percent
Number of Shares
Name Amount of Shares Offered
- --------------------------- -------- --------- ------------
Thomas B. Meyer $ 50,000 5,000 1.4%
Merrill G. Norton 150,000 15,000 4.3
Carl W. Busby 150,000 15,000 4.3
Robert L. Ewbank 150,000 15,000 4.3
William T. Ingram 150,000 15,000 4.3
All directors and executive
officers as a group
(5 persons) $650,000(2) 65,000 18.6%
- ----------
(1) Includes proposed subscriptions, if any, by associates. The ESOP intends
to acquire up to 8.0% of the Common Stock in the Conversion, or 27,600
shares at the maximum of the Estimated Price Range, which shares are not
reflected in the amounts to be purchased by the Company's directors and
officers in the table above. In addition, this does not include awards
pursuant to the Stock Option Plan or the Recognition Plan, which will be
submitted for approval to stockholders at a meeting of stockholders
expected to be held not earlier than six months following the completion
of the Conversion. See "- Benefits - Employee Stock Ownership Plan and
Trust."
(2) Includes purchases to be made by executive officers through the 401(k)
Plan.
-35-
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
The following Consolidated Statement of Income of the Bank for each of the
years in the two-year period ended September 30, 1996 have been audited by Geo.
S. Olive & Co. LLC, independent certified public accountants, whose report
thereon appears elsewhere herein. This Consolidated Statement of Income should
be read in conjunction with the Consolidated Financial Statements and related
notes included elsewhere herein.
Year Ended September 30,
--------------------------
1996 1995
---- ----
(In Thousands)
Interest income:
Loans receivable $ 2,118 $ 1,757
Investment securities 449 538
Deposits with financial institutions 67 80
------- -------
Total interest income 2,634 2,375
------- -------
Interest expense:
Deposits 1,671 1,588
FHLB advance 107 0
------- -------
Total interest expense 1,778 1,588
------- -------
Net interest income 856 787
Provision for losses on loans 80 13
------- -------
Net interest income after provisions for
for losses on loans 776 774
------- -------
Non-interest income:
Loan fees 12 11
Net realized gains on sales of securities
available for sale -- 1
Other income 33 39
------- -------
Total non-interest income 45 51
------- -------
Non-interest expenses:
Salaries and employee benefits 276 297
Net occupancy expenses 97 95
Data processing fees 40 39
Deposit insurance expense 277 71
Printing and office supplies 16 17
Legal and professional fees 36 43
Advertising and promotion 29 28
Director fees 41 41
Other expenses 77 79
------- -------
Total non-interest expenses 889 710
------- -------
Income (Loss) Before Income Tax (68) 115
Income tax expense 3 15
------- -------
Net income (loss) $ (71) $ 100
======= =======
See accompanying notes to Consolidated Financial Statements.
-36-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company has only recently been formed and accordingly, has no results
of operations. The operating results of the Bank depend primarily upon its net
interest income, which is determined by the difference between interest income
on interest-earning assets, which consist principally of loans, investment
securities and other investments, and interest expense on interest-bearing
liabilities, which consist principally of deposits. The Bank's net income also
is affected by its provision for loan losses, as well as the level of its
non-interest income, including loan fees and other income and its non-interest
expenses, including salaries and employee benefits, occupancy expense, federal
deposit insurance premiums, director fees, data processing fees, legal and
professional fees, and other expenses.
Asset and Liability Management
The ability to maximize net interest income is largely dependent upon the
achievement of a positive interest rate spread that can be sustained during
fluctuations in prevailing interest rates. Interest rate sensitivity is a
measure of the difference between amounts of interest-earning assets and
interest-bearing liabilities which either reprice or mature within a given
period of time. The difference, or the interest rate repricing "gap," provides
an indication of the extent to which an institution's interest rate spread will
be affected by changes in interest rates. A gap is considered positive when the
amount of interest-rate sensitive assets exceeds the amount of interest-rate
sensitive liabilities, and is considered negative when the amount of
interest-rate sensitive liabilities exceeds the amount of interest-rate
sensitive assets during a given time period. Generally, during a period of
rising interest rates, a negative gap within shorter maturities would adversely
affect net interest income, while a positive gap within shorter maturities would
result in an increase in net interest income, and during a period of falling
interest rates, a negative gap within shorter maturities would result in an
increase in net interest income while a positive gap within shorter maturities
would have the opposite effect. As of September 30, 1996, the amount of the
Bank's interest-bearing liabilities which were estimated to mature or reprice
within one year exceeded the Bank's interest-earning assets with the same
characteristics by $10.4 million or 29.4% of the Bank's total assets.
The Bank's actions with respect to interest rate risk and its
asset/liability gap management are reviewed periodically by the Bank's Board of
Directors. As part of the Board's review, it sets interest rate risk targets and
reviews the Bank's current composition of assets and liabilities in light of the
prevailing interest rate environment.
The Bank has historically emphasized the origination of fixed-rate
long-term residential real estate loans for retention in its portfolio. At
September 30, 1996, $15.8 million or 56.8% of the Bank's total loan portfolio
consisted of one-to-four-family fixed-rate long-term residential mortgage loans.
Although the Bank anticipates that a substantial portion of its loan portfolio
will continue to consist of fixed-rate long-term loans, the Bank has limited the
term of such loans originated since 1983 to no more than 20 years with a
substantial majority of such loans having a term of 15 years or less. The Bank
has also attempted to mitigate the interest rate risk of holding a significant
portion of fixed-rate loans in its portfolio through the origination of
one-to-four family fixed-rate balloon loans with terms of one or three years. At
the end of a balloon loan's term, the entire balance is due. The borrower has
the option of repaying the loan on the due date or, subject to satisfying the
Bank's underwriting criteria, accepting the modified loan rate which is then
offered by the Bank for such loans. In the latter case, the renewed loan is a
new balloon loan with the same term as the initial balloon loan. The Bank has
generally offered rates on such renewed loans at 1/4 of 1% to 1/2 of 1% higher
than rates then offered on its new balloon residential real estate loans.
Renewed balloon loans are amortized over the remaining life of the original
amortization period. At September 30, 1996, $5.6 million or 20.7% of the Bank's
total loan portfolio consisted of one-to-four family fixed-rate balloon loans.
-37-
<PAGE>
In addition, in 1995 the Bank increased its originations of consumer loans
and commercial business loans due to their generally shorter terms and higher
yields than residential mortgage loans. At September 30, 1996, such loans
totalled $2.9 million or 10.8% of the Bank's total loan portfolio. The Bank has
also invested new funds or reinvested funds from maturing securities into
shorter-term securities and variable-rate mortgage-backed securities in order to
increase the interest-rate sensitivity of its assets. As of September 30, 1996,
the Bank had $1.7 million of variable-rate mortgage-backed securities and had
$2.7 million of investments in various and federal agency government securities
with terms to maturity of less than five years. As of September 30, 1996, $2.2
million of the Bank's investment securities portfolio were classified as
available for sale, which will permit the Bank to sell such securities if deemed
appropriate in response to, among other things, changes in interest rates.
The Bank's deposits have included a relatively high amount of
certificates, which are generally higher costing and more interest-rate
sensitive than "core" deposits. At September 30, 1996, $23.8 million, or 77.3%
of the Bank's total deposits were comprised of certificates and $17.0 million,
or 55.4% of the Banks total deposits consisted of certificates which are
scheduled to mature within one year. Certificates generally are costlier and a
more volatile source of funds than transaction accounts. In addition,
certificates are more likely to be invested in other instruments than are
transaction accounts. Notwithstanding the foregoing, management believes that
most of its certificates will remain at the Bank upon maturity. The Bank does
not accept brokered deposits. See "Business of the Bank - Sources of Funds -
Deposits."
In order to continue to improve the Bank's interest-rate gap position, it
plans to continue to focus on increasing consumer and commercial business
lending and investing in shorter-term and variable-rate securities. Moreover,
the Bank believes that the additional capital it will raise as a result of the
sale of the Common Stock will enhance its flexibility to operate within a wider
range of interest-rate gap scenarios.
-38-
<PAGE>
The following table summarizes the anticipated maturities or repricing of
the Bank's interest-earning assets and interest-bearing liabilities as of
September 30, 1996 based on the information and assumptions set forth in the
notes below.
<TABLE>
<CAPTION>
More Than
Six to More Than Three Years
Within Six Twelve One Year to to Five Over Five
Months Months Three Years Years Years Total
---------- ------ ----------- ----------- --------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Securities(1)(2) $ 894 $ 303 $ 743 $ 782 $ 630 $ 3,352
Loans, net(3) 1,989 1,955 6,215 5,666 11,242 27,067
Interest-bearing deposits(4) 429 99 528
Mortgage-backed securities 835 1,228 846 391 176 3,476
-------- -------- -------- -------- -------- --------
Total interest-earning assets $ 4,147 $ 3,486 $ 7,903 $ 6,839 $ 12,048 $ 34,423
======== ======== ======== ======== ======== ========
Interest-bearing liabilities:
Deposits(5):
NOW accounts 102 103 206 -- -- 411
Money market investment accounts 260 261 522 -- -- 1,043
Savings accounts 232 233 930 932 -- 2,327
Retirement accounts 152 152 604 604 1,511 3,023
Certificates 10,051 6,527 6,385 791 -- 23,754
-------- -------- -------- -------- -------- --------
Total interest-bearing deposits 10,797 7,276 8,647 2,327 1,511 30,558
-------- -------- -------- -------- -------- --------
Advances from FHLB -- -- 2,000 -- -- 2,000
-------- -------- -------- -------- -------- --------
Total interest-bearing liabilities $ 10,797 $ 7,276 $ 10,647 $ 2,327 $ 1,511 $ 32,558
======== ======== ======== ======== ======== ========
Excess (deficiency) of interest-earning
assets over interest-bearing liabilities $ (6,650) $ (3,790) $ (2,744) $ 4,512 $ 10,537 $ 1,865
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities $ (6,650) $(10,440) $(13,184) $ (8,672) $ 1,865
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities as a percent of
total assets (18.75)% (29.44)% (37.18)% (24.46)% 5.26%
</TABLE>
- ----------
(1) Reflects repricing, contractual maturity or anticipated call date.
(2) Includes securities available for sale and held to maturity and FHLB of
Chicago stock. Excludes mortgage-backed securities.
(3) Fixed-rate loans, including balloon loans, are included in the periods in
which they are scheduled to be repaid, based on scheduled amortization,
adjusted to take into account estimated prepayments. Therefore, for
purposes of the table, all of the Bank's balloon loans are deemed to have
a term equal to the initial amortization period.
(4) Includes interest-bearing demand and interest-bearing time deposits.
(5) Adjusted to reflect various decay rate assumptions.
-39-
<PAGE>
Certain assumptions are contained in the above table which affect the
presentation therein. Although certain assets and liabilities may have similar
maturities or periods of repricing, they may react in different degrees to
changes in market interest rates. The interest rates on certain types of assets
and liabilities may fluctuate in advance of changes in market interest rates,
while interest rates of other types of assets and liabilities lag behind changes
in market interest rates. Certain assets, such as adjustable-rate loans, have
features which restrict changes in interest rates on a short-term basis and over
the life of the asset. In the event of a change in interest rates, prepayment
and early withdrawal levels would likely deviate significantly from those
assumed in calculating the table.
Net Portfolio Value. Although interest rate sensitivity gap is a useful
measurement and contributes toward effective asset and liability management, it
is difficult to predict the effect of changing interest rates based solely on
that measure. Therefore, the Bank's Board of Directors also monitors its
interest rate sensitivity through the use of the net portfolio value model
produced by the Commissioner which generates estimates of the change in the
Bank's net portfolio value ("NPV") over a range of interest rate scenarios. NPV
is the present value of expected cash flows from assets, liabilities, and
off-balance sheet contracts. The NPV ratio, under any interest rate scenario, is
defined as the NPV in that scenario divided by the market value of assets in the
same scenario. The Commissioner produces such estimates utilizing its own model,
based upon data submitted on the Bank's Call Reports on a quarterly basis. The
Commissioner's model assumes estimated loan prepayment rates, reinvestment rates
and deposit decay rates. See "Regulation - The Savings Bank." The following
table sets forth the Bank's NPV as of September 30, 1996 (the latest available
analysis produced by the Commissioner) as calculated by the Commissioner.
NPV as % of Portfolio
Net Portfolio Value Value of Assets
------------------------------ ---------------------
Change (In Basis Points) NPV
in Interest Rates(1) Amount $ Change % Change Ratio Change (1)
- ------------------------ ------ -------- -------- ----- ----------
(Dollars in Thousands)
+ 400 $1,221 $(1,702) (58)% 3.77 (448)
+ 300 1,615 (1,308) (45) 4.88 (337)
+ 200 2,054 (869) (30) 6.06 (219)
+ 100 2,498 (425) (15) 7.21 (104)
0 2,923 -- -- 8.25 --
- 100 2,722 (201) (7) 7.54 (71)
- 200 3,115 192 7 8.48 23
- 300 2,839 (84) (3) 7.73 (52)
- 400 3,018 95 3 8.11 (14)
- ----------
(1) Assumes an instantaneous and permanent uniform change in interest rates at
all maturities.
Management of the Bank believes that the assumptions used by it to
evaluate the vulnerability of the Bank's operations to changes in interest rates
approximate actual experience and considers them reasonable; however, the
interest rate sensitivity of the Bank's assets and liabilities and the estimated
effects of changes in interest rates on the Bank's net interest income and NPV
indicated in the above tables could vary substantially if different assumptions
were used or actual experience differs from the historical experience on which
they are based. In addition, the interest rate characteristics of certain of the
Bank's assets and liabilities impact the results of the above table.
-40-
<PAGE>
Changes in Financial Condition
General. Total assets of the Bank increased by $1.5 million, or 4.4%, to
$35.5 million at September 30, 1996 from $34.0 million at September 30, 1995.
The increase in total assets during 1996 was due primarily to a $3.0 million
increase in loans which was partially offset by a $1.7 million decrease in
investment securities.
Cash and Cash Equivalents. Cash and cash equivalents, which consist of
interest-bearing demand deposits at other institutions, increased by $218,000,
or 38.2%, to $789,000 at September 30, 1996 compared to $571,000 at September
30, 1995. The increase in cash and cash equivalents during fiscal 1996 was
primarily the result of maturities and repayments of investment securities. At
September 30, 1996, cash and cash equivalents amounted to 2.2% of the Bank's
total assets. Cash and cash equivalents may be utilized to fund deposit
withdrawals or as a source of funds for new loan originations or for the
purchase of investment or mortgage-backed securities.
Loans, Net. The Bank's loans, net, amounted to $26.9 million at September
30, 1996, a $3.0 million, or 12.5%, increase over loans, net, at September 30,
1995. Such increase was due primarily to new originations of residential
mortgage loans and increased originations of consumer loans.
Investment Securities. The Bank's investment securities amounted to $6.6
million at September 30, 1996 compared to $8.3 million at September 30, 1995.
The decrease in investment securities during fiscal 1996 was due to maturities
and repayments of investment securities.
Deposits. The Bank's total deposits amounted to $30.7 million at September
30, 1996 compared to $31.3 million at September 30, 1995. During 1996, before
interest credited, the Bank's total deposits decreased by $1.9 million.
Federal Home Loan Bank Advances. The Bank's total advances from the FHLB
of Chicago amounted to $2.0 million at September 30, 1996. The proceeds from
these advances were used to fund growth in the Bank's loan portfolio during
1996. The Bank had no such advances at September 30, 1995.
Results of Operations
The Bank reported a net loss of $71,000 during the year ended September
30, 1996 and net income of $100,000 during the year ended September 30, 1995.
The primary reason for the net loss reported in fiscal 1996 was the increase in
deposit insurance expense from $71,000 in fiscal 1995 to $277,000 in fiscal 1996
due to a special assessment of $206,000. See Risk Factors - Regulatory Oversight
and Possible Legislation. Excluding the special assessment, the Bank would have
had net income of $84,000 tax effected, a decrease of $16,000 or 16.00% compared
to net income for fiscal 1995. The primary reason for that decrease was an
increase of $67,000 in provisions for losses on loans coupled with an $18,000
charge to the Bank's income tax expense due to a change in the rate applied to
deferred income tax items. These increases were partially offset by a $69,000
increase in the Bank's net interest income.
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<PAGE>
Average Balances, Net Interest Income and Yields Earned and Rates Paid.
The following table presents for the periods indicated the total dollar amount
of interest income from average interest-earning assets and the resultant
yields, as well as the total dollar amount of interest expense on average
interest-bearing liabilities and the resultant rates, and the net interest
margin. The table does not reflect any effect of income taxes. All average
balances are based on average monthly balances during the periods.
<TABLE>
<CAPTION>
Year Ended September 30,
At September 30,------------------------------------------------------------------
1996 1996 1995
--------------- ----------------------------- ---------------------------------
Yield/ Average Yield/ Average Yield/
Rate Balance Interest Rate Balance Interest Rate
------ ------- -------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans, net(1) 8.17% $25,869 $ 2,118 8.19% $22,399 $1,757 7.84%
Interest-bearing deposits with financial
institutions 5.77 1,330 67 5.04 1,381 80 5.80
Securities(2) 5.53 3,531 204 5.78 4,670 256 5.48
Mortgage-backed securities 6.99 3,811 245 6.43 4,510 282 6.25
------- ------- ------- ------
Total interest-earning assets 7.72 34,541 2,634 7.63 32,960 2,375 7.21
------- ------
Non-interest-earning assets 1,117 1,112
------- -------
Total assets $35,658 $34,072
======= =======
Interest-bearing liabilities:
Deposits:
NOW accounts 1.42% $ 469 $ 10 2.13 $ 516 $ 13 2.52
Money market investment accounts 2,75 1,355 38 2.80 1,685 55 3.26
Savings and retirement accounts 4.58 5,161 236 4.57 5,124 234 4.57
Certificates 5.81 23,672 1,387 5.86 23,842 1,286 5.39
------- ------- ------- ------
Total deposits 5.41 30,657 1,671 5.45 31,167 1,588 5.10
FHLB advances 5.83 1,917 107 5.58 -- -- --
------- ------- ------- ------
Total interest-bearing liabilities 5.43 32,574 1,778 5.46 31,167 1,588 5.10
------- ------
Non-interest bearing liabilities 624 513
------- -------
Total liabilities 33,198 31,680
Equity capital 2,460 2,392
------- -------
Total liabilities and equity capital $35,658 $34,072
======= =======
Net interest income; interest rate spread(3) 2.29% $ 856 2.17% $ 787 2.11%
==== ======= ==== ======= ====
Net interest margin(4) 2.48% 2.39%
==== ====
Ratio of interest-earning assets to
average interest-bearing liabilities 105.67 106.05% 104.04%
====== ====== ======
</TABLE>
- ----------
(1) Includes loans on which the Bank has discontinued accruing interest.
(2) Includes securities available for sale and held to maturity and excludes
mortgage-backed securities.
(3) Interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average rate on
interest-bearing liabilities.
(4) Net interest margin is net interest income divided by average
interest-earning assets.
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<PAGE>
Rate/Volume Analysis. The following table describes the extent to which
changes in interest rates and changes in volume of interest-related assets and
liabilities have affected the Bank's interest income and interest expense during
the periods indicated. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume (change in volume multiplied by prior year rate), (ii)
changes in rate (change in rate multiplied by prior year volume), and (iii)
total change in rate and volume. The combined effect of changes in both rate and
volume has been allocated proportionately to the change due to rate and the
change due to volume.
Year Ended September 30,
-----------------------------
1996 vs. 1995
-----------------------------
Increase
(Decrease)
Due To Total
---------------- Increase
Rate Volume (Decrease)
----- ------ ----------
(In Thousands)
Interest-earning assets:
Interest-bearing deposits with financial
institutions $ (10) $ (3) $ (13)
Loans, net 80 281 361
Securities(1) 13 (65) (52)
Mortgage-backed securities 8 (45) (37)
----- ----- -----
Total change in interest income 91 168 259
----- ----- -----
Interest-bearing liabilities:
Deposits:
NOW accounts (2) (1) (3)
Money market investment accounts (7) (10) (17)
Savings and retirement accounts -- 2 2
Certificates 110 (9) 101
FHLB advances -- 107 107
----- ----- -----
Total change in interest expense 101 89 190
----- ----- -----
Net change in net interest income $ (10) $ 79 $ 69
===== ===== =====
- ----------
(1) Includes securities available for sale and held to maturity. Does not
include mortgage-backed securities.
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<PAGE>
Net Interest Income. Net interest income is determined by interest rate
spread (i.e., the difference between the yields earned on its interest-earning
assets and the rates paid on its interest-bearing liabilities) and the relative
amounts of interest-earning assets and interest-bearing liabilities. The Bank's
average interest-rate spread was 2.17% and 2.11% during the years ended
September 30, 1996 and 1995, respectively. The Bank's interest-rate spread was
2.29% at September 30, 1996. The Bank's net interest margin (i.e., net interest
income as a percentage of average interest-earning assets) was 2.48% and 2.39%
during the years ended September 30, 1996 and 1995 respectively.
Net interest income increased by $68,000, or 8.6%, during the year ended
September 30, 1996 to $856,000 compared to $788,000 for the year ended September
30, 1995. The reason for such increase in net interest income in fiscal 1996 was
a $259,000 increase in interest income which more than offset a $190,000
increase in interest expense.
Interest Income. Total interest income increased by $259,000 or 10.9% in
the year ended September 30, 1996. Interest income on loans amounted to $2.1
million in fiscal 1996 compared to $1.8 million in fiscal 1995. The average
balance of the Bank's total loans increased by $3.5 million, or 15.5%, in fiscal
1996 compared to fiscal 1995 and the average yield earned on loans increased by
35 basis points (with 100 basis points being equal to 1.0%). Interest income on
mortgage-backed securities decreased by $37,000 or 13.1% in fiscal 1996 compared
to fiscal 1995 due primarily to an $699,000 or 15.5% decrease in the average
balance of the mortgage-backed securities portfolio. Interest income on
securities and interest-bearing deposits decreased by $65,000, or 19.3%, in
fiscal 1996 compared to fiscal 1995 due to a $1.2 million, or 19.7%, decrease in
the average balance of the securities and interest-bearing deposits portfolio
which was slightly offset by a 2 basis point increase in the average yield
earned.
Interest Expense. The primary component of interest expense during all
periods presented is interest on deposits. Total interest expense increased by
$190,000, or 12.0%, during the year ended September 30, 1996 compared to the
year ended September 30, 1995. The increase was due primarily to a $107,000
interest expense on FHLB advances outstanding during fiscal 1996 compared to no
such expense during fiscal 1995 and a $101,000 increase in interest expense on
certificates in fiscal 1996 compared to fiscal 1995, which more than offset a
$20,000 aggregate decrease in interest expense on NOW accounts and money market
investment accounts. Certificates constituted 77.3% of the Bank's total deposits
at September 30, 1996 compared to 77.6% at September 30, 1995. The average
balance of the Bank's certificates remained relatively stable during fiscal
years 1996 and 1995, while the average cost of certificates increased by 47
basis points in fiscal 1996.
Provisions for Losses on Loans. Provisions for losses on loans are charged
to earnings to bring the total allowance for loan losses to a level considered
appropriate by management based on a methodology implemented by the Bank which
is designed to assess, among other things, experience, the volume and type of
lending conducted by the Bank, overall portfolio mix, the amount of the Bank's
classified assets (see "Business of the Bank - Asset Quality"), the status of
past due principal and interest payments, loan-to-value ratios of loans in the
Bank's loan portfolio, general economic conditions, particularly as they relate
to the Bank's market area, and other factors related to the collectibility of
the Bank's loan portfolio. Management of the Bank assesses the allowance for
loan losses on a monthly basis and will make provisions for loan losses as
deemed appropriate by management in order to maintain the adequacy of the
allowance for loan losses.
The Bank's provisions for loan losses increased to $80,000 in fiscal 1996,
compared to $13,000 in fiscal 1995. At September 30, 1996, the Bank's allowance
for loan losses amounted to 43.6% of total non-performing loans and to 0.5% of
[total] loans receivable. The $67,000 increase in provisions from fiscal 1995 to
fiscal 1996 was the result of the Bank's review of its overall loan portfolio
with particular focus on the Bank's increase in consumer and commercial business
lending in recent years.
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<PAGE>
Non-interest Income. Non-interest income decreased $6,000 or 11.6% for the
year ended September 30, 1996 compared to the year ended September 30, 1995.
Non-interest income was negatively affected in fiscal 1996 by a $6,000 decrease
in insurance commissions. Such decreases were partially offset by a $1,000
increase in loan fees in fiscal 1996 compared to fiscal 1995.
Non-interest Expenses. Total non-interest expenses were $889,000 in the
year ended September 30, 1996 which amounted to a $180,000 or 25.3% increase
compared to the year ended September 30, 1995. The primary reason for the
increase was the $206,000 increase in deposit insurance expense, due to a
special assessment required by federal law to recapitalize the SAIF. See "Risk
Factors - Regulatory Oversight and Possible Legislation." Excluding this
assessment, the Bank's non-interest expenses would have decreased by $27,000 or
3.8%. The only other significant changes in the Bank's non-interest expenses for
fiscal 1996 were a $21,000 or 7.0% decrease in salaries and employee benefits
and a $7,000 or 15.6% decrease in legal and professional fees. Future
non-interest expense may be effected by litigation and compensation expenses.
See "Risk Factors - Pending Litigation Against Bank" and "- ESOP and Recognition
Plan Expense."
Income Taxes. In the year ended September 30, 1996, the Bank recognized a
$3,000 tax expense even though it recognized a net loss during the year. This
was primarily attributable to a change in the income tax rate applied to the
Bank's net deferred tax assets. Under generally accepted accounting principles,
the Bank is required to apply the tax rate to its deferred income tax items at
which it expects to be paying when those temporary differences reverse. This
change had the effect of reducing the Bank's net deferred income tax asset by
approximately $18,000 and increasing income tax expense by the same amount.
Accordingly, prior to making this change, the Bank's income tax benefit for the
year ended September 30, 1996 would have been $15,000 compared to income tax
expense of $15,000 in the year ended September 30, 1995.
Liquidity and Capital Resources
The Bank's liquidity, represented by cash and cash equivalents, is a
product of its operating, investing and financing activities. The Bank's primary
sources of funds are deposits, amortization, prepayments and maturities of
outstanding loans and mortgage-backed securities, maturities of investment
securities and other short-term investments and funds provided from operations.
While scheduled payments from the amortization of loans and mortgage-backed
securities and maturing investment securities and short-term investments are
relatively predictable sources of funds, deposit flows and loan prepayments are
greatly influenced by general interest rates, economic conditions and
competition. In addition, the Bank invests excess funds in overnight deposits
and other short-term interest-earning assets which provide liquidity to meet
lending requirements. The Bank has been able to generate sufficient cash through
its deposits and has had a limited use of borrowings as a source of funds during
the past five years. As loan originations and deposits remained stable, the Bank
used cash from maturing securities in its investment portfolio to fund loan
originations. In addition, in fiscal 1996 the Bank borrowed $2.0 million from
the FHLB of Chicago to serve as another source of funding for loans. As of
September 30, 1996, the Bank had the ability to borrow up to $17.0 million from
the FHLB.
Liquidity management is both a daily and long-term function of business
management. Excess liquidity is generally invested in short-term investments
such as overnight deposits. On a longer-term basis, the Bank maintains a
strategy of investing in various lending products as described in greater detail
under "Business of the Bank - Lending Activities." The Bank uses its sources of
funds primarily to meet its ongoing commitments, to pay maturing savings
certificates and savings withdrawals, fund loan commitments and maintain a
portfolio of mortgage-backed and investment securities. At September 30, 1996
the total approved loan commitments outstanding amounted to $1.2 million. At the
same date, the Bank had commitments of $23,000 under unused letters of credit.
Certificates scheduled to mature in one year or less at September 30, 1996
totalled $17.0 million. Management believes that a significant portion of
maturing deposits will remain with the Bank. The Bank anticipates that even with
interest rates at lower levels than have been experienced in recent years, which
has caused a disintermediation of funds, it will continue to have sufficient
funds together with borrowings, to
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<PAGE>
meet its current commitments. The mixture of deposit liabilities and borrowings
will depend on the relevant cost of each of these sources of funds. Moreover,
the Bank anticipates that the primary use of the proceeds from the stock sale to
the Company will be the funding of loans.
Federally-insured state-chartered banks are required to maintain minimum
levels of regulatory capital. Under current FDIC regulations, insured
state-chartered banks generally must maintain (i) a ratio of Tier 1 leverage
capital to total assets of at least 3.0% (4.0% to 5.0% for all but the most
highly rated banks) and (ii) a ratio of Tier 1 capital to risk weighted assets
of at least 4.0% and a ratio of total capital risk weighted assets of at least
8.0%. At September 30, 1996, the Bank was in compliance with applicable
regulatory capital requirements.
The following reflects the Bank's actual levels of regulatory capital and
applicable regulatory capital requirements at September 30, 1996.
<TABLE>
<CAPTION>
Required Actual Excess
----------------- ------------------- ------------------
Percent Amount Percent Amount Percent Amount
------- ------ ------- ------ ------- ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Tier 1 leverage capital ratio 3.0% $1,064 6.669% $2,371 3.69% $ 307
Risk-based capital ratios:
Tier 1 4.0 656 14.45 2,371 10.45 1,715
Total 8.0 1,312 15.33 2,514 7.33 1,202
</TABLE>
The Company, as a separately incorporated holding company, will have no
significant operations other than serving as sole stockholder of the Bank. On an
unconsolidated basis, the Company initially will have no paid employees. The
Company's assets will consist of its investment in the Bank, the Company's loan
to the Bank's ESOP and 25% of the net proceeds retained from the Conversion, and
its sources of income will consist primarily of earnings from the investment of
such funds as well as any dividends from the Bank. The only expenses expected to
be incurred initially by the Company will relate to its reporting obligations
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
related expenses as a publicly traded company. The Company will be directly
reimbursed by the Bank for all such expenses. Upon consummation of the
Conversion, management believes that the Company will have adequate liquidity
available to respond to liquidity demands.
Impact of New Accounting Standards
Accounting for impairment of Loans. In 1993 the Financial Accounting
Standards Board ("FASB") issued SFAS No. 114 ("SFAS 114") entitled "Accounting
by Creditors for Impairment of a Loan." The purpose of SFAS 114 is to eliminate
inconsistencies in the accounting among different types of creditors for loans
with similar collection problems by requiring a single method of measuring
impaired loans. Formally restructured loans and loans evaluated as groups or
pools of homogeneous loans (e.g., single family residences) are excluded from
SFAS 114. In October, 1994, FASB issued SFAS No. 118 ("SFAS 118"), "Accounting
by Creditors for Impairment of a Loan - Income Recognition and Disclosures."
SFAS 118 amends the disclosure requirements in SFAS 114 to require information
about the recorded investment in certain impaired loans and about how a creditor
recognizes interest income related to those impaired loans. The Bank adopted
SFAS 114 and 118 as of October 1, 1995. Management does not anticipate such
adoption will have a material impact on the earnings or financial condition of
the Bank.
Disclosure About Fair Value of Financial Statements. In 1991, FASB issued
SFAS No. 107 ("SFAS 107") entitled "Disclosures About Fair Value of Financial
Statements." This statement requires disclosure of fair value information about
financial instruments, whether or not recognized on the balance sheet, for which
it is
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<PAGE>
practicable to estimate that value. SFAS 107 excludes certain financial
instruments and all nonfinancial instruments from its disclosure requirements.
The Bank adopted SFAS 107 for the year ended September 30, 1995.
Accounting for Certain Securities. In 1993, FASB issued SFAS No. 115
("SFAS 115"), "Accounting for Certain Investments in Debt and Equity
Securities." SFAS 115 generally requires that debt and equity securities that
have readily determinable fair values be carried at fair value unless they are
classified as held to maturity. Securities can be classified as held to maturity
and carried at amortized cost only if the reporting entity has a positive intent
and ability to hold those securities to maturity. If not classified as held to
maturity, such securities must be classified as trading securities or securities
available for sale and are carried at their market value. The unrealized gains
and losses on securities available for sale are to be excluded from earnings and
reported as a net amount as a separate component of stockholders' equity.
Unrealized gains and losses on trading securities are to be included in
earnings. The statement became effective for fiscal years beginning after
December 15, 1993. SFAS 115 was adopted by the Bank on October 1, 1994. At that
date, investment securities with carrying value of $1.8 million were
reclassified as available for sale. This reclassification resulted in a net
decrease in equity of $12,000.
On November 28, 1994, the FDIC changed its policy relating to the
treatment of unrealized gains and losses on securities available for sale in
accordance with SFAS 115. Under the new policy, unrealized gains and losses are
excluded for purposes of calculating regulatory capital. The change in FDIC
policy resulted in an increase in regulatory capital of approximately $15,000 at
September 30, 1996 and a decrease in regulatory capital of $1,000 at September
30, 1995.
On November 15, 1995, the FASB issued its Special Report for SFAS No. 115,
"A Guide to Implementation of Statement 115 on Accounting for Certain
Investments in Debt and Equity Securities." The Special Report provides that,
concurrent with the initial adoption of this implementation guidance but no
later than December 31, 1995, an enterprise may reassess the appropriateness of
the classification of all securities held at that time and account for any
resulting reclassifications at fair value. Reclassification from the held to
maturity category that result from this one-time reassessment (which must be
made on a single date) will not call into question the intent of an enterprise
to hold debt securities to maturity in the future. In accordance with such
Special Report, on December 31, 1995, the Bank transferred certain securities
included in its held to maturity portfolio which, at the date of transfer, had a
carrying value and fair value of $1.6 million to its available for sale
portfolio.
Accounting for Contributions Made. In 1993, the FASB also issued SFAS No.
116 ("SFAS 116") entitled "Accounting for Contributions Received and
Contributions Made." Generally, contributions made, including unconditional
pledges, are recognized as expense in the period made, at the fair value. The
fair value of an unconditional promise to give cash shall be measured on a
discounted cash flow basis. This provision of SFAS 116 became effective for the
Bank beginning October 1, 1995 and did not have a material impact on earnings or
financial condition of the Bank as a result of adoption.
Disclosures about Financial Instruments. In 1994, the FASB issued SFAS No.
119, "Disclosure about Derivative Financial Instruments and Fair Value of
Financial Instruments." This Statement defines derivative financial instruments
as futures, swaps, option contracts or other financial instruments with similar
characteristics and is effective for the Bank's September 30, 1995 financial
statements. The Bank has not entered into these types of contracts and,
accordingly, management believes that the adoption of this Statement will not
have a material impact on the financial statements of the Company.
Accounting for Long Lived Assets. In 1995, the FASB issued SFAS No. 121,
"Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of." This Statement establishes accounting standards for the impairment
of long-lived assets, certain identifiable intangibles, and goodwill related to
those
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<PAGE>
aspects to be held and used and for long-lived assets and certain identifiable
intangibles to be disposed of. This Statement is effective for the Bank on
October 1, 1996. Management believes that the adoption of this Statement will
not have a material impact on the earnings or financial statements of the
Company.
Accounting for Mortgage Servicing Rights. In 1995, the FASB also issued
SFAS No. 122, "Accounting for Mortgage Servicing Rights." This Statement amends
SFAS No. 65, "Accounting for Certain Mortgage Banking Activities," to require
that a mortgage banking enterprise recognize as separate assets rights to
service mortgage loans for others, however those services are acquired. This
statement became effective for the Company on October 1, 1996. Management
believes that adoption of this Statement will not have a material impact on the
earnings of the Company.
Accounting for Stock-Based Compensation. In October 1995, the FASB issued
SFAS No. 123, Accounting for Stock-Based Compensation, establishing financial
accounting and reporting standards for stock-based employee compensatin plans.
This statement encourages all entities to adopt a new method of accounting to
measure compensation cost of all employee stock compensation plans based on the
estimated fair value of the award at the date it is granted. Companies are,
however, allowed to continue to measure compensation cost for those plans using
the intrinsic value based method of accounting, which generally does not result
in compensation expense recognition for most plans. Companies that elect to
remain with the existing accounting are required to disclose in a footnote to
the financial statements pro forma net income and, if presented, earnings per
share, as if this Statement had been adopted. The accounting requirements of
this Statement are effective for transactions entered into in fiscal years that
begin after December 15, 1995; however, companies are required to disclose
information for awards granted in their first fiscal year beginning after
December 15, 1994. For the Bank, accounting requirements will begin to apply for
transaction entered into on or after October 1, 1996. In 1994, the FASB issued
an Exposure Draft ("ED") of a proposed SFAS, "Accounting for Stock-Based
Compensation." The FASB decided to require expanded disclosures rather than
recognition of compensation cost for fixed, at the money, options rather than
recognition of compensation expense as was originally proposed in the ED. The
FASB will develop an approach to accounting for employee stock options and other
equity instruments issued to employers based on the estimated fair value of
instruments at the date they are granted. The FASB will encourage employers to
adopt that method. However, employers would be permitted to continue to follow
APB No. 25 and would be required to disclose in notes to financial statements
the pro forma effects on their net income and earnings per share of the new
accounting method.
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. SFAS No. 125 supersedes SFAS No. 122 and will be
effective for all transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996. This statement
provides accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities based on consistent
application of a financial-components approach that focuses on control. It
distinguished transfers of financial assets that are sales from transfers that
are secured borrowings. Under the financial-components approach, after a
transfer of financial assets, an entity recognizes all financial assets it no
longer controls and liabilities that have been extinguished. The
financial-components approach focuses on the assets and liabilities that exist
after the transfer. Many of these assets and liabilities are components of
financial assets that existed prior to the transfer. If a transfer does not meet
the criteria for a sale, the transfer is accounted for as a secured borrowing
with a pledge of collateral. Management does not anticipate that the adoption of
this Statement will have a material impact on the earnings or the financial
statements of the Company.
In November 1993, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants ("AcSEC") issued SOP 93-6,
"Employers' Accounting for Employee Stock Ownership Plans," which is effective
for fiscal years beginning after December 15, 1993. SOP 93-6 will apply to the
Bank for its fiscal year ending [September 30, 1997. SOP 93-6 requires the
application of its guidance for shares acquired by ESOPs after December 31,
1992, but not yet committed to be released as of the beginning of the year SOP
93-6 is adopted. SOP 93-6 will, among other things, change the measure of
compensation expense recorded by
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<PAGE>
employers for leveraged ESOPs from the cost of ESOP shares to the fair value of
ESOP shares. Under SOP 93-6 the Company will recognize compensation cost equal
to the fair value of the ESOP shares during the periods in which they become
committed to be released. To the extent that the fair value of the Bank's ESOP
shares differ from the cost of such shares, this differential will be charged or
credited to equity. Employers with internally leveraged ESOPs will not report
the loan receivable from the ESOP as an asset and will not report the ESOP debt
as a liability. See "Management of the Bank - Benefit Plans - Employee Stock
Ownership Plan and Trust."
Disclosure of Certain Significant Risks and Uncertainties. AcSEC has
issued SOP 94-6, "Disclosure of Certain Significant Risks and Uncertainties."
The SOP requires reporting entities to include in their financial statements
disclosures about the nature of their operations and the use of estimates in the
preparation of financial statements. In addition, if specified disclosure
criteria are met, it requires entities to make disclosure about: (i) amounts
reported in the financial statements or in the notes that are particularly
sensitive to change in the near term (for example, inventory subject to rapid
technological obsolescence, valuation allowances for commercial and real estate
loans and amounts reported for long-term contracts); and (ii) concentrations in
the volume of business transacted with a particular customer, supplier, lender,
grantor or contributor; in revenue from particular products, services or
fund-raising events; in the available sources of supply materials, labor or
services, or of licenses or other rights in the entity's operations; or in the
market of geographic area in which an entity conducts its operations. The SOP
became effective for the Company for the fiscal year ending September 30, 1996.
Impact of Inflation and Changing Prices
The Financial Statements of the Bank and related notes presented herein
have been prepared in accordance with generally accepted accounting principles
("GAAP") which require the measurement of financial position and operating
results in terms of historical dollars, without considering changes in the
relative purchasing power of money over time due to inflation.
Unlike most industrial companies, substantially all of the assets and
liabilities of a financial institution are monetary in nature. As a result,
interest rates have a more significant impact on a financial institution's
performance than the effects of general levels of inflation. Interest rates do
not necessarily move in the same direction or in the same magnitude as the
prices of goods and services, since such prices are affected by inflation to a
larger extent than interest rates. In the current interest rate environment,
liquidity and the maturity structure of the Bank's assets and liabilities are
critical to the maintenance of acceptable performance levels. [Over the three
most recent fiscal years, interest rates have been relatively low and stable and
such environment has generally had a positive impact on the Bank's revenues and
income.]
BUSINESS OF THE BANK
General
American is a traditional, community oriented Illinois savings bank. The
Bank is primarily engaged in attracting deposits from the general public and
using those funds to originate loans. The Bank's primary lending emphasis has
been, and continues to be, loans secured by first and second liens on
single-family (one-to-four units) residences located in the Bank's primary
market area which consists of the area within a fifty mile radius of Danville,
Illinois. The Bank also originates consumer loans (including home improvement
and vehicle loans), loans for the construction of single-family homes, loans
secured by commercial real estate and multi-family (over four units) residential
properties and commercial business loans. Residential mortgage loans originated
by the Bank since 1984 have generally been retained in its portfolio. The Bank
also originates FHA-insured home improvement loans. In 1995, the Bank began
making smaller non-FHA-insured home improvement loans, increased its
originations of consumer loans (primarily vehicle loans) and commercial business
loans, due to their generally shorter terms and higher yields than residential
mortgage loans.
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<PAGE>
In addition to its deposit gathering and lending activities, the Bank
invests in mortgage-backed securities, all of which are issued or guaranteed by
U.S. Government agencies and government sponsored enterprises, as well as U.S.
Treasury and federal government agency obligations and other investment
securities. At September 30, 1996, the Bank's mortgage-backed securities
amounted to $3.5 million, or 9.9% of total assets, all of which are designated
as held to maturity. As of that same date, its other investment securities
portfolio amounted to $3.1 million, or 8.7% of total assets, with $861,000 of
such securities classified as held to maturity and the remaining $2.2 million
classified as available for sale.
Lending Activities
Loan Portfolio Composition. The following table sets forth the composition
of the Bank's loan portfolio by type of loan at the dates indicated:
<TABLE>
<CAPTION>
At September 30,
-----------------------------------------------
1996 1995
--------------------- ----------------------
Percent of Percent of
Balance Total Balance Total
------- ---------- ------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Type of Loan:
Real estate mortgage loans:
One-to-four family............... $21,419 79.13% 19,181 79.53%
Multi-family..................... 1,236 4.57 1,157 4.80
Commercial real estate........... 781 2.89 669 2.77
Real estate sold on contract...... 374 1.38 415 1.72
Real estate construction loans..... 342 1.26 163 0.68
Commercial business loans.......... 334 1.23 242 1.00
Consumer loans..................... 2,581 9.54 2,291 9.50
------- ------ ------- ------
Total loans........................... 27,067 100.00% 24,118 100.00%
------- ====== ------- ======
Plus:
Deferred loan costs................ 38 --
Less:
Undisbursed portion of loans....... 26 89
Allowance for loan losses.......... 143 74
Unearned interest.................. -- 1
------- -------
Total loans, net...................... $26,936 $23,954
======= =======
</TABLE>
Contractual Principal Repayments and Interest Rates. The following table
sets forth certain information at September 30, 1996 regarding the dollar amount
of loans maturing in the Bank's total loan portfolio, based on the contractual
terms to maturity, before giving effect to net items. Loans having no stated
schedule of repayments and no stated maturity are reported as due in one year or
less.
<TABLE>
<CAPTION>
Over One
One Year Through Five Over Five
or Less Years Years Total
-------- ------------ --------- -----
(In Thousands)
<S> <C> <C> <C> <C>
Real estate mortgage loans:
One-to-four family mortgage loans..... $1,475 $6,226 $13,718 $21,419
Multi-family ......................... 84 392 760 1,236
Commercial real estate................ 155 229 397 781
Real estate sold on contract............ 104 43 227 374
Real estate construction loans.......... 342 -- -- 342
Commercial business loans............... 45 248 41 334
Consumer Loans.......................... 738 1,043 800 2,581
------ ------ ------- -------
Total loans......................... $2,943 $8,181 $15,943 $27,067
====== ====== ======= =======
</TABLE>
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<PAGE>
The following table sets forth the dollar amount of all loans, before net
items, due one year after September 30, 1996 which have fixed interest rates or
which have floating or adjustable interest rates. For purposes of the table, all
of the Bank's balloon loans were deemed to have floating or adjustable rates.
Floating or
Fixed Rates Adjustable Rates Total
----------- ---------------- -----
(In Thousands)
Real estate mortgage loans:
One-to-four family $14,420 $5,524 $19,944
Multi-family 1,001 151 1,152
Commercial real estate 516 110 626
Real estate sold on contract 270 -- 270
Real estate construction loans -- -- --
Commercial business loans 289 -- 289
Consumer loans 1,843 -- 1,843
------- ------ -------
Total loans $18,339 $5,785 $24,124
======= ====== =======
Scheduled contractual amortization of loans does not reflect the expected
term of the Bank's loan portfolio. The average life of loans is substantially
less than their contractual terms because of prepayments and due-on-sale
clauses, which give the Bank the right to declare a conventional loan
immediately due and payable in the event, among other things, that the borrower
sells the real property subject to the mortgage and the loan is not repaid. The
average life of mortgage loans tends to increase when current mortgage loan
rates are higher than rates on existing mortgage loans and, conversely, decrease
when rates on existing mortgage loans are lower than current mortgage loan rates
(due to refinancings of adjustable-rate and fixed-rate loans at lower rates).
Under the latter circumstances, the weighted average yield on loans decreases as
higher-yielding loans are repaid or refinanced at lower rates.
Loan Origination. The following table shows total loans originated and
repaid during the periods indicated. During the periods indicated, no loans were
purchased or sold.
Years Ended September 30,
-------------------------
1996 1995
------ ------
(In Thousands)
Net loans, beginning balance................ $23,954 $21,626
Loan originations:
Real estate mortgage loans:
One-to-four family........................ 5,293 3,667
Multi-family.............................. 235 68
Commercial real estate 155 262
Real estate construction loans.............. 801 344
Commercial business loans................... 71 263
Consumer loans.............................. 2,180 1,558
------- -------
Total loan originations................. 8,735 6,162
Loan principal reductions................... 5,785 3,803
Increase (decrease) due to other items,
net(1).................................... 32 (31)
------- -------
Net increase in loan portfolio.............. 2,982 2,328
------- -------
Loans receivable, net end of period......... $26,936 $23,954
======= =======
(Footnotes on following page)
-51-
<PAGE>
- ----------
(1) Includes changes in undisbursed portion of loans, allowance for loan
losses, deferred loan fees and unearned interest.
The lending activities of the Bank are subject to written underwriting
standards and loan origination procedures established by the Bank's Board of
Directors and management. Applications for residential mortgage loans are taken
by one of the Bank's officers at the Bank's office or submitted to the Bank by
mail. The process of underwriting loans and obtaining appropriate documentation,
such as credit reports, appraisals, employment verification and other
documentation is undertaken by the Bank's loan department. The Bank generally
requires that a property appraisal be obtained in connection with all new
mortgage loans. Property appraisals generally are performed by an independent
appraiser from a list approved by the Bank's Board of Directors. American
requires that title insurance (or receipt of an abstract opinion) and hazard
insurance be maintained on all security properties and that flood insurance be
maintained if the property is within a designated flood plain.
Residential mortgage loan applications are primarily developed from
advertising, referrals from real estate brokers and builders, existing customers
and walk-in customers. Commercial real estate and commercial business loan
applications are obtained primarily from previous borrowers, direct
solicitations by Bank personnel, as well as referrals. Consumer loans originated
by the Bank are obtained primarily through existing customers. In addition, the
Bank uses a small group of pre-approved dealers to assist it in the generation
of home improvement loans.
Most loan approvals are considered by the Bank's loan committee (the "Loan
Committee"), consisting of the Bank's president, assistant vice president and
each of the outside members of the Bank's board of directors. Generally, real
estate mortgage loans of $100,000 or less may be reviewed and approved by at
least two members of the Loan Committee. All other real estate loans require the
approval of a majority of the Bank's Board of Directors. Any non-real estate
loan in an amount up to $10,000 may be approved by one Loan Committee member and
any one loan officer or assistant loan officer. Share loans may be approved by
any elected Bank officer, loan officer or Loan Committee member and all other
loans within the Loan Committee lending limits must be approved by at least two
Loan Committee members. Loans exceeding the Loan Committee limitations must be
reviewed and approved by the full Board of Directors of the Bank. The Bank also
has established aggregate loan limitations which generally apply to larger loans
and groups of loans made to one borrower. No loan or group of loans to any one
borrower may (1) exceed $500,000 or (2) excluding first mortgage and share
loans, exceed $100,000 (with such loans in excess of $20,000 required to be
secured).
Single-Family Residential Loans. Substantially all of the Bank's
one-to-four family residential mortgage loans consist of conventional loans.
Conventional loans are loans that are neither insured by the Federal Housing
Administration ("FHA") or partially guaranteed by the Department of Veterans
Affairs ("VA"). Virtually all of the Bank's one-to-four family residential
mortgage loans are secured by properties and are originated under terms and
documentation which permit their sale to the Federal Home Loan Mortgage
Corporation ("FHLMC"), or the Federal National Mortgage Association ("FNMA").
Sales of residential mortgage loans have been insignificant to date. As of
September 30, 1996, $21.4 million, or 79.1%, of the Bank's total loans consisted
of one-to-four family residential mortgage loans.
The Bank's residential mortgage loans are generally either fixed-rate
loans or shorter-term balloon loans. The Bank does not offer adjustable-rate
one-to-four family residential mortgage loans. Fixed-rate loans generally have
maturities ranging from 10 to 20 years and are fully amortizing with monthly
loan payments sufficient to repay the total amount of the loan with interest by
the end of the loan term. At September 30, 1996, $15.8 million, or 69.9%, of the
Bank's one-to-four family residential mortgage loans were fixed-rate loans with
terms of from 10 to 30 years. At September 30, 1996, the weighted average
remaining term to maturity of the Bank's fixed-rate, single-family residential
mortgage loans was approximately 10.5 years. Substantially all of the Bank's
fixed-rate, one-to-four family residential mortgage loans contain due-on-sale
clauses, which permit the Bank to declare the unpaid balance to be due and
payable upon the sale or transfer of any interest in the property
-52-
<PAGE>
securing the loan. The Bank generally enforces such due-on-sale clauses, but may
waive the clause in certain circumstances.
The balloon loans currently offered by the Bank have terms of one or three
years, but an amortization schedule of up to 30 years. At the end of a balloon
loan's term, the entire balance of the loan is due. The borrower has the option
of repaying the loan on the due date or, subject to satisfying the Bank's
underwriting criteria, accepting the renewed loan rate which is then offered by
the Bank for such loans. In the latter case, the renewed loan is a new balloon
loan with the same term as the initial balloon loan. The Bank has generally
offered rates on such renewed loans at 1/4 of 1% to 1/2 of 1% higher than rates
then offered on its new balloon residential real estate loans. Modified loans
are amortized over the remaining life of the original amortization period. At
September 30, 1996, $5.6 million or 26.1% of the Bank's one-to-four family
residential mortgage loans were balloon loans.
Balloon loans decrease the risks associated with changes in interest rates
but involve other risks. If a borrower renews the loan at a higher interest
rate, the loan payment by the borrower increases, thereby increasing the
potential for default. As with fixed-rate loans, as interest rates increase, the
marketability of the underlying collateral property may be adversely affected by
higher interest rates. The Bank believes the ability to adjust the rates of
these loans to reflect either a rising or falling interest rate environment more
than compensates for risks associated with changing customer payments.
For one-to-four family residential first mortgage loans the Bank's maximum
LTV ratio generally is 80%, and is based on the lesser of sales price or
appraised value. On such loans with a LTV ratio of over 85%, private mortgage
insurance ("PMI") is required on the amount of the loan in excess of 80% of
value. The amount of an owner-occupied residential first mortgage loan is
limited to $300,000 and the amount of an investment residential first mortgage
loan is $250,000.
The Bank offers home equity loans secured by second mortgages. These
second mortgage loans have been made to borrowers who have first mortgages held
by the Bank or customers with substantial other business with the Bank. The Bank
placed second mortgages on many properties to comply with FHA insurance
requirements which currently require such a lien for loans of over $7,500. For
most of the Bank's second mortgage loans, the Bank either holds the first
mortgage or the second mortgage is FHA insured. The Bank holds the first
mortgage on approximately 90% of the properties securing its second mortgage
portfolio which are not FHA-insured loans. A second mortgage loan generally has
a fixed rate of interest and a term of six months.
Multi-Family Residential and Commercial Real Estate Loans. At September
30, 1996, the Bank had $2.0 million in outstanding loans secured by multi-family
residences or commercial real estate. Such loans comprised 7.5% of the Bank's
total loan portfolio at September 30, 1996 and all have either fixed rates of
interest or are balloon loans. Generally, fees of 50 basis points to 1% of the
principal loan balances are charged to the borrower upon closing. The Bank also
obtains personal guarantees of the principals as additional security for any
multi-family residential or commercial real estate loan.
At September 30, 1996, the Bank had $1.2 million in outstanding loans
secured by multi-family residences, all of which were apartment buildings. The
Bank's underwriting standards generally provide for terms of up to 20 years with
amortization of principal over the term of the loan and LTV ratios of not more
than 75%. At September 30, 1996, the Bank had 17 loans secured by multi-family
residences with an average balance of $72,700. As of that date none of the
multi-family loans was non-performing loans.
At September 30, 1996, the Bank had $781,000 in outstanding loans secured
by commercial real estate, primarily retail office and farmland. The Bank's
underwriting standards generally provide for terms of up to ten years with
amortization of principal over the term of the loans and LTV ratios of not more
than 70%. At September 30, 1996, the Bank had 14 loans secured by commercial
real estate with an average balance of $55,800. As of that date, two of the
Bank's commercial real estate loans totaling $93,000 or 27.8% were
non-performing loans.
-53-
<PAGE>
The Bank evaluates various aspects of multi-family residential and
commercial real estate loan transactions in an effort to mitigate risk to the
extent possible. In underwriting these loans, consideration is given to the
stability of the property's cash flow history, future operating projections,
current and projected occupancy, position in the market, location and physical
condition. The underwriting analysis also includes credit checks and a review of
the financial condition of the borrower and guarantor, if applicable. An
appraisal report is prepared by a state-licensed or certified appraiser
commissioned by the Bank to substantiate property values for every multi-family
and commercial real estate loan transaction. All appraisal reports are reviewed
by the Bank prior to the closing of the loan.
Multi-family residential and commercial real estate lending entails
different and significant risks when compared to one-to-four family residential
lending because such loans often involve large loan balances to single borrowers
and because the payment experience on such loans is typically dependent on the
successful operation of the rental units or business. These risks can also be
significantly affected by supply and demand conditions in the local market for
apartments, offices or other commercial space. The Bank attempts to minimize its
risk exposure by limiting such lending to experienced businessmen, only
considering properties with existing operating performance which can be
analyzed, requiring conservative debt coverage ratios and periodically
monitoring the operation and physical condition of the collateral. In most cases
commercial real estate loans are made to business people who are also operating
the tenant businesses.
Construction Loans. As of September 30, 1996, the Bank's construction
loans amounted to $342,000, or 1.3% of the Bank's total loan portfolio. The Bank
originated $801,000 of single-family construction loans to individuals during
the year ended September 30, 1996. A substantial majority of the Bank's
construction loans have consisted of loans to construct single-family residences
although the Bank will also consider construction loans for small apartment
buildings.
The Bank makes construction loans to individuals and, on rare occasions,
to developers for one-to-four family residences. Normally these loans are
construction/permanent loans which require no payments of principal during the
construction period. Interest on the construction loan is normally paid during
or at the close of construction period. Following the construction period (which
is typically no longer than 6 months), the loan converts to a permanent loan
with monthly amortization of principal and interest. Construction loans to
individuals for single-family residential properties generally have the same LTV
ratio requirements as applicable to loans for one-to-four family residences.
Loans to developers are limited to no more than two active projects.
Disbursements of funds during construction are conditioned upon the completion
of a specified percentage of construction.
Construction financing is generally considered to involve a higher degree
of risk of loss than long-term financing on improved, owner-occupied real
estate. Risk of loss on a construction loan is dependent largely upon the
accuracy of the initial estimate of the property's value at completion of
construction or development and the estimated cost (including interest) of
construction. During the construction phase, a number of factors could result in
delays and cost overruns. If the estimate of value proves to be inaccurate, the
Bank may be confronted, at or prior to the maturity of the loan, with a project,
when completed, having a value which is insufficient to assure full repayment.
Loans on lots may run the risk of adverse zoning changes, environmental or other
restrictions on future use. As of September 30, 1996, none of the Bank's
construction loans was considered non-performing.
Consumer Loans. The Bank offers consumer loans in order to provide a full
range of retail financial services to its customers. However, substantially all
of such loans are either home improvement, automobile or share loans. At
September 30, 1996 $2.6 million, or 9.5%, of the Bank's total loan portfolio was
comprised of consumer loans. The Bank originates substantially all of such loans
in its primary market area. Originations of consumer loans by the Bank amounted
to $2.3 million in 1996 compared to $1.6 million and $868,000 in 1995 and 1994,
respectively. The primary reason for the increase in consumer loan originations
in 1995 and 1996 was the Bank's determination to increase its portfolio of
automobile and other vehicle loans due to their generally
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<PAGE>
higher yields and shorter terms to maturity compared to mortgage loans. Loans
secured by vehicles are made directly to customers and the Bank has no direct
relationship with dealers.
For loans secured by vehicles either new or less than two model years old,
the Bank's maximum LTV ratio is the lower of 90% of the purchase price or 100%
of the balance due after trade-in allowances and the maximum loan amount is
$30,000. For loans secured by vehicles at least two but less than six model
years old, the amount of the loan may not exceed the lowest of 75% of the
purchase price, 100% of the maximum NADA Official Used Car Guide value or 100%
of the balance due after trade-in and allowances. However, loans on such
vehicles may not in any case exceed $20,000. The Board has granted management
the authority to exceed LTV ratios and other terms on vehicle loans if they are
noted in subsequent monthly reports to the Board. As of September 30, 1996, the
Bank had $435,000 of loans secured by vehicles.
Share loans are secured by the balance in the borrower's account with the
Bank. These loans generally have interest rates 2% above the rate paid on the
account balance and the principal of the loan may not exceed 90% of the account
balance. As of September 30, 1996, the Bank had $202,000 of share loans.
A substantial portion of the Bank's consumer loans outstanding totaling
$1.2 million at September 30, 1996 are FHA-insured home improvement loans. These
loans are 90% insured by the FHA subject to the limitations of the Bank's FHA
Title I insurance coverage reserve account. The available balance at September
30, 1996 was $349,000.
Consumer finance loans generally involve more credit risk than mortgage
loans because of the type and nature of the collateral and, in certain cases,
the absence of collateral. In addition, consumer lending collections are
dependent on the borrower's continuing financial stability, and thus are more
likely to be adversely affected by job loss, divorce, illness and personal
bankruptcy. In many cases, any repossessed collateral for a defaulted consumer
financial loan will not provide an adequate source of repayment of the
outstanding loan balance because of improper repair and maintenance or
depreciation of the underlying security. The remaining deficiency often does not
warrant further substantial collection efforts against the borrower. As of
September 30, 1996, $49,000 or [1.9%] of the Bank's consumer loans were
considered non-performing. See "Risk Factors - Increased Emphasis on Consumer
Lending."
Commercial Business Loans. The Bank began offering commercial business
loans in March 1995. At September 30, 1996, the Bank's commercial business loans
amounted to $334,000 or 1.2% of the Bank's total loan portfolio. The Bank's
commercial business loans are generally made to its current customers on a
secured or unsecured basis and involve a wide range of business purposes. These
loans generally have terms of between six months to one year. Notes either
require a single payment at the end of their term or have amortizing payments of
principal and interest for periods of up to five years. Any two loan committee
members may approve a loan of this type in an amount up to $20,000. Any
unsecured loan in excess of $20,000 must be approved by the Board of Directors.
The Bank generally obtains personal guarantees from the principals of the
borrower with respect to all commercial loans. The Bank had nine commercial
business loans as of September 30, 1996 with an average loan balance on that
date of $37,000. As of September 30, 1996, none of the Bank's commercial
business loans was non-performing.
Commercial business lending generally entails significantly greater risk
than the risks involved with more traditional real estate lending. The repayment
of commercial business loans typically is dependent on the successful operation
and income stream of the borrower. Such risks can be significantly affected by
economic conditions.
Loans-to-One Borrower Limitations. The Illinois Savings Bank Act imposes
limitations on the aggregate amount of loans that an Illinois chartered savings
bank can make to any one borrower. Under the Illinois Savings Bank Act the
permissible amount of loans-to-one borrower is the greater of $500,000 (for a
savings bank meeting its minimum capital requirements) or 20% of a savings
bank's total capital plus general loan loss reserves. In addition, a savings
bank may make loans in an amount equal to an additional 10% of the savings
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<PAGE>
bank's capital plus general loan loss reserves if the loans are 100% secured by
readily marketable collateral. Under Illinois law, a savings bank's capital
consists of capital stock and noncumulative perpetual preferred stock, related
paid-in capital, retained earnings and other forms of capital deemed to be
qualifying capital by the FDIC. At September 30, 1996, the Bank's limit on
loans-to-one borrower under the Illinois Savings Bank Act was $500,000. At
September 30, 1996, the Bank's five largest groups of loans-to-one borrower
ranged from $459,000 to $235,000, with largest single loan in such groups being
a $229,000 loan secured by a ten-unit apartment building. Each of the five
largest groups of borrowers has several loans from the Bank generally a
combination of loans secured by investment properties and a residence as well as
smaller secured and unsecured personal loans. A substantial portion of each
large group of loans is secured by real estate. At September 30, 1996, all of
such loans were performing in accordance with their terms.
Asset Quality
General. As a part of the Bank's efforts to improve its asset quality, it
has developed and implemented an asset classification system. All of the Bank's
assets are subject to periodic review under the classification system and assets
with classifications of above normal risk of collection are reported to and
reviewed by the Board monthly. Quarterly reports to the Board classify the
totals of all loan assets by risk classification.
When a borrower fails to make a required payment on a loan, the Bank
attempts to cure the deficiency by contacting the borrower and seeking payment.
Contacts are generally made by mail within ten days after a payment is due. In
most cases, deficiencies are cured promptly. If a delinquency continues, late
charges are assessed and additional efforts are made to collect the loan. While
the Bank generally prefers to work with borrowers to resolve such problems, when
the account becomes 120 days delinquent, the Bank institutes foreclosure or
other proceedings, as necessary, to minimize any potential loss.
As a matter of policy the Bank evaluates individual loans past due 90 days
or more to determine if current payments being collected or underlying
collateral security justifies the accrual of additional interest. See Note 1 of
the Notes to Consolidated Financial Statements.
Real estate acquired by the Bank as a result of foreclosure or by
deed-in-lieu of foreclosure and loans deemed to be in-substance foreclosed under
GAAP are classified as real estate owned until sold. Pursuant to SOP 92-3 issued
by the AICPA in April 1992, which provides guidance on determining the balance
sheet treatment of foreclosed assets in annual financial statements for periods
ending on or after December 15, 1992, there is a rebuttable presumption that
foreclosed assets are held for sale and such assets are recommended to be
carried at the lower of fair value minus estimated costs to sell the property,
or cost (generally the balance of the loan on the property at the date of
acquisition). After the date of acquisition, all costs incurred in maintaining
the property are expensed and costs incurred for the improvement or development
of such property are capitalized up to the extent of their net realizable value.
Although, as of September 30, 1996, the Bank had no real estate owned, it is its
policy to comply with the guidance set forth in SOP 92-3.
Under GAAP, the Bank is required to account for certain loan modifications
or restructurings as "troubled debt restructurings." In general, the
modification or restructuring of a debt constitutes a troubled debt
restructuring if the Bank for economic or legal reasons related to the
borrower's financial difficulties grants a concession to the borrower that the
Bank would not otherwise consider under current market conditions. Debt
restructurings or loan modifications for a borrower do not necessarily always
constitute troubled debt restructurings, however, and troubled debt
restructurings do not necessarily result in non-accrual loans. As of September
30, 1996, the Bank had no loans deemed to be troubled debt restructurings. See
the table below under "- Non-Performing Assets and Troubled Debt
Restructurings."
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<PAGE>
Delinquent Loans. The following table sets forth information concerning
delinquent loans at the dates indicated in dollar amounts and as a percentage of
each category of the Bank's loan portfolio. The amounts presented represent the
total outstanding principal balances of the related loans, rather than the
actual payment amounts which are past due.
September 30, 1996
-------------------------------------------------
30-89 Days 90 Days or more
---------------------- -----------------------
Percent of Percent of
Amount Loan Category Amount Loan Category
------ ------------- ------ -------------
(Dollars in thousands)
Real estate mortgage loans:
One-to-four family $287 1.3% $186 0.9%
Multi-family -- -- -- --
Commercial real estate -- -- 93 8.3
Construction -- -- -- --
Commercial business loans -- -- -- --
Consumer loans 18 0.7 49 1.9
---- ----
Total $305 $328
==== ====
September 30, 1995
-------------------------------------------------
30-89 Days 90 Days or more
---------------------- -----------------------
Percent of Percent of
Amount Loan Category Amount Loan Category
------ ------------- ------ -------------
(Dollars in thousands)
Real estate mortgage loans:
One-to-four family $308 1.6% $210 1.1%
Multi-family -- -- -- --
Commercial real estate 97 10.7 -- --
Construction -- -- -- --
Commercial business loans -- -- -- --
Consumer loans 17 0.7 6 0.3
---- ----
Total $422 $216
==== ====
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<PAGE>
Non-Performing Assets. The following table sets forth the amounts and
categories of the Bank's non-performing assets at the dates indicated. The Bank
did not have any troubled debt restructuring at any of the dates presented.
At September 30,
----------------
1996 1995
---- -----
(Dollars in Thousands)
Non accruing loans:
Real estate mortgage loans:
One-to-four family $ 74 $ 70
Multi-family -- --
Commercial real estate -- --
Real estate construction loans -- --
Commercial business loans -- --
Consumer loans -- --
---- ----
Total non-accruing loans $ 74 $ 70
---- ----
Accruing loans greater than 90 days delinquent:
Real estate mortgage loans:
One-to-four family 112 140
Multi-family -- --
Commercial real estate 93 --
Real estate construction loans -- --
Commercial business loans -- --
Consumer loans 49 6
---- ----
Total accruing loans greater than 90 days
delinquent 254 146
---- ----
Total non-performing loans 328 216
Real estate owned -- --
---- ----
Total non-performing assets $328 $216
==== ====
Total non-performing loans as a percentage
of total loans 1.21% 0.90%
==== ====
Total non-performing assets as a percentage
of total assets 0.93% 0.64%
==== ====
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<PAGE>
For the year ended September 30, 1996, approximately $5,400 in gross
interest income would have been recorded on loans accounted for on a non-accrual
basis if such loans had been current in accordance with their original terms and
had been outstanding throughout the year or since origination if held for part
of the year. For the year ended September 30, 1996, $5,000 was included in net
income for these loans.
Other Classified Assets. Federal regulations require that the Bank
classify its assets on a regular basis. In addition, in connection with
examinations of insured institutions, federal examiners have authority to
identify problem assets and, if appropriate, classify them in their reports of
examination. There are three classifications for problem assets: "substandard,"
"doubtful" and "loss." Substandard assets have one or more defined weaknesses
and are characterized by the distinct possibility that the insured institution
will sustain some loss if the deficiencies are not corrected. Doubtful assets
have the weaknesses of substandard assets with the additional characteristic
that the weaknesses make collection or liquidation in full, on the basis of
currently existing facts, conditions and values questionable, and there is a
high possibility of loss. An asset classified loss is considered uncollectible
and of such little value that continuance as an asset of the institution is not
warranted.
At September 30, 1996, the Bank had $288,000 of assets classified
substandard, $37,000 of assets classified doubtful and $15,000 classified as
loss. At such date, the aggregate of the Bank's classified assets amounted to
1.0% of total assets.
Allowance for Loan Losses. The Bank's policy is to establish reserves to
absorb losses on loans based on management's continuing review and evaluation of
the portfolio and its judgment as to the impact of economic conditions on the
portfolio. The allowance for losses on loans is maintained at a level believed
adequate by management to absorb potential losses in the portfolio. Management's
determination of the adequacy of the allowance is based on an evaluation of the
past loss experience, changes in the composition of the portfolio and the
current conditions and amount of loans outstanding. The allowance is increased
by provisions for loan losses which are charged against income. As shown in the
table below, at September 30, 1996, the Bank's allowance for loan losses
amounted to 43.6% and 0.5% of the Bank's non-performing loans and total loans
receivable, respectively.
Effective December 21, 1993, the FDIC, in conjunction with the Office of
the Comptroller of the Currency, the Office of Thrift Supervision ("OTS") and
the Federal Reserve Board, issued the Policy Statement regarding an
institution's allowance for loan and lease losses. The Policy Statement, which
reflects the position of the issuing regulatory agencies and does not
necessarily constitute GAAP, includes guidance (i) on the responsibilities of
management for the assessment and establishment of an adequate allowance and
(ii) for the agencies' examiners to use in evaluating the adequacy of such
allowance and the policies utilized to determine such allowance. The Policy
Statement also sets forth quantitative measures for the allowance with respect
to assets classified substandard and doubtful and with respect to the remaining
portion of an institution's loan portfolio. Specifically, the Policy Statement
sets forth the following quantitative measures which examiners may use to
determine the reasonableness of an allowance: (i) 50% of the portfolio that is
classified doubtful; (ii) 15% of the portfolio that is classified substandard;
and (iii) for the portions of the portfolio that have not been classified
(including loans designated special mention), estimated credit losses over the
upcoming 12 months based on facts and circumstances available on the evaluation
date. While the Policy Statement sets forth this quantitative measure, such
guidance is not intended as a "floor" or "ceiling." The review of the Policy
Statement did not result in a material adjustment to the Bank's policy for
establishing loan losses.
-59-
<PAGE>
The following table describes the activity related to the Bank's allowance
for possible loan losses for the periods indicated.
Year Ended September 30,
------------------------
1996 1995
---------- ----------
(Dollars in Thousands)
Balance at beginning of period $ 74 $ 67
Charge-offs:
One-to-four family real estate loans (10) (10)
Consumer loans (2) --
Recoveries: one-to-four family real estate
loans 1 4
----- -----
Net charge-offs (11) (6)
Provision for losses on loans 80 13
----- -----
Balance at end of period $ 143 $ 74
===== =====
Allowance for loan losses as a percentage
of total loans outstanding 0.53% 0.31%
Allowance for loan losses as a percentage
of total non-performing loans 43.60% 34.26%
Ratio of net charge-offs to average loans
outstanding 0.04% 0.03%
-60-
<PAGE>
The following table presents an allocation of the allowance for loan
losses by the categories indicated and the percentage that loans in each
category bear to total loans. This allocation is used by management to assist in
its evaluation of the Bank's loan portfolio. It should be noted that allocations
are no more than estimates and are subject to revisions as conditions change.
Based upon historical loss experience and the Bank's assessment of its loan
portfolio, all of the Bank's allowance for loan losses have been allocated to
the categories of loans indicated. Allocations of these loans are based
primarily on the creditworthiness of each borrower. In addition, general
allocations are also made to each category based upon, among other things, the
current and future impact of economic conditions on the loan portfolio taken as
a whole. Losses on loans made to consumers are reasonably predictable based on
the prior loss experience and a review of current economic conditions.
At September 30,
-----------------------------------------------
1996 1995
---------------------- ----------------------
Percent of Percent of
Loans in Each Loans in Each
Category to Category to
Amount Total Loans Amount Total Loans
------ ------------- ------ -------------
(Dollars in Thousands)
Real estate mortgage loans:
One-to-four family $ 98 79.13 $53 79.53%
Multi-family -- 4.57 -- 4.80
Commercial real estate -- 2.89 -- 2.77
Real estate sold on contract 4 1.38 4 1.72
Real estate construction loans -- 1.26 -- 0.68
Commercial business loans 3 1.23 -- 1.00
Consumer loans 38 9.54 17 9.50
---- ------ --- ------
Total $143 100.00% $74 100.00%
==== ====== === ======
-61-
<PAGE>
Management of the Bank presently believes that its allowance for loan
losses is adequate to cover any potential losses in the Bank's loan portfolio.
However, future adjustments to this allowance may be necessary, and the Bank's
results of operations could be adversely affected if circumstances differ
substantially from the assumptions used by management in making its
determinations in this regard.
Investment Activities.
General. Interest income from mortgage-backed securities and investment
securities generally provides the second largest source of income to the Bank
after interest on loans. The Bank's Board of Directors has authorized investment
in U.S. Government and agency securities, obligations of the FHLB, and
mortgage-backed securities issued by FNMA, FHLMC and the Government National
Mortgage Association ("GNMA") as well as by certain state, county and municipal
securities. The Bank's objective is to use such investments to reduce interest
rate risk, enhance yields on assets and provide liquidity. On September 30,
1996, the Bank's investment securities portfolio amounted to $6.6 million,
including an net unrealized loss of $20,000, with respect to its securities
available for sale.
Mortgage-Backed Securities. As of September 30, 1996, the Bank's
mortgage-backed securities amounted to $3.5 million, or 9.9% of total assets.
The Bank's mortgage-backed securities portfolio provides a means of investing in
housing-related mortgage instruments without the costs associated with
originating mortgage loans for portfolio retention and with limited credit risk
of default which arises in holding a portfolio of loans to maturity.
Mortgage-backed securities (which also are known as mortgage participation
certificates or pass-through certificates) represent a participation interest in
a pool of single-family or multi-family mortgages. The principal and interest
payments on mortgage-backed securities are passed from the mortgage originators,
as servicer, through intermediaries (generally U.S. Government agencies and
government-sponsored enterprises) that pool and repackage the participation
interests in the form of securities, to investors such as the Bank. Such U.S.
Government agencies and government sponsored enterprises, which guarantee the
payment of principal and interest to investors, primarily include the FHLMC, the
FNMA and the GNMA.
The FHLMC is a public corporation chartered by the U.S. Government and
owned by the 12 FHLBs and federally insured savings institutions. The FHLMC
issues participation certificates backed principally by conventional mortgage
loans. The FHLMC guarantees the timely payment of interest and the ultimate
return of principal on participation certificates. The FNMA is a private
corporation chartered by the U.S. Congress with a mandate to establish a
secondary market for mortgage loans. The FNMA guarantees the timely payment of
principal and interest on FNMA securities. FHLMC and FNMA securities are not
backed by the full faith and credit of the United States, but because the FHLMC
and the FNMA are U.S. Government-sponsored enterprises, these securities are
considered to be among the highest quality investments with minimal credit
risks. The GNMA is a government agency within the Department of Housing and
Urban Development which is intended to help finance government-assisted housing
programs. GNMA securities are backed by FHA-insured and VA-guaranteed loans, and
the timely payment of principal and interest on GNMA securities are guaranteed
by the GNMA and backed by the full faith and credit of the U.S. Government.
Because the FHLMC, the FNMA and the GNMA were established to provide support for
low- and middle-income housing, there are limits to the maximum size of loans
that qualify for these programs which limit currently is $207,000.
Mortgage-backed securities typically are issued with stated principal
amounts, and the securities are backed by pools of mortgages that have loans
with interest rates that are within a range and have varying maturities. The
underlying pool of mortgages can be composed of either fixed-rate or
adjustable-rate loans. As a result, the risk characteristics of the underlying
pool of mortgages, (i.e., fixed rate or adjustable rate) as well as prepayment
risk, are passed on to the certificate holder. The life of a mortgage-backed
pass-through security thus approximates the life of the underlying mortgages.
The Bank's mortgage-backed securities portfolio includes investments in
mortgage-backed securities backed by ARMs or securities which otherwise have an
adjustable rate feature.
-62-
<PAGE>
Mortgage-backed securities generally yield less than the loans which
underlie such securities because of their payment guarantees or credit
enhancements which offer nominal credit risk. In addition, mortgage-backed and
related securities are more liquid than individual mortgage loans and may be
used to collateralize borrowings of the Bank in the event that the Bank
determined to utilize borrowings as a source of funds. Mortgage-backed
securities issued or guaranteed by the FNMA or the FHLMC (except interest-only
securities or the residual interests in CMOs) are weighted at no more than 20.0%
for risk-based capital purposes, compared to a weight of 50.0% to 100.0% for
residential loans. See "Regulation - The Bank - Capital Requirements."
As of September 30, 1996, all of the Bank's $3.5 million of
mortgage-backed securities were classified as held to maturity. See Note 3 of
the Notes to Consolidated Financial Statements.
At September 30, 1996, the weighted average contractual maturity of the
Bank's fixed-rate mortgage-backed securities was approximately 2.0 years. The
actual maturity of a mortgage-backed security may be less than its stated
maturity due to prepayments of the underlying mortgages. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations - Asset
and Liability Management." Prepayments that are faster than anticipated may
shorten the life of the security and adversely affect its yield to maturity. The
yield is based upon the interest income and the amortization of any premium or
discount related to the mortgage-backed security. In accordance with GAAP,
premiums and discounts are amortized over the estimated lives of the loans,
which decrease and increase interest income, respectively. The prepayment
assumptions used to determine the amortization period for premiums and discounts
can significantly affect the yield of the mortgage-backed security, and these
assumptions are reviewed periodically to reflect actual prepayments. Although
prepayments of underlying mortgages depend on many factors, including the type
of mortgages, the coupon rate, the age of mortgages, the geographical location
of the underlying real estate collateralizing the mortgages and general levels
of market interest rates, the difference between the interest rates on the
underlying mortgages and the prevailing mortgage interest rates generally is the
most significant determinant of the rate of prepayments.
During periods of rising mortgage interest rates, if the coupon rates of
the underlying mortgages are less than the prevailing market interest rates
offered for mortgage loans, refinancings generally decrease and slow the
prepayment of the underlying mortgages and the related securities. Conversely,
during periods of falling mortgage interest rates, if the coupon rates of the
underlying mortgages exceed the prevailing market interest rates offered for
mortgage loans, refinancing generally increases and accelerates the prepayment
of the underlying mortgages and the related securities. Under such
circumstances, the Bank may be subject to reinvestment risk because to the
extent that the Bank's mortgage-related securities amortize or prepay faster
than anticipated, the Bank may not be able to reinvest the proceeds of such
repayments and prepayments at a comparable rate.
Securities. The Bank's investments in investment securities other than
mortgage-backed securities consist primarily of securities issued by the U.S.
Treasury and federal government agency obligations except for $361,000 of
securities all of which are general obligations of Illinois municipalities. As
of September 30, 1996, $2.2 million of such securities portfolio were classified
available for sale. The remaining $861,000 of the Bank's investment securities
portfolio were classified as held to maturity. The Bank attempts to maintain a
high degree of liquidity in its investment securities portfolio and generally
does not invest in securities with terms to maturity exceeding ten years. As of
September 30, 1996, the estimated weighted average life of the Bank's investment
securities portfolio was 2.91 years.
-63-
<PAGE>
The following table sets forth certain information regarding the Bank's
investment securities at the dates indicated.
<TABLE>
<CAPTION>
September 30,
-------------------------------------------------------------
1996 1995
----------------------------- -----------------------------
Amortized Cost Market Value Amortized Cost Market Value
-------------- ------------ -------------- ------------
(In Thousands)
<S> <C> <C> <C> <C>
Available for sale:(1)
U.S. Treasury $ 250 $ 253 $ 198 $ 199
Federal agencies 1,992 1,969 1,286 1,287
------ ------ ------ ------
Total available for sale $2,242 $2,222 $1,484 $1,486
====== ====== ====== ======
Held to maturity:(1)
Federal agencies $ 500 $ 499 $2,196 $2,157
State and municipal 361 355 360 353
Mortgage-backed securities 3,476 3,473 4,260 4,256
------ ------ ------ ------
Total held to maturity $4,337 $4,327 $6,816 $6,766
====== ====== ====== ======
</TABLE>
- ----------
(1) The Bank adopted the provisions set forth in SFAS No. 115 on October 1,
1994, which requires entities to carry securities that are available for
sale at their market value while continuing to carry securities that are
held to maturity at their amortized cost.
-64-
<PAGE>
The following table sets forth certain information regarding the
maturities of the Bank's investment securities at September 30, 1996.
<TABLE>
<CAPTION>
Contractually Maturing
---------------------------------------------------------------------------------------
Weighted Weighted Weighted Weighted
Under 1 Average 1-5 Average 6-10 Average Over 10 Average
Year Yield Years Yield Years Yield Years Yield Total
------- -------- ----- -------- ----- -------- ------- ------- -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Available for sale:
U.S. Treasury $ -- % $ 253 6.13% $ -- % $ -- % $ 253
Federal agencies 604 6.53 1,365 5.88 1,969
------ ------ ----- ----- ------
Total available for sale 604 1,618 2,222
------ ------ ----- ----- ------
Held to maturity:
Federal agencies 500 4.32 500
State and municipal(1) 165 4.65 196 4.85 361
Mortgage-backed securities 2,063 6.98 1,237 6.67 55 9.11 121 9.52 3,476
------ ------ ----- ----- ------
Total held to maturity 2,563 1,237 220 317 4,337
------ ------ ----- ----- ------
Total investment securities $3,167 $2,855 $ 220 $ 317 $6,559
====== ====== ===== ===== ======
</TABLE>
- ----------
(1) Yields on tax-exempt investments have not been computed on a
tax-equivalent basis.
-65-
<PAGE>
In addition, as a member of the FHLB of Chicago the Bank is required to
maintain an investment in stock of the FHLB of Chicago equal to the greater of
1% of the Bank's outstanding home mortgage related assets or 5% of its
outstanding advances from the FHLB of Chicago. As of September 30, 1996, the
Bank's investment in stock of the FHLB of Chicago amounted to $269,000. During
the year ended September 30, 1996, the Bank received $18,000 in dividends on its
FHLB stock. No ready market exists for such stock, which is carried at par
value.
Sources of Funds
General. The Bank's principal source of funds for use in lending and for
other general business purposes has traditionally come from deposits obtained
through the Bank's single retail office. The Bank also derives funds from
amortization and prepayments of outstanding loans and mortgage-related
securities, and from maturing investment securities. Loan repayments are a
relatively stable source of funds, while deposit inflows and outflows are
significantly influenced by general interest rates and money market conditions.
The Bank has made limited use of borrowings to supplement its deposits as a
source of funds.
Deposits. The Bank's current deposit products include savings accounts,
retirement savings accounts, NOW accounts, MMIA, certificates ranging in terms
from six months to five years and noninterest-bearing personal and business
checking accounts.
The Bank's deposits are obtained primarily from residents in its Primary
Market Area. The Bank attracts local deposit accounts by offering a wide variety
of accounts, competitive interest rates and a convenient location and convenient
service hours. The Bank utilizes traditional marketing methods to attract new
customers and savings deposits, including print and broadcast advertising and
direct mailings. However, the Bank does not solicit funds through deposit
brokers nor does it pay any brokerage fees if it accepts such deposits.
The Bank has been competitive in the types of accounts and in interest
rates it has offered on its deposit products but does not necessarily seek to
match the highest rates paid by competing institutions. With the decline in
interest rates paid on deposit products, the Bank in recent years has
experienced limited disintermediation of deposits into competing investment
products. See "Risk Factors - Potential Effects of Changes in Interest Rates."
See generally Note 7 of the Notes to Consolidated Financial Statements.
-66-
<PAGE>
The following table sets forth certain information relating to the Bank's
deposits by type, as of the dates indicated.
<TABLE>
<CAPTION>
September 30,
------------------------------------------------------------------------------
1996 1995
------------------------------------ -------------------------------------
Percent of Weighted Percent of Weighted
Total Average Total Average
Amount Deposits Nominal Rate Amount Deposits Nominal Rate
------ -------- ------------ ------ -------- ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Transaction accounts:
NOW accounts $ 577 1.88% 1.42% $ 625 1.99% 2.09%
Money market 1,043 3.39 2.75 1,432 4.57 3.30
investment accounts
Savings and retirement accounts 5,350 17.42 4.58 4,965 15.85 4.57
------- ------ ------- ------
Total transaction accounts 6,970 22.69 7,022 22.41
------- ------ ------- ------
Certificates of deposit:
Within 1 year 16,995 55.32 6.02 14,134 45.12 5.73
1-2 years 4,369 14.22 5.85 7,681 24.52 6.84
2-3 years 1,599 5.20 5.51 1,856 5.92 5.63
3-4 years 293 0.95 6.50 339 1.08 5.07
4-5 years 498 1.62 5.95 299 0.95 7.00
------- ------ ------- ------
Total certificate accounts 23,754 77.31 5.81 24,309 77.59 5.87
------- ------ ------- ------
Total deposits $30,724 100.00% $31,331 100.00%
======= ====== ======= ======
</TABLE>
-67-
<PAGE>
The following table sets forth information relating to the Bank's deposit
flows during the periods shown:
At or for the year ended
September 30,
------------------------
1996 1995
---------- ----------
(In Thousands)
Net deposits (withdrawals) before interest
credited $(1,877) $ (567)
Interest credited 1,270 1,200
------- -------
Total increase (decrease) in deposits $ (607) $ 633
======= =======
-68-
<PAGE>
The following table shows the interest rate and maturity information for
the Bank's certificates at September 30, 1996.
<TABLE>
<CAPTION>
Maturity Date
----------------------------------------------------------------------------------------
One Year
Interest Rate or Less Over 1-2 Years Over 2-3 Years Over 3-4 Years Over 4-5 Years Total
- ------------- -------- -------------- -------------- -------------- -------------- ------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
4.50 to 4.99% $ 200 $ -- $ -- $ -- $ -- $ 200
5.00 to 5.99% 9,450 2,835 1,586 -- 274 14,145
6.00 to 6.99% 4,265 1,534 13 293 224 6,329
7.00 to 7.10% 3,080 -- -- -- -- 3,080
------- ------- ------- ------- ------- -------
Total $16,995 $ 4,369 $ 1,599 $ 293 $ 498 $23,754
======= ======= ======= ======= ======= =======
</TABLE>
The following table sets for the maturities of the Bank's certificates
having principal amounts of $100,000 or more at September 30, 1996.
Maturity Period Amount
- ------------------------------------ -------
(In Thousands)
Three months or less $ 723
Over three through six months 656
Over six through twelve months 913
Over twelve months 483
-----
Total certificates of deposit with
balances of $100,00 or more $2,775
=====
-69-
<PAGE>
Borrowings. The Bank may obtain advances from the FHLB of Chicago upon the
security of the common stock it owns in that bank and certain of its residential
mortgage loans and securities held to maturity, provided certain standards
related to creditworthiness have been met. Such advances are made pursuant to
several credit programs, each of which has its own interest rate and range of
maturities. Prior to fiscal 1996, the Bank had not used such borrowings during
the most recent five-year period.
The following table sets forth the amounts of the Bank's borrowings and
the weighted average rates for the year ended September 30, 1996. The Bank had
no borrowings during the year ended September 30, 1995.
For the Year Ended
September 30, 1996
------------------
(Dollars
in Thousands)
FHLB advances:
Average balance outstanding
during the period(1).................. $1,917
======
Maximum amount outstanding
at any month-end during
the period............................ $2,000
======
Balance outstanding at end
of period............................. $2,000
======
Weighted average interest
rate during the period................ 5.58%
Weighted average interest
rate at the end of period............. 5.83%
======
- ----------
(1) The average balance was computed using an average of monthly balances
during the year.
-70-
<PAGE>
Subsidiaries
The Bank currently has one subsidiary, G.B.W. Service Corporation ("GBW").
GBW's primary activities are the collection of premiums on credit life and
credit disability insurance policies and the collection of interest on certain
real estate sales contracts. The Bank's investment totalled $118,000 as of
September 30, 1996.
Legal Proceedings
The Bank is involved in routine legal proceedings occurring in the
ordinary course of business which, in the aggregate except as noted below, are
believed by management to be immaterial to the financial condition of the Bank.
On December 30, 1992, Rosemary Frobose, a former officer of the Bank, filed a
lawsuit against the Bank in the United States District Court, Southern District
of Illinois, (subsequently transferred to the Central District of Illinois,
Peoria Division) alleging that she was the victim of a retaliatory discharge
based on common law rights and the federal "whistleblower statute," 12 USC ss.
1831j(a). The plaintiff seeks compensatory and punitive damages against the Bank
based upon her loss of income and employment for at least a ten-year period. She
has not sought a specific dollar amount in her complaint but at one point made a
demand of $900,000. Recently, the Court entered a summary judgment in favor of
the Bank on each count except one which was subsequently dismissed by the Court.
The Bank anticipates an appeal of the court's order against the plaintiff. The
Bank plans to continue to vigorously contest this lawsuit. In the judgment of
the Bank's litigation counsel, the likelihood that the plaintiff will prevail in
this case is remote. However, should the case be revised on appeal and a verdict
ultimately directed against the Bank by the trial court, the Bank's litigation
counsel believes that the range of potential loss is $250,000 to $1 million.
Competition
The Bank faces strong competition both in attracting deposits and making
real estate loans. Its most direct competition for deposits has historically
come from other savings institutions, credit unions and commercial banks located
in its market area including many large financial institutions which have
greater financial and marketing resources available to them. As of June 30,
1996, the Bank's total deposits ranked sixth out of 17 commercial banks and
savings associations operating in Vermilion County, Illinois. In addition, as of
that same date, there were also 18 credit unions operating in Vermilion County.
While each of such institutions, as of June 30, 1995, had total deposits of less
than $20 million, including 15 with total deposits of less than $10 million, in
the aggregate they provide strong competition for the Bank, especially in the
consumer lending area. In addition, during times of high interest rates, the
Bank has faced significant competition for investors' funds from short-term
money market securities, mutual funds and other corporate and government
securities. The ability of the Bank to attract and retain savings deposits
depends on its ability to generally provide a rate of return, liquidity and risk
comparable to that offered by competing investment opportunities.
The Bank experiences strong competition for real estate loans principally
from other savings institutions, commercial banks and mortgage banking
companies. The Bank competes for loans principally through the interest rates
and loan fees it charges, the efficiency and quality of services it provides
borrowers and the convenient locations of its branch office network. Competition
may increase as a result of the continuing reduction of restrictions on the
interstate operations of financial institutions.
Employees
The Bank had eight full-time employees and two part-time employees as of
September 30, 1996. None of these employees is represented by a collective
bargaining agreement. The Bank believes that it enjoys excellent relations with
its personnel.
Offices and Properties
At September 30, 1996, the Bank conducted business from a single office
located in Danville, Illinois.
-71-
<PAGE>
The following table sets forth certain information relating to the Bank's
office at September 30, 1996.
Net Book Value of
Premises and
Owned or Equipment at Deposits at
Location Leased September 30, 1996 September 30, 1996
- -------------------------- -------- ------------------ ------------------
(In Thousands)
Main Office:
714 North Vermilion Street Owned $ 467 $30,726
Danville, Illinois 61832
REGULATION
Set forth below is a brief description of those laws and regulations
which, together with the descriptions of other laws and regulations contained
elsewhere herein, are deemed material to an investor's understanding of the
extent to which the Company and the Bank are regulated. The description of these
laws and regulations, as well as descriptions of laws and regulations contained
elsewhere herein, does not purport to be complete and is qualified in its
entirety by reference to applicable laws and regulations.
The Company
Financial institutions and their holding companies are extensively
regulated under federal and state law by various regulatory authorities
including the Federal Reserve Board, the FDIC and the Commissioner. The
financial performance of the Company and the Bank may be affected by such
regulation, although the extent to which they may be affected cannot be
predicted with a high degree of certainty.
Federal and state laws and regulations generally applicable to financial
institutions and their holding companies regulate, among other things, the scope
of business, investments, reserves against deposits, capital levels relative to
operations, the nature and amount of collateral for loans, the establishment of
branches, mergers, consolidations and dividends. The system of supervision and
regulation applicable to the Company and the Bank establishes a comprehensive
framework for their operations and is intended primarily for the protection of
the FDIC's deposit insurance funds and the depositors of the Bank, rather than
the stockholders of the Company.
The following references to material statutes and regulations affecting
the Company and the Bank are brief summaries thereof and are qualified in their
entirety by reference to such statutes and regulations. Any change in applicable
law or regulations may have a material effect on the business of the Company and
the Bank.
The Bank
General. The Bank is an Illinois-chartered savings bank, the deposit
accounts of which are insured by the SAIF of the FDIC. As a SAIF-insured,
Illinois-chartered savings bank, the Bank is subject to the examination,
supervision, reporting and enforcement requirements of the Commissioner, as the
chartering authority for Illinois savings banks, and the FDIC, as administrator
of the SAIF, and to the statutes and regulations administered by the
Commissioner and the FDIC governing such matters as capital standards, mergers,
establishment of branch offices, subsidiary investments and activities and
general investment authority. The Bank is required to file reports with the
Commissioner and the FDIC concerning its activities and financial condition and
will be required to obtain regulatory approvals prior to entering into certain
transactions, including mergers with, or acquisitions of, other financial
institutions.
-72-
<PAGE>
The Commissioner and the FDIC have extensive enforcement authority over
Illinois-chartered savings banks, such as the Bank. This enforcement authority
includes, among other things, the ability to issue cease-and-desist or removal
orders, to assess civil money penalties and to initiate injunctive actions. In
general, these enforcement actions may be initiated for violations of laws and
regulations and unsafe and unsound practices.
The Commissioner has established a schedule for the assessment of
"supervisory fees" upon all Illinois savings banks to fund the operations of the
Commissioner. These supervisory fees are computed on the basis of each savings
bank's total assets (including consolidated subsidiaries) and are payable at the
end of each calendar quarter. A schedule of fees has also been established for
certain filings made by Illinois savings banks with the Commissioner. The
Commissioner also assesses fees for examinations conducted by the Commissioner's
staff, based upon the number of hours spent by the Commissioner's staff
performing the examination. During the fiscal year ended September 30, 1996, the
Bank paid approximately $11,000 in supervisory fees and expenses.
The system of regulation and supervision applicable to the Bank
establishes a comprehensive framework for its operations and is intended
primarily for the protection of the FDIC's deposit insurance funds and the
depositors of the Bank. Changes in the regulatory framework could have a
material adverse effect on the Bank and its operations which, in turn, could
have a material adverse effect on the Holding Company.
Capital Requirements. Under the Illinois Savings Bank Act ("ISBA") and the
regulations of the Commissioner, an Illinois savings bank must maintain a
minimum level of total capital equal to the higher of 3% of total assets or the
amount required to maintain insurance of deposits by the FDIC. The Commissioner
has the authority to require an Illinois savings bank to maintain a higher level
of capital if the Commissioner deems such higher level necessary based on the
savings bank's financial condition, history, management or earnings prospects.
FDIC-insured institutions are required to follow certain capital adequacy
guidelines which prescribe minimum levels of capital and require that
institutions meet certain risk-based and leverage capital requirements. Under
the FDIC capital regulations, an FDIC-insured institution is required to meet
the following capital standards: (i) "Tier 1 capital", for all but the most
highly rated institutions in an amount not less than 4% of total assets; (ii)
"Tier 1 capital" in an amount not less than 4% of risk-weighted assets; and
(iii) "total capital" in an amount not less than 8% of risk-weighted assets.
FDIC-insured institutions in the strongest financial and managerial
condition (with a composite rating of "1" under the Uniform Financial
Institutions Rating System established by the Federal Financial Institutions
Examination Council) are required to maintain "Tier 1 capital" equal to at least
3% of total assets ( the "leverage limit" requirement). For all other
FDIC-insured institutions, the minimum leverage limit requirement is 3% of total
assets plus at least an additional 100 to 200 basis points. Tier 1 capital is
defined to include the sum of common stockholders' equity, noncumulative
perpetual preferred stock (including any related surplus), and minority
interests in consolidated subsidiaries, minus all intangible assets (other than
qualifying servicing rights, qualifying purchased credit-card relationships and
qualifying supervisory goodwill), certain identified losses (as defined in the
FDIC's regulations) and investments in certain subsidiaries.
FDIC-insured institutions also are required to adhere to certain
risk-based capital guidelines which are designed to provide a measure of capital
more sensitive to the risk profiles of individual banks. Under the risk-based
capital guidelines, capital is divided into two tiers: core (Tier 1) capital, as
defined above, and supplementary (Tier 2) capital. Tier 2 capital is limited to
100% of core capital and includes cumulative perpetual preferred stock,
perpetual preferred stock for which the dividend rate is reset periodically
based on current credit standing, regardless of whether dividends are cumulative
or non-cumulative, mandatory convertible debt securities, term subordinated
debt, intermediate-term preferred stock and the allowance for possible loan and
lease losses. The allowance for possible loan and lease losses includable in
Tier 2 capital is limited to a maximum of 1.25% of risk-weighted assets. Total
capital is the sum of Tier 1 and Tier 2 capital. The risk-based capital
framework assigns balance sheet assets to one of four broad risk categories
which are assigned risk weights ranging from 0% to 100% based primarily on the
degree of credit risk associated with the obligor. Off balance sheet items are
converted to an on-balance sheet
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"credit equivalent" amount utilizing certain conversion factors. The sum of the
four risk-weighted categories equals risk-weighted assets. At September 30, 1996
the Bank met each of its capital requirements.
Dividends. Under the ISBA, dividends may only be declared when the total
capital of the Bank is greater than that required by Illinois law. Dividends may
be paid by the Bank out of its net profits (i.e., earnings from current
operations, plus actual recoveries on loans, investments, and other assets after
deducting all current expenses, including dividends or interest on deposit
accounts, additions to reserves as may be required by the Illinois Commissioner,
actual losses, accrued dividends on preferred stock, if any, and all State and
federal taxes). The written approval of the Commissioner must be obtained,
however, before a savings bank having total capital of less than 6% of total
assets may declare dividends in any year in an amount in excess of 50% of its
net profits for that year. A savings bank may not declare dividends in excess of
its net profits in any year without the approval of the Commissioner. In
addition, before declaring a dividend on its capital stock, the Bank must
transfer no less than one-half of its net profits of the preceding half year to
its paid-in surplus until it shall have paid-in surplus equal to 20% of its
capital stock. Finally, the Bank will be unable to pay dividends in an amount
which would reduce its capital below the greater of (i) the amount required by
the FDIC, (ii) the amount required by the Commissioner or (iii) the amount
required for the liquidation account to be established by the Bank in connection
with the Conversion. The Commissioner and the FDIC also have the authority to
prohibit the payment of any dividends by the Bank if the Commissioner or the
FDIC determines that the distribution would constitute an unsafe or unsound
practice. For the year ended September 30, 1996, the Bank's net loss was
$71,000, and the Bank could have paid no dividends without the written approval
of the Commissioner.
Federal Home Loan Bank System. The Bank is a member of the FHLB System
which consists of 12 FHLBs under the jurisdiction of the Federal Housing Finance
Board ("FHFB"). As a member of the FHLB System, the Bank is required to acquire
and hold shares of capital stock of the FHLB of Chicago in an amount equal to
the greater of (i) 1.0% of the aggregate outstanding principal amount of the
Bank's aggregate unpaid loan principal, or (ii) 0.3% of the Bank's total assets.
The Bank's holdings of FHLB capital stock will be reviewed annually by the FHLB
of Chicago using calendar year-end financial data to ensure that the Bank is
holding the minimum required amount of FHLB capital stock. If the minimum amount
required is decreased, the FHLB-Chicago may in its discretion and upon
application of the Bank, retire excess shares of capital stock held by the Bank.
The Bank is in compliance with this requirement with an investment in FHLB
capital stock of $269,000 at September 30, 1996.
The FHLBs provide a central credit facility primarily for member
institutions. FHLBs make advances to member banks in accordance with each
Federal Home Loan Bank's policies and procedures established by the FHFB and the
Board of Directors of such FHLB. All long-term advances by a Federal Home Loan
Bank (advances having an original term to maturity greater than five years) must
be made only for the purpose of providing funds for residential housing finance.
Advances are made upon the note or obligation of a member bank, must be fully
secured and bear interest at a rate established by the FHFB. At September 30,
1996, the Bank had $2.0 million in advances outstanding from the FHLB of
Chicago. The Bank's aggregate outstanding advances from the FHLB of Chicago may
at no time exceed 20 times the amounts paid in by the Bank for its holding of
FHLB capital stock.
Lending Limitations. Under the ISBA, the Bank is prohibited from making
secured or unsecured loans for business, corporate, commercial or agricultural
purposes representing in the aggregate an amount in excess of 15% of its total
assets, unless the Commissioner authorizes in writing a higher percentage limit
for such loans upon the request of an institution. In addition, the regulations
of the Commissioner prohibit the Bank from making educational loans in excess of
5% of its total assets.
The Bank is also subject to a loans-to-one borrower limitation. Under the
ISBA, the total loans and extensions of credit, both direct and indirect, by the
Bank to any person (other than the United States or its agencies, the state of
Illinois or its agencies, and any municipal corporation for money borrowed)
outstanding at one time must not exceed the greater of $500,000 or 20% of the
Bank's total capital plus general loan loss reserves. In addition to the above,
the total loans and extensions of credit, both direct and indirect, by the Bank
to any person outstanding at one time and at least 100% secured by readily
marketable collateral must not exceed the greater of $500,000 or 10% of the
Bank's total capital plus general loan loss reserves.
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Brokered Deposits; Regulation of Deposit Rates. Under applicable laws and
regulations, an insured depository institution may be restricted in obtaining,
directly or indirectly, funds by or through any "deposit broker," as defined,
for deposit into one or more deposit accounts at the institution. The term
"deposit broker" generally includes any person engaged in the business of
placing deposits, or facilitating the placement of deposits, of third parties
with insured depository institutions or the business of placing deposits with
insured depository institutions for the purpose of selling interests in those
deposits to third parties. Under FDIC regulations, well-capitalized institutions
are subject to no brokered deposit limitations, while adequately capitalized
institutions are able to accept, renew or roll over brokered deposits only (i)
with a waiver from the FDIC and (ii) subject to the limitation that they do not
pay an effective yield on any such deposit which exceeds by more than (a) 75
basis points the effective yield paid on deposits of comparable size and
maturity in such institution's normal market area for deposits accepted in its
normal market area or (b) by 120% for retail deposits and 130% for wholesale
deposits, respectively, of the current yield on comparable maturity U.S.
Treasury obligations for deposits accepted outside the institution's normal
market area. Undercapitalized institutions are not permitted to accept brokered
deposits and may not solicit deposits by offering an effective yield that
exceeds by more than 75 basis points the prevailing effective yields on insured
deposits of comparable maturity in the institution's normal market area or in
the market area in which such deposits are being solicited. At September 30,
1996, the Bank was an adequately capitalized institution which was not subject
to restrictions on brokered deposits within the meaning of these regulations and
had no brokered deposits. See "Business - Sources of Funds - Deposits."
An institution that is not well-capitalized, even if meeting minimum
capital requirements, may not solicit deposits by offering interest rates that
are significantly higher than the relevant local or national rate as determined
under the regulations.
Community Reinvestment Act Requirements. The FDIC, the Federal Reserve
Board, the Office of Thrift Supervision and the OCC have jointly issued a final
rule (the "Final Rule") under the Community Reinvestment Act (the "CRA"). The
Final Rule eliminates the existing CRA regulation's twelve assessment factors
and substitutes a performance based evaluation system. The Final Rule will be
phased in over a period of time and become fully effective by July 1, 1997.
Under the Final Rule, an institution's performance in meeting the credit needs
of its entire community, including low- and moderate-income areas, as required
by the CRA, will generally be evaluated under three tests: the "lending test,"
the "investment test," and the "service test." A "small bank," defined to
include one with less than $250 million in assets, is subject to a special test,
involving consideration of loan to deposit ratio, the percentage of loans
located in the institution's "assessment area", the degree of lending to persons
of different income levels and to business and farms of different sizes,
geographic distribution of loans, and responsiveness to complaints about its
performance in meeting local credit needs. As an alternative, institutions may
submit a "strategic plan" approved by the FDIC. These tests and standards are
applied in a "performance context." The performance context includes information
on income levels, housing stock and costs in the local area, any information
about lending, investment and service opportunities in the area, the
association's product offerings and business strategy, the institution's
capacity and constraints, past performance and performance of similarly situated
lenders, and written comments placed in the association's public file.
Institutions receive a rating of "outstanding", "satisfactory", "needs to
improve" or "substantial noncompliance." These ratings are made publicly
available and are used when applications are filed with the agency to branch,
relocate an office, merge with or acquire other institutions, among other
transactions. Based upon a review of the Final Rule, management of the Company
does not anticipate that the new CRA regulations will adversely affect the Bank.
The Company
General. Upon consummation of the Conversion, the Company will become the
sole stockholder of the Bank. As such, the Holding Company will be a bank
holding company. As a bank holding company, the Company will be required to
register with, and will become subject to regulation by, the Federal Reserve
Board under the BHCA. In accordance with Federal Reserve Board policy, the
Company will be expected to act as a source of financial strength to the Bank
and to commit resources to support the Bank in circumstances where the Company
might not do so absent such policy. Under the BHCA, the Company will be subject
to periodic examination by the Federal
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Reserve Board and will be required to file periodic reports of its operations
and such additional information as the Federal Reserve Board may require.
Because the Bank is chartered under Illinois law, the Company will also be
subject to registration with, and regulation by, the Commissioner under the
ISBA.
The BHCA requires prior Federal Reserve Board approval for, among other
things, the acquisition by a bank holding company of direct or indirect
ownership or control of more than five percent of the voting shares or
substantially all the assets of any bank, or for a merger or consolidation of a
bank holding company with another bank holding company. With certain exceptions,
the BHCA prohibits a bank holding company from acquiring direct or indirect
ownership or control of voting shares of any company which is not a bank or bank
holding company and from engaging directly or indirectly in any activity other
than banking or managing or controlling banks or performing services for its
authorized subsidiaries. A bank holding company may, however, engage in or
acquire an interest in a company that engages in activities which the Federal
Reserve Board has determined by regulation or order to be so closely related to
banking or managing or controlling banks as to be a proper incident thereto.
A bank holding company is a legal entity separate and distinct from its
subsidiary bank or banks. Normally, the major source of a holding company's
revenue is dividends a holding company receives from its subsidiary banks. The
right of a bank holding company to participate as a stockholder in any
distribution of assets of its subsidiary banks upon their liquidation or
reorganization or otherwise is subject to the prior claims of creditors of such
subsidiary banks. The subsidiary banks are subject to claims by creditors for
long-term and short-term debt obligations, including substantial obligations for
federal funds purchased and securities sold under repurchase agreements, as well
as deposit liabilities. Under the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, in the event of a loss suffered by the FDIC in
connection with a banking subsidiary of a bank holding company (whether due to a
default or the provision of FDIC assistance), other banking subsidiaries of the
holding company could be assessed for such loss.
Federal laws limit the transfer of funds by a subsidiary bank to its
holding company in the form of loans or extensions of credit, investments or
purchases of assets. Transfers of this kind are limited to ten percent of a
bank's capital and surplus with respect to each affiliate and to twenty percent
to all affiliates in the aggregate, and are also subject to certain collateral
requirements. These transactions, as well as other transactions between a
subsidiary bank and its holding company, must also be on terms substantially the
same as, or at least as favorable as, those prevailing at the time for
comparable transactions with non-affiliated companies or, in the absence of
comparable transactions, on terms or under circumstances, including credit
standards, that would be offered to, or would apply to, non-affiliated
companies.
Capital Requirements. The Federal Reserve Board has adopted capital
adequacy guidelines for bank holding companies (on a consolidated basis)
substantially similar to those of the FDIC for the Bank. On a pro forma basis
assuming consummation of the Conversion, the Company's pro forma Tier 1 and
total capital would significantly exceed the Federal Reserve Board's capital
adequacy requirements.
Other Regulations
FDICIA. FDICIA was enacted on December 19, 1991. In addition to providing
for the recapitalization of BIF, FDICIA represents a comprehensive and
fundamental change to banking supervision. FDICIA imposes relatively detailed
standards and mandates the development of additional regulations governing
nearly every aspect of the operations, management and supervision of banks and
bank holding companies like the Company and the Bank.
As required by FDICIA, and subsequently amended by the Riegle Community
Development and Regulatory Improvement Act of 1994, the federal banking
regulators have adopted (effective August 9, 1995) interagency guidelines
establishing standards for safety and soundness for depository institutions on
matters such as internal controls, loan documentation, credit underwriting,
interest-rate risk exposure, asset growth, and compensation and other benefits
(the "Guidelines"). In addition, the federal banking regulators have proposed
asset quality and earnings standards to be added to the Guidelines. The agencies
expect to request a compliance plan from an institution whose
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failure to meet one or more of the standards is of such severity that it could
threaten the safe and sound operation of the institution. FDIC regulations
enacted under FDICIA also require all depository institutions to be examined
annually by the banking regulators and depository institutions having $500
million or more in total assets to have an annual independent audit, an audit
committee comprised solely of outside directors, and to hire outside auditors to
evaluate the institution's internal control structure and procedures and
compliance with laws and regulations relating to safety and soundness. The FDIC,
in adopting the regulations, reiterated its belief that every depository
institution, regardless of size, should have an annual independent audit and an
independent audit committee.
FDICIA requires the banking regulators to take prompt corrective action
with respect to depository institutions that fall below certain capital levels
and prohibits any depository institution from making any capital distribution
that would cause it to be considered undercapitalized. Regulations establishing
five capital categories of well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically undercapitalized
became effective December 19, 1992. Institutions that are not adequately
capitalized may be subjected to a broad range of restrictions on their
activities and will be required to submit a capital restoration plan which, to
be accepted by the regulators, must be guaranteed in part by any company having
control of the institution. Only well capitalized institutions and adequately
capitalized institutions receiving a waiver from the FDIC will be permitted to
accept brokered deposits, and only those institutions eligible to accept
brokered deposits may provide pass-through deposit insurance for participants in
employee benefit plans. In other respects, FDICIA provides for enhanced
supervisory authority, including greater authority for the appointment of a
conservator or receiver for undercapitalized institutions.
A range of other regulations adopted as a result of FDICIA include
requirements applicable to closure of branches; additional disclosures to
depositors with respect to terms and interest rates applicable to deposit
accounts; requirements for the banking agencies to adopt uniform regulations for
extensions of credit secured by real estate; modification of accounting
standards to conform to generally accepted accounting principles including the
reporting of off-balance sheet items and supplemental disclosure of estimated
fair market value of assets and liabilities in financial statements filed with
the banking regulators; increased penalties in making or failing to file
assessment reports with the FDIC; greater restrictions on extensions of credit
to directors, officers and principal stockholders; and increased reporting
requirements on agricultural loans and loans to small businesses.
As required by FDICIA, the FDIC has established a risk-based assessment
system for the deposit insurance provided to depositors at depository
institutions whereby assessments to each institution are calculated upon the
probability that the insurance fund will incur a loss with respect to the
institution, the likely amount of such loss, and the revenue needs of the
insurance fund. Under the system, deposit insurance premiums are based upon an
institution's assignment to one of three capital categories and a further
assignment to one of three supervisory subcategories within each capital
category. The result is a nine category assessment system with initial
assessment rates ranging from twenty-three cents to thirty-one cents per one
hundred dollars of deposits in an institution. The classification of an
institution into a category will depend, among other things, on the results of
off-site surveillance systems, capital ratio, and CAMEL rating (a supervisory
rating of capital, asset quality, management, earnings, and liquidity).
The CDR Act. On September 23, 1994, the Riegle Community Development and
Regulatory Improvement Act of 1994 (the "CDR Act") was enacted. The CDR Act
includes more than 50 regulatory relief provisions designed to streamline the
regulatory process for banks and thrifts and to eliminate certain duplicative
regulations and paperwork requirements established after, and largely as a
result of, the savings and loan debacle. Well run community banks with less than
$250 million in assets will be examined every 18 months rather than annually.
The application process for forming a bank holding company has been greatly
reduced. Also, the requirement that call report data be published in local
newspapers has been eliminated.
The CDR Act establishes dual programs and provides funding in the amount
of $382 million to provide for development services, lending and investment in
distressed urban and rural areas by community development financial institutions
and banks. In addition, the CDR Act includes provisions relating to flood
insurance reform, money laundering, regulation of high-cost mortgages, and small
business and commercial real estate loan securitization.
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The Branching Act. On September 29, 1994, the Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994 (the "Branching Act") was enacted.
Under the Branching Act, beginning September 29, 1995, adequately capitalized
and adequately managed bank holding companies will be allowed to acquire banks
across state lines, without regard to whether the transaction is prohibited by
state law; however, they will be required to maintain the acquired institutions
as separately chartered institutions. Any state law relating to the minimum age
of target banks (not to exceed five years) will be preserved. Under the
Branching Act, the Federal Reserve Board will not be permitted to approve any
acquisition if, after the acquisition, the bank holding company would control
more than 10% of the deposits of insured depository institutions nationwide or
30% or more of the deposits in the state where the target bank is located. The
Federal Reserve Board could approve an acquisition, notwithstanding the 30%
limit, if the state waives the limit either by statute, regulation or order of
the appropriate state official.
In addition, under the Branching Act beginning on June 1, 1997, banks will
be permitted to merge with one another across state lines and thereby create a
main bank with branches in separate states. After establishing branches in a
state through an interstate merger transaction, the bank could establish and
acquire additional branches at any location in the state where any bank involved
in the merger could have established or acquired branches under applicable
federal or state law.
The responsible federal agency will not be permitted to approve any merger
if, after the merger, the resulting entity would control more than 10% of the
deposits of insured depository institutions nationwide or 30% or more of the
deposits in any state affected by the merger. The responsible agency could
approve a merger, notwithstanding the 30% limit, if the home state waives the
limit either by statute, regulation or order of the appropriate state official.
Under the Branching Act, states may adopt legislation permitting
interstate mergers before June 1, 1997. In contrast, states may adopt
legislation before June 1, 1997, subject to certain conditions, opting out of
interstate branching. If a state opts out of interstate branching, no
out-of-state bank may establish a branch in that state through an acquisition or
de novo, and a bank whose home state opts out may not participate in an
interstate merger transaction. Illinois has adopted legislation permitting
interstate mergers beginning on June 1, 1997.
Recent Developments Affecting Deposit Insurance Premiums
On September 30, 1996, the Deposit Insurance Funds Act of 1996 ("Insurance
Act") was enacted into law. Among other things, the Insurance Act authorizes the
FDIC to impose a special assessment on each depository institution with
SAIF-assessable deposits so that the SAIF may achieve its designated reserve
ratio. The Bank's assessment was $206,000 on a pre-tax basis, and was accrued
during the quarter ended September 30, 1996. In addition, the Insurance Act
provides for the merger of the BIF and the SAIF into the Deposit Insurance Fund
on January 1, 1999, but only if no insured depository institution is a savings
association on that date. As a result of the enactment of the Insurance Act,
beginning January 1, 1997 the deposit insurance premium applicable to most
savings associations was reduced from $2.30 per $1,000 of deposits to $0.645 per
$1,000.
FEDERAL AND STATE TAXATION
Federal Taxation
General. The Company and the Bank are subject to the corporate tax
provisions of the Code, as well as certain additional provisions of the Code
which apply to thrift and other types of financial institutions. The following
discussion of tax matters is intended only as a summary and does not purport to
be a comprehensive description of the tax rules applicable to the Company and
the Bank.
Fiscal Year. The Company will file its federal income tax return on a
September 30 year end basis.
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Method of Accounting. The Bank maintains its books and records for federal
income tax purposes using the accrual method of accounting. The accrual method
of accounting generally requires that items of income be recognized when all
events have occurred that establish the right to receive the income and the
amount of income can be determined with reasonable accuracy, and that items of
expense be deducted at the later of (i) the time when all events have occurred
that establish the liability to pay the expense and the amount of such liability
can be determined with reasonable accuracy or (ii) the time when economic
performance with respect to the item of expense has occurred.
Bad Debt Reserves. Savings institutions, such as the Bank, which meet
certain definitional tests primarily relating to their assets and the nature of
their businesses, are permitted to establish a reserve for bad debts and to make
annual additions to the reserve. These additions may, within specified formula
limits, be deducted in arriving at the institution's taxable income. For
purposes of computing the deductible addition to its bad debt reserve, the
institution's loans are separated into "qualifying real property loans" (i.e.,
generally those loans secured by certain interests in real property) and all
other loans ("non-qualifying loans"). The deduction with respect to
non-qualifying loans must be computed under the experience method as described
below. The following formulas may be used to compute the bad debt deduction with
respect to qualifying real property loans: (i) actual loss experience, or (ii) a
percentage of taxable income. Reasonable additions to the reserve for losses on
non-qualifying loans must be based upon actual loss experience and would reduce
the current year's addition to the reserve for losses on qualifying real
property loans, unless that addition is also determined under the experience
method. The sum of the additions to each reserve for each year is the
institution's annual bad debt deduction.
Under the experience method, the deductible annual addition to the
institution's bad debt reserves is the amount necessary to increase the balance
of the reserve at the close of the taxable year to the greater of (a) the amount
which bears the same ratio to loans outstanding at the close of the taxable year
as the total net bad debts sustained during the current and five preceding
taxable years bear to the sum of the loans outstanding at the close of the six
years, or (b) the lower of (i) the balance of the reserve account at the close
of the Bank's "base year," which was its tax year ended December 31, 1987, or
(ii) if the amount of loans outstanding at the close of the taxable year is less
than the amount of loans outstanding at the close of the base year, the amount
which bears the same ratio to loans outstanding at the close of the taxable year
as the balance of the reserve at the close of the base year bears to the amount
of loans outstanding at the close of the base year.
Under the percentage of taxable income method, the bad debt deduction
equals 8% of taxable income determined without regard to that deduction and with
certain adjustments. The availability of the percentage of taxable income method
permits a qualifying savings institution to be taxed at a lower effective
Federal income tax rate than that applicable to corporations in general. This
resulted generally in an effective Federal income tax rate payable by a
qualifying savings institution fully able to use the maximum deduction permitted
under the percentage of taxable income method, in the absence of other factors
affecting taxable income, of 31.3% exclusive of any minimum tax or environmental
tax (as compared to 34% for corporations generally). For tax years beginning on
or after January 1, 1993, the maximum corporate tax rate was increased to 35%,
which increased the maximum effective federal income tax rate payable by a
qualifying savings institution fully able to use the maximum deduction to 32.2%.
Any savings institution at least 60% of whose assets are qualifying assets, as
described in the Code, will generally be eligible for the full deduction of 8%
of taxable income. As of December 31, 1995, 93.6% of the assets of the Bank were
"qualifying assets" as defined in the Code, and the Bank anticipates that at
least 60% of its assets will continue to be qualifying assets in the immediate
future. If this ceases to be the case, the institution may be required to
restore some portion of its bad debt reserve to taxable income in the future.
Under the percentage of taxable income method, the bad debt deduction for
an addition to the reserve for qualifying real property loans cannot exceed the
amount necessary to increase the balance in this reserve to an amount equal to
6% of such loans outstanding at the end of the taxable year. The bad debt
deduction is also limited to the amount which, when added to the addition to the
reserve for losses on non-qualifying loans, equals the amount by which 12% of
deposits at the close of the year exceeds the sum of surplus, undivided profits
and reserves at the beginning of the year. Based on experience, it is not
expected that these restrictions will be a limiting factor for the
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Bank in the foreseeable future. In addition, the deduction for qualifying real
property loans is reduced by an amount equal to all or part of the deduction for
non-qualifying loans.
At September 30, 1996, the Federal income tax reserves of the Bank
included $1.0 million for which no Federal income tax has been provided. Because
of these Federal income tax reserves and the liquidation account to be
established for the benefit of certain depositors of the Bank in connection with
the conversion of the Bank to stock form, the retained earnings of the Bank are
substantially restricted.
Pursuant to certain legislation which was recently enacted and which will
be effective for tax years beginning after 1995, a small thrift institution (one
with an adjusted basis of assets of less than $500 million), such as the Bank,
would no longer be permitted to make additions to its tax bad debt reserve under
the percentage of taxable income method. Such institutions would be permitted to
use the experience method in lieu of deducting bad debts only as they occur.
Such legilsation will require the Bank to realize increased tax liability over a
period of at least six years, beginning in 1996. Specifically, the legislation
will require a small thrift institution to recapture (i.e., take into income)
over a multi-year period the balance of its bad debt reserves in excess of the
lesser of (i) the balance of such reserves as of the end of its last taxable
year ending before 1988 or (ii) an amount that would have been the balance of
such reserves had the institution always computed its additions to its reserves
using the experience method. The recapture requirement would be suspended for
each of two successive taxable years beginning January 1, 1996 in which the Bank
originates an amount of certain kinds of residential loans which in the
aggregate are equal to or greater than the average of the principal amounts of
such loans made by the Bank during its six taxable years preceding 1996. It is
anticipated that any recapture of the Bank's bad debt reserves accumulated after
1987 would not have a material adverse effect on the Bank's financial condition
and results of operations. As of September 30, 1996, the Bank's accumulated bad
debt reserves after 1987 amounted to $129,600. See Note 9 to the Consolidated
Financial Statements.
Distributions. If the Bank were to distribute cash or property to its sole
stockholder, and the distribution was treated as being from its accumulated bad
debt reserves, the distribution would cause the Bank to have additional taxable
income. A distribution is deemed to have been made from accumulated bad debt
reserves to the extent that (a) the reserves exceed the amount that would have
been accumulated on the basis of actual loss experience, and (b) the
distribution is a "non-qualified distribution." A distribution with respect to
stock is a non-qualified distribution to the extent that, for federal income tax
purposes, (i) it is in redemption of shares, (ii) it is pursuant to a
liquidation of the institution, or (iii) in the case of a current distribution,
together with all other such distributions during the taxable year, it exceeds
the institution's current and post-1951 accumulated earnings and profits. The
amount of additional taxable income created by a non-qualified distribution is
an amount that when reduced by the tax attributable to it is equal to the amount
of the distribution.
Minimum Tax. The Code imposes an alternative minimum tax at a rate of 20%.
The alternative minimum tax generally applies to a base of regular taxable
income plus certain tax preferences ("alternative minimum taxable income" or
"AMTI") and is payable to the extent that tax calculated on AMTI in excess of an
exemption amount exceeds the regular tax liability. The Code provides that an
item of tax preference is the excess of the bad debt deduction allowable for a
taxable year pursuant to the percentage of taxable income method over the amount
allowable under the experience method. Other items of tax preference that
constitute AMTI include (a) tax-exempt interest on newly issued (generally,
issued on or after August 8, 1986) private activity bonds other than certain
qualified bonds and (b) 75% of the excess (if any) of (i) adjusted current
earnings as defined in the Code, over (ii) AMTI (determined without regard to
this preference and prior to reduction by net operating losses).
Net Operating Loss Carryovers. A financial institution may carry back net
operating losses ("NOLs") to the preceding three taxable years and forward to
the succeeding 15 taxable years. This provision applies to losses incurred in
taxable years beginning after 1986. At September 30, 1996, the Bank had no NOL
carryforwards for Federal income tax purposes.
Audit by IRS. The Bank's Federal income tax returns for taxable years
through September 30, 1992 have been closed for the purpose of examination by
the Internal Revenue Service.
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State and Local Taxation.
State of Illinois. The Company and the Bank will file a combined Illinois
income tax return. For Illinois income tax purposes, they are taxed at an
effective rate equal to 7.2% of Illinois Taxable Income. For these purposes,
"Illinois Taxable Income" generally means federal taxable income, subject to
certain adjustments (including the addition of interest income on state and
municipal obligations and the exclusion of interest income on United States
Treasury obligations). The exclusion of income on United States Treasury
obligations has the effect of reducing Illinois taxable income. The Company is
also required to file an annual report with and pay an annual franchise tax to
the State of Illinois.
Delaware Taxation. As a Delaware holding company not earning income in
Delaware, the Company is exempt from Delaware corporate income tax but is
required to file an annual report with and pay an annual franchise tax to the
State of Delaware.
MANAGEMENT
Management of the Company
The Board of Directors is divided into three classes, each of which
contains one-third of the Board. The directors shall be elected by the
stockholders of the Company for staggered three-year terms, or until their
successors are elected and qualified. One class of directors, consisting of
Messrs. Ewbank and Ingram has a term of office expiring at the first annual
meeting of stockholders, a second class, consisting of Messrs. Busby and Norton
has a term of office expiring at the second annual meeting of stockholders and a
third class, consisting of Mr. Meyer has a term of office expiring at the third
annual meeting of stockholders. Their names and biographical information are set
forth under "- Management of the Bank."
The following individuals are executive officers of the Company and hold
the offices set forth below opposite their names.
Executive Position Held with Company
- ----------------- -------------------------------------
Thomas B. Meyer Chairman of the Board
Merrill G. Norton President and Chief Executive Officer
William T. Ingram Secretary
The executive officers of the Company are elected annually and hold office
until their respective successors have been elected and qualified or until
death, resignation or removal by a majority vote of stockholders.
Since the formation of the Company, none of the executive officers,
directors or other personnel has received remuneration from the Company.
Information concerning the principal occupations, employment and compensation of
the directors and officers of the Company during the past five years is set
forth under "- Management of the Bank" and "- Executive Officers Who Are Not
Directors." Directors and executive officers of the Company initially will not
be compensated by the Company but will serve and be compensated by the Bank. It
is not anticipated that separate compensation will be paid to directors and
officers of the Company until such time as such persons devote significant time
to the separate management of the Company's affairs, which is not expected to
occur until the Company becomes actively engaged in additional businesses other
than holding the stock of the Bank. The Company may determine that such
compensation is appropriate in the future.
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Management of the Bank
The following table sets forth certain information regarding the Board of
Directors of the Bank. Each member is elected annually.
Positions Held
With Director
Name Age(1) the Bank Since
- ------------------- ------ ------------------------------ --------
Thomas B. Meyer 51 Chairman of the Board 1972
Merrill G. Norton 50 Director, President and Chief
Executive Officer 1992
Carl W. Busby 67 Director 1993
Robert L. Ewbank 64 Director 1983
William T. Ingram 56 Director/Secretary 1990
- ----------
(1) As of December 31, 1995.
Set forth below is information with respect to the principal occupations
during at least the last five years for the directors of the Bank.
Thomas B. Meyer Mr. Meyer is an attorney in private practice in Danville,
Illinois. He has served as Chairman of the Board since 1992.
Merrill G. Norton Mr. Norton has served as the Bank's president and chief
executive officer since 1992. He was the sole proprietor of Merrill G. Norton,
C.P.A. from 1973 to 1992.
Carl W. Busby Mr. Busby is an auctioneer, farm and real estate appraiser
and agriculture real estate salesman. He is the president and owner with his
wife of Busby Farms, Inc. and Busby Land and Auction Co., Inc.
Dr. Robert L. Ewbank Dr. Ewbank has been a medical consultant since 1995
when he retired from his oral and maxillofacial surgery practice in Danville,
Illinois.
William T. Ingram Mr. Ingram operates a number of businesses in the
Danville, Illinois area, including Automobile Diagnostics, Quick Air Freight,
Ingram's Quicklube and Ingram's Apartments.
Committees and Meetings of the Board of the Bank
The Bank's Board of Directors holds regular meetings on the third
Wednesday of each month, as well as special meetings as necessary. The Board of
Directors held 15 meetings (including three special meetings) held in the fiscal
year ended September 30, 1996. The Board has established various committees to
which it has delegated certain responsibilities, including a nominating
committee, investment committee, audit committee, promotion and advertising
committee and interest rate risk/asset liability committee. No director attended
fewer than 75% of the total number of Board meetings and meetings of Board
committees on which he served during the fiscal year ended September 30, 1996.
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All of the Board members serve on the Investment Committee and the
Interest Rate Risk/Asset Liability Committee and all of the Board members except
for Mr. Norton serve on the Nominating Committee. The Audit Committee's current
members are Messrs. Meyer, Ewbank and Busby and the members of the Promotion and
Advertising Committee are Messrs. Norton and Ingram. During fiscal 1996, the
Investment Committee met 12 times, the Interest Rate Risk/Asset Liability
Committee met quarterly, the Promotion and Advertising Committee met three
times, the Audit Committee met twice and the Nominating Committee met once.
Directors' Compensation
Members of the Bank's Board of Directors receive $400 per month plus $300
per special meeting attended. Board fees are subject to adjustment by the Board
of Directors annually. Each of the Bank's directors also serves on GBW's board
of directors and receives a monthly fee of $50 for such service. In addition to
fees paid to directors for Board meetings, the Bank's directors are expected to
participate in the Stock Option Plan and Recognition Plan. See "- Benefits -
Stock Option Plan" and "- Recognition and Retention Plan."
Summary Compensation Table
The following table sets forth a summary of certain information concerning
the compensation paid by the Bank for services rendered in all capacities during
the year ended September 30, 1996 to the President and Chief Executive Officer
of the Bank. No other executive officers of the Bank had total annual
compensation in excess of $100,000 during fiscal 1996.
<TABLE>
<CAPTION>
====================================================================================================================================
Annual Compensation Long Term Compensation
-------------------------------------------------------------------------------------
Other
Annual Awards Payouts
Name and Year Salary Bonus Compensation(1) All Other
Principal Position Compensation
-----------------------------------------
Restricted Securities LTIP
Stock Underlying Payouts
Options
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Merrill G. Norton
President and Chief
Executive Officer 1996 $74,613 $ -0- -- -- -- -- $6,700(2)
====================================================================================================================================
</TABLE>
- ----------
(1) Does not include amounts attributable to miscellaneous benefits received
by the named executive officer. In the opinion of management of the Bank,
the costs to the Bank of providing such benefits to the named executive
officer during the year ended September 30, 1996 did not exceed the lesser
of $50,000 or 10% of the total of annual salary and bonus reported for the
individual.
(2) Consists of $6,700 allocated by the Bank on behalf of Mr. Norton pursuant
to the Bank's 401(k) plan.
Employment Agreements
The Bank intends to enter into an employment agreement with Mr. Norton
upon consummation of the Conversion. The Bank intends to agree to employ Mr.
Norton for a term of three years in his current position at an initial base
salary of $76,000. The agreement is terminable with or without cause by the
Bank. The officer shall have no right to compensation or other benefits pursuant
to the employment agreement for any period after voluntary termination or
termination by the Bank for cause, provided, however, that (i) in the event that
the Bank fails to comply with any material provision of the employment agreement
he shall be entitled to severance payments equal to his annual salary multiplied
by three or (ii) if certain adverse actions are taken with respect to the
officer's employment following a Change in Control of the Company, as defined,
Mr. Norton will be
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entitled to cash severance payments equal to his average annual compensation at
the date of termination multiplied by two. A Change in Control of the Company is
generally defined in the employment agreement to mean a change in control of a
nature that would be required to be reported in response to Item 6(c) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended. Mr. Norton's employment agreement provides that in the event
that any payments to be paid thereunder are deemed to constitute "excess
parachute payments" and, therefore, subject to an excise tax under Section 4999
of the Code, the amount of severance shall be reduced to an amount that will not
result in any excess parachute payments. Mr. Norton's agreement also provides
that in the event of Mr. Norton's disability, retirement or death during the
term of the agreement, Mr. Norton or his estate will receive payments equal to
the amount of compensation for 12 months at his then current base salary.
Based upon compensation levels at September 30, 1996, in the event of a
termination of employment following a Change in Control, Mr. Norton would
receive $149,200 in cash severance.
Although the above-described employment agreement could increase the cost
of any acquisition of control of the Company, management of the Company does not
believe that the terms thereof would have a significant anti-takeover effect.
Benefits
401(k) Profit Sharing Plan. The Bank maintains a 401(k) profit sharing
plan. The 401(k) Plan is designed to promote the future economic welfare of the
employees of the Bank and to encourage employee savings. Employee deferrals of
salary and employer contributions made under the 401(k) Plan, together with the
income thereon, are accumulated in individual accounts maintained in trust on
behalf of the employee participants, and is made available to the employee
participants upon retirement and under certain other circumstances as provided
in the 401(k) Plan. Since employee deferrals of salary and employer
contributions made under the 401(k) Plan are made on a tax deferred basis,
employee participants are able to enjoy significant income tax savings by
participating in the 401(k) Plan. Employees are also permitted to direct the
investment of their accounts among five mutual funds.
An employee of the Bank becomes eligible to participate in the 401(k) Plan
after he or she completes a year of service (provided he or she is at least age
21). A year of service is a 12 consecutive month period in which the employee
works at least 1,000 hours for the Bank. An employee will become a participant
in the 401(k) Plan on the first day of the month coinciding with or next
following the date he or she satisfies the eligibility requirements.
Participants may elect to defer amounts of up to 15% of their annual
compensation to the 401(k) Plan, subject to certain limits imposed by law. Each
year the Bank may make a discretionary matching contribution equal to a
percentage of compensation deferred and may make additional discretionary
contributions. Upon consummation of the Conversion, the Bank expects to
terminate the matching provision of the 401(k) Plan. The Bank may also make
discretionary profit sharing contributions, allocated to eligible employees on
the basis of relative compensation.
The 401(k) Plan was amended on January 15, 1996 to permit participants in
the plan to direct the administrator to invest their vested account balances
into an Employee Stock Fund which will be invested in shares of Common Stock of
the Company. However, no 401(k) Plan participant may purchase more than $50,000
in aggregate value of the Common Stock in the Conversion (subject to the overall
purchase limitations) through the 401(k) Plan's subscription rights. A
participant's ability to direct all or some of his vested account to purchase
Common Stock in the Subscription Offering will be dependent upon such individual
being an Eligible Account Holder, Supplemental Eligible Account Holder or Other
Member. A participant may directly vote shares of Common Stock held in his or
her 401(k) Plan account. During 1996, the Bank contributed $19,000 to the 401(k)
Plan, $6,700 of which was for the benefit of Mr. Norton.
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Employee Stock Ownership Plan and Trust. The Company has established the
ESOP for employees of the Company and the Bank to become effective upon the
consummation of the Conversion. Full-time employees of the Company and the Bank
who have been credited with at least 1,000 hours of service during a 12-month
period and who have attained age 21 are eligible to participate in the ESOP.
As part of the Conversion, in order to fund the purchase of up to 8.0% of
the Common Stock to be issued in the Conversion, or 27,600 shares assuming
shares are sold at the maximum of the Estimated Price Range, it is anticipated
that the ESOP will borrow funds from the Company. It is anticipated that such
loan will equal 100% of the aggregate purchase price of the Common Stock
acquired by the ESOP. The loan to the ESOP will be repaid principally from the
Company's contributions to the ESOP over a period of ten years, and the
collateral for the loan will be the Common Stock purchased by the ESOP. The
interest rate for the ESOP loan is expected to be ___%. The Company may, in any
plan year, make additional discretionary contributions for the benefit of plan
participants in either cash or shares of Common Stock, which may be acquired
through the purchase of outstanding shares in the market or from individual
stockholders, upon the original issuance of additional shares by the Company or
upon the sale of treasury shares by the Company. Such purchases, if made, would
be funded through additional borrowing by the ESOP or additional contributions
from the Company. The timing, amount and manner of future contributions to the
ESOP will be affected by various factors, including prevailing regulatory
policies, the requirements of applicable laws and regulations and market
conditions.
Shares purchased by the ESOP with the proceeds of the loan will be held in
a suspense account and released on a pro rata basis as debt service payments are
made. Discretionary contributions to the ESOP and shares released from the
suspense account will be allocated among participants on the basis of
compensation. Forfeitures will be reallocated among remaining participating
employees and may reduce any amount the Company might otherwise have contributed
to the ESOP. Participants will vest in their right to receive their account
balances within the ESOP at the rate of 25% per year. In the case of a "change
in control," as defined, however, participants will become immediately fully
vested in their account balances. Benefits may be payable upon retirement, early
retirement, disability or separation from service. The Company's contributions
to the ESOP are not fixed, so benefits payable under the ESOP cannot be
estimated.
Messrs. Meyer, Ingram and Norton will serve as trustees of the ESOP. Under
the ESOP, the trustees must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees, and allocated
shares for which employees do not give instructions, and unallocated shares,
will be voted in the same ratio on any matter as to those shares for which
instructions are given.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Recent Accounting Pronouncements" for a discussion of
SOP 93-6, which changes the measure of compensation expense recorded by
employers for leveraged ESOPs from the cost of ESOP shares to the fair value of
ESOP shares.
GAAP requires that any third party borrowing by the ESOP be reflected as a
liability on the Company's statement of financial condition. Since the ESOP is
borrowing from the Company, such obligation is not treated as a liability, but
will be excluded from stockholders' equity. If the ESOP purchases newly-issued
shares from the Company, total stockholders' equity would neither increase nor
decrease, but per share stockholders' equity and per share net earnings would
decrease because of the increase in the number of outstanding shares as those
shares become committed to be released.
The ESOP will be subject to the requirements of Employee Retirement Income
Security Act of 1974, as amended, and the regulations of the IRS and Department
of Labor thereunder.
Stock Option Plan. Following the Conversion, the Board of Directors of the
Company intends to submit the Stock Option Plan for approval to stockholders at
a special meeting of stockholders, which is expected to
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be held not earlier than six months following consummation of the Conversion. No
options shall be awarded under the Stock Option Plan unless stockholder approval
is obtained.
The Stock Option Plan will be designed to attract and retain qualified
personnel in key positions, provide officers and key employees with a
proprietary interest in the Company as an incentive to contribute to the success
of the Company and reward key employees for outstanding performance and the
attainment of targeted goals. The Stock Option Plan will also be designed to
retain qualified directors for the Company. The Stock Option Plan will provide
for the grant of incentive stock options intended to comply with the
requirements of Section 422 of the Code ("incentive stock options"),
non-incentive or compensatory stock options and stock appreciation rights
(collectively "Awards"). Awards will be available for grant to directors and key
employees of the Company and any subsidiaries, except that directors will not be
eligible to receive incentive stock options. If stockholder approval is
obtained, it is expected that options to acquire shares of Common Stock will be
awarded to key employees of the Company and the Bank and directors of the
Company in accordance with applicable regulations. Regulations which apply to
the Stock Option Plan and the Recognition Plan provide that no individual
employee may receive more than 25% of the shares of any plan and non-employee
directors may not receive more than 5% of any plan individually or 30% in the
aggregate for all directors.
The Stock Option Plan will be administered and interpreted by a committee
of the Board of Directors ("Committee") which will be "disinterested" pursuant
to applicable regulations under the Federal securities laws. Unless sooner
terminated, the Stock Option Plan will be in effect for a period of ten years
from the earlier of adoption by the Board of Directors or approval by the
Company's stockholders.
Under the Stock Option Plan, the Committee will determine which officers
and key employees will be granted options, whether such options will be
incentive or compensatory options, the number of shares subject to each option,
whether such options may be exercised by delivering other shares of Common Stock
and when such options become exercisable. The per share exercise price of an
incentive and compensatory stock option shall be required to be at least equal
to the fair market value of a share of Common Stock on the date the option is
granted.
Stock options shall become vested and exercisable in the manner specified
by the Committee, which shall not be faster than 20% per year, beginning one
year from the date of grant. Each stock option or portion thereof shall be
exercisable at any time on or after it vests and is exercisable until ten years
after its date of grant or three months after the date on which the optionee's
employment terminates, unless extended by the Committee to a period not to
exceed one year from such termination. However, failure to exercise incentive
stock options within three months after the date on which the optionee's
employment terminates may result in adverse tax consequences to the optionee.
Stock options are non-transferable except by will or the laws of descent and
distribution.
Under the Stock Option Plan, the Committee will be authorized to grant
rights to optionees ("stock appreciation rights") under which an optionee may
surrender any exercisable incentive stock option or compensatory stock option or
part thereof in return for payment by the Company to the optionee of cash or
Common Stock in an amount equal to the excess of the fair market value of the
shares of Common Stock subject to option at the time over the option price of
such shares, or a combination of cash and Common Stock. Stock appreciation
rights may be granted concurrently with the stock options to which they relate
or at any time thereafter which is prior to the exercise or expiration of such
options.
The number of options to be granted to non-employee directors will be
specifically set forth in the Stock Option Plan and will be granted upon
approval of the Stock Option Plan by stockholders. Such stock options to
directors will become vested and exercisable under the same terms as options
granted by the Committee to officers and employees. If an optionee dies or
terminates service due to disability, while serving as an employee or
non-employee director, all unvested options are accelerated. Under such
circumstances, the optionee or, as the case may be, the optionee's executors,
administrators, legatees or distributees, shall have the right to exercise
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all unexercised options during the 12-month period following termination due to
disability or death, provided no option will be exercisable within six months
after the date of grant or more than ten years from the date it was granted.
The Company intends to reserve for future issuance pursuant to the Stock
Option Plan a number of authorized shares of Common Stock equal to 10% of the
Common Stock issued in the Conversion, or 34,500 shares, based on the issuance
of 345,000 shares at the maximum of the Estimated Price Range. In the event of a
stock split, reverse stock split or stock dividend, the number of shares of
Common Stock under the Stock Option Plan, the number of shares to which any
Award relates and the exercise price per share under any option or stock
appreciation right shall be adjusted to reflect such increase or decrease in the
total number of shares of the Common Stock outstanding.
Under current provisions of the Code, the Federal income tax treatment of
incentive stock options and compensatory stock options is different. As regards
incentive stock options, an optionee who meets certain holding period
requirements will not recognize income at the time the option is granted or at
the time the option is exercised, and a Federal income tax deduction generally
will not be available to the Company at any time as a result of such grant or
exercise. With respect to compensatory stock options, the difference between the
fair market value of the shares subject to the option on the date of exercise
and the option exercise price generally will be treated as compensation income
upon exercise, and the Company will be entitled to a deduction in the amount of
income so recognized by the optionee. Upon the exercise of a stock appreciation
right, the holder will realize income for Federal income tax purposes equal to
the amount received by him, whether in cash, shares of stock or both, and the
Company will be entitled to a deduction for Federal income tax purposes in the
same amount.
Although no specific award determinations have been made, assuming the
requisite receipt of stockholder approval, the Company intends to follow Federal
criteria with respect to awards of stock options under the Stock Option Plan.
Under such criteria, awards to individual non-employee directors may not exceed
5.0% of the options available under the plan and awards to all non-employee
directors may not exceed 30% of the plan in the aggregate. Awards to any
individual employee may not exceed 25% of the shares available under the plan.
Recognition and Retention Plan. Following the Conversion, the Board of
Directors of the Company intends to submit the Recognition Plan to stockholders
for approval at a special meeting of stockholders, which is expected to be held
not earlier than six months following completion of the Conversion. The
objective of the Recognition Plan will be to enable the Company to provide
directors, officers and employees with a proprietary interest in the Company as
an incentive to contribute to its success. The Recognition Plan will set forth
specific awards to be made to non-employee directors.
Assuming the receipt of stockholder approval, the Company expects to
acquire Common Stock on behalf of the Recognition Plan, in an amount equal to 4%
of the Common Stock issued in the Conversion, or 13,800 shares at the maximum of
the Estimated Price Range. These shares will be acquired through open market
purchases or from authorized but unissued shares. Although no specific award
determinations have been made, the Company intends to follow Federal criteria
for making awards under the Recognition Plan. Under such criteria, the
individual and aggregate award limitations under the Recognition Plan will be
the same as under the Stock Option Plan. See "- Stock Option Plan."
The Board of Directors of the Company will administer the Recognition Plan
as it pertains to directors and a Board Committee will administer the
Recognition Plan with respect to all other persons. The Committee will have the
responsibility to invest all funds contributed by the Company to the Recognition
Plan. Shares of Common Stock granted pursuant to the Recognition Plan generally
will be in the form of restricted stock payable over a period specified by the
administrators, which shall not be faster than 20% per year, beginning one year
from the date of the award. For accounting purposes, compensation expense in the
amount of the fair market
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value of the Common Stock at the date of the grant to the recipient will be
recognized pro rata over the number of years during which the shares are
payable. While restricted, shares may not be sold, pledged or otherwise disposed
of and are required to be held in the Trust. But, while restricted, a recipient
will be entitled to voting and other stockholder rights. If a recipient
terminates employment for reasons other than death, disability or retirement,
the recipient will forfeit all rights to the allocated shares under restriction.
If the recipient's termination is caused by death or disability, all
restrictions will expire and all allocated shares will become unrestricted. The
Board of Directors of the Company will be authorized to terminate the
Recognition Plan at any time, and if it does so, any shares not allocated will
revert to the Company.
Transactions With Certain Related Persons
The Bank's policy provides that all loans made by the Bank to its
directors and officers are made in the ordinary course of business, are made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and do not
involve more than the normal risk of collectibility or present other unfavorable
features. As of September 30, 1996, none of the Bank's directors or executive
officers had aggregate loan balances in excess of $60,000. All loans made to the
Bank's directors and executive officers are made in the ordinary course of
business, without favorable terms and do not involve more than the normal risk
of collectibility.
Subscriptions by Directors and Executive Officers
The following table sets forth the number of shares of Common Stock of the
Company proposed to be purchased by the Company's directors and by all directors
and executive officers as a group (including purchases by any associates of or
groups acting in concert with such persons), assuming shares of Common Stock are
issued at the maximum of the Estimated Price Range and that sufficient shares
will be available to satisfy their subscriptions.
At the Maximum
of the Estimated Price Range(1)
------------------------------------------
As a Percent
Number of Shares
Name Amount of Shares Offered
- --------------------------- ---------- ----------- -------------
Thomas B. Meyer $ 50,000 5,000 1.4%
Merrill G. Norton 150,000 15,000 4.3
Carl W. Busby 150,000 15,000 4.3
Robert L. Ewbank 150,000 15,000 4.3
William T. Ingram 150,000 15,000 4.3
All directors and executive
officers as a group
(5 persons) $650,000(2) 65,000 18.6%
- ----------
(1) Includes proposed subscriptions, if any, by associates. The ESOP intends
to acquire up to 8.0% of the Common Stock in the Conversion, or 27,600
shares at the maximum of the Estimated Price Range, which shares are not
reflected in the amounts to be purchased by the Company's directors and
officers in the table above. In addition, this does not include awards
pursuant to the Stock Option Plan or the Recognition Plan, which will be
submitted for approval to stockholders at a meeting of stockholders
expected to be held not earlier than six months following the completion
of the Conversion. See "- Benefits - Employee Stock Ownership Plan and
Trust."
(2) Includes purchases to be made by executive officers through the 401(k)
Plan.
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THE CONVERSION
THE BOARD OF DIRECTORS OF THE BANK AND THE COMMISSIONER HAVE APPROVED THE
PLAN OF CONVERSION, SUBJECT TO APPROVAL BY THE MEMBERS OF THE BANK ENTITLED TO
VOTE ON THE MATTER AND THE SATISFACTION OF CERTAIN OTHER CONDITIONS. SUCH
APPROVAL BY THE COMMISSIONER, HOWEVER, DOES NOT CONSTITUTE A RECOMMENDATION OR
ENDORSEMENT OF THE PLAN BY SUCH AGENCY.
General
On November 6, 1996, the Bank's Board of Directors unanimously adopted the
Plan, pursuant to which the Bank will be converted from an Illinois-chartered
mutual savings bank to an Illinois-chartered stock savings bank. It is intended
that all of the common stock of the Bank to be issued in the Conversion will be
held by the Company, which is incorporated under Delaware law. The Plan has been
approved by the Commissioner, subject to, among other things, approval of the
Plan by the Bank's members. In addition, the FDIC has issued its conditional
non-objection to the Plan and the Conversion. A Special Meeting of the Bank's
members has been called for the purpose of approving the Plan, which meeting is
to be held on March __, 1997.
In adopting the Plan, the Board of Directors of the Bank determined that
conversion was advisable and in the best interests of its members and the Bank,
and further determined that the interests of certain holders of its deposit
accounts in the net worth of the Bank would be equitably provided for and that
the Conversion would not have any adverse impact on the reserves and net worth
of the Bank. In determining to convert to the stock form of organization the
Board of Directors of the Bank considered a number of factors. The stock form of
organization is used by commercial banks, most business entities and thrift
institutions. The Board of Directors considered that converting will increase
the Bank's capital base and enhance its ability to support future growth. The
stock form also will facilitate the Bank's ability to engage in acquisition or
merger transactions with other entities. While the Bank currently has no
understandings, arrangements or agreements, written or oral, with any other
entity, the Board of Directors considered the continuing consolidation occurring
throughout the banking industry and concluded that converting to the stock form
may enhance the Bank's ability to engage in acquisition opportunities which may
arise in the future. The Board of Directors also considered that upon conversion
to the stock form, the Bank's employees could participate in stock-benefit
compensation plans, such as stock option and/or stock grant plans. Upon
consideration of these and other factors, the Board of Directors of the Bank
determined that converting from the mutual to the stock form was in the best
interests of the Bank.
The Company has applied for the approval of the Federal Reserve Board to
become a bank holding company and to acquire all of the common stock of the Bank
to be issued in the Conversion. The Company plans to retain 25% of the net
proceeds from the sale of the Common Stock, with all the remaining proceeds used
to purchase all of the then to be issued and outstanding capital stock of the
Bank. Based on the issuance of 345,000 shares at the Purchase Price at the
maximum of the Estimated Price Range, approximately $276,000 of the net proceeds
retained by the Company are intended to be used to loan funds to the ESOP to
enable the ESOP to purchase up to 8.0% of the shares issued in the Conversion.
The Conversion will be effected only upon completion of the sale of all of the
shares of Common Stock of the Company to be issued pursuant to the Plan.
The Plan provides generally that (i) the Bank will convert from an
Illinois-chartered mutual savings bank to an Illinois-chartered stock savings
bank and (ii) the Company will offer shares of Common Stock for sale in the
Subscription Offering to Eligible Account Holders, the ESOP, Supplemental
Eligible Account Holders, Other Voting Members, and in a concurrent Community
Offering to certain members of the general public, subject to the prior rights
of holders of subscription rights. See "- Subscription Offering and Subscription
Rights" and "- Community Offering." It is anticipated that all shares not
subscribed for in the Subscription and Community Offerings will be offered for
sale by the Company to the general public in a Syndicated Community Offering.
See "- Syndicated Community Offering." The Bank has the right to accept or
reject, in whole or in part, any
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orders to purchase shares of the Common Stock received in the Community Offering
or in the Syndicated Community Offering.
The aggregate price of the shares of Common Stock to be issued in the
Conversion within the Estimated Price Range, currently estimated to be between
$2,550,000 and $3,450,000, will be determined based upon an independent
appraisal of the estimated pro forma market value of the Common Stock of the
Company. All shares of Common Stock to be issued and sold in the Conversion will
be sold at the same price. The independent appraisal will be affirmed or, if
necessary, updated at the completion of the Subscription and Community
Offerings, if all shares are subscribed for, or at the completion of the
Syndicated Community Offering. The appraisal has been performed by RP Financial,
a consulting firm experienced in the valuation and appraisal of savings
institutions. See "- Stock Pricing and Number of Shares to be Issued" for more
information as to the determination of the estimated pro forma market value of
the Common Stock.
The Plan may be amended at any time with the concurrence of the
Commissioner and the receipt of any necessary approval from the FDIC. Amendments
to the Plan will require additional approval of the Bank's members, whether such
amendment is made before or after the Special Meeting of the Bank's members
called to consider the Plan, only if required by the Commissioner and/or the
FDIC. The Plan shall terminate if the Offerings are not completed within [12]
months of the date of the Special Meeting of the Bank's members called to
consider the Plan, subject to further extension by the Commissioner. Prior to
the Special Meeting of the Bank's members to consider the Plan, the Bank's Board
of Directors may terminate the Plan without approval of the Commissioner and,
thereafter, only with the Commissioner's approval.
The following is a brief summary of the material aspects of the
Conversion. The summary is qualified in its entirety by reference to the
provisions of the Plan. A copy of the Plan is available for inspection at the
Bank and at the offices of the Office. The Plan is also filed as an Exhibit to
the Registration Statement of which this Prospectus is a part, copies of which
may be obtained from the SEC. See "Additional Information."
Purposes of Conversion
The Bank, as an Illinois-chartered mutual savings bank, does not have
shareholders and has no authority to issue capital stock. By converting to the
capital stock form of organization, the Bank will be structured in the form used
by commercial banks, most business entities and a growing number of savings
institutions. The Conversion will be important to the future growth and
performance of the institution by providing a larger capital base on which the
Bank may operate, enhanced future access to capital markets, enhanced ability to
support increased originations of commercial business loans and consumer loans
and to diversify into other financial services related activities, and enhanced
ability to render services to the public.
The holding company form of organization will provide additional
flexibility to diversify the Bank's business activities through existing or
newly formed subsidiaries, or through acquisition of other financial
institutions, as well as other companies. Although there are no current
arrangements, understandings or agreements regarding any such opportunities, the
Company will be in a better position after the Conversion, subject to regulatory
limitations and the Company's financial position, to take advantage of
opportunities which may arise.
After completion of the Conversion, the unissued common and preferred
stock authorized by the Company's Certificate of Incorporation will permit the
Company, subject to market conditions and applicable regulatory approvals, to
raise additional equity capital through further sales of securities, and to
issue securities in connection with possible acquisitions. At the present time,
the Company has no plans with respect to additional offerings of securities,
other than the possible issuance of additional shares to the Recognition Plan or
upon exercise of stock options. Following Conversion, the Company will also be
able to use stock-related incentive programs to attract and retain executive and
other personnel for itself and its subsidiaries. See "Management - Management of
the Bank."
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Effects of Conversion
General. Each depositor in a mutual savings bank has both a deposit
account in the institution and a pro rata ownership interest in the net worth of
the institution based upon the balance in his account, which interest may only
be realized in the event of a liquidation of the institution. However, this
ownership interest is tied to the depositor's account and has no tangible market
value separate from such deposit account. Any depositor who opens a deposit
account obtains a pro rata ownership interest in the net worth of the
institution without any additional payment beyond the amount of the deposit. A
depositor who reduces or closes his account receives a portion or all of the
balance in the account but nothing for his ownership interest in the net worth
of the institution, which is lost to the extent that the balance in the account
is reduced.
Consequently, mutual savings bank depositors normally have no way to
realize the value of their ownership interest, which has realizable value only
in the unlikely event that the mutual savings bank is liquidated. In such event,
the depositors of record at that time, as owners, would share pro rata in any
residual surplus and reserves after other claims, including claims of depositors
to the amounts of their deposits, are paid.
When a mutual savings bank converts to stock form, permanent
nonwithdrawable capital stock is created to represent the ownership of the
institution's net worth. The Bank's common stock and the Common Stock of the
Company is separate and apart from deposit accounts and cannot be and is not
insured by the FDIC or any other governmental agency. Certificates are issued to
evidence ownership of the permanent stock. The stock certificates are
transferable and, therefore, the stock may be sold or traded if a purchaser is
available with no effect on any account the seller may hold in the institution.
Continuity. While the Conversion is being accomplished, the normal
business of the Bank of accepting deposits and making loans will continue
without interruption. The Bank will continue to be subject to regulation by the
Commissioner and the FDIC. After Conversion, the Bank will continue to provide
services for depositors and borrowers under current policies by its present
management and staff.
The directors serving the Bank at the time of the Conversion will continue
to serve as directors of the Bank after the Conversion. The Directors of the
Company will consist of individuals currently serving on the Board of Directors
of the Bank. All officers of the Bank at the time of the Conversion will retain
their positions after the Conversion.
Effect on Deposit Accounts. Under the Plan, each depositor in the Bank at
the time of the Conversion will automatically continue as a depositor after the
Conversion to stock form, and each such deposit account will remain the same
with respect to deposit balance, interest rate and other terms. Each such
account will be insured by the FDIC to the same extent as before the Conversion.
Depositors will continue to hold their existing certificates, passbooks and
other evidences of their accounts.
Effect on Loans. No loan outstanding from the Bank will be affected by the
Conversion, and the amount, interest rate, maturity and security for each loan
will remain as they were contractually fixed prior to the Conversion.
Effect on Voting Rights of Members. At present, all depositors of the Bank
are members of, and have voting rights in, the Bank as to all matters requiring
membership action. Upon Conversion, depositors will cease to be members and will
no longer be entitled to vote at meetings of the Bank. Upon Conversion, all
voting rights in the Bank will be vested in the Company as the sole stockholder
of the Bank. Exclusive voting rights with respect to the Company will be vested
in the holders of Common Stock. Depositors of the Bank will not have voting
rights after the Conversion except to the extent that they become stockholders
of the Company through the purchase of Common Stock.
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Tax Effects. The Bank has received opinions with regard to Federal and
Illinois income taxation which indicates that the adoption and implementation of
the Plan of Conversion set forth herein will not be taxable for Federal or
Illinois tax purposes to the Bank or its Eligible Account Holders or
Supplemental Eligible Account Holders or the Company, except as discussed below.
See "- Tax Aspects."
Effect on Liquidation Rights. Were a mutual savings bank to liquidate, all
claims of creditors (including those of depositors, to the extent of deposit
balances) would be paid first. Thereafter, if there were any assets remaining,
depositors would receive such remaining assets, pro rata, based upon the deposit
balances in their deposit accounts immediately prior to liquidation. In the
unlikely event that the Bank were to liquidate after Conversion, all claims of
creditors (including those of depositors, to the extent of their deposit
balances) would also be paid first, followed by distribution of the "liquidation
account" to certain depositors (see "- Liquidation Rights"), with any assets
remaining thereafter distributed to the Company as the holder of the Bank's
capital stock. Pursuant to the rules and regulations of the Office, a
post-Conversion merger, consolidation, sale of bulk assets or similar
combination or transaction with another insured savings institution would not be
considered a liquidation and, in such a transaction, the liquidation account
would be required to be assumed by the surviving institution.
Stock Pricing and Number of Shares to be Issued
The Plan of Conversion requires that the aggregate purchase price of the
Common Stock sold in the Offerings must be based on the appraised pro forma
market value of the Common Stock, as determined on the basis of an independent
valuation. The Bank and the Company have retained RP Financial to make such
valuation. For its services in making such appraisal and certain other services
(including assisting the Bank in the preparation of a business plan) rendered in
connection with the Conversion, RP Financial will receive a fee of $15,000, plus
reimbursement for reasonable expenses. The Bank and the Company have agreed to
indemnify RP Financial and its employees and affiliates against certain losses
(including any losses in connection with claims under the Federal securities
laws) arising out of its services as appraiser, except where RP Financial's
liability results from its negligence or willful misconduct.
An appraisal has been made by RP Financial in reliance upon the
information contained in this Prospectus, including the Consolidated Financial
Statement. RP Financial also considered the following factors, among others: the
present and projected operating results and financial condition of the Company
and the Bank and the economic and demographic conditions in the Bank's existing
marketing area; certain historical, financial and other information relating to
the Bank; a comparative evaluation of the operating and financial statistics of
the Bank with those of other similarly situated publicly-traded savings
institutions located in Illinois and other regions of the United States; the
aggregate size of the offering of the Common Stock; the impact of Conversion on
the Bank's net worth and earnings potential; and the trading market for
securities of comparable institutions and general conditions in the market for
such securities. In its review of the appraisal provided by RP Financial, the
Board of Directors reviewed the methodologies and the appropriateness of the
assumptions used by RP Financial in addition to the factors enumerated above.
On the basis of the foregoing, RP Financial has advised the Company and
the Bank that, in its opinion, dated November 15, 1996 the Estimated Price Range
of the Common Stock ranged from a minimum of $2,550,000 to a maximum of
$3,450,000 with a midpoint of $3,000,000. Based upon the Estimated Price Range
and the Purchase Price of $10.00 per share for the Common Stock established by
the Board of Directors, the Company expects to issue between 255,000 and 345,000
shares of Common Stock. The Estimated Price Range may be amended with the
approval of the Commissioner and non-objection of the FDIC, if required, if
necessitated by subsequent developments in the financial condition of the
Company or the Bank or market conditions generally. In the event the appraisal
is updated to amend the value of the Bank below $2,550,000 or above $3,967,500
(the maximum of the Estimated Price Range, as adjusted by 15%), the range of the
number of shares that may be issued will increase or decrease to conform with
the updated appraisal. Such appraisal
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will be filed with the SEC by post-effective amendment. The Conversion will not
be consummated unless the minimum of the Estimated Price Range is sold.
In the event the Company receives orders for Common Stock in excess of
$3,450,000 (the maximum of the Estimated Price Range) and up to $3,967,500 (the
maximum of the Estimated Price Range, as adjusted by 15%), the Company may
determine to accept all such orders. No assurances, however, can be made that
the Company will receive orders for Common Stock in excess of the maximum of the
Estimated Price Range or that, if such orders are received, that all such orders
will be accepted because the Company's final valuation and number of shares to
be issued are subject to the receipt of an updated appraisal from RP Financial
which reflects such an increase in the valuation and the approval of such
increase by the Commissioner and non-objection of the FDIC, if required. There
is no obligation or understanding on the part of management to take and/or pay
for any shares in order to complete the Conversion.
Such valuation, however, is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing such shares. RP
Financial did not independently verify the Consolidated Financial Statement and
other information provided by the Bank, nor did RP Financial value independently
the assets or liabilities of the Bank. The valuation considers the Bank as a
going concern and should not be considered as an indication of the liquidation
value of the Bank. Moreover, because such valuation is necessarily based upon
estimates and projections of a number of matters, all of which are subject to
change from time to time, no assurance can be given that persons purchasing such
shares in the Conversion will thereafter be able to sell such shares at prices
at or above the Purchase Price or in the range of the foregoing valuation of the
pro forma market value thereof.
Following commencement of the Subscription Offering, the maximum of the
Estimated Price Range may be increased up to 15% and the number of shares of
Common Stock to be issued in the Conversion may be increased to 396,750 shares
to reflect changes in the market and financial conditions, without the
resolicitation of subscribers. See "- Limitations on Common Stock Purchases" as
to the method of distribution and allocation of additional shares that may be
issued in the event of an increase in the Estimated Price Range to fill unfilled
orders in the Subscription Offering.
No sale of shares of Common Stock in the Conversion may be consummated
unless prior to such consummation RP Financial confirms that nothing of a
material nature has occurred which, taking into account all relevant factors,
would cause it to conclude that the aggregate price is materially incompatible
with the estimate of the pro forma valuation of the aggregate market value of
the Common Stock at the time of the sale of the Common Stock. If such is not the
case, a new Estimated Price Range may be set, a new Subscription and Community
Offering and/or Syndicated Community Offering may be held or such other action
may be taken as the Company and the Bank shall determine and the Commissioner
and FDIC may permit.
Depending upon market or financial conditions following the commencement
of the Subscription Offering, the total number of shares to be issued in the
Conversion may be increased or decreased without a resolicitation of
subscribers, provided that the product of the total number of shares times the
Purchase Price is not below the minimum or more than 15% above the maximum of
the Estimated Price Range. In the event market or financial conditions change so
as to cause the aggregate Purchase Price of the shares to be below the minimum
of the Estimated Price Range or more than 15% above the maximum of such range,
purchasers will be resolicited (i.e., permitted to continue their orders, in
which case they will need to affirmatively reconfirm their subscriptions prior
to the expiration of the resolicitation offering or their subscription funds
will be promptly refunded with interest at the Bank's passbook rate of interest,
or be permitted to modify or rescind their subscriptions). Any change in the
Estimated Price Range must be approved by the Commissioner and requires the
non-objection of the FDIC.
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An increase in the number of shares to be issued in the Conversion, as a
result of an increase in the estimated pro forma market value, would decrease
both a subscriber's ownership interest and the Company's pro forma net income
and stockholders' equity on a per share basis while increasing pro forma net
income and stockholders' equity on an aggregate basis. A decrease in the number
of shares to be issued in the Conversion would increase both a subscriber's
ownership interest and the Company's pro forma net income and stockholders'
equity on a per share basis while decreasing pro forma net income and
stockholders' equity on an aggregate basis. See "Pro Forma Data."
Copies of the appraisal report of RP Financial, including any amendments
thereto, and the detailed memorandum of the appraiser setting forth the method
and assumptions for such appraisal are available for inspection at the main
office of the Bank and the other locations specified under "Additional
Information."
Subscription Offering and Subscription Rights
In accordance with the Plan of Conversion, rights to subscribe for the
purchase of Common Stock have been granted under the Plan of Conversion to the
following persons in the following order of descending priority: (1) Eligible
Account Holders, (2) the ESOP, (3) Supplemental Eligible Account Holders, and
(4) Other Voting Members. All subscriptions received will be subject to the
availability of Common Stock after satisfaction of all subscriptions of all
persons having prior rights in the Subscription Offering and to the maximum and
minimum purchase limitations set forth in the Plan of Conversion and as
described below under "- Limitations on Common Stock Purchases."
Priority 1: Eligible Account Holders. Each Eligible Account Holder will
receive, without payment therefor, first priority, nontransferable subscription
rights to subscribe for in the Subscription Offering up to the greater of: (i)
$50,000 of Common Stock; (ii) one-tenth of one percent (0.10%) of the total
offering of shares of Common Stock; or (iii) fifteen times the product (rounded
down to the next whole number) obtained by multiplying the total number of
shares of Common Stock to be issued by a fraction, of which the numerator is the
amount of the Eligible Account Holder's qualifying deposit and the denominator
of which is the total amount of qualifying deposits of all Eligible Account
Holders, in each case on July 31, 1995 ("Eligibility Record Date"); in each case
subject to the overall purchase limitation. See "- Limitations on Common Stock
Purchases."
If there are not sufficient shares available to satisfy all subscriptions,
shares first will be allocated among subscribing Eligible Account Holders so as
to permit each such Eligible Account Holder, to the extent possible, to purchase
a number of shares which will make his total allocation equal to the lesser of
the number of shares subscribed for or 100 shares. Any available shares
remaining after each such subscribing Eligible Account Holder has been allocated
the lesser of the number of shares subscribed for or 100 shares shall be
allocated among the subscribing Eligible Account Holders in the proportion which
the amounts of the qualifying deposits of each such subscribing Eligible Account
Holder bears to the total amount of qualifying deposits of all such subscribing
Eligible Account Holders, provided that no fractional shares shall be issued.
The submission of multiple orders by an Eligible Account Holder or other
subscriber will result in a lower deposit credit per order in the event of an
allocation.
To ensure proper allocation of stock, each Eligible Account Holder must
list on his subscription order form all accounts in which he has an ownership
interest. Failure to list an account could result in less shares being allocated
than if all accounts had been disclosed. The subscription rights of Eligible
Account Holders who are also directors or officers of the Bank or their
associates will be subordinated to the subscription rights of other Eligible
Account Holders to the extent attributable to increased deposits in the year
preceding July 31, 1995.
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Priority 2: Employee Stock Ownership Plan. The ESOP will receive, without
payment therefor, second priority non-transferable subscription rights to
purchase, in the aggregate, up to 10.0% of the Common Stock issued in the
Conversion. The subscription rights granted to the ESOP are subject to the
availability of shares after taking into account the shares purchased by
Eligible Account Holders, including any shares of Common Stock to be issued in
the Conversion as a result of an increase of up to 15% in the maximum of the
Estimated Price Range. The ESOP intends to purchase up to 8.0% of the shares to
be issued in the Conversion, or 20,400 shares and 27,600 shares, based on the
issuance of 255,000 shares and 345,000 shares, respectively. Subscriptions by
the ESOP will not be aggregated with shares of Common Stock purchased directly
by or which are otherwise attributable to any other participants in the
Subscription and Community Offerings, including subscriptions of any of the
Bank's directors, officers, employees or associates thereof. In the event that
there are not sufficient shares available to satisfy the ESOP's purchase order,
it is anticipated that the ESOP will attempt to purchase additional shares of
Common Stock in the open market in order that the ESOP shall have purchased an
aggregate of 8.0% of the shares of Common Stock sold in the Offerings.
Priority 3: Supplemental Eligible Account Holders. Each Supplemental
Eligible Account Holder will receive, without payment therefor, third priority,
nontransferable subscription rights to subscribe for in the Subscription
Offering up to the greater of: (i) $50,000 of Common Stock; (ii) one-tenth of
one percent (0.10%) of the total offering of shares of Common Stock; or (iii)
fifteen times the product (rounded down to the next whole number) obtained by
multiplying the total number of shares of Common Stock to be issued by a
fraction, of which the numerator is the amount of the Supplemental Eligible
Account Holder's qualifying deposit and the denominator of which is the total
amount of qualifying deposits of all Supplemental Eligible Account Holders, in
each case on December 31, 1996; and, in all cases, subject to the overall
purchase limitation. See "- Limitations on Common Stock Purchases."
If there are not sufficient shares available to satisfy all Supplemental
Eligible Account Holders, shares first will be allocated among subscribing
Supplemental Eligible Account Holders so as to permit each such Supplemental
Eligible Account Holder, to the extent possible, to purchase a number of shares
sufficient to make his total allocation (including the number of shares, if any,
allocated to such person as an Eligible Account Holder) equal to the lesser of
the number of shares subscribed for or 100 shares. Any remaining available
shares shall be allocated among such subscribing Supplemental Eligible Account
Holders in the proportion that the amount of their respective amount of
qualifying deposits bears to the total amount of the amount of qualifying
deposits of all subscribing Supplemental Eligible Account Holders, provided that
no fractional shares shall be issued. The submission of multiple orders by a
Supplemental Eligible Account Holder or other subscriber will result in a lower
deposit credit per order in the event of an allocation.
Priority 4: Other Voting Members. To the extent that there are sufficient
shares remaining after satisfaction of subscriptions by Eligible Account
Holders, the ESOP, and Supplemental Eligible Account Holders, each Other Voting
Member will receive, without payment therefor, third priority, nontransferable
subscription rights to subscribe for Common Stock in the Subscription Offering
up to the greater of: (i) $50,000 of Common Stock or (ii) one-tenth of one
percent (0.10%) of the total offering of shares of Common Stock; in each case
subject to the overall purchase limitation. See "- Limitations on Common Stock
Purchases."
In the event the Other Voting Members subscribe for a number of shares of
Conversion Stock in excess of the total number of shares of Conversion Stock
remaining, available shares shall be allocated among subscribing Other Voting
Members on a pro rata basis in the same proportion as each Other Voting Members'
subscription bears to the total subscriptions of all subscribing Other Voting
Members.
Expiration Date for the Subscription Offering. The Subscription Offering
will expire on [March __,] 1997, unless extended for up to 45 days or such
additional periods by the Bank and the Company with the approval of the
Commissioner of the Commissioner and, if required, the non-objection of the
FDIC. Subscription rights which have not been exercised prior to the
Subscription Expiration Date will become void.
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The Bank and the Company will not execute orders before the Subscription
Expiration Date and until at least the minimum number of shares of Common Stock
(255,000 shares) have been subscribed for or otherwise sold. If the Subscription
Offering is not completed within 45 days after the Subscription Expiration Date,
unless such period is extended, all funds delivered to the Bank pursuant to the
Subscription Offering will be returned promptly to the subscribers with interest
and all withdrawal authorizations will be cancelled. If an extension beyond the
45 day period following the Subscription Expiration Date is granted, the Bank
will notify subscribers of the extension of time and of any rights of
subscribers to modify or rescind their subscriptions.
Community Offering
To the extent that shares remain available for purchase after satisfaction
of all subscriptions of Eligible Account Holders, the ESOP, Supplemental
Eligible Account Holders, and Other Voting Members, the Bank may offer shares
pursuant to the Plan to certain members of the general public, with preference
given to natural persons residing in the Bank's Local Community ("Preferred
Subscribers"). Such persons, together with associates of and persons acting in
concert with such persons, may purchase up to the greater of (i) $50,000 of the
Common Stock offered in the Conversion, or (ii) one-tenth of one percent (0.10%)
of the total offering of shares of Common Stock, in each case subject to the
maximum purchase limitation. See "- Limitations on Common Stock Purchases." This
amount may be increased or decreased at the sole discretion of the Company and
the Bank. The opportunity to subscribe for shares of Common Stock in the
Community Offering category is subject to the right of the Bank and the Company,
in its sole discretion, to accept or reject any such orders in whole or in part
either at the time of receipt of an order or as soon as practicable following
the Subscription Expiration Date. The Community Offering may be commenced at any
time during the Subscription Offering or subsequent thereto.
If there are not sufficient shares available to fill the orders of
Preferred Subscribers after completion of the Subscription and Community
Offerings, such stock will be allocated first to each Preferred Subscriber whose
order is accepted by the Bank, in an amount equal to the lesser of 100 shares or
the number of shares subscribed for by each such Preferred Subscriber, if
possible. Thereafter, unallocated shares will be allocated among the Preferred
Subscribers whose orders remain unsatisfied in the same proportion that the
unfilled subscription of each bears to the total unfilled subscriptions of all
Preferred Subscribers whose subscription remains unsatisfied. If there are any
shares remaining after all subscriptions by Preferred Subscribers, shares will
be allocated to other members of the general public who subscribe in the
Community Offering applying the same allocation described above for Preferred
Subscribers.
Persons in Nonqualified States or Foreign Countries. The Company and the
Bank will make reasonable efforts to comply with the securities laws of all
states in the United States in which persons entitled to subscribe for stock
pursuant to the Plan reside. However, the Bank and the Company are not required
to offer stock in the Subscription Offering to any person who resides in a
foreign country or resides in a state of the United States with respect to
which: (a) the number of persons otherwise eligible to subscribe for shares
under the Plan who reside in such jurisdiction is small; (b) the granting of
subscription rights or the offer or sale of shares of Common Stock to such
persons would require the Company, the Bank, or their officers, directors or
employees under the laws of such jurisdiction, to register as a broker, dealer,
salesman or selling agent or to register or otherwise qualify its securities for
sale in such jurisdiction or to qualify as a foreign corporation or file a
consent to service of process in such jurisdiction; and (c) such registration or
qualification in the Company's and the Bank's judgment would be impracticable or
unduly burdensome for reasons of cost or otherwise. Where the number of persons
eligible to subscribe for shares in one state is small, the Bank and the Company
will base their decision as to whether or not to offer the Common Stock in such
state on a number of factors, including the size of accounts held by account
holders in the state, the cost of registering or qualifying the shares or the
need to register the Company, its officers, directors or employees as brokers,
dealers or salesmen.
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Marketing Arrangements
The Company and the Bank have engaged Trident as a financial advisor and
marketing agent in connection with the offering of the Common Stock, and Trident
has agreed to use its best efforts to solicit subscriptions and purchase orders
for shares of Common Stock in the Offerings. Trident has not prepared or
delivered any opinion or recommendation with respect to the suitability of the
Common Stock or the appropriateness of the amount of Common Stock to be issued
in the Conversion. The engagement of Trident by the Company and the Bank and the
work performed thereunder should not be construed by purchasers of the Common
Stock as constituting an opinion or recommendation relating to such investment
and should not be construed as a verification of the accuracy or completeness of
the information contained in this Prospectus. Trident is a member of the
National Association of Securities Dealers, Inc. ("NASD") and an SEC-registered
broker-dealer. Trident is headquartered in Raleigh, North Carolina, and its
telephone number is (919) 781-8900. Trident will provide various services
including, but not limited to, (1) training and educating the Bank's directors,
officers and employees regarding the mechanics and regulatory requirements of
the stock sales process; (2) providing its employees to staff the Stock Sales
Center to assist the Bank's customers and internal stock purchasers and to keep
records of orders for shares of Common Stock; (3) targeting the Company's sales
efforts, including preparation of marketing materials; and (4) assisting in the
solicitation of proxies of members for use at the Special Meeting. In the event
that a selected dealers agreement is entered into in connection with a
Syndicated Community Offering, the Bank will pay a to-be negotiated fee to such
selected dealers for shares sold by any NASD member firm pursuant to a selected
dealers agreement. Fees to Trident and to any other broker-dealer may be deemed
to be underwriting fees, and Trident and such broker-dealers may be deemed to be
underwriters. Trident will also be reimbursed for its reasonable out-of-pocket
expenses in an amount not to exceed $10,000 and reasonable legal fees not to
exceed $22,500. To date, Trident has received $10,000 from the Bank as an
advance payment of its anticipated expenses.
The Company and the Bank have agreed to indemnify Trident for reasonable
costs and expenses in connection with certain claims or liabilities, including
certain claims or liabilities arising out of or based upon any untrue or alleged
untrue statement of a material fact or the omission or alleged omission of a
material fact required to be stated or necessary to make not misleading any
statements contained in the Company's Registration Statement or the Prospectus.
Directors and executive officers of the Company and the Bank may
participate in the solicitation of offers to purchase Common Stock. Other
employees of the Bank may participate in the Offering in ministerial capacities
or providing clerical work in effecting a sales transaction. Such other
employees have been instructed not to solicit offers to purchase Common Stock or
provide advice regarding the purchase of Common Stock. Questions of prospective
purchasers will be directed to executive officers or registered representatives.
The Company will rely on Rule 3a4-1 under the Exchange Act, and sales of Common
Stock will be conducted within the requirements of Rule 3a4-1, so as to permit
officers, directors and employees to participate in the sale of Common Stock. No
officer, director or employee of the Company or the Bank will be compensated in
connection with his participation by the payment of commissions or other
remuneration based either directly or indirectly on the transactions in the
Common Stock.
Procedure for Purchasing Shares in Subscription and Community Offerings
To ensure that each purchaser receives a Prospectus at least 48 hours
before the Subscription Expiration Date in accordance with Rule 15c2-8 of the
Exchange Act, no Prospectus will be mailed any later than five days prior to
such date or hand delivered any later than two days prior to such date.
Execution of the order form will confirm receipt or delivery in accordance with
Rule 15c2-8. Order forms will only be distributed with a Prospectus.
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To purchase shares in the Subscription and Community Offerings, an
executed order form with the required payment for each share subscribed for, or
with appropriate authorization for withdrawal from the Bank's deposit account
(which may be given by completing the appropriate blanks in the order form),
must be received by the Bank at any of its offices by [12:00 noon, Central
Time,] on the Subscription Expiration Date. Order forms which are not received
by such time or are altered or executed defectively or are received without full
payment (or appropriate withdrawal instructions) are not required to be
accepted. In addition, the Bank will neither accept orders submitted on
photocopied or facsimilied order forms nor order forms unaccompanied by an
executed certification form. The Company and the Bank have the right to waive or
permit the correction of incomplete or improperly executed forms, but do not
represent that they will do so. Once received, an executed order form may not be
modified, amended or rescinded without the consent of the Bank unless the
Conversion has not been completed within 45 days after the end of the
Subscription and Community Offerings, unless such period has been extended.
In order to ensure that depositors are properly identified as to their
stock purchase priority, depositors as of the Eligibility Record Date (July 31,
1995), the Supplemental Eligibility Record Date (December 31, 1996) and/or the
Voting Record Date (March __, 1997), must list all accounts on the stock order
form giving all names in each account and the account numbers.
Payment for subscriptions may be made (i) in cash if delivered in person
at the Bank, (ii) by check, bank draft or money order, or (iii) by authorization
of withdrawal from deposit accounts maintained with the Bank. Wire transfers
will not be accepted except at the discretion of the Company and the Bank.
Interest will be paid on payments made by check, bank draft or money order at
the Bank's passbook rate of interest from the date payment is received until
completion or termination of the Conversion. If payment is made by authorization
of withdrawal from deposit accounts, the funds authorized to be withdrawn from a
deposit account will continue to accrue interest at the contractual rates until
completion or termination of the Conversion, but a hold will be placed on such
funds, thereby making them unavailable to the depositor until completion or
termination of the Conversion.
If a subscriber authorizes the Bank to withdraw the amount of the purchase
price from his deposit account, the Bank will do so as of the effective date of
Conversion. The Bank will waive any applicable penalties for early withdrawal
from certificate accounts. If the remaining balance in a certificate account is
reduced below the applicable minimum balance requirement at the time that the
funds actually are transferred under the authorization, the certificate will be
cancelled at the time of the withdrawal, and the remaining balance will earn
interest at the passbook rate.
If the ESOP subscribes for shares during the Subscription Offering, such
plan will not be required to pay for the shares subscribed for at the time it
subscribes, but rather, may pay for such shares of Common Stock subscribed for
by such plan at the Purchase Price upon consummation of the Subscription and
Community Offering, if all shares are sold, or upon consummation of the
Syndicated Community Offering if shares remain to be sold in such offering,
provided that there is in force from the time of its subscription until such
time, a loan commitment from an unrelated financial institution or the Company
to lend to the ESOP, at such time, the aggregate Purchase Price of the shares
for which it subscribed.
Owners of self-directed IRAs may use the assets of such IRAs to purchase
shares of Common Stock in the Subscription and Community Offerings, provided
that the trustee of such IRA is not the Bank. Persons with self-directed IRAs
maintained at the Bank must have their accounts transferred to an unaffiliated
institution or broker to purchase shares of Common Stock in the Subscription and
Community Offerings. Subscriptions by IRAs will be credited only with the
balance of such IRA account in the event of an allocation. In order to ensure
that any necessary transfer is completed prior to the termination of the
Offering, any person desiring to transfer his or her account must notify the
Savings Bank on or before March __, 1997.
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Certificates representing shares of Common Stock purchased will be mailed
to purchasers at such other address as may be specified in properly completed
order forms, as soon as practicable following consummation of the sale of all
shares of Common Stock. Any certificates returned as undeliverable will be
disposed of in accordance with applicable law.
Restrictions on Transfer of Subscription Rights and Shares
Pursuant to the rules and regulations of the Office, no person with
subscription rights may transfer or enter into any agreement or understanding to
transfer the legal or beneficial ownership of the subscription rights issued
under the Plan or the shares of Common Stock to be issued upon their exercise.
Such rights may be exercised only by the person to whom they are granted and
only for his account. Each person exercising such subscription rights will be
required to certify that he is purchasing shares solely for his own account and
that he has no agreement or understanding regarding the sale or transfer of such
shares. No person may offer, or make an announcement of an offer or intent to
make an offer, to purchase such subscription rights or shares of Common Stock
prior to the completion of the Conversion.
The Bank and the Company will pursue any and all legal and equitable
remedies in the event they become aware of the transfer of subscription rights
and will not honor orders known by them to involve the transfer of such rights.
Syndicated Community Offering
As a final step in the Conversion, the Plan provides that, if feasible,
all shares of Common Stock not purchased in the Subscription and Community
Offerings may be offered for sale to the general public in a Syndicated
Community Offering through a syndicate of registered broker-dealers to be
formed. The Bank and the Company expect to market any shares which remain
unsubscribed after the Subscription and Community Offerings through a Syndicated
Community Offering. The Company and the Bank have the right to reject orders in
whole or part in their sole discretion in the Syndicated Community Offering.
Neither the Agent nor any registered broker-dealer shall have any obligation to
take or purchase any shares of the Common Stock in the Syndicated Community
Offering; however, the Agent has agreed to use its best efforts in the sale of
shares in the Syndicated Community Offering. In the event that a selected
dealers agreement is entered into in connection with a Syndicated Community
Offering, the Bank will pay a to-be negotiated fee to such selected dealers for
shares sold by any NASD member firm pursuant to a selected dealers agreement.
The price at which Common Stock is sold in the Syndicated Community
Offering will be determined as described above under "- Stock Pricing and Number
of Shares to be Issued." Subject to overall purchase limitations, no person,
together with any associate or group of persons acting in concert, will be
permitted to subscribe in the Syndicated Community Offering for more than
$50,000 of the Common Stock offered in the Conversion, without giving effect to
an increase in shares issued pursuant to an increase in the Estimated Price
Range by up to 15%.
Payments made in the form of a check, bank draft or money order will earn
interest at the Bank's passbook rate of interest from the date such payment is
actually received by the Bank until completion or termination of the Conversion.
In addition to the foregoing, if a syndicate of broker-dealers ("selected
dealers") is formed to assist in the Syndicated Community Offering, a purchaser
may pay for his shares with funds held by or deposited with a selected dealer.
If an order form is executed and forwarded to the selected dealer or if the
selected dealer is authorized to execute the order form on behalf of a
purchaser, the selected dealer is required to forward the order form and funds
to the Bank for deposit in a segregated account on or before 12:00 noon of the
business day following receipt of the order form or execution of the order form
by the selected dealer. Alternatively, selected dealers may solicit indications
of interest from their customers to place orders for shares. Such selected
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dealers shall subsequently contact their customers who indicated an interest and
seek their confirmation as to their intent to purchase. Those indicating an
intent to purchase shall execute order forms and forward them to their selected
dealer or authorize the selected dealer to execute such forms. The selected
dealer will acknowledge receipt of the order to its customer in writing on the
following business day and will debit such customer's account on the third
business day after the customer has confirmed his intent to purchase (the "debit
date") and on or before 12:00 noon of the next business day following the debit
date will send order forms and funds to the Bank for deposit in a segregated
account. If such alternative procedure is employed, purchasers' funds are not
required to be in their accounts with selected dealers until the debit date.
Certificates representing shares of Common Stock purchased, together with
any refund due, will be mailed to purchasers at the address specified in the
order form, as soon as practicable following consummation of the sale of the
Common Stock. Any certificates returned as undeliverable will be disposed of in
accordance with applicable law.
The Syndicated Community Offering will terminate no more than 45 days
following the Subscription Expiration Date, unless extended by the Company and
the Bank with the approval of the Commissioner and, if required, the
non-objection of the FDIC. See "- Stock Pricing and Number of Shares to be
Issued" above for a discussion of rights of subscribers, if any, in the event an
extension is granted.
Limitations on Common Stock Purchases
The Plan includes the following limitations on the number of shares of
Common Stock which may be purchased during the Conversion:
(1) No less than 25 shares;
(2) Each Eligible Account Holder may subscribe for and purchase in
the Subscription Offering up to the greater of (i) $50,000 of Common
Stock, subject to the overall limitation in (8) below, (ii) one-tenth of
one percent (0.10%) of the total offering of shares of Common Stock or
(iii) fifteen times the product (rounded down to the next whole number)
obtained by multiplying the total number of shares of Common Stock to be
issued by a fraction, of which the numerator is the amount of the
qualifying deposit of the Eligible Account Holder and the denominator is
the total amount of qualifying deposits of all Eligible Account Holders,
in each case on the Eligibility Record Date, subject to the overall
limitation in (8) below;
(3) The ESOP may purchase in the aggregate up to 10% of the shares
of Common Stock issued in the Conversion, including any additional shares
issued in the event of an increase in the Estimated Price Range, after
taking into account the shares purchased by Eligible Account Holders;
(4) Each Supplemental Eligible Account Holder may subscribe for and
purchase in the Subscription Offering up to the greater of (i) $50,000 of
Common Stock, subject to the overall limitation in (8) below, (ii)
one-tenth of one percent (0.10%) of the total offering of shares of Common
Stock or (iii) fifteen times the product (rounded down to the next whole
number) obtained by multiplying the total number of shares of Common Stock
to be issued by a fraction, of which the numerator is the amount of the
qualifying deposit of the Supplemental Eligible Account Holder and the
denominator is the total amount of qualifying deposits of all Supplemental
Eligible Account Holders, in each case on the Supplemental Eligibility
Record Date, subject to the overall limitation in (8) below;
(5) Each Other Voting Member may subscribe for and purchase in the
Subscription Offering up to the greater of (i) $50,000 of Common Stock,
subject to the overall limitation in (8) below, or (ii) one-tenth of one
percent (0.10%) of the total offering of shares of Common Stock, subject
to the overall limitation in (8) below;
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(6) Persons purchasing shares of Common Stock in the Community
Offering, together with associates of and groups of persons acting in
concert with such persons, may purchase in the Community Offering up to
the greater of (i) $50,000 of Common Stock, subject to the overall
limitation in (8) below or (ii) one-tenth of one percent (0.10%) of the
total offering of shares of Common Stock, subject to the overall
limitation in (8) below;
(7) Persons purchasing shares of Common Stock in the Syndicated
Community Offering, together with associates of and persons acting in
concert with such persons, may purchase in the Syndicated Community
Offering up to $50,000 of Common Stock, subject to the overall limitation
in (8) below;
(8) Eligible Account Holders, Supplemental Eligible Account Holders
and Other Voting Members may purchase stock in the Community and
Syndicated Community Offerings subject to the purchase limitations
described in (6) and (7) above, provided that, except for the ESOP, the
maximum number of shares of Common Stock subscribed for or purchased in
all categories of the Conversion by any person together with associates of
and groups of persons acting in concert with such persons, shall not
exceed $150,000 of the aggregate value of the shares of Common Stock sold
in the Conversion; and
(9) No more than 35% of the total number of shares offered for sale
in the Conversion may be purchased by directors and officers of the Bank
and their associates in the aggregate, excluding purchases by the ESOP.
Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the members of
the Bank, both the individual amount permitted to be subscribed for and the
overall purchase limitation may be increased to up to a maximum of 5% at the
sole discretion of the Company and the Bank. If such amount is increased,
subscribers for the maximum amount will be, and certain other large subscribers
in the sole discretion of the Company and the Bank may be, given the opportunity
to increase their subscriptions up to the then applicable limit. In the event
that an individual purchase limitation is decreased after commencement of the
Subscription or Community Offerings, the orders of any persons who subscribed
for the maximum number of shares of Common Stock shall be decreased by the
minimum amount necessary so that such person shall be in compliance with the
maximum number of shares permitted to be subscribed for by participants. Unless
otherwise permitted by the FDIC, the Company and the Bank do not anticipate that
they would decrease the maximum purchase limitations below one-tenth of 1% of
the total shares of Common Stock permitted to be purchased in the Subscription
and Community Offerings.
The overall purchase limitation may not be reduced to less than 1.0% but
the individual amount permitted to be purchased may be reduced to less than
$50,000, subject to (2), (4) and (5) above. Each Eligible Account Holder,
Supplemental Eligible Account Holder or Other Voting Member may purchase in the
Subscription Offering $50,000 of the Common Stock offered, assuming that at
least $2.6 million of Common Stock is sold in the Offerings.
In the event of an increase in the total number of shares offered in the
Conversion due to an increase in the Estimated Price Range of up to 15% (the
"Adjusted Maximum"), the additional shares will be allocated in the following
order or priority in accordance with the Plan: (i) in the event that there is an
oversubscription by Eligible Account Holders, to fill unfulfilled subscriptions
of Eligible Account Holders; (ii) to fill the ESOP's subscription of 8.0% of the
Adjusted Maximum number of shares; (iii) in the event that there is an
oversubscription by Supplemental Eligible Account Holders, to fill unfulfilled
subscriptions of Supplemental Eligible Account Holders; (iv) in the event that
there is an oversubscription by Other Voting Members, to fill unfulfilled
subscriptions of Other Voting Members; and (v) to fill unfulfilled subscriptions
in the Community Offering to the extent possible.
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The term "associate" of a person is defined to mean: (i) any corporation
or other organization (other than the Company, the Bank or a majority-owned
subsidiary of the Bank) of which such person is an officer or partner or is
directly or indirectly the beneficial owner of 10% or more of any class of
equity securities; (ii) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as a trustee
or in a similar fiduciary capacity, provided, however, such term shall not
include any employee stock benefit plan of the Company or the Bank in which such
person has a substantial beneficial interest or serves as a trustee or in a
similar fiduciary capacity; and (iii) any relative or spouse of such person, or
any relative of such spouse, who either has the same home as such person or who
is a director or officer of the Bank or the Company or any of their
subsidiaries.
Liquidation Rights
In the unlikely event of a complete liquidation of the Bank in its present
mutual form, each depositor would receive his pro rata share of any assets of
the Bank remaining after payment of claims of all creditors (including the
claims of all depositors to the withdrawal value of their accounts). Each
depositor's pro rata share of such remaining assets would be in the same
proportion as the value of his deposit account was to the total value of all
deposit accounts in the Bank at the time of liquidation. After the Conversion,
each depositor, in the event of a complete liquidation, would have a claim as a
creditor of the same general priority as the claims of all other general
creditors of the Bank. However, except as described below, his claim would be
solely in the amount of the balance in his deposit account plus accrued
interest. He would not have an interest in the value or assets of the Bank above
that amount.
The Plan provides for the establishment, upon the completion of the
Conversion, of a special "liquidation account" for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders in an amount equal to
the net worth of the Bank as of the date of its latest statement of financial
condition contained in the final Prospectus used in connection with the
Conversion. Such liquidation account will not be reflected as an asset or
liability on the Company's or the Bank's financial statements subsequent to the
Conversion. Each Eligible Account Holder and Supplemental Eligible Account
Holder, if he were to continue to maintain his deposit account at the Bank,
would be entitled, on a complete liquidation of the Bank after Conversion, to an
interest in the liquidation account prior to any payment to the stockholders of
the Bank. Each Eligible Account Holder and Supplemental Eligible Account Holder
would have an initial interest in such liquidation account for each deposit
account, including passbook accounts, transaction accounts such as NOW accounts,
money market deposit accounts, and certificates of deposit, held in the Bank on
July 31, 1995 and December 31, 1996, respectively. Each Eligible Account Holder
and Supplemental Eligible Account Holder will have a pro rata interest in the
total liquidation account for each of his deposit accounts based on the
proportion that the balance of each such deposit account on the July 31, 1995
Eligibility Record Date or the December 31, 1996 Supplemental Eligibility Record
Date bore to the balance of qualifying deposits of all Eligible Account Holders
or Supplemental Eligible Account Holders on such dates. For deposit accounts in
existence at both the Eligibility Record Date and the Supplemental Eligibility
Record Date, separate initial subaccount balances will be determined for such
accounts on each of the Eligibility Record Date and the Supplemental Eligibility
Record Date.
If, however, on any July 31 or September 31, annual closing date of the
Bank, commencing after July 31, 1995 or December 31, 1996, the amount in any
deposit account is less than the amount in such deposit account on July 31, 1995
or December 31, 1996, or any other annual closing date, then the interest in the
liquidation account relating to such deposit account would be reduced from time
to time by the proportion of any such reduction, and such interest will cease to
exist if such deposit account is closed. In addition, no interest in the
liquidation account would ever be increased despite any subsequent increase in
the related deposit account. Any assets remaining after the above liquidation
rights of Eligible Account Holders and Supplemental Eligible Account Holders are
satisfied would be distributed to the Company as the sole stockholder of the
Bank.
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Tax Aspects
The Bank has received an opinion of its counsel, Elias, Matz, Tiernan &
Herrick L.L.P., regarding the material effects of the Conversion for Federal
income tax purposes, which opinion states, among other matters: (i) the Bank's
change in form from mutual to stock ownership will constitute a reorganization
under section 368(a)(1)(F) of the Code and neither the Bank nor the Company will
recognize any gain or loss as a result of the Conversion; (ii) no gain or loss
will be recognized to the Bank or the Company upon the purchase of the Bank's
capital stock by the Company or to the Company upon the purchase of its Common
Stock in the Conversion; (iii) no gain or loss will be recognized by Eligible
Account Holders and Supplemental Eligible Account Holders upon the issuance to
them of deposit accounts in the Bank in its stock form plus their interests in
the liquidation account in exchange for their deposit accounts in the Bank; (iv)
the tax basis of the depositors' deposit accounts in the Bank immediately after
the Conversion will be the same as the basis of their deposit accounts
immediately prior to the Conversion; (v) the tax basis of each Eligible Account
Holder's and Supplemental Eligible Account Holder's interest in the liquidation
account will be zero; and (vi) the tax basis to the stockholders of the Common
Stock of the Company purchased in the Conversion will be the amount paid
therefor and the holding period for the shares of Common Stock purchased by such
persons will begin on the date on which their subscription rights are exercised.
Geo. S. Olive & Co. LLC, has rendered an opinion to the effect that the
foregoing tax effects of the Conversion under Illinois law are substantially the
same as they are under Federal law. Certain portions of both the Federal and the
state tax opinions are based upon the opinion of RP Financial that subscription
rights issued in connection with the Conversion will have no value.
In the opinion of RP Financial, which opinion is not binding on the IRS,
the subscription rights do not have any value, based on the fact that such
rights are acquired by the recipients without cost, are nontransferable and of
short duration, and afford the recipients the right only to purchase the Common
Stock at a price equal to its estimated fair market value, which will be the
same price as the Purchase Price for the unsubscribed shares of Common Stock. If
the subscription rights granted to eligible subscribers are deemed to have an
ascertainable value, receipt of such rights would be taxable probably only to
those eligible subscribers who exercise the subscription rights (either as a
capital gain or ordinary income) in an amount equal to such value and the Bank
could recognize gain on such distribution. Eligible subscribers are encouraged
to consult with their own tax advisor as to the tax consequences in the event
that such subscription rights are deemed to have an ascertainable value.
Unlike private rulings, an opinion of counsel is not binding on the IRS
and the IRS could disagree with conclusions reached therein. In the event of
such disagreement, there can be no assurance that the IRS would not prevail in a
judicial or administrative proceeding. A copy of each of the above-referenced
opinions is included as an exhibit to the Company's registration statement on
Form S-1 as filed with the SEC.
Delivery of Certificates
Certificates representing Common Stock issued in the Conversion will be
mailed by the Company's transfer agent to the persons entitled thereto at the
addresses of such persons appearing on the stock order form as soon as
practicable following consummation of the Conversion. Any certificates returned
as undeliverable will be held by the Company until claimed by persons legally
entitled thereto or otherwise disposed of in accordance with applicable law.
Until certificates for Common Stock are available and delivered to subscribers,
subscribers may not be able to sell the shares of Common Stock for which they
have subscribed, even though trading of the Common Stock may have commenced.
Certain Restrictions on Purchase or Transfer of Shares After Conversion
All shares of Common Stock purchased in connection with the Conversion by
a director or an officer of the Company and the Bank will be subject to a
restriction that the shares not be sold for a period of one year following the
Conversion, except in the event of the death of such director or officer or
pursuant to a merger
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or similar transaction approved by the Office. Each certificate for restricted
shares will bear a legend giving notice of this restriction on transfer, and
instructions will be issued to the effect that any transfer within such time
period of any certificate or record ownership of such shares other than as
provided above is a violation of the restriction. Any shares of Common Stock
issued at a later date within this one year period as a stock dividend, stock
split, or otherwise, with respect to such restricted stock will be subject to
the same restrictions. The directors and executive officers of the Company and
the Bank will also be subject to the insider trading rules promulgated pursuant
to the Exchange Act.
Purchases of outstanding shares of Common Stock of the Company by
directors, executive officers (or any person who was an executive officer or
director of the Company and the Bank after adoption of the Plan of Conversion)
during the three-year period following Conversion may be made only through a
broker or dealer registered with the SEC, except with the prior written approval
of the Office. This restriction does not apply, however, to negotiated
transactions involving more than 1.0% of the Company's outstanding Common Stock
or to certain purchases of stock pursuant to an employee stock benefit plan.
The Company has no present plans with respect to any repurchase of shares
of Common Stock and will not undertake any repurchase of shares of Common Stock
within the one year period subsequent to the Conversion. Any repurchases of
Common Stock by the Company in the future will be subject to the receipt of any
necessary approvals from the Commissioner and/or the FRB and will be subject to
any applicable regulations and policies of the Commissioner and FRB.
RESTRICTIONS ON ACQUISITION OF THE COMPANY
General
The Bank's Plan of Conversion provides for the Conversion of the Bank from
the mutual to the stock form of organization and for the concurrent formation of
a holding company. As described below, certain provisions in the Company's
Certificate of Incorporation and Bylaws, together with provisions of Delaware
law, may have anti-takeover effects. In addition, regulatory restrictions may
make it difficult for persons or companies to acquire control of either the
Company or the Bank.
Restrictions in the Company's Certificate of Incorporation and Bylaws
General. A number of provisions of the Company's Certificate of
Incorporation and Bylaws deal with matters of corporate governance and certain
rights of stockholders. The following discussion is a general summary of certain
provisions of the Company's Certificate of Incorporation and Bylaws which might
be deemed to have a potential "anti-takeover" effect. These provisions may have
the effect of discouraging a future takeover attempt which is not approved by
the Board of Directors but which individual Company stockholders may deem to be
in their best interests or in which stockholders may receive a substantial
premium for their shares over then current market prices. As a result,
stockholders who might desire to participate in such a transaction may not have
an opportunity to do so. Such provisions will also render the removal of the
current Board of Directors or management of the Company more difficult. The
following description of certain of the provisions of the Certificate of
Incorporation and Bylaws of the Company is necessarily general and reference
should be made in each case to such Certificate of Incorporation and Bylaws,
which are incorporated herein by reference. See "Additional Information" as to
how to obtain a copy of these documents.
Limitation on Acquisition of Voting Stock and Voting Rights. Article X of
the Company's Certificate of Incorporation provides that for a period of five
years from the date of Conversion of the Bank from the mutual to the stock form,
no person shall directly or indirectly offer to acquire or acquire the
beneficial ownership of (i) more than 10% of the issued and outstanding shares
of any class of an equity security of the Company, or (ii) any securities
convertible into, or exercisable for, any equity securities of the Company if,
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assuming conversion or exercise by such person of all securities of which such
person is the beneficial owner which are convertible into, or exercisable for,
such equity securities (but of no securities convertible into, or exercisable
for, such equity securities of which such person is not the beneficial owner),
such person would be the beneficial owner of more than 10% of any class of an
equity security of the Company. The term "person" is broadly defined to prevent
circumvention of this restriction.
The foregoing restrictions do not apply to (i) any offer with a view
toward public resale made exclusively to the Company by underwriters or a
selling group acting on its behalf, (ii) any tax-qualified employee benefit plan
or arrangement established by the Company or the Bank and any trustee of such a
plan or arrangement, and (iii) any other offer or acquisition approved in
advance by the affirmative vote of two-thirds of the Company's entire Board of
Directors. In the event that shares are acquired in violation of Article X, all
shares beneficially owned by any person in excess of 10% shall be considered
"Excess Shares" and shall not be counted as shares entitled to vote and shall
not be voted by any person or counted as voting shares in connection with any
matters submitted to stockholders for a vote, and the Board of Directors may
cause such Excess Shares to be transferred to an independent trustee for sale on
the open market or otherwise, with the expenses of such trustee to be paid out
of the proceeds of the sale.
Board of Directors. Article VII of the Certificate of Incorporation of the
Company contains provisions relating to the Board of Directors and provides,
among other things, that the Board of Directors shall be divided into three
classes as nearly equal in number as possible with the term of office of one
class expiring each year. See "Management of the Company." The classified Board
is intended to provide for continuity of the Board of Directors and to make it
more difficult and time consuming for a stockholder group to fully use its
voting power to gain control of the Board of Directors without the consent of
the incumbent Board of Directors of the Company. Cumulative voting in the
election of directors is prohibited by the Certificate of Incorporation.
Elimination of cumulative voting will help to ensure continuity and stability of
the Company's Board of Directors and the policies adopted by it by making it
more difficult for the holders of a relatively small amount of the common stock
to elect their nominees to the Board of Directors and possibly by delaying,
deterring, or discouraging proxy contests.
Directors may be removed only with cause at a duly constituted meeting of
stockholders called expressly for that purpose upon the vote of the holders of
not less than a majority of the total votes eligible to be cast by stockholders.
Any vacancy occurring in the Board of Directors for any reason (including an
increase in the number of authorized directors) may be filled by the affirmative
vote of a majority of the Directors then in office, though less than a quorum of
the Board, or by the sole remaining director, and a director appointed to fill a
vacancy shall serve for the remainder of the term to which the director has been
elected, and until his successor has been elected and qualified.
Section 4.15 of the Bylaws governs nominations for election to the Board,
and provides that nominations for election to the Board of Directors may be made
by the Board of Directors or a committee thereof or by a stockholder eligible to
vote at an annual meeting of stockholders who has complied with the notice
provisions in that section. Written notice of a stockholder nomination must be
delivered to, or mailed to and received at, the principal executive offices of
the Company not less than ninety days prior to the anniversary date of the
mailing of proxy materials by the Company in connection with the immediately
preceding annual meeting, provided, however, that, with respect to the first
scheduled annual meeting following completion of the Conversion, which is
expected to be held on the third Wednesday of January 1998, nominations by the
stockholder must be so delivered or received no later than the close of business
on the third Wednesday of October 1997, notwithstanding a determination by the
Company to schedule such annual meeting at a date later than the third Wednesday
of January 1998. With respect to an election to be held at a special meeting of
stockholders for the election of directors, the notice must be delivered or
received no later than the close of business on the tenth day following the date
on which notice of such meeting is first given to stockholders. Each such notice
shall set forth: (a) the name and address of the stockholder who intends to make
the nomination and of the person or persons to be nominated; (b) a
representation that the stockholder is a holder of record
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of stock of the Company entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice; (c) a description of all arrangements or understandings between
the stockholder and each nominee and any arrangements or understandings between
the stockholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by such stockholders; (d) such other information regarding each nominee
proposed by such stockholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the SEC; and (e) the consent of
each nominee to serve as a director of the Company if so elected.
The provisions regarding director elections and other provisions in the
Certificate of Incorporation and Bylaws discussed herein are generally designed
to protect the ability of the Board of Directors to negotiate with the proponent
of an unfriendly or unsolicited proposal to take over or restructure the Company
by making it more difficult and time-consuming to change majority control of the
Board, whether by proxy contest or otherwise. The general effect of these
provisions will be to require generally two annual stockholders meetings,
instead of one, to effect a change in control of the Board of Directors of the
Company even if holders of a majority of the Company's capital stock believe
that a change in the composition of the Board of Directors is desirable. Because
a majority of the directors at any given time will have prior experience as
directors, these requirements will help to ensure continuity and stability of
the Company's management and policies and facilitate long-range planning for the
Company's business. The provisions relating to removal of directors and filling
of vacancies are consistent with and supportive of a classified board of
directors.
The procedures regarding stockholder nominations will provide the Board of
Directors with sufficient time and information to evaluate a stockholder nominee
to the Board and other relevant information, such as existing stockholder
support for the nominee. The proposed procedures, however, will provide
incumbent directors advance notice of a dissident slate of nominees for
directors, and will make it easier for the Board to solicit proxies resisting
such nominees. This may make it easier for the incumbent directors to retain
their status as directors, even when certain stockholders view the dissident
nominations as in the best interests of the Company or its stockholders.
Limitation of Liability. Article IX of the Company's Certificate of
Incorporation provides that the personal liability of the directors and officers
of the Company for monetary damages shall be eliminated to the fullest extent
permitted by the General Corporation Law of the State of Delaware as it exists
on the effective date of the Certificate of Incorporation or as such law may be
thereafter in effect. Section 102(b)(7) of the Delaware General Corporation Law
currently provides that directors (but not officers) of corporations that have
adopted such a provision will not be so liable, except (i) for any breach of the
director's duty of loyalty to the corporation or its shareholders, (ii) for acts
or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) for the payment of certain unlawful dividends
and the making of certain stock purchases or redemptions, or (iv) for any
transaction from which the director derived an improper personal benefit. This
provision would absolve directors of personal liability for negligence in the
performance of their duties, including gross negligence. It would not permit a
director to be exculpated, however, for liability for actions involving
conflicts of interest or breaches of the traditional "duty of loyalty" to the
Company and its shareholders, and it would not affect the availability of
injunctive or other equitable relief as a remedy.
If Delaware law was amended in the future to provide for greater
limitations on the personal liability of directors or to permit corporations to
limit the personal liability of officers, the provision in the Company's
Certificate of Incorporation limiting the personal liability of directors and
officers would automatically incorporate such authorities without further action
by shareholders. Similarly, if Delaware law was amended in the future to
restrict the ability of a corporation to limit the personal lability of
directors, the Company's Certificate of Incorporation would automatically
incorporate such restrictions without further action by shareholders.
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Currently, the scope of the provision in the Company's Certificate of
Incorporation limiting the personal liability of directors is uncertain because
of the absence of judicial precedent interpreting similar provisions. In
addition, the SEC takes the position that similar provisions added to other
corporations' certificates of incorporation would not protect those
corporations' directors from liability for violations of the federal securities
laws. Federal banking regulators also may take the same position with respect to
violations of federal banking laws and regulations.
The provision limiting the personal liability of the Company's directors
does not eliminate or alter the duty of the Company's directors; it merely
limits personal lability for monetary damages to the maximum extent now or
hereafter permitted by the Delaware General Corporation Law. Moreover, it
currently applies only to claims against a director arising out of his role as a
director; it currently does not apply to claims arising out of his role as an
officer (if he is also an officer) or arising out of any other capacity in which
he serves because Section 102(b)(7) does not authorize such a limitation of
liability.
The provision in the Company's Certificate of Incorporation which limits
the personal liability of directors is designed to ensure that the ability of
the Company's directors to exercise their best business judgment in managing the
Company's affairs is not unreasonably impeded by exposure to the potentially
high personal costs or other uncertainties of litigation. The nature of the
tasks and responsibilities undertaken by directors of publicly-held corporations
often require such persons to make difficult judgments of great importance which
can expose such persons to personal liability, but from which they will acquire
no personal benefit. In recent years, litigation against publicly-held
corporations and their directors and officers challenging good faith business
judgments and involving no allegations of personal wrongdoing has become common.
Such litigation regularly involves damage claims in huge amounts which bear no
relationship to the amount of compensation received by the directors or
officers, particularly in the case of directors who are not employees of the
corporation. The expense of such litigation, whether it is well-founded or not,
can be enormous. The provisions of the Certificate of Incorporation relating to
director liability is intended to reduce, in appropriate cases, the risk
incident to serving as a director and to enable the Company to elect and retain
persons most qualified to serve as directors.
Indemnification of Directors, Officers, Employees and Agents. Article VI
of the Company's Bylaws provide that the Company shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that such person is or was a director,
officer, employee or agent of the Company or any predecessor of the Company, or
is or was serving at the request of the Company or any predecessor of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding to the fullest extent authorized by Section 145 of the
General Corporation Law of the State of Delaware, provided that the Company
shall not be liable for any amounts which may be due in connection with a
settlement of any action, suit or proceeding effected without its prior written
consent or any action, suit or proceeding initiated by any person seeking
indemnification thereunder without its prior written consent.
Under Section 145 of the Delaware General Corporation Law as currently in
effect, other than in actions brought by or in the right of the Company, such
indemnification would apply if it was determined in the specific case that the
proposed indemnitee acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Company and, with
respect to any criminal proceeding, if he or she had no reasonable cause to
believe that his or her conduct was unlawful. In actions brought by or in the
right of the Company, such indemnification would probably be limited to
reasonable expenses (including attorneys' fees), and would apply if it were
determined in the specific case that the proposed indemnitee acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the Company, except that no indemnification may be made with
respect to any claim, issue or matter as to which such person is adjudged liable
to the Company unless, and only to the extent that, the Delaware Court of
Chancery or the court in which that action was brought determines upon
application that, in view of all the circumstances of the
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case, the proposed indemnitee is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper. To the extent that any director,
officer, employee or agent of the Company has been successful on the merits or
otherwise in defense of any proceeding, he or she must be indemnified against
reasonable expenses incurred by him or her in connection therewith.
The Company's Bylaws also provide that reasonable expenses (including
attorneys' fees) incurred by a director, officer, employee or agent of the
Company in defending any civil, criminal, administrative or investigative
action, suit or proceeding described above shall be paid by the Company in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors upon receipt of an undertaking by or on
behalf of such person to repay such amount if it shall ultimately be determined
that the person is not entitled to be indemnified by the Company.
Authorized Shares and Issuance of Capital Stock. Article IV of the
Certificate of Incorporation authorizes the issuance of 1,600,000 shares of
Common Stock with a par value of $.01 per share and 400,000 shares of preferred
stock with a par value of $0.01 per share (the "Preferred Stock"). The shares of
Common Stock and Preferred Stock were authorized in an amount greater than that
to be issued in the Conversion to provide the Company's Board of Directors with
flexibility to effect, among other transactions, financings, acquisitions, stock
dividends, stock splits and employee stock options. However, these additional
authorized shares may also be used by the Board of Directors consistent with its
fiduciary duty to deter future attempts to gain control of the Company. The
Board of Directors also has sole authority to determine the terms of any one or
more series of Preferred Stock, including voting rights, conversion rates, and
liquidation preferences. As a result of the ability to fix voting rights for a
series of Preferred Stock, the Board has the power, to the extent consistent
with its fiduciary duty, to issue a series of Preferred Stock to persons
friendly to management in order to attempt to block a post-tender offer merger
or other transaction by which a third party seeks control, and thereby assist
management to retain its position. The Company's Board currently has no plans
for the issuance of additional shares, other than the issuance of additional
shares pursuant to stock benefit plans.
Neither the Certificate of Incorporation nor the Bylaws of the Company
contain a restriction on the issuance of shares of capital stock to directors,
officers or controlling persons of the Company. Thus, stock- related
compensation plans such as the Stock Option Plan and the Recognition Plan could
be adopted by the Company without shareholder approval and shares of Company
capital stock could be issued directly to directors, officers or controlling
persons without shareholder approval. The Bylaws of the National Association of
Securities Dealers, Inc., however, generally require corporations with
securities which are quoted on the Nasdaq Stock Market to obtain shareholder
approval of most stock compensation plans for directors, officers and key
employees of the corporation. Moreover, although generally not required,
shareholder approval of stock-related compensation plans may be sought in
certain instances in order to qualify such plans for favorable federal income
tax and securities law treatment under current laws and regulations.
Special Meetings of Stockholders and Stockholder Proposals. Section 2.4 of
the Company's Bylaws provides that special meetings of the Company's
stockholders, for any purpose or purposes, may only be called by the affirmative
vote of a majority of the Board of Directors then in office.
Section 2.14 of the Company's Bylaws provides that only such business as
shall have been properly brought before an annual meeting of stockholders shall
be conducted at the annual meeting. In order to be properly brought before an
annual meeting following completion of the Conversion, business must be (a)
brought before the meeting by or at the direction of the Board of Directors or
(b) otherwise properly brought before the meeting by a stockholder who has given
timely notice thereof in writing to the Company. For stockholder proposals to be
included in the Company's proxy materials, the stockholder must comply with all
the timing and informational requirements of Rule 14a-8 of the Exchange Act.
With respect to stockholder proposals to be considered at the annual meeting of
stockholders but not included in the Company's proxy materials, the
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Company not less than 90 days prior to the
anniversary date of the mailing of proxy materials by the Company
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in connection with the immediately preceding annual meeting; provided, however,
that with respect to the first scheduled annual meeting following completion of
the Conversion, which is expected to be held on the third Wednesday of January
1998, such written notice must be received by the Company not later than the
close of business on the third Wednesday of October 1997. In connection with
such first annual meeting, stockholder nominations will be required to be
received by the Company by the aforementioned date notwithstanding a
determination by the Company to schedule such annual meeting at a date later
than the third Wednesday of January 1998. A stockholder's notice shall set forth
as to each matter the stockholder proposes to bring before the annual meeting
(a) a brief description of the business desired to be brought before the annual
meeting, (b) the name and address, as they appear on the Company's books, of the
stockholder proposing such business, (c) the class and number of shares of the
Company which are beneficially owned by the stockholder, and (d) any financial
interest of the stockholder in such business. The presiding officer of an annual
meeting shall determine and declare to the meeting whether the business was
properly brought before the meeting in accordance with the provisions of Section
2.14 and any such business not properly brought before the meeting shall not be
transacted.
The procedures regarding stockholder proposals are designed to provide the
Board with sufficient time and information to evaluate a stockholder proposal
and other relevant information, such as existing stockholder support for the
proposal. The proposed procedures, however, will give incumbent directors
advance notice of a business proposal. This may make it easier for the incumbent
directors to defeat a stockholder proposal, even when certain stockholders view
such proposal as in the best interests of the Company or its stockholders.
Amendment of Certificate of Incorporation and Bylaws. Article 11 of the
Company's Certificate of Incorporation generally provides that any amendment of
the Certificate of Incorporation must be first approved by a majority of the
Board of Directors and, to the extent required by law, then by the holders of a
majority of the shares of the Company entitled to vote in an election of
directors, except that the approval of 75% of the shares of the Company entitled
to vote in an election of directors is required for any amendment to Articles
VII (directors), VIII (meetings of stockholders and bylaws), IX (limitation on
liability of directors and officers), X (restrictions on acquisitions) and 11
(amendment), unless any such proposed amendment is approved by a vote of 75% of
the Board of Directors then in office.
The Bylaws of the Company may be amended by a majority of the Board of
Directors or by the affirmative vote of a majority of the total shares entitled
to vote in an election of directors, except that the affirmative vote of at
least 75% of the total shares entitled to vote in an election of directors shall
be required to amend, adopt, alter, change or repeal any provision inconsistent
with certain specified provisions of the Bylaws, unless any such proposed
amendment is approved by a vote of 75% of the Board of Directors then in office.
Delaware General Corporation Law. In addition to the provisions contained
in the Company's Certificate of Incorporation, the Delaware General Corporation
Law includes certain provisions applicable to Delaware corporations, such as the
Company, which may be deemed to have an anti-takeover effect. Section 203 of the
Delaware General Corporation Law ("Section 203") imposes certain restrictions on
business combinations between the Company and large shareholders. Specifically,
Section 203 prohibits a "business combination" (as defined in Section 203,
generally including mergers, sales and leases of assets, issuances of securities
and similar transactions) between the Company or a subsidiary and an "interested
shareholder" (as defined in Section 203, generally the beneficial owner of 15%
or more of the Company's Common Stock) within three years after the person or
entity becomes an interested shareholder, unless (i) prior to the person or
entity becoming an interested shareholder, the business combination or the
transaction pursuant to which such person or entity became an interested
shareholder shall have been approved by the Company's Board of Directors, (ii)
upon consummation of the transaction in which the interested shareholder became
such, the interested shareholder holds at least 85% of the Company's Common
Stock (excluding shares held by persons who are both officers and directors and
shares held by certain employee benefit plans), or (iii) the business
combination is approved by the Company's Board of Directors and by the holders
of at least two-thirds of the outstanding Company Common Stock, excluding shares
owned by the interested shareholders.
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One of the effects of Section 203 may be to prevent highly leveraged
takeovers, which depend upon getting access to the acquired corporation's assets
to support or repay acquisition indebtedness and certain coercive acquisition
tactics. By requiring approval of the holders of two-thirds of the shares held
by disinterested shareholders for business combinations involving an interested
shareholder, Section 203 may prevent any interested shareholder from taking
advantage of its position as a substantial, if not controlling, shareholder and
engaging in transactions with the Company that may not be fair to the Company's
other shareholders or that may otherwise not be in the best interests of the
Company, its shareholders and other constituencies.
For similar reasons, however, these provisions may make more difficult or
discourage an acquisition of the Company, or the acquisition of control of the
Company by a principal shareholder, and thus the removal of incumbent
management, because a business combination within the specified three-year
period that is not approved by a majority of the Board of Directors prior to the
transaction in which a person becomes an interested shareholder will require the
approval of the Board of Directors and the holders of two-thirds of the shares
held by disinterested shareholders. In addition, to the extent that Section 203
discourages takeovers that would result in the change of the Company's
management, such a change may be less likely to occur.
Anti-Takeover Effects of the Certificate of Incorporation and Bylaws and
Management Remuneration Adopted in the Conversion
The foregoing provisions of the Certificate of Incorporation and Bylaws of
the Company could have the effect of discouraging an acquisition of the Company
or stock purchases in furtherance of an acquisition, and could accordingly,
under certain circumstances, discourage transactions which might otherwise have
a favorable effect on the price of the Company's Common Stock.
In addition, certain provisions of the proposed employment agreement with
the Company's and the Bank's President provide him with severance payments upon
his termination in connection with a change in control of the Company or the
Bank. See "Management of the Company - Employment Agreement." The foregoing
provisions may make it more difficult for companies or persons to acquire
control of the Company. Additionally, the provisions could deter offers to the
shareholders which might be viewed by such shareholders to be in their best
interests.
The Board of Directors believes that the provisions described above are
prudent and will reduce vulnerability to takeover attempts and certain other
transactions that are not negotiated with and approved by the Board of Directors
of the Company. The Board of Directors believes that these provisions are in the
best interests of the Company and its future stockholders. In the Board of
Directors' judgment, the Board of Directors is in the best position to determine
the true value of the Company and to negotiate more effectively for what may be
in the best interests of its stockholders. Accordingly, the Board of Directors
believes that it is in the best interests of the Company and its future
stockholders to encourage potential acquirors to negotiate directly with the
Board of Directors and that these provisions will encourage such negotiations
and discourage hostile takeover attempts. It is also the Board of Directors'
view that these provisions should not discourage persons from proposing a merger
or other transaction at prices reflective of the true value of the Company and
where the transaction is in the best interests of all stockholders.
Despite the Board of Directors' belief as to the benefits to the Company's
stockholders of the foregoing provisions, these provisions also may have the
effect of discouraging a future takeover attempt in which stockholders might
receive a substantial premium for their shares over then current market prices
and may tend to perpetuate existing management. As a result, stockholders who
might desire to participate in such a transaction may not have an opportunity to
do so. The Board of Directors, however, has concluded that the potential
benefits of these provisions outweigh their possible disadvantages.
The Board of Directors of the Company and the Bank are not aware of any
effort that might be made to acquire control of the Bank or the Company.
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Regulatory Restrictions
The Change in Bank Control Act provides that no person, acting directly or
indirectly or through or in concert with one or more other persons, may acquire
control of a bank unless the FDIC has been given 60 days' prior written notice.
The Bank Company Act provides that no company may acquire "control" of a bank
without the prior approval of the Federal Reserve Board. Any company that
acquires such control becomes a bank holding company subject to registration,
examination and regulation by the Federal Reserve Board. Pursuant to federal
regulations, control of a bank is conclusively deemed to have been acquired by,
among other things, the acquisition of more than 25% of any class of voting
stock of the bank or the ability to control the election of a majority of the
directors of a bank. The Federal Reserve Board may prohibit an acquisition if
(i) it would result in a monopoly or substantially lessen competition, (ii) the
financial condition of the acquiring person might jeopardize the financial
stability of the institution, or (iii) the competence, experience or integrity
of the acquiring person indicates that it would not be in the interest of the
depositors or of the public to permit the acquisition of control by such person.
Approval of a change in control of an Illinois-chartered savings bank is also
required from the Office pursuant to the Savings Bank Act.
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
General
The Company is authorized to issue 1,600,000 shares of Common Stock having
a par value of $0.01 per share and 400,000 shares of preferred stock having a
par value of $0.01 per share (the "Preferred Stock"). The Company currently
expects to issue up to a maximum of 345,000 shares of Common Stock and no shares
of Preferred Stock in the Conversion. Each share of the Company's Common Stock
will have the same relative rights as, and will be identical in all respects
with, each other share of Common Stock. Upon payment of the Purchase Price for
the Common Stock in accordance with the Plan of Conversion, all such stock will
be duly authorized, fully paid and nonassessable. Presented below is a
description of all aspects of the Company's capital stock which are deemed
material to an investment decision with respect to the Conversion.
The Common Stock of the Company will represent nonwithdrawable capital,
will not be an account of an insurable type, and will not be insured by the
FDIC.
Common Stock
Distributions. The Company can pay dividends if, as and when declared by
its Board of Directors, subject to compliance with limitations which are imposed
by law. See "Dividend Policy." The holders of Common Stock of the Company will
be entitled to receive and share equally in such dividends as may be declared by
the Board of Directors of the Company out of funds legally available therefor.
If the Company issues Preferred Stock, the holders thereof may have a priority
over the holders of the Common Stock with respect to dividends. During at least
the one-year period subsequent to the Conversion, the Company will take no
action to implement any distribution of a return of excess capital to
stockholders.
Voting Rights. Upon Conversion, the holders of Common Stock of the Company
will possess exclusive voting rights in the Company. They will elect the
Company's Board of Directors and act on such other matters as are required to be
presented to them under Delaware law or the Company's Certificate of
Incorporation or as are otherwise presented to them by the Board of Directors.
Each holder of Common Stock will be entitled to one vote per share and will not
have any right to cumulate votes in the election of directors. Cumulative voting
means that holders of stock of a corporation are entitled, in the election of
directors, to cast a number of votes equal to the number of shares which they
own multiplied by the number of directors to be elected Because a stockholder
entitled to cumulative voting may cast all of his votes for one nominee or
disperse his votes among nominees as he chooses, cumulative voting is generally
considered to increase the ability of minority stockholders to elect nominees to
a corporation's board of directors. Under certain circumstances, shares in
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excess of 10.0% of the issued and outstanding shares of Common Stock may be
considered "Excess Shares" and, accordingly, not be entitled to vote. See
"Restrictions on Acquisitions of the Company and the Bank." If the Company
issues Preferred Stock, holders of the Preferred Stock may also possess voting
rights.
As an Illinois-chartered mutual savings bank, corporate powers and control
of the Bank are vested in its Board of Directors who elect the officers of the
Bank and will fill any vacancies on the Board of Directors as it exists upon
Conversion. Subsequent to Conversion, voting rights will be vested exclusively
in the owners of the shares of capital stock of the Bank, which will be the
Company, and voted at the direction of the Company's Board of Directors.
Consequently, the holders of the Common Stock will not have direct control of
the Bank.
Liquidation. In the event of any liquidation, dissolution or winding up of
the Bank, the Company, as holder of the Bank's capital stock, would be entitled
to receive, after payment or provision for payment of all debts and liabilities
of the Bank (including all deposit accounts and accrued interest thereon) and
after distribution of the balance in the special liquidation account to Eligible
Account Holders and Supplemental Eligible Account Holders (see "The Conversion -
Liquidation Rights"), all assets of the Bank available for distribution. In the
event of liquidation, dissolution or winding up of the Company, the holders of
its Common Stock would be entitled to receive, after payment or provision for
payment of all its debts and liabilities, all of the assets of the Company
available for distribution. If Preferred Stock is issued, the holders thereof
may have a priority over the holders of the Common Stock in the event of
liquidation or dissolution.
Preemptive Rights. Holders of the Common Stock of the Company will not be
entitled to preemptive rights with respect to any shares which may be issued.
The Common Stock is not subject to redemption.
Preferred Stock
None of the shares of the Company's authorized Preferred Stock will be
issued in the Conversion. Such stock may be issued with such preferences and
designations as the Board of Directors may from time to time determine. The
Board of Directors can, without stockholder approval, issue preferred stock with
voting, dividend, liquidation and conversion rights which could dilute the
voting strength of the holders of the Common Stock and may assist management in
impeding an unfriendly takeover or attempted change in control. The Company has
no present plans to issue Preferred Stock.
DESCRIPTION OF CAPITAL STOCK OF THE BANK
General
The Amended and Restated Articles of Incorporation of the Bank, to be
effective upon the Conversion, authorizes the issuance of capital stock
consisting of 1,000,000 shares of common stock, par value $1.00 per share. Each
share of common stock of the Bank will have the same relative rights as, and
will be identical in all respects with, each other share of common stock. After
the Conversion, the Board of Directors will be authorized to approve the
issuance of common stock up to the amount authorized by the Amended and Restated
Articles of Incorporation without the approval of the Bank's stockholders. Upon
Conversion, all of the issued and outstanding common stock of the Bank will be
held by the Company as the Bank's sole stockholder. The capital stock of the
Bank will represent nonwithdrawable capital, will not be an account of an
insurable type, and will not be insured by the FDIC. Presented below is a
description of all aspects of the Bank's capital stock which are deemed material
to an investment decision with respect to the Conversion.
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Dividends
The holders of the Bank's common stock will be entitled to receive and to
share equally in such dividends as may be declared by the Board of Directors of
the Bank out of funds legally available therefore. See "Dividend Policy" for
certain restrictions on the payment of dividends.
Voting Rights
Immediately after the Conversion, the holders of the Bank's common stock,
which consist solely of the Company, will possess exclusive voting rights in the
Bank. Each holder of shares of common stock will be entitled to one vote for
each share held and there shall be no right to cumulate votes.
Liquidation
In the event of any liquidation, dissolution, or winding up of the Bank,
the holders of common stock will be entitled to receive, after payment of all
debts and liabilities of the Bank (including all deposit accounts and accrued
interest thereon), and distribution of the balance in the special liquidation
account to Eligible Account Holders and Supplemental Eligible Account Holders,
all assets of the Bank available for distribution in cash or in kind. If
additional preferred stock is issued subsequent to the Conversion, the holders
thereof may also have priority over the holders of common stock in the event of
liquidation or dissolution.
Preemptive Rights; Redemption
Holders of the common stock of the Bank will not be entitled to preemptive
rights with respect to any shares of the Bank which may be issued. The common
stock will not be subject to redemption. Upon receipt by the Bank of the full
specified purchase price therefor, the common stock will be fully paid and
nonassessable.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is
___________________________.
EXPERTS
The consolidated financial statements of the Bank as of September 30, 1996
and 1995, and for each of the years in the two-year period ended September 30,
1996, included in the Prospectus have been audited by Geo. S. Olive & Co. LLC,
independent auditors, as stated in their report appearing elsewhere herein, and
have been so included in reliance upon the report of such firm, given upon their
authority as experts in accounting and auditing.
RP Financial has consented to the publication herein of the summary of its
report to the Bank and Company setting forth its opinion as to the estimated pro
forma market value of the Common Stock upon Conversion and its opinion with
respect to subscription rights.
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LEGAL AND TAX OPINIONS
The legality of the Common Stock and the Federal income tax consequences
of the Conversion will be passed upon for the Bank and the Company by Elias,
Matz, Tiernan & Herrick L.L.P., Washington, D.C., special counsel to the Bank
and the Company. The Illinois income tax consequences of the Conversion will be
passed upon for the Bank and the Company by Geo. Olive & Co. LLC. Certain legal
matters will be passed upon for Trident by Luse Lehman Gorman Pomerenk &
Schick, PC, Washington, D.C.
ADDITIONAL INFORMATION
The Company has filed with the SEC a Registration Statement under the
Securities Act with respect to the Common Stock offered hereby. As permitted by
the rules and regulations of the SEC, this Prospectus does not contain all the
information set forth in the Registration Statement. Such information, including
the Conversion Valuation Appraisal Report which is an exhibit to the
Registration Statement, can be examined without charge at the public reference
facilities of the SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies of such material can be obtained from the SEC at prescribed rates.
The Commission maintains a World Wide Web site on the Internet that contains
reports, proxy and information statements and other information regarding
registrants such as the Company that file electronically with the Commission.
The address of such site is http://www.sec.gov. The statements contained in this
Prospectus as to the contents of any contract or other document filed as an
exhibit to the Registration Statement are, of necessity, brief descriptions
thereof and are not necessarily complete.
The Bank has filed an Application for Conversion with the Commissioner
with respect to the Conversion. This Prospectus omits certain information
contained in that application. The Application may be examined at the offices of
the Commissioner, Office of Banks and Real Estate, 310 S. Michigan Avenue, 21st
Floor, Chicago, Illinois 60604-4278 and 500 E. Monroe Street, Springfield,
Illinois 62701-1532.
In connection with the Conversion, the Company will register its Common
Stock with the SEC under Section 12(g) of the Exchange Act, and, upon such
registration, the Company and the holders of its stock will become subject to
the proxy solicitation rules, reporting requirements and restrictions on stock
purchases and sales by directors, officers and greater than 10% stockholders,
the annual and periodic reporting and certain other requirements of the Exchange
Act. Under the Plan, the Company has undertaken that it will not terminate such
registration for a period of at least three years following the Conversion.
A copy of the Plan of Conversion and Articles of Incorporation and the
Bylaws of the Company and the Amended and Restated Articles of Incorporation and
Bylaws of the Bank are available without charge from the Bank. Requests for such
information should be directed to: Mr. Merrill Norton, President, American
Savings Bank of Danville, 714 North Vermilion Street, Danville, Illinois 61834.
Copies of the appraisal report of RP Financial, including any amendments
thereto, are available at the Bank's office and is also part of the Application
for Conversion and the Registration Statement.
-114-
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Consolidated Financial Statements
September 30, 1996 and 1995
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report.............................................. F-2
Consolidated Balance Sheet................................................ F-3
Consolidated Statement of Income......................................... 36
Consolidated Statement of Capital......................................... F-4
Consolidated Statement of Cash Flows ..................................... F-5
Notes to Consolidated Financial Statements................................ F-6
The financial statements of Vermilion Bancorp, Inc. ("VBI") have been omitted
because VBI had not yet issued any stock, has no assets or liabilities, and has
not conducted any business other than of an organization nature.
All schedules are omitted as the required information is not applicable or the
information is presented in the Consolidated Financial Statements.
F-1
<PAGE>
Independent Auditor's Report
Board of Directors
American Savings Bank of Danville
Danville, Illinois
We have audited the consolidated balance sheet of American Savings Bank of
Danville and subsidiary as of September 30, 1996 and 1995, and the related
consolidated statements of income, equity capital, and cash flows for the years
then ended. These consolidated financial statements are the responsibility of
the Bank's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements described above present
fairly, in all material respects, the consolidated financial position of
American Savings Bank of Danville and subsidiary as of September 30, 1996 and
1995, and the results of their operations and their cash flows for the years
then ended, in conformity with generally accepted accounting principles.
As discussed in the notes to the consolidated financial statements, the Bank
changed its method of accounting for investment securities in 1995.
/s/ Geo. S. Olive & Co. LLC
Champaign, Illinois
October 11, 1996,
except as to the subsequent
event note, which is as of
November 6, 1996
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Consolidated Balance Sheet
September 30 1996 1995
- --------------------------------------------------------------------------------
Assets
Cash and due from banks $ 359,747 $ 426,372
Interest-bearing demand deposits 429,451 144,220
----------------------------
Cash and cash equivalents 789,198 570,592
Interest-bearing time deposits 99,000 99,000
Investment securities
Available for sale 2,221,693 1,485,815
Held to maturity 4,336,559 6,816,446
----------------------------
Total investment securities 6,558,252 8,302,261
Loans 27,079,584 24,028,147
Allowance for loan losses 143,349 74,190
----------------------------
Net loans 26,936,235 23,953,957
Premises and equipment 466,928 495,251
Federal Home Loan Bank stock 269,000 255,000
Other assets 340,599 300,774
----------------------------
Total assets $35,459,212 $33,976,835
============================
Liabilities
Deposits
Noninterest-bearing $ 165,593 $ 105,078
Interest-bearing 30,558,460 31,226,360
----------------------------
Total deposits 30,724,053 31,331,438
Federal Home Loan Bank borrowings 2,000,000
Other liabilities 380,010 202,988
----------------------------
Total liabilities 33,104,063 31,534,426
----------------------------
Equity Capital
Retained earnings 2,370,504 2,441,672
Net unrealized gain (loss) on securities
available for sale (15,355) 737
----------------------------
Total equity capital 2,355,149 2,442,409
----------------------------
Total liabilities and equity capital $35,459,212 $33,976,835
============================
See notes to consolidated financial statements.
F-3
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Consolidated Statement of Income
Year Ended September 30 1996 1995
- --------------------------------------------------------------------------------
Interest Income
Loans receivable $ 2,118,137 $ 1,757,456
Investment securities 448,729 537,854
Deposits with financial institutions 67,274 80,233
-----------------------------
Total interest income 2,634,140 2,375,543
-----------------------------
Interest Expense
Deposits 1,670,717 1,588,004
Federal Home Loan Bank borrowings 107,113
-----------------------------
Total interest expense 1,777,830 1,588,004
-----------------------------
Net Interest Income 856,310 787,539
Provision for losses on loans 80,000 13,059
-----------------------------
Net Interest Income After Provision for
Losses on Loans 776,310 774,480
-----------------------------
Noninterest Income
Loan fees 11,551 10,788
Net realized gains on sales of
available-for-sale securities 563
Other income 33,343 39,426
-----------------------------
Total noninterest income 44,894 50,777
-----------------------------
Noninterest Expense
Salaries and employee benefits 275,741 296,624
Net occupancy expenses 96,895 94,548
Data processing fees 40,568 39,165
Deposit insurance expense 277,093 71,039
Printing and office supplies 15,710 16,760
Legal and professional fees 36,569 43,305
Advertising and promotion 28,525 28,311
Director and committee fees 41,107 41,107
Other expenses 77,281 78,853
-----------------------------
Total noninterest expense 889,489 709,712
-----------------------------
Income (Loss) Before Income Tax (68,285) 115,545
Income tax expense 2,883 15,230
-----------------------------
Net Income (Loss) $ (71,168) $ 100,315
=============================
See notes to consolidated financial statements.
F-4
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Consolidated Statement of Equity Capital
Net Unrealized
Gain (Loss) on
Securities
Retained Available
Earnings For Sale Total
- --------------------------------------------------------------------------------
Balances, October 1, 1994 $2,341,357 $2,341,357
Net income for 1995 100,315 100,315
Cumulative effect of change in
method of accounting for
securities $(12,419) (12,419)
Net change in unrealized gain
(loss) on securities available
for sale 13,156 13,156
---------------------------------------------
Balances, September 30, 1995 2,441,672 737 2,442,409
Net loss for 1996 (71,168) (71,168)
Net change in unrealized gain
(loss) on securities available
for sale (16,092) (16,092)
---------------------------------------------
Balances, September 30, 1996 $2,370,504 $(15,355) $2,355,149
=============================================
See notes to consolidated financial statements.
F-5
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Year Ended September 30 1996 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Operating Activities
Net income (loss) $ (71,168) $ 100,315
Adjustments to reconcile net income (loss) to net
cash provided by operating activities
Provision for loan losses 80,000 13,059
Investment securities gains (563)
Deferred income tax (41,577)
Investment securities amortization (accretion), net 11,049 (15,705)
Depreciation 33,594 35,742
Federal Home Loan Bank stock dividend (3,600)
Net change in:
Interest receivable (51,317) (16,370)
Interest payable 7,652 (5,594)
Other assets 58,567 (14,173)
Other liabilities 169,370 49,134
----------------------------
Net cash provided by operating activities 196,170 142,245
----------------------------
Investing Activities
Net change in interest-bearing deposits 595,000
Purchases of securities available for sale (550,000) (671,775)
Proceeds from maturities of securities available for sale 1,394,257 700,000
Proceeds from sales of securities available for sale 300,563
Proceeds from maturities of securities held to maturity 867,113 590,564
Net change in loans (3,062,278) (2,340,524)
Purchase of premises and equipment (5,271) (62,900)
Purchase of Federal Home Loan Bank stock (14,000) (15,300)
----------------------------
Net cash used by investing activities (1,370,179) (904,372)
----------------------------
Financing Activities
Net change in deposits (607,385) 633,385
Proceeds of Federal Home Loan Bank borrowings 2,000,000
----------------------------
Net cash provided by financing activities 1,392,615 633,385
----------------------------
Net Change in Cash and Cash Equivalents 218,606 (128,742)
Cash and Cash Equivalents, Beginning of Year 570,592 699,334
----------------------------
Cash and Cash Equivalents, End of Year $789,198 $570,592
============================
Additional Cash Flows Information
Interest paid $1,770,178 $1,593,598
Income tax paid 17,205 16,800
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Notes to Consolidated Financial Statements
1) Nature of Operations and Summary of Significant Accounting Policies
The accounting and reporting policies of American Savings Bank of Danville (the
"Bank") and its wholly owned subsidiary, GBW Service Corporation (which services
contract sales of real estate), conform to generally accepted accounting
principles and reporting practices followed by the thrift industry. The more
significant of the policies are described below.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The Bank operates under a state thrift charter and provides full banking
services. As a state-chartered thrift, the Bank is subject to regulation by the
State of Illinois Office of Banks and Real Estate and the Federal Deposit
Insurance Corporation.
The Bank generates commercial, mortgage and consumer loans and receives deposits
from customers located primarily in Danville and the immediately surrounding
communities. The Bank's loans are generally secured by specific items of
collateral including real property and consumer assets. Although the Bank has a
diversified loan portfolio, a substantial portion of its debtors' ability to
honor their contracts is dependent upon economic conditions in the Danville
area.
Consolidation--The consolidated financial statements include the accounts of the
Bank and subsidiary after elimination of all material intercompany transactions
and accounts.
Investment Securities--The Bank adopted Statement of Financial Accounting
Standards ("SFAS") No. 115, Accounting For Certain Investments in Debt and
Equity Securities, on October 1, 1994. Debt securities are classified as held to
maturity when the Bank has the positive intent and ability to hold the
securities to maturity. Securities held to maturity are carried at amortized
cost. Debt securities not classified as held to maturity are classified as
available for sale. Securities available for sale are carried at fair value with
unrealized gains and losses reported separately in equity capital, net of tax.
Amortization of premiums and accretion of discounts are recorded as interest
income from securities. Realized gains and losses are recorded as net security
gains (losses). Gains and losses on sales of securities are determined on the
specific-identification method.
At October 1, 1994, investment securities with an approximate carrying value of
$1,799,600 were reclassified as available for sale. This reclassification
resulted in a decrease in total equity, net of taxes, of $12,419.
F-7
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Notes to Consolidated Financial Statements
Loans are carried at the principal amount outstanding. Interest income is
accrued on the principal balances of loans. The accrual of interest on impaired
loans is discontinued when, in management's opinion, the borrower may be unable
to meet payments as they become due. Interest income is subsequently recognized
only to the extent cash payments are received. Certain loan fees and direct
costs are being deferred and amortized as an adjustment of yield on the loans.
Allowance for loan losses is maintained to absorb loan losses based on
management's continuing review and evaluation of the portfolio and its judgment
as to the impact of economic conditions on the portfolio. The evaluation by
management includes consideration of past loss experience, changes in the
composition of the portfolio, and the current condition and amount of loans
outstanding, and the probability of collecting all amounts due. Impaired loans
are measured by the present value of expected future cash flows, or the fair
value of the collateral of the loan, if collateral dependent.
In May 1993, the Financial Accounting Standards Board issued Statement No. 114
Accounting by Creditors for Impairment of a Loan which requires that impaired
loans that are within the scope of this statement be measured based on the
present value of expected future cash flows discounted at the loan's effective
interest rate or at the loan's market price or the fair value of the collateral
if the loan is collateral dependent. The Bank uses the loan-by-loan measurement
method for all loans, however, residential mortgage loans and consumer
installment loans are considered to be groups of smaller balance homogenous
loans and are collectively evaluated for impairment and are not subject to SFAS
114 measurement criteria. A loan is considered impaired when it is probable that
all contractual amounts due will not be collected in accordance with the terms
of the loan. A loan is not deemed to be impaired if a delay in receipt of
payment is expected to be less than 60 days or if, during a longer period of
delay, the Bank expects to collect all amounts due, including interest accrued
at the contractual rate during the period of the delay. Factors considered by
management include the property location, economic conditions and any unique
circumstances affecting the loan. Due to the composition of the Bank's loan
portfolio, the fair value of collateral is utilized to measure virtually all of
the Bank's impaired loans. If the fair value of an impaired loan is less than
the related recorded amount, a valuation allowance is established or the
writedown is charged against the allowance for loan losses if the impairment is
considered to be permanent.
Premises and equipment are carried at cost net of accumulated depreciation.
Depreciation is computed using both the straight-line and accelerated methods
based on the estimated useful lives of the assets. Maintenance and repairs are
expensed as incurred while major additions and improvements are capitalized.
Gains and losses on dispositions are included in current operations.
Federal Home Loan Bank stock is a required investment for institutions that are
members of the Federal Home Loan Bank ("FHLB") system. The required investment
in the common stock is based on a predetermined formula.
Income tax in the consolidated statement of income includes deferred income tax
provisions or benefits for all significant temporary differences in recognizing
income and expenses for financial reporting and income tax purposes. The Bank
files consolidated income tax returns with its subsidiary.
Reclassifications of certain amounts in the 1995 consolidated financial
statements have been made to conform to the 1996 presentation.
F-8
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Notes to Consolidated Financial Statements
2) Subsequent Events
On November 6, 1996, the Board of Directors adopted a Plan of Conversion (the
"Plan") whereby the Bank will convert from a state chartered mutual savings bank
to a state chartered stock savings bank. The Plan is subject to approval of
regulatory authorities and members at a special meeting. The stock of the Bank
will be issued to a holding company formed in connection with the conversion.
Pursuant to the Plan, shares of capital stock of the holding company are
expected to be offered initially for subscription to eligible members of the
Bank and certain other persons as of specified dates subject to various
subscription priorities as provided in the Plan. The capital stock will be
offered at a price to be determined by the Board of Directors based upon an
appraisal to be made by an independent appraisal firm. The exact number of
shares to be offered will be determined by the Board of Directors in conjunction
with the determination of the subscription price. At least the minimum number of
shares offered in the conversion must be sold. Any stock not purchased in the
subscription offering will be sold in a community offering to be commenced
simultaneously with the subscription offering. The Plan provides that when the
conversion is completed, a liquidation account will be established in an amount
equal to the retained income of the Bank as of the date of the most recent
financial statements contained in the final conversion prospectus. The
liquidation account is established to provide a limited priority claim to the
assets of the Bank to qualifying depositors at July 31, 1995, who continue to
maintain deposits in the Bank after conversion. In the unlikely event of a
complete liquidation of the Bank, and only in such event, eligible account
holders would receive from the liquidation account a liquidation distribution
based on their proportionate share of the then total remaining qualifying
deposits.
Current regulations allow the Bank to pay dividends on its stock after the
conversion if its regulatory capital would not thereby be reduced below the
amount then required for the aforementioned liquidation account. Also, capital
distribution regulations limit the Bank's ability to make capital distributions
which include dividends, stock redemptions or repurchases, cash-out mergers,
interest payments on certain convertible debt and other transactions charged to
the capital account based on its capital level and supervisory condition.
No conversion costs have been incurred as of September 30, 1996. Costs of
conversion will be netted from proceeds of sale of common stock and recorded as
a reduction of additional paid-in capital or common stock. If the conversion is
not completed, such costs would be charged to expense.
F-9
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Notes to Consolidated Financial Statements
3) Investment Securities
<TABLE>
<CAPTION>
1996
-----------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
September 30 Cost Gains Losses Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale
U.S. Treasury $ 250,000 $ 3,250 $ 253,250
Federal agencies 1,992,166 5,025 $28,748 1,968,443
--------------------------------------------------------
Total available for sale 2,242,166 8,275 28,748 2,221,693
--------------------------------------------------------
Held to maturity
Federal agencies 499,798 928 498,870
State and municipal 361,177 6,759 354,418
Mortgage-back securities 3,475,584 30,440 32,713 3,473,311
--------------------------------------------------------
Total held to maturity 4,336,559 30,440 40,400 4,326,599
--------------------------------------------------------
Total investment securities $6,578,725 $38,715 $69,148 $6,548,292
========================================================
</TABLE>
<TABLE>
<CAPTION>
1995
-----------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
September 30 Cost Gains Losses Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale
U.S. Treasury $ 198,274 $ 400 $ 198,674
Federal agencies 1,286,424 3,749 $ 3,032 1,287,141
-------------------------------------------------------
Total available for sale 1,484,698 4,149 3,032 1,485,815
-------------------------------------------------------
Held to maturity
Federal agencies 2,196,132 2,363 41,891 2,156,604
State and municipal 360,201 7,165 353,036
Mortgage-backed securities 4,260,113 36,696 40,317 4,256,492
-------------------------------------------------------
Total held to maturity 6,816,446 39,059 89,373 6,766,132
-------------------------------------------------------
Total investment securities $8,301,144 $43,208 $92,405 $8,251,947
=======================================================
</TABLE>
F-10
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Notes to Consolidated Financial Statements
The amortized cost and fair value of securities available for sale and held to
maturity at September 30, 1996, by contractual maturity, are shown below.
Expected maturities will differ from contractual maturities because issuers may
have the right to call or prepay obligations with or without call or prepayment
penalties.
Available for Sale Held to Maturity
-----------------------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
- --------------------------------------------------------------------------------
Within one year $ 600,000 $ 604,341 $ 499,798 $ 498,870
One to five years 1,642,166 1,617,352
Five to ten years 165,469 162,370
After ten years 195,708 192,048
----------------------------------------------------
2,242,166 2,221,693 860,975 853,288
Mortgage-backed securities 3,475,584 3,473,311
----------------------------------------------------
Totals $2,242,166 $2,221,693 $4,336,559 $4,326,599
====================================================
There were no pledged securities at September 30, 1996 or 1995.
Proceeds from the sale of a security available for sale during 1995 were
$300,563. A gross gain of $563 was realized on the sale. There were no sales of
securities during 1996.
On December 31, 1995, the Bank transferred certain securities from held to
maturity to available for sale in accordance with a transition reclassification
allowed by the Financial Accounting Standards Board. Such securities had a
carrying value of $1,600,000 and a fair value of $1,592,598.
F-11
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Notes to Consolidated Financial Statements
4) Loans And Allowance
September 30 1996 1995
- ----------------------------------------------------------------------
Real estate mortgage loans
One-to-four family $21,418,924 $19,181,018
Multi-family 1,236,140 1,157,351
Commercial real estate loans 780,848 669,127
Real estate sold on contract 373,846 414,915
Real estate construction loans 341,793 163,147
Commercial business loans 334,376 242,147
Consumer loans 2,581,152 2,290,163
-------------------------
Total loans 27,067,079 24,117,868
Plus
Deferred loan costs 38,121
Less
Undisbursed portion of loans 25,376 89,194
Unearned interest 240 527
-------------------------
$27,079,584 $24,028,147
=========================
Allowance for loan losses
Balances, October 1 $ 74,190 $ 67,309
Provision for losses 80,000 13,059
Recoveries on loans 1,296 4,158
Loans charged off (12,137) (10,336)
-------------------------
Balances, September 30 $ 143,349 $ 74,190
=========================
The Bank adopted SFAS No. 114 and No. 118, Accounting by Creditors for
Impairment of a Loan and Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures on October 1, 1995. The Bank did not have any
impaired loans at September 30, 1996 nor at any time during the year then ended
as defined in SFAS No. 114 and No. 118. Accordingly, the adoption of SFAS No.
114 and No. 118 did not have a material impact on the Bank's financial position
or results of operations.
Mortgage loans serviced for others are not included in the accompanying
consolidated balance sheet. The unpaid principal balances of mortgage loans
serviced for others were $432,071 and $525,065 at September 30, 1996 and 1995.
F-12
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Notes to Consolidated Financial Statements
5) Premises and Equipment
September 30 1996 1995
- ------------------------------------------------------------------------
Land $ 209,431 $ 209,431
Office building 568,593 568,593
Furniture and fixtures 292,129 286,858
---------------------------
Total cost 1,070,153 1,064,882
Accumulated depreciation (603,225) (569,631)
---------------------------
Net 466,928 $ 495,251
===========================
6) Other Assets and Other Liabilities
September 30 1996 1995
- ------------------------------------------------------------------------
Other assets
Interest receivable $147,719 $ 96,402
Cash value of life insurance annuity 53,284 58,654
Deferred income tax asset 97,963 50,888
Prepaid expenses and other 41,633 94,830
-------------------------
Total $340,599 $300,774
=========================
Other liabilities
Interest payable on deposits $ 17,917 $ 19,982
Interest payable on borrowings 9,717
Deferred compensation payable 79,831 74,831
Federal income tax payable 30,229 49,094
SAIF Assessment 207,307
Other 35,009 59,081
-------------------------
Total $380,010 $202,988
==========================
F-13
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Notes to Consolidated Financial Statements
7) Deposits
1996 1995
---------------------------
September 30 Amount Amount
- ---------------------------------------------------------------------------
NOW accounts $ 576,722 $ 625,170
Money market investment accounts 1,043,201 1,432,051
Savings and retirement accounts 5,350,222 4,964,863
Certificates 23,753,908 24,309,354
---------------------------
Total deposits $30,724,053 $31,331,438
===========================
Certificates maturing in years ending September 30:
1997 $16,995,124
1998 4,368,789
1999 1,598,821
2000 292,850
2001 498,324
-----------
$23,753,908
===========
The aggregate amount of certificates of deposit with a minimum denomination of
$100,000 was approximately $2,775,000 and $2,924,000 at December 31, 1996 and
1995.
8) Federal Home Loan Bank Borrowings
September 30 1996
- ---------------------------------------------------------------------------
Federal Home Loan Bank advances:
At 6.02%; due October,1997 $ 500,000
At 5.98%; due October, 1997 500,000
At 5.66%; due November, 1997 1,000,000
----------
Total FHLB borrowings $2,000,000
==========
The terms of security agreements with the FHLB require the Bank to pledge as
collateral for the advances qualifying first mortgage loans in an amount equal
to at least 170 percent of the advances and all stock in the FHLB.
F-14
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Notes to Consolidated Financial Statements
9) Income Tax
Year Ended September 30 1996 1995
- -------------------------------------------------------------------------------
Income tax expense (benefit)
Current federal $ 44,460 $15,230
Deferred federal (41,577)
-------------------------
Total income tax expense $ 2,883 $15,230
=========================
Reconciliation of federal statutory to actual
tax expense
Federal statutory income tax at 34% $(23,217) $39,285
Tax exempt interest (5,048) (10,687)
Graduated tax rates 7,467 (11,398)
Change in tax rate applicable to deferred taxes 18,404
Other 5,277 (1,970)
-------------------------
Actual tax expense $ 2,883 $15,230
=========================
A cumulative net deferred tax asset is included in other assets. The components
of the asset are as follows:
September 30 1996 1995
- --------------------------------------------------------------------------------
Differences in depreciation methods $ (530) $(4,255)
Differences in accounting for loan losses 32,408 27,713
Deferred compensation 19,958 29,185
Unrealized (gain) loss on securities available
for sale 5,118 (380)
Deferred loan costs (9,530)
SAIF assessment 51,439
Other (900) (1,375)
-------------------------
$ 97,963 $50,888
=========================
Assets $108,923 $57,278
Liabilities (10,960) (6,390)
-------------------------
$97,963 $50,888
=========================
There was no state income tax expense for 1996 or 1995.
F-15
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Notes to Consolidated Financial Statements
Retained earnings at September 30, 1996 and 1995, include approximately $995,000
for which no deferred income tax liability has been recognized. This amount
represents an allocation of income to bad debt deductions as of September 30,
1988, for tax purposes only. Reduction of amounts so allocated for purposes
other than tax bad debt losses or adjustments arising from carryback of net
operating losses would create income for tax purposes only, which income would
be subject to the then-current corporate income tax rate. The unrecorded
deferred income tax liability on the above amounts was approximately $338,300 at
September 30, 1996 and 1995.
10) Commitments and Contingent Liabilities
In the normal course of business there are outstanding commitments and
contingent liabilities, such as commitments to extend credit and standby letters
of credit, which are not included in the accompanying financial statements. The
Bank's exposure to credit loss in the event of nonperformance by the other party
to the financial instruments for commitments to extend credit and standby
letters of credit is represented by the contractual or notional amount of those
instruments. The Bank uses the same credit policies in making such commitments
as it does for instruments that are included in the consolidated balance sheet.
Financial instruments whose contract amount represents credit risk at September
30 were as follows:
1996 1995
- --------------------------------------------------------------------------------
Mortgage loan commitments at fixed rates $576,000 $386,000
Construction and home improvement loan commitments at
fixed rates 606,000 88,000
Standby letters of credit 23,000
At September 30, 1996, mortgage loan commitments have terms up to 30 days and
rates ranging from 7.25% to 9.00%. Construction and home improvement loan
commitments have terms up to 6 months and rates ranging from 9.50% to 10.50%.
At September 30, 1995, mortgage loan commitments had terms up to 30 days and
rates ranging from 7.00% to 8.50%. Construction and home improvement loan
commitments had terms up to 6 months and rates ranging from 10.00% to 10.50%.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Bank upon extension of credit, is based on management's credit
evaluation. Collateral held varies, but may include residential real estate,
income-producing commercial properties, or other assets of the borrower.
F-16
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Notes to Consolidated Financial Statements
Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party.
On December 30, 1992, a former employee filed a lawsuit against the Bank which
involves various accusations. A summary judgement has been issued by the court
in favor of the Bank on each count with the exception of one. Based on the
current status of the litigation, the Bank's attorneys have advised that, while
they are unable to express an opinion as to the ultimate disposition of the
claim, they believe that it is unlikely that the former employee will prevail on
the remaining count. No accrual for loss from this action has been recognized in
the accompanying financial statements.
In addition, the Bank and subsidiary are also subject to other claims and
lawsuits which arise primarily in the ordinary course of business. It is the
opinion of management that the disposition or ultimate determination of such
possible claims or lawsuits will not have a material adverse effect on the
consolidated financial position of the Bank.
11) Regulatory Capital
The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate actions by the regulatory agencies that, if undertaken, could have a
material effect on the Bank's financial statements. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the Bank
must meet specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance sheet items as calculated
under regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgements by the regulators
about components, risk weightings, and other factors.
At September 30, 1996, the management of the Bank believes that it meets all
capital adequacy requirements to which it is subject. The most recent
notification from the regulatory agency categorized the Bank as well capitalized
under the regulatory framework for prompt corrective action. There have been no
conditions or events since that notification that management believes have
changed this categorization.
The Bank's actual and required capital amounts (in thousands) and ratios are as
follows:
<TABLE>
<CAPTION>
1996
-----------------------------------------------------------
Required for To Be Well
Actual Adequate Capital(1) Capitalized(1)
-----------------------------------------------------------
September 30 Amount Ratio Amount Ratio Amount Ratio
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total risk-based capital1 (to risk-
weighted assets) $2,514 15.33% $1,312 8.0% $1,640 10.0%
Tier 1 capital1 (to risk-weighted
assets) 2,371 14.45% 656 4.0% 984 6.0%
Tier 1 capital1 (to adjusted total
assets) 2,371 6.69% 1,418 4.0% 1,773 5.0%
</TABLE>
(1) As defined by regulatory agencies
F-17
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Notes to Consolidated Financial Statements
The Bank's tangible capital at September 30, 1996, was $2,371,000 which was 6.69
percent of tangible assets and exceeded the required ratio of 1.5 percent.
On September 30, 1996, legislation was enacted to recapitalize the Federal
Deposit Insurance Corporation's Savings Association Insurance Fund ("SAIF") as
well as to provide regulatory relief to SAIF insured institutions. As a result
of this legislation, a special assessment was levied on all SAIF assessable
deposits outstanding on March 31, 1995, at a rate of approximately .657 percent
of deposits. Accordingly, the Bank recorded an expense related to this special
assessment of approximately $155,000 net of taxes, on the date of enactment.
12) Benefit Plans
The Bank has a retirement savings Section 401(k) plan in which substantially all
employees may participate. The Bank contributes three percent of base salary for
each participant. In addition, the Bank matches 100 percent of the first four
percent of employees' base salary contributions. The Bank also matches 50
percent of the next 4 percent of base salary contributed by the participants.
The Bank's expense for the plan was approximately $19,000 for 1996 and $18,300
for 1995.
The Bank also has a deferred compensation plan for directors whereby
participating directors can elect to defer directors' fees in return for
inclusion in a deferred compensation plan which pays benefits to such
participating directors upon retirement or death. The Bank purchased a deferred
annuity, which is included in other assets, to fund the deferred compensation
plan benefits; however, this annuity is not restricted for that purpose. A
deferred compensation liability has been calculated and recorded in other
liabilities, which represents the present value of future benefits to be paid at
retirement for each participating director. Deferred compensation plan expense
included in the financial statements was $12,600 for both 1996 and 1995.
13) Fair Values of Financial Instruments
The following methods and assumptions were used to estimate the fair value of
each class of financial instrument:
Cash and Cash Equivalents--The fair value of cash and cash equivalents
approximates carrying value.
Interest-Bearing Time Deposits--The fair value of interest-bearing time deposits
approximates carrying value.
Securities and Mortgage-Backed Securities--Fair values are based on quoted
market prices.
Loans--For both short-term loans and variable-rate loans that reprice frequently
and with no significant change in credit risk, fair values are based on carrying
values. The fair value for other loans are estimated using discounted cash flow
analyses, using interest rates currently being offered for loans with similar
terms to borrowers of similar credit quality.
Interest Receivable/Payable--The fair values of interest receivable/payable
approximate carrying values.
F-18
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
AND SUBSIDIARY
Notes to Consolidated Financial Statements
Federal Home Loan Bank Stock--Fair value of FHLB stock is based on the price at
which it may be resold to the FHLB.
Deposits--The fair values of noninterest-bearing, interest-bearing demand and
savings accounts are equal to the amount payable on demand at the balance sheet
date. Fair values for fixed-rate certificates of deposit are estimated using a
discounted cash flow calculation that applies interest rates currently being
offered on certificates to a schedule of aggregated expected monthly maturities
on such time deposits.
Federal Home Loan Bank Advances--The fair value of these borrowings are
estimated using a discounted cash flow calculation, based on current rates for
similar debt.
Off-Balance Sheet Commitments--Commitments include commitments to originate
mortgage loans and standby letters of credit and are generally of a short-term
nature. The fair value of such commitments are based on fees currently charged
to enter into similar agreements, taking into account the remaining terms of the
agreements and the counterparties' credit standing. The Bank currently does not
charge a commitment fee; accordingly, no value has been assigned to the Bank's
commitments to extend credit.
The estimated fair values of the Bank's financial instruments are as follows:
1996
----------------------------
September 30 Carrying Amount Fair Value
- -------------------------------------------------------------------------------
Assets
Cash and cash equivalents $ 789,189 $ 789,189
Interest-bearing time deposits 99,000 99,000
Investment securities available for sale 2,221,693 2,221,693
Investment securities held to maturity 4,336,559 4,326,599
Loans, net 26,936,235 27,000,354
Interest receivable 147,719 147,719
Stock in FHLB 269,000 269,000
Cash surrender value of life insurance 53,284 53,284
Liabilities
Deposits 30,724,053 30,852,791
FHLB borrowings 2,000,000 1,991,610
Interest payable 27,634 27,634
Off-Balance Sheet Assets (Liabilities)
Commitments to extend credit 0 0
Standby letters of credit 0 0
F-19
<PAGE>
Other Information
F-20
<PAGE>
[Letterhead of Geo. S. Olive & C. LLC]
Independent Auditor's Report on Internal Control Structure
Board of Directors
American Savings Bank of Danville
Danville, Illinois
We have audited the consolidated financial statements of American Savings Bank
of Danville and subsidiary as of and for the years ended September 30, 1996 and
1995, and have issued our report thereon, dated October 11, 1996. In planning
and performing our audits of the consolidated financial statements, we
considered their internal control structure in order to determine our auditing
procedures for the purpose of expressing our opinion on the consolidated
financial statements and not to provide assurance on the internal control
structure. Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control structure that might be
material weaknesses under standards established by the American Institute of
Certified Public Accountants.
A material weakness is a reportable condition in which the design or operation
of one or more of the internal control structure elements does not reduce to a
relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the consolidated financial statements being
audited may occur and not be detected within a timely period by employees in the
normal course of performing their assigned functions. However, we noted no
matters involving the internal control structure and its operations that we
consider to be material weaknesses as defined above.
This report is intended solely for the information and use of the audit
committee, board of directors, management, examiners and bonding company.
/s/ Geo. S. Olive & Co. LLC
Champaign, Illinois
October 11, 1996
F-21
<PAGE>
NO DEALER, SALESMAN OR ANY
OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN AS
CONTAINED IN THIS PROSPECTUS
IN CONNECTION WITH THE
OFFERING MADE HEREBY, AND, IF
GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY
VERMILION BANCORP, INC., THE
BANK OR TRIDENT SECURITIES,
INC. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES
OFFERED HEREBY TO ANY PERSON
IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED
TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN
SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE
HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS
OF VERMILION BANCORP, INC. OR
THE BANK SINCE ANY OF THE
DATES AS OF WHICH INFORMATION
IS FURNISHED HEREIN OR SINCE
THE DATE HEREOF.
_____________________
TABLE OF CONTENTS
_____________________
Page
-----
Summary Overview 4
Selected Consolidated Financial
Information 6
Recent Developments 8
Summary 12
Risk Factors 20
Vermilion Bancorp, Inc. 24
American Savings Bank 25
Use of Proceeds 26
Dividend Policy and
Return of Excess Capital 26
Market for the Common Stock 27
Capitalization 28
Pro Forma Data 30
Regulatory Capital
Requirements 33
American Savings Bank of Danville
and Subsidiary Consolidated
Statements of Operations 36
Management's Discussion and
Analysis
of Financial Condition and
Results
of Operations 37
Business of the Bank 49
Regulation 72
Federal and State Taxation 78
Management 81
The Conversion 89
Restrictions on Acquisition of
the Company 104
Description of Capital Stock
of the Company 111
Description of Capital Stock
of the Bank 112
Transfer Agent and Resistrar 113
Experts 113
Legal and Tax Opinions 114
Additional Information 114
Index to Consolidated
Financial Statements F-1
UNTIL ____________ __, 1997,
ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS
IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
345,000 Shares
VERMILION
BANCORP, INC.
(Proposed Holding Company for
American Savings Bank of Danville)
COMMON STOCK
_____________________
PROSPECTUS
_____________________
_______________________
February __, 1997
TRIDENT SECURITIES, INC.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
SEC filing fees $ 1,200
Illinois Commissioner filing fees 10,000
NASD filing fees 900
Printing, Postage and mailing 35,000
Legal fees and expenses 55,000
Blue Sky and expenses 7,500
Accounting Fees 40,000
Appraiser's fees and expenses 15,000
Conversion agent and transfer agent fees and expenses 10,000
Agent's counsel fees and out-of-pocket expenses 22,500
Underwriter's Expenses 10,000
Underwriter's Management Fee 22,500
Miscellaneous 4,400
-------
Total $234,000
-------
-------
In addition to the foregoing expenses, the Agent will receive aggregate
fees of $29,710, $36,946, $44,183 and $52,530 at the minimum midpoint,
maximum and maximum, as adjusted, respectively, of the Estimated Price Range.
Item 14. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law sets forth
circumstances under which directors, officers, employees and agents may be
insured or indemnified against liability which they may incur in their
capacity as such. The Bylaws of the Company provide that the directors,
officers, employees and agents of the Company shall be indemnified to the
full extent permitted by law. Such indemnity shall extend to expenses,
including attorney's fees, judgments, fines and amounts paid in the
settlement, prosecution or defense of the foregoing actions.
Article IX of the Registrant's Certificate of Incorporation provides as
follows:
The personal liability of the directors and officers of the Corporation
for monetary damages shall be eliminated to the fullest extent permitted by
the General Corporation Law of the State of Delaware as it exists on the
effective date of this Certificate of Incorporation or as such law may be
thereafter in effect. No amendment, modification or repeal of this Article
IX shall adversely affect the rights provided hereby with respect to any
claim, issue or matter in any
<PAGE>
proceeding that is based in any respect on any alleged action or failure to
act prior to such amendment, modification or repeal.
Article VI of the Registrant's Bylaws provides as follows:
6.1 Indemnification. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was a director, officer, employee or agent of the Corporation or any
predecessor of the Corporation, or is or was serving at the request of the
Corporation or any predecessor of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred by
such person in connection with such action, suit or proceeding to the fullest
extent authorized by Section 145 of the General Corporation Law of the State
of Delaware, provided that the Corporation shall not be liable for any
amounts which may be due to any person in connection with a settlement of any
action, suit or proceeding effected without its prior written consent or any
action, suit or proceeding initiated by any person seeking indemnification
hereunder without its prior written consent.
6.2 Advancement of Expenses. Reasonable expenses (including attorneys'
fees) incurred by a director, officer or employee of the Corporation in
defending any civil, criminal, administrative or investigative action, suit
or proceeding described in Section 6.1 shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors only upon receipt of an undertaking by
or on behalf of such person to repay such amount if it shall ultimately be
determined that the person is not entitled to be indemnified by the
Corporation.
6.3 Other Rights and Remedies. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Article VI shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under the Corporation's
Certificate of Incorporation, any agreement, vote of stockholders or
disinterested directors or otherwise, both as to actions in their official
capacity and as to actions in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer or
employee and shall inure to the benefit of the heirs, executors and
administrators of such person.
6.4 Insurance. Upon resolution passed by the Board of Directors, the
Corporation may purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, against any liability asserted against him or incurred
by him in any such capacity or arising out of his status as such, whether or
not the Corporation would have the power to indemnify him against such
liability under the provisions of its Certificate of Incorporation or this
Article VI.
2
<PAGE>
6.5 Modification. The duties of the Corporation to indemnify and to
advance expenses to a director, officer, employee or agent provided in this
Article VI shall be in the nature of a contract between the Corporation and
each such person, and no amendment or repeal of any provision of this Article
VI shall alter, to the detriment of such person, the right of such person to
the advance of expenses or indemnification related to a claim based on an act
or failure to act which took place prior to such amendment or repeal.
3
<PAGE>
Item 15. Recent Sales of Unregistered Securities
Not applicable.
Item 16. Exhibits and Financial Statements Schedules
The exhibits and financial statement schedules filed as a part of this
Registration Statement are as follows:
(a) List of Exhibits (filed herewith unless otherwise noted)
1.1* Engagement Letter with Trident Securities, Inc.
1.2 Agency Agreement with Trident Securities, Inc.
2.0* Plan of Conversion
3.1* Articles of Incorporation of Vermilion Bancorp, Inc.
3.2* Bylaws of Vermilion Bancorp, Inc.
3.3* Amended and Restated Articles of Incorporation of American
Savings Bank of Danville
3.4* Amended and Restated Bylaws of American Savings Bank of Danville
4.0* Form of Stock Certificate of Vermilion Bancorp, Inc.
5.0* Form of Opinion of Elias, Matz, Tiernan & Herrick L.L.P.
regarding legality of securities
8.1 Opinion of Elias, Matz, Tiernan & Herrick regarding federal tax
matters
8.2 Opinion of Geo. Olive & Co., llc regarding Illinois tax matters
8.3* Opinion of RP Financial, L.C. regarding subscription rights
10.1* Form of 1997 Stock Option Plan for Employees and Non-Employee
Directors
10.2* Employment Agreement between American Savings Bank of Danville and
Merrill G. Norton
23.1 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (Included in
Exhibits 5.0 and 8.1, respectively)
23.2 Consent of Geo. Olive & Co. LLC
23.3 Consent of RP Financial, Inc.
24.0* Power of Attorney (included in Signature Page of this Registration
Statement)
99.1 Appraisal Report of RP Financial, L.C., dated November 15, 1996
99.2 Subscription Order Form and Instructions
99.3 Return Request Card
99.4 Transmittal Letters
99.5 Question and Answer Brochure
99.6 Proxygram
99.7 Proxy Statement and Form of Proxy
* Previously filed
4
<PAGE>
(b) Financial Statement Schedules
All schedules have been omitted as not applicable or not required under the
rules of Regulation S-X.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of the
securities offered would not exceed that which was registered) and any
deviation from the low or high and the estimated maximum offering range may
be reflected in the form of Prospectus filed with the Commission pursuant
to Rule 424 (b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the Offering.
The undersigned Registrant hereby undertakes to furnish stock
certificates to or in accordance with the instructions of the respective
purchasers of the Common Stock, so as to make delivery to each purchaser
promptly following the closing under the Plan of Conversion.
5
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
VERMILION BANCORP, INC.
By: ---------------------------------
Merrill G. Norton
President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below hereby makes, constitutes and appoints Merrill G. Norton his true and
lawful attorney with full power to sign for such person and in such person's
name and capacity indicated below, and with full power of substitution, any
and all amendments to this registration statement, hereby ratifying and
confirming such person's signature as it may be signed by said attorney to
any and an all amendments.
Name Title Date
- ---- ----- ----
- ----------------- President and Chief Executive January 16, 1997
Merrill G. Norton Officer an Director
- ----------------- Chairman of the Board January 16, 1997
Thomas B. Meyer
- ----------------- Director January 16, 1997
Carl W. Busby
<PAGE>
- ----------------- Director January 16, 1997
Robert L. Ewbank
- ----------------- Director January 16, 1997
William T. Ingram
- ----------------- President and Chief Executive January 16, 1997
Merrill G. Norton Officer (principal financial
accounting officer)
<PAGE>
As filed with the Securities and Exchange Commission on January 23, 1997
Registration No.333-17227
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
AMENDMENT NO. 1 ON FORM SB-2 TO THE
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VOLUME II
(EXHIBITS)
------------
VERMILION BANCORP, INC.
(Exact name of registrant as specified in its articles of incorporation)
------------
Delaware 6711 37-1363755
-------- ---- ----------
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Code Number)
organization)
------------
714 North Vermilion Street
Danville, Illinois 61832
(217) 442-0270
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
------------
Merrill G. Norton
President and Chief Executive Officer
Vermilion Bancorp, Inc.
714 North Vermilion Street
Danville, Illinois 61832
(217) 442-0270
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
John P. Soukenik, Esq.
Stephen M. Ege, Esq.
Elias, Matz, Tiernan & Herrick L.L.P.
734 15th Street, N.W.
12th Floor
Washington, D.C. 20005
<PAGE>
VERMILION BANCORP, INC.
255,000 TO 345,000 SHARES
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
$10.00 PER SHARE
SALES AGENCY AGREEMENT
----------------------
Trident Securities, Inc.
4601 Six Forks Road, Suite 400
Raleigh, North Carolina 27609
Dear Sirs:
Vermilion Bancorp, Inc., a Delaware corporation (the "Company"), and
American Savings Bank of Danville, an Illinois chartered and federally insured
mutual savings bank (the "Bank"), hereby confirm, as of __________, 1997, their
respective agreements with Trident Securities, Inc. ("Trident"), a broker-dealer
registered with the Securities and Exchange Commission ("Commission") and a
member of the National Association of Securities Dealers, Inc. ("NASD"), as
follows:
1. INTRODUCTORY. The Bank intends to convert from an Illinois chartered
mutual savings bank to an Illinois chartered stock savings bank as a wholly
owned subsidiary of the Company (together with the Offerings, as defined below,
the issuance of shares of common stock of the Bank to the Company and the
incorporation of the Company, the "Conversion") pursuant to a plan of conversion
adopted on November 6, 1996 (the "Plan"). In accordance with the Plan, the
Company is offering shares of its common stock, par value $.01 per share (the
"Shares" and the "Common Stock"), pursuant to nontransferable subscription
rights in a subscription offering (the "Subscription Offering") to certain
depositors of the Bank, the Bank's tax-qualified employee benefit plans (I.E.,
the Bank's Employee Stock Ownership Plan (the "ESOP")) and to employees,
officers and directors. Shares of the Common Stock not sold in the Subscription
Offering may be offered to the general public in a community offering (the
"Community Offering", and together with the Subscription Offering the
"Offerings"), subject to the right of the Company and the Bank, in their
absolute discretion, to reject orders in the Community Offering in whole or in
part. It is anticipated that shares of the Common Stock not otherwise
subscribed for in the Subscription and Community Offerings may be offered at the
discretion of the Company to certain members of the general public as part of a
community offering on a best efforts basis by a selling group of selected
broker-dealers to be managed by Trident Securities, Inc. (the "Syndicated
Community Offering"). In the Offerings, the Company is offering between 255,000
and 345,000 shares, with the possibility of offering up to 396,750 Shares
without a resolicitation of subscribers. No Eligible
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 2
Account Holder or Other Member may purchase in their capacity as such more
than $50,000 of Common Stock in the Subscription Offering. No individual
person or other entity, together with associates of and persons acting in
concert with such person, may purchase in the Community Offering and the
Syndicated Community Offering more than $50,000 of Common Stock. No person,
individually or together with associates of and persons acting in concert
with such person, may purchase more than $150,000 of Common Stock in the
Conversion.
The Company and the Bank have been advised by Trident that it will utilize
its best efforts in assisting the Company and the Bank with the sale of the
Shares in the Offerings and, if deemed necessary by the Company, in a syndicated
community offering. Prior to the execution of this Agreement, the Company has
delivered to Trident the Prospectus dated __________, 1997 (as hereinafter
defined) and all supplements thereto to be used in the Offerings. Such
Prospectus contains information with respect to the Company, the Bank and the
Shares.
2. REPRESENTATIONS AND WARRANTIES.
(a) The Company and the Bank jointly and severally represent and
warrant to Trident that:
(i) The Company has filed with the Commission a registration
statement, including exhibits and an amendment or amendments thereto,
on Form SB-2 (No. 333-____), including a Prospectus relating to the
Offerings, for the registration of the Shares under the Securities Act
of 1933, as amended (the "Act"); and such registration statement has
become effective under the Act and no stop order has been issued with
respect thereto and no proceedings therefor have been initiated or, to
the Company's best knowledge, threatened by the Commission. Except as
the context may otherwise require, such registration statement, as
amended or supplemented, on file with the Commission at the time the
registration statement became effective, including the Prospectus,
financial statements, schedules, exhibits and all other documents
filed as part thereof, as amended and supplemented, is herein called
the "Registration Statement," and the prospectus, as amended or
supplemented, on file with the Commission at the time the Registration
Statement became effective is herein called the "Prospectus," except
that if the prospectus filed by the Company with the Commission
pursuant to Rule 424(b) of the general rules and regulations of the
Commission under the Act (together with the enforceable published
policies and actions of the Commission thereunder, the "SEC
Regulations") differs from the form of prospectus on file at the time
the Registration Statement became effective, the term "Prospectus"
shall refer to the Rule 424(b) prospectus from and after the time it
is filed with or mailed for filing to the Commission and shall include
any amendments or supplements thereto from and after their dates of
effectiveness or use,
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 3
respectively. If any Shares remain unsubscribed following
completion of the Subscription Offering and the Community Offering, the
Company (i) will, if required by the SEC Regulations, promptly file
with the Commission a post-effective amendment to such Registration
Statement relating to the results of the Subscription and the Community
Offerings, any additional information with respect to the proposed
plan of distribution and any revised pricing information or (ii) if no
such post-effective amendment is required, will file with, or mail for
filing to, the Commission a prospectus or prospectus supplement
containing information relating to the results of the Subscription and
Community Offerings and pricing information pursuant to Rule 424(c) of
the Regulations, in either case in a form reasonably acceptable to the
Company and Trident.
(ii) The Bank has filed an Application for Approval of Conversion
including exhibits (as amended or supplemented, the "Conversion
Application" with the Illinois Commissioner of Banks and Real Estate
(the "Commissioner") under the Illinois Savings Bank Act and the rules
and regulations promulgated thereunder, which has been approved by the
Commissioner; and the Prospectus and the proxy statement for the
solicitation of proxies from members for the special meeting to
approve the Plan (the "Proxy Statement") included as part of the
Conversion Application have been approved for use by the Commissioner.
No order has been issued by the Commissioner preventing or suspending
the use of the Prospectus or the Proxy Statement; and no action by or
before the Commissioner revoking such approvals is, to the Bank's best
knowledge, pending or threatened.
(iii) The Company has filed with the Board of Governors of
the Federal Reserve System (the "FRB") an application on Form FRY-3
(the "FRY-3") under the Bank Holding Company Act and the regulations
promulgated thereunder and has received approval of its acquisition of
the Bank from the FRB.
(iv) The Bank has filed a Notice of Intent to Convert (as amended
or supplemented, the "Notice") with the Federal Deposit Insurance
Corporation (the "FDIC"). The FDIC has indicated its non-objection to
the Notice and the FDIC has not taken any action to revoke, alter or
rescind the basis of its order of non-objection to the Notice.
(v) At the date of the Prospectus and at all times subsequent
thereto through and including the Closing Date (i) the Registration
Statement and the Prospectus (as amended or supplemented, if amended
or supplemented) complied with the Act and the SEC Regulations, (ii)
the Registration Statement (as amended or supplemented, if amended or
supplemented) did not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 4
they were made, not misleading, (iii) the Prospectus (as amended
or supplemented, if amended or supplemented) did not contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading, (iv) the FRY-3 was complete and did
not contain an untrue statement or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
with leading, (v) the Notice was complete and did not contain an
untrue statement or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made not misleading, and
(vi) the Conversion Application was complete and did not contain an
untrue statement or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
Representations or warranties in this subsection shall not apply to
statements or omissions made in reliance upon and in conformity with
written information furnished to the Company or the Bank relating to
Trident by or on behalf of Trident expressly for use in the
Registration Statement or Prospectus.
(vi) The Company has been duly incorporated as a Delaware
corporation and the Bank has been duly organized as a mutual savings
and loan association under the laws of the United States, and each of
them is validly existing and in good standing under the laws of the
jurisdiction of its organization with full power and authority to own
its property and conduct its business as described in the Registration
Statement and Prospectus; the Bank is a member in good standing of the
Federal Home Loan Bank of Chicago; and the deposit accounts of the
Bank are insured by the Federal Deposit Insurance Corporation
("FDIC") up to the applicable legal limits. The Company is qualified
to do business as a foreign corporation in the state of Illinois.
Except as noted above, neither the Company nor the Bank is required to
be qualified to do business as a foreign corporation in any
jurisdiction where non-qualification would have a material adverse
effect on the operations of the Company and the Bank, taken as a
whole. The Bank does not own equity securities of or an equity
interest in any business enterprise other than the Company. Upon
amendment of the Bank's charter and bylaws to read in the form of an
Illinois stock charter as provided in the Savings Bank Act and the
rules and regulations promulgated thereunder and completion of the
sale by the Company of the Shares as contemplated by the Prospectus,
(i) the Bank will be converted pursuant to the Plan to an Illinois
chartered capital stock savings bank with full power and authority to
own its property and conduct its business as described in the
Prospectus, (ii) all of the authorized and outstanding capital stock
of the Bank will be owned of record and beneficially by the Company,
and (iii) the Company will have no direct subsidiaries other than the
Bank.
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 5
(vii) The Bank has good and marketable title to all assets
material to its business and to those assets described in the
Prospectus as owned by it, free and clear of all material liens,
charges, encumbrances or restrictions, except for liens for taxes not
yet due, except as described in the Prospectus and except as could not
in the aggregate have a material adverse effect upon the operations or
financial condition of the Company and the Bank taken as a whole; and
all of the leases and subleases material to the operations or
financial condition of the Bank, under which it holds properties,
including those described in the Prospectus, are in full force and
effect as described therein.
(viii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary actions on the part of each of
the Company and the Bank, and this Agreement is a valid and binding
obligation with valid execution and delivery by each of the Company
and the Bank, enforceable in accordance with its terms (except as the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws relating to or affecting
the enforcement of creditors' rights generally or the rights of
creditors of savings and loan holding companies the accounts of whose
subsidiaries are insured by the FDIC or by general equity principles,
regardless of whether such enforceability is considered in a
proceeding in equity or at law, and except to the extent that the
provisions of Sections 8 and 9 hereof may be unenforceable as against
public policy or pursuant to Section 23A of the Federal Reserve Act,
12 U.S.C. Section 371c ("Section 23A")).
(ix) There is no litigation or governmental proceeding pending
or, to the best knowledge of the Company or the Bank, threatened
against or involving the Company, the Bank or any of their respective
assets which individually or in the aggregate would reasonably be
expected to have a material adverse effect on the condition (financial
or otherwise), results of operations and business, including the
assets and properties, of the Company and the Bank, taken as a whole.
(x) The Company and the Bank have received the opinion of Luse
Lehman Gorman Pomerenk & Schick, P.C. to the effect that the
Conversion will constitute a tax-free reorganization under the
Internal Revenue Code of 1986, as amended, and the opinion of
__________ to the effect that the Conversion will not be a taxable
transaction for the Company or the Bank under the income tax laws of
Illinois. The facts relied upon in such opinions are accurate and
complete.
(xi) Each of the Company and the Bank has all such corporate
power, authority, authorizations, approvals and orders as may be
required to enter into this Agreement and to carry out the provisions
and conditions hereof, subject to the
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 6
limitations set forth herein and subject to the satisfaction
of certain conditions imposed by the (i) Commissioner in connection
with its approval Conversion Application, (ii) FDIC in connection with
its non-objection to the Notice, and (iii) FRB in connection with its
approval of the FRY-3, and except as may be required under the
securities, or "blue sky," laws of various jurisdictions, and
in the case of the Company, as of the Closing Date, will, to the
actual knowledge of the Bank, have such approvals and orders to
issue and sell the Shares to be sold by the Company as provided herein,
and in the case of the Bank, as of the Closing Date, will, to the
knowledge of the Company, have such approvals and orders to issue
and sell the Shares of its Common Stock to be sold to the Company as
provided in the Plan, subject to the issuance of an amended charter in
the form required for federally chartered stock savings and
loan associations (the "Stock Charter"), the form of which Stock
Charter has been approved by the Commissioner.
(xii) Neither the Company nor the Bank is in violation of any
rule or regulation of the FRB, Commissioner or the FDIC that could
reasonably be expected to result in any enforcement action against the
Company, the Bank or their officers or directors that could reasonably
be expected to have a material adverse effect on the condition
(financial or otherwise), operations, businesses, assets or properties
of the Company and the Bank, taken as a whole.
(xiii) The financial statements and any related notes or
schedules which are included in the Registration Statement and the
Prospectus fairly present the financial condition, income, retained
earnings and cash flows of the Bank at the respective dates thereof
and for the respective periods covered thereby and comply as to form
with the applicable accounting requirements of the SEC Regulations and
the applicable accounting regulations of the Commissioner and FDIC.
Such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved, except as set forth therein, and such
financial statements are consistent with financial statements and
other reports filed by the Bank with supervisory and regulatory
authorities except as such generally accepted accounting principles
may otherwise require. The tables in the Prospectus accurately
present the information purported to be shown thereby at the
respective dates thereof and for the respective periods therein.
(xiv) There has been no material change in the condition
(financial or otherwise), results of operations or business, including
assets and properties, of the Company and the Bank, taken as a whole,
since the latest date as of which such condition is set forth in the
Prospectus, except as set forth therein; and the capitalization,
assets, properties and business of each of the Company and the Bank
conform in all material respects to the descriptions thereof contained
in the
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 7
Prospectus. Neither the Company nor the Bank has any material
liabilities of any kind, contingent or otherwise, except as set forth
in the Prospectus.
(xv) There has been no breach or default (or the occurrence of
any event which, with notice or lapse of time or both, would
constitute a default) under, or creation or imposition of any lien,
charge or other encumbrance upon any of the properties or assets of
the Company or the Bank pursuant to any of the terms, provisions or
conditions of, any agreement, contract, indenture, bond, debenture,
note, instrument or obligation to which the Company or the Bank is a
party or by which any of them or any of their respective assets or
properties may be bound or is subject, or violation of any
governmental license or permit or any enforceable published law,
administrative regulation or order or court order, writ, injunction or
decree, which breach, default, encumbrance or violation would have a
material adverse effect on the condition (financial or otherwise),
operations, business, assets or properties of the Company and the Bank
taken as a whole; all agreements which are material to the condition
(financial or otherwise), results of operations or business of the
Company and the Bank taken as a whole are in full force and effect,
and no party to any such agreement has instituted or, to the best
knowledge of the Company and the Bank, threatened any action or
proceeding wherein the Company or the Bank would be alleged to be in
default thereunder.
(xvi) Neither the Company nor the Bank is in violation of its
respective certificate of incorporation, charter or bylaws. The
execution and delivery hereof and the consummation of the transactions
contemplated hereby by the Company and the Bank do not conflict with
or result in a breach of the certificate of incorporation, charter or
bylaws of the Company or the Bank (in either mutual or stock form) or
constitute a material breach of or default (or an event which, with
notice or lapse of time or both, would constitute a default) under,
give rise to any right of termination, cancellation or acceleration
contained in, or result in the creation or imposition of any lien,
charge or other encumbrance upon any of the properties or assets of
the Company or the Bank pursuant to any of the terms, provisions or
conditions of, any material agreement, contract, indenture, bond,
debenture, note, instrument or obligation to which the Company or the
Bank is a party or violate any governmental license or permit or any
enforceable published law, administrative regulation or order or court
order, writ, injunction or decree (subject to the satisfaction of
certain conditions imposed by the Commissioner in connection with its
approval of the Conversion Application, the FDIC non-objection to the
Notice and the FRB approval of the FRY-3), which breach, default,
encumbrance or violation would have a material adverse effect on the
condition (financial or otherwise), operations or business of the
Company and the Bank taken as a whole.
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 8
(xvii) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus and
prior to the Closing Date (as hereinafter defined), except as
otherwise may be indicated or contemplated therein, neither the
Company nor the Bank has issued any securities which will remain
issued at the Closing Date or incurred any liability or obligation,
direct or contingent, or borrowed money, except liabilities,
obligations or borrowings in the ordinary course of business, or
entered into any other transaction not in the ordinary course of
business and consistent with prior practices, which is material in
light of the business of the Company and the Bank, taken as a whole.
(xviii) Upon consummation of the Conversion, the authorized,
issued and outstanding equity capital of the Company shall be within
the range as set forth in the Prospectus under the caption
"Capitalization," and no Common Stock of the Company shall be
outstanding immediately prior to the Closing Date; the issuance and
the sale of the Shares of the Company have been duly authorized by all
necessary action of the Company and approved by the Commissioner and
consistent with the FDIC's non-objection to the Notice, and, when
issued in accordance with the terms of the Plan and paid for, shall be
validly issued, fully paid and nonassessable and shall conform to the
description thereof contained in the Prospectus; the issuance of the
Shares is not subject to preemptive rights, except as set forth in the
Prospectus; and purchasers of the Shares from the Company, upon
issuance thereof against payment therefor, will acquire such Shares
free and clear of all claims, encumbrances, security interests and
liens against the Company whatsoever. The certificates representing
the Shares will conform in all material respects with the requirements
of applicable laws and regulations. The issuance and sale of the
capital stock of the Bank to the Company has been duly authorized by
all necessary action of the Bank and the Company and appropriate
regulatory authorities (subject to the satisfaction of various
conditions imposed by the (i) Commissioner in connection with its
approval of the Conversion Application, (ii) the FDIC in connection
with its non-objection to the Notice, and (iii) FRB in connection with
its approval of the FRY-3), and such capital stock, when issued in
accordance with the terms of the Plan, will be fully paid and
nonassessable and will conform in all material respects to the
description thereof contained in the Prospectus.
(xix) No approval of any regulatory or supervisory or other
public authority is required in connection with the execution and
delivery of this Agreement or the issuance of the Shares, except for
the declaration of effectiveness of any required post-effective
amendment by the Commission and approval thereof by the Commissioner
and approval of the Company's application on FRY-3 by the FRB, the
issuance of the Stock Charter by the Office and as may be required
under the securities laws of various jurisdictions.
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 9
(xx) All contracts and other documents required to be filed as
exhibits to the Registration Statement or the Conversion Application,
the FRY-3 and the Notice have been filed with the Commission, the
Commissioner, the FRB and the FDIC, as the case may be.
(xxi) Geo. Olive & Co. Inc. which has audited the financial
statements of the Bank at September 30, 1996 and 1995 and for the
years ended September 30, 1996, 1995 and 1996 included in the
Prospectus, is an independent public accountant within the meaning of
the Code of Professional Ethics of the American Institute of Certified
Public Accountants and Title 12 of the Code of Federal Regulations.
(xxii) The Company and the Bank have timely filed all required
federal, state and local franchise tax returns, and no deficiency has
been asserted with respect to such returns by any taxing authorities,
and the Company and the Bank have paid all taxes that have become due
and, to the best of their knowledge, have made adequate reserves for
similar future tax liabilities, except where any failure to make such
filings, payments and reserves, or the assertion of such a deficiency,
would not have a material adverse effect on the condition of the
Company and the Bank, taken as a whole or in the case of taxes which
the Bank is contesting in good faith.
(xxiii) All of the loans represented as assets of the Bank on
the most recent financial statements of the Bank included in the
Prospectus meet or are exempt from all requirements of federal, state
or local law pertaining to lending, including without limitation truth
in lending (including the requirements of Regulation Z and 12 C.F.R.
Part 226 and Section 563.99), real estate settlement procedures,
consumer credit protection, equal credit opportunity and all
disclosure laws applicable to such loans, except for violations which,
if asserted, would not have a material adverse effect on the Company
and the Bank, taken as a whole.
(xxiv) The records of account holders, depositors, borrowers
and other members of the Bank delivered to Trident by the Bank or its
agent for use during the Conversion have been prepared or reviewed by
the Bank and, to the best knowledge of the Company and the Bank, are
reliable and accurate.
(xxv) None of the Company, the Bank or the employees of the
Company or the Bank, has made any payment of funds to the Company or
the Bank prohibited by law, and no funds of the Company or the Bank
have been set aside to be used for any payment prohibited by law.
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 10
(xxvi) There are no actions, suits, regulatory investigations
or other proceedings pending or, to the best knowledge of the Company
or the Bank, threatened against the Company or the Bank relating to
environmental protection. To the best knowledge of the Company and
the Bank, no disposal, release or discharge of hazardous or toxic
substances, pollutants or contaminants, including petroleum and gas
products, as any of such terms may be defined under federal, state or
local law, has been caused by the Company or the Bank or, to the best
knowledge of the Company or the Bank, has occurred on, in or at any of
the facilities or properties of the Company or the Bank, except such
disposal, release or discharge which would not have a material adverse
effect on the Company or the Bank, taken as a whole.
(xxvii) At the Closing Date, the Company and the Bank will have
completed the conditions precedent to, and shall have conducted the
Conversion in all material respects in accordance with, the Plan, the
Savings Bank Act and regulations promulgated thereunder and all other
applicable laws, regulations, published decisions and orders,
including all terms, conditions, requirements and provisions precedent
to the Conversion imposed by the Commissioner.
(b) Trident represents and warrants to the Company and the Bank that:
(i) Trident is registered as a broker-dealer with the
Commission, and is in good standing with the Commission and the NASD.
(ii) Trident is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, with
full corporate power and authority to provide the services to be
furnished to the Company and the Bank hereunder.
(iii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary action on the part of Trident,
and this Agreement is a legal, valid and binding obligation of
Trident, enforceable in accordance with its terms (except as the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, reorganization or similar laws relating to or affecting
the enforcement of creditors' rights generally or the rights of
creditors of registered broker-dealers accounts of whose may be
protected by the Securities Investor Protection Corporation or by
general equity principles, regardless of whether such enforceability
is considered in a proceeding in equity or at law, and except to the
extent that the provisions of Sections 8 and 9 hereof may be
unenforceable as against public policy or pursuant to Section 23A).
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 11
(iv) Each of Trident and, to Trident's knowledge, its employees,
agents and representatives who shall perform any of the services
required hereunder to be performed by Trident shall be duly authorized
and shall have all licenses, approvals and permits necessary to
perform such services, and Trident is a registered selling agent in
the jurisdictions listed in Exhibit A hereto and will remain
registered in such jurisdictions in which the Company is relying on
such registration for the sale of the Shares, until the Conversion is
consummated or terminated.
(v) The execution and delivery of this Agreement by Trident, the
fulfillment of the terms set forth herein and the consummation of the
transactions contemplated hereby shall not violate or conflict with
the corporate charter or bylaws of Trident or violate, conflict with
or constitute a breach of, or default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, any
material agreement, indenture or other instrument by which Trident is
bound or under any governmental license or permit or any law,
administrative regulation, authorization, approval or order or court
decree, injunction or order.
(vi) Any funds received by Trident to purchase Common Stock will
be handled in accordance with Rule 15c2-4 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(vii) There is not now pending or, to Trident's knowledge,
threatened against Trident any action or proceeding before the
Commission, the NASD, any state securities commission or any state or
federal court concerning Trident's activities as a broker-dealer.
3. EMPLOYMENT OF TRIDENT; SALE AND DELIVERY OF THE SHARES. On the basis
of the representations and warranties herein contained, but subject to the terms
and conditions herein set forth, the Company and the Bank hereby employ Trident
as their agent to utilize its best efforts in assisting the Company with the
Company's sale of the Shares in the Subscription Offering and Community
Offering. The employment of Trident hereunder shall terminate (a) forty-five
(45) days after the Offerings close, unless the Company and the Bank, with the
approval of the Commissioner, are permitted to extend such period of time, or
(b) upon consummation of the Conversion, whichever date shall first occur.
In the event the Company is unable to sell a minimum of 255,000 Shares (or
such lesser amount as the Commissioner may permit) within the period herein
provided, this Agreement shall terminate, and the Company and the Bank shall
refund promptly to any persons who have subscribed for any of the Shares, the
full amount which it may have received from them, together with interest as
provided in the Prospectus, and no party to this Agreement shall have any
obligation to the other party hereunder, except as set forth in Sections 6, 8(a)
and 9 hereof. Appropriate arrangements for placing the funds received from
subscriptions for Shares in special
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 12
interest-bearing accounts with the Bank until all Shares are sold and paid
for were made prior to the commencement of the Subscription Offering, with
provision for prompt refund to the purchasers as set forth above, or for
delivery to the Company if all Shares are sold.
If all conditions precedent to the consummation of the Conversion are
satisfied, including the sale of all Shares required by the Plan to be sold, the
Company agrees to issue or have issued such Shares and to release for delivery
certificates to subscribers thereof for such Shares on the Closing Date against
payment to the Company by any means authorized pursuant to the Prospectus, at
the principal office of the Company at 714 North Vermilion Street, Danville,
Illinois 61832 or at such other place as shall be agreed upon between the
parties hereto. The date upon which Trident is paid the compensation due
hereunder is herein called the "Closing Date."
Trident agrees either (a) upon receipt of executed order forms of
subscribers to forward, for deposit in a segregated account, the offering price
of the Common Stock ordered on or before twelve noon on the next business day
following receipt or execution of an order form by Trident to the Bank or (b) to
solicit indications of interest in which event (i) Trident will subsequently
contact any potential subscriber indicating interest to confirm the interest and
give instructions to execute and return an order form or to receive
authorization to execute the order form on the subscriber's behalf, (ii) Trident
will mail acknowledgments of receipt of orders to each subscriber confirming
interest on the business day following such confirmation, (iii) Trident will
debit accounts of such subscribers on the third business day ("debit date")
following receipt of the confirmation referred to in (i), and (iv) Trident will
forward completed order forms together with such funds to the Bank on or before
twelve noon on the next business day following the debit date for deposit in a
segregated account. Trident acknowledges that if the procedure in (b) is
adopted, subscribers' funds are not required to be in their accounts until the
debit date.
In addition to the expenses specified in Section 6 hereof, Trident shall
receive the following compensation for its services hereunder:
(a) (i) a commission equal to 2.0% of the aggregate dollar amount of
stock sold to eligible account holders, supplemental eligible account
holders and other members who reside in the Bank's market area; (ii) a
commission equal to 1.5% on sales of common stock sold to eligible account
holders, supplemental eligible account holders and other members who reside
outside the Bank's market area; and (iii) a commission to be agreed upon by
Trident and the Company for Shares sold by other member firms of the NASD
through a selected dealers arrangement (the "Selected Dealer Offering").
All such fees are to be payable in next-day funds to Trident on the Closing
Date.
(b) Trident shall be reimbursed for allocable expenses, including but
not limited to travel, communications, legal fees and postage, incurred by
it whether or not the Offerings are successfully completed; provided,
however, that reimbursable legal fees will
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 13
not exceed $22,500 (excluding reasonable out of pocket expenses), that other
reimbursable expenses will not exceed $10,000 and that neither the Company
nor the Bank shall pay or reimburse Trident for any of the foregoing
expenses accrued after Trident shall have notified the Company or the Bank
of its election to terminate this Agreement pursuant to Section 11 hereof
or after such time as the Company or the Bank shall have given notice in
accordance with Section 12 hereof that Trident is in breach of this
Agreement. Full payment to defray Trident's reimbursable expenses shall be
made in next-day funds on the Closing Date or, if the Conversion is not
completed and is terminated for any reason, within ten (10) business days of
receipt by the Company of a written request from Trident for reimbursement
of its expenses. Trident acknowledges receipt of $10,000 advance payment
from the Bank which shall be credited against the total reimbursement due
Trident hereunder.
(c) Notwithstanding the limitations on reimbursement of Trident for
allocable expenses provided in the immediately preceding paragraph (b), in
the event that a resolicitation or other event causes the Offerings to be
extended beyond their original expiration date, Trident shall be reimbursed
for its reasonable allocable expenses incurred during such extended period,
provided that the allowance for allocable expenses provided for in the
immediately preceding paragraph (b) above have been exhausted and subject
to the following. Such reimbursement shall not exceed an amount equal to
the product obtained by dividing $10,000 (original out-of-pocket expenses)
by the total number of days of the unextended Subscription Offering
(calculated from the date of the Prospectus to the intended close of the
Subscription Offering as stated in the Prospectus) and multiplying such
product by the number of days of the extension (that number of days from
the date of the supplemental prospectus used in the extended Subscription
Offering to the closing of the extension of the Subscription Offering
described in such supplemental prospectus).
The Company shall pay any stock issue and transfer taxes which may be
payable with respect to the sale of the Shares. The Company and the Bank shall
also pay all reasonable expenses of the Conversion incurred by them or on their
prior approval including but not limited to their attorneys' fees, NASD filing
fees, and attorneys' fees relating to any required state securities laws
research and filings, telephone charges, air freight, rental equipment,
supplies, transfer agent charges, fees relating to auditing and accounting and
costs of printing all documents necessary in connection with the Conversion.
4. OFFERING. Subject to the provisions of Section 7 hereof, Trident is
assisting the Company on a best efforts basis in offering a minimum of 255,000
and a maximum of 345,000 Shares, with the possibility of offering up to 396,750
Shares (except as the Office may permit to be decreased or increased) in the
Subscription and Community Offerings. The Shares are to be offered to the
public at the price set forth on the cover page of the Prospectus and the first
page of this Agreement.
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 14
5. FURTHER AGREEMENTS. The Company and the Bank jointly and severally
covenant and agree that:
(a) The Company shall deliver to Trident, from time to time, such
number of copies of the Prospectus as Trident reasonably may request. The
Company authorizes Trident to use the Prospectus in any lawful manner in
connection with the offer and sale of the Shares.
(b) The Company will notify Trident immediately upon discovery, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement becomes effective or any supplement to the
Prospectus has been filed, (ii) of the issuance by the Commission of any
stop order relating to the Registration Statement or of the initiation or
the threat of any proceedings for that purpose, (iii) of the receipt of any
notice with respect to the suspension of the qualification of the Shares
for offering or sale in any jurisdiction, and (iv) of the receipt of any
comments (other than those of a non-substantive nature) from the staff of
the Commission relating to the Registration Statement. If the Commission
enters a stop order relating to the Registration Statement at any time, the
Company will make every reasonable effort to obtain the lifting of such
order at the earliest possible moment.
(c) During the time when a prospectus is required to be delivered
under the Act, the Company will comply so far as it is able with all
requirements imposed upon it by the Act, as now in effect and hereafter
amended, and by the SEC Regulations, as from time to time in force, so far
as necessary to permit the continuance of offers and sales of or dealings
in the Shares in accordance with the provisions hereof and the Prospectus.
If during the period when the Prospectus is required to be delivered in
connection with the offer and sale of the Shares any event relating to or
affecting the Company and the Bank, taken as a whole, shall occur as a
result of which it is necessary, in the opinion of counsel for Trident,
with the concurrence of counsel to the Company, to amend or supplement the
Prospectus in order to make the Prospectus not false or misleading in light
of the circumstances existing at the time it is delivered to a purchaser of
the Shares, the Company forthwith shall prepare and furnish to Trident a
reasonable number of copies of an amendment or amendments or of a
supplement or supplements to the Prospectus (in form and substance
satisfactory to counsel for Trident) which shall amend or supplement the
Prospectus so that, as amended or supplemented, the Prospectus shall not
contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances existing at the time the Prospectus is delivered to a
purchaser of the Shares, not misleading. The Company will not file or use
any amendment or supplement to the Registration Statement or the Prospectus
of which Trident has not first been furnished a copy or to which Trident
shall reasonably object after having been furnished such copy. For the
purposes of this subsection the Company and
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 15
the Bank shall furnish such information with respect to themselves as
Trident from time to time may reasonably request.
(d) The Company and the Bank have taken or will take all reasonably
necessary action as may be required to qualify or register the Shares for
offer and sale by the Company under the securities or blue sky laws of such
jurisdictions as Trident and the Company may agree upon; provided, however,
that the Company shall not be obligated to qualify as a foreign corporation
to do business under the laws of any such jurisdiction. In each
jurisdiction where such qualification or registration shall be effected,
the Company, unless Trident agrees that such action is not necessary or
advisable in connection with the distribution of the Shares, shall file and
make such statements or reports as are, or reasonably may be, required by
the laws of such jurisdiction.
(e) Appropriate entries will be made in the financial records of the
Bank sufficient to establish a liquidation account for the benefit of
eligible account holders in accordance with the requirements of the Office.
(f) The Company will file a registration statement for the Common
Stock under Section 12(g) of the Exchange Act, prior to completion of the
stock offering pursuant to the Plan and shall request that such
registration statement be effective upon completion of the Conversion. The
Company shall maintain the effectiveness of such registration for a minimum
period of three years or for such shorter period as may be required by
applicable law.
(g) The Company will make generally available to its security holders
as soon as practicable, but not later than 90 days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 of the regulations promulgated under the Act)
covering a twelve-month period beginning not later than the first day of
the Company's fiscal quarter next following the effective date (as defined
in said Rule 158) of the Registration Statement.
(h) For a period of three (3) years from the date of this Agreement
(unless the Common Stock shall have been deregistered under the Exchange
Act), the Company will furnish to Trident, as soon as publicly available
after the end of each fiscal year, a copy of its annual report to
shareholders for such year; and the Company will furnish to Trident (i) as
soon as publicly available, a copy of each report or definitive proxy
statement of the Company filed with the Commission under the Exchange Act
or mailed to shareholders, and (ii) from time to time, such other public
information concerning the Company as Trident may reasonably request.
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 16
(i) The Company shall use the net proceeds from the sale of the
Shares consistently with the manner set forth in the Prospectus.
(j) The Company shall not deliver the Shares until each and every
condition set forth in Section 7 hereof has been satisfied, unless such
condition is waived by Trident.
(k) The Company shall advise Trident, if necessary, as to the
allocation of deposits, in the case of eligible account holders and votes,
in the case of other members, and of the Shares in the event of an
oversubscription and shall provide Trident final instructions as to the
allocation of the Shares ("Allocation Instructions") in such event and such
information shall be accurate and reliable. Trident shall be entitled to
rely on such instructions and shall have no liability in respect of its
reliance thereon, including without limitation, no liability for or related
to any denial or grant of a subscription in whole or in part.
(l) The Company and the Bank will take such actions and furnish such
information as are reasonably requested by Trident in order for Trident to
ensure compliance with the NASD's "Interpretation Relating to Free-Riding
and Withholding."
6. PAYMENT OF EXPENSES. Whether or not the Conversion is consummated,
the Company and the Bank shall pay or reimburse Trident for (a) all filing fees
paid or incurred by Trident in connection with all filings with the NASD with
respect to the Subscription and Community Offerings and, (b) if the Company is
unable to sell a minimum of 255,000 Shares or such lesser amount as the FDIC and
Commissioner may permit or the Conversion is otherwise terminated, the Company
and the Bank shall reimburse Trident for allocable expenses incurred by Trident
relating to the offering of the Shares as provided in Section 3 hereof;
provided, however, that neither the Company nor the Bank shall pay or reimburse
Trident for any of the foregoing expenses accrued after Trident shall have
notified the Company or the Bank of its election to terminate this Agreement
pursuant to Section 11 hereof or after such time as the Company or the Bank
shall have given notice in accordance with Section 12 hereof that Trident is in
breach of this Agreement.
7. CONDITIONS OF TRIDENT'S OBLIGATIONS. Except as may be waived by
Trident, the obligations of Trident as provided herein shall be subject to the
accuracy of the representations and warranties contained in Section 2 hereof as
of the date hereof and as of the Closing Date, to the performance by the Company
and the Bank of their obligations hereunder and to the following conditions:
(a) At the Closing Date, Trident shall receive the favorable opinion
of Elias Matz Tiernan & Herrick, L.L.P., special counsel for the Company
and the Bank, dated
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 17
the Closing Date, addressed to Trident, in form and substance reasonably
satisfactory to counsel for Trident and to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, and the Bank is validly existing as a
savings and loan Bank in mutual form in good standing under the laws
of the State of Illinois, each with full corporate power and authority
to own its properties and conduct its business as described in the
Prospectus;
(ii) the Bank is a member of the Federal Home Loan Bank of
Chicago, and the deposit accounts of the Bank are insured by the FDIC
up to the applicable legal limits;
(iii) to the knowledge of such counsel, the activities of the
Bank as such activities are described in the prospectus are permitted
under federal and Delaware law to subsidiaries of a Delaware business
corporation and the Bank does not have any subsidiaries;
(iv) the Plan complies with, and to such counsel's knowledge, the
Conversion has been effected in all material respects in accordance
with, the Savings Bank Act and the regulations promulgated thereunder,
the FDIC regulations governing conversions by state chartered savings
banks and the Bank Holding Company Act; to such counsel's knowledge,
all of the terms, conditions, requirements and provisions with respect
to the Plan and the Conversion imposed by the Commissioner, FDIC and
FRB, except with respect to the filing or submission of certain
required post-Conversion reports or other materials by the Company or
the Bank, have been complied with by the Company and the Bank; and, to
the knowledge of such counsel, no person has sought to obtain
regulatory or judicial review of the final action of the Commissioner,
FDIC and FRB in approving the Plan;
(v) the Company has authorized Common Stock as set forth in the
Registration Statement and the Prospectus, and the description of such
Common Stock in the Registration Statement and the Prospectus is
accurate in all material respects;
(vi) the issuance and sale of the Shares have been duly and
validly authorized by all necessary corporate action on the part of
the Company; the Shares, upon receipt of payment and issuance in
accordance with the terms of the Plan and this Agreement, will be
validly issued, fully paid, nonassessable and free of preemptive
rights, and purchasers of the Shares from the Company, upon
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 18
issuance thereof against payment therefor, will acquire such Shares
free and clear of all claims, encumbrances, security interests and
liens created by the Company;
(vii) the form of certificate used to evidence the Shares is
in proper form and complies in all material respects with applicable
Delaware law;
(viii) the issuance and sale of the capital stock of the Bank
to the Company have been duly authorized by all necessary corporate
action of the Bank and the Company and have received the approval of
the Commissioner, and such capital stock, upon receipt of payment and
issuance in accordance with the terms of the Plan, will be validly
issued, fully paid and nonassessable and owned of record and, to the
knowledge of such counsel, beneficially by the Company;
(ix) subject to the satisfaction of the conditions to the
Commissioner's approval of the Conversion Application, no further
approval, authorization, consent or other order of any public board or
body is required in connection with the execution and delivery of this
Agreement and the consummation of the Conversion, except with respect
to the issuance to the Bank of the Stock Charter by the Commission and
as may be required under the "blue sky" laws of various jurisdictions
and except as may be required under the rules and regulations of the
NASD;
(x) to the knowledge of such counsel, the Bank has obtained all
licenses, permits and other governmental authorizations currently
required for the conduct of its business as such business is described
in the Prospectus, all such licenses, permits and other governmental
authorizations are in full force and effect and the Bank is in all
material respects complying therewith, except where the failure to
hold such licenses, permits or governmental authorizations or the
failure to so comply would not have a material adverse effect on the
Company and the Bank, taken as a whole;
(xi) to the knowledge of such counsel, there are no material
legal or governmental proceedings pending or threatened against or
involving the assets of the Company or the Bank (provided that for
this purpose such counsel need not regard any litigation or
governmental procedure to be "threatened" unless the potential
litigant or government authority has manifested to the management of
the Company or the Bank, or to such counsel, a present intention to
initiate such litigation or proceeding);
(xii) to the knowledge of such counsel, the execution and
delivery of this Agreement and the consummation of the Conversion by
the Company and the Bank do not constitute a material breach of or
default (or an event which, with notice or
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 19
lapse of time or both, would constitute a default) under, give rise to
any right of termination, cancellation or acceleration contained in,
or result in the creation or imposition of any lien, charge or other
encumbrance upon any of the properties or assets of the Company or the
Bank pursuant to any of the terms, provisions or conditions of, any
material agreement, contract, indenture, bond, debenture, note,
instrument or obligation to which the Company or the Bank is a party
or violate any governmental license or permit or any enforceable
published law, administrative regulation or order or court order,
writ, injunction or decree (subject to the satisfaction of certain
conditions imposed by the (i) Commissioner in connection with its
approval of the Conversion Application, (ii) FDIC in connection with
its non-objection to the Notice and (iii) the FRB in connection with
its approval of the FRY-3), which breach, default, encumbrance or
violation would have a material adverse effect on the condition
(financial or otherwise), operations, business, assets or properties
of the Company and the Bank, taken as a whole; and
(xiii) to the knowledge of such counsel, there has been no
material breach of any provision of the Company's or the Bank's
certificate of incorporation, charter or bylaws or breach or default
(or the occurrence of any event which, with notice or lapse of time or
both, would constitute a default) under any agreement, contract,
indenture, bond, debenture, note, instrument or obligation to which
the Company or the Bank is a party or by which any of them or any of
their respective assets or properties may be bound, or any
governmental license or permit, or a violation of any enforceable
published law, administrative regulation or order, or court order,
writ, injunction or decree which breach, default, encumbrance or
violation would have a material adverse effect on the condition
(financial or otherwise), operations, business, assets or properties
of the Company and the Bank, taken as a whole;
(xiv) the execution and delivery of this Agreement and the
consummation of the Conversion have been duly and validly authorized
by all necessary corporate action on the part of each of the Company
and the Bank;
(xv) this Agreement is a legal, valid and binding obligation of
each of the Company and the Bank, enforceable in accordance with its
terms (except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization, receivership,
conservatorship or similar laws relating to or affecting the
enforcement of creditors' rights generally or the rights of creditors
of depository institutions whose accounts are insured by the FDIC or
savings and loan holding companies the accounts of whose subsidiaries
are insured by the FDIC or by general equity principles, regardless of
whether such enforceability is considered in a proceeding in equity or
at law, and except to the extent that the
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 20
provisions of Sections 8 and 9 hereof may be unenforceable as against
public policy or pursuant to Section 23A, as to which no opinion need
be rendered);
(xvi) the statements in the Prospectus and incorporated by
reference in the Proxy Statement under the captions "Regulation,"
"Dividends," "Restrictions on Acquisitions of Stock and Related
Takeover Defensive Provisions" and "Description of Capital Stock,"
insofar as they are, or refer to, statements of law or legal
conclusions (excluding financial data included therein, as to which an
opinion need not be expressed), have been prepared or reviewed by such
counsel and are correct in all material respects;
(xvii) the Conversion Application has been approved by the
Commissioner, and the Prospectus and the Proxy Statement have been
authorized for use by the Commissioner; the Registration Statement and
any post-effective amendment thereto has been declared effective by
the Commission, the FDIC has issued a non-objection to the Notice and
to the knowledge of such counsel, no proceedings are pending by or
before the Commission, the Commissioner or the FDIC seeking to revoke
or rescind the orders declaring the Registration Statement effective
or approving the Conversion Application or Notice, or, to the
knowledge of such counsel, are contemplated or threatened;
(xviii) the execution and delivery of this Agreement and the
consummation of the Conversion by the Company and the Bank do not
conflict with or result in a breach of the certificate of
incorporation, charter or bylaws of the Company or the Bank (in either
mutual or stock form); and
(xix) the Conversion Application, the Notice, the
Registration Statement, the Prospectus and the Proxy Statement, in
each case as amended, comply as to form in all material respects with
the requirements of the Act, the Bank Holding Company Act, the Savings
Bank Act, the SEC Regulations, the FDIC regulations governing
conversions and the Savings Bank Act Regulations, as the case may be
(except as to information with respect to Trident included therein and
financial statements, notes to financial statements, financial tables
and other financial and statistical data, including the appraisal,
included therein, as to which an opinion need not be expressed); to
such counsel's knowledge, all documents and exhibits required to be
filed with the Conversion Application and the Registration Statement
have been so filed and the descriptions in the Conversion Application
and the Registration Statement of such documents and exhibits are
accurate in all material respects.
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 21
In rendering such opinions, such counsel may rely as to matters of
fact on certificates of officers and directors of the Company, the Bank and
the Subsidiary and certificates of public officials delivered pursuant
hereto. Such counsel may assume that any agreement is the valid and
binding obligation of any parties to such agreement other than the Company
and the Bank. Such opinion may be governed by, and interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section
of Business Law (1991), and, as a consequence, such opinion is subject to
the qualifications, exceptions, definitions, limitations on coverage and
other limitations, all as more particularly described in the Accord, and it
should be read in conjunction therewith. In addition, the General
Qualifications set forth in the Accord apply to the opinions set forth in
such opinion. Such opinion may be limited to present statutes, regulations
and judicial interpretations and to facts as they presently exist; in
rendering such opinion, such counsel need assume no obligation to revise or
supplement it should the present laws be changed by legislative or
regulatory action, judicial decision or otherwise; and such counsel need
express no view, opinion or belief with respect to whether any proposed or
pending legislation, if enacted, or any regulations or any policy
statements issued by any regulatory agency, whether or not promulgated
pursuant to any such legislation, would affect the validity of the
execution and delivery by the Company and the Bank of this Agreement or the
issuance of the Shares. Further, in rendering such opinions, Elias Matz
Tiernan & Herrick. L.L.P. will opine solely as to matters of Federal
Securities and Banking law and Delaware law.
(c) At the Closing Date, Trident shall receive the letter of Elias
Matz Tiernan & Herrick, LLC, special counsel for the Company and the Bank,
dated the Closing Date, addressed to Trident, in form and substance
reasonably satisfactory to counsel for Trident and to the effect that:
based on such counsel's participation in conferences with representatives
of the Company, the Bank, its counsel, the independent appraiser, the
independent certified public accountants, Trident and its counsel, review
of documents and understanding of applicable law (including the
requirements of Form SB-2 and the character of the Registration Statement
contemplated thereby) and the experience such counsel has gained in its
practice under the Act, nothing has come to such counsel's attention that
would lead it to believe that the Registration Statement, as amended or
supplemented (except as to information in respect of Trident contained
therein and except as to the financial statements, notes to financial
statements, financial tables and other financial and statistical data
contained therein, as to which such counsel need express no comment), at
the time it became effective contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, or that the
Prospectus, as amended or supplemented (except as to information in respect
of Trident contained therein and except as to financial statements, notes
to financial statements, financial tables and other financial and
statistical data contained therein as to which such counsel need express no
comment), as of its date and at the
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 22
Closing Date, contained any untrue statement of a material fact or omitted
to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading (in making
this statement such counsel may state that it has not undertaken to verify
independently the information in the Registration Statement or Prospectus
and, therefore, does not assume any responsibility for the accuracy of
completeness or fairness thereof).
(d) Counsel for Trident shall have been furnished such documents as
they reasonably may require for the purpose of enabling them to review or
pass upon the matters required by Trident, and for the purpose of
evidencing the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained, including but
not limited to, resolutions of the Board of Directors of the Company and
the Bank regarding the authorization of this Agreement and the transactions
contemplated hereby.
(e) Prior to and at the Closing Date, in the reasonable opinion of
Trident, (i) there shall have been no material adverse change in the
condition, financial or otherwise, business or results of operations of the
Company and the Bank, taken as a whole, since the latest date as of which
such condition is set forth in the Prospectus, except as referred to
therein; (ii) there shall have been no transaction entered into by the
Company or the Bank after the latest date as of which the financial
condition of the Company and the Bank is set forth in the Prospectus other
than transactions referred to or contemplated therein, transactions in the
ordinary course of business, and transactions which are not materially
adverse to the Company and the Bank, taken as a whole; (iii) none of the
Company or the Bank shall have received from the Commissioner, FDIC or
Commission any direction (oral or written) to make any change in the method
of conducting their respective businesses which is material and adverse to
the business of the Company and the Bank, taken as a whole, with which they
have not complied; (iv) no action, suit or proceeding, at law or in equity
or before or by any federal or state commission, board or other
administrative agency, shall be pending or threatened against the Company
or the Bank or affecting any of their respective assets, wherein an
unfavorable decision, ruling or finding would have a material adverse
effect on the business, operations, financial condition or income of the
Company and the Bank, taken as a whole; and (v) the Shares shall have been
qualified or registered for offering and sale by the Company under the
securities or blue sky laws of such jurisdictions as Trident and the
Company shall have agreed upon.
(f) At the Closing Date, Trident shall receive a certificate of the
principal executive officer and the principal financial officer of each of
the Company and the Bank, dated the Closing Date, to the effect that: (i)
they have examined the Prospectus and, at the time the Prospectus became
authorized by the Company for use, the Prospectus did not contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 23
made, not misleading with respect to the Company or the Bank; (ii) since the
date the Prospectus became authorized by the Company for use, no event has
occurred which should have been set forth in an amendment or supplement to
the Prospectus which has not been so set forth, including specifically, but
without limitation, any material change in the business, condition
(financial or otherwise) or results of operations of the Company or the
Bank and, the conditions set forth in clauses (ii) through (iv) inclusive
of subsection (e) of this Section 7 have been satisfied; (iii) to the best
knowledge of such officers, no order has been issued by the Commission, the
Commissioner or the FDIC to suspend the Subscription Offering or the
Community Offering or the effectiveness of the Prospectus, and no action
for such purposes has been instituted or threatened by the Commission, the
Commissioner or the FDIC; (iv) to the best knowledge of such officers, no
person has sought to obtain review of the final actions of the Office
approving the Plan; and (v) all of the representations and warranties
contained in Section 2 of this Agreement are true and correct, with the
same force and effect as though expressly made on the Closing Date.
(g) At the Closing Date, Trident shall receive, among other
documents, (i) copies of the letters from the Commissioner authorizing the
use of the Prospectus and the Proxy Statement, (ii) if available, a copy of
the order of the Commission declaring the Registration Statement effective;
(iii) copies of the letters from the Commissioner evidencing the corporate
existence of the Bank; (iv) a copy of the letter from the appropriate
Delaware authority evidencing the incorporation (and, if generally
available from such authority, good standing) of the Company; (v) a copy of
the Company's certificate of incorporation certified by the appropriate
Delaware governmental authority; (vi) a copy of the FDIC non-objection
order; (vii) a copy of the FRB order approving the FRY-3; and, (viii) if
available, a copy of the letter from the Commissioner approving the Bank's
Stock Charter.
(h) As soon as available after the Closing Date, Trident shall
receive a certified copy of the Bank's Stock Charter executed by the
appropriate federal governmental authority.
(i) Concurrently with the execution of this Agreement, Trident
acknowledges receipt of a letter from Geo. S. Olive & Co., LLC, independent
certified public accountants, addressed to Trident and the Company, in
substance and form satisfactory to counsel for Trident, with respect to the
financial statements and certain financial information contained in the
Prospectus.
(j) At the Closing Date, Trident shall receive a letter in form and
substance satisfactory to counsel for Trident from Geo. S. Olive & Co.,
LLC, independent certified public accountants, dated the Closing Date and
addressed to Trident and the Company, confirming the statements made by
them in the letter delivered by them pursuant to the
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 24
preceding subsection as of a specified date not more than five (5) days
prior to the Closing Date.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are, in the reasonable
opinion of Trident and its counsel, satisfactory to Trident and its counsel.
Any certificates signed by an officer or director of the Company or the Bank
prepared for Trident's reliance and delivered to Trident or to counsel for
Trident shall be deemed a representation and warranty by the Company or the Bank
to Trident as to the statements made therein. If any condition to Trident's
obligations hereunder to be fulfilled prior to or at the Closing Date is not so
fulfilled, Trident may terminate this Agreement or, if Trident so elects, may
waive any such conditions which have not been fulfilled, or may extend the time
of their fulfillment. If Trident terminates this Agreement as aforesaid, the
Company and the Bank shall reimburse Trident for its expenses as provided in
Section 3(b) hereof.
8. INDEMNIFICATION.
(a) The Company and the Bank jointly and severally agree to indemnify
and hold harmless Trident, its officers, directors and employees and each
person, if any, who controls Trident within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, against any and all loss,
liability, claim, damage and expense whatsoever and shall further promptly
reimburse such persons upon written demand for any legal or other expenses
reasonably incurred by each or any of them in investigating, preparing to
defend or defending against any such action, proceeding or claim (whether
commenced or threatened) arising out of or based upon (A) any
misrepresentation by the Company or the Bank in this Agreement or any
breach of warranty by the Company or the Bank with respect to this
Agreement or arising out of or based upon any untrue or alleged untrue
statement of a material fact or the omission or alleged omission of a
material fact required to be stated or necessary to make not misleading any
statements contained in (i) the Registration Statement or the Prospectus or
(ii) any application or other document or communication (in this Section 8
collectively called "Application") prepared or executed by or on behalf of
the Company or the Bank or based upon (B) written information furnished by
or on behalf of the Company or the Bank, whether or not filed in any
jurisdiction, to effect the Conversion or qualify the Shares under the
securities laws thereof or filed with the Commissioner, FDIC, FRB or
Commission, unless such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company or the Bank
with respect to Trident by or on behalf of Trident expressly for use in the
Prospectus or any amendment or supplement thereof or in any Application, as
the case may be.
(b) The Company shall indemnify and hold Trident harmless for any
liability whatsoever arising out of (i) the Allocation Instructions or
(ii) any records of account
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 25
holders, depositors, borrowers and other members of the Bank delivered to
Trident by the Bank or its agents for use during the Conversion.
(c) Trident agrees to indemnify and hold harmless the Company and the
Bank, their officers, directors and employees and each person, if any, who
controls the Company and the Bank within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, to the same extent as the
foregoing indemnity from the Company and the Bank to Trident, but only with
respect to (A) statements or omissions, if any, made in the Prospectus or
any amendment or supplement thereof, in any Application or to a purchaser
of the Shares in reliance upon, and in conformity with, written information
furnished to the Company or the Bank with respect to Trident by or on
behalf of Trident expressly for use in the Prospectus or in any
Application; (B) any misrepresentation or breach of warranty by Trident in
Section 2(b) of this Agreement; or (C) any liability of the Company or the
Bank which is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have principally and
directly resulted from gross negligence or willful misconduct of Trident.
(d) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party of
the commencement thereof; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 8. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish,
jointly with the other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party under this Section 8 for any legal or
other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than the reasonable cost of
investigation except as otherwise provided herein. In the event the
indemnifying party elects to assume the defense of any such action and
retain counsel acceptable to the indemnified party, the indemnified party
may retain additional counsel, but shall bear the fees and expenses of such
counsel unless (i) the indemnifying party shall have specifically
authorized the indemnified party to retain such counsel or (ii) the parties
to such suit include such indemnifying party and the indemnified party, and
such indemnified party shall have been advised by counsel that one or more
material legal defenses may be available to the indemnified party which may
not be available to the indemnifying party, in which case the indemnifying
party shall not be entitled to assume the defense of such suit
notwithstanding the indemnifying party's obligation to bear the fees and
expenses of such counsel. An indemnifying party against whom indemnity may
be sought shall not be liable to indemnify
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 26
an indemnified party under this Section 8 if any settlement of any such
action is effected without such indemnifying party's consent. To the
extent required by law, this Section 8 is subject to and limited by the
provisions of Section 23A.
9. CONTRIBUTION. In order to provide for just and equitable contribution
in circumstances in which the indemnity agreement provided for in Section 8
above is for any reason held to be unavailable to Trident, the Company and/or
the Bank other than in accordance with its terms, the Company or the Bank and
Trident shall contribute to the aggregate losses, liabilities, claims, damages,
and expenses of the nature contemplated by said indemnity agreement incurred by
the Company or the Bank and Trident (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Bank on the one
hand and Trident on the other from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above, but also the relative fault of the Company or
the Bank on the one hand and Trident on the other hand in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Bank on
the one hand and Trident on the other shall be deemed to be in the same
proportions as the total net proceeds from the Conversion received by the
Company and the Bank bear to the total fees received by Trident under this
Agreement. The relative fault of the Company or the Bank on the one hand and
Trident on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Bank or by Trident and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Bank and Trident agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by the indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, Trident shall not be required
to contribute any amount in excess of the amount by which fees owed Trident
pursuant to this Agreement exceeds the amount of any damages which Trident has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. To the extent required by law, this Section 9 is subject to
and limited by the provisions of Section 23A.
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 27
10. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND INDEMNITIES. The
respective indemnities of the Company and the Bank and Trident and the
representation and warranties of the Company and the Bank and of Trident set
forth in or made pursuant to this Agreement shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of Trident or the Company or the Bank or any
controlling person or indemnified party referred to in Section 8 hereof, and
shall survive any termination or consummation of this Agreement and/or the
issuance of the Shares, and any legal representative of Trident, the Company,
the Bank and any such controlling persons shall be entitled to the benefit of
the respective agreements, indemnities, warranties and representations.
11. TERMINATION. Trident may terminate this Agreement by giving the
notice indicated below in this Section at any time after this Agreement becomes
effective as follows:
(a) If any domestic or international event or act or occurrence has
materially disrupted the United States securities markets such as to make
it, in Trident's reasonable opinion, impracticable to proceed with the
offering of the Shares; or if trading on the New York Stock Exchange
("NYSE") shall have suspended (except that this shall not apply to the
imposition of NYSE trading collars imposed on program trading); or if the
United States shall have become involved in a war or major hostilities; or
if a general banking moratorium has been declared by a state or federal
authority which has a material effect on the Bank or the Conversion; or if
a moratorium in foreign exchange trading by major international banks or
persons has been declared; or if there shall have been a material adverse
change in the capitalization, condition or business of the Company, or if
the Bank shall have sustained a material or substantial loss by fire,
flood, accident, hurricane, earthquake, theft, sabotage or other calamity
or malicious act, whether or not said loss shall have been insured; or if
there shall have been a material adverse change in the condition or
prospects of the Company or the Bank.
(b) If Trident elects to terminate this Agreement as provided in this
Section, the Company and the Bank shall be notified promptly by Trident by
telephone or telegram, confirmed by letter.
(c) If this Agreement is terminated by Trident for any of the reasons
set forth in subsection (a) above, and to fulfill its obligations, if any,
pursuant to Sections 3, 6, 8(a) and 9 of this Agreement and upon demand,
the Company and the Bank shall pay Trident the full amount so owing
thereunder.
(d) The Bank may terminate the Conversion in accordance with the
terms of the Plan. Such termination shall be without liability to any
party, except that the Company and the Bank shall be required to fulfill
their obligations pursuant to Sections 3(b), 3(c), 6, 8(a) and 9 of this
Agreement.
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 28
12. NOTICES. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and if sent to Trident shall be
mailed, delivered or telegraphed and confirmed to Trident Securities, Inc., 4601
Six Forks Road, Suite 400, Raleigh, North Carolina 27609, Attention: Mr. R. Lee
Burrows, Jr. (with a copy to Luse Lehman Gorman Pomerenk & Schick, P.C. Suite
400, 5335 Wisconsin Avenue, N.W., Washington, D.C., 20015, Attention: Alan
Schick, Esquire). and if sent to the Company or the Bank, shall be mailed,
delivered or telegraphed and confirmed to Vermilion Bancorp, Inc., 714 N.
Vermilion Street, Danville, Illinois 61832, Attention: Merrill G. Norton,
President (with a copy to Elias, Matz, Tiernan & Herrick L.L.P., 734 15th
Street, N.W., 12th Floor, Washington, D.C. 20005, Attention: Jack Soukenik,
Esquire).
13. PARTIES. This Agreement shall inure solely to the benefit of, and
shall be binding upon, Trident, the Company, the Bank and the controlling and
other persons referred to in Section 8 hereof, and their respective successors,
legal representatives and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained.
14. CONSTRUCTION. Unless governed by preemptive federal law, this
Agreement shall be governed by and construed in accordance with the substantive
laws of Louisiana.
15. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which together shall constitute but one and the same instrument.
Please acknowledge your agreement to the foregoing by signing below and
returning to the Company one copy of this letter.
VERMILION BANCORP, INC. AMERICAN SAVINGS BANK OF DANVILLE
By: By:
----------------------- --------------------------------------
Merrill G. Norton
President and Chief President and Chief Executive Officer
Executive Officer
Date: -----------, 1997 Date: ----------------, 1997
Agreed to and accepted:
TRIDENT SECURITIES, INC.
<PAGE>
Vermilion Bancorp, Inc.
Sales Agency Agreement
Page 29
By: ---------------------------
Date: ---------------, 1997
<PAGE>
January 17, 1997
Boards of Directors
Vermilion Bancorp, Inc.
American Savings Bank of Danville
714 North Vermilion
Danville, Illinois 61834
Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of the conversion (the "Conversion") of American Savings Bank of
Danville from an Illinois-chartered mutual savings bank to an Illinois-chartered
stock savings bank (the "Bank," in its mutual or stock form, as the sense of the
context requires). In the Conversion, all of the Bank's to-be-issued capital
stock will be acquired by Vermilion Bancorp, Inc. (the "Company"), a
newly-organized Delaware-chartered corporation. For the reasons set forth below
and based on your representations in a letter dated January 15, 1997 (the
"Representation Letter"), it is our opinion that the proposed Conversion will
qualify as a reorganization within the meaning of Section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended (the "Code"). Our opinion also
addresses certain other federal income tax consequences which follow from this
conclusion.
This opinion letter, including the opinions contained herein, is governed
by, and shall be interpreted in accordance with, the Legal Opinion Accord (the
"Accord") of the American Bar Association Section of Business Law (1991). As a
consequence, it is subject to a number of qualifications, exceptions,
definitions, limitations on coverage and other limitations, all as more
particularly described in the Accord and herein, and this opinion letter should
be read in conjunction with the Accord. Our opinions herein are limited to the
Code and the regulations promulgated thereunder (the "Subject Laws"). We express
no opinion in this letter as to other federal laws and regulations or as to laws
and regulations of other jurisdictions or as to factual or legal matters other
than as set forth herein.
We have reviewed the Company's Registration Statement on Form S-1 relating
to the proposed issuance of up to 345,000 shares of common stock, par value $.01
per share ("Common Stock"), the Prospectus contained therein, the Certificate of
Incorporation and Bylaws of the Company, the existing mutual and proposed state
stock charter of the Bank, the Plan of Conversion of the Bank, the Bank's
Application for Conversion and such other
<PAGE>
Board of Directors
January 17, 1997
Page 2
corporate records and documents as we have deemed relevant for the purposes of
this opinion.
FACTS
The Bank conducts business from a single office located in Danville,
Illinois. At September 30, 1996, the Bank had total assets of $35.5 million,
deposits of $30.7 million and retained earnings of $2.4 million. The Bank is
subject to examination and comprehensive regulation by the Office of Bank and
Real Estate of the State of Illinois, which is the Bank's chartering authority
and primary regulator, and by the Federal Deposit Insurance Corporation
("FDIC"), which is the administrator of the Savings Association Insurance Fund
("SAIF"). The Bank is also subject to certain reserve requirements established
by the Board of Governors of the Federal Reserve System and is a member of the
Federal Home Loan Bank of Chicago ("FHLB"), which is one of the 12 regional
banks comprising the FHLB System.
As a mutual savings bank, the Bank has no capital stock. Each depositor has
both a deposit account in the institution and a pro rata ownership interest in
the net worth of the institution based on the balance in his or her deposit
account. This ownership interest is tied directly to the depositor's deposit
account, and the depositors ordinarily would be unable to realize the value of
their ownership, except in the unlikely event that the Bank were to be
liquidated. In such event, the depositors would share pro rata in any residual
net worth after other claims, including those of depositors for the amount of
their deposits, are paid.
The Company is a recently-formed Delaware corporation which will acquire
all of the to-be-outstanding capital stock of the Bank upon consummation of the
Conversion and, thereby, become a holding company. The Company shall purchase
all of the capital stock of the Bank in exchange for 75% of the net Conversion
proceeds.
On November 6, 1996, the Board of Directors of the Bank adopted a Plan of
Conversion. The purpose of the Conversion is to enable the Bank to issue and
sell shares of its capital stock to the Company and thereby enhance the equity
capital base of the Bank, which will support the Bank's lending and investment
activities and thereby enhance the Bank's capability to serve the borrowing and
other financial needs of the communities it serves. The use of the holding
company format will provide greater organizational flexibility and the ability
for possible diversification. Capitalized terms used herein but not otherwise
defined herein shall have the meaning set forth in the Plan of Conversion.
<PAGE>
Board of Directors
January 17, 1997
Page 3
Upon approval of the Plan of Conversion, the Bank will take all necessary
steps to authorize the issuance of all of its to-be-outstanding capital stock to
the Company at the time the Conversion is consummated. As of the date hereof,
the Company is filing a Registration Statement on Form S-1 to register its
Common Stock under the Securities Act of 1933 and intends to offer for sale
shares of its Common Stock registered thereby.
The Common Stock will be offered for sale in a Subscription Offering
pursuant to subscription rights which will not be transferable and will be
issued without payment therefor. The recipients will not be entitled to receive
cash or other property in lieu of such rights. It is anticipated that any shares
of Common Stock remaining unsold after the Subscription Offering will be sold
through a Community Offering. All shares of Common Stock will be sold at a
uniform price based upon an independent valuation.
The Conversion will be effected only upon completion of the sale of all
shares of Common Stock of the Company to be issued pursuant to the Plan of
Conversion. The Company has no plan or intention to dispose of any shares of the
capital stock of the Bank, to cause the Bank to be merged with any other
corporation, or to liquidate the Bank.
The Conversion will not affect the business of the Bank. Mortgages and
other loans from the Bank will remain unchanged and retain their same
characteristics after the Conversion. There is no plan or intention for the Bank
to sell or otherwise dispose of any of its assets following the Conversion,
except for dispositions in the ordinary course of business.
Each deposit account in the Bank at the time of the consummation of the
Conversion shall become, without any action by the account holder, a deposit
account in the converted Bank equivalent in withdrawable amount, and subject to
the same terms and conditions (except as to voting and liquidation rights), as
the deposit account in the Bank immediately prior to the Conversion. In
addition, at the time of the Conversion, the Bank shall establish a liquidation
account in an amount equal to the Bank's net worth as reflected in the final
prospectus utilized in the Conversion. The liquidation account will be
maintained for the benefit of all Eligible Account Holders and Supplemental
Eligible Account Holders who maintain their deposit accounts in the Bank after
the Conversion. Each such account holder will, with respect to each deposit
account, have an inchoate interest in a portion of the liquidation account which
is the account holder's subaccount balance. An account holder's subaccount
balance in the liquidation account will be determined at the time of the
Conversion and can never increase thereafter. It will, however, be decreased to
reflect subsequent withdrawals that reduce, as of annual closing dates, the
amount in each depositor's account below the amount in the account as of the
specified record date. In the event of a complete liquidation of the Bank, each
Eligible Account Holder and Supplemental Eligible Account Holder will be
entitled to receive a liquidation distribution
<PAGE>
Board of Directors
January 17, 1997
Page 4
in the amount of the balance of his or her subaccount in the liquidation account
before any distribution may be made with respect to the capital stock of the
Bank.
LAW AND ANALYSIS
Section 368(a)(1)(F) of the Code provides that a mere change in the
identity, form or place of organization of one corporation, however effected, is
a reorganization. If a transaction qualifies as an "F"-type reorganization, it
will generally be nontaxable to the corporation and its shareholders under
related provisions of the Code.
In Rev. Rul. 80-105, 1980-1 C.B. 78, the Internal Revenue Service
considered the federal income tax consequences of the conversion of a federal
mutual savings and loan association into a state stock savings and loan
association. The ruling concluded that the conversion qualified as a mere change
in identity, form or place of organization within the meaning of Section
368(a)(1)(F). The rationale for this conclusion is not clearly expressed in the
ruling, but two factors are stressed. First, the changes at the corporate level
other than the place of organization and form of organization were regarded as
insubstantial. The converted association continued its business in the same
manner; it had the same savings accounts and loans. The converted association
continued its membership in the Federal Savings and Loan Insurance Corporation
(replaced subsequently by the SAIF) and remained subject to the regulations of
the Federal Home Loan Bank Board (which was replaced subsequently by the Office
of Thrift Supervision). Second, the ruling states that the ownership rights of
the depositors in the mutual company are "more nominal than real." Although the
ruling does not explain the significance of this statement, subsequent
administrative interpretations have indicated that the Internal Revenue Service
believes these nominal rights are preserved in the liquidation account that is
typically established for the depositors' benefit. This approach enables the
Internal Revenue Service to distinguish the tax treatment of conversion
transactions from the tax treatment of acquisitive transactions in which mutual
companies acquire stock companies. See Paulsen v. Com'r, 469 U.S. 131 (1985);
Rev. Rul. 69-6, 1969-1 C.B. 104.
The Internal Revenue Service has extended the holding of Rev. Rul. 80-105
to transactions similar to the one contemplated by the Bank and the Company, in
which a conversion from mutual to stock form occurs simultaneously with the
creation of a holding company. See e.g. private letter rulings numbered 9140014
and 9144031. While these rulings have no precedential value, they do indicate
the current views of the Internal Revenue Service on the issues presented.
Hanover Bank v. U.S., 369 U.S. 672, 686 (1962).
<PAGE>
Board of Directors
January 17, 1997
Page 5
In our opinion and based on your Representation Letter, the conversion of
the Bank from a state-chartered mutual savings bank to a state-chartered stock
savings bank, and the sale of its capital stock to the Company, will constitute
a reorganization within the meaning of Section 368(a)(1)(F) of the Code because
the transaction represents a mere change in the form of organization of a single
corporation. There will be no change in the Bank's business or operations, nor
in its loans and deposits, all of which will become loans and deposits of the
converted Bank. The only significant difference between the assets of the Bank
before and after the Conversion will be the infusion of new capital. An infusion
of capital occurs in all conversion transactions, however, and had no effect
upon the Internal Revenue Service's analysis in Rev. Rul. 80-105. The ownership
rights of the depositors of the mutual Bank, which have nominal value, will be
preserved through their interests in the liquidation account in the converted
Bank. This account will be substantially the same as the liquidation account
described in Rev. Rul. 80-105.
Because the Bank's change in form from mutual to stock ownership will
constitute a reorganization under Section 368(a)(1)(F) of the Code, it is also
our opinion that (1) the Bank will recognize no gain or loss as a result of the
Conversion pursuant to Section 361 of the Code and Rev. Rul. 80-105; (2) no gain
or loss will be recognized by Eligible Account Holders and Supplemental Eligible
Account Holders upon the issuance to them of deposit accounts in the Bank in its
stock form plus their interests in the liquidation account in exchange for their
deposit accounts in the Bank in its mutual form; (3) assuming the
nontransferable subscription rights to purchase Common Stock have no value, the
tax basis of the depositors' deposit accounts in the Bank immediately after the
Conversion will be the same as the basis of their deposit accounts immediately
prior to the Conversion; (4) assuming the nontransferable subscription rights to
purchase Common Stock have no value, the tax basis of each Eligible Account
Holder's and Supplemental Eligible Account Holder's interest in the liquidation
account will be zero; (5) the tax basis to the stockholders of the Common Stock
of the Company purchased in the Conversion will be the amount paid therefor; and
(6) the holding period for such shares will begin on the date of consummation of
the Conversion if purchased through the exercise of subscription rights and on
the day after the date of purchase if purchased in the Community Offering or
Syndicated Community Offering.
It is further our opinion that the Eligible Account Holders and
Supplemental Eligible Account Holders will recognize gain, if any, upon the
issuance to them of withdrawable savings accounts in the Bank following the
Conversion, interests in the liquidation account and non-transferable
subscription rights to purchase Company Common Stock in exchange for their
savings accounts and proprietary interests in the Bank, but only to the extent
of the value, if any, of the subscription rights.
<PAGE>
Board of Directors
January 17, 1997
Page 6
The opinions expressed above are limited to the income tax consequences of
the Conversion under the Subject Laws. Further, our opinions are based on
research of the Code, applicable Treasury Regulations, current published
administrative decisions of the Internal Revenue Service, existing judicial
decisions as of the date hereof, and your Representation Letter. No assurance
can be given that legislative, administrative or judicial decisions or
interpretations may not be forthcoming that will significantly change the
opinions set forth herein. We express no opinions other than those stated
immediately above as our opinions. We hereby consent to the filing of this
opinion as an exhibit to the Registration Statement and the Application for
Conversion.
Sincerely,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By:___________________________________
Stephen M. Ege, a Partner
<PAGE>
January 9, 1997
Board of Directors
American Savings Bank of Danville
714 North Vermilion Street
Danville, IL 61832
and
Board of Directors
Vermilion Bancorp, Inc.
714 North Vermilion Street
Danville, IL 61832
Ladies and Gentlemen:
You have requested that we provide you with our opinion as to certain State of
Illinois income tax consequences to Vermilion Bancorp, Inc. ("Holding Company")
and American Savings Bank of Danville ("Savings Bank") with respect to the
proposed conversion of Savings Bank to an Illinois-chartered stock savings bank
(hereafter, the "Stock Bank"). Our opinion is based solely upon information
included in the Prospectus involving the conversion of Savings Bank and the
federal tax opinion letter (the "Opinion Letter") issued by legal counsel Elias,
Matz, Tiernan & Herrick, LLP (including Savings Bank management's representation
letter).
SCOPE OF OPINION
You have advised us that the Prospectus and the Opinion Letter provide an
accurate and complete description of the facts and circumstances surrounding the
proposed transaction, and we have made no independent inquiry into them.
The opinions expressed herein are rendered only with respect to the specific
matters discussed, and we express no opinion with respect to any of the federal
or legal aspects of the transactions. If any of the facts, circumstances, or
representations contained in the Prospectus or the Opinion Letter are not
entirely complete or accurate, it is imperative that
<PAGE>
Board of Directors
American Savings Bank of Danville
Vermilion Bancorp, Inc.
Page 2
we be informed immediately, as such an inaccuracy could have a material effect
upon our conclusions.
STATE OF ILLINOIS TAX OPINION
Section 102 of the State of Illinois Income Tax Act (the "Act") provides that,
except as otherwise expressly stated or clearly appearing from the context, any
term used in the Act shall have the same meaning as when used in a comparable
context in the United States Internal Revenue Code of 1986 (the "IRC") or any
successor law or laws relating to federal income taxes in effect for such
taxable year. Further, Section 403 of the Act states, "To the extent not
inconsistent with the provisions of this Act--each person making a return under
this Act shall take into account the items of income, deduction, and exclusion
on such return in the same manner and amounts as reflected in such person's
federal income tax return for the same taxable year."
The Act contains no provisions which alter the consequences of a "reorganization
transaction" pursuant to IRC Section 368 in determining State of Illinois income
tax liability (including transactions similar to the proposed transaction
involving Holding Company, Savings Bank, and Stock Bank). Accordingly, it is our
opinion that under State of Illinois income tax law:
The conversion of Savings Bank from an Illinois-chartered mutual savings
bank to an Illinois-chartered stock savings bank will constitute a
reorganization transaction within the meaning of IRC Section
368(a)(1)(F). Accordingly, neither Savings Bank nor Stock Bank will
recognize any gain/loss as a result of such conversion transaction.
Savings Bank and Stock Bank will each be a "party to a reorganization"
within the meaning of IRC Section 368(b).
Stock Bank will not recognize gain/loss upon the receipt of money and other
property, if any, in exchange for shares of its common stock.
No gain or loss will be recognized by Holding Company upon the receipt of
money in exchange for the issuance of stock in the proposed
transaction.
The basis of Savings Bank's assets in the hands of Stock Bank will be the
same as the basis of those assets in the hands of Savings Bank
immediately prior to the transaction.
<PAGE>
Board of Directors
American Savings Bank of Danville
Vermilion Bancorp, Inc.
Page 3
Stock Bank's holding period of the assets of Savings Bank will include the
period during which such assets were held by Savings Bank prior to the
proposed conversion transaction.
No gain or loss will be recognized by the depositors of Savings Bank on
the issuance to them of withdrawable deposit accounts of Stock Bank
plus interests in the liquidation account of Stock Bank in exchange
for their deposit accounts.
A depositor's basis in the savings deposits of Stock Bank will be the
same as the basis of his or her savings deposits in Savings Bank.
The basis of Holding Company stock to its shareholders will equal the
purchase price thereof.
A Holding Company shareholder's holding period for stock acquired in
connection with the proposed conversion transaction through the
exercise of the nontransferable subscription rights shall begin on the
date on which the subscription rights are exercised.
* * * * *
We consent to the inclusion of this opinion as an exhibit to the Form AC of
American Savings Bank of Danville and Form SB-2 Registration Statement of
Vermilion Bancorp, Inc., and the references to and summary of this opinion in
such Form AC and Form SB-2 Registration Statement.
Sincerely,
GEO. S. OLIVE & CO. LLC
David R. Stafseth, CPA
Member of the Firm
217-429-2411
<PAGE>
EXHIBIT 23.2
Consent of Independent Public Accountants
We consent to the use of our report dated October 11, 1996, on the financial
statements of American Savings Bank of Danville (the "Bank") and to reference
made to us under the captions "American Savings Bank of Danville and Subsidiary
Consolidated Statement of Income," "Tax Aspects," "Experts," and "Legal and Tax
Opinions: in the Application for Conversion filed by the Bank with the Office of
Banks and Real Estate of the State of Illinois and in the Registration Statement
filed by Vermilion Bancorp, Inc. with the United States Securities and Exchange
Commission.
/s/ Geo. S. Olive & Co. LLC
- ---------------------------
Champaign, Illinois
January 17, 1997
<PAGE>
EXHIBIT 23.3
January 17, 1997
Board of Directors
American Savings Bank of Danville
714 North Vermilion Street
Danville, Illinois 61832
Gentlemen:
We hereby consent to the use of our firm's name in the
Application for Conversion of American Savings Bank of Danville,
Danville, Illinois, and any amendments thereto, in the Form S-1
Registration Statement for Vermilion Bancorp, Inc., and any
amendments thereto, and in Application for Conversion for the
Office of Banks and Real Estate of the State of Illinois, and any
amendments thereto. We also hereby consent to the inclusion of,
summary of and references to our Appraisal Report and our
statement concerning subscription rights in such filings
including the Prospectus of Vermilion Bancorp, Inc.
Very truly yours,
RP FINANCIAL, LC.
/s/ Gregory E. Dunn
-------------------
Gregory E. Dunn
Senior Vice President
<PAGE>
-------------------------------------
CONVERSION APPRAISAL REPORT
VERMILION BANCORP, INC.
PROPOSED HOLDING COMPANY FOR
AMERICAN SAVINGS BANK OF DANVILLE
Danville, Illinois
Dated As Of:
November 15, 1996
-------------------------------------
Prepared By:
RP Financial, LC.
1700 North Moore Street
Suite 2210
Arlington, Virginia 22209
<PAGE>
[LETTERHEAD OF RP FINANCIAL, L.C.]
November 15, 1996
Board of Directors
American Savings Bank of Danville
714 North Vermilion Street
Danville, Illinois 61832
Gentlemen:
At your request, we have completed and hereby provide an independent
appraisal ("Appraisal") of the estimated pro forma market value of the common
stock which is to be issued in connection with the mutual-to-stock conversion of
American Savings Bank of Danville, Danville, Illinois ("American Savings" or the
"Bank"). The common stock issued in connection with the Bank's conversion will
simultaneously be acquired by a holding company, Vermilion Bancorp, Inc.
("Vermilion Bancorp" or the "Holding Company"). The conversion involves the
issuance of shares of common stock to depositors, the Holding Company's and the
Bank's employee stock ownership plan ("ESOP"), members of the local community
and the public at large.
This appraisal is furnished pursuant to the requirements of Regulation
563b.7 and has been prepared in accordance with the "Guidelines for Appraisal
Reports for the Valuation of Savings and Loan Associations Converting from
Mutual to Stock Form of Organization" of the Office of Thrift Supervision
("OTS"), which have been adopted in practice by the Federal Deposit Insurance
Corporation ("FDIC") and the Office of Banks and Real Estate of the State of
Illinois, including the most recent revisions as of October 21, 1994, and
applicable regulatory interpretations thereof.
Description of Reorganization
The Board of Directors of the Bank has adopted a Plan of Conversion
pursuant to which the Bank will convert from an Illinois chartered mutual
savings bank to an Illinois chartered stock savings bank and issue all of its
outstanding shares to the Holding Company. The Holding Company will sell in
Subscription and Community offerings Holding Company stock in the amount equal
to the appraised value of the Bank. Immediately following the conversion, the
only significant assets of the Holding Company will be the capital stock of the
Bank and the net conversion proceeds remaining after purchase of the Bank's
common stock by the Holding Company. The Holding Company will use 75 percent of
the net conversion proceeds to purchase the Bank's common stock. A portion of
the remaining 25 percent of the net conversion proceeds will be used to fund a
loan to the ESOP with the remainder to be used as general working capital.
RP Financial, LC.
RP Financial, LC. ("RP Financial") is a financial consulting firm serving
the financial services industry nationwide that, among other things, specializes
in financial valuations and analyses of business enterprises and securities,
including the pro forma valuation for savings institutions converting from
mutual-to-stock form. The background and experience of RP Financial is detailed
in Exhibit V-1. We believe that, except for the fee we will receive for our
appraisal and assisting the Bank in the preparation of its business plan, we are
independent of the Bank and the other parties engaged by the Bank to assist in
the stock conversion process.
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RP Financial, LC.
Board of Directors
November 15, 1996
Page 2
Valuation Methodology
In preparing our appraisal, we have reviewed American Savings' application
for Approval of Conversion, including the Proxy Statement, as filed with the
FDIC, and the Holding Company's Form S-1 registration statement as filed with
the Securities Exchange Commission. We have conducted a financial analysis of
the Bank that has included due diligence related discussions with the Bank's
management; Geo. S. Olive & Co., LLC, the Bank's independent auditor; Elias,
Matz, Tiernan & Herrick, L.L.P., the Bank's conversion counsel; and Trident
Securities, Inc., which has been retained by the Bank as a financial and
marketing advisor in connection with the Holding Company's stock offering. All
conclusions set forth in the appraisal were reached independently from such
discussions. In addition, where appropriate, we have considered information
based on other available published sources that we believe are reliable. While
we believe the information and data gathered from all these sources are
reliable, we cannot guarantee the accuracy and completeness of such information.
We have investigated the competitive environment within which the Bank
operates and have assessed the Bank's relative strengths and weaknesses. We have
kept abreast of the changing regulatory and legislative environment and analyzed
the potential impact on the Bank and the industry as a whole. We have analyzed
the potential effects of conversion on the Bank's operating characteristics and
financial performance as they relate to the pro forma market value of American
Savings. We have reviewed the economy in the Bank's primary market area and have
compared the Bank's financial performance and condition with selected
publicly-traded thrift institutions with similar characteristics as the Bank's,
as well as all publicly-traded thrifts. We have reviewed conditions in the
securities markets in general and in the market for thrift stocks in particular,
including the market for existing thrift issues and the market for initial
public offerings by thrifts.
Our appraisal is based on the Bank's representation that the information
contained in the regulatory applications and additional information furnished to
us by the Bank and its independent auditors are truthful, accurate and complete.
We did not independently verify the financial statements and other information
provided by the Bank and its independent auditors, nor did we independently
value the assets or liabilities of the Bank. The valuation considers the Bank
only as a going concern and should not be considered as an indication of the
liquidation value of American Savings.
Our appraised value is predicated on a continuation of the current
operating environment for the Bank and for all thrifts. 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 Bank's value alone. It is our understanding American Savings intends to
remain an independent institution and there are no current plans for selling
control of the Bank as a converted institution. To the extent that such factors
can be foreseen, they have been factored into our analysis.
Pro forma market value is defined as the price at which American Savings'
stock, immediately upon completion of the conversion offering, would change
hands between a willing buyer and a willing seller, neither being under any
compulsion to buy or sell and both having reasonable knowledge of relevant
facts.
Valuation Conclusion
It is our opinion that, as of November 15, 1996, the aggregate pro forma
market value of the shares to be issued was $3,000,000 at the midpoint, equal to
300,000 shares offered at a per share value of $10.00. Pursuant to the
conversion guidelines, the 15 percent offering range indicates a minimum value
of $2,550,000 and a maximum value of $3,450,000. Based on the $10.00 per share
offering price, this valuation range equates
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RP Financial, LC.
Board of Directors
November 15, 1996
Page 3
to an offering of 255,000 shares at the minimum to 345,000 shares at the
maximum. In the event that the Bank's appraised value is subject to an increase,
up to 396,750 shares may be sold at an issue price of $10.00 per share, for an
aggregate market value of $3,967,500, without a resolicitation.
Limiting Factors and Considerations
Our valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing shares of the
common stock. Moreover, because such valuation is necessarily based upon
estimates and projections of a number of matters, all of which are subject to
change from time to time, no assurance can be given that persons who purchase
shares of common stock in the conversion will thereafter be able to buy or sell
such shares at prices related to the foregoing valuation of the pro forma market
value thereof.
RP Financial's valuation was determined based on the financial condition
and operations of the Bank as of September 30, 1996, the date of the financial
data included in the Holding Company's prospectus.
RP Financial is not a seller of securities within the meaning of any
federal and state securities laws and any report prepared by RP Financial shall
not be used as an offer or solicitation with respect to the purchase or sale of
any securities. RP Financial maintains a policy which prohibits the company, its
principals or employees from purchasing stock of its client institutions.
The valuation will be updated as provided for in the conversion regulations
and guidelines. These updates will consider, among other things, any
developments or changes in the Bank's financial performance and condition,
management policies, and current conditions in the equity markets for thrift
shares. These updates may also consider changes in other external factors which
impact value including, but not limited to: various changes in the legislative
and regulatory environment, the stock market and the market for thrift stocks,
and interest rates. Should any such new developments or changes be material, in
our opinion, to the valuation of the shares, appropriate adjustments to the
estimated pro forma market value will be made. The reasons for any such
adjustments will be explained in the update at the date of the release of the
update.
Respectfully submitted,
RP FINANCIAL, LC.
/s/ Ronald S. Riggins
-----------------------------
Ronald S. Riggins
President
/s/ Gregory E. Dunn
-----------------------------
Gregory E. Dunn
Senior Vice President
<PAGE>
RP Financial, LC.
TABLE OF CONTENTS
AMERICAN SAVINGS BANK OF DANVILLE
Danville, Illinois
PAGE
DESCRIPTION NUMBER
----------- ------
CHAPTER ONE OVERVIEW AND FINANCIAL ANALYSIS
Introduction 1.1
Strategic Overview 1.1
Balance Sheet Trends 1.4
Income and Expense Trends 1.7
Interest Rate Risk Management 1.10
Lending Activities and Strategy 1.11
Asset Quality 1.14
Funding Composition and Strategy 1.14
Subsidiary 1.15
Legal Proceedings 1.15
CHAPTER TWO MARKET AREA
Introduction 2.1
Market Area Demographics 2.1
National Economic Factors 2.3
Local Economy 2.5
Competition 2.6
CHAPTER THREE PEER GROUP ANALYSIS
Selection of Peer Group 3.1
Financial Condition 3.5
Income and Expense Components 3.8
Loan Composition 3.11
Interest Rate Risk 3.13
Credit Risk 3.13
Summary 3.16
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RP Financial, LC.
TABLE OF CONTENTS
AMERICAN SAVINGS BANK OF DANVILLE
Danville, Illinois
(continued)
PAGE
DESCRIPTION NUMBER
----------- ------
CHAPTER FOUR VALUATION ANALYSIS
Introduction 4.1
Appraisal Guidelines 4.1
RP Financial Approach to the Valuation 4.1
Valuation Analysis 4.2
1. Financial Condition 4.3
2. Profitability, Growth and Viability of Earnings 4.4
3. Asset Growth 4.6
4. Primary Market Area 4.6
5. Dividends 4.7
6. Liquidity of the Shares 4.8
7. Marketing of the Issue 4.9
A. The Public Market 4.9
B. The New Issue Market 4.13
C. The Acquisition Market 4.14
8. Management 4.17
9. Effect of Government Regulation and Regulatory
Reform 4.17
Summary of Adjustments 4.17
Valuation Approaches 4.18
1. Price-to-Earnings ("P/E") 4.19
2. Price-to-Book ("P/B") 4.20
3. Price-to-Assets ("P/A") 4.21
Valuation Conclusion 4.21
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RP Financial, LC.
LIST OF TABLES
AMERCIAN SAVINGS BANK OF DANVILLE
Danville, Illinois
TABLE
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
1.1 Summary Balance Sheet Data 1.5
1.2 Historical Income Statement 1.8
2.1 Summary Demographic Data 2.2
2.2 Unemployment Rates 2.6
2.3 Deposit Summary 2.7
3.1 Peer Group of Publicly-Traded Thrifts 3.3
3.2 Balance Sheet Composition and Growth Rates 3.6
3.3 Income as a Percent of Average Assets and
Yields, Costs, Spreads 3.9
3.4 Loan Portfolio Composition Comparative Analysis 3.12
3.5 Interest Rate Risk Comparative Analysis 3.14
3.6 Peer Group Credit Risk Comparative Analysis 3.15
4.1 Market Area Unemployment Rates 4.7
4.2 Conversion Pricing Characteristics 4.15
4.3 Market Pricing Comparatives 4.16
4.4 Public Market Pricing 4.22
<PAGE>
RP Financial, LC.
Page 1.1
I. OVERVIEW AND FINANCIAL ANALYSIS
Introduction
American Savings Bank of Danville ("American Savings" or the "Bank") is an
Illinois chartered mutual savings bank headquartered in Danville, Illinois.
American Savings conducts operations from its sole office facility in Danville,
which is located in east-central Illinois along the Indiana border. Danville is
approximately 85 miles west of Indianapolis and 130 miles south of Chicago.
American Savings was organized in 1888 and has operated as traditional thrift
throughout its history. American Savings is a member of the Federal Home Loan
Bank ("FHLB") system, with its deposits insured up to the regulatory maximums by
the Savings Association Insurance Fund ("SAIF") of the Federal Deposit Insurance
Corporation ("FDIC"). At September 30, 1996, American Savings had $35.5 million
in assets, $30.7 million in deposits and net worth of $2.4 million or
6.64 percent of total assets. A summary of American Savings' key operating
ratios for the past five fiscal years are presented in Exhibit I-3.
Vermilion Bancorp, Inc. ("Vermilion Bancorp" or the "Holding Company"), a
Delaware corporation, was recently organized to facilitate the conversion of
American Savings. In the course of the conversion, the Holding Company will
acquire all of the capital stock that the Bank will issue upon its conversion
from the mutual to stock form of ownership. Going forward, Vermilion Bancorp
will own 100 percent of the Bank's stock, and the Bank will be Vermilion
Bancorp's sole subsidiary. Approximately 75 percent of the net proceeds received
from the sale of common stock will be used to purchase all of the then to be
issued and outstanding capital stock of the Bank, with the balance of the
proceeds being retained by the Holding Company. At this time, no other
activities are contemplated for Vermilion Bancorp other than the ownership of
the Bank, a loan to the newly-formed employee stock ownership plan ("ESOP") and
investment of the cash retained at the holding company in investment securities.
In the future Vermilion Bancorp may acquire or organize other operating
subsidiaries.
Strategic Overview
American Savings is a community-oriented thrift, with a primary strategic
objective of meeting the borrowing and savings needs of its local customer base.
The market area served by the Bank has been experiencing population and
household shrinkage, which has translated into limited economic growth as well.
While contracting somewhat, the market area economy has been fairly stable in
terms of real estate values and, thus, is considered to be an attractive lending
market with respect to limiting credit risk exposure. American Savings faces
notable competition from a number of other community oriented thrifts and banks,
as well as
<PAGE>
RP Financial, LC.
Page 1.2
from larger regional financial institutions. In this operating environment the
Bank has pursued a strategy of conservative growth, although, in recent years,
the composition of American Savings' interest-earning assets has exhibited a
shift towards loans, primarily 1-4 family permanent mortgage loans. The Bank's
renewed emphasis on lending, which had stagnated for several years during the
late-1980s and early-1990s, came under the direction of a new President which
was hired in November 1992.
Throughout its history, American Savings has pursued a traditional thrift
operating strategy and, thus, 1-4 family permanent mortgage loans and retail
deposits have consistently been the principal components of the Bank's assets
and liabilities, respectively. Loan diversification by the Bank primarily
consists of commercial real estate/multi-family loans and consumer loans. Going
forward the Bank plans to pursue a strategy of greater lending diversification,
primarily in the area of consumer lending. Such growth is expected to be gradual
and limited to familiar markets. American Savings' emphasis on originating 1-4
family permanent mortgage loans in local and familiar markets, as well as the
generally stable real estate market conditions of the primary market area, have
been fairly effective in limiting credit risk exposure as indicated by the
Bank's credit quality measures. Comparatively, the Bank maintains a greater
degree of interest rate risk exposure, as American Savings maintains a fairly
notable repricing mismatch between its interest-sensitive assets and
liabilities. The repricing mismatch stems from the high concentration of funding
liabilities consisting of short-term deposits, while the major portion of
American Savings' interest-earning assets consists of intermediate- and
long-term loans and investments.
As a traditional thrift, American Savings' earnings base is largely
dependent upon net interest income and operating expense levels. Maintenance of
a liability sensitive balance sheet reflects the Bank's philosophy that earnings
can be more fully maximized by incurring some interest rate risk, while American
Savings' healthy capital position and resultant favorable interest-earning
assets to interest-bearing liabilities ("IEA/IBL") ratio will sustain earnings
at lower but profitable levels during periods of rising and higher interest
rates. American Savings' ability to take on a certain degree of interest rate
risk in the net margin is further enhanced by the limited risk that earnings
will be negatively impacted to any significant extent by credit quality related
losses. Interest rate risk associated with the net interest margin is also
somewhat negated by American Savings' control of operating expenses, which is
supported by the Bank's limited diversification and maintenance of only one full
service branch. Overall, American Savings' operating strategy has provided for a
certain degree of fluctuation in the net interest margin, with the net interest
margin coming under pressure during recent years due primarily to higher funding
costs.
Retail deposits have consistently served as the primary funding source for
the Bank, while borrowings comprise a minor portion of American Savings' funding
composition. Borrowings held by the Bank consist of FHLB advances, which were
added during fiscal 1996 to fund loan growth and to support control of deposit
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RP Financial, LC.
Page 1.3
costs. The Bank's deposits are concentrated in CDs, which along with its recent
use of borrowings, has resulted in a relatively high cost of funds maintained by
the Bank. Further contributing to the Bank's high cost of funds is a current
promotion being run by the Bank, in which an above market rate is being paid on
savings accounts held in retirement accounts. Approximately half of the Bank's
$5.4 million of savings accounts were held in retirement accounts, as of
September 30, 1996.
Over the past five fiscal years, American Savings' operating strategy has
resulted in limited asset growth, an increasing capital position and moderate
core earnings. An emphasis on originating 1-4 family permanent mortgage loans
for portfolio has served to limit the Bank's credit risk exposure, while the
Bank's interest rate risk exposure is more notable as indicated by its negative
short-term gap position.
The Bank's Board of Directors has elected to convert to the stock form of
ownership to improve the competitive position of American Savings. The
additional capital realized from conversion proceeds will increase liquidity to
support funding of future loan growth and other interest-earning assets, and
reduce interest rate risk by enhancing the Bank's IEA/IBL ratio, which, will in
turn reduce the repricing mismatch between the Bank's interest-sensitive assets
and interest-sensitive liabilities. The additional funds realized from the stock
offering will also serve as an alternative funding source to deposits in meeting
the Bank's future funding needs, which will allow for competitive pricing in the
Bank's deposit rates. Additionally, American Savings' higher equity-to-assets
ratio will also better position the Bank to take advantage of expansion
opportunities as they arise. Such expansion would most likely occur through
acquiring branches or other financial institutions in areas that would provide
for further penetration in the markets currently served by the Bank or nearby
surrounding markets. At this time, the Bank has no other specific plans for
expansion other than internal growth, which American Savings has been pursuing
more aggressively in recent years following the hiring of a new President in
November 1992. The Bank's projected internal use of proceeds are highlighted
below.
The proceeds from the conversion are expected to be deployed as follows:
o Holding Company. Approximately 25 percent of the net conversion
proceeds will be retained by Vermilion Bancorp. Such funds will be
invested initially into short- and intermediate-term investments. Over
time, the Holding Company funds may be utilized for various corporate
purposes, including payment of dividends and possible repurchases of
common stock consistent with regulatory limitations.
o American Savings. The remaining net proceeds of the conversion will be
infused into the Bank in exchange for all of the Bank's newly issued
stock. Proceeds infused into the Bank will initially be held in
short-term investments. Over time, the proceeds are expected to be
redeployed into the Bank's loan growth and normal investment
activities.
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RP Financial, LC.
Page 1.4
Overall, it is the Bank's objective to pursue growth that will serve to
increase returns, while, at the same time, growth will not be pursued that could
potentially compromise the overall risk associated with American Savings'
operations. The Bank has acknowledged that it intends to operate with excess
capital in the near term, operating with a below market return on equity, until
such time as the new capital can be leveraged in a safe and sound manner over an
extended period of time.
Balance Sheet Trends
From September 30, 1992 through September 30, 1996, American Savings
exhibited annual asset growth of positive 1.1 percent (see Table 1.1). During
this period, the asset side of the Bank's balance sheet has exhibited respective
increases and declines in the level of loans and investments comprising total
assets. Assets have been primarily funded by deposits and retained earnings, as
the Bank's use of borrowings over the past five fiscal years has been minimal.
American Savings' loan portfolio increased at a 10.5 percent annual rate
from fiscal year end 1992 through fiscal year end 1996, with the substantial
portion of the growth being realized during the past three fiscal years.
Consistent with he Bank's traditional emphasis on originating and retaining 1-4
family permanent loans, the growth realized in the loan portfolio has been
primarily attributable to growth in 1-4 family loans. For example, during fiscal
1996, 1-4 family loans accounted for $2.2 million, or 76 percent of the Bank's
loan growth. As of September 30, 1996, 1-4 family loans comprised 79.1 percent
of the loan balance. The balance of the loan portfolio is diversified among
consumer, commercial real estate, multi-family, construction, real estate sold
on contract and commercial business loans, with consumer and commercial real
estate/multi-family loans accounting for the Bank's notable areas of lending
diversification. As of September 30, 1996, consumer loans comprised $2.6
million, or 9.5 percent, of the Bank's loan portfolio, versus comparative
measures of $2.0 million, or 7.5 percent, for commercial real
estate/multi-family loans. Commercial business and construction loans, amounting
to $334,000 and $342,000, respectively, at September 30, 1996, have generally
been and are expected to remain as minor areas of lending diversification for
American Savings. Similarly, real estate sold on contract loans, amounting to
$374,00 at September 30, 1996, is not considered to be an active lending area
for the Bank.
American Savings' cash and investments balance has generally declined
during the past five fiscal years, dropping from a high of $11.4 million, or
33.6 percent of assets, at fiscal year end 1992, to a low of $4.1 million, or
11.7 percent of assets, at fiscal year end 1996. The decline in the cash and
investments balance primarily resulted from redeployment of liquidity into
loans, and, to a much lesser extent, liquidity funded purchases of
mortgage-backed securities during fiscal 1993. The investment portfolio is
substantially comprised
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RP Financial, L.C.
Page 1.5
Table 1.1
American Savings Bank of Danville
Historical Balance Sheets (1)
(Amount and Percent of Assets)
<TABLE>
<CAPTION>
At September 30,
------------------------------------------------------------
1992 1993 1994
------------------- ----------------- ------------------
Amount Pct Amount Pct Amount Pct
------ --- ------ --- ------ ---
($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C>
Total Amount of:
Assets $33,904 100.00% $33,591 100.00% $33,198 100.00%
Cash and cash equivalents 2,234 6.59% 1,288 3.83% 699 2.11%
Investment securities 8,911 26.28% 7,183 21.38% 4,354 13.12%
Mortgage-backed securities 3,668 10.82% 5,899 17.56% 4,851 14.61%
Loans receivable, net 18,056 53.26% 18,235 54.29% 21,627 65.15%
FHLB stock 230 0.68% 236 0.70% 236 0.71%
Deposits 31,640 93.32% 31,158 92.76% 30,698 92.47%
FHLB advances --- 0.00% --- 0.00% --- 0.00%
Equity 2,012 5.93% 2,185 6.50% 2,341 7.05%
<CAPTION>
6/30/92-
At September 30, 6/30/96
-------------------------------------- Annualized
1995 1996 Growth Rate
------------------ ----------------- -----------
Amount Pct Amount Pct Pct
------ --- ------ --- ---
($000) (%) ($000) (%) (%)
<S> <C> <C> <C> <C> <C>
Total Amount of:
Assets $33,977 100.00% $35,459 100.00% 1.13%
Cash and cash equivalents 571 1.68% $789 2.23% -22.91%
Investment securities 4,042 11.90% 3,083 8.69% -23.31%
Mortgage-backed securities 4,260 12.54% 3,476 9.80% -1.34%
Loans receivable, net 23,954 70.50% 26,936 75.96% 10.52%
FHLB stock 255 0.75% 269 0.76% 3.99%
Deposits 31,331 92.21% 30,724 86.65% -0.73%
FHLB advances --- 0.00% 2,000 5.64% N.M.
Equity 2,442 7.19% 2,355 6.64% 4.01%
</TABLE>
- ----------
(1) Ratios are as a percent of ending assets.
Sources: American Savings' prospectus and audited financial statements
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RP Financial, LC.
Page 1.6
of U.S. Government and federal agency securities ($2.7 million), with the
balance of the portfolio consisting of municipal bonds ($361,000). Exhibit I-4
provides detail of the Bank's investment portfolio at fiscal year ends 1995 and
1996. The investment portfolio consists of securities with maturities of less
than five years, with the exception of the municipal bond portfolio. As of
September 30, 1996, the investment portfolio consisted of $2.2 million of
securities classified as available for sale and $861,000 of securities as
classified as held to maturity. American Savings maintained an unrealized loss
of $20,000 on the available for sale portfolio at September 30, 1996. In
addition to investment securities, the Bank held cash and cash equivalents of
$789,000, and FHLB stock of $269,000, as of September 30, 1996. Not reflected in
Table 1.1 are interest-bearing deposits held at other financial institutions,
which amounted to $99,000 at September 30, 1996.
Mortgage-backed securities comprise the balance of the Bank's
interest-earning assets composition, serving as an investment alternative to 1-4
family permanent mortgage loans. After peaking at $5.9 million, or 17.6 percent
of assets, at fiscal year end 1993, the mortgage-backed securities portfolio has
trended lower to a balance of $3.5 million, or 9.8 percent of assets, at fiscal
year end 1996. The decline in the mortgage-backed securities portfolio reflects
that American Savings' excess cash flow has been adequately absorbed by loan
growth in recent years. Mortgage-backed securities held by the Bank consists of
participation certificates, which have been issued by FHLMC, FNMA and GNMA. As
of September 30, 1996, adjustable rate securities accounted for approximately 58
percent of the mortgage-backed securities portfolio and the entire portfolio was
classified as held to maturity.
Over the past five fiscal years, American Savings' funding needs have been
substantially met through retail deposits, internal cash flows and retained
earnings. The Bank's balance of deposits declined slightly from fiscal year end
1992 to fiscal year end 1996, as borrowings were utilized to fund the asset
growth recorded during fiscal 1996. Deposits held by the Bank have generally
been concentrated in CDs and, as of September 30, 1996, CDs comprised 77.3
percent of the Bank's total deposits. Transaction and savings accounts comprise
the balance of the Bank's deposits, with savings and retirement accounting
comprising the significant portion of those lower costing deposits. As of
September 30, 1996, savings and retirement accounts comprised $5.4 million, or
76.8 percent, of the Bank's transaction and savings accounts. American Savings
added $2.0 million of FHLB advances during fiscal 1996 to fund loan growth and
to support control of funding costs. Additionally, the borrowings reduced the
interest sensitivity of the Bank's funding liabilities, as the advances are
fixed rate notes with two year terms.
Positive earnings provided for an increase in the Bank's capital from
fiscal year end 1992 through fiscal year end 1995, which was followed by a
slight decline in capital during fiscal 1996 reflecting the net loss posted by
American Savings. Overall, the Bank's capital increased at a 4.0 percent annual
rate during the past five years, which served to increase the Bank's
equity-to-assets ratio from 5.9 percent at the end of fiscal 1992 to
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RP Financial, LC.
Page 1.7
6.6 percent at the end of fiscal 1996. Except for a nominal balance of
intangibles ($4,000), all of the Bank's capital was tangible capital at fiscal
year end 1996. American Savings maintains capital surpluses relative to all of
its regulatory capital requirements. The addition of conversion proceeds will
serve to strengthen American Savings' capital position and competitive posture
within its primary market area, as well as possibly support expansion in
existing or other nearby markets.
Income and Expense Trends
The Bank has reported low to mediocre earnings over the last five fiscal
years (see Table 1.2), ranging from a low of negative 0.20 percent of average
assets in fiscal 1996 to a high of 0.46 percent of average assets in fiscal
1994. The net loss recorded in 1996 was primarily the result of the one time
special assessment incurred to recapitalize the SAIF and, to a lesser degree,
higher than normal loan loss provisions. Consistent with the Bank's traditional
thrift operating mode, net interest income and operating expenses have been the
dominant factors in American Savings' earnings. Non-interest operating income
has been a limited contributor to the Bank's earnings, while loan loss
provisions have had a varied impact on American Savings' earnings. Real estate
operations and gains and losses realized from the sale of loans and investments
have generally not been a significant factor in the Bank's earnings.
American Savings' level of net interest income before provision for loan
losses peaked at 2.77 percent of average assets in fiscal 1994, which coincided
with the peak earnings posted by the Bank over the past five fiscal years. The
peak net interest income to average assets ratio posted in fiscal 1994 was
largely attributable to a reduction in the Bank's funding costs, as American
Savings' interest expense to average assets ratio declined from 4.51 percent in
fiscal 1993 to 4.06 percent in fiscal 1994. An improving capital position and
resultant lower level of interest-bearing liabilities meeting the Bank's funding
needs also supported the decline exhibited in American Savings' fiscal 1994
interest expense ratio. Comparatively, after declining to 2.34 percent in fiscal
1995, the Bank's net interest income to average assets ratio equaled 2.47
percent during fiscal 1996. The reduction in the net interest margin during
fiscal 1995 was attributable to a more significant increase in the interest
expense ratio relative to the interest income ratio, reflecting the more
immediate impact of higher interest rates on the Bank's interest-sensitive
liabilities. While American Savings' interest expense ratio continued to trend
higher during fiscal 1996, it was more than offset by a more significant
increase in the Bank's interest income to average assets ratio. The upward trend
exhibited in the Bank's interest income ratio over the past two fiscal years has
been supported by a shift in the Bank's interest-earning assets composition, in
which cash flow generated from maturing investments and loans has been
redeployed into loans. Loans comprised 76.0 percent of the Bank's assets at
fiscal year end 1996, versus a comparative ratio of 65.2 percent at fiscal year
end 1994.
<PAGE>
RP Financial, LC.
Page 1.8
Table 1.2
American Savings Bank of Danville
Historical Income Statement (1)
(Amount and Percent of Assets)
<TABLE>
<CAPTION>
For the Fiscal Year Ended September 30,
------------------------------------------------------------------------------------
1992 1993 1994 1995 1996
--------------- --------------- -------------- -------------- ---------------
Amount Pct Amount Pct Amount Pct Amount Pct Amount Pct
------ --- ------ --- ------ --- ------ --- ------ ---
($000) (%) ($000) (%) ($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income $2,724 8.04% $2,390 7.08% $2,279 6.82% $2,375 7.07% $2,634 7.59%
Interest expense (1,999) -5.90% (1,521) -4.51% (1,355) -4.06% (1,588) -4.73% (1,778) -5.12%
------ ------ ------- ------ ------- ------ ------- ------ ------- ------
Net Interest Income $725 2.14% $869 2.57% $924 2.77% $787 2.34% $856 2.47%
Provision for Loan Losses (49) -0.14% (8) -0.02% (105) -0.31% (13) -0.04% (80) -0.23%
------ ------ ------- ------ ------- ------ ------- ------ ------- ------
Net Interest Income after Provisions $676 2.00% $861 2.55% $819 2.45% $774 2.30% $776 2.24%
Other income 99 0.29% 82 0.24% 49 0.15% 50 0.15% 45 0.13%
Operating expenses (630) -1.86% (682) -2.02% (685) -2.05% (710) -2.11% (889) -2.56%
------ ------ ------- ------ ------- ------ ------- ------ ------- ------
Net Operating Income $145 0.43% $261 0.77% $183 0.55% $114 0.34% ($68) -0.20%
Non-Operating Income
Gain(Loss) on Sales of Int-Earn Assts, Net 0 0.00% (57) -0.17% (4) -0.01% 1 0.00% 0 0.00%
Real estate operations, net (47) -0.14% (24) -0.07% (11) -0.03% 0 0.00% 0 0.00%
Net Income Before Tax $98 0.29% $180 0.53% $168 0.50% $115 0.34% ($68) -0.20%
Income Taxes (21) -0.06% (59) -0.17% (13) -0.04% (15) -0.04% (3) -0.01%
------ ------ ------- ------ ------- ------ ------- ------ ------- ------
Net Income Before
Extraordinary Items $77 0.23% $121 0.36% $155 0.46% $100 0.30% ($71) -0.20%
Extraordinary Items(2) 0 0.00% 0 0.00% 0 0.00% 0 0.00% 0 0.00%
------ ------ ------- ------ ------- ------ ------- ------ ------- ------
Net Income (Loss) $77 0.23% $121 0.36% $155 0.46% $100 0.30% ($71) -0.20%
Estimated Core Earnings:
Net Income $77 0.23% $121 0.36% $155 0.46% $100 0.30% ($71) -0.20%
Adjustments for non-operating income 0 0.00% 57 0.17% 4 0.01% (1) -0.00% 0 0.00%
SAIF Assessment 0 0.00% 0 0.00% 0 0.00% 0 0.00% 206 0.59%
Tax Effect (34.0%) 0 0.00% (19) -0.06% (1) -0.00% 0 0.00% (70) -0.20%
------ ------ ------- ------ ------- ------ ------- ------ ------- ------
Estimated Core Net Income $77 0.23% $159 0.47% $158 0.47% $99 0.30% $65 0.19%
</TABLE>
- ----------
(1) Ratios are as a percent of average assets.
Sources: American Savings' prospectus and audited financial statements.
<PAGE>
RP Financial, LC.
Page 1.9
The impact of interest rates on American Savings' net interest margin is
further revealed through examination of the Bank's historical net interest rate
spreads and yields and costs set forth in Exhibits I-3 and I-5. In general,
trends in the Bank's net interest margin paralleled the widening and narrowing
of the yield-cost spread. American Savings' yield-cost spread peaked at 2.59
percent during fiscal 1994, versus comparative net interest rate spreads of 2.11
percent and 2.17 percent during fiscal years 1995 and 1996, respectively. The
narrowing of the Bank's interest rate spread was primarily attributable to an
increase in the Bank's deposit costs, with most of the increase in deposit costs
stemming from higher CD rates. A shift in deposit composition towards higher
costing CDs further contributed to the increase in the Bank's deposit costs. As
of September 30, 1996, transaction and savings accounts comprised 22.7 percent
of the Bank's deposits, versus a comparative ratio of 25.5 percent at fiscal
year end 1994.
Consistent with the Bank's adherence to a traditional thrift operating
philosophy and resultant limited diversification, sources of non-interest
operating income have not been a significant contributor to the Bank's earnings.
Throughout the period shown in Table 1.2, sources of non-interest operating
income have ranged from a low of 0.13 percent of average assets in fiscal 1996
to a high of 0.29 percent of average assets in fiscal 1992. Sources of
non-interest operating income consist substantially of loan fees and
miscellaneous sources of non-interest operating income. The relatively low level
of transaction deposit accounts maintained by the Bank has also constrained fee
income.
Operating expenses at American Savings have generally been contained at
relatively low levels, with the sharp increase exhibited in operating expenses
during fiscal 1996 being attributable to the special SAIF assessment. Net of the
SAIF assessment, the Bank's operating expense to average assets ratio equaled
1.97 percent during fiscal 1996. Accordingly, after trending higher from fiscal
1992 through fiscal 1995, the Bank's operating expense ratio declined in fiscal
1996. The upward trend exhibited in the operating expense ratio from fiscal 1992
through fiscal 1995 was the result of normalized increases in operating expenses
and the absence of asset growth, while, comparatively, the decline in the
operating expense ratio recorded during fiscal 1996 was realized through asset
growth and a modest reduction in operating expenses. Containment of the Bank's
operating expenses is supported by operating efficiencies realized from pursuing
a traditional thrift operating strategy, which has limited diversification into
areas that generate additional operating expenses. Control of operating expenses
is further facilitated by the Bank's limited fixed asset costs, as the result of
maintaining only one office facility. However, further upward pressure will be
placed on the Bank's operating expense ratio in the forthcoming year, due to
higher depreciation expenses that will result from capital expenditures to
renovate the main office and increase costs associated with operating as a
publicly-traded company, including expenses related to the stock benefit plans.
Capital expenditures related to the renovation of the main office have been
estimated by management to total $300,000 and will be incurred over the next one
<PAGE>
RP Financial, LC.
Page 1.10
and one-half years. While operating expenses will be higher following the
conversion, the Bank will also be in a better position to leverage operating
expenses following the infusion of stock proceeds.
Gains and losses resulting from the sale of investments and loans typically
have not been a significant factor in the Bank's earnings, with the most notable
impact occurring during fiscal 1993. During fiscal 1993, the Bank recorded
losses on the sale of investments amounting to 0.17 percent of average assets.
The investments were sold to reduce the volatility risk of the investment
portfolio and the proceeds were primarily redeployed into more favorable
yielding mortgage-backed securities and loans. Since fiscal 1993, gains and
losses recorded by the Bank have been nominal. Gains and losses resulting from
the sale of loans and investments are expected to remain a minor factor in the
Bank's earnings going forward.
Credit quality related losses have impacted the Bank's earnings to various
degrees over the past five fiscal years, with such losses consisting of loan
loss provisions and real estate operations losses. Loan loss provisions
established by the Bank peaked during fiscal 1993, amounting to $105,000 or 0.31
percent of average assets. The higher than normal loss provisions established
during fiscal 1993 stemmed largely from problem loans associated with one
borrower, which were subsequently foreclosed on and sold. Relatively high loss
provisions were established during fiscal 1996 as well ($80,000 or 0.23 percent
of average assets), which was attributable to the recent strong growth recorded
in the loan portfolio, including growth in higher risk types of loans. Going
forward, loss provisions established by the Bank are expected to be lower than
the $80,000 of provisions established in fiscal 1996. As of September 30, 1996,
the Bank maintained valuation allowances of $143,000, equal to 0.53 percent of
net loans receivable and 43.6 percent of non-performing assets. Exhibit I-6 sets
forth the Bank's loan loss allowance activity during the past two fiscal years.
Real estate operations losses posted by American Savings primarily reflect
losses incurred on maintaining and disposing of OREO, with such losses generally
being minimal over the past five fiscal years.
Interest Rate Risk Management
American Savings' balance sheet is currently liability-sensitive, as
indicated by its one year cumulative gap to assets ratio of negative 29.4
percent (see Exhibit I-7). The concentration of the Bank's interest-bearing
liabilities consist of short-term deposits, while American Savings'
interest-earning assets are diversified among various repricing periods. The
Bank's most notable interest rate risk exposure is associated with its holdings
of fixed rate loans, which generally have maturities of more than 5 years. As of
September 30, 1996, of the total loans due after one year from September 30,
1996, fixed rate loans comprised 76.0 percent of those loans (see Exhibit I-8).
American Savings pursues management of interest rate risk from both the asset
and liability sides of the balance, with the intent of maintaining a certain
degree of interest rate risk that will provide for
<PAGE>
RP Financial, LC.
Page 1.11
enhanced profitability during periods of low and declining interest rates.
Strategies implemented by the Bank to support control of interest rate risk on
the asset side include increasing the interest sensitivity of the 1-4 family
loan portfolio through the origination of 1 and 3 year balloon loans,
diversifying into more interest sensitive types of lending, and investing in
short- and intermediate-term securities. On the liability side, management of
interest rate risk is pursued through promoting certain longer term CDs from
time-to-time and utilizing FHLB advances with maturities of more than one year.
The short-term repricing mismatch between the Bank's interest sensitive
assets and liabilities indicates that net interest income will be somewhat
inconsistent in various interest rate environments, with declining and low
interest rate environments being highly beneficial to American Savings' net
interest margin. Comparatively, the Bank's net interest margin is adversely
impacted by rising and higher interest rates, as highlighted by the narrowing of
American Savings' yield-cost in recent years. As noted previously, the Bank's
yield-cost spread narrowed from 2.59 percent during fiscal 1994 to 2.17 percent
during fiscal 1996. However, given the Bank's current IEA/IBL ratio of 105.9
percent, which will become stronger following the infusion of conversion
proceeds, American Savings has the capacity to take on a certain degree of
interest rate risk and sustain positive, although lower, core earnings during
periods of moderately rising interest rates.
Lending Activities and Strategy
The Bank's lending activities have concentrated on the origination and
retention of 1-4 family permanent mortgage loans (see Exhibits I-9 and I-10,
which reflect loan composition and lending activity, respectively). As of
September 30, 1996, 1-4 family permanent mortgage loans accounted for $21.4
million or 79.1 percent of American Savings' total loan portfolio. The Bank's
second and third largest category of loans were consumer and commercial real
estate/multi-family loans, which totaled $2.6 million, or 9.5 percent, and $2.0
million, or 7.5 percent, of gross loans outstanding, respectively, at September
30, 1996. The balance of the loan portfolio was comprised of construction,
commercial business, and real estate sold on contract loans. Exhibit I-11
provides the contractual maturity of the Bank's loan portfolio, by loan type, as
of September 30, 1996.
American Savings originates fixed rate and balloon 1-4 family mortgage
loans, retaining all originations for portfolio. A substantial majority of the
Bank's 1-4 family permanent mortgage loans are underwritten in accordance with
FHLMC requirements. To enhance the interest sensitivity of the loan portfolio,
fixed rate loans offered by the Bank have terms of 20 years or less. Balloon
loan products currently offered by American Savings have 1 or 3 year balloon
periods, at which time the loan is subject to repricing or is repaid. Balloon
loans are initially priced to be competitive with 1 and 3 year ARM loan rates
offered in the Bank's lending area
<PAGE>
RP Financial, LC.
Page 1.12
and typically are repriced to a rate that is slightly above (generally 0.25
percent to 0.50 percent) the initial balloon rates being offered by the Bank at
the time of the adjustment. Balloon loans currently have a lifetime repricing
cap of 12.0 percent. At September 30, 1996, $5.6 million or 24.8 percent of the
Bank's 1-4 family permanent mortgage loans were balloon loans. The Bank will
originate 1-4 family permanent mortgage loans up to a maximum loan-to-value
("LTV") ratio of 95.0 percent, with private mortgage insurance ("PMI") being
required for loans with LTV ratios of greater than 85.0 percent.
Real estate sold on contract loans have comparable terms as permanent
mortgage loans offered by the Bank, except American Savings holds title to the
property until the balance is paid-off. Such loans are extended only on real
estate owned properties held by the Bank and, thus, does not represent an active
lending area for American Savings. As of September 30, 1996, real estate sold on
contract accounted for $374,000 or 1.4 percent of the Bank's loan portfolio.
On a limited basis, the Bank also originates construction loans, with such
loans primarily consisting of loan to finance the construction of 1-4 family
residences. To a lesser extent, American Savings provides construction financing
for multi-family and commercial properties. At September 30, 1996, the Bank had
$342,000 of construction loans, which accounted for 1.3 percent of total loans
outstanding. The Bank's construction lending activities for 1-4 family
residences typically consist of loans to finance the construction of pre-sold
single-family houses, which roll into a permanent loan upon completion of the
construction. Construction loans require payment of interest only during the
construction period and are offered at rates that are at a premium to the Bank's
1-4 permanent mortgage loan rates. Land loans constitute a minor portion of the
construction loan balance, typically consisting of 1-4 family lots and farmland.
Land loans generally require a LTV ratio of 60.0 percent or less and are
extended as three year balloon loans.
Commercial real estate and multi-family loans held by the Bank are
collateralized by properties in the Bank's normal lending territory. Commercial
real estate and multi-family loans are generally extended up to a LTV ratio of
75 percent and are originated as either short-term balloon loans or fixed rate
loans with terms of up to 20 years. Consistent with the higher credit risk
associated with commercial real estate and multi-family loans, loan rates
offered on those loans are at a premium to the Bank's 1-4 family loan rates.
Properties securing the commercial real estate and multi-family loan portfolio
include office buildings, retail shops, storage facilities, churches, and
residential apartments. American Savings' largest loans-to-one borrower
concentration is secured by multi-family and commercial real estate properties,
as well as single-family investment properties, with such loans totaling
$459,000 at September 30, 1996. All of the loans comprising the Bank's largest
loans-to-one-borrower concentration were performing in accordance with their
terms, as of September 30, 1996.
<PAGE>
RP Financial, LC.
Page 1.13
American Savings' diversification into non-mortgage lending has been
somewhat limited, consisting primarily of consumer loans. FHA insured home
improvement loans represent the Bank's most notable consumer lending activity
followed by auto loans. Home equity loans, loans secured by savings accounts and
mobile home loans also represent consumer lending activities conducted by
American Savings. FHA home improvement loans, which totaled $1.2 million at
September 30, 1996, are extended up to a balance of $25,000 and are offered as
fixed rate loans with amortization terms of up to 10 years. No equity is
required for FHA loans with balances of $25,000 or less, but they are 90 percent
insured by the FHA. FHA loans are priced at a premium to the Bank's 1-4 family
loan rates. The Bank has had some recent success in realizing growth in the
consumer loan portfolio, which has been supported by promotion and
diversification into new types of consumer lending. Consumer lending is a
desired growth area for the Bank, with such growth expected to be primarily
realized in the types of consumer loans currently offered by American Savings.
Other non-mortgage lending activities conducted by the Bank include
commercial businesss loans, which represent a very minor area of lending
diversification for American Savings. Commercial business loans held by the Bank
consist of secured loans extended to local businesses and are typically offered
as fixed rate loans with amortization terms of up to five years. At September
30, 1996, the Bank's commercial business loans amounted to $334,000 or 1.2
percent of total loans outstanding. Commercial business lending is expected to
remain as a minor area of lending diversification for the Bank.
Exhibit I-10, which shows the Bank's loan originations over the past two
fiscal years, highlights American Savings' emphasis on originating 1-4 family
permanent mortgage loans and recent emphasis on diversifying into consumer
lending. During fiscal years 1995 and 1996, 1-4 family loan originations
accounted for 64.2 percent and 61.3 percent of the Bank's total lending volumes,
respectively. Comparatively, consumer loan originations accounted for 25.3
percent and 26.0 percent of total originations over the same time period.
Overall, the Bank posted net loan growth of $2.3 million and $3.0 million during
fiscal years 1995 and 1996, respectively, with the stronger growth recorded in
fiscal 1996 being largely supported by higher originations of 1-4 family and
consumer loans. After several years of stagnant loan growth during the
early-1990s, the Bank's recent loan growth provides an indication that American
Savings has re-established itself as a competitive lender in the local market
area. Going forward, the Bank's lending strategy is to place a greater emphasis
on the origination of consumer loans, although the origination of 1-4 family
permanent mortgage loans is expected to remain as the Bank's most prominent
lending activity.
<PAGE>
RP Financial, LC.
Page 1.14
Asset Quality
The Bank's historical 1-4 family lending emphasis has generally supported
favorable credit quality measures. Over the past five fiscal years, American
Savings' non-performing assets-to-assets ratio has ranged from a high of 1.64
percent at fiscal year end 1993 to a low of 0.26 percent at fiscal year end
1994. As of September 30, 1996, the Bank held $328,000 of non-performing assets,
equaling 0.93 percent of total assets. Non-performing assets held by the Bank at
fiscal year end 1996 consisted of $74,000 of non-accruing loans and $254,000 of
accruing loans that are more than 90 days past due. As shown in Exhibit I-12,
the concentration of the Bank's non-performing loans consist of 1-4 family
permanent mortgage loans.
The Bank reviews and classifies assets on a monthly basis and determines
the adequacy of loan loss provisions on a quarterly basis, based on the overall
quality, size and composition of the loan portfolio, as well other factors such
as historical loss experience, industry trends and local real estate market and
economic conditions. At September 30, 1996, the Bank had $288,000 of assets
classified as substandard, $37,000 of assets classified as doubtful, and $15,000
of assets classified as loss. The Bank maintained valuation allowances of
$143,000 at September 30, 1996, equal to 0.53 percent of net loans receivable
and 43.6 percent of non-performing assets.
Funding Composition and Strategy
Deposits have consistently been the Bank's primary source of funds (see
Exhibits I-13 and I-14), and at September 30, 1996 deposits accounted for 93.9
percent of American Savings' interest-bearing liabilities. The Bank's deposit
composition has consistently been concentrated in CDs, with American Savings' CD
composition generally reflecting a higher concentration of shorter-term CDs
(maturities of one year or less). As of September 30, 1996, the CD portfolio
totaled $23.8 million, or 77.3 percent of total deposits, with 71.5 percent of
those CDs having maturities of one year or less. Jumbo CDs (CD accounts with
balances of $100,000 or more) amounted to $2.8 million or 11.7 percent of total
CDs at September 30, 1996. American Savings generally does not offer premium
rates for higher balance CDs. The Bank does not maintain any brokered CDs.
Deposit rates offered by the Bank are generally in the middle to upper end of
the range of rates offered by local competitors.
Lower costing savings and transaction accounts comprise the remainder of
American Savings' deposits, amounting to $7.0 million or 22.7 percent of total
deposits at September 30, 1996. Since fiscal year end 1994, the Bank's deposit
composition has exhibited an increase towards CDs. The shift in deposit
composition towards CDs reflects the more attractive rates being paid on CDs in
general, following the increase in market rates that occurred during 1994 and
early 1995. In comparison to the 22.7 percent ratio maintained at
<PAGE>
RP Financial, LC.
Page 1.15
September 30, 1996, savings and transaction accounts comprised 25.5 percent
of the Bank's deposits at September 30, 1994. Accordingly, due to the upward
repricing of CDs, and the shift in deposit composition away from lower costing
deposit accounts, the Bank's deposit costs have increased considerably during
the past two fiscal years.
Borrowings held by the Bank at fiscal year end 1996 consisted entirely of
FHLB advances. Typically, borrowings have not been utilized by the Bank, with
American Savings' limited growth in recent previous years curtailing the need
for additional funding. Comparatively, as American Savings realized stronger
asset growth during fiscal 1996, the Bank added $2.0 million of FHLB advances to
fund loan growth and to support control of deposit costs. Exhibit I-15 shows the
Bank's use of borrowed funds during the 1996 fiscal year. American Savings'
deposit growth and internal funding are expected to be adequate enough to fund
most of the Bank's lending and investment activities in the near term. If
additional borrowings are needed, the Bank maintains ample borrowing capacity
with the FHLB of Chicago.
Subsidiary
American Savings maintains one wholly-owned subsidiary, GBW Service
Corporation ("GBW"), and as of September 30, 1996, the Bank's equity investment
in this subsidiary was $118,000. The primary activity of GBW has been to collect
payments on real estate sold contracts. As of September 30, 1996, GBW held
$90,000 of real estate sold on contract, which have comparable repayment
features as loans except GBW holds title to the property until the balance is
paid-off. GBW also earns commission income on the sale of credit life and
disability insurance policies and collects premiums on any such outstanding
policies, which has been a very minor activity for the subsidiary. No other
subsidiary activities are being planned by the Bank at this time.
Legal Proceedings
The Bank is involved in routine legal proceedings occurring in the ordinary
course of business which, in the aggregate, are believed by management to be
immaterial to the financial condition of the Bank. On December 30, 1992, a
former employee filed a lawsuit against the Bank which involves various
accusations. A summary judgement has been issued by the court in favor of the
Bank on each count with the exception of one. Based on the current status of the
litigation, the Bank's attorneys have advised that while they are unable to
express an opinion as to the ultimate disposition of the claim, the believe that
it is unlikely that the former employee will prevail in the remaining count. No
accrual for loss has been recognized in the accompanying financial statements.
<PAGE>
RP Financial, LC.
Page 2.1
II. MARKET AREA
Introduction
American Savings conducts operations out of one full service office in
Danville, the county seat and largest town in Vermilion County, Illinois.
Vermilion County is located in east-central Illinois along the border of
Indiana, while Danville is located in east-central Vermilion County. The primary
market area for American Savings is considered to be Danville, supplemented by
additional business generated in the nearby communities also in Vermilion
County. Exhibit II-1 provides information on the Bank's office facility.
A community-oriented institution, American Savings has conducted business
in Vermilion County for over 100 years since it was established in 1888. In this
regard, the Bank has developed strong ties to the local community and benefits
from a loyal customer base. The Danville market area has yet to be targeted by
money center or super regional banks, with few exceptions, the predominant
competition for deposits and loans comes from other community oriented and
regional banks.
Future growth opportunities for American Savings depend in part on national
economic factors, the future growth in the market area, which has been measured
by indicators such as demographic growth trends, the health and stability of the
regional and local economy, and the nature and intensity of the competitive
environment for financial institutions. These factors have been briefly examined
to help determine the growth potential that exists for the Bank, and the
relative economic health of the Bank's market area.
Market Area Demographics
Demographic and economic growth trends, measured by changes in population,
number of households, age distribution and median household income, provide key
insight into the health of the Bank's market area (see Table 2.1). In the 1990s,
the Bank's market area has exhibited less favorable growth characteristics than
the comparative growth rates of Illinois and the U.S. Vermilion County's
population declined slightly from 1990 to 1995, versus comparative increases
posted by Illinois and the U.S. Growth in households mirrored the population
growth rates, further evidencing the less favorable growth characteristics
associated with Vermilion County. Over the next five years, population and
household growth trends are projected to remain negative in the Bank's primary
market area, although the rate of decline is expected to moderate.
Comparatively, Illinois and the U.S. are projected to sustain positive growth in
population and households for the balance of the decade, with their projected
growth rates being slightly less than recent historical trends.
<PAGE>
RP Financial, LC.
Page 2.2
--------------------------------------------------------------
Table 2.1
Summary Demographic Data
State and County Data
--------------------------------------------------------------
<TABLE>
<CAPTION>
Year
------------------------------------- Growth Rate Growth Rate
Population (000) 1990 1995 2000 1990-95 1995-2000
- ---------------- ---- ---- ---- ------- ---------
(%) (%)
<S> <C> <C> <C> <C> <C>
UNITED STATES 248,710 263,006 277,084 1.1% 1.0%
ILLINOIS 11,431 11,821 12,201 0.7% 0.6%
VERMILION COUNTY 88 87 87 -0.3% -0.1%
Households (000)
UNITED STATES 91,947 97,070 102,202 1.1% 1.0%
ILLINOIS 4,202 4,344 4,481 0.7% 0.6%
VERMILION COUNTY 34 34 33 -0.3% -0.1%
Median Household Income ($)
UNITED STATES $29,199 $33,610 $32,972 9.7% -0.4%
ILLINOIS 29,519 35,865 35,492 4.0% -0.2%
VERMILION COUNTY 25,801 26,156 25,171 0.3% -0.8%
Per Capita Income - 1995 ($)
UNITED STATES $13,179 $16,405 ---- 4.5% ----
ILLINOIS 12,666 17,047 ---- 6.1% ----
VERMILION COUNTY 11,015 13,027 ---- 3.4% ----
1995 Age Distribution(%) 0-14 Years 15-24 Years 25-44 Years 45-64 Years 65+ Years Median Age
- ------------------------ ---------- ----------- ----------- ----------- --------- ----------
UNITED STATES 22.1 13.8 31.8 19.5 12.8 34.0
ILLINOIS 22.2 13.8 31.7 19.5 12.7 32.8
VERMILION COUNTY 21.1 13.0 28.3 21.3 16.2 35.4
Less Than $15,000 to $25,000 to $50,000 to $100,000 to
1995 HH Income Dist.(%) $15,000 24,999 $49,999 $99,999 $149,999 $150,000+
- ----------------------- ------- ------ ------- ------- -------- ---------
UNITED STATES 20.5 15.8 33.8 23.7 4.2 2.0
ILLINOIS 18.9 14.7 34.3 25.5 4.4 2.2
VERMILION COUNTY 27.8 19.7 34.5 15.6 1.6 0.9
</TABLE>
Source: CACI, Inc.; U.S. Dept. of Commerce.
<PAGE>
RP Financial, LC.
Page 2.3
Median household and per capital income measures for Vermilion County were
lower than the Illinois and U.S. comparative measures in 1995. In general, the
lower than average income levels in the market area reflect the market area's
somewhat rural nature. The growth rates of median household and per capita
income in Vermilion County from 1990 to 1995 were lower than the Illinois and
U.S. comparative growth rates, indicating that the lack of population growth
occurring in the market area has translated into relatively slow economic growth
as well. Consistent with the U.S. and Illinois, household income is projected to
decline in Vermilion County for the balance of the decade. A slightly steeper
decline is projected for Vermilion County's household income compared to the
U.S. and Illinois, with Vermilion County's median household income in the year
2000 projected to be lower than the 1990 median. The general decline exhibited
in household income levels reflects that most of the job growth is being
realized in service related jobs, which tend to be relatively low paying jobs.
In summary, the demographic characteristics of Vermilion County are not
considered to be highly conducive for loan or deposit growth, and, thus,
American Savings' growth will be somewhat contingent upon gaining market share.
National Economic Factors
Over the past year, national economic growth has been mixed. Economic data
through most of the fourth quarter of 1995 suggested that the economy was on
track for a soft landing, as indicated by modest retail sales growth and a
stable inflation picture. Weak retail sales during the holiday shopping season
and a slight increase in the November unemployment rate provided indications of
a slowing national economy at the end of the fourth quarter. Economic data
released in January 1996 continued to indicate a generally sluggish economy, as
highlighted by the Federal Reserve's mid-January "Beige Book" report which
indicated slowing economic growth in its latest nationwide survey of economic
conditions. Record-breaking winter weather conditions further slowed the economy
in January of 1996. Unemployment declined sharply in February, although the
January figures were skewed by the weather and by striking GM workers. A
stronger than expected March 1996 employment report served to rekindle inflation
fears, while other economic indicators suggested that the pace of economic
growth was moderate and inflation was under control.
Higher oil and commodity prices heightened inflation concerns in late-April
1996; however, wages, which account for most of the inflation measures, did not
signal that inflation was heating up. Unemployment data for both May and June
suggested a strong pace of economic growth, with the stronger than expected job
growth pushing interest rates higher. Second quarter GDP increased at a healthy
4.7 percent annual rate, however, other economic measures, such as consumer and
producer prices, reflected a more modest pace of economic growth.
<PAGE>
RP Financial, LC.
Page 2.4
The third quarter of 1996 started with a continuation of second quarter
trends, although mid-July Congressional testimony by the Federal Reserve
Chairman hinted of expectations that the economy would taper off slightly in the
second half of 1996. However, much of the economic data released during July and
August continued to indicate a fairly robust pace of economic growth. Such
economic data included a stronger than expected increase in July durable good
orders, the consumer confidence index hitting a six year high and a decline in
the August unemployment rate. Comparatively, for the balance of the third
quarter, economic data, such as a decline in August durable good orders and
smaller than expected increases in August retail sales and consumer prices,
suggested that the economy was cooling off. A slight increase in the September
unemployment rate further signaled a slowing economy.
Economic data released in the beginning of the fourth quarter generally
confirmed that the national economy was slowing. October unemployment remained
at 5.2 percent, although the number of new jobs being added to the economy was
lower compared to job growth recorded during the late-spring and the summer.
Third quarter GDP growth fell to a 2.2 percent annual rate, versus a comparative
4.7 percent rate in the second quarter. Wage data indicated that inflation was
under control, as wages remained flat for production and nonsupervisory workers
in October, despite a $0.50 increase in the minimum wage becoming effective on
October 1, 1996. Modest increases in the October consumer price index and
October retail sales provided further indications that the national economy was
slowing.
Consistent with the mixed economic activity, interest rate trends have been
varied as well over the past year. Interest rates generally trended lower in the
fourth quarter of 1995, due to the slowing of the economy. The sluggish economy
and a 0.25 percent cut in short-term interest rates by the Federal Reserve
pushed the yield on 30-year U.S. Government bond to slightly below 6.0 percent
at year end 1995. Following another 0.25 percent rate cut by the Federal Reserve
in January 1996, interest rates moved higher during the balance of the first
quarter. The upward trend in interest rates reflected generally improving
economic conditions and indications that the Fed would not cut interest rates
further due to mixed inflation signals.
Interest rates continued to edge higher during the second quarter and the
30-year U.S. Government bond yield climbed above 7.0 percent following the
stronger than expected May job growth reported in early-June. The favorable June
employment report had a more severe effect on bond prices, as the large drop in
unemployment provided for one of the largest one day declines in bond prices
with the yield on the 30-year benchmark bond increasing from 6.93 percent to
7.18 percent. During the balance of third quarter, economic data which contained
mixed inflation signals provided for an uneven interest rate environment. After
trending lower for a brief period in July and August, another spike in interest
rates was experienced in late-August and early-September as inflation concerns
were raised by the stronger than expected economic growth. Comparatively, aided
by the Federal Reserve's decision not to raise interest rates at its September
and October
<PAGE>
RP Financial, LC.
Page 2.5
meetings, along with economic data providing indications of a cooling economy,
interest rates declined in late-September and through most of October. Interest
rates continued to edge lower through mid-November, as the October economic data
suggested that inflationary pressures were non-threatening. As of November 15,
1996, one- and thirty-year U.S. Government bonds were yielding 5.38 percent and
6.46 percent, respectively. Exhibit II-2 provides historical interest rate
trends from 1991 through November 15, 1996.
Local Economy
The Vermilion County economy has traditionally been supported by
manufacturing, supplemented by employment in services, wholesale/retail trade
and miscellaneous other employment sectors. While manufacturing employment
continues to account for the highest proportion of industry earnings in
Vermilion County, in recent years manufacturing employment has been declining
and employment growth has been occurring mostly in services and wholesale/retail
trade. Based on 1994 data (the most recent data available), the largest
employment sector in Vermilion County is the services industry (24 percent of
total employment) followed by wholesale/retail trade (23 percent of total
employment) and the manufacturing sector (19 percent of total employment). The
balance of employment in Vermilion County is concentrated in government and
government enterprises.
Economic activity in Vermilion County is concentrated in Danville, the
largest city in Vermilion County. The current largest manufacturing employer in
Vermilion County is NACCO Materials Handling Group, which manufactures
forklifts, trucks and parts, and employs approximately 1,300. The largest non-
manufacturing private employer is the United Samaritans Medical Center, which is
the largest employer in Vermilion County with approximately 1,400 employees.
Other major private employers in Vermilion County include Devro-Teepak, Inc., a
manufacturer of plastic packaging films with 790 employees, CCL Custom
Manufacturing, a packager of liquid and aerosol products with 670 employees, and
McLane Midwest Company, Inc., a distributor with 665 employees. While
manufacturing employment has declined in Vermilion County during recent years,
due to closures, relocations, and layoffs, six new employers were announced in
1995-1996 which added approximately 390 jobs to the Vermilion County economy.
Overall the Vermilion County economy is fairly diverse, although the
concentration of earnings in manufacturing jobs somewhat exposes the economy to
national economic downturns. Unemployment in Vermilion County was 6.7 percent as
of September 1996, down slightly from a year ago; however, well above the
comparative U.S. and Illinois unemployment rates of 5.0 percent and 4.9 percent,
respectively. Comparative unemployment rates for Vermilion County, the U.S. and
Illinois are shown in Table 2.2. Vermilion County's relatively high unemployment
rate tends to be a characteristic of rural market areas in general.
<PAGE>
RP Financial, LC.
Page 2.6
Table 2.2
American Savings Bank of Danville
Selected Unemployment Rates(1)
September 1995 September 1996
Region Unemployment Unemployment
------ -------------- --------------
United States 5.4% 5.0%
Illinois 4.8 4.9
Vermilion County 6.8 6.7
(1) Data is not seasonally adjusted.
Source: Bureau of Labor Statistics.
Competition
Competition among financial institutions in the market area is substantial.
At this time, American Savings' market is dominated by community and regional
banks. Competition in the market area served by the Bank has been further
intensified by the decline in population, leaving fewer potential growth
opportunities within the primary market area served by American Savings.
The Bank's retail deposit base is closely tied to the economic fortunes of
Vermilion County. Table 2.3 displays deposit market trends over the past several
years for Vermilion County, with additional data presented for the State of
Illinois. The data indicates that deposit growth in the Bank's primary market
area was comparable to the Illinois deposit growth rate, with deposit growth by
commercial banks and credit unions being partially offset by a decline in thrift
deposits. The modest deposit growth rates exhibited by Illinois and Vermilion
County were consistent with the national deposit market environment for
financial institutions during the period covered in Table 2.3, in light of the
relatively low market rates being offered for CDs and the more attractive
returns that were being realized through investing in the stock market.
In contrast to the deposit shrinkage recorded by Vermilion County thrifts
overall, American Savings realized a slight increase in deposits from June 30,
1993 to June 30, 1995. The Bank's 0.9 percent annual deposit growth rate served
to preserve its market share of Vermilion County deposits at 3.2 percent. Future
deposit growth by the Bank should be enhanced by the conversion, as the
additional capital will improve American Savings' competitive position and
leverage capacity. At the same time, the notable competitive market forces
within the Bank's primary market area will somewhat limit its capacity to
realize notable gains in deposit market share without paying above market rates
for deposits. To augment the deposit growth that is possible internally, the
Bank may seek deposit growth opportunities through acquiring branches or other
<PAGE>
RP Financial, LC.
Page 2.7
---------------------------------
Table 2.3
American Savings Bank of Danville
Deposit Summary
---------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
As of June 30,
-----------------------------------------------------------------------
1993 1995
--------------------------------- -------------------------------- Deposit
Market Number of Market No. of Growth Rate
Deposits Share Branches Deposits Share Branches 1993-1995
-------- ----- -------- -------- ----- -------- ---------
(Dollars In Thousands) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
A. Deposit Summary
State of Illinois $196,224,674 100.0% 4,064 $200,533,147 100.0% 4,160 1.1%
Commercial Banks 137,353,042 70.0% 2,420 144,208,086 71.9% 2,626 2.5%
Credit Unions 11,244,485 5.7% 790 11,516,109 5.7% 726 1.2%
Savings Institutions 47,627,147 24.3% 854 44,808,952 22.3% 808 -3.0%
Vermilion County $973,557 100.0% 54 $995,182 100.0% 50 1.1%
Commercial Banks 676,252 69.5% 29 696,048 69.9% 27 1.5%
Credit Unions 103,695 10.7% 19 109,876 11.0% 18 2.9%
Savings Institutions 193,610 19.9% 6 189,258 19.0% 5 -1.1%
American Savings 30,853 3.2% 1 31,387 3.2% 1 0.9%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Sources: FDIC; OTS; Thompson Credit Union Directory.
<PAGE>
RP Financial, LC.
Page 2.8
financial institutions, but, at this time, the Bank has no definite plans
to acquire additional branches or other financial institutions.
<PAGE>
RP Financial, LC.
Page 3.1
III. PEER GROUP ANALYSIS
This chapter presents an analysis of American Savings' operations versus a
group of comparable savings institutions (the "Peer Group") selected from the
universe of all publicly-traded savings institutions. The basis of the pro forma
market valuation of American Savings is provided by these institutions. Factors
affecting the Bank's pro forma value such as financial condition, credit risk,
interest rate risk, loan composition and recent operating results can be readily
assessed in relation to the Peer Group. Current market pricing of the Peer
Group, subject to appropriate adjustments to account for differences between
American Savings and the Peer Group, will then be used as a basis for the pro
forma valuation of American Savings' to-be-issued common stock.
Selection of Peer Group
We consider the appropriate Peer Group to be comprised of only those
publicly-traded savings institutions whose common stock is either listed on a
national exchange or is NASDAQ listed, since the market for companies trading
in this fashion is regular and reported. We believe non-listed institutions
are inappropriate since the trading activity for thinly-traded stocks is
typically highly irregular in terms of frequency and price and may not be a
reliable indicator of market value. We have also excluded from the Peer Group
those companies under acquisition, mutual holding companies and recent
conversions, since their pricing ratios are subject to distortion and/or do
not have a seasoned trading history.
From the universe of publicly-traded thrifts, we selected ten institutions
with characteristics similar to those of American Savings. In the selection
process, we applied two primary "screens" to the universe of all public
companies:
o Screen #1. Illinois and Indiana institutions with assets of less than
$300 million, equity-to-assets ratios of 8.0 percent to 20.0 percent,
positive core earnings of 0.75 percent or less of average assets, and
non-performing assets-to-assets ratios of less than 2.0 percent. Nine
companies met the criteria for Screen #1 and six were included in the
Peer Group: AmTrust Capital Corp. of Indiana, Home Building Bancorp of
Indiana, LSB Financial Corp. of Indiana, MFB Corp. of Indiana, North
Bancshares of Illinois and Sobieski Bancorp of Indiana. One of the
companies was excluded due to the recency of its conversion: Citizens
First Financial Corp. of Illinois (conversion completed May 1996). The
other two companies were excluded on the basis of their operating
strategies, which were not consistent with American Savings'
traditional thrift operating strategy. The operating strategies of
Indiana Community Bank of Indiana and First Financial Bancorp of
Illinois placed an emphasis on retail banking and mortgage banking,
respectively, which provided those institutions with somewhat
different earnings compositions compared to a traditional thrift's
earnings. Exhibit III-2 details the financial characteristics of all
publicly-traded Illinois and Indiana Institutions.
<PAGE>
RP Financial, LC.
Page 3.2
o Screen #2. Midwest institutions with assets of less than $300 million,
equity-to-assets ratios of 8.0 percent to 20.0 percent, positive core
earnings of 0.75 percent or less of average assets, and non-
performing assets-to-assets ratios of less than 2.0 percent. Six
institutions met the selection criteria for Screen #2 (see Exhibit
III-3) and four were included as part of American Savings' Peer Group:
First Franklin Corp. of Ohio, First Federal Bancorp of Minnesota,
Three Rivers Financial Corp. of Michigan and Horizon Financial
Services of Iowa. The two companies not selected for the Peer Group
(Glenway Financial Corp. of OH and Suburban Bancorp of OH) had market
capitalizations in excess of $20 million, which was considered to be a
fairly significant differentiating factor in light of the relatively
small size of the Bank's proposed offering (less than $5.0 million).
Table 3.1 on the following page shows the general characteristics of each
of the Peer Group companies and Exhibit III-4 provides summary demographic data
for the primary market areas served by each of the Peer Group companies. While
there are some differences between the Peer Group companies and American
Savings, we believe that the Peer Group provides a good representation of
publicly-traded thrifts with operations comparable to those of the Bank and,
thus, will provide a good basis for valuation. The following sections present a
comparison of American Savings' financial condition, income and expense trends,
loan composition, interest rate risk and credit risk versus the Peer Group. The
conclusions drawn from the comparative analysis are then factored into the
valuation analysis discussed in the final chapter.
A summary description of the key characteristics of each of the Peer Group
companies, which we determined warranted their inclusion as a comparable
institution to American Savings, is detailed below.
o AmTrust Capital Corp. of IN. Selected due to Indiana market area,
traditional thrift operating strategy, small asset size, comparable
interest-earning asset mix, and core earnings depressed by a relatively low
net interest margin.
o First Federal Bancorp of MN. Selected due to traditional thrift operating
strategy, similar funding composition, and comparability of capital
position to the Bank's pro forma equity-to-assets ratio.
o First Franklin Corp. of OH. Selected due to traditional thrift operating
strategy, similar interest-earning asset mix, comparable funding
composition, similar net interest margin, and similar concentration of
mortgage-backed securities and 1-4 family permanent mortgage loans
comprising the loan and MBS portfolio.
o Home Building Bancorp of IN. Selected due to Indiana market area,
traditional thrift operating strategy, small asset size, similar size of
branch network, comparable interest-earning asset mix, similar funding
composition, comparability of capital position to the Bank's pro forma
equity-to-assets ratio, and similar concentration of mortgage-backed
securities and 1-4 family permanent mortgage loans comprising the loan and
MBS portfolio.
o Horizon Financial Services of IA. Selected due to traditional thrift
operating strategy, small asset size, and comparability of capital position
to the Bank's pro forma equity-to-assets ratio.
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.1
Peer Group of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FFHS First Franklin Corp. of OH OTC Cincinnati OH Thrift 218 7 12-31 01/88 17.25 20
MFBC MFB Corp. of Mishawaka IN OTC Northern IN Thrift 211 J 4 09-30 03/94 16.00 32
LSBI LSB Fin. Corp. of Lafayette IN OTC Central IN Thrift 178 3 12-31 02/95 18.87 17
NBSI North Bancshares of Chicago IL OTC Chicago IL Thrift 117 2 06-30 12/93 16.50 18
BDJI First Fed. Bancorp. of MN OTC Northern MN Thrift 107 5 09-30 04/95 16.50 12
THR Three Rivers Fin. Corp. of MI AMEX Southwest MI Thrift 87 J 4 06-30 08/95 13.87 12
SOBI Sobieski Bancorp of S. Bend IN OTC Northern IN Thrift 79 J 3 06-30 03/95 13.50 12
HZFS Horizon Fin'l. Services of IA OTC Central IA Thrift 77 3 06-30 06/94 14.75 7
ATSB AmTrust Capital Corp. of IN OTC Northcentral IN Thrift 72 J 3 06-30 03/95 10.00 5
HBBI Home Building Bancorp of IN OTC Southwest IN Thrift 43 2 09-30 02/95 17.50 5
</TABLE>
NOTES: (1) Or most recent date available (M=March, S=September, D=December,
J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift,
M.B.=Mortgage Banker, R.E.=Real Estate Developer,
Div.=Diversified, and Ret.=Retail Banking.
(3) FDIC savings bank institution.
Source: Corporate offering circulars, data derived from information published in
SNL Securities Quarterly Thrift Report, and financial reports of
publicly-traded thrifts.
Date of Last Update: 11/20/96
<PAGE>
RP Financial, LC.
Page 3.4
o LSB Financial Corp. of Lafayette IN. Selected due to Indiana market area
and traditional thrift operating strategy.
o MFB Corp. of Mishawaka IN. Selected due to Indiana market area, traditional
thrift operating strategy, and high concentration of 1-4 family permanent
mortgage loans comprising loan and MBS portfolio.
o North Bancshares of Chicago IL. Selected due to Illinois market area,
traditional thrift operating strategy, comparability of capital position to
the Bank's pro forma equity-to-assets ratio, and high concentration of
mortgage-backed securities and 1-4 family permanent mortgage loans
comprising the loan and MBS portfolio.
o Sobieski Bancorp of South Bend IN. Selected due to Indiana market area,
traditional thrift operating strategy, small asset size, similar
interest-earning asset mix, comparable funding composition, and high
concentration of mortgage-backed securities and 1-4 family permanent
mortgage loans comprising the loan and MBS portfolio.
o Three Rivers Financial Corp. of MI. Selected due to traditional thrift
operating strategy, small asset size, and comparability of capital position
to the Bank's pro forma equity-to-assets ratio.
In aggregate, the Peer Group companies are similarly capitalized as the
industry average (12.91 percent of assets versus 12.97 percent for the all SAIF
average), generate lower earnings (0.37 percent ROAA versus 0.72 percent for the
all SAIF average), and generate a lower ROE (2.70 percent versus 6.35 percent
for the all SAIF average). Overall, the Peer Group's average P/B ratio and P/E
multiple were below and above the respective comparable SAIF averages.
As of November 15, 1996
-----------------------
Peer All SAIF
Group Insured
----- -------
Equity-to-Assets 13.91% 12.97%
Return on Assets ("ROA") 0.37 0.72
Return on Equity ("ROE") 2.70 6.35
Price-to-Book ratio ("P/B") 91.34% 114.64%
Price-to-Earnings multiple ("P/E") 19.23x 16.26x
Price-to-Assets ratio ("P/A") 11.74% 14.06%
Source: Table 4.4 - Chapter IV Valuation Analysis.
Ideally, the Peer Group companies would be comparable to American Savings
in terms of all of the selection criteria, but the universe of publicly-traded
thrifts does not provide for an appropriate number of such
<PAGE>
RP Financial, LC.
Page 3.5
companies. However, in general, the companies selected for the Peer Group were
fairly comparable to American Savings, as will be highlighted in the following
comparative analysis.
Financial Condition
Table 3.2 shows comparative balance sheet measures for American Savings and
the Peer Group, reflecting the expected similarities and some differences given
the selection procedures outlined above. The Bank's ratios reflect balances as
of September 30, 1996, while the Peer Group's ratios are based on data as of
June 30, 1996 or September 30, 1996. American Savings' net worth base of 6.6
percent was below the Peer Group's average net worth ratio of 12.9 percent;
however, with the addition of stock proceeds, the Bank's pro forma capital
position (consolidated with the holding company) can be expected to be
comparable to the Peer Group's ratio. Both the Bank's and the Peer Group's
capital included nominal balances of intangibles. The increase in American
Savings' pro forma capital position will be favorable from a risk perspective
and in terms of future earnings potential that may be realized through leverage
and lower funding costs. Both the Bank's and the Peer Group's capital ratios
reflected capital surpluses with respect to the regulatory capital requirements,
with the Peer Group's ratios currently indicating greater capital surpluses.
Again on a pro forma basis, the Bank's regulatory capital surpluses will be
fairly comparable to the Peer Group's.
The interest-earning asset compositions for the Bank and the Peer Group
were somewhat similar, with loans and mortgage-backed securities constituting
the bulk of interest-earning assets for both American Savings and the Peer
Group. American Savings' combined level of loans and mortgage-backed securities
was higher than the Peer Group's ratio (85.8 percent versus 76.2 percent for the
Peer Group), with the Bank maintaining a higher concentration of loans and a
similar concentration of mortgage-backed securities relative to the comparative
Peer Group ratios. Comparatively, the Peer Group's cash and investments-to-
assets ratio was higher than the comparable ratio for American Savings (20.5
percent versus 12.0 percent for the Bank). Overall, American Savings'
interest-earning assets amounted to 97.8 percent of assets, which was above the
comparable Peer Group ratio of 96.7 percent.
American Savings' funding liabilities reflect a funding strategy similar to
that of the Peer Group's funding composition. The Bank's deposits equaled 86.6
percent of assets, which was higher than the Peer Group average of 72.4 percent.
Partially offsetting American Savings' higher ratio of deposits was its lower
level of borrowings, as the Bank and the Peer Group posted borrowings-to-assets
ratios of 5.6 percent and 13.5 percent, respectively. Accordingly, the Bank was
considered to have slightly greater borrowing capacity than the Peer Group,
although both American Savings and the Peer Group were considered to have ample
borrowing capacities. Total interest-bearing liabilities maintained by the Bank
and the Peer Group, as a
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.2
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of September 30, 1996
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
----------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref.Stock
----------- ------ ------ -------- -------- ------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Savings Bank
- ---------------------
September 30, 1996 12.0 76.0 9.8 86.6 5.6 0.0 6.6 0.0 6.6 0.0
SAIF-Insured Thrifts 17.9 66.5 12.4 71.8 13.9 0.1 12.6 0.2 12.4 0.0
State of IL 18.6 67.8 10.3 72.7 12.9 0.1 12.7 0.2 12.5 0.0
Comparable Group Average 20.5 66.4 9.8 72.4 13.5 0.0 12.9 0.0 12.9 0.0
Mid-West Companies 20.5 66.4 9.8 72.4 13.5 0.0 12.9 0.0 12.9 0.0
Comparable Group
- ----------------
Mid-West Companies
- ------------------
ATSB AmTrust Capital Corp. of IN(1) 15.5 71.4 6.2 62.0 26.4 0.0 10.0 0.0 10.0 0.0
BDJI First Fed. Bancorp. of MN 39.8 47.6 9.0 75.6 11.1 0.0 11.5 0.0 11.5 0.0
FFHS First Franklin Corp. of OH 11.0 68.0 18.6 86.7 3.3 0.0 9.1 0.1 9.0 0.0
HBBI Home Building Bancorp of IN 17.5 66.0 13.6 76.7 9.3 0.0 12.9 0.0 12.9 0.0
HZFS Horizon Fin'l. Services of IA 30.9 66.0 0.0 72.0 16.5 0.0 10.7 0.0 10.7 0.0
LSBI LSB Fin. Corp. of Lafayette IN 6.7 87.8 2.2 65.4 24.9 0.0 9.4 0.0 9.4 0.0
MFBC MFB Corp. of Mishawaka IN(1) 20.8 65.9 11.8 73.1 8.3 0.0 17.9 0.0 17.9 0.0
NBSI North Bancshares of Chicago IL 31.4 59.9 6.8 62.0 20.3 0.0 15.1 0.0 15.1 0.0
SOBI Sobieski Bancorp of S. Bend IN(1) 8.8 67.3 20.5 77.6 3.8 0.0 17.8 0.0 17.8 0.0
THR Three Rivers Fin. Corp. of MI(1) 22.4 64.3 9.6 73.1 10.6 0.0 14.7 0.1 14.6 0.0
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Annual Growth Rates Regulatory Capital
------------------------------------------------------------ -------------------------
Cash and Loans Borrows. Net Tng Net
Assets Investments & MBS Deposits &Subdebt Worth Worth Tangible Core Reg.Cap.
------ ----------- ------ -------- -------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Savings Bank
- ---------------------
September 30, 1996 4.36 -14.63 7.79 -1.94 NM -3.57 -3.53 6.63 NM 15.33
SAIF-Insured Thrifts 11.41 6.46 12.05 5.67 11.15 0.89 0.52 10.78 10.82 22.85
State of IL 13.44 4.50 12.12 5.90 15.54 -4.59 -4.85 9.84 10.50 22.36
Comparable Group Average 9.05 -10.52 7.97 1.19 54.56 -7.30 -7.39 11.03 11.03 25.55
Mid-West Companies 9.05 -10.52 7.97 1.19 54.56 -7.30 -7.39 11.03 11.03 25.55
Comparable Group
- ----------------
Mid-West Companies
- ------------------
ATSB AmTrust Capital Corp. of IN(1) 5.70 7.79 1.56 -11.78 100.00 -5.58 -5.58 9.86 9.86 NM
BDJI First Fed. Bancorp. of MN 7.77 8.94 6.55 -1.24 NM - 18.34 - 18.34 9.55 9.55 19.39
FFHS First Franklin Corp. of OH 4.13 -20.76 7.52 3.17 31.10 -0.15 -1.00 6.40 6.40 14.47
HBBI Home Building Bancorp of IN 2.14 -3.43 2.94 4.35 -2.31 -9.51 -9.51 10.07 10.07 20.95
HZFS Horizon Fin'l. Services of IA 9.36 NM -10.47 5.75 45.30 -4.39 -4.39 NM NM NM
LSBI LSB Fin. Corp. of Lafayette IN 17.95 -41.68 27.36 6.32 98.72 -7.79 -7.79 8.84 8.84 13.93
MFBC MFB Corp. of Mishawaka IN(1) 15.37 -7.27 23.69 7.58 NM 0.21 0.21 14.90 14.90 35.67
NBSI North Bancshares of Chicago IL 7.94 3.35 10.00 -0.96 NM - 16.54 - 16.54 14.49 14.49 40.10
SOBI Sobieski Bancorp of S. Bend IN(1) 0.79 -31.08 5.79 -3.03 NM -3.56 -3.56 13.37 13.37 35.21
THR Three Rivers Fin. Corp. of MI(1) 19.32 NM 4.80 1.73 NM NM NM 11.78 11.78 24.69
</TABLE>
(1) Financial information is for the quarter ending June 30, 1996.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, Inc. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.7
percent of assets, equaled 92.2 percent and 85.9 percent, respectively, with the
Peer Group's lower ratio being supported by maintenance of a higher capital
position.
A key measure of balance sheet strength for a thrift institution is its
IEA/IBL ratio. Presently, the Bank's IEA/IBL ratio is lower than the Peer
Group's ratio, based on respective ratios of 105.9 percent and 112.6 percent.
The additional capital realized from stock proceeds should largely address the
lower IEA/IBL ratio currently maintained by the Bank, as the interest free
capital realized in American Savings' stock offering will be deployed into
interest-earning assets.
The growth rate section of Table 3.2 shows annual growth rates for key
balance sheet items. American Savings' growth rates are based on annual growth
for the twelve months ended September 30, 1996, while the Peer Group's growth
rates are based on annual growth for the twelve months ended June 30, 1996 or
September 30, 1996. Asset growth rates of 4.4 percent and 9.1 percent were
posted by the Bank and the Peer Group, respectively. American Savings' asset
growth was largely attributable to loan growth, which was in part funded by
redeployment of cash and investments. Similarly, growth in loans and
mortgage-backed securities accounted for the Peer Group's asset growth, as a
negative growth rate was also realized in the Peer Group's balance of cash and
investments. Overall, the Peer Group's asset growth measures would tend to
support greater earnings growth relative to the Bank's measures. However,
following the conversion, American Savings' leverage capacity will be comparable
to the Peer Group's.
Borrowings funded the Bank's asset growth, as well as a modest decline in
deposits. American Savings' not meaningful borrowings growth rate resulted from
$2.0 million of borrowings being added to a zero balance of borrowings during
fiscal 1996. The Peer Group's asset growth was funded by deposits and
borrowings, with the Peer Group's lower balance of borrowings exhibiting a
significantly higher growth rate. In fact, the Peer Group's borrowings growth
rate shown in Table 3.2 is somewhat understated, as it does not include the
borrowings growth rates of the Peer Group companies which recorded a more than
100 percent increase in borrowings during the twelve month period. In fact, all
five Peer Group companies with "NMs" indicated as borrowing growth rates in
Table 3.2 posted borrowing growth rates in excess of 100 percent. Both the Bank
and the Peer Group recorded negative capital growth rates. American Savings'
decline in capital reflects the net loss recorded during fiscal 1996, as well as
a negative SFAS 115 adjustment pertaining to unrealized gains and losses on
securities maintained as available for sale. Despite the more favorable return
on average assets posted by the Peer Group, a slightly higher negative capital
growth rate was exhibited by the Peer Group. Dividend payments, and stock
repurchases, as well as possible negative SFAS 115 adjustments, were likely
factors that accounted for the Peer Group's slightly higher negative capital
growth rate.
<PAGE>
RP Financial, LC.
Page 3.8
Income and Expense Components
American Savings and the Peer Group reported net income to average assets
ratios of negative 0.20 percent and positive 0.37 percent, respectively (see
Table 3.3), based on earnings for the twelve months ended September 30, 1996, or
for the twelve months ended June 30, 1996 for some of the Peer Group companies.
Both the Bank's and the Peer Group's earnings were depressed by the one time
assessment to recapitalize the SAIF. With the exception of the SAIF assessment,
the Bank's and the Peer Group's earnings were fairly representative of their
core earnings, as other non-recurring items were not material factors in their
respective earnings. The Peer Group's higher earnings were realized primarily
through maintenance of a stronger net interest margin and a higher level of
non-interest operating income, which was partially negated by the Bank's lower
level of operating expenses. Further contributing to the Peer Group's higher
return was the absence of the special SAIF assessment for the Peer Group
companies which reported earnings for the twelve months ended June 30, 1996.
The Peer Group's stronger net interest margin resulted from a lower
interest expense ratio, which was partially offset by the Bank's higher interest
income ratio. As highlighted in the yield-cost section of Table 3.3, American
Savings' higher interest income ratio was realized through earning a slightly
higher yield on interest-earning assets, which was supported by the higher
concentration of loans maintained by the Bank relative to the Peer Group average
(76.0 percent versus 66.4 percent for the Peer Group). The higher level of
interest-earning assets maintained by the Bank (97.8 percent of assets versus
96.7 percent for the Peer Group) further contributed to American Savings' more
favorable interest income ratio. Likewise, the Peer Group's lower interest
expense ratio was supported by a lower cost of funds and maintenance of a lower
level of interest-bearing liabilities. The Peer Group's lower cost of funds
indicates that the Bank has a relatively high cost of deposits, as borrowings,
which tend to be higher costing than deposits, accounted for a higher portion of
the Peer Group's funding composition (13.5 percent of assets versus 5.6 percent
for the Bank). The lower level of interest-bearing liabilities maintained by the
Peer Group (85.9 percent of assets versus 92.2 percent for American Savings)
further contributed to the Peer Group's lower interest expense ratio. Following
the infusion of conversion proceeds, the Bank's ratio of interest-bearing
liabilities to assets will be more comparable to the Peer Group average.
Overall, American Savings and the Peer Group reported net interest income to
average assets ratios of 2.47 percent and 3.19 percent, respectively.
In another key area of core earnings strength, the Bank and the Peer Group
reported operating expense to average assets ratios of 1.97 percent and 2.53
percent, respectively. It should be noted that the one time SAIF assessment
expense has been reflected as a non-operating item for the Bank and the Peer
Group companies which reported earnings for the twelve months ended September
30, 1996. Accordingly, the operating expense ratios posted by the Bank and the
Peer Group were considered to be representative of their
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.3
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended September 30, 1996
<TABLE>
<CAPTION>
Net Interest Income Other Income G&A/Other Exp.
----------------------------- -------------------- ---------------
Loss NII Total
Net Provis. After Loan R.E. Other Other G&A Goodwill
Income Income Expense NII on IEA Provis. Fees Oper. Income Income Expense Amort.
------ ------ ------- ------ ------- ------- ---- ----- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Savings Bank
- ---------------------
September 30, 1996 -0.20 7.59 5.12 2.47 0.23 2.24 0.03 0.00 0.10 0.13 1.97 0.00
SAIF-Insured Thrifts 0.71 7.36 4.16 3.20 0.12 3.08 0.12 0.00 0.31 0.43 2.23 0.02
State of IL 0.50 7.17 4.17 3.00 0.08 2.92 0.09 0.05 0.33 0.47 2.35 0.01
Comparable Group Average 0.37 7.33 4.14 3.19 0.23 2.96 0.01 -0.01 0.32 0.32 2.53 0.01
Mid-West Companies 0.37 7.33 4.14 3.19 0.23 2.96 0.01 -0.01 0.32 0.32 2.53 0.01
Comparable Group
- ----------------
Mid-West Companies
- ------------------
ATSB AmTrust Capital Corp. of IN(1) 0.48 7.07 4.40 2.67 0.18 2.49 0.00 0.00 0.53 0.53 2.95 0.00
BDJI First Fed. Bancorp. of MN 0.31 7.24 3.92 3.33 0.00 3.33 0.00 0.01 0.51 0.52 2.75 0.00
FFHS First Franklin Corp. of OH 0.28 7.23 4.54 2.69 0.04 2.65 0.05 0.00 0.14 0.19 1.91 0.01
HBBI Home Building Bancorp of IN -0.32 7.55 4.13 3.43 0.96 2.47 0.00 0.00 0.28 0.28 2.52 0.00
HZFS Horizon Fin'l. Services of IA 0.13 7.61 4.34 3.27 0.57 2.70 0.00 -0.09 0.45 0.36 2.57 0.00
LSBI LSB Fin. Corp. of Lafayette IN 0.50 7.74 4.37 3.36 0.49 2.88 0.05 0.00 0.25 0.30 2.44 0.00
MFBC MFB Corp. of Mishawaka IN(1) 0.73 6.92 3.94 2.97 0.02 2.96 0.00 0.00 0.17 0.17 1.94 0.00
NBSI North Bancshares of Chicago IL 0.34 7.23 3.96 3.26 0.01 3.25 0.00 0.00 0.17 0.17 2.52 0.00
SOBI Sobieski Bancorp of S. Bend IN(1) 0.43 7.06 3.91 3.14 0.00 3.14 0.00 0.00 0.22 0.22 2.66 0.00
THR Three Rivers Fin. Corp. of MI(1) 0.82 7.70 3.93 3.78 0.08 3.70 0.00 0.02 0.48 0.51 3.02 0.04
</TABLE>
<TABLE>
<CAPTION>
Non-Op. Items Yields, Costs, and Spreads
-------------- -------------------------
MEMO: MEMO:
Net Extrao. Yield Cost Yld-Cost Assets/ Effective
Gains Items On Assets Of Funds Spread FTE Emp. Tax Rate
------- ------- --------- -------- ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
American Savings Bank
- ---------------------
September 30, 1996 -0.59 0.00 7.63 5.46 2.17 3,939 0.00
SAIF-Insured Thrifts -0.19 0.00 7.62 4.84 2.78 4,054 35.23
State of IL -0.29 0.00 7.50 4.87 2.63 3,703 32.14
Comparable Group Average -0.14 0.00 7.57 4.88 2.69 3,264 35.10
Mid-West Companies -0.14 0.00 7.57 4.88 2.69 3,264 35.10
Comparable Group
- ----------------
Mid-West Companies
- ------------------
ATSB AmTrust Capital Corp. of IN(1) 0.68 0.00 7.47 4.98 2.48 2,568 36.45
BDJI First Fed. Bancorp. of MN -0.57 0.00 7.50 4.62 2.88 2,750 40.60
FFHS First Franklin Corp. of OH -0.51 0.00 7.37 5.04 2.34 4,549 31.50
HBBI Home Building Bancorp of IN -0.52 0.00 7.76 4.83 2.93 3,040 NM
HZFS Horizon Fin'l. Services of IA -0.30 0.00 7.85 4.96 2.90 3,194 26.15
LSBI LSB Fin. Corp. of Lafayette IN 0.07 0.00 8.00 4.92 3.08 3,014 37.94
MFBC MFB Corp. of Mishawaka IN(1) 0.02 0.00 7.03 4.99 2.04 4,297 39.86
NBSI North Bancshares of Chicago IL -0.41 0.00 7.38 4.97 2.41 3,653 30.48
SOBI Sobieski Bancorp of S. Bend IN(1) 0.00 0.00 7.31 4.85 2.46 3,155 38.94
THR Three Rivers Fin. Corp. of MI(1) 0.10 0.00 7.98 4.63 3.35 2,421 33.99
</TABLE>
(1) Financial information is for the quarter ending June 30, 1996.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, Inc. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.10
recurring operating expenses. American Savings' lower operating expense
ratio can in part be explained by its more favorable proficiency, with respect
to maintaining a relatively low number of employees for its asset size. Assets
per full time equivalent employee equaled $3.9 million for the Bank, versus a
comparative measure of $3.3 million for the Peer Group. Further contributing to
the Bank's lower operating expense ratio was the expense savings realized from
operating in a relatively low cost market area. Comparatively, some of the Peer
Group companies operate in higher costing more urban markets, such as Chicago.
Maintenance of only one full service branch facility was also a factor in
supporting containment of the Bank's operating expenses.
When viewed together, net interest income and operating expenses provide
considerable insight into a thrift's earnings strength, since those sources of
income and expenses are typically the most prominent components of earnings and
are generally more predictable than losses and gains realized from the sale of
assets or other non-recurring activities. In this regard, as measured by their
expense coverage ratios (net interest margin divided by the operating expense
ratio), American Savings' earnings strength was similar to the Peer Group's.
Expense coverage ratios posted by American Savings and the Peer Group equaled
1.25x and 1.26x, respectively. An expense coverage ratio of greater than 1.0x
indicates that an institution is able to sustain pre-tax profitability without
having to rely on non-interest sources of income.
Sources of non-interest operating income made a higher contribution to the
Peer Group's earnings, with such income amounting to 0.13 percent and 0.32
percent of American Savings' and the Peer Group's average assets, respectively.
The Bank's relatively low level of non-interest operating income is consistent
with a traditional thrift operating strategy, which provides for limited
diversification into services that generate non-interest operating income. Real
estate operations were not a material factor in either American Savings' or the
Peer Group's non-interest operating income, which was indicative of their
favorable credit quality measures and, in particular, relatively low levels of
real estate owned. Overall, the Peer Group's higher level of non-interest
operating represented not only a current earnings advantage, but was also
considered to be more favorable in terms of limiting interest rate risk
exposure, as a higher level of non-interest operating income indicates that the
ability to sustain earnings is less dependent upon the net interest margin.
Loan loss provisions had a comparable impact on the Bank's and the Peer
Group's earnings (0.23 percent of average assets for both the Bank and the Peer
Group), although the Peer Group's credit quality measures were generally more
favorable than the Bank's. Net gains were negative for both the Bank and the
Peer Group, with such losses amounting to 0.59 percent and 0.14 percent of
average assets for the Bank and the Peer Group, respectively. The net loss
recorded by the Bank was solely attributable to the special SAIF assessment,
while the lower net loss posted by the Peer Group was supported by the absence
of the special SAIF assessment for the Peer Group companies which reported
earnings for the twelve months ended June 30, 1996. Gains recorded on the sale
of loans and investments by some of the Peer Group companies also
<PAGE>
RP Financial, LC.
Page 3.11
contributed to the lower net loss exhibited by the Peer Group. Gains and losses
resulting from the sale of loans and investments are generally viewed as being
non-recurring in nature, given that they are highly dependent upon interest
rate movements and typically do not represent a core earnings activity for a
thrift. Similarly, the special SAIF assessment is also viewed as a non-recurring
item. Accordingly, the Bank's and the Peer Group's net losses will be discounted
in evaluating the relative strengths and weaknesses of their respective
earnings. Extraordinary items were not a factor in either the Bank's or the Peer
Group's earnings.
Overall, net of the SAIF assessment expense, the Bank's and the Peer
Group's reported earnings were fairly representative of their core earnings.
Loan Composition
Table 3.4 presents data related to the loan composition of American Savings
and the Peer Group. An emphasis on low risk residential lending was apparent in
both the Bank's and the Peer Group's loan compositions, with 1-4 family
permanent mortgage loans and mortgage-backed securities accounting for 82.7
percent and 77.3 percent of American Savings' and the Peer Group's loan and MBS
portfolios, respectively. The Bank's higher ratio was attributable to
maintaining higher a higher concentration of 1-4 family permanent mortgage
loans, as the Peer Group's ratio of mortgage-backed securities was slightly
higher than American Savings' ratio. Loans serviced for others represented a
more significant off-balance sheet item for the Peer Group, both in terms of
dollar balance ($12.9 million versus $432,000 for the Bank) and as a percent of
assets (10.8 percent versus 1.2 percent for the Bank). The Peer Group's higher
balance of loans serviced for others was a factor that contributed to its higher
level of non-interest operating income. Only three of the Peer Group companies
maintained a modest amount of servicing intangibles, while the Bank did not
maintain any servicing intangibles as of September 30, 1996.
As indicated by the higher percentage of 1-4 family loans and
mortgage-backed securities maintained by American Savings, lending
diversification was more limited for the Bank. American Savings' lending
diversification consisted primarily of consumer loans (8.5 percent of loans and
MBS), followed by commercial real estate and multi-family loans (6.6 percent of
loans and MBS). Similarly, the Peer Group's primary area of lending
diversification consisted of consumer loans (9.8 percent of loans and MBS),
followed by commercial real estate and multi-family loans (8.5 percent of loans
and MBS). Commercial business and construction loans represented relatively
minor areas of lending diversification for both American Savings and the Peer
Group, with the Peer Group maintaining slightly higher concentrations of both
loan types compared to the Bank's ratios. American Savings' more limited
diversification into higher risk types of lending translated into a slightly
lower risk weighted assets-to-assets ratio than exhibited by the Peer Group
(46.3 percent versus 49.2 percent
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.4
Loan Portfolio Composition and Related Information
Comparable Institution Analysis
As of September 30, 1996
<TABLE>
<CAPTION>
Portfolio Composition as a Percent of MBS and Loans
---------------------------------------------------------
1-4 Constr. 5+Unit Commerc. RWA/ Serviced Servicing
Institution MBS Family & Land Comm RE Business Consumer Assets For Others Assets
- ----------- ------ ------ ------ ------ ------ -------- ------ ---------- ------
(%) (%) (%) (%) (%) (%) (%) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Savings Bank 11.38 71.35 1.12 6.60 1.09 8.45 46.26 432 0
SAIF-Insured Thrifts 15.74 61.48 5.15 11.54 1.61 6.34 50.92 416,500 3,114
State of IL 12.56 64.84 2.33 11.19 1.58 8.04 49.61 102,399 182
Comparable Group Average 13.00 64.29 3.41 8.46 2.76 9.76 49.18 12,903 11
Comparable Group
- ----------------
ATSB AmTrust Capital Corp. of IN(1) 8.14 51.74 1.96 4.91 2.70 31.67 59.46 27,887 12
BDJI First Fed. Bancorp. of MN 17.14 44.60 0.44 19.58 3.36 16.37 50.67 192 0
FFHS First Franklin Corp. of OH 22.33 62.00 5.30 10.38 0.00 2.15 45.34 54,227 33
HBBI Home Building Bancorp of IN 15.15 64.13 1.51 0.84 3.57 15.66 48.72 0 0
HZFS Horizon Fin'l. Services of IA 12.38 57.46 2.46 8.04 8.37 12.59 52.38 924 0
LSBI LSB Fin. Corp. of Lafayette IN 2.61 59.87 10.61 23.24 3.00 5.25 69.70 31,517 64
MFBC MFB Corp. of Mishawaka IN(1) 3.56 93.30 3.44 0.49 0.95 0.04 42.17 0 0
NBSI North Bancshares of Chicago IL 11.18 82.18 0.00 5.59 0.76 0.30 36.65 138 0
SOBI Sobieski Bancorp of S. Bend IN(1) 24.58 68.58 1.20 3.88 2.71 0.27 37.12 0 0
THR Three Rivers Fin. Corp. of MI(1) 12.91 59.06 7.20 7.65 2.21 13.26 49.55 14,141 0
</TABLE>
(1) Financial information is for the quarter ending June 30, 1996.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, Inc. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.13
for the Peer Group). Overall, both the Bank's and the Peer Group's risk
weighted assets ratios were indicative of relatively low risk operating
strategies, as both ratios were lower than the SAIF-insured average of 50.9
percent.
Interest Rate Risk
Table 3.5 reflects various key ratios highlighting the relative interest
rate risk exposure of the Bank versus the Peer Group companies. The data
indicates cumulative one year gap to assets ratios of negative 29.4 percent for
American Savings and positive 1.8 percent for the six Peer Group companies which
reported gap data. American Savings' one year gap ratio indicates that net
interest income is exposed to a relatively high degree of volatility due to
interest rate movements, while the Peer Group's more closely matched one year
gap ratio should provide for greater stability in the net interest margin in
various interest rate environments. Following the infusion of stock proceeds and
the resulting decline in the proportion of interest sensitive liabilities
meeting the Bank's funding needs, American Savings' one year gap ratio should
narrow. However, the repricing mismatch between the Bank's short-term interest
sensitive assets and liabilities can be expected to remain greater than the Peer
Group's.
In terms of balance sheet composition, American Savings' interest rate risk
characteristics were also considered to be less favorable than the Peer Group's.
In particular, American Savings' lower capital position and resulting lower
IEA/IBL ratio indicate a greater dependence on the yield-cost spread to sustain
the net interest margin. However, American Savings' lower level of non-interest
earning assets provides the Bank with a greater capacity to generate interest
income in comparison to the Peer Group. On a pro forma basis, the infusion of
stock proceeds should serve to substantially address the lower equity-to-assets
and IEA/IBL ratios currently maintained by American Savings.
Credit Risk
Overall, American Savings' credit risk exposure appears to be greater than
the Peer Group's, as indicated by the higher level of non-performing assets
maintained by the Bank. As shown in Table 3.6, American Savings' ratio of
non-performing assets (REO, non-accruing loans, troubled debt restructurings and
accruing loans more than 90 days past due) to assets equaled 0.93 percent,
versus a comparative ratio of 0.50 percent for the Peer Group. Additionally,
American Savings' non-performing loans to loans ratio was higher than the Peer
Group's ratio (1.22 percent versus 0.45 percent for the Peer Group). Loss
reserve ratios further indicated less significant credit risk exposure for the
Peer Group, as the Peer Group maintained a higher level of loss reserves as a
percent of non-performing assets (124.2 percent versus 43.6 percent for the
Bank) and non-
<PAGE>
RP Financial, LC.
Page 3.14
Table 3.5
American Savings Bank and the Peer Group
Interest Rate Risk Comparative Analysis
<TABLE>
<CAPTION>
Interest-Earning Non Interest-
Assets/ Earning
One Year Equity/ Interest-Bearing Assets(3)/
Gap/Assets(1) Assets Liabilities(2) Assets
------------ ------- ---------------- --------------
(%) (%) (%) (%)
<S> <C> <C> <C> <C>
American Savings(4) -29.4% 6.6% 105.9% 2.5%
Peer Group Average 1.8% 12.9% 112.8% 3.7%
Peer Group(5)
AmTrust Capital Corp. of IN NA 10.0% 105.3% 7.0%
First Fed. Bancorp. of MN 4.0%(J96) 11.5% 111.2% 3.5%
First Franklin Corp. of OH 1.3%(M96) 9.1% 108.4% 2.4%
Home Building Bancorp of IN NA 12.9% 112.9% 3.0%
Horizon Financial Services of IA 4.8%(M96) 10.7% 109.5% 3.9%
LSB Fin. Corp. of Lafayette IN -1.9%(D95) 9.4% 107.1% 4.9%
MFB Corp. of Mishawaka IN 1.0%(S95) 17.9% 121.0% 1.5%
North Bancshares of Chicago IL 1.9%(M96) 15.1% 119.2% 2.7%
Sobieski Bancorp of S. Bend IN NA 17.8% 118.7% 3.6%
Three Rivers Fin. Corp. of MI NA 14.7% 115.1% 3.9%
</TABLE>
(1) Latest date as of: M=March, J=June, S=September, D=December.
(2) Interest-earning assets includes cash; interest-bearing liabilities
includes non interest-bearing deposits but excludes escrows.
(3) Comprised of REO, non-accruing loans, and other non interest-earning
assets.
(4) American Savings' data is as of September 30, 1996.
(5) As of June 30, 1996 or most recent data available.
Sources: American Savings' prospectus and SNL Securities.
<PAGE>
RP FINANCIAL, LC.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.6
Credit Risk Measures and Related Information
Comparable Institution Analysis
As of September 30, 1996 or Most Recent Date Available
<TABLE>
<CAPTION>
NPAs & Rsrves/
REO/ 90+Del/ NPLs/ Rsrves/ Rsrves/ NPAs & Net Loan NLCs/
Institution Assets Assets Loans Loans NPLs 90+Del Chargoffs Loans
- ----------- ------ ------ ------ ------ ------ -------- --------- ----------
(%) (%) (%) (%) (%) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
American Savings Bank 0.00 0.93 1.22 0.53 43.60 43.60 11 0.04
SAIF-Insured Thrifts 0.17 0.84 0.95 0.84 177.79 130.48 279 0.11
State of IL 0.17 0.63 0.55 0.60 131.45 109.36 107 0.08
Comparable Group Average 0.09 0.50 0.45 0.61 262.07 124.20 9 0.07
Comparable Group
- ----------------
ATSB AmTrust Capital Corp. of IN(1) 0.06 NA NA 0.95 NA NA 0 0.00
BDJI First Fed. Bancorp. of MN 0.18 0.38 0.11 0.88 825.45 112.10 16 0.13
FFHS First Franklin Corp. of OH 0.11 0.52 0.47 0.62 130.61 81.80 29 0.08
HBBI Home Building Bancorp of IN 0.00 0.35 0.53 0.27 51.68 51.68 27 0.39
HZFS Horizon Fin'l. Services of IA 0.00 NA NA NA NA NA 9 0.00
LSBI LSB Fin. Corp. of Lafayette IN 0.00 1.37 1.55 1.09 70.21 70.21 2 0.01
MFBC MFB Corp. of Mishawaka IN(1) 0.00 0.06 0.02 0.24 NA 258.14 0 0.00
NBSI North Bancshares of Chicago IL 0.00 NA NA 0.30 NA NA 0 0.00
SOBI Sobieski Bancorp of S. Bend IN(1) 0.00 0.11 0.17 0.38 222.22 222.22 0 0.00
THR Three Rivers Fin. Corp. of MI(1) 0.51 0.69 0.29 0.78 272.22 73.26 7 0.05
</TABLE>
(1) Financial information is for the quarter ending June 30, 1996.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, Inc. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP Financial, LC.
Page 3.16
performing loans (262.1 percent versus 43.6 percent for the Bank).
Similarly, the Peer Group's loss reserves as a percent of loans exceeded the
Bank's ratio (0.61 percent versus 0.53 for the Bank). Net loan charge-offs were
not a significant factor in either the Bank's or the Peer Group's earnings.
Notwithstanding the Peer Group's more favorable credit risk measures, the credit
risk exposure associated with the Bank's credit quality measures was considered
to be relatively limited as well.
Summary
Based on the above analysis and the criteria employed by RP Financial in
the selection of the companies for the Peer Group, RP Financial concluded that
the Peer Group forms a reasonable basis for determining the pro forma market
value of American Savings. Such general characteristics as asset size, capital
position, interest-earning asset composition, funding composition, core earnings
measures and loan composition all tend to support the reasonability of the Peer
Group from a financial standpoint.
<PAGE>
RP Financial, LC.
Page 4.1
IV. VALUATION ANALYSIS
Introduction
This chapter presents the valuation analysis, prepared pursuant to the
approved valuation methodology promulgated by the OTS, and adopted by the FDIC
and numerous state banking agencies, and valuation factors used to determine the
estimated pro forma market value of the common stock of the Holding Company. The
common stock will be issued in conjunction with the conversion of American
Savings from the mutual-to-stock form of ownership. The valuation has been
prepared utilizing the pro forma valuation methodology promulgated by the OTS,
most recently set forth in their 1994 valuation guidelines, and regulatory
interpretations thereof.
Appraisal Guidelines
The OTS appraisal guidelines, originally released in October 1983, specify
the methodology for estimating the pro forma market value of an institution. The
methodology provides for: (1) selection of a peer group of comparable
publicly-traded institutions, subsequent guidance from the OTS limited
eligibility to only seasoned public companies in the peer group; (2) a financial
and operational comparison of the subject company to the peer group; and (3) a
valuation analysis in which the pro forma market value of the subject company is
determined based on the market pricing of the peer group as of the date of
valuation.
On October 21, 1994, the OTS released written revisions to the appraisal
guidelines, which had already been implemented in practice by the OTS. As
outlined in the guideline revisions, the basic appraisal methodology to be
followed is unchanged from the October 1983 guidelines. The revised guidelines,
however, limit the amount of a new issue discount which may be incorporated into
the valuation and thereby curtail the potential price appreciation in the
after-market.
RP Financial Approach to the Valuation
RP Financial's valuation analysis complies with the appraisal guidelines as
revised and issued as of October 21, 1994. Accordingly, the valuation
incorporates a detailed analysis based on the Peer Group discussed in Chapter
III, incorporating "fundamental analysis" techniques. Additionally, the
valuation incorporates a "technical analysis" of recently completed stock
conversions, given the significant weight in the valuation process of limiting
the new issue discount. The pricing characteristics of recent conversions serve
as the best proxy for near-term aftermarket trading activity in newly issued
thrift shares, and the pricing
<PAGE>
RP Financial, LC.
Page 4.2
characteristics of such recent conversions have been applied to American
Savings' valuation in order to evaluate the Bank's potential aftermarket trading
characteristics. It should be noted that such analysis cannot possibly fully
account for all the market forces which impact trading activity and pricing
characteristics of a stock on a given day.
The pro forma market value determined herein is a preliminary value for the
Holding Company's to-be-issued stock. Throughout the conversion process, RP
Financial will: (1) review changes in the Bank's operations and financial
condition; (2) monitor the Bank's operations and financial condition relative to
the Peer Group to identify any fundamental changes; (3) monitor the external
factors affecting value including, but not limited to, local and national
economic conditions, interest rates, and the stock market environment, including
the market for thrift stocks; and (4) monitor pending conversion offerings
(including those in the offering phase) both regionally and nationally. If
material changes should occur during the conversion process, RP Financial will
prepare updated valuation reports reflecting such changes and their related
impact on value, if any, over the course of the conversion process. RP Financial
will also prepare a final valuation update at the closing of the conversion
offering to determine if the preliminary range of value continues to be
appropriate.
The appraised value determined herein is based on the current market and
operating environment for the Bank and for all thrifts. Subsequent 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 major world events), which may occur from time to time (often with
great unpredictability) may materially impact the market value of all thrift
stocks, including American Savings, or American Savings' value alone. To the
extent a change in factors impacting the Bank's value can be reasonably
anticipated and/or quantified, RP Financial has incorporated the estimated
impact into the valuation analysis.
Valuation Analysis
A fundamental analysis discussing similarities and differences relative to
the Peer Group was presented in Chapter III. The following sections focus on
differences between the Bank and the Peer Group and how those differences affect
our pro forma valuation. Emphasis is placed on the specific strengths and
weaknesses of the Bank relative to the Peer Group in such key areas as financial
condition, profitability, growth and viability of earnings, asset growth,
primary market area, dividends, liquidity of the issue, marketing of the issue,
management, and the effect of government regulations and/or regulatory reform.
We have also considered the market for thrift stocks, and in particular new
issues, to assess the impact on value of American Savings coming to market at
this time.
<PAGE>
RP Financial, LC.
Page 4.3
1. Financial Condition
The financial condition of an institution is an important determinant in
pro forma market value, because investors typically look to such factors as
liquidity, capital, asset composition and quality, and funding sources in
assessing investment attractiveness. The similarities and differences in the
Bank's and the Peer Group's financial strengths are noted as follows:
o Overall A/L Composition. Residential assets, including 1-4 family
permanent mortgage loans and MBS, funded by retail deposits were the
primary components of both American Savings' and the Peer Group's
balance sheets. The Bank's interest-earning asset composition
exhibited a higher concentration of loans, while greater
diversification into higher risk types of loans was reflected in the
Peer Group's loan composition. Overall, the Bank's and the Peer
Group's interest-earning compositions were fairly comparable in terms
of yield and credit risk exposure. Both the Bank's and the Peer
Group's credit risk exposure were considered to be somewhat limited,
as indicated by relatively low risk weighted assets-to-assets ratios
and generally favorable credit quality measures. Notwithstanding the
Peer Group's greater diversification into higher risk types of
lending, the Peer Group's credit quality measures were more favorable
than the Bank's. There were no material differences in American
Savings' and the Peer Group's funding compositions, with retail
deposits meeting the major portion of their respective funding needs.
Borrowings were utilized to a slightly greater degree by the Peer
Group, although both the Bank and the Peer Group maintained ample
borrowing capacities. For valuation purposes, RP Financial concluded
no adjustment was warranted for the Bank's asset/liability
composition.
o Credit Quality. The Peer Group recorded more favorable credit quality
measures than the Bank in terms of NPAs to assets (0.5 percent versus
0.9 percent for the Bank) and reserves maintained as a percent of NPAs
(124.2 percent versus 43.6 percent for the Bank). The Bank's less
favorable credit quality was further indicated by its higher ratio of
non-performing loans to loans and lower reserves maintained as percent
of non-performing loans. Notwithstanding American Savings' less
favorable credit quality measures, the Bank's measures were also
indicative of relatively limited credit exposures and, thus, the
Bank's credit quality and credit risk warranted only a slight downward
adjustment for valuation purposes.
o Balance Sheet Liquidity. The Peer Group operated with a higher balance
of cash and investment securities than the Bank (20.5 percent of
assets versus 12.0 percent for American Savings). American Savings and
the Peer Group were considered to have ample borrowing capacities,
with the Peer Group currently utilizing borrowings to a slightly
greater degree than the Bank. Overall, the Bank's current balance
sheet liquidity is considered to be slightly less favorable than Peer
Group's; however, conversions proceeds received by the Bank and the
Holding Company are expected to be initially deployed into short-term
investments and, thus, should largely address the lower level of cash
and investments currently maintained by American Savings. Therefore,
RP Financial concluded that the Bank's balance sheet liquidity was
comparable to the Peer Group's and no adjustment was warranted for
valuation purposes.
o Funding Liabilities. Retail deposits served as the primary
interest-bearing source of funds for the Bank and the Peer Group, with
borrowings being utilized to a slightly greater degree by the Peer
Group. American Savings' more limited use of borrowings was favorable
in terms of providing for greater future borrowing capacity, however,
in terms of controlling funding costs, the Bank's cost of funds was
higher than the Peer Group's. For purposes of the
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RP Financial, LC.
Page 4.4
valuation, RP Financial concluded that there were no material
differences between the Bank's and the Peer Group's funding
compositions.
o Capital. The Bank operates with a lower pre-conversion capital ratio
than the Peer Group, 6.6 percent and 12.9 percent of assets,
respectively. This disadvantage will be addressed as a result of the
stock offering, as the consolidated pro forma capital position of the
Holding Company will be comparable to the Peer Group's
equity-to-assets ratio.
On balance, the characteristics of the Bank's and the Peer Group's
financial conditions were not materially different in most respects for
valuation purposes. The most distinguishing characteristic between the Bank's
and the Peer Group's financial conditions was the Bank's less favorable credit
quality measures. Therefore, we concluded that a slight downward valuation
adjustment was warranted for the Bank's financial strength.
2. Profitability, Growth and Viability of Earnings
Earnings are an important factor in determining pro forma market value, as
the level and risk characteristics of an institution's earnings stream and the
prospects and ability to generate future earnings are typically heavily factored
into an investment decision. The historical income statements of American
Savings and the Peer Group were generally reflective of traditional operating
strategies, with net interest income and operating expenses being the major
determinants of their respective earnings. The specific factors considered in
the valuation include:
o Reported Earnings. The Bank recorded lower earnings on a ROAA basis
(negative 0.20 percent of average assets versus positive 0.37 percent
for the Peer Group). Both the Bank's and the Peer Group's reported
earnings were depressed by the one time assessment to recapitalize the
SAIF, with the earnings advantage maintained by the Peer Group being
in part attributable to the fact that reported earnings for some of
the Peer Group companies were for the twelve months ended June 30,
1996 and, thus, did not include the impact of the SAIF assessment.
Absent the SAIF assessment expense, American Savings' reported
earnings remained lower than the Peer Group's. The Peer Group's more
favorable reported earnings stemmed largely from stronger core
earnings measures of net interest income and non-interest operating
income, while, to a lesser extent, non-operating gains supported the
Peer Group's reported earnings advantage. However, after factoring out
the gains recorded by some of the Peer Group companies and taking into
account the pro forma impact of conversion proceeds on American
Savings' earnings, the Bank's and the Peer Group's reported earnings
indicated comparability in earnings strength. Therefore, no adjustment
was warranted for this factor.
o Core Earnings. Both the Bank's and the Peer Group's earnings were
derived largely from recurring sources, including net interest income,
non-interest operating income, and operating expenses. In these
measures, the Bank operated with a lower net interest margin, a lower
operating expense ratio and a lower level of non-interest operating
income, which combined to provide the Peer Group with a slightly more
favorable efficiency ratio (72.1 percent versus 75.8 percent for the
Bank). Loss provisions had a comparable impact on the Bank's and Peer
Group's earnings, although the Bank's credit quality measures were
less favorable than the
<PAGE>
RP Financial, LC.
Page 4.5
Peer Group's. The Bank's core earnings will realize the benefit of
redeploying conversion proceeds into interest-earning assets, which
will be somewhat negated by the increase in operating expenses that
will occur from the implementation of stock benefit plans and
operating as a stock owned company. Overall, we concluded that the
Bank's and the Peer Group's core earnings were comparable and no
adjustment was warranted for the Bank's core earnings.
o Interest Rate Risk. Interest rate risk as measured by gap data
indicated a greater degree of interest rate risk associated with
American Savings' net interest margin. In terms of other measures of
interest rate risk, the Peer Group's capital and IEA/IBL ratios were
more favorable than the Bank's, while American Savings maintained a
slightly lower level of non-interest earning assets as compared to the
Peer Group. On a pro forma basis, the infusion of stock proceeds will
address the lower equity-to-assets and IEA/IBL ratios currently
maintained by the Bank. While the Bank's negative short-term gap
position will be somewhat mitigated by the redeployment of conversion
proceeds into short-term investments, American Savings' earnings
exposure to rising and higher interest rates will continue to be more
significant than the Peer Group's; particularly, after factoring in
the Peer Group's higher level of non-interest operating income.
Accordingly, RP Financial concluded a downward adjustment was
appropriate for this factor.
o Credit Risk. Loan loss provisions were a similar factor in the Bank's
and Peer Group's earnings, while real estate operations did not have a
material impact on either the Bank's or the Peer Group's earnings. In
terms of future exposure to credit quality related losses, the Bank's
and Peer Group's credit quality measures indicated relatively limited
credit risk exposure. Lending diversification into higher risk types
of loans was more notable for the Peer Group, which was largely
negated by the Bank's higher concentration of loans comprising total
assets. Overall, the Bank's risk weighted assets to assets ratio was
slightly lower than the Peer Group's. The most distinguishing
characteristics between the Bank's and the Peer Group's potential
credit risk exposure were the Bank's higher level of non-performing
assets and lower level of reserves maintained as a percent of
non-performing assets, non-performing loans and total loans
outstanding. Accordingly, RP Financial concluded that a slight
downward adjustment was warranted for this factor.
o Earnings Growth Potential. The Peer Group's stronger capital position
is considered as a current advantage in terms of earnings growth
potential, as it indicates that the Peer Group has a greater capacity
to increase earnings through leveraging. However, American Savings'
lower capital position will be substantially addressed by the infusion
of conversion proceeds. The demographic characteristics associated
with the Bank's primary market area, in terms of supporting lending
and deposit growth, were considered to be less favorable than the
primary market areas served by the Peer Group companies on average. As
shown in Exhibit III-4, in comparison to the primary market areas
served by the Peer Group companies, Vermilion County's population
growth and per capita income were generally less favorable than the
comparative averages for the primary market area counties served by
the Peer Group companies. On balance, the Bank's earnings growth
potential was considered to be slightly less favorable than the Peer
Group's for purposes of this valuation.
Overall, in comparison to the Peer Group, American Savings' earning
characteristics were less favorable than the Peer Group's and, therefore, RP
Financial concluded that a slight downward valuation adjustment was warranted
for profitability, growth and viability of the Bank's earnings relative to the
Peer Group's.
<PAGE>
RP Financial, LC.
Page 4.6
3. Asset Growth
American Savings' asset growth trends are less favorable than the Peer
Group's, both historically and prospectively. While the Bank's pro forma capital
position will provide for comparability in terms of growth capacity, the
characteristics of the Bank's market area are less favorable with respect to
supporting potential loan and deposit growth. Accordingly, a moderate downward
adjustment was warranted for this factor.
4. Primary Market Area
The general condition of a financial institution's market area has an
impact on value, as future success is in part dependent upon opportunities for
profitable activities in the local market area. American Savings' primary market
area has been experiencing generally weak demographic trends, which is
reflective of the limited growth that has been occurring in the local economy.
The relatively high level of unemployment and low economic growth in the primary
market area has served to intensify competitiveness for deposits and loans, with
the number of households in the primary market area declining from 1990 through
1995.
In general, the Peer Group companies operate in healthier and faster
growing market areas than the Bank's primary market area. Population growth and
per capita income measures in the primary market areas served by the Peer Group
companies were both more favorable than the comparative measures for Vermilion
County. Likewise, as shown in Table 4.1 below, unemployment rates in the primary
market areas served by the Peer Group companies were all lower than the
unemployment rate in Vermilion County. Overall, the primary market areas served
by the Peer Group companies are considered to be more favorable in terms of
supporting potential growth and in terms of limiting credit risk exposure.
Therefore, we concluded a moderate downward adjustment was necessary for this
factor.
<PAGE>
RP Financial, LC.
Page 4.7
Table 4.1
Market Area Unemployment Rates
American Savings Bank and the Peer Group Companies (1)
Sept. 1996
County Unemployment
------ ------------
American Savings Bank of Danville Vermilion 6.7%
Peer Group
----------
AmTrust Capital Corp. of IN Miami 6.4%
First Fed. Bancorp of MN Beltrami 6.6
First Franklin Corp.of OH Hamilton 4.1
Home Building Bancorp of IN Daviess 3.5
Horizon Financial Services of IA Mahaska 2.5
LSB Fin. Corp. of Lafayette IN Tippecanoe 2.5
MFB Corp. of Mishawaka IN St. Joseph 3.8
North Bancshares of Chicago IL Cook 5.3
Sobieski Bancorp of S. Bend IN St. Joseph 3.8
Three Rivers Fin. Corp. of MI St. Joseph 4.2
Unemployment rates are not seasonally adjusted.
Source: U.S. Bureau of Labor Statistics.
5. Dividends
The Holding Company presently has not established a dividend policy, but
will consider instituting a cash dividend policy at some point in the future,
based on numerous factors including growth objectives, financial condition, the
amount of net proceeds retained by the Holding Company in the conversion,
investment opportunities available to the Holding Company and the Bank,
profitability, tax considerations, minimum capital requirements, regulatory
limitations, stock market characteristics and general economic conditions.
Historically, thrifts typically have not established dividend policies at
the time of their conversion to stock ownership. Newly converted institutions,
in general, have preferred to gain market seasoning, establish an earnings track
record and fully invest the conversion proceeds before establishing a dividend
policy. However, during the late-1980s and early-1990s, with negative publicity
surrounding the thrift industry, there was a tendency for more thrifts to
initiate moderate dividend policies concurrent with their conversion as a means
of increasing the attractiveness of the stock offering. Today, fewer
institutions are compelled to initially establish dividend policies at the time
of their conversion offering as (1) industry profitability has improved, (2) the
number of problem thrift institutions has declined, and (3) the stock market
cycle for thrift stocks is
<PAGE>
RP Financial, LC.
Page 4.8
generally more favorable than in the early-1990s. At the same time, with ROE
ratios under pressure, due to high equity levels, well-capitalized institutions
are subject to increased competitive pressures to offer dividends.
As publicly-traded thrifts' capital levels and profitability have improved
and as weakened institutions have been resolved, the proportion of institutions
with cash dividend policies has increased. Seven out of the ten institutions in
the Peer Group presently pay regular cash dividends, with implied dividend
yields ranging from 1.70 percent to 2.42 percent. The average dividend yield on
the stocks of the Peer Group institutions was 1.40 percent as of November 15,
1996, representing an average earnings payout ratio of 25.73 percent. As of
November 15, 1996, approximately 79 percent of all publicly-traded SAIF-insured
thrifts had adopted cash dividend policies (see Exhibit IV-1), exhibiting an
average yield of 2.34 percent and an average payout ratio of 38.80 percent. The
dividend paying thrifts generally maintain higher than average profitability
ratios, facilitating their ability to pay cash dividends, which supports a
market pricing premium on average relative to non-dividend paying thrifts.
The Holding Company will have the capacity to pay a dividend that is
comparable to the Peer Group's average dividend yield, based on pro forma
profitability and capital. Accordingly, the Holding Company's decision to forego
establishing a dividend policy at the time of conversion is not believed to
represent a material impact on the attractiveness of its stock, relative to the
stocks of the Peer Group companies on average. Accordingly, no adjustment has
been applied for this factor.
6. Liquidity of the Shares
The Peer Group is by definition composed of companies that are traded in
the public markets, all of which trade on the NASDAQ system. Typically, the
number of shares outstanding and market capitalization provides an indication of
how much liquidity there will be in a particular stock. The market
capitalization of the Peer Group companies ranged from $5.3 million to $31.6
million as of November 15, 1996, with an average market value of $13.9 million.
The shares outstanding of the Peer Group members ranged from 332,000 to 2.0
million, with average shares outstanding of approximately 897,000. The Bank's
conversion offering will result in a market value and shares outstanding that
will be well below the Peer Group averages. Most importantly, in contrast to the
Peer Group companies, the smaller size of American Savings' stock offering will
preclude the stock from being listed on NASDAQ. Accordingly, the liquidity in
the Bank's stock is expected to be very limited, which warrants a moderate
downward adjustment for this factor.
<PAGE>
RP Financial, LC.
Page 4.9
7. Marketing of the Issue
We believe that three separate markets exists for thrift stocks coming to
market such as American Savings: (1) the after-market for public companies, in
which trading activity is regular and investment decisions are made based upon
financial condition, earnings, capital, ROE and dividends; (2) the new issue
market in which converting thrifts are evaluated on a pro forma basis without
the benefit of prior operations as a publicly-held company and stock trading
history; and (3) the acquisition market for thrift franchises in Illinois. All
three of these markets were considered in the valuation of the Bank's
to-be-issued stock.
A. The Public Market
The value of publicly-traded thrift stocks is easily measurable, and
is tracked by most investment houses and related organizations. In general,
thrift stock values react to market stimuli such as interest rates, inflation,
perceived industry health, projected rates of economic growth, regulatory issues
and stock market conditions in general. Exhibit IV-2 displays historical stock
market trends for various indices and includes historical stock price index
values for thrifts and commercial banks. Exhibit IV-3 displays historical stock
price indices for thrifts only.
In terms of assessing general stock market conditions, the stock
market has generally trended higher over the past year. Quarterly earnings
controlled the market in beginning of the fourth quarter of 1995, with
day-to-day fluctuations reflecting positive and negative earnings surprises
particularly in the technology sector. Economic data indicating that the economy
was on track for a soft landing provided for a rally in the bond market and
stability in the stock market in mid-October 1995, which was followed by a broad
sell-off in the stock market in late-October. The sell-off was primarily
attributable to increasing signs of consumer credit weakness and the possibility
that such weakness could lead to a recession. However, the downturn was brief,
as the DJIA rallied to new highs in early- and mid-November. The rally was
initially led by transportation issues, and continued strength in the bond
market. Investors poured into defensive issues during the first budget impasse,
with the DJIA posting several consecutive highs in mid-November. The DJIA surged
past the 5000 mark in late-November, reflecting strength in blue chip issues and
a mild rebound in the technology sector amid increasing expectations that the
Federal Reserve would cut short-term interest rates. Defensive issues sustained
the rally through early-December, while weakness in the technology sector
provided for a slight pull-back in the stock market in mid-December. At the
close of 1995, market activity was mixed. Favorable inflation data led to a 0.25
percent cut in short-term interest rates by the Federal Reserve in late-
December, which served to initially lift stock prices. However, the second
budget impasse and weak holiday retail sales quickly erased the positive impact
of the interest rate cut, as the DJIA dropped sharply one day after the
<PAGE>
RP Financial, LC.
Page 4.10
Federal Reserve action. Bond prices rallied on news of the sagging economy, as
the 30-year bond yield fell below 6.0 percent in late-December.
The stock market began 1996 on a down note, reflecting concern over
the budget stalemate in Washington. A sell-off in technology stocks further
sustained the decline in the stock market, as investors dumped technology stocks
on profit concerns. However, favorable inflation data and strong fourth quarter
earnings by some blue chip issues served to abbreviate the decline in the stock
market, with the DJIA posting several new highs in the second half of January.
Stock prices were further boosted by increasing expectations of another rate cut
by the Federal Reserve, which occurred at the end of January. The stock market
moved sharply higher in early-February, as the cut in short-term interest rates
and strong fourth quarter earnings posted by some large technology companies
served to renew investor interest in technology stocks. Low inflation and modest
economic growth translated into renewed interest for cyclical stocks as well,
with the DJIA posting five consecutive all-time highs during the week ended
February 9. Congressional testimony by the Federal Reserve Chairman provided for
significant swings in the stock market in mid-February, reflecting changing
investor sentiment regarding the possibility of future rate cuts. The volatility
continued through the end of February, reflecting turbulence in the bond market
and general uncertainty over future interest rate trends. An unexpectedly large
drop in the February unemployment rate provided for a sharp one day sell-off in
the stock market on March 8, as bond prices plunged on news of the strong job
growth and the possibility that an accelerating economy may lead to higher
inflation. However, the stock market recovered the following week, as inflation
fears were somewhat alleviated by additional economic data which indicated a
more modest pace of economic growth than suggested by the unemployment data,
including a 0.2 percent drop in February wholesale prices. After trading in a
narrow range through the end of March, merger activity and a jump in IBM's stock
price propelled the DJIA to a new record in early-April. The upturn was brief,
as bond and stock prices slumped following the stronger than expected March
employment report which served to rekindle inflation fears.
Earnings reports dominated the stock market in mid-April 1996, with
day-to-day fluctuations in the market reflecting changing investor sentiment
regarding the strength of first quarter earnings and future earnings
expectations. Favorable fourth quarter earnings among technology issues pushed
the NASDAQ Composite Index to new highs in late-April and early-May, while blue
chip stocks lagged the overall market. Stronger than expected first quarter GDP
growth reported in early-May stirred major sell-offs in stocks and bonds,
resulting in the 30-year bond edging above 7.0 percent and a one day drop in the
DJIA of almost 77 points. Inflation concerns receded somewhat following a
mid-May report by the Federal Reserve, which indicated that inflation remained
in check and near term rate increases were not likely. The positive reading on
inflation by the Federal Reserve, along with the Federal Reserve's decision to
leave interest rates unchanged at
<PAGE>
RP Financial, LC.
Page 4.11
its late-May meeting, served to strengthen bond and stock prices, with the DJIA
posting new highs in late-May and the 30-year bond dropping below 7.0 percent.
However, signs of an accelerating economy and revised upward estimates of second
quarter GDP growth provided for a pullback in the stock market at the end of
May. Stronger than expected job growth in May further depressed bond prices in
early-June, which served to stall the stock market as well.
Expectations that the Federal Reserve would not tighten interest rates
at its July 1996 meeting provided for a rally in the bond market in late-June,
as the 30-year bond yield dropped below 7.0 percent. The positive interest rate
outlook also served to boost the stock market in early-July, but the rally was
cut short by a larger than expected drop in June unemployment. Bond and stock
prices tumbled following the June unemployment report, as highlighted by a 115
point decline in the Dow Jones Industrial Average ("DJIA") and an increase in
the 30-year bond yield to 7.18 percent. The release of second quarter earnings
reports provided for a volatile stock market in mid-July, especially among the
technology stocks. Overall, the stock market declined due to earnings
disappointments, with a more severe decline occurring in the technology driven
NASDAQ Composite Index. At the same time bond prices recovered, as the 30-year
bond yield dropped below 7.0 percent following statements by the Federal Reserve
Chairman which indicated he expected the economy to slow down in the second half
of 1996. Stocks and bonds rallied in late-July and early-August, as economic
data indicated a healthy but moderating economy. However, higher interest rates
pushed stocks lower in late-August, reflecting increasing expectations that the
Federal Reserve would tighten interest rates in September. The decline in the
stock market was reversed in early-September, as investors reacted positively to
the inflation data contained in the August employment report. Oil stocks
sustained the upward trend in the stock market in early-September, as renewed
tension between the U.S. and Iraq pushed crude oil prices to their highest level
in five years. Both bond and stock prices surged higher in mid-September, as
most of the economic data for August indicated that economy was moderating and
investors became more optimistic that the Federal Reserve would not raise
interest rates in September.
The Federal Reserve's decision not to raise interest rates at its
September 1996 meeting, and generally healthy third quarter earnings results
sustained the upward momentum in the stock market during the beginning of the
fourth quarter. Favorable inflation data and lower interest rates further
spurred the upward trend in the stock market prior to the election. Investors
were cheered by the "status quo" election results, as stocks rallied strongly
immediately following the election with the DJIA posting ten consecutive
advances through mid-November. On November 15, 1996, the DJIA closed at 6348.03,
translating into an increase of 24.1 percent from year end 1995.
Similar to the overall stock market, the market for thrift stocks has
generally been favorable during the past twelve months. Lower interest rates and
generally favorable third quarter earnings propelled
<PAGE>
RP Financial, LC.
Page 4.12
thrift prices higher during the first half of October 1995, while credit quality
concerns sparked a widespread sell-off in financial stocks during late-October.
In particular, the concerns were related to rising consumer delinquencies, as
indicated by a steady rise in the consumer delinquency index maintained by the
American Bankers Association. For the first time since 1991, the index increased
for three consecutive quarters. However, sustained by acquisition activity and
relatively low interest rates, thrift stocks edged higher during the first half
of November. A tax law change in the new congressional budget, which would
provide for the elimination of back taxes on bad-debt reserves taken before
1988, served to push thrift stocks higher in late-November, as investors
speculated that the removal of the potential back taxes would accelerate the
pace of mergers and acquisitions in the thrift industry. Uncertainty regarding
the Federal Reserve's intentions on cutting short-term interest rates provided
for a relatively narrow trading range for thrift stocks during the first half of
December. The rate cut by the Fed and reports of sluggish retail sales led to a
rally in the bond market in late-December, which, in turn, bolstered prices for
thrift and bank issues.
Thrift stocks followed the stock market in general lower in
early-1996, reflecting concern that the absence of a budget agreement would lead
to higher interest rates. The downturn in thrift stocks was brief, as thrift
prices trended higher in the second half of January. Economic data which
indicated that inflation was low supported the recovery in thrift prices, as the
favorable inflation news served to calm the credit markets and increased
expectations that interest rates would remain low. Thrift prices were further
boosted by the Federal Reserve's move to cut short-term interest rates at the
end of January and generally favorable fourth quarter earnings. Mixed
indications on the future direction of interest rates translated into a
relatively narrow trading range for thrift stocks throughout February.
Interest sensitive issues were among the stocks most severely affected
by the sell-off precipitated by the decline in the February 1996 unemployment
rate, as prospects for further near-term rate cuts by the Federal Reserve were
substantially eliminated by the explosive job growth. However, thrift prices
rebounded in late-March and early-April as interest rates stabilized. A bullish
outlook on the financial institution sector in general served to further bolster
prices in early-April, as a number of analysts forecasted healthy first quarter
earnings for thrift and bank stocks and that the financial institution sector
would outperform the market in general during the balance of 1996. However,
thrift prices declined following the release of the March employment report, as
interest sensitive stocks were pulled lower by the unfavorable interest rate
outlook. The downturn was abbreviated by the generally strong first quarter
earnings posted by bank and thrift issues, which provided for a mild upward
trend in thrift stocks in mid-April. Paralleling the stock market in general,
thrift prices dropped sharply in early-May following the rise in interest rates
caused by the strong first quarter GDP growth. Thrift prices rebounded in
mid-May, as interest rates declined slightly on
<PAGE>
RP Financial, LC.
Page 4.13
the strength of tame inflation news. At the end of May and through mid-June,
uncertainty over future interest rate trends provided for a flat thrift stock
market.
The Supreme Court's ruling in favor of thrifts seeking damages for
goodwill served to boost thrift prices in the beginning of July, but the upturn
was abbreviated by a sharp increase in interest rates in early-July. The sharp
rise in interest rates, which was prompted by the stronger than expected June
unemployment report, pushed interest-sensitive issues in general lower.
Generally favorable second quarter earnings and lower interest rates supported a
modest recovery in thrift prices in mid-July, although concerns about future
interest rate trends moderated the impact of the healthy second quarter
earnings. Lower interest rates and the announced acquisitions of two large
California thrifts, American Savings with $20 billion in assets and CalFed
Bancorp with $14 billion in assets, pushed the SNL Index higher in late-July and
through mid-August. Thrift stocks settled into a narrow trading range in
late-August and early-September, as higher interest rates dampened interest in
the thrift sector. For the balance of September, trading activity in thrift
stocks was somewhat mixed. Higher thrift prices were recorded in mid-September,
as the yield on the 30-year U.S. Treasury bond briefly dropped below 7.0
percent. However, the rally in financial services stocks faltered in
late-September, reflecting renewed fears about higher interest rates and rising
bad debt on credit cards.
Thrift prices generally moved higher during October and through
mid-November 1996. The upward trend in thrift prices has been supported by lower
interest rates, with the slow down in economic growth pushing the 30-year U.S.
bond rate below 6.5 percent in mid-November. Investors also reacted positively
to the SAIF rescue legislation, in light of the reduction in deposit insurance
premiums to be paid by SAIF-insured thrifts following the one time special
assessment. The SNL Index for all publicly-traded thrifts closed at 468.1 on
November 15, 1996, an increase of 29.7 percent from one year ago.
B. The New Issue Market
In addition to thrift stock market conditions in general, the new
issue market for converting thrifts is also an important consideration in
determining the Bank's pro forma market value. Demand for converting issues was
strong in the first quarter of 1996, with most offerings being oversubscribed
and posting healthy increases in near term aftermarket trading. Comparatively,
offerings completed in the second quarter reflected a cooling interest in thrift
IPOs, as indicated by fewer oversubscriptions and generally weak aftermarket
trading performance. The most recently completed offerings, which generally
closed in late-September and early-October, have generally been well received in
the market place. Fewer offerings, more attractive pricing, lower interest
rates, and the general positive trend in thrift prices have been among the most
prominent factors contributing to the renewed investor interest shown for
converting thrift issues. As shown in
<PAGE>
RP Financial, LC.
Page 4.14
Table 4.2, the median one week change in price for offerings completed during
the latest three months equaled positive 23.4 percent.
In examining the current pricing characteristics of institutions
completing their conversions during the last three months (see Table 4.3), we
note there exists a considerable difference in pricing ratios compared to the
universe of all publicly-traded thrifts. Specifically, the current average P/B
ratio of the conversions completed in the most recent three month period of
88.93 percent reflects a discount of 22.4 percent from the average P/B ratio of
all publicly-traded SAIF-insured thrifts (equal to 114.64 percent), and the
average core P/E ratio of 21.33 times reflects a premium of 36.4 percent from
the all SAIF-insured public average core P/E ratio of 15.64 times. The pricing
ratios of the better capitalized but lower earning (based on return on equity
measures) recently converted thrifts suggest that the investment community has
determined to discount their stocks on a book basis until the earnings improve
through redeployment and leveraging of the proceeds over the longer term.
In determining our valuation adjustment for marketing of the issue, we
considered trends in both the overall thrift market and the new issue market.
The overall market for thrift stocks is considered to be healthy, as thrift
stocks are currently exhibiting pricing ratios that are approaching historically
high levels. Investor interest in the new issue market has been favorable, as
most of the recently completed offerings have been oversubscribed and have
recorded healthy price increases in initial post-conversion trading activity.
C. The Acquisition Market
Also considered in the valuation was the potential impact on American
Savings' stock price of recently completed and pending acquisitions of other
thrifts operating in American Savings' market area. As shown in Exhibit IV-4,
there were 16 Illinois thrifts acquired in 1994, 1995 and year-to-date 1996 and
four acquisitions are currently pending. In light of the Bank's one office
operation in a market area that has been experiencing a decline in population,
American Savings is not considered to be a highly attractive acquisition
candidate and, thus, acquisition speculation is not expected to have a material
influence on the Bank's initial trading price. However, at the same time, the
fairly active acquisition market for Illinois thrifts, may imply a certain
degree of acquisition speculation for the Bank's stock. To the extent that
acquisition speculation may impact the Bank's offering, we have largely taken
this into account in selecting Illinois and other Mid-West based companies,
which operate in markets that have experienced a comparable level of acquisition
activity as the Bank's market area and, thus, are subject to the same type of
acquisition speculation that may influence American Savings' trading price.
<PAGE>
RP Financial, L.C.
----------------------------------------------------------
Table 4.2
Recent Conversions (Last Three Months)
Conversion Pricing Characteristics: Sorted Chronologically
----------------------------------------------------------
<TABLE>
<CAPTION>
Pre-Conversion Data
------------------------------ Offering
Institutional Information Financial Info. Asset Quality Information Insider Purchases
- ------------------------------------------------------ ------------------------------ --------------------- ---------------------
Benefit Plans
-------------
Conversion Equity/ NPAs/ Res. Gross % of Exp./ Recog. Mgmt.
Institution State Date Ticker Assets Assets Assets Cov. Proc. Mid. Proc. ESOP Plans & Dirs.
- ----------- ----- ---- ------ ------ ------ ------ ---- ----- ---- ----- ---- ------ -------
($Mil) (%) (%)(2) (%) ($Mil) (%) (%) (%) (%) (%)(3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fulton Bancorp MO * 10/18/96 FTNB $90 10.33% 0.54% 276% $17.2 132% 3.2% 8.0% 4.0% 7.4%
Chester Bancorp IL * 10/08/96 CNBA 137 8.81% 0.16% 179% 21.8 132% 3.0% 8.0% 4.0% 18.2%
South Street Fin. Corp.(1) NC 10/03/96 SSFC 168 12.33% 0.36% 73% 45.0 132% 3.1% 8.0% 4.0% 2.1%
AFSALA Bancorp NY 10/01/96 AFED 137 6.08% 0.56% 105% 14.5 132% 4.9% 8.0% 4.0% 4.7%
CBES Bancorp MO * 09/30/96 CBES 90 9.00% 0.73% 59% 10.3 98% 5.1% 8.0% 4.0% 10.3%
First Allen Parish Bancorp LA 09/30/96 P./Sheet 30 7.30% 0.43% 242% 2.6 106% 13.2% 8.0% 4.0% 19.3%
Westwood Hmstd.(1) OH * 09/30/96 WEHO 98 14.59% 0.00% NM 28.4 132% 2.5% 8.0% 4.0% 11.9%
Home Bancorp of Elgin IL * 09/27/96 HBEI 300 12.38% 0.49% 60% 70.1 132% 2.7% 8.0% 4.0% 2.0%
Foundation Bancorp OH 09/26/96 P.Sheet 31 9.06% 0.00% NA 4.6 132% 5.4% 8.0% 4.0% 16.0%
Midwest SB IL * 09/23/96 P.Sheet 36 4.33% 0.60% 83% 1.9 132% 19.8% 7.0% 3.0% 12.7%
Peoples Financial Corp. OH 09/13/96 PFFC 78 12.88% 0.77% 32% 14.9 100% 3.9% 4.0% 4.0% 6.4%
Averages: $109 9.74% 0.42% 123% $21.0 124% 6.1% 7.5% 3.9% 10.1%
Medians: 90 9.06% 0.49% 83% 14.9 132% 3.9% 8.0% 4.0% 10.3%
<CAPTION>
Pro Forma Data Post-IPO Pricing Trends
--------------------------------------- ---------------------------------------------------------
Pricing Ratios(4) Fin. Characteristics Closing Price:
----------------- -------------------- --------------------------------------------------
First After After
IPO Trading % First % First %
Institution P/TB P/E P/A ROA TE/A ROE Price Day Chg. Week(5) Chg. Month(6) Chg.
- ----------- ---- --- --- --- ---- --- ----- --- ---- ------- ---- -------- ----
(%) (x) (%) (%) (%) (%) ($) ($) (%) ($) (%) ($) (%)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fulton Bancorp 71.9% 15.0 16.4% 1.1% 22.8% 4.8% $10.00 $12.50 25.0% $12.88 28.8% $14.75 47.5%
Chester Bancorp 71.3% 15.7 14.1% 0.9% 19.7% 4.6% 10.00 12.94 29.4% 12.88 28.8% 12.88 28.8%
South Street Fin. Corp.(1) 76.1% 16.2 21.6% 1.3% 28.4% 4.7% 10.00 12.75 27.5% 12.50 25.0% 12.25 22.5%
AFSALA Bancorp 71.2% 16.3 9.7% 0.6% 13.7% 4.4% 10.00 11.38 13.8% 11.31 13.1% 12.13 21.3%
CBES Bancorp 61.9% 13.3 10.4% 0.8% 16.9% 4.6% 10.00 12.63 26.3% 13.44 34.4% 13.50 35.0%
First Allen Parish Bancorp 63.5% 8.4 8.3% 1.0% 13.0% 7.6% 10.00 NT NA NT NA NT NA
Westwood Hmstd.(1) 73.5% 36.5 23.2% 0.6% 31.5% 2.0% 10.00 10.75 7.5% 10.63 6.3% 10.63 6.3%
Home Bancorp of Elgin 72.3% 24.0 19.5% 0.8% 26.9% 3.0% 10.00 11.81 18.1% 12.19 21.9% 12.63 26.3%
Foundation Bancorp 70.0% 28.2 13.4% 0.5% 19.1% 2.5% 10.00 NT NA NT NA NT NA
Midwest SB 66.6% 18.4 5.3% 0.3% 7.9% 3.6% 10.00 NT NA NT NA NT NA
Peoples Financial Corp. 64.2% 27.6 16.3% 0.6% 25.4% 2.3% 10.00 10.88 8.7% 11.50 15.0% 12.75 27.5%
69.3% 20.0 14.4% 0.8% 20.5% 4.0% $10.00 $11.95 19.5% $12.16 21.6% $12.69 26.9%
71.2% 16.3 14.1% 0.8% 19.7% 4.4% 10.00 12.16 21.6% 12.34 23.4% 12.69 26.9%
</TABLE>
November 15, 1996
Note: * - Appraisal performed by RP Financial; "NT" - Not Traded; "NA" - Not
Applicable, Not Available.
(1) Non-OTS regulated thrifts.
(2) As reported in summary pages of prospectus.
(3) As reported in prospectus.
(4) Does not take into account the adoption of SOP 93-6.
(5) Latest price if offering less than one week old.
(6) Latest price if offering more than one week but less than one month old.
(7) Second-step conversions.
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.3
Market Pricing Comparatives
Prices As of November 15, 1996
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization -------------- Pricing Ratios(3) Dividends(4)
--------------- Book --------------------------------------- -----------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------- ------- ------ -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 18.61 141.08 1.00 16.19 16.26 114.64 14.06 117.58 15.64 0.37 1.97 30.34
Converted Last 3 Mths (no MHC) 12.72 36.22 0.48 14.37 20.08 88.93 21.09 88.93 21.33 0.00 0.00 0.00
Comparable Group
- ----------------
Converted Last 3 Mths (no MHC)
- ------------------------------
AFED AFSALA Bancorp of NY 12.00 17.46 0.61 14.05 19.67 85.41 11.68 85.41 19.67 0.00 0.00 0.00
CBES CBES Bancorp of MO 13.25 13.58 0.75 16.16 17.67 81.99 13.83 81.99 23.25 0.00 0.00 0.00
FTNB Fulton Bancorp of MO 14.75 25.36 0.67 13.92 22.01 105.96 24.16 105.96 22.69 0.00 0.00 0.00
HBEI Home Bancorp of Elgin IL 12.62 88.45 0.06 14.12 NM 89.38 23.87 89.38 NM 0.00 0.00 0.00
PFFC Peoples Fin. Corp. of OH 12.12 18.07 0.36 15.57 NM 77.84 19.77 77.84 NM 0.00 0.00 0.00
SSFC South Street Fin. Corp. of NC 13.00 58.46 0.62 13.15 20.97 98.86 28.11 98.86 19.70 0.00 0.00 0.00
WEHO Westwood Hmstd Fin Corp of OH 11.31 32.15 0.27 13.61 NM 83.10 26.19 83.10 NM 0.00 0.00 0.00
<CAPTION>
Financial Characteristics(6)
-------------------------------------------------------
Reported Core
Total Equity/ NPAs/ --------------- ---------------
Financial Institution Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------ ------- ------- ------- ------- ------- -------
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 1,351 12.97 0.84 0.72 6.35 0.83 7.42
Converted Last 3 Mths (no MHC) 164 23.63 0.44 0.74 3.37 0.86 3.92
Comparable Group
- ----------------
Converted Last 3 Mths (no MHC)
- ------------------------------
AFED AFSALA Bancorp of NY 149 13.68 0.59 0.59 4.34 0.59 4.34
CBES CBES Bancorp of MO 98 16.87 0.17 0.78 4.64 0.60 3.53
FTNB Fulton Bancorp of MO 105 22.80 0.92 1.10 4.81 1.06 4.67
HBEI Home Bancorp of Elgin IL 371 26.71 0.49 0.13 0.80 0.68 4.14
PFFC Peoples Fin. Corp. of OH 91 25.40 NA 0.59 2.31 0.67 2.63
SSFC South Street Fin. Corp. of NC 208 28.43 NA 1.34 4.71 1.43 5.02
WEHO Westwood Hmstd Fin Corp of OH 123 31.52 0.01 0.63 1.98 0.97 3.09
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/CORE = Price to estimated core
earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month earnings and average equity and assets
balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, Inc.
<PAGE>
RP Financial, LC.
Page 4.17
Taking these factors and trends into account, primarily recent trends
in the new issue market, market conditions overall, and recent trends in the
acquisition market, RP Financial concluded that no adjustment was appropriate in
the valuation analysis for purposes of marketing of the issue.
8. Management
American Savings' management team has experience and expertise in all of
the key areas of the Bank's operations. Exhibit IV-5 provides summary resumes of
American Savings' Board of Directors and executive management. While the Bank
does not have the resources to develop a great deal of management depth, given
its small asset size and the significant impact acquiring significant depth
would have on operating expenses, management and the Board have been effective
in implementing an operating strategy that can be well managed by the Bank's
present management structure.
Similarly, the returns, capital positions, and other operating measures of
the Peer Group companies are indicative of well-managed financial institutions,
which have Boards and management teams that have been effective in implementing
conservative and competitive operating strategies. Therefore, on balance, we
concluded no valuation adjustment relative to the Peer Group was appropriate for
this factor.
9. Effect of Government Regulation and Regulatory Reform
The Bank and the Peer Group companies were similarly impacted by the
recently enacted SAIF rescue legislation, as they are all SAIF-insured
institutions subject to the same one time assessment and their deposits will be
assessed at the same rate going forward. In summary, as a fully-converted
SAIF-insured savings bank, American Savings will operate in substantially the
same regulatory environment as the Peer Group members -- all of whom are
adequately capitalized institutions and are operating with no apparent
restrictions. Exhibit IV-6 reflects the Bank's pro forma regulatory capital
ratios. On balance, RP Financial concluded that no adjustment to the Bank's
value was warranted for this factor.
Summary of Adjustments
Overall, we believe the Bank's pro forma market value should be discounted
relative to the Peer Group as follows:
<PAGE>
RP Financial, LC.
Page 4.18
Key Valuation Parameters: Valuation Adjustment
------------------------- --------------------
Financial Condition Slight Downward
Profitability, Growth and Viability of Earnings Slight Downward
Asset Growth Moderate Downward
Primary Market Area Moderate Downward
Dividends No Adjustment
Liquidity of the Shares Moderate Downward
Marketing of the Issue No Adjustment
Management No Adjustment
Effect of Government Regulations and Regulatory
Reform No Adjustment
Valuation Approaches
In applying the accepted valuation methodology promulgated by the OTS and
adopted by the FDIC, i.e., the pro forma market value approach, we considered
the three key pricing ratios in valuing American Savings' to-be-issued stock --
price/earnings ("P/E"), price/book ("P/B"), and price/assets ("P/A") approaches
- -- all performed on a pro forma basis including the effects of the conversion
proceeds. In computing the pro forma impact of the conversion and the related
pricing ratios, we have incorporated the valuation parameters disclosed in
American Savings' prospectus for offering expenses, the effective tax rate, and
stock benefit plan assumptions (summarized in Exhibits IV-7 and IV-8). A
reinvestment rate of 6.54 percent was utilized, equal to the arithmetic average
of the Bank's average yield on interest-earnings assets and cost of deposits for
the twelve months ended September 30, 1996 (the reinvestment rate calculation
specified by OTS conversion guidelines). The 6.54 percent reinvestment rate is
reasonably similar (1) to the blended rate reflecting the Bank's business plan
as converted, incorporating the impact of deposit withdrawals to fund a portion
of the stock issued in conversion, and (2) the current market rate on the
short-term securities the proceeds would initially be reinvested.
In our estimate of value, we assessed the relationship of the pro forma
pricing ratios relative to the Peer Group and the recent conversions.
RP Financial's valuation placed an emphasis on the following:
o P/E Approach. The P/E approach is generally the best indicator of
long-term value for a stock. Given the traditional thrift operating
strategies employed by the Bank and the Peer Group provided a certain
degree of comparability between the Bank's and the Peer Group's
earnings and overall financial condition, the P/E approach was
carefully considered in this valuation.
o P/B Approach. P/B ratios have generally served as a useful benchmark
in the valuation of thrift stocks, with the greater determinant of
long term value being earnings. RP Financial considered the P/B
approach to be a reliable indicator of value given current market
<PAGE>
RP Financial, LC.
Page 4.19
conditions, particularly the market for new conversions which often
exhibit P/E multiples that are well above industry averages and since
the P/E multiples do not reflect the actual impact of reinvestment,
leveraging and capital management strategies, we have modified the P/B
approach to exclude the impact of intangible assets (i.e.,
price/tangible book value or "P/TB"). Since the Bank and the Peer
Group maintained only nominal balances of intangibles, the resulting
differences in the P/B and P/TB ratios did not lead to different
valuation results.
o P/A Approach. P/A ratios are generally a less reliable indicator of
market value, as investors do not place significant weight on the size
of total assets as a determinant of market value. Furthermore, this
approach does not take into account the amount of stock purchases
funded by deposit withdrawals, thus understating the P/A ratio.
Investors place significantly greater weight on book value and
earnings -- which have received greater weight in our valuation
analysis. At the same time, the P/A ratio is an indicator of franchise
value, and, in the case of highly capitalized institutions, the high
P/A ratio limits the investment community's willingness to pay market
multiples for other pricing ratios when ROE is low.
Based on the application of the three valuation approaches, taking into
consideration the valuation adjustments discussed above, and placing the
greatest weight on the P/E and P/B approaches, RP Financial concluded that the
pro forma market value of the Bank's conversion stock is $3,000,000 at the
midpoint at this time.
1. Price-to-Earnings ("P/E"). The application of the P/E valuation method
requires calculating the Bank's pro forma market value by applying a valuation
P/E multiple times the pro forma earnings base. Ideally, the pro forma earnings
base is composed principally of the Bank's recurring earnings base, that is,
earnings adjusted to exclude any one-time non-operating items, plus the
estimated after-tax earnings benefit of the reinvestment of net conversion
proceeds. American Savings' reported earnings equaled negative $71,000 for the
twelve months ended September 30, 1996. In deriving American Savings' core
earnings, two adjustments were made to reported earnings to account for the one
time expense of the special SAIF assessment and the higher than normal loss
provisions established during the twelve month period analyzed. The special SAIF
assessment recorded by the Bank amounted to $206,000. On a tax effected basis,
assuming an effective tax rate of 34.0 percent, the elimination of the SAIF
assessment resulted in a $136,000 increase to the Bank's reported earnings. Loss
provisions established by the Bank amounted to $80,000 for the twelve months
ended September 30, 1996. Based on discussions with the Bank's management and
the Bank's historical loan loss experience, we assumed normalized loan loss
provisions of $40,000 for American Savings. On a tax effected basis, the
reduction in loan loss provisions increased the Bank's earnings by $26,000. As
shown below, after factoring in the two adjustments, American Savings' core
earnings were determined to equal $91,000 for the twelve months ended September
30, 1996. (Note: see Exhibit IV-9 for the adjustments applied to the Peer
Group's earnings in the calculation of core earnings).
<PAGE>
RP Financial, LC.
Page 4.20
Amount
------
($000)
Net income $(71)
Adjustment for SAIF assessment(1) 136
Adjustment for loss provisions(1) 26
------
Core earnings estimate $91
(1) Tax effected at 34.0 percent.
Based on American Savings' trailing twelve month estimated core earnings,
and incorporating the impact of the pro forma assumptions discussed previously,
the Bank's pro forma P/E multiple at the $3,000,000 midpoint value was 18.57
times, resulting in a discount of 8.4 percent from the Peer Group average of
20.27 times core earnings. The slight discount exhibited in the Bank's core P/E
multiple was accounted for in the discount reflected in its pro forma P/B ratio.
In comparison to all SAIF and Illinois publicly-traded thrifts, the Bank's
midpoint core P/E ratio reflected premiums of 18.7 percent and 9.4 percent,
respectively.
2. Price-to-Book ("P/B"). The application of the P/B valuation method
requires calculating the Bank's pro forma market value by applying a valuation
P/B ratio to American Savings' pro forma book value. Based on the $3.0 million
midpoint valuation, American Savings' pro forma P/B ratio was 63.51 percent. In
comparison to the average P/B ratio for the Peer Group of 91.34 percent,
American Savings' valuation reflected a discount of 30.5 percent. RP Financial
considered the discount to be reasonable, in light of the valuation adjustments
referenced earlier and the nominal discount reflected in the Bank's core P/E
multiple.
Given the emphasis in the revised appraisal guidelines on limiting near
term aftermarket price increases in the stocks of converting institutions, RP
Financial also considered the pro forma P/B ratios of recent conversions in its
valuation analysis. It is these companies that provide the best proxy for
aftermarket trading for a new issue such as American Savings' conversion stock
in that they share similar financial characteristics upon completing their stock
conversions. The pro forma P/B ratio is the key ratio that investors have
recently tended to emphasize in evaluating the trading of new issues, based on
many conversations with industry observers and investment bankers. At the
midpoint value of $3,000,000, American Savings' pro forma P/B ratio of 63.5
percent was discounted by approximately 8.4 percent and 28.6 percent from the
average of the recently completed stock conversions of 69.3 percent at closing
(see Table 4.2) and 88.9 percent currently in the after-market (see Table 4.3).
American Savings' lower P/B ratio takes into account the more illiquid nature of
the Bank's stock, particularly with respect to the fact the Bank's stock will
not be quoted on NASDAQ. However, the Bank's pro forma pricing in the upper
portion of the range approximates or exceeds the average closing P/B ratios for
the recent conversions (see Table 4.2).
<PAGE>
RP Financial, LC.
Page 4.21
3. Price-to-Assets ("P/A"). The P/A valuation methodology determines market
value by applying a valuation P/A ratio to the Bank's pro forma asset base,
conservatively assuming no deposit withdrawals are made to fund stock purchases.
In all likelihood there will be deposit withdrawals, which results in
understating the pro forma P/A ratio which is computed herein. At the midpoint
of the valuation range, American Savings' value equaled 7.93 percent of pro
forma assets. Comparatively, the Peer Group companies exhibited an average P/A
ratio of 11.74 percent, which implies a 32.5 percent being applied to the Bank's
pro forma P/A ratio.
Valuation Conclusion
Based on the foregoing, is our opinion that, as of November 15, 1996, the
aggregate pro forma market value of the Bank was $3,000,000 at the midpoint,
equal to 300,000 shares offered at $10.00 per share. Pursuant to the conversion
guidelines, the 15 percent offering range includes a minimum of $2,550,000 and a
maximum of $3,450,000. Based on the $10.00 per share offering price, this
valuation range equates to an offering of 255,000 shares at the minimum to
345,000 shares at the maximum. The Holding Company's offering also includes a
provision for a super maximum, which if exercised, would result in an offering
size of $3,967,500, equal to 396,750 shares at the $10.00 per share offering
price. The comparative pro forma valuation ratios relative to the Peer Group are
shown in Table 4.4, and the key valuation assumptions are detailed in Exhibit
IV-7. The pro forma calculations for the range are detailed in Exhibit IV-8.
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.4
Public Market Pricing
American Savings Bank and the Comparables
As of November 15, 1996
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization -------------- Pricing Ratios(3) Dividends(4)
--------------- Book ------------------------------------ -----------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
------- ------- ------- ------- ------ ------ ------ ------ ------ ------- ----- -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Savings Bank
- ---------------------
Superrange 10.00 3.97 0.06 14.01 NM 71.37 10.26 71.42 21.17 0.00 0.00 0.00
Range Maximum 10.00 3.45 0.03 14.82 NM 67.48 9.03 67.53 19.87 0.00 0.00 0.00
Range Midpoint 10.00 3.00 0.00 15.75 NM 63.51 7.93 63.56 18.57 0.00 0.00 0.00
Range Minimum 10.00 2.55 -0.05 17.00 NM 58.82 6.81 58.88 17.05 0.00 0.00 0.00
SAIF-Insured Thrifts(7)
- -----------------------
Averages 18.61 141.08 1.00 16.19 16.26 114.64 14.06 117.58 15.64 0.37 1.97 30.34
Medians --- --- --- --- 17.22 109.34 12.46 111.15 15.69 --- --- ---
All Non-MHC State of IL(7)
- --------------------------
Averages 17.89 83.59 0.73 17.77 18.67 99.74 13.92 101.71 16.98 0.21 1.16 20.07
Medians --- --- --- 19.66 96.76 13.09 99.01 16.75 --- --- ---
Comparable Group Averages
- -------------------------
Averages 15.47 13.94 0.45 16.88 19.23 91.34 11.74 91.47 20.27 0.23 1.40 25.73
Medians --- --- --- --- 19.26 93.10 11.81 93.29 22.86 --- --- ---
State of IL
- -----------
AVND Avondale Fin. Corp. of IL 14.62 52.68 1.02 16.33 14.33 89.53 8.89 89.53 20.03 0.00 0.00 0.00
CSBF CSB Financial Group Inc of IL 10.06 10.41 0.32 12.30 NM 81.79 25.26 81.79 NM 0.00 0.00 0.00
CBCI Calumet Bancorp of Chicago IL 30.50 72.50 2.07 33.48 14.73 91.10 14.71 91.10 11.25 0.00 0.00 0.00
CBSB Charter Financial Inc. of IL 12.75 62.14 0.74 13.09 17.23 97.40 16.93 104.77 17.47 0.24 1.88 32.43
CBK Citizens First Fin.Corp. of IL 12.50 35.21 0.21 14.32 NM 87.29 13.22 87.29 NM 0.00 0.00 0.00
DFIN Damen Fin. Corp. of Chicago IL 12.50 49.59 0.51 13.85 24.51 90.25 20.90 90.25 25.00 0.24 1.92 47.06
EGLB Eagle BancGroup of IL 13.25 17.26 -0.52 16.75 NM 79.10 10.54 79.10 NM 0.00 0.00 NM
FBCI Fidelity Bancorp of Chicago IL 17.25 50.56 1.03 16.99 16.75 101.53 11.07 101.89 16.75 0.24 1.39 23.30
FFBI First Financial Bancorp of IL 15.50 7.22 1.17 16.89 13.25 91.77 7.64 91.77 15.20 0.00 0.00 0.00
FMBD First Mutual Bancorp of IL 14.00 53.83 0.35 16.40 NM 85.37 17.02 85.37 NM 0.32 2.29 NM
FFDP FirstFed Bancshares of IL 16.75 54.89 0.44 15.76 NM 106.28 9.10 111.52 NM 0.40 2.39 NM
GTPS Great American Bancorp of IL 14.62 27.05 0.42 17.95 NM 81.45 22.44 81.45 NM 0.40 2.74 NM
HNFC Hinsdale Financial Corp. of IL 24.81 66.86 1.14 20.58 21.76 120.55 10.27 124.11 14.51 0.00 0.00 0.00
HBEI Home Bancorp of Elgin IL 12.62 88.45 0.06 14.12 NM 89.38 23.87 89.38 NM 0.00 0.00 0.00
HMCI Homecorp, Inc. of Rockford IL 18.25 20.60 0.29 18.09 NM 100.88 6.05 100.88 18.43 0.00 0.00 0.00
KNK Kankakee Bancorp of IL 24.00 33.96 1.05 24.99 22.86 96.04 9.62 103.23 16.11 0.40 1.67 38.10
LBCI Liberty Bancorp of Chicago IL(7) 24.00 59.45 0.86 25.55 NM 93.93 8.95 94.19 14.46 0.60 2.50 69.77
MAFB MAF Bancorp of IL 30.50 319.79 1.21 23.07 NM 132.21 10.11 154.59 14.45 0.36 1.18 29.75
NBSI North Bancshares of Chicago IL 16.50 17.69 0.36 16.50 NM 100.00 15.13 100.00 25.00 0.40 2.42 NM
PFED Park Bancorp of Chicago IL 12.00 32.41 0.50 15.01 24.00 79.95 18.65 79.95 22.64 0.00 0.00 0.00
SWBI Southwest Bancshares of IL 18.37 48.77 1.12 14.71 16.40 124.88 12.96 124.88 11.93 0.48 2.61 42.86
SPBC St. Paul Bancorp, Inc. of IL 26.94 487.13 1.37 20.55 19.66 131.09 11.39 131.54 12.95 0.48 1.78 35.04
STND Standard Fin. of Chicago IL 19.50 315.84 0.74 16.26 NM 119.93 13.50 120.15 19.31 0.32 1.64 43.24
SFSB SuburbFed Fin. Corp. of IL 19.75 24.75 0.66 20.26 NM 97.48 6.33 98.01 13.91 0.32 1.62 48.48
<CAPTION>
Financial Characteristics(6)
-------------------------------------------------------
Reported Core
Total Equity/ NPAs/ --------------- ---------------
Assets Assets Assets ROA ROE ROA ROE
------ ------- ------- ------- ------- ------- -------
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
American Savings Bank
- ---------------------
Superrange 39 14.38 0.85 0.07 0.46 0.48 3.37
Range Maximum 38 13.38 0.86 0.03 0.23 0.45 3.40
Range Midpoint 38 12.49 0.87 0.00 -0.01 0.43 3.42
Range Minimum 37 11.58 0.88 -0.03 -0.29 0.40 3.45
SAIF-Insured Thrifts(7)
- -----------------------
Averages 1,351 12.97 0.84 0.72 6.35 0.83 7.42
Medians --- --- --- --- --- --- ---
All Non-MHC State of IL(7)
- --------------------------
Averages 692 14.62 0.64 0.54 4.07 0.72 5.75
Medians --- --- --- --- --- --- ---
Comparable Group Averages
- -------------------------
Averages 119 12.91 0.50 0.37 2.70 0.47 3.41
Medians --- --- --- --- --- --- ---
State of IL
- -----------
AVND Avondale Fin. Corp. of IL 593 9.93 NA 0.63 5.82 0.45 4.16
CSBF CSB Financial Group Inc of IL 41 30.89 0.70 0.82 4.53 0.82 4.53
CBCI Calumet Bancorp of Chicago IL 493 16.15 1.29 0.98 5.93 1.28 7.76
CBSB Charter Financial Inc. of IL 367 17.39 0.52 1.17 6.86 1.15 6.77
CBK Citizens First Fin.Corp. of IL 266 15.14 NA 0.25 2.32 0.52 4.87
DFIN Damen Fin. Corp. of Chicago IL 237 23.15 0.20 0.91 4.83 0.89 4.73
EGLB Eagle BancGroup of IL 164 13.33 1.76 -0.44 -5.05 -0.08 -0.97
FBCI Fidelity Bancorp of Chicago IL 457 10.90 0.61 0.73 5.74 0.73 5.74
FFBI First Financial Bancorp of IL 94 8.33 0.31 0.67 6.85 0.58 5.97
FMBD First Mutual Bancorp of IL 316 19.93 0.14 0.47 1.94 0.72 2.99
FFDP FirstFed Bancshares of IL 603 8.57 0.14 0.24 2.62 0.29 3.21
GTPS Great American Bancorp of IL 121 27.55 0.19 0.68 2.55 0.66 2.49
HNFC Hinsdale Financial Corp. of IL 651 8.52 0.17 0.45 5.68 0.68 8.52
HBEI Home Bancorp of Elgin IL 371 26.71 0.49 0.13 0.80 0.68 4.14
HMCI Homecorp, Inc. of Rockford IL 340 6.00 3.64 0.10 1.59 0.33 5.44
KNK Kankakee Bancorp of IL 353 10.02 0.90 0.42 4.14 0.60 5.87
LBCI Liberty Bancorp of Chicago IL(7) 664 9.53 0.10 0.32 3.31 0.62 6.40
MAFB MAF Bancorp of IL 3,163 7.65 0.47 0.53 7.80 0.92 13.60
NBSI North Bancshares of Chicago IL 117 15.13 NA 0.34 1.96 0.62 3.60
PFED Park Bancorp of Chicago IL 174 23.32 0.17 0.78 3.33 0.82 3.53
SWBI Southwest Bancshares of IL 376 10.38 0.22 0.82 6.91 1.13 9.49
SPBC St. Paul Bancorp, Inc. of IL 4,276 8.69 0.57 0.59 6.56 0.90 9.95
STND Standard Fin. of Chicago IL 2,340 11.26 0.16 0.55 4.41 0.75 6.02
SFSB SuburbFed Fin. Corp. of IL 391 6.49 0.28 0.22 3.20 0.48 6.89
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.4
Public Market Pricing
American Savings Bank and the Comparables
As of November 15, 1996
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization -------------- Pricing Ratios(3) Dividends(4)
--------------- Book ------------------------------------ -----------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
------- ------- ------- ------- ------ ------ ------ ------ ------ ------- ----- -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WCBI WestCo Bancorp of IL 21.75 56.57 1.17 18.34 18.59 118.59 18.38 118.59 13.77 0.48 2.21 41.03
Comparable Group
- ----------------
ATSB AmTrust Capital Corp. of IN 10.00 5.28 0.63 13.66 15.87 73.21 7.34 73.21 NM 0.00 0.00 0.00
BDJI First Fed. Bancorp. of MN 16.50 11.57 0.45 17.58 NM 93.86 10.78 93.86 16.50 0.00 0.00 0.00
FFHS First Franklin Corp. of OH 17.25 19.98 0.52 17.07 NM 101.05 9.15 101.95 15.00 0.32 1.86 61.54
HBBI Home Building Bancorp of IN 17.50 5.46 -0.44 17.62 NM 99.32 12.83 99.32 NM 0.30 1.71 NM
HZFS Horizon Fin'l. Services of IA 14.75 6.61 0.21 18.37 NM 80.29 8.62 80.29 NM 0.32 2.17 NM
LSBI LSB Fin. Corp. of Lafayette IN 18.87 17.32 0.90 18.21 20.97 103.62 9.74 103.62 23.01 0.32 1.70 35.56
MFBC MFB Corp. of Mishawaka IN 16.00 31.58 0.71 19.09 22.54 83.81 15.00 83.81 22.86 0.32 2.00 45.07
NBSI North Bancshares of Chicago IL 16.50 17.69 0.36 16.50 NM 100.00 15.13 100.00 25.00 0.40 2.42 NM
SOBI Sobieski Bancorp of S. Bend IN 13.50 12.07 0.37 15.72 NM 85.88 15.30 85.88 NM 0.00 0.00 0.00
THR Three Rivers Fin. Corp. of MI 13.87 11.80 0.79 15.02 17.56 92.34 13.54 92.71 19.26 0.30 2.16 37.97
<CAPTION>
Financial Characteristics(6)
-------------------------------------------------------
Reported Core
Total Equity/ NPAs/ --------------- ---------------
Assets Assets Assets ROA ROE ROA ROE
------ ------- ------- ------- ------- ------- -------
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
WCBI WestCo Bancorp of IL 308 15.50 0.53 0.99 6.36 1.33 8.58
Comparable Group
- ----------------
ATSB AmTrust Capital Corp. of IN 72 10.03 NA 0.47 4.40 0.03 0.28
BDJI First Fed. Bancorp. of MN 107 11.49 0.38 0.31 2.22 0.68 4.94
FFHS First Franklin Corp. of OH 218 9.05 0.52 0.28 2.99 0.62 6.61
HBBI Home Building Bancorp of IN 43 12.92 0.35 -0.32 -2.31 0.02 0.16
HZFS Horizon Fin'l. Services of IA 77 10.74 NA 0.13 1.11 0.33 2.85
LSBI LSB Fin. Corp. of Lafayette IN 178 9.40 1.37 0.50 4.76 0.46 4.33
MFBC MFB Corp. of Mishawaka IN 211 17.90 0.06 0.72 3.67 0.71 3.62
NBSI North Bancshares of Chicago IL 117 15.13 NA 0.34 1.96 0.62 3.60
SOBI Sobieski Bancorp of S. Bend IN 79 17.82 0.11 0.43 2.31 0.43 2.31
THR Three Rivers Fin. Corp. of MI 87 14.67 0.69 0.82 5.92 0.75 5.40
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) EPS (common earnings per share) is based on actual trailing twelve month
data and is shown on a pro forma basis.
(3) P/E = Price to Earnings; P/B = Price to Book; P/A = Price to Assets; P/TB =
Price to Tangible Book; and P/CORE = Price to Core Earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated twelve month dividend as a percent of trailing twelve month
earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and total assets balances.
(7) Excludes from averages and medians those companies the subject of actual or
rumored acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, Inc.
<PAGE>
EXHIBITS
<PAGE>
RP Financial, LC.
LIST OF EXHIBITS
Exhibit
Number Description
- ------ -----------
I-1 Map of Office Location
I-2 Audited Financial Statements
I-3 Key Operating Ratios
I-4 Investment Portfolio Composition
I-5 Yields and Costs
I-6 Loan Loss Allowance Activity
I-7 Gap Table
I-8 Fixed Rate and Adjustable Rate Loans
I-9 Loan Portfolio Composition
I-10 Loan Originations, Purchases, and Sales
I-11 Contractual Maturity By Loan Type
I-12 Non-Performing Assets
I-13 Deposit Composition
I-14 Time Deposit Rate/Maturity
I-15 Borrowings
II-1 Description of Office Facility
II-2 Historical Interest Rates
III-1 General Characteristics of Publicly-Traded
Institutions
III-2 Financial Analysis of Illinois and Indiana
Institutions
<PAGE>
RP Financial, LC.
LIST OF EXHIBITS(continued)
III-3 Financial Analysis of Peer Group Candidates
III-4 Peer Group Market Area Comparative Analysis
IV-1 Stock Prices: November 15, 1996
IV-2 Historical Stock Price Indices
IV-3 Historical Thrift Stock Indices
IV-4 Market Area Acquisition Activity
IV-5 Director and Senior Management Summary Resumes
IV-6 Pro Forma Regulatory Capital Ratios
IV-7 Pro Forma Analysis Sheet
IV-8 Pro Forma Effect of Conversion Proceeds
IV-9 Peer Group Core Earnings Analysis
V-1 Firm Qualifications Statement
<PAGE>
EXHIBIT I-1
American Savings Bank of Danville
Map of Office Location
<PAGE>
[MAP OF ILLINOIS]
<PAGE>
EXHIBIT 1-2
American Savings Bank of Danville
Audited Financial Statements
[Incorporated by Reference]
<PAGE>
EXHIBIT 1-3
American Savings Bank of Danville
Key Operating Ratios
<TABLE>
<CAPTION>
At or For the Year Ended September 30,
--------------------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Other Data
Profitability:
Return on average assets .................. (0.20)%(5) 0.29% 0.46% 0.36% 0.23%
Return on average equity .................. (2.89)(5) 4.18 6.86 5.78 3.95
Interest rate spread for period(1) ........ 2.17 2.11 2.59 2.42 1.91
Net interest margin(2) .................... 2.48 2.39 2.83 2.64 2.16
Non-interest expenses to average assets ... 2.49 2.08 2.13 2.26 2.00
Average interest-earning assets to
average interest-bearing liabilities .... 106.05 104.04 104.78 104.81 104.12
Capital ratios:
Average equity to average assets .......... 6.90 7.02 6.76 6.22 5.79
Total risk-based capital to risk-
weighted assets ....................... 15.33 15.03 16.44 16.02 14.61
Asset Quality:
Non-performing assets to total
assets(4) ................................. 0.93 0.64 0.26 1.64 0.54
Net charge-offs (recoveries) to average loans 0.04 0.03 0.76 (0.01) 0.07
Allowance for loan losses to total
loans ..................................... 0.53 0.31 0.29 0.60 0.55
Allowance for loan losses to non-
performing loans .......................... 43.60 34.26 73.26 19.78 54.40
</TABLE>
(1) The interest rate spread represents the difference between the average
yield on interest-earning assets and the average rate paid on
interest-bearing liabilities.
(2) The net interest margin represents net interest income divided by average
interest-earning assets.
(3) The efficiency ratio is non-interest expense divided by the sum of net
interest income plus non-interest income.
(4) Non-performing assets include non-accrual loans, accruing loans delinquent
90 days or more and real estate owned.
(5) When calculated without the special SAIF assessment, the return on average
assets and the return on average equity would have been 0.24% and 3.01%,
respectively.
Source: American Savings' prospectus.
<PAGE>
EXHIBIT 1-4
American Savings Bank of Danville
Investment Portfolio Composition
<TABLE>
<CAPTION>
September 30,
-------------------------------------------------------------------
1996 1995
------------------------------- -------------------------------
Amortized Cost Market Value Amortized Cost Market Value
-------------- ------------ -------------- ------------
(In Thousands)
<S> <C> <C> <C> <C>
Available for sale:
U.S. Treasury $ 250 $ 253 $ 198 $ 199
Federal agencies 1,992 1,969 1,286 1,287
-------- -------- -------- --------
Total available for sale $ 2,242 $ 2,222 $ 1,484 $ 1,486
======== ======== ======== ========
Held to maturity:
Federal agencies $ 500 $ 499 $ 2,196 $ 2,157
State and municipal 361 355 360 353
Mortgage-backed securities 3,476 3,473 4,260 4,256
-------- -------- -------- --------
Total held to maturity $ 4,337 $ 4,327 $ 6,816 $ 6,766
======== ======== ======== ========
</TABLE>
Source: American Savings' prospectus
<PAGE>
EXHIBIT 1-5
American Savings Bank of Danville
Yields and Costs
<TABLE>
<CAPTION>
Year Ended September 30,
At September 30, -------------------------------------------------------------
1996 1996 1995
----------- ----------------------------- ----------------------------
Yield/ Average Yield/ Average Yield/
Rate Balance Interest Rate Balance Interest Rate
----------- ------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans, net 8.17% $25,869 $ 2,118 8.19% $22,399 $ 1,757 7.84%
Securities and interest-bearing deposits(1) 5.56 4,861 271 5.57 6,051 336 5.55
Mortgage-backed securities 6.99 3,811 245 6.43 4,510 282 6.25
------- ------- ------- -------
Total interest-earning assets 7.72 34,541 2,634 7.63 32,960 2,375 7.21
------- ------- ------- -------
Non-interest-earning assets 1,117 1,112
------- -------
Total assets $35,658 $34,072
======= =======
Interest-bearing liabilities:
Deposits
NOW accounts 1.42% $ 469 $ 10 2.13 $ 516 $ 13 2.52
Money market investment accounts 2.75 1,355 38 2.80 1,685 55 3.26
Savings and retirement accounts 4.58 5,161 236 4.57 5,124 234 4.57
Certificates 5.81 23,672 1,387 5.86 23,842 1,286 5.39
------- ------- ------- -------
Total deposits 5.41 30,657 1,671 5.45 31,167 1,588 5.10
FHLB advances 5.83 1,917 107 5.58 -- -- --
------- ------- ------- -------
Total Interest-bearing liabilities 5.43 32,574 1,778 5.46 31,167 1,588 5.10
------- ------- ------- -------
Non-interest-bearing liabilities 624 513
------- -------
Total liabilities 33,198 31,680
Equity capital 2,460 2,392
------- -------
Total liabilities and equity capital $35,658 $34,072
======= =======
Net interest income; interest rate spread(2) 2.29% $ 856 2.17% $ 787 2.11%
======= ======= ======= ======= =======
Net interest margin(3) 2.48% 2.39%
======= =======
Ratio of interest-earning assets to
average income-bearing liabilities 105.67 106.05% 104.04%
======= ======= =======
</TABLE>
- ----------
(1) Includes securities available for sale and held to maturity and excludes
mortgage-backed securities.
(2) Interest rate spread represents the difference between the weighted average
yield on interest-earning assets and the weighted average rate on
interest-bearing liabilities.
(3) Net interest margin is net interest income divided by average
interest-earning assets.
Source: America Savings' prospectus
<PAGE>
EXHIBIT 1-6
American Savings Bank of Danville
Loan Loss Allowance Activity
Year Ended September 30,
-------------------------
1996 1995
----------- -----------
(Dollars in Thousands)
Balance at beginning of period $ 74 $ 67
Charge-offs (12) (10)
Recoveries 1 4
-------- --------
Net charge-offs (11) (6)
Provision for losses on loans 80 13
-------- --------
Balance at end of period $ 143 $ 74
======== ========
Allowance for loan losses as a percentage
of total loans outstanding 0.53% 0.31%
Allowance for loan losses as a percentage
of total non-performing loans 43.60% 34.26%
Ratio of net charge-offs to average loans
outstanding 0.04% 0.03%
Source: America Savings' prospectus
<PAGE>
EXHIBIT 1-7
American Savings Bank of Danville
Gap Table
<TABLE>
<CAPTION>
More Than
Six to More than Three Years
Within Six Twelve One Year to to Five Over Five
Months Months Three Years Years Years Total
--------- --------- --------- --------- --------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Securities(1)(2) $ 894 $ 303 $ 743 $ 782 $ 630 $ 3,352
Loans, net(3) 1,989 1,955 6,215 5,666 11,242 27,067
Interest-bearing deposits(4) 429 99 528
Mortgage-backed securities 835 1,228 846 391 176 3,476
--------- --------- --------- --------- --------- ---------
Total interest-earning assets $ 4,147 $ 3,486 $ 7,903 $ 6,839 $ 12,048 $ 34,423
========= ========= ========= ========= ========= =========
Interest-bearing liabilities:
Deposits(5):
NOW accounts 102 103 206 -- -- 411
Money market investment accounts 260 261 522 -- -- 1,043
Savings accounts 232 233 930 932 -- 2,327
Retirement accounts 152 152 604 604 1,511 3,023
Certificates 10,051 6,527 6,385 791 -- 23,754
--------- --------- --------- --------- --------- ---------
Total interest-bearing deposits 10,797 7,276 8,647 2,327 1,511 30,558
--------- --------- --------- --------- --------- ---------
Advances from FHLB -- -- 2,000 -- -- 2,000
--------- --------- --------- --------- --------- ---------
Total interest-bearing liabilities $ 10,797 $ 7,276 $ 10,647 $ 2,327 $ 1,511 $ 32,558
========= ========= ========= ========= ========= =========
Excess (deficiency) of interest-earning
assets over interest-bearing liabilities $ (6,650) $ (3,790) $ (2,744) $ 4,512 $ 10,537 $ 1,865
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities $ (6,650) $ (10,440) $ (13,184) $ (8,672) $ 1,865
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities as a percent of
total assets (18.75)% (29.44)% (37.18)% (24.46)% 5.26%
</TABLE>
- ----------
(1) Reflects repricing, contractual maturity or anticipated call date.
(2) Includes securities available for sale and held to maturity and excludes
mortgage-backed securities.
(3) Fixed-rate loans, including balloon loans, are included in the periods in
which they are scheduled to be repaid, based on scheduled amortization,
adjusted to take into account estimated prepayments. Adjustable-rate loans
are included in the periods in which interest rates are next scheduled to
reset, adjusted to take into account estimated prepayments.
(4) Includes interest-bearing demand and interest-bearing time deposits.
(5) Adjusted to reflect various decay rate assumptions.
Source: America Savings' prospectus
<PAGE>
EXHIBIT 1-8
American Savings Bank of Danville
Fixed Rate and Adjustable Rate Loans
Floating or
Fixed Rates Adjustable Rates Total
----------- ---------------- -----------
(In Thousands)
Real estate mortgage loans:
One-to-four family $ 14,420 $ 5,524 $ 19,944
Multi-family 1,001 151 1,152
Commercial real estate 516 110 626
Real estate sold on contract 270 -- 270
Real estate construction loans -- -- --
Commercial business loans 289 -- 289
Consumer loans 1,843 -- 1,843
-------- -------- --------
Total loans $ 18,339 $ 5,785 $ 24,124
======== ======== ========
Source: America Savings' prospectus
<PAGE>
EXHIBIT 1-9
American Savings Bank of Danville
Loan Portfolio Composition
<TABLE>
<CAPTION>
At September 30,
---------------------------------------------
1996 1995
-------------------- --------------------
Percent of Percent of
Balance Total Balance Total
------- ------- ------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Type of Loan:
Real estate mortgage loans:
One-to-four family ................. $21,419 79.13% $19,181 79.53%
Multi-family ....................... 1,236 4.57 1,157 4.80
Commercial real estate ............. 781 2.89 669 2.77
Real estate sold on contract ......... 374 1.38 415 1.72
Real estate construction loans ....... 342 1.26 163 0.68
Commercial business loans ............ 334 1.23 242 1.00
Consumer loans ....................... 2,581 9.54 2,291 9.50
------- ------- ------- -------
Total loans ............................ 27,067 100.00% 24,118 100.00%
------- ======= ------- =======
Plus:
Deferred loan costs .................. 38 --
Less:
Undistributed portion of loans ....... 26 89
Allowance for loan losses ............ 143 74
Unearned interest .................... -- 1
------- -------
Total loans, net ....................... $26,936 $23,954
======= =======
</TABLE>
Source: American Savings' prospectus
<PAGE>
EXHIBIT I-10
American Savings Bank of Danville
Loan Originations, Purchases, and Sales
Years Ended September 30,
-------------------------
1996 1995
------- --------
(In Thousands)
Net loans, beginning balance ....................... $23,954 $ 21,626
Loan originations:
Real estate mortgage loans:
One-to-four family ............................... 5,357 3,956
Multi-family ..................................... 235 68
Commercial real estate ........................... -- --
Real estate construction loans ..................... 801 344
Commercial business loans .......................... 71 263
Consumer loans ..................................... 2,271 1,558
------- --------
Total loan originations ........................ 8,735 6,162
Loan principal reductions .......................... 5,785 3,803
Increase (decrease) due to other items,
net(1) ........................................... 32 (31)
------- --------
Net increase in loan portfolio ..................... 2,982 2,328
------- --------
Loans receivable, net end of period ................ $26,936 $ 23,954
======= ========
- ---------
(1) Includes changes in undisbursed portion of loans, allowance for loan
losses, deferred loan fees and unearned interest.
Source: American Savings' prospectus
<PAGE>
EXHIBIT I-11
American Savings Bank of Danville
Contractual Maturity By Loan Type
<TABLE>
<CAPTION>
Over One
One Year Through Over Five
or Less Five Years Years Total
------- ---------- ----- -----
(In Thousands)
<S> <C> <C> <C> <C>
Real estate mortgage loans:
One-to-four family mortgage loans ...... $1,475 $6,226 $13,718 $21,419
Multi-family and commercial ............ 84 392 760 1,236
Commercial real estate ................. 155 229 397 781
Real estate sold on contract ............. 104 43 227 374
Real estate construction loans ........... 342 -- -- 342
Commercial business loans ................ 45 248 41 334
Consumer Loans ........................... 738 1,043 800 2,581
------ ------ ------- -------
Total loans .......................... $2,943 $8,181 $15,943 $27,067
====== ====== ======= =======
</TABLE>
Source: American Savings' prospectus
<PAGE>
EXHIBIT I-12
American Savings Bank of Danville
Non-Performing Assets
At September 30,
------------------
1996 1995
---- ----
(Dollars in Thousands)
Non-accruing loans:
Real estate mortgage loans:
One-to-four family ................................. $ 74 $ 70
Multi-family ....................................... -- --
Commercial real estate ............................. -- --
Real estate construction loans ....................... -- --
Commercial business loans ............................ -- --
Consumer loans ....................................... -- --
---- ----
Total non-accruing loans ......................... $ 74 $ 70
---- ----
Accruing loans greater than 90 days delinquent:
Real estate mortgage loans:
One-to-four family ................................. 112 140
Multi-family ....................................... -- --
Commercial real estate ............................. 93 --
Real estate construction loans ....................... -- --
Commercial business loans ............................ -- --
Consumer loans ....................................... 49 6
---- ----
Total accruing loans greater than 90 days
delinquent ..................................... 254 146
---- ----
Total non-performing loans ....................... 328 216
Real estate owned .................................... -- --
---- ----
Total non-performing assets .......................... $328 $216
==== ====
Total non-performing loans as a percentage
of total loans ..................................... 1.21% 0.90%
==== ====
Total non-performing assets as a percentage
of total assets .................................... 0.93% 0.64%
Source: American Savings' prospectus
<PAGE>
EXHIBIT I-13
American Savings Bank of Danville
Deposit Composition
<TABLE>
<CAPTION>
September 30,
-----------------------------------------------------------------------
1996 1995
----------------------------------- ----------------------------------
Percent of Weighted Percent of Weighted
Total Average Total Average
Amount Deposits Nominal Rate Amount Deposits Nominal Rate
------ -------- ------------ ------ -------- ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Transaction accounts:
NOW accounts $ 577 1.88% 1.42% $ 625 1.99% 2.09%
Money market 1,043 3.39 2.75 1,432 4.57 3.30
investment accounts
Savings and retirement accounts 5,350 17.42 4.58 4,965 15.85 4.57
------ ------ ------ ------
Total transaction accounts 6,970 22.69 7,022 22.41
------ ------ ------ ------
Certificates of deposit:
Within 1 year 16,995 55.32 6.02 14,134 45.12 5.73
1-2 years 4,369 14.22 5.85 7,681 24.52 6.84
2-3 years 1,599 5.20 5.51 1,856 5.92 5.63
3-4 years 293 0.95 6.50 339 1.08 5.07
4-5 years 498 1.62 5.95 299 0.95 7.00
------ ------ ------ ------
Total certificate accounts 23,754 77.31 5.81 24,309 77.59 5.87
------ ------ ------ ------
Total deposits 30,724 100.00% 31,331 100.00%
====== ====== ====== ======
</TABLE>
Source: American Savings' prospectus
<PAGE>
EXHIBIT I-14
American Savings Bank of Danville
Time Deposit Rate/Maturity
<TABLE>
<CAPTION>
Maturity Date
------------------------------------------------------------------------------------
One Year
Interest Rate or Less Over 1-2 Years Over 2-3 years Over 3-4 Years Over 4-5 Years Total
- ------------- -------- -------------- -------------- -------------- -------------- -------
<S> <C> <C> <C> <C> <C> <C>
4.50 to 4.99% $ 200 $ -- $ -- $ -- $ -- $ 200
5.00 to 5.99% 9,450 2,835 1,586 -- 274 14,145
6.00 to 6.99% 4,265 1,534 13 293 224 6,329
7.00 to 7.10% 3,080 -- -- -- -- 3,080
------- ------ ------ ------ ------ -------
Total $16,995 $4,369 $1,599 $ 293 $ 498 $23,754
======= ====== ====== ====== ====== =======
</TABLE>
The following table sets for the maturities of the Bank's certificates
having principal amouts of $100,000 or more at September 30, 1996.
Maturity Period Amount
- ------------------------------- --------------
(In Thousands)
Three months or less $ 723
Over three through six months 656
Over six through twelve months 913
Over twelve months 483
------
Total certificates of deposits with
balances of $100,000 or more $2,775
======
Source: American Savings' prospectus
<PAGE>
EXHIBIT I-15
American Savings Bank of Danville
Borrowings
For the Year Ended
September 30, 1996
------------------
(Dollars
in Thousands)
FHLB advances:
Average balance outstanding during the period ................ $1,917
======
Maximum amount outstanding at any month-end during the period $2,000
======
Balance outstanding at end of period ......................... $2,000
======
Weighted average interest rate during the period ............. 5.58%
====
Weighted average interest rate at the end of period .......... 5.83%
====
<PAGE>
EXHIBIT II-1
American Savings Bank of Danville
Description of Office Facilities
Net Book Value of
Premises and
Owned or Equipment at Deposits at
Location Leased September 30, 1996 September 30, 1996
- -------------------------- -------- ------------------ ------------------
(In Thousands)
Main Office:
714 North Vermilion Street Owned $ 467 $30,726
Danville, Illinois 61832
Source: American Savings' prospectus
<PAGE>
EXHIBIT II-2
Historical Interest Rates
<PAGE>
Historical Interest Rates(1)
Prime 90 Day One Year 30 Year
Year/Qtr. Ended Rate T-Bill T-Bill T-Bond
- --------------- ---- ------ ------ ------
1991: Quarter 1 8.75% 5.92% 6.24% 8.26%
Quarter 2 8.50% 5.72% 6.35% 8.43%
Quarter 3 8.00% 5.22% 5.38% 7.80%
Quarter 4 6.50% 3.95% 4.10% 7.47%
1992: Quarter 1 6.50% 4.15% 4.53% 7.97%
Quarter 2 6.50% 3.65% 4.06% 7.79%
Quarter 3 6.00% 2.75% 3.06% 7.38%
Quarter 4 6.00% 3.15% 3.59% 7.40%
1993: Quarter 1 6.00% 2.95% 3.18% 6.93%
Quarter 2 6.00% 3.09% 3.45% 6.67%
Quarter 3 6.00% 2.97% 3.36% 6.03%
Quarter 4 6.00% 3.06% 3.59% 6.34%
1994: Quarter 1 6.25% 3.56% 4.44% 7.09%
Quarter 2 7.25% 4.22% 5.49% 7.61%
Quarter 3 7.75% 4.79% 5.94% 7.82%
Quarter 4 8.50% 5.71% 7.21% 7.88%
1995: Quarter 1 9.00% 5.86% 6.47% 7.43%
Quarter 2 9.00% 5.57% 5.63% 6.63%
Quarter 3 8.75% 5.42% 5.68% 6.51%
Quarter 4 8.50% 5.09% 5.14% 5.96%
1996: Quarter 1 8.25% 5.14% 5.38% 6.67%
1996: Quarter 2 8.25% 5.16% 5.68% 6.87%
1996: Quarter 3 8.25% 5.03% 5.69% 6.92%
November 15, 1996 8.25% 5.14% 5.38% 6.46%
(1) End of period data.
Source: SNL Securities.
<PAGE>
EXHIBIT III-1
General Characteristics of Publicly-Traded Institutions
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
California Companies
--------------------
AHM Ahmanson and Co. H.F. of CA NYSE Nationwide M.B. 50,588 345 12-31 10/72 31.37 3,309
GWF Great Western Fin. Corp. of CA NYSE CA,FL Div. 43,548 416 12-31 / 28.75 3,951
GDW Golden West Fin. Corp. of CA NYSE Nationwide M.B. 37,012 232 12-31 05/59 65.37 3,751
GLN Glendale Fed. Bk, FSB of CA NYSE CA Div. 15,104 150 06-30 10/83 20.00 943
CAL CalFed Inc. of Los Angeles CA NYSE CA,NV Div. 14,127 124 12-31 03/83 23.62 1,167
CSA Coast Savings Financial of CA NYSE California R.E. 8,549 89 12-31 12/85 33.62 625
DSL Downey Financial Corp. of CA NYSE Southern CA Thrift 4,712 J 52 12-31 01/71 26.75 454
FED FirstFed Fin. Corp. of CA NYSE Los Angeles CA R.E. 4,197 25 12-31 12/83 22.00 231
BVFS Bay View Capital Corp. of CA OTC San Francisco CA M.B. 3,428 27 12-31 05/86 40.75 271
BPLS Bank Plus Corp. of CA OTC Los Angeles CA R.E. 3,323 33 12-31 / 11.62 212
WES Westcorp Inc. of Orange CA NYSE California Div. 3,181 25 12-31 05/86 22.50 585
PFFB PFF Bancorp of Pomona CA OTC Southern CA Thrift 2,486 22 03-31 03/96 13.12 260
AFFFZ America First Fin. Fund of CA OTC San Francisco CA Div. 2,228 36 12-31 / 29.06 175
CENF CENFED Financial Corp. of CA OTC Los Angeles CA Thrift 2,161 18 12-31 10/91 27.75 142
FRC First Republic Bancorp of CA (3) NYSE CA,NV M.B. 2,122 11 12-31 / 16.62 122
CFHC California Fin. Hld. Co. of CA OTC Central CA Thrift 1,339 22 12-31 04/83 23.50 111
REDF RedFed Bancorp of Redlands CA OTC Southern CA Thrift 866 14 12-31 04/94 12.50 89
HTHR Hawthorne Fin. Corp. of CA OTC Southern CA Thrift 761 J 9 12-31 / 7.75 20
HEMT HF Bancorp of Hemet CA OTC Southern CA Thrift 754 M 12 06-30 06/95 11.25 71
QCBC Quaker City Bancorp of CA OTC Los Angeles CA R.E. 738 8 06-30 12/93 17.31 66
ITLA Imperial Thrift & Loan of CA (3) OTC Los Angeles CA R.E. 670 J 11 12-31 / 15.00 117
PROV Provident Fin. Holdings of CA OTC M.B. 580 0 06-30 06/96 13.62 70
HBNK Highland Federal Bank of CA OTC Los Angeles CA R.E. 469 11 12-31 / 16.75 38
SGVB SGV Bancorp of W. Covina CA OTC Los Angeles CA Thrift 336 J 6 06-30 06/95 10.47 27
MBBC Monterey Bay Bancorp of CA OTC West Central CA Thrift 317 J 6 12-31 02/95 15.12 50
PCCI Pacific Crest Capital of CA (3) OTC Southern CA R.E. 265 4 12-31 / 10.00 30
BYFC Broadway Fin. Corp. of CA OTC Los Angeles CA Thrift 112 J 3 12-31 01/96 9.00 8
FSSB First FS&LA of San Bern. CA OTC San Bernard. CA Thrift 102 J 4 06-30 12/92 9.50 3
</TABLE>
Florida Companies
-----------------
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Florida Companies (continued)
-----------------------------
BANC BankAtlantic Bancorp of FL OTC Southeastern FL M.B. 1,975 J 43 12-31 11/83 13.00 191
FFPB First Palm Beach Bancorp of FL OTC Southeast FL Thrift 1,438 J 31 09-30 09/93 24.87 129
HOFL Home Financial Corp. of FL OTC Southern FL R.E. 1,216 J 8 09-30 10/94 15.81 391
HARB Harbor FSB, MHC of FL (45.7) OTC Eastern FL Thrift 1,057 22 09-30 01/94 31.00 153
FFFL Fidelity FSB, MHC of FL(47.2) OTC Southeast FL Thrift 817 J 20 12-31 01/94 16.50 111
BKUNA BankUnited SA of FL OTC Miami FL Thrift 802 J 7 09-30 12/85 8.37 48
CMSV Commty. Svgs, MHC of FL(47.6) OTC Southeast FL Thrift 626 J 17 09-30 10/94 17.25 84
FFLC FFLC Bancorp of Leesburg FL OTC Central FL Thrift 336 8 12-31 01/94 20.00 51
FFFG F.F.O. Financial Group of FL OTC Central FL R.E. 311 11 12-31 10/88 2.75 23
FFPC Florida First Bancorp of FL OTC Northwestern FL Thrift 297 9 12-31 11/86 11.12 38
FFML First Family Bank, FSB of FL OTC Central FL Thrift 159 M 5 06-30 10/92 21.50 12
Mid-Atlantic Companies
----------------------
DME Dime Savings Bank, FSB of NY (3) NYSE NY,NJ,FL M.B. 19,545 J 87 12-31 08/86 15.25 1,623
GPT GreenPoint Fin. Corp. of NY (3) NYSE New York City NY Thrift 13,410 82 06-30 01/94 46.62 2,222
SVRN Sovereign Bancorp of PA OTC PA,NJ,DE M.B. 9,365 120 12-31 08/86 12.87 635
ASFC Astoria Financial Corp. of NY OTC New York City NY Thrift 7,266 46 12-31 11/93 35.62 766
COFD Collective Bancorp Inc. of NJ OTC Southern NJ Thrift 5,253 79 06-30 02/84 33.75 688
LISB Long Island Bancorp of NY OTC Long Island NY M.B. 5,221 J 36 09-30 04/94 30.75 758
RCSB RCSB Financial, Inc. of NY (3) OTC NY M.B. 4,049 J 34 11-30 04/86 29.50 454
ALBK ALBANK Fin. Corp. of Albany NY OTC NY,MA Thrift 3,510 63 06-30 04/92 28.62 375
ROSE TR Financial Corp. of NY OTC New York, NY Thrift 3,141 15 12-31 06/93 30.37 272
NYB New York Bancorp, Inc. of NY AMEX Southeastern NY Thrift 2,918 J 29 09-30 01/88 34.00 377
GRTR Greater New York SB of NY (3) OTC New York NY Div. 2,541 J 14 12-31 06/87 12.00 161
BKCO Bankers Corp. of NJ (3) OTC Central NJ Thrift 2,330 15 12-31 03/90 19.12 237
CMSB Cmnwealth Bancorp of PA OTC Philadelphia PA M.B. 2,049 J 39 06-30 06/96 13.50 242
MLBC ML Bancorp of Villanova PA OTC Philadelphia PA M.B. 1,889 18 03-31 08/94 14.25 169
NWSB Northwest SB, MHC of PA(29.9) OTC Pennsylvania Thrift 1,878 J 53 06-30 11/94 12.87 301
RELY Reliance Bancorp of NY OTC NYC NY Thrift 1,829 28 06-30 03/94 18.37 164
NSBK Northside SB of Bronx NY (3) OTC New York NY Thrift 1,639 17 09-30 04/86 48.37 235
HAVN Haven Bancorp of Woodhaven NY OTC New York City NY Thrift 1,565 9 12-31 09/93 27.25 118
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Companies (continued)
----------------------------------
HARS Harris SB, MHC of PA (23.1) OTC Southeast PA Thrift 1,542 J 31 12-31 01/94 16.75 188
JSBF JSB Financial, Inc. of NY OTC New York City R.E. 1,526 J 13 12-31 06/90 36.31 365
QCSB Queens County SB of NY (3) OTC New York City NY R.E. 1,326 9 12-31 11/93 45.25 347
WSFS WSFS Financial Corp. of DE (3) OTC DE Div. 1,313 J 14 12-31 11/86 9.87 137
DIME Dime Community Bancorp of NY OTC Thrift 1,226 0 06-30 06/96 14.12 205
OCFC Ocean Fin. Corp. of NJ OTC Thrift 1,179 P 0 12-31 07/96 25.75 216
YFED York Financial Corp. of PA OTC PA,MD Thrift 1,154 22 06-30 02/84 17.75 132
PFSB PennFed Fin. Services of NJ OTC Northern NJ Thrift 1,142 17 06-30 07/94 20.25 98
MFSL Maryland Fed. Bancorp of MD OTC MD Thrift 1,128 J 25 02-28 06/87 33.00 99
FSLA First SB, SLA MHC of NJ (37.6) OTC Eastern NJ Thrift 975 17 12-31 06/92 18.25 119
PVSA Parkvale Financial Corp of PA OTC Southwestern PA Thrift 924 28 06-30 07/87 25.25 102
PSBK Progressive Bank, Inc. of NY (3) OTC Eastern NY Thrift 886 17 12-31 08/84 35.00 91
MBB MSB Bancorp of Middletown NY (3) OTC Southeastern NY Thrift 863 M 17 09-30 08/92 17.87 51
PKPS Poughkeepsie SB of NY OTC Poughkeepsie NY R.E. 861 9 12-31 11/85 5.12 64
FFIC Flushing Fin. Corp. of NY (3) OTC New York, NY Thrift 770 7 12-31 11/95 17.87 147
IBSF IBS Financial Corp. of NJ OTC Southwest NJ Thrift 749 J 8 09-30 10/94 16.12 177
PWBC PennFirst Bancorp of PA OTC Western PA Thrift 701 9 12-31 06/90 13.50 53
SFIN Statewide Fin. Corp. of NJ OTC Northern NJ Thrift 678 J 16 03-31 10/95 13.37 68
FCIT First Cit. Fin. Corp of MD OTC DC Metro Area Thrift 668 14 12-31 12/86 18.25 53
FSFI First State Fin. Serv. of NJ OTC Northeastern NJ Thrift 666 J 13 09-30 12/87 14.00 55
THRD TF Financial Corp. of PA OTC Philadelphia PA Thrift 663 11 06-30 07/94 15.87 68
FSNJ First SB of NJ, MHC (45.0) OTC Northern NJ Thrift 651 J 4 05-31 01/95 16.75 51
PSAB Prime Bancorp, Inc. of PA OTC Southeastern PA Thrift 645 J 18 12-31 11/88 18.75 70
BFSI BFS Bankorp, Inc. of NY OTC New York NY R.E. 643 5 09-30 05/88 51.00 83
GAF GA Financial Corp. of PA AMEX Pittsburgh PA Thrift 589 10 12-31 03/96 14.12 126
FBBC First Bell Bancorp of PA OTC Pittsburgh PA Thrift 577 7 12-31 06/95 15.63 121
TSBS Trenton SB, FSB MHC of NJ(35.0 OTC Central NJ Thrift 524 10 12-31 08/95 14.06 127
FMCO FMS Financial Corp. of NJ OTC Southern NJ Thrift 519 16 12-31 12/88 16.75 41
PULS Pulse Bancorp of S. River NJ OTC Central NJ Thrift 502 4 09-30 09/86 15.50 47
FSPG First Home SB, SLA of NJ OTC NJ,DE Thrift 487 10 12-31 04/87 19.00 39
IROQ Iroquois Bancorp of Auburn NY (3) OTC Central NY Thrift 474 9 12-31 01/86 16.37 38
CJFC Central Jersey Fin. Corp of NJ OTC Central NJ Thrift 469 J 6 03-31 09/84 37.25 99
ANBK American Nat'l Bancorp of MD OTC Baltimore MD R.E. 461 J 9 07-31 11/95 11.75 44
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Companies (continued)
----------------------------------
AHCI Ambanc Holding Co. of NY (3) OTC East-Central NY Thrift 459 J 9 12-31 12/95 10.50 57
LVSB Lakeview SB of Paterson NJ OTC Northern NJ Thrift 455 M 8 07-31 12/93 23.25 58
PBIX Patriot Bank Corp. of PA OTC Southeast PA Thrift 418 J 7 12-31 12/95 13.62 64
SHEN First Shenango Bancorp of PA OTC Western PA Thrift 384 4 12-31 04/93 22.06 50
PFNC Progress Financial Corp. of PA OTC Southeastern PA M.B. 367 9 12-31 07/83 8.13 30
PBCI Pamrapo Bancorp, Inc. of NJ OTC Northern NJ Thrift 363 8 12-31 10/89 18.87 61
CARV Carver FSB of New York, NY OTC New York, NY Thrift 362 J 8 03-31 10/94 7.62 18
CNSK Covenant Bank for Svgs. of NJ (3) OTC Southern NJ Thrift 355 J 12 12-31 / 13.00 25
RARB Raritan Bancorp. of Raritan NJ (3) OTC Central NJ Thrift 354 5 12-31 03/87 23.50 36
FFWM First Fin. Corp of Western MD OTC Western MD Thrift 346 9 06-30 01/92 28.25 60
FOBC Fed One Bancorp of Wheeling WV OTC Northern WV,OH Thrift 342 9 12-31 01/95 15.37 38
FSBI Fidelity Bancorp, Inc. of PA OTC Southwestern PA Thrift 317 J 8 09-30 06/88 18.75 26
HARL Harleysville SA of PA OTC Southeastern PA Thrift 315 4 09-30 08/87 18.62 24
FKFS First Keystone Fin. Corp of PA OTC Philadelphia PA Thrift 291 J 5 09-30 01/95 19.25 25
CVAL Chester Valley Bancorp of PA OTC Southeastern PA Thrift 284 6 06-30 03/87 19.50 32
CATB Catskill Fin. Corp. of NY (3) OTC Albany NY Thrift 284 3 09-30 04/96 13.00 74
LFBI Little Falls Bancorp of NJ OTC New Jersey Thrift 281 7 12-31 01/96 11.50 33
LFED Leeds FSB, MHC of MD (35.3) OTC Baltimore MD Thrift 273 J 1 06-30 03/94 14.00 48
EQSB Equitable FSB of Wheaton MD OTC Central MD Thrift 268 J 4 09-30 09/93 27.50 17
FIBC Financial Bancorp of NY OTC New York, NY Thrift 267 5 09-30 08/94 14.25 26
WVFC WVS Financial Corp. of PA (3) OTC Pittsburgh PA Thrift 266 5 06-30 11/93 22.37 39
IFSB Independence FSB of DC OTC Washington DC Ret. 264 M 2 12-31 06/85 7.50 10
FBER First Bergen Bancorp of NJ OTC Northern NJ Thrift 252 J 2 09-30 04/96 11.75 37
WSB Washington SB, FSB of MD AMEX Southeastern MD Thrift 247 J 3 07-31 / 4.50 19
YFCB Yonkers Fin. Corp. of NY OTC Yonkers NY Thrift 243 J 4 09-30 04/96 12.81 46
CTBK Center Banks, Inc. of NY (3) OTC Central NY Thrift 242 7 12-31 05/86 15.25 14
GDVS Greater DV SB,MHC of PA(19.9) (3) OTC Southeast PA Thrift 232 7 12-31 03/95 10.25 34
ESBK Elmira SB of Elmira NY (3) OTC NY,PA Ret. 221 6 12-31 03/85 15.25 11
WYNE Wayne Bancorp of NJ OTC Thrift 214 P 0 12-31 06/96 13.87 31
LARL Laurel Capital Group of PA OTC Southwestern PA Thrift 202 6 06-30 02/87 15.75 24
HRBF Harbor Federal Bancorp of MD OTC Baltimore MD Thrift 201 J 6 03-31 08/94 15.50 27
SBFL SB Fing. Lakes MHC of NY(33.0) OTC Western NY Thrift 197 4 04-30 11/94 13.50 24
PEEK Peekskill Fin. Corp. of NY OTC Southeast NY Thrift 186 3 06-30 12/95 13.50 52
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Companies (continued)
----------------------------------
PHFC Pittsburgh Home Fin. of PA OTC Pittsburgh PA Thrift 184 J 6 09-30 04/96 12.25 27
SFED SFS Bancorp of Schenectady NY OTC Eastern NY Thrift 164 J 3 12-31 06/95 16.00 21
TPNZ Tappan Zee Fin. Corp. of NY OTC Southeast NY Thrift 115 M 1 03-31 10/95 13.50 21
PRBC Prestige Bancorp of PA OTC Thrift 104 0 12-31 06/96 12.37 12
WHGB WHG Bancshares of MD OTC Baltimore MD Thrift 98 J 5 09-30 04/96 13.00 21
THBC Troy Hill Bancorp of PA OTC Pittsburgh PA Thrift 92 J 2 06-30 06/94 20.06 21
WWFC Westwood Fin. Corp. of NJ OTC Northern NJ Thrift 91 J 2 03-31 06/96 15.25 10
ALBC Albion Banc Corp. of Albion NY OTC Western NY Thrift 58 J 2 09-30 07/93 16.87 4
BRFC Bridgeville SB, FSB of PA OTC Western PA Thrift 55 1 12-31 10/94 15.25 17
PWBK Pennwood SB of PA (3) OTC Pittsburgh PA Thrift 48 P 3 12-31 07/96 12.25 7
Mid-West Companies
------------------
SFB Standard Fed. Bancorp of MI NYSE MI,IN,OH M.B. 15,354 166 12-31 01/87 55.25 1,723
COFI Charter One Financial of OH OTC OH,MI Div. 13,826 155 12-31 01/88 43.00 2,011
RFED Roosevelt Fin. Grp. Inc. of MO OTC MO,IL,KS Div. 9,328 J 79 12-31 01/87 18.44 777
TCB TCF Financial Corp. of MN NYSE MN,IL,MI,WI,OH Div. 7,115 184 12-31 06/86 40.63 1,417
CFB Commercial Federal Corp. of NE NYSE NE,CO,KS,OK M.B. 6,668 98 06-30 12/84 45.12 625
FFHC First Financial Corp. of WI OTC WI,IL Div. 5,596 129 12-31 12/80 28.50 853
SPBC St. Paul Bancorp, Inc. of IL OTC Chicago IL Div. 4,276 52 12-31 05/87 26.94 487
SECP Security Capital Corp. of WI OTC Wisconsin Div. 3,437 J 42 06-30 01/94 67.50 621
MAFB MAF Bancorp of IL OTC Chicago IL Thrift 3,163 13 06-30 01/90 30.50 320
GTFN Great Financial Corp. of KY OTC Kentucky M.B. 2,831 41 12-31 03/94 29.25 415
CTZN CitFed Bancorp of Dayton OH OTC Dayton OH M.B. 2,748 33 03-31 01/92 48.25 276
STND Standard Fin. of Chicago IL OTC Chicago IL Thrift 2,340 13 12-31 08/94 19.50 316
ABCW Anchor Bancorp Wisconsin of WI OTC Wisconsin M.B. 1,892 33 03-31 07/92 35.00 162
FISB First Indiana Corp. of IN OTC Central IN M.B. 1,485 28 12-31 08/83 24.75 205
DNFC D&N Financial Corp. of MI OTC MI,WI Ret. 1,408 35 12-31 02/85 15.06 114
FTFC First Fed. Capital Corp. of WI OTC Southern WI M.B. 1,389 J 44 12-31 11/89 23.75 148
STFR St. Francis Cap. Corp. of WI OTC Milwaukee WI Thrift 1,330 J 13 09-30 06/93 25.75 146
JSBA Jefferson Svgs Bancorp of MO OTC St. Louis MO,TX Thrift 1,125 J 21 12-31 04/93 22.87 96
FFSW First Fed Fin. Serv. of OH OTC Northeastern OH Thrift 1,045 J 18 12-31 04/87 37.25 135
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
------------------------------
AADV Advantage Bancorp of WI OTC WI,IL Thrift 996 J 15 09-30 03/92 32.75 111
OFCP Ottawa Financial Corp. of MI OTC Western MI Thrift 827 26 12-31 08/94 16.25 84
CFSB CFSB Bancorp of Lansing MI OTC Central MI Thrift 812 18 12-31 06/90 18.25 88
IFSL Indiana Federal Corp. of IN OTC Northwestern IN Thrift 809 15 12-31 02/87 23.00 109
NASB North American SB of MO OTC KS,MO M.B. 740 J 8 09-30 09/85 31.75 72
FFEC First Fed. Bancshares of WI OTC Northwest WI Thrift 729 20 12-31 10/94 18.12 124
MSBK Mutual SB, FSB of Bay City MI OTC Michigan M.B. 678 22 12-31 07/92 5.75 25
GSBC Great Southern Bancorp of MO OTC Southwest MO Div. 668 J 25 06-30 12/89 17.12 151
LBCI Liberty Bancorp of Chicago IL OTC Chicago IL Thrift 664 4 12-31 12/91 24.00 59
HNFC Hinsdale Financial Corp. of IL OTC Chicago IL M.B. 651 10 09-30 07/92 24.81 67
HOMF Home Fed Bancorp of Seymour IN OTC Southern IN Thrift 630 J 15 06-30 01/88 31.50 70
FNGB First Northern Cap. Corp of WI OTC Northeast WI Thrift 608 20 12-31 12/83 18.50 81
FFDP FirstFed Bancshares of IL OTC Chicago IL Thrift 603 3 12-31 07/92 16.75 55
FFYF FFY Financial Corp. of OH OTC Youngstown OH Thrift 603 10 06-30 06/93 24.87 127
SFSL Security First Corp. of OH OTC Northeastern OH R.E. 600 13 03-31 01/88 17.00 85
AVND Avondale Fin. Corp. of IL OTC Chicago IL Ret. 593 J 6 03-31 04/95 14.62 53
HMNF HMN Financial, Inc. of MN OTC Southeast MN Thrift 555 J 7 12-31 06/94 17.87 88
HFFC HF Financial Corp. of SD OTC South Dakota Thrift 554 19 06-30 04/92 16.87 51
SSBK Strongsville SB of OH OTC Cleveland OH Thrift 542 13 12-31 / 21.75 55
FDEF First Defiance Fin.Corp. of OH OTC Northwest OH Thrift 524 9 06-30 10/95 11.50 114
FFBH First Fed. Bancshares of AR OTC Northern AR Thrift 510 8 12-31 05/96 16.00 82
CBCI Calumet Bancorp of Chicago IL OTC Chicago IL Thrift 493 5 06-30 02/92 30.50 72
FFSX First FS&LA. MHC of IA (45.0) OTC Western IA Thrift 458 12 06-30 06/92 26.50 50
FBCI Fidelity Bancorp of Chicago IL OTC Chicago IL Thrift 457 J 5 09-30 12/93 17.25 51
PERM Permanent Bancorp of IN OTC Southwest IN Thrift 411 J 11 03-31 04/94 17.75 38
ASBI Ameriana Bancorp of IN OTC Eastern IN,OH Thrift 400 8 12-31 02/87 15.00 49
PMFI Perpetual Midwest Fin. of IA OTC EastCentral IA Thrift 396 4 12-31 03/94 19.00 36
SFSB SuburbFed Fin. Corp. of IL OTC IL,IN Thrift 391 12 12-31 02/92 19.75 25
HALL Hallmark Capital Corp. of WI OTC Milwaukee WI Thrift 388 3 06-30 01/94 17.50 25
CAFI Camco Fin. Corp. of OH OTC Eastern OH M.B. 378 7 12-31 / 16.50 34
PFSL Pocahnts Fed, MHC of AR (46.4) OTC Northeast AR Thrift 377 J 5 09-30 04/94 14.25 23
SWBI Southwest Bancshares of IL OTC Chicago IL Thrift 376 5 12-31 06/92 18.37 49
HBEI Home Bancorp of Elgin IL OTC Northern IL Thrift 371 5 12-31 09/96 12.62 88
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
------------------------------
CBSB Charter Financial Inc. of IL OTC Southern IL Thrift 367 J 6 09-30 12/95 12.75 62
FFKY First Fed. Fin. Corp. of KY OTC Central KY Thrift 357 7 06-30 07/87 19.75 83
FFHH FSF Financial Corp. of MN OTC Southern MN Thrift 355 11 09-30 10/94 14.00 49
KNK Kankakee Bancorp of IL AMEX Illinois Thrift 353 10 03-31 12/92 24.00 34
HVFD Haverfield Corp. of OH OTC Cleveland OH Thrift 351 10 12-31 03/85 19.50 37
PVFC PVF Capital Corp. of OH OTC Cleveland OH R.E. 345 9 06-30 12/92 15.25 35
CASH First Midwest Fin. Corp. of IA OTC IA,SD R.E. 342 J 9 09-30 09/93 23.75 42
HMCI Homecorp, Inc. of Rockford IL OTC Northern IL Thrift 340 9 12-31 06/90 18.25 21
WOFC Western Ohio Fin. Corp. of OH OTC Western OH Thrift 333 J 6 12-31 07/94 21.00 48
INBI Industrial Bancorp of OH OTC Northern OH Thrift 320 10 12-31 08/95 12.37 69
FMBD First Mutual Bancorp of IL OTC Central IL Thrift 316 7 12-31 07/95 14.00 54
HBFW Home Bancorp of Fort Wayne IN OTC Northeast IN Thrift 316 J 8 09-30 03/95 17.50 51
MCBS Mid Continent Bancshares of KS OTC Central KS M.B. 314 J 7 09-30 06/94 21.50 44
WCBI WestCo Bancorp of IL OTC Chicago IL Thrift 308 1 12-31 06/92 21.75 57
SMFC Sho-Me Fin. Corp. of MO OTC Southwest MO Thrift 292 7 12-31 06/94 21.75 36
WFCO Winton Financial Corp. of OH OTC Cincinnati OH R.E. 283 J 4 09-30 08/88 11.25 22
GFCO Glenway Financial Corp. of OH OTC Cincinnati OH Thrift 279 J 6 06-30 11/90 20.00 23
PFDC Peoples Bancorp of Auburn IN OTC Northeastern IN Thrift 278 J 6 09-30 07/87 20.00 47
CBK Citizens First Fin.Corp. of IL AMEX Central IL Thrift 266 6 12-31 05/96 12.50 35
FFED Fidelity Fed. Bancorp of IN OTC Southwestern IN Thrift 262 4 06-30 08/87 10.50 26
FBCV 1st Bancorp of Vincennes IN OTC Southwestern IN M.B. 258 1 06-30 04/87 30.12 20
FFOH Fidelity Financial of OH OTC Cincinnati OH Thrift 256 4 12-31 03/96 11.12 45
FCBF FCB Fin. Corp. of Neenah WI OTC Eastern WI Thrift 256 M 6 03-31 09/93 19.25 47
OSBF OSB Fin. Corp. of Oshkosh WI OTC Eastern WI Thrift 250 7 12-31 06/92 25.75 30
WAYN Wayne S&L Co., MHC of OH(46.7) OTC Central OH Thrift 250 J 6 03-31 06/93 21.25 32
DFIN Damen Fin. Corp. of Chicago IL OTC Chicago IL Thrift 237 J 3 11-30 10/95 12.50 50
CBIN Community Bank Shares of IN OTC Southeast IN Thrift 233 J 7 12-31 04/95 12.25 24
CAPS Capital Savings Bancorp of MO OTC Central MO Thrift 231 7 06-30 12/93 25.00 23
MBLF MBLA Financial Corp. of MO OTC Northeast MO Thrift 227 2 06-30 06/93 20.50 28
FFHS First Franklin Corp. of OH OTC Cincinnati OH Thrift 218 7 12-31 01/88 17.25 20
OHSL OHSL Financial Corp. of OH OTC Cincinnati, OH Thrift 218 4 12-31 02/93 20.00 24
EFBI Enterprise Fed. Bancorp of OH OTC Cincinnati OH Thrift 214 J 5 09-30 10/94 14.50 30
LARK Landmark Bancshares of KS OTC Central KS Thrift 214 5 09-30 03/94 16.50 31
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
------------------------------
MFBC MFB Corp. of Mishawaka IN OTC Northern IN Thrift 211 J 4 09-30 03/94 16.00 32
SBCN Suburban Bancorp. of OH OTC Cincinnati OH Thrift 202 J 8 06-30 09/93 15.25 22
CBCO CB Bancorp of Michigan City IN OTC Northwest IN Thrift 196 J 3 03-31 12/92 25.50 30
FFFD North Central Bancshares of IA OTC Central IA Thrift 194 J 4 12-31 03/96 12.75 51
WEFC Wells Fin. Corp. of Wells MN OTC Southcentral MN Thrift 192 J 7 12-31 04/95 12.62 26
MWFD Midwest Fed. Fin. Corp of WI OTC Central WI Thrift 188 J 9 12-31 07/92 21.75 36
GFED Guaranty FS&LA,MHC of MO(31.1) OTC Southwest MO Thrift 185 J 4 06-30 04/95 11.12 35
PULB Pulaski SB, MHC of MO (29.0) OTC St. Louis MO Thrift 179 M 5 09-30 05/94 14.50 30
MFFC Milton Fed. Fin. Corp. of OH OTC Southwest OH Thrift 178 J 2 09-30 10/94 13.25 30
LSBI LSB Fin. Corp. of Lafayette IN OTC Central IN Thrift 178 3 12-31 02/95 18.87 17
FFBZ First Federal Bancorp of OH OTC Eastern OH Thrift 178 J 6 09-30 06/92 29.25 23
CMRN Cameron Fin. Corp. of MO OTC Northwest MO Thrift 176 J 3 09-30 04/95 15.25 43
MARN Marion Capital Holdings of IN OTC Central IN Thrift 175 2 06-30 03/93 21.50 40
PFED Park Bancorp of Chicago IL OTC Chicago IL Thrift 174 P 3 12-31 08/96 12.00 32
EGLB Eagle BancGroup of IL OTC Central IL Thrift 164 1 12-31 07/96 13.25 17
SMBC Southern Missouri Bncrp of MO OTC Southeast MO Thrift 160 J 8 06-30 04/94 14.12 24
FFWC FFW Corporation of Wabash IN OTC Central IN Thrift 155 3 06-30 03/93 21.00 15
NEIB Northeast Indiana Bncrp of IN OTC Northeast IN Thrift 154 J 3 12-31 06/95 13.12 26
FFWD Wood Bancorp of OH OTC Northern OH Thrift 152 6 06-30 08/93 17.00 25
SJSB SJS Bancorp of St. Joseph MI OTC Southwest MI Thrift 152 J 4 06-30 02/95 25.50 24
QCFB QCF Bancorp of Virginia MN OTC Northeast MN Thrift 146 M 2 06-30 04/95 16.12 29
JXSB Jcksnville SB,MHC of IL(43.3%) OTC Central IL Thrift 144 4 12-31 04/95 12.00 15
FBSI First Bancshares of MO OTC Southcentral MO Thrift 144 J 5 06-30 12/93 15.25 19
BWFC Bank West Fin. Corp. of MI OTC Southeast MI Thrift 138 J 2 06-30 03/95 10.37 23
MWBI Midwest Bancshares, Inc. of IA OTC Southeast IA Thrift 138 4 12-31 11/92 27.00 9
FKKY Frankfort First Bancorp of KY OTC Frankfort KY Thrift 129 3 06-30 07/95 11.50 40
PTRS The Potters S&L Co. of OH OTC Northeast OH Thrift 125 4 12-31 12/93 17.50 9
MFCX Marshalltown Fin. Corp. of IA OTC Central IA Thrift 124 3 09-30 03/94 15.50 22
WEHO Westwood Hmstd Fin Corp of OH OTC Cincinnati OH Thrift 123 P 2 12-31 09/96 11.31 32
GTPS Great American Bancorp of IL OTC East Central IL Thrift 121 M 3 09-30 06/95 14.62 27
NBSI North Bancshares of Chicago IL OTC Chicago IL Thrift 117 2 06-30 12/93 16.50 18
MIFC Mid Iowa Financial Corp. of IA OTC Central IA Thrift 115 J 6 09-30 10/92 6.37 11
ASBP ASB Financial Corp. of OH OTC Southern OH Thrift 114 1 06-30 04/95 15.12 26
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
------------------------------
HFFB Harrodsburg 1st Fin Bcrp of KY OTC Central KY Thrift 110 J 2 09-30 10/95 18.62 40
BDJI First Fed. Bancorp. of MN OTC Northern MN Thrift 107 5 09-30 04/95 16.50 12
FFSL First Independence Corp. of KS OTC Southeast KS Thrift 106 J 1 09-30 10/93 20.25 12
FTNB Fulton Bancorp of MO OTC Central MO Thrift 105 P 2 04-30 10/96 14.75 25
CNSB CNS Bancorp of MO OTC Central MO Thrift 99 5 12-31 06/96 14.00 23
CBES CBES Bancorp of MO OTC Western MO Thrift 98 P 2 06-30 09/96 13.25 14
NWEQ Northwest Equity Corp. of WI OTC Northwest WI Thrift 96 3 03-31 10/94 11.62 11
WCFB Webster CityFSB,MHC of IA(45.2 OTC Central IA Thrift 95 1 12-31 08/94 13.50 28
FFBI First Financial Bancorp of IL OTC Northern IL M.B. 94 J 2 12-31 10/93 15.50 7
CIBI Community Inv. Bancorp of OH OTC NorthCentral OH Thrift 92 J 3 06-30 02/95 16.50 11
PFFC Peoples Fin. Corp. of OH OTC Northeast OH Thrift 91 P 2 09-30 09/96 12.12 18
INCB Indiana Comm. Bank, SB of IN OTC Central IN Ret. 91 J 3 06-30 12/94 16.00 15
FTSB Fort Thomas Fin. Corp. of KY OTC Northern KY Thrift 89 J 2 09-30 06/95 14.00 22
HFSA Hardin Bancorp of Hardin MO OTC Western MO Thrift 88 3 03-31 09/95 12.25 12
THR Three Rivers Fin. Corp. of MI AMEX Southwest MI Thrift 87 J 4 06-30 08/95 13.87 12
KYF Kentucky First Bancorp of KY AMEX Central KY Thrift 86 2 06-30 08/95 15.00 21
FFDF FFD Financial Corp. of OH OTC Northeast OH Thrift 85 1 06-30 04/96 13.50 20
GFSB GFS Bancorp of Grinnell IA OTC Central IA Thrift 85 1 06-30 01/94 20.25 10
AMFC AMB Financial Corp. of IN OTC Northwest IN Thrift 84 4 12-31 04/96 12.50 14
LOGN Logansport Fin. Corp. of IN OTC Northern IN Thrift 80 1 12-31 06/95 14.25 19
SOBI Sobieski Bancorp of S. Bend IN OTC Northern IN Thrift 79 J 3 06-30 03/95 13.50 12
PCBC Perry Co. Fin. Corp. of MO OTC EastCentral MO Thrift 78 M 1 09-30 02/95 17.25 15
SFFC StateFed Financial Corp. of IA OTC Des Moines IA Thrift 77 J 2 06-30 01/94 17.25 14
HZFS Horizon Fin'l. Services of IA OTC Central IA Thrift 77 3 06-30 06/94 14.75 7
HHFC Harvest Home Fin. Corp. of OH OTC Southwest OH Thrift 73 M 3 09-30 10/94 9.56 9
ATSB AmTrust Capital Corp. of IN OTC Northcentral IN Thrift 72 J 3 06-30 03/95 10.00 5
GWBC Gateway Bancorp of KY OTC Eastern KY Thrift 69 2 06-30 01/95 14.00 16
MIVI Miss. View Hold. Co. of MN OTC Central MN Thrift 69 J 1 09-30 03/95 11.87 11
CLAS Classic Bancshares of KY OTC Eastern KY Thrift 69 J 1 03-31 12/95 11.69 15
MSBF MSB Financial Corp. of MI OTC Southcentral MI Thrift 63 2 06-30 02/95 18.50 12
LXMO Lexington B&L Fin. Corp. of MO OTC West Central MO Thrift 61 J 1 09-30 06/96 12.06 15
CKFB CKF Bancorp of Danville KY OTC Central KY Thrift 60 1 12-31 01/95 19.75 19
NSLB NS&L Bancorp of Neosho MO OTC Southwest MO Thrift 57 J 2 09-30 06/95 13.50 11
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
------------------------------
MFSB Mutual Bancompany of MO OTC Central MO Thrift 53 M 1 06-30 02/95 22.25 7
RELI Reliance Bancshares Inc of WI (3) OTC Milwaukee WI Thrift 50 P 1 June 04/96 10.12 26
HBBI Home Building Bancorp of IN OTC Southwest IN Thrift 43 2 09-30 02/95 17.50 5
CSBF CSB Financial Group Inc of IL OTC Centralia IL Thrift 41 M 1 09-30 10/95 10.06 10
FLKY First Lancaster Bncshrs of KY OTC Thrift 41 J 0 06-30 07/96 15.75 15
HWEN Home Financial Bancorp of IN OTC Central IN Thrift 39 0 06-30 07/96 12.50 6
LONF London Financial Corp. of OH OTC Central OH Thrift 37 J 1 09-30 04/96 12.00 6
JOAC Joachim Bancorp of MO OTC Eastern MO Thrift 36 1 03-31 12/95 15.00 11
New England Companies
---------------------
PBCT Peoples Bank, MHC of CT(32.3) (3) OTC Southwestern CT Div. 7,237 84 12-31 07/88 28.37 1,149
PHBK Peoples Heritage Fin Grp of ME (3) OTC ME,NH Div. 4,456 82 12-31 12/86 24.62 620
WBST Webster Financial Corp. of CT OTC Central CT Thrift 3,837 J 64 12-31 12/86 35.00 284
EGFC Eagle Financial Corp. of CT OTC Western CT Thrift 1,402 J 19 09-30 02/87 26.75 121
SISB SIS Bank of Sprinfield MA (3) OTC Central MA Div. 1,285 21 12-31 02/95 22.87 131
DSBC DS Bancor Inc. of Derby CT (3) OTC Southwestern CT Thrift 1,259 22 12-31 12/85 41.25 125
ANDB Andover Bancorp, Inc. of MA (3) OTC Northeastern MA M.B. 1,199 11 12-31 05/86 27.25 139
WLDN Walden Bancorp of MA (3) OTC Eastern MA M.B. 1,049 17 04-30 12/85 32.25 165
CFX Cheshire Fin. Corp. of NH (3) AMEX S.W. NH,MA M.B. 1,026 J 23 12-31 02/87 15.37 188
MDBK Medford Savings Bank of MA (3) OTC Eastern MA Thrift 1,008 16 12-31 03/86 25.00 113
AFCB Affiliated Comm BC, Inc of MA OTC MA Thrift 984 J 10 12-31 / 22.12 113
FFES First FS&LA of E. Hartford CT OTC Central CT Thrift 943 12 12-31 06/87 23.25 61
FMLY Family Bancorp of Haverhill MA (3) OTC MA,NH Div. 918 21 12-31 11/86 31.12 134
MASB MassBank Corp. of Reading MA (3) OTC Eastern MA Thrift 879 14 12-31 05/86 35.75 96
FESX First Essex Bancorp of MA (3) OTC MA,NH Div. 869 10 12-31 08/87 13.25 80
EBCP Eastern Bancorp of NH OTC VT, NH M.B. 841 J 25 09-30 11/83 22.25 81
BFD BostonFed Bancorp of MA AMEX Boston MA M.B. 797 8 12-31 10/95 14.12 93
MECH Mechanics SB of Hartford CT (3) OTC Hartford CT Thrift 728 J 0 12-31 06/96 15.87 84
NSSB Norwich Financial Corp. of CT (3) OTC Southeastern CT Thrift 694 18 12-31 11/86 20.37 110
DIBK Dime Financial Corp. of CT (3) OTC Central CT Thrift 692 10 12-31 07/86 18.37 94
NSSY Norwalk Savings Society of CT (3) OTC Southwest CT Thrift 610 J 8 12-31 06/94 23.12 55
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
New England Companies (continued)
---------------------------------
GROV GroveBank for Savings of MA (3) OTC Eastern MA Thrift 599 7 12-31 08/86 48.87 75
CBNH Community Bankshares Inc of NH (3) OTC Southcentral NH M.B. 549 9 06-30 05/86 19.37 47
BKC American Bank of Waterbury CT (3) AMEX Western CT Thrift 548 15 12-31 12/81 29.37 67
PBKB People's SB of Brockton MA (3) OTC Southeastern MA Thrift 524 J 14 12-31 10/86 11.50 39
SOSA Somerset Savings Bank of MA (3) OTC Eastern MA R.E. 511 5 12-31 07/86 2.00 33
MWBX Metro West of MA (3) OTC Eastern MA Thrift 499 9 12-31 10/86 4.12 57
ABBK Abington Savings Bank of MA (3) OTC Southeastern MA M.B. 484 7 12-31 06/86 20.37 38
PBNB Peoples Sav. Fin. Corp. of CT (3) OTC Central CT Thrift 460 8 12-31 08/86 27.50 52
SWCB Sandwich Co-Op. Bank of MA (3) OTC Southeastern MA Thrift 450 J 11 04-30 07/86 30.25 57
PETE Primary Bank of NH (3) OTC Southern NH Ret. 414 8 12-31 10/93 14.62 29
BKCT Bancorp Connecticut of CT (3) OTC Central CT Thrift 402 3 12-31 07/86 22.50 60
EIRE Emerald Island Bancorp, MA (3) OTC Eastern MA R.E. 392 7 12-31 09/86 17.62 31
MIDC Midconn Bank of Kensington CT (3) OTC Central CT Thrift 358 10 09-30 09/86 19.00 37
WRNB Warren Bancorp of Peabody MA (3) OTC Eastern MA R.E. 354 6 12-31 07/86 13.50 49
LSBX Lawrence Savings Bank of MA (3) OTC Northeastern MA Thrift 330 6 12-31 05/86 8.00 34
CEBK Central Co-Op. Bank of MA (3) OTC Eastern MA Thrift 311 M 11 04-30 10/86 16.37 32
NMSB Newmil Bancorp. of CT (3) OTC Eastern CT Thrift 306 12 06-30 02/86 8.25 33
POBS Portsmouth Bank Shrs Inc of NH (3) OTC Southeastern NH Thrift 269 3 12-31 02/88 13.00 75
NHTB NH Thrift Bancshares of NH OTC Central NH Thrift 264 10 12-31 05/86 12.06 20
TBK Tolland Bank of CT (3) AMEX Northern CT Thrift 228 7 12-31 12/86 12.87 15
NEBC Northeast Bancorp of ME (3) OTC Eastern ME Thrift 222 J 8 06-30 08/87 13.00 16
HIFS Hingham Inst. for Sav. of MA (3) OTC Eastern MA Thrift 193 4 12-31 12/88 17.00 22
HPBC Home Port Bancorp, Inc. of MA (3) OTC Southeastern MA Thrift 189 2 12-31 08/88 16.50 30
BSBC Branford SB of CT (3) OTC New Haven CT R.E. 176 5 12-31 11/86 3.50 23
IPSW Ipswich SB of Ipswich MA (3) OTC Northwest MA Thrift 158 4 12-31 05/93 11.00 13
AFED AFSALA Bancorp of NY OTC Central NY Thrift 149 P 4 09-30 10/96 12.00 17
KSBK KSB Bancorp of Kingfield ME (3) OTC Western ME M.B. 133 J 8 12-31 06/93 22.25 9
MFLR Mayflower Co-Op. Bank of MA (3) OTC Southeastern MA Thrift 115 J 4 04-30 12/87 15.75 14
NTMG Nutmeg FS&LA of CT OTC CT M.B. 91 J 3 12-31 / 7.50 5
FCB Falmouth Co-Op Bank of MA (3) AMEX Southeast MA Thrift 88 J 1 09-30 03/96 13.75 20
MCBN Mid-Coast Bancorp of ME OTC Eastern ME Thrift 56 2 03-31 11/89 19.50 4
GLBK Glendale Co-op. Bank of MA (3) OTC Boston MA Thrift 37 J 1 04-30 01/94 20.00 5
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WAMU Washington Mutual Inc. of WA (3) OTC WA,OR,ID,UT,MT Div. 22,414 290 12-31 03/83 43.12 3,111
WFSL Washington FS&LA of Seattle WA OTC Western US Thrift 5,115 89 09-30 11/82 24.75 1,007
IWBK Interwest SB of Oak Harbor WA OTC Western WA Div. 1,712 31 12-31 / 30.25 240
STSA Sterling Financial Corp. of WA OTC WA,OR M.B. 1,531 41 06-30 / 13.75 76
MSEA Metropolitan Bancorp of WA OTC Western WA R.E. 753 10 03-31 01/90 18.06 66
FWWB First Savings Bancorp of WA (3) OTC Central WA Thrift 743 M 16 03-31 11/95 17.12 179
KFBI Klamath First Bancorp of OR OTC Southern OR Thrift 630 J 7 09-30 10/95 14.62 179
HRZB Horizon Financial Corp. of WA (3) OTC Northwest WA Thrift 500 12 03-31 08/86 13.37 87
FMSB First Mutual SB of Bellevue WA (3) OTC Western WA M.B. 386 J 6 12-31 12/85 17.25 42
CASB Cascade SB of Everett WA OTC Seattle WA Thrift 340 6 06-30 08/92 15.00 31
RVSB Rvrview SB,FSB MHC of WA(40.3) OTC Southwest WA M.B. 214 J 9 03-31 10/93 16.25 36
South-East Companies
--------------------
FFCH First Fin. Holdings Inc. of SC OTC CHARLESTON SC Div. 1,523 J 32 09-30 11/83 22.25 142
LIFB Life Bancorp of Norfolk VA OTC Southeast VA Thrift 1,405 20 12-31 10/94 17.12 169
AMFB American Federal Bank of SC OTC Northwest SC Thrift 1,382 J 41 12/31 01/89 18.81 206
MGNL Magna Bancorp of MS OTC MS,AL M.B. 1,302 62 06-30 03/91 18.50 254
FLFC First Liberty Fin. Corp. of GA OTC Georgia M.B. 991 J 29 9-30 12/83 18.81 113
HFNC HFNC Financial Corp. of NC OTC Charlotte NC Thrift 845 8 06-30 12/95 18.00 309
VFFC Virginia First Savings of VA OTC Petersburg VA M.B. 781 23 06-30 01/78 14.00 80
ISBF ISB Financial Corp. of LA OTC SouthCentral LA Thrift 687 J 16 12-31 04/95 16.87 120
PALM Palfed, Inc. of Aiken SC OTC Southwest SC Thrift 660 19 12-31 12/85 14.75 77
CNIT Cenit Bancorp of Norfolk VA OTC Southeastern VA Thrift 656 J 15 12-31 08/92 39.62 65
EBSI Eagle Bancshares of Tucker GA OTC Atlanta GA Thrift 621 J 10 03-31 04/86 15.75 72
VABF Va. Beach Fed. Fin. Corp of VA OTC Southeast VA M.B. 604 12 12-31 11/80 8.75 43
FFFC FFVA Financial Corp. of VA OTC Southern VA Thrift 530 11 12-31 10/94 20.00 100
CFCP Coastal Fin. Corp. of SC OTC SC Thrift 453 J 9 09-30 09/90 21.00 72
TSH Teche Holding Company of LA AMEX Southern LA Thrift 380 8 09-30 04/95 13.50 48
FSFC First So.east Fin. Corp. of SC OTC Northwest SC Thrift 329 11 06-30 10/93 10.25 45
FFRV Fid. Fin. Bkshrs. Corp. of VA OTC Southern VA Thrift 329 7 12-31 05/86 23.00 53
COOP Cooperative Bk.for Svgs. of NC OTC Eastern NC Thrift 327 17 03-31 08/91 19.00 28
ESX Essex Bancorp of VA AMEX VA,NC M.B. 305 J 12 12-31 / 2.06 2
SOPN First SB, SSB, Moore Co. of NC OTC Central NC Thrift 263 5 06-30 01/94 18.00 67
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
South-East Companies (continued)
--------------------------------
ANA Acadiana Bancshares of LA (3) AMEX Southern LA Thrift 258 P 4 12-31 07/96 14.75 40
UFRM United FS&LA of Rocky Mount NC OTC Eastern NC M.B. 255 J 9 12-31 07/80 8.06 25
MERI Meritrust FSB of Thibodaux LA OTC Southeast LA Thrift 231 8 12-31 / 31.00 24
FLAG Flag Financial Corp of GA OTC Western GA M.B. 229 J 4 12-31 12/86 11.50 23
SSFC South Street Fin. Corp. of NC (3) OTC South Central NC Thrift 208 P 2 09-30 10/96 13.00 58
PERT Perpetual of SC, MHC (46.8%) OTC Northwest SC Thrift 202 P 5 09-30 10/96 20.25 30
CFTP Community Fed. Bancorp of MS OTC Northeast MS Thrift 202 J 1 09-30 03/96 16.25 75
PLE Pinnacle Bank of AL AMEX Central AL Thrift 192 5 06-30 12/86 17.87 16
GSFC Green Street Fin. Corp. of NC OTC Southern NC Thrift 179 J 3 09-30 04/96 15.37 66
FTF Texarkana Fst. Fin. Corp of AR AMEX Southwest AR Thrift 164 J 5 09-30 07/95 14.37 28
NFSL Newnan SB, FSB of Newnan GA OTC Western GA M.B. 162 J 8 03-31 03/86 26.75 39
CFFC Community Fin. Corp. of VA OTC Central VA Thrift 159 J 3 03-31 03/88 21.50 27
FGHC First Georgia Hold. Corp of GA OTC Southeastern GA Thrift 144 J 7 09-30 02/87 6.25 13
PDB Piedmont Bancorp of NC AMEX Central NC Thrift 132 2 06-30 12/95 18.25 50
FFBS FFBS Bancorp of Columbus MS OTC Columbus MS Thrift 126 3 06-30 06/93 22.00 35
BFSB Bedford Bancshares of VA OTC Southern VA Thrift 122 J 3 09-30 08/94 17.75 21
SRN Southern Banc Company of AL AMEX Northeast AL Thrift 108 4 06-30 10/95 13.50 19
TWIN Twin City Bancorp of TN OTC Northeast TN Thrift 107 3 12-31 01/95 17.00 15
SSM Stone Street Bancorp of NC AMEX Central NC Thrift 106 2 12-31 04/96 20.00 37
GSLC Guaranty Svgs & Loan FA of VA OTC Charltsvl VA M.B. 103 M 3 06-30 / 8.25 8
KSAV KS Bancorp of Kenly NC OTC Central NC Thrift 96 3 12-31 12/93 21.00 14
SZB SouthFirst Bancshares of AL AMEX Central AL Thrift 91 J 2 09-30 02/95 12.50 11
CCFH CCF Holding Company of GA OTC Atlanta GA Thrift 79 J 3 09-30 07/95 14.50 16
CZF Citisave Fin. Corp. of LA AMEX Baton Rouge LA Thrift 76 5 12-31 07/95 13.50 13
SSB Scotland Bancorp of NC AMEX S. Central NC Thrift 70 J 2 09-30 04/96 13.25 24
SCCB S. Carolina Comm. Bnshrs of SC OTC Central SC Thrift 44 J 1 06-30 07/94 15.00 11
MBSP Mitchell Bancorp of NC (3) OTC Western NC Thrift 36 P 1 12-31 07/96 12.37 12
South-West Companies
--------------------
CBSA Coastal Bancorp of Houston TX OTC Houston TX M.B. 2,859 40 12-31 / 21.62 107
FBHC Fort Bend Holding Corp. of TX OTC Eastcentral TX M.B. 255 J 5 03-31 06/93 21.75 18
</TABLE>
<PAGE>
RP FINANCIAL, LC.
------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
November 20, 1996(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
South-West Companies (continued)
--------------------------------
JXVL Jacksonville Bancorp of TX OTC East Central TX Thrift 218 J 6 09-30 04/96 13.25 35
LBFI L&B Financial of S. Springs TX OTC Northeast TX Thrift 144 J 6 06-30 09/94 17.25 27
LOAN Horizon Bancorp, Inc of TX (3) OTC Austin TX R.E. 141 J 8 04-30 / 18.50 26
ETFS East Texas Fin. Serv. of TX OTC Northeast TX Thrift 115 J 2 09-30 01/95 15.00 17
AABC Access Anytime Bancorp of NM OTC Eastern NM Thrift 112 J 3 12-31 08/86 5.75 4
GUPB GFSB Bancorp of Gallup NM OTC Northwest NM Thrift 73 J 1 06-30 06/95 14.31 14
Western Companies (Excl CA)
---------------------------
FFBA First Colorado Bancorp of Co OTC Denver CO Thrift 1,501 J 26 12-31 01/96 16.00 304
WSTR WesterFed Fin. Corp. of MT OTC MT Thrift 564 J 20 06-30 01/94 17.12 75
GBCI Glacier Bancorp of MT OTC Western MT Div. 412 13 06-30 03/84 24.25 82
SFBM Security Bancorp of MT OTC Southcentral MT Thrift 382 16 06-30 11/86 29.25 43
UBMT United SB, FA of MT OTC Central MT Thrift 104 J 4 12-31 09/86 19.25 24
TRIC Tri-County Bancorp of WY OTC Southeastern WY Thrift 77 J 2 12-31 09/93 18.25 11
MORG Morgan Financial Corp. of CO OTC Northeast CO Thrift 75 1 06-30 01/93 11.50 9
CRZY Crazy Woman Creek Bncorp of WY OTC Northeast WY Thrift 52 1 09-30 03/96 11.75 12
</TABLE>
Other Areas
-----------
NOTES: (1) Or most recent date available (M=March, S=September, D=December,
J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift, M.B.=Mortgage
Banker, R.E.=Real Estate Developer, Div.=Diversified, and
Ret.=Retail Banking.
(3) FDIC savings bank.
Source: Corporate offering circulars, SNL Securities Quarterly Thrift Report,
and financial reports of publicly Traded Thrifts.
Date of Last Update: 11/20/96
<PAGE>
EXHIBIT III-2
Financial Analysis of Illinois and Indiana Institutions
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-2
Market Pricing Comparatives
Prices As of November 15, 1996
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------- Pricing Ratios(3) Dividends(4)
--------------- Book -------------------------------------- ----------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
------- ------- ------- ------- ------- ------- ------- ------- ------ ------- ------ -------
Financial Institution
- --------------------- ($) ($Mil) ($) ($) (X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 18.61 141.08 1.00 16.19 16.26 114.64 14.06 117.58 15.64 0.37 1.97 30.34
State of IL 17.65 80.51 0.71 17.58 18.67 99.44 13.78 101.34 17.32 0.22 1.24 20.07
Comparable Group
- ----------------
State of IL
- -----------
AVND Avondale Fin. Corp. of IL 14.62 52.68 1.02 16.33 14.33 89.53 8.89 89.53 20.03 0.00 0.00 0.00
CSBF CSB Financial Group Inc of IL 10.06 10.41 0.32 12.30 NM 81.79 25.26 81.79 NM 0.00 0.00 0.00
CBCI Calumet Bancorp of Chicago IL 30.50 72.50 2.07 33.48 14.73 91.10 14.71 91.10 11.25 0.00 0.00 0.00
CBSB Charter Financial Inc. of IL 12.75 62.14 0.74 13.09 17.23 97.40 16.93 104.77 17.47 0.24 1.88 32.43
CBK Citizens First Fin.Corp. of IL 12.50 35.21 0.21 14.32 NM 87.29 13.22 87.29 NM 0.00 0.00 0.00
DFIN Damen Fin. Corp. of Chicago IL 12.50 49.59 0.51 13.85 24.51 90.25 20.90 90.25 25.00 0.24 1.92 47.06
EGLB Eagle BancGroup of IL 13.25 17.26 -0.52 16.75 NM 79.10 10.54 79.10 NM 0.00 0.00 NM
FBCI Fidelity Bancorp of Chicago IL 17.25 50.56 1.03 16.99 16.75 101.53 11.07 101.89 16.75 0.24 1.39 23.30
FFBI First Financial Bancorp of IL 15.50 7.22 1.17 16.89 13.25 91.77 7.64 91.77 15.20 0.00 0.00 0.00
FMBD First Mutual Bancorp of IL 14.00 53.83 0.35 16.40 NM 85.37 17.02 85.37 NM 0.32 2.29 NM
FFDP FirstFed Bancshares of IL 16.75 54.89 0.44 15.76 NM 106.28 9.10 111.52 NM 0.40 2.39 NM
GTPS Great American Bancorp of IL 14.62 27.05 0.42 17.95 NM 81.45 22.44 81.45 NM 0.40 2.74 NM
HNFC Hinsdale Financial Corp. of IL 24.81 66.86 1.14 20.58 21.76 120.55 10.27 124.11 14.51 0.00 0.00 0.00
HBEI Home Bancorp of Elgin IL 12.62 88.45 0.06 14.12 NM 89.38 23.87 89.38 NM 0.00 0.00 0.00
HMCI Homecorp, Inc. of Rockford IL 18.25 20.60 0.29 18.09 NM 100.88 6.05 100.88 18.43 0.00 0.00 0.00
JXSB Jcksnville SB,MHC of IL(43.3%) 12.00 6.70 0.21 13.01 NM 92.24 10.62 92.45 23.08 0.40 3.33 NM
KNK Kankakee Bancorp of IL 24.00 33.96 1.05 24.99 22.86 96.04 9.62 103.23 16.11 0.40 1.67 38.10
LBCI Liberty Bancorp of Chicago IL(7) 24.00 59.45 0.86 25.55 NM 93.93 8.95 94.19 14.46 0.60 2.50 69.77
MAFB MAF Bancorp of IL 30.50 319.79 1.21 23.07 NM 132.21 10.11 154.59 14.45 0.36 1.18 29.75
NBSI North Bancshares of Chicago IL 16.50 17.69 0.36 16.50 NM 100.00 15.13 100.00 25.00 0.40 2.42 NM
PFED Park Bancorp of Chicago IL 12.00 32.41 0.50 15.01 24.00 79.95 18.65 79.95 22.64 0.00 0.00 0.00
SWBI Southwest Bancshares of IL 18.37 48.77 1.12 14.71 16.40 124.88 12.96 124.88 11.93 0.48 2.61 42.86
SPBC St. Paul Bancorp, Inc. of IL 26.94 487.13 1.37 20.55 19.66 131.09 11.39 131.54 12.95 0.48 1.78 35.04
STND Standard Fin. of Chicago IL 19.50 315.84 0.74 16.26 NM 119.93 13.50 120.15 19.31 0.32 1.64 43.24
SFSB SuburbFed Fin. Corp. of IL 19.75 24.75 0.66 20.26 NM 97.48 6.33 98.01 13.91 0.32 1.62 48.48
WCBI WestCo Bancorp of IL 21.75 56.57 1.17 18.34 18.59 118.59 18.38 118.59 13.77 0.48 2.21 41.03
</TABLE>
<TABLE>
<CAPTION>
Financial Characteristics(6)
-------------------------------------------------------
Reported Core
Total Equity/ NPAs/ --------------- ---------------
Assets Assets Assets ROA ROE ROA ROE
------ ------- ------- ------- ------- ------- -------
Financial Institution
- --------------------- ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 1,351 12.97 0.84 0.72 6.35 0.83 7.42
State of IL 670 14.50 0.63 0.53 3.97 0.71 5.67
Comparable Group
- ----------------
State of IL
- -----------
AVND Avondale Fin. Corp. of IL 593 9.93 NA 0.63 5.82 0.45 4.16
CSBF CSB Financial Group Inc of IL 41 30.89 0.70 0.82 4.53 0.82 4.53
CBCI Calumet Bancorp of Chicago IL 493 16.15 1.29 0.98 5.93 1.28 7.76
CBSB Charter Financial Inc. of IL 367 17.39 0.52 1.17 6.86 1.15 6.77
CBK Citizens First Fin.Corp. of IL 266 15.14 NA 0.25 2.32 0.52 4.87
DFIN Damen Fin. Corp. of Chicago IL 237 23.15 0.20 0.91 4.83 0.89 4.73
EGLB Eagle BancGroup of IL 164 13.33 1.76 -0.44 -5.05 -0.08 -0.97
FBCI Fidelity Bancorp of Chicago IL 457 10.90 0.61 0.73 5.74 0.73 5.74
FFBI First Financial Bancorp of IL 94 8.33 0.31 0.67 6.85 0.58 5.97
FMBD First Mutual Bancorp of IL 316 19.93 0.14 0.47 1.94 0.72 2.99
FFDP FirstFed Bancshares of IL 603 8.57 0.14 0.24 2.62 0.29 3.21
GTPS Great American Bancorp of IL 121 27.55 0.19 0.68 2.55 0.66 2.49
HNFC Hinsdale Financial Corp. of IL 651 8.52 0.17 0.45 5.68 0.68 8.52
HBEI Home Bancorp of Elgin IL 371 26.71 0.49 0.13 0.80 0.68 4.14
HMCI Homecorp, Inc. of Rockford IL 340 6.00 3.64 0.10 1.59 0.33 5.44
JXSB Jcksnville SB,MHC of IL(43.3%) 144 11.52 0.37 0.19 1.60 0.47 3.96
KNK Kankakee Bancorp of IL 353 10.02 0.90 0.42 4.14 0.60 5.87
LBCI Liberty Bancorp of Chicago IL(7) 664 9.53 0.10 0.32 3.31 0.62 6.40
MAFB MAF Bancorp of IL 3,163 7.65 0.47 0.53 7.80 0.92 13.60
NBSI North Bancshares of Chicago IL 117 15.13 NA 0.34 1.96 0.62 3.60
PFED Park Bancorp of Chicago IL 174 23.32 0.17 0.78 3.33 0.82 3.53
SWBI Southwest Bancshares of IL 376 10.38 0.22 0.82 6.91 1.13 9.49
SPBC St. Paul Bancorp, Inc. of IL 4,276 8.69 0.57 0.59 6.56 0.90 9.95
STND Standard Fin. of Chicago IL 2,340 11.26 0.16 0.55 4.41 0.75 6.02
SFSB SuburbFed Fin. Corp. of IL 391 6.49 0.28 0.22 3.20 0.48 6.89
WCBI WestCo Bancorp of IL 308 15.50 0.53 0.99 6.36 1.33 8.58
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/CORE = Price to estimated core
earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month earnings and average equity and assets
balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, Inc.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-2
Market Pricing Comparatives
Prices As of November 15, 1996
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------- Pricing Ratios(3) Dividends(4)
--------------- Book -------------------------------------- ----------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
------- ------- ------- ------- ------- ------- ------- ------- ------ ------- ------ -------
Financial Institution
- ---------------------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 18.61 141.08 1.00 16.19 16.26 114.64 14.06 117.58 15.64 0.37 1.97 30.34
State of IN 17.80 34.81 1.24 16.82 15.41 109.23 13.86 109.62 16.75 0.42 2.34 35.09
Comparable Group
- ----------------
State of IN
- -----------
FBCV 1st Bancorp of Vincennes IN 30.12 20.21 6.92 31.52 4.35 95.56 7.83 95.56 NM 0.40 1.33 5.78
AMFC AMB Financial Corp. of IN 12.50 14.05 0.33 14.40 NM 86.81 16.82 86.81 24.04 0.24 1.92 72.73
ATSB AmTrust Capital Corp. of IN 10.00 5.28 0.63 13.66 15.87 73.21 7.34 73.21 NM 0.00 0.00 0.00
ASBI Ameriana Bancorp of IN 15.00 49.17 0.71 13.27 21.13 113.04 12.30 113.21 14.15 0.56 3.73 NM
CBCO CB Bancorp of Michigan City IN 25.50 29.63 2.29 16.63 11.14 153.34 15.14 153.34 11.23 1.30 5.10 56.77
CBIN Community Bank Shares of IN 12.25 24.30 0.95 13.00 12.89 94.23 10.42 94.23 13.17 0.34 2.78 35.79
FFWC FFW Corporation of Wabash IN 21.00 14.74 1.89 22.04 11.11 95.28 9.54 95.28 9.21 0.60 2.86 31.75
FFED Fidelity Fed. Bancorp of IN 10.50 26.19 0.34 5.03 NM 208.75 10.00 208.75 23.86 0.80 7.62 NM
FISB First Indiana Corp. of IN 24.75 205.28 1.62 16.30 15.28 151.84 13.82 154.01 13.31 0.56 2.26 34.57
HBFW Home Bancorp of Fort Wayne IN 17.50 50.52 0.91 16.96 19.23 103.18 15.99 103.18 19.23 0.20 1.14 21.98
HBBI Home Building Bancorp of IN 17.50 5.46 -0.44 17.62 NM 99.32 12.83 99.32 NM 0.30 1.71 NM
HOMF Home Fed Bancorp of Seymour IN 31.50 70.12 3.30 23.14 9.55 136.13 11.13 141.32 10.82 0.50 1.59 15.15
HWEN Home Financial Bancorp of IN 12.50 6.33 0.36 15.31 NM 81.65 16.35 81.65 24.04 0.00 0.00 0.00
INCB Indiana Comm. Bank, SB of IN 16.00 14.75 0.54 12.44 NM 128.62 16.28 128.62 NM 0.35 2.19 64.81
IFSL Indiana Federal Corp. of IN(7) 23.00 108.95 1.07 14.77 21.50 155.72 13.47 166.91 15.33 0.72 3.13 67.29
LSBI LSB Fin. Corp. of Lafayette IN 18.87 17.32 0.90 18.21 20.97 103.62 9.74 103.62 23.01 0.32 1.70 35.56
LOGN Logansport Fin. Corp. of IN 14.25 18.84 0.71 12.05 20.07 118.26 23.63 118.26 16.01 0.40 2.81 56.34
MFBC MFB Corp. of Mishawaka IN 16.00 31.58 0.71 19.09 22.54 83.81 15.00 83.81 22.86 0.32 2.00 45.07
MARN Marion Capital Holdings of IN 21.50 39.62 1.09 21.49 19.72 100.05 22.69 100.05 15.69 0.80 3.72 73.39
NEIB Northeast Indiana Bncrp of IN 13.12 25.64 0.84 14.91 15.62 87.99 16.63 87.99 15.62 0.32 2.44 38.10
PFDC Peoples Bancorp of Auburn IN 20.00 46.92 1.72 18.46 11.63 108.34 16.88 108.34 11.70 0.60 3.00 34.88
PERM Permanent Bancorp of IN 17.75 37.90 0.68 18.87 NM 94.06 9.22 95.28 NM 0.30 1.69 44.12
SOBI Sobieski Bancorp of S. Bend IN 13.50 12.07 0.37 15.72 NM 85.88 15.30 85.88 NM 0.00 0.00 0.00
</TABLE>
<TABLE>
<CAPTION>
Financial Characteristics(6)
-------------------------------------------------------
Reported Core
Total Equity/ NPAs/ --------------- ---------------
Assets Assets Assets ROA ROE ROA ROE
------ ------- ------- ------- ------- ------- -------
Financial Institution
- ---------------------
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 1,351 12.97 0.84 0.72 6.35 0.83 7.42
State of IN 265 13.39 0.58 0.79 6.66 0.78 5.96
Comparable Group
- ----------------
State of IN
- -----------
FBCV 1st Bancorp of Vincennes IN 258 8.20 0.44 1.72 22.62 -0.16 -2.12
AMFC AMB Financial Corp. of IN 84 19.37 0.43 0.49 3.04 0.76 4.79
ATSB AmTrust Capital Corp. of IN 72 10.03 NA 0.47 4.40 0.03 0.28
ASBI Ameriana Bancorp of IN 400 10.88 0.48 0.61 5.14 0.91 7.67
CBCO CB Bancorp of Michigan City IN 196 9.88 NA 1.39 14.63 1.38 14.50
CBIN Community Bank Shares of IN 233 11.05 0.12 0.87 7.46 0.85 7.31
FFWC FFW Corporation of Wabash IN 155 10.01 0.10 0.90 8.36 1.08 10.09
FFED Fidelity Fed. Bancorp of IN 262 4.79 0.17 0.31 6.17 0.40 7.99
FISB First Indiana Corp. of IN 1,485 9.10 1.76 0.90 10.21 1.03 11.72
HBFW Home Bancorp of Fort Wayne IN 316 15.50 0.04 0.84 5.00 0.84 5.00
HBBI Home Building Bancorp of IN 43 12.92 0.35 -0.32 -2.31 0.02 0.16
HOMF Home Fed Bancorp of Seymour IN 630 8.18 0.46 1.22 15.14 1.08 13.35
HWEN Home Financial Bancorp of IN 39 20.03 0.96 0.50 4.10 0.72 5.92
INCB Indiana Comm. Bank, SB of IN 91 12.66 1.23 0.54 3.67 0.54 3.67
IFSL Indiana Federal Corp. of IN(7) 809 8.65 NA 0.68 7.23 0.96 10.14
LSBI LSB Fin. Corp. of Lafayette IN 178 9.40 1.37 0.50 4.76 0.46 4.33
LOGN Logansport Fin. Corp. of IN 80 19.98 0.36 1.23 4.85 1.54 6.08
MFBC MFB Corp. of Mishawaka IN 211 17.90 0.06 0.72 3.67 0.71 3.62
MARN Marion Capital Holdings of IN 175 22.68 0.95 1.14 4.80 1.43 6.03
NEIB Northeast Indiana Bncrp of IN 154 18.90 0.20 1.18 5.48 1.18 5.48
PFDC Peoples Bancorp of Auburn IN 278 15.58 0.34 1.45 9.56 1.44 9.50
PERM Permanent Bancorp of IN 411 9.80 1.66 0.38 3.49 0.38 3.49
SOBI Sobieski Bancorp of S. Bend IN 79 17.82 0.11 0.43 2.31 0.43 2.31
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/CORE = Price to estimated core
earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month earnings and average equity and assets
balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, Inc.
<PAGE>
EXHIBIT III-3
Financial Analysis of Peer Group Candidates
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III
Market Pricing Comparatives
Prices As of November 15, 1996
<TABLE>
<CAPTION>
Per Share Data
Market ---------------
Capitalization Pricing Ratios(3) Dividends(4)
--------------- Book -------------------------------------- ----------------------
Price/ Market 12-Mth Value/ Amount/ Payout
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE Share Yield Ratio(5)
------- ------- ------- ------- ------- ------- ------- ------- ------ ------- ------ -------
Financial Institution
- ---------------------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 18.61 141.08 1.00 16.19 16.26 114.64 14.06 117.58 15.64 0.37 1.97 30.34
Comparable Group Average 16.27 15.84 0.67 18.19 18.54 89.91 10.22 90.43 16.50 0.37 2.25 37.29
Mid-West Companies 16.27 15.84 0.67 18.19 18.54 89.91 10.22 90.43 16.50 0.37 2.25 37.29
Comparable Group
- ----------------
Mid-West Companies
- ------------------
BDJI First Fed. Bancorp. of MN 16.50 11.57 0.45 17.58 NM 93.86 10.78 93.86 16.50 0.00 0.00 0.00
FFHS First Franklin Corp. of OH 17.25 19.98 0.52 17.07 NM 101.05 9.15 101.95 15.00 0.32 1.86 61.54
GFCO Glenway Financial Corp. of OH 20.00 22.62 1.37 23.68 14.60 84.46 8.11 86.32 14.39 0.68 3.40 49.64
HZFS Horizon Fin'l. Services of IA 14.75 6.61 0.21 18.37 NM 80.29 8.62 80.29 NM 0.32 2.17 NM
SBCN Suburban Bancorp. of OH 15.25 22.49 0.65 17.44 23.46 87.44 11.13 87.44 17.33 0.60 3.93 NM
THR Three Rivers Fin. Corp. of MI 13.87 11.80 0.79 15.02 17.56 92.34 13.54 92.71 19.26 0.30 2.16 37.97
</TABLE>
<TABLE>
<CAPTION>
Financial Characteristics(6)
-------------------------------------------------------
Reported Core
Total Equity/ NPAs/ --------------- ---------------
Assets Assets Assets ROA ROE ROA ROE
------ ------- ------- ------- ------- ------- -------
Financial Institution
- ---------------------
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 1,351 12.97 0.84 0.72 6.35 0.83 7.42
Comparable Group Average 162 11.38 0.42 0.43 3.64 0.60 5.13
Mid-West Companies 162 11.38 0.42 0.43 3.64 0.60 5.13
Comparable Group
- ----------------
Mid-West Companies
- ------------------
BDJI First Fed. Bancorp. of MN 107 11.49 0.38 0.31 2.22 0.68 4.94
FFHS First Franklin Corp. of OH 218 9.05 0.52 0.28 2.99 0.62 6.61
GFCO Glenway Financial Corp. of OH 279 9.61 0.40 0.57 5.93 0.57 6.01
HZFS Horizon Fin'l. Services of IA 77 10.74 NA 0.13 1.11 0.33 2.85
SBCN Suburban Bancorp. of OH 202 12.73 0.13 0.48 3.66 0.65 4.95
THR Three Rivers Fin. Corp. of MI 87 14.67 0.69 0.82 5.92 0.75 5.40
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/CORE = Price to estimated core
earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month earnings and average equity and assets
balances. (7) Excludes from averages those companies the subject of actual
or rumored acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, Inc.
<PAGE>
EXHIBIT III-4
Peer Group Market Area Comparative Analysis
<PAGE>
Exhibit III-4
Peer Group Primary Market Area Demographic/Competition Trends
<TABLE>
<CAPTION>
Per Capita Income
Population Proj. ----------------- Deposit
------------------ Pop. 1990-95 1995-2000 % State Market
Institution County 1990 1995 2000 % Change % Change Median Age Amount Average Share(1)
- ----------- ------ ---- ---- ---- -------- -------- ---------- ------ ------- --------
(000) (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AmTrust Capital Corp. of IN Miami 37 31 29 -16.2% -6.5% 33.2 11,609 76.0% 10.0%
First Fed. Bancorp. of MN Beltrami 34 39 42 14.7% 7.7% 29.8 10,800 60.5% 14.0%
First Franklin Corp. of OH Hamilton 866 861 858 -0.6% -0.3% 34.0 17,676 114.7% 1.1%
Home Building Bancorp of IN Daviess 28 29 30 4.9% 3.7% 34.7 12,450 81.5% 9.4%
Horizon Financial Services of IA Mahaska 22 22 23 2.6% 2.0% 35.9 14,489 92.9% 14.3%
LSB Fin. Corp. of Lafayette IN Tippecanoe 131 136 141 4.4% 3.4% 27.9 15,728 103.0% 6.1%
MFB Corp. of Mishawaka IN St. Joseph 247 261 271 5.5% 4.1% 34.0 15,126 99.0% 4.0%
North Bancshares of Chicago IL Cook 5,105 5,136 5,161 0.6% 0.5% 34.1 18,013 105.7% 0.1%
Sobieski Bancorp of S. Bend IN St. Joseph 247 261 271 5.5% 4.1% 34.0 15,126 99.0% 1.7%
Three Rivers Fin. Corp. of MI St. Joseph 59 61 63 3.8% 2.9% 34.2 15,650 89.0% 8.4%
----- ----- ----- --- --- ---- ------ ----- ---
Averages: 677 684 689 2.5% 2.2% 33.2 14,667 92.1% 6.9%
Medians: 95 99 102 4.1% 3.2% 34.0 15,126 96.0% 7.3%
American Savings of Danville Vermilion 88 87 87 -1.4% 0.0% 35.4 13,027 76.4% 3.2%
</TABLE>
(1) Total institution deposits in headquarters county as percent of total
county deposits.
Sources: CACI, Inc; FDIC; OTS.
<PAGE>
EXHIBIT IV-1
Stock Prices:
As of November 15, 1996
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1
Weekly Thrift Market Line - Part One
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHC)
- ---------------------------------------------
SAIF-Insured Thrifts(323) 18.71 6,014 148.1 19.69 14.93 18.58 0.61 156.76 12.49
NYSE Traded Companies(12) 35.58 45,404 1,601.3 36.08 25.71 34.99 1.59 265.87 22.70
AMEX Traded Companies(17) 15.91 3,208 58.4 16.71 12.56 15.66 1.56 236.07 11.96
NASDAQ Listed OTC Companies(294) 18.19 4,591 94.8 19.21 14.64 18.09 0.52 142.83 12.05
California Companies(25) 21.64 21,433 644.2 22.35 16.06 21.46 0.67 80.78 19.88
Florida Companies(8) 13.80 7,312 88.3 14.35 11.13 13.79 -0.82 45.75 15.39
Mid-Atlantic Companies(66) 18.67 6,157 125.1 19.53 14.68 18.57 0.48 137.60 14.44
Mid-West Companies(151) 19.01 4,073 107.1 20.04 15.47 18.87 0.61 180.41 10.62
New England Companies(10) 19.14 3,446 79.9 19.75 15.03 18.60 3.23 227.34 16.23
North-West Companies(6) 19.67 13,687 306.5 20.67 15.15 19.65 0.02 85.15 14.77
South-East Companies(42) 17.15 3,802 64.8 18.52 13.77 17.06 0.67 194.99 11.02
South-West Companies(7) 15.28 1,871 32.5 16.25 12.52 14.99 1.56 -14.81 6.02
Western Companies (Excl CA)(8) 16.87 4,353 73.9 17.49 13.76 17.13 -1.38 290.08 15.49
Thrift Strategy(249) 17.37 3,516 67.9 18.41 14.15 17.31 0.30 121.13 10.61
Mortgage Banker Strategy(39) 22.82 12,217 382.0 23.66 17.50 22.39 2.28 255.59 18.06
Real Estate Strategy(16) 20.33 7,613 147.3 21.19 15.07 20.08 1.18 132.24 18.89
Diversified Strategy(15) 29.94 30,291 888.1 30.70 22.23 29.70 0.67 207.31 20.95
Retail Banking Strategy(4) 13.30 3,348 47.8 14.13 10.78 13.16 0.97 173.56 4.72
Companies Issuing Dividends(255) 19.57 6,362 165.9 20.61 15.61 19.43 0.66 174.30 12.66
Companies Without Dividends(68) 15.25 4,624 76.7 16.00 12.23 15.16 0.42 75.39 11.58
Equity/Assets [6%(33) 22.22 18,548 498.4 23.18 16.35 21.97 1.11 146.10 19.19
Equity/Assets 6-12%(152) 20.46 6,157 162.5 21.54 16.13 20.26 0.92 165.26 13.88
Equity/Assets ]12%(138) 16.00 2,967 51.7 16.89 13.32 15.98 0.17 122.44 8.47
Converted Last 3 Mths (no MHC)(6) 12.68 2,590 32.5 12.98 11.58 12.63 0.27 0.00 0.00
Actively Traded Companies(52) 26.57 17,908 560.1 27.52 20.32 26.16 1.65 182.37 18.01
Market Value Below $20 Million(75) 14.29 958 12.4 15.34 12.39 14.30 -0.22 98.83 0.77
Holding Company Structure(279) 19.11 6,027 154.9 20.11 15.30 18.98 0.59 147.08 12.20
Assets Over $1 Billion(65) 27.66 18,806 552.0 28.50 20.63 27.35 1.17 193.52 22.39
Assets $500 Million-$1 Billion(57) 18.07 5,311 86.2 18.83 14.48 17.84 1.29 189.11 14.20
Assets $250-$500 Million(73) 17.11 2,671 41.6 18.31 13.99 16.97 0.96 108.06 10.83
Assets less than $250 Million(128) 15.15 1,436 20.8 16.19 12.66 15.17 -0.16 104.76 6.40
Goodwill Companies(132) 21.61 10,226 260.8 22.54 16.56 21.35 1.16 184.38 18.24
Non-Goodwill Companies(191) 16.75 3,167 71.9 17.77 13.83 16.71 0.24 104.72 7.92
Acquirors of FSLIC Cases(14) 29.92 32,729 1,135.0 30.40 22.59 29.38 1.35 258.61 11.22
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHC)
- --------------------------------------------
SAIF-Insured Thrifts(323) 1.02 1.19 16.36 15.93 163.54
NYSE Traded Companies(12) 1.83 2.66 21.61 20.14 381.66
AMEX Traded Companies(17) 0.74 0.92 14.75 14.59 109.10
NASDAQ Listed OTC Companies(294) 1.00 1.15 16.24 15.84 157.94
California Companies(25) 0.48 0.96 17.77 17.32 276.36
Florida Companies(8) 1.09 1.00 12.66 12.32 144.45
Mid-Atlantic Companies(66) 1.20 1.40 16.33 15.64 172.20
Mid-West Companies(151) 1.05 1.18 17.04 16.71 150.44
New England Companies(10) 1.36 1.34 17.30 15.95 232.01
North-West Companies(6) 0.97 1.26 12.45 11.86 167.19
South-East Companies(42) 0.87 1.06 14.03 13.84 118.73
South-West Companies(7) 1.06 1.14 16.17 15.64 218.21
Western Companies (Excl CA)(8) 0.98 1.04 15.65 15.62 97.95
Thrift Strategy(249) 0.91 1.06 16.27 15.91 143.57
Mortgage Banker Strategy(39) 1.58 1.63 16.58 15.65 246.63
Real Estate Strategy(16) 0.84 1.36 15.96 15.77 205.69
Diversified Strategy(15) 1.51 2.11 18.62 18.08 235.79
Retail Banking Strategy(4) 0.93 0.82 13.07 12.58 163.65
Companies Issuing Dividends(255) 1.15 1.32 16.65 16.15 164.46
Companies Without Dividends(68) 0.50 0.70 15.22 15.06 159.88
Equity/Assets [6%(33) 0.97 1.38 15.64 14.44 310.94
Equity/Assets 6-12%(152) 1.29 1.49 16.63 16.03 200.45
Equity/Assets >12%(138) 0.73 0.82 16.23 16.17 89.78
Converted Last 3 Mths (no MHC)(6) 0.45 0.49 14.57 14.57 69.48
Actively Traded Companies(52) 1.63 2.13 18.61 17.76 259.29
Market Value Below $20 Million(75) 0.68 0.78 15.71 15.62 127.15
Holding Company Structure(279) 1.02 1.20 16.81 16.37 162.29
Assets Over $1 Billion(65) 1.56 1.96 19.44 18.07 274.06
Assets $500 Million-$1 Billion(57) 1.12 1.28 15.34 14.94 164.99
Assets $250-$500 Million(73) 0.95 1.07 15.79 15.53 159.15
Assets less than $250 Million(128) 0.73 0.82 15.49 15.45 107.32
Goodwill Companies(132) 1.21 1.47 16.84 15.78 216.87
Non-Goodwill Companies(191) 0.88 1.00 16.04 16.04 127.49
Acquirors of FSLIC Cases(14) 1.79 2.50 19.02 17.72 315.66
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by
public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
BIF-Insured Thrifts(74) 18.49 7,937 186.2 19.09 13.57 18.18 1.98 128.83 23.55
NYSE Traded Companies(3) 26.16 53,821 1,322.5 27.50 15.17 26.58 -2.20 160.46 44.07
AMEX Traded Companies(5) 17.22 3,978 66.2 17.55 13.37 16.80 2.37 54.44 13.86
NASDAQ Listed OTC Companies(66) 18.20 5,870 136.9 18.79 13.50 17.86 2.17 133.15 22.91
California Companies(3) 13.87 6,047 89.7 14.17 9.92 13.62 1.93 269.33 29.02
Mid-Atlantic Companies(20) 20.52 13,230 303.7 21.52 15.36 20.61 -0.59 92.94 16.78
Mid-West Companies(1) 10.12 2,562 25.9 10.12 7.50 9.50 6.53 0.00 0.00
New England Companies(42) 17.98 4,116 71.6 18.50 13.09 17.53 2.89 143.14 26.06
North-West Companies(4) 22.72 22,894 854.9 22.94 15.20 22.00 3.44 84.82 27.52
South-East Companies(3) 13.37 2,736 37.0 13.50 11.33 12.83 4.22 0.00 0.00
Thrift Strategy(47) 18.11 4,525 106.9 18.78 13.39 17.85 1.80 128.71 24.74
Mortgage Banker Strategy(10) 20.36 18,983 328.2 20.83 14.60 19.97 1.98 168.90 24.06
Real Estate Strategy(8) 17.48 5,072 99.6 17.56 12.48 17.08 3.00 165.64 27.21
Diversified Strategy(7) 20.96 22,728 706.7 21.38 14.71 20.58 1.48 75.80 20.58
Retail Banking Strategy(2) 14.94 1,341 19.8 16.69 13.25 14.38 4.36 6.12 -1.41
Companies Issuing Dividends(54) 20.46 7,263 205.8 21.17 14.91 20.18 1.54 129.51 23.41
Companies Without Dividends(20) 13.73 9,569 138.5 14.07 10.34 13.35 3.05 122.40 24.14
Equity/Assets [6%(9) 13.20 18,738 269.8 14.03 9.61 13.39 -1.17 102.24 16.84
Equity/Assets 6-12%(49) 20.13 7,129 207.8 20.81 14.59 19.79 2.15 137.08 25.74
Equity/Assets >12%(16) 16.71 4,442 81.1 17.00 12.83 16.24 3.18 -0.45 19.01
Converted Last 3 Mths (no MHC)(1) 13.00 4,497 58.5 13.00 12.12 12.25 6.12 0.00 0.00
Actively Traded Companies(28) 20.71 12,286 295.4 21.27 14.91 20.41 2.15 162.02 27.12
Market Value Below $20 Million(10) 15.00 836 11.7 15.81 11.65 14.54 2.76 69.58 18.58
Holding Company Structure(46) 19.01 7,154 179.6 19.56 14.21 18.74 1.95 136.11 24.56
Assets Over $1 Billion(17) 25.18 24,937 686.2 25.88 17.15 25.10 0.02 124.04 28.78
Assets $500 Million-$1 Billion(18) 20.21 4,900 89.7 20.96 15.51 20.08 0.99 138.35 18.03
Assets $250-$500 Million(22) 16.12 3,337 42.7 16.62 11.81 15.71 2.65 143.91 25.59
Assets less than $250 Million(17) 13.99 1,661 18.5 14.50 10.83 13.45 3.79 99.01 20.57
Goodwill Companies(36) 21.51 12,386 333.6 22.35 15.46 21.28 1.10 136.99 23.80
Non-Goodwill Companies(37) 16.23 4,405 68.6 16.65 12.18 15.87 2.58 115.57 23.29
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
BIF-Insured Thrifts(74) 1.36 1.32 15.00 14.17 165.75
NYSE Traded Companies(3) 1.55 1.59 18.37 13.90 251.10
AMEX Traded Companies(5) 0.95 0.90 14.31 13.87 135.03
NASDAQ Listed OTC Companies(66) 1.38 1.35 14.88 14.21 163.95
California Companies(3) 1.13 1.04 11.62 11.61 154.50
Mid-Atlantic Companies(20) 1.50 1.49 17.02 15.29 192.78
Mid-West Companies(1) 0.29 0.29 11.06 11.06 19.67
New England Companies(42) 1.42 1.33 14.41 13.86 166.69
North-West Companies(4) 1.49 1.54 14.26 13.78 154.04
South-East Companies(3) 0.22 0.52 14.72 14.72 59.21
Thrift Strategy(47) 1.23 1.22 15.65 14.57 154.85
Mortgage Banker Strategy(10) 1.73 1.65 14.71 14.32 219.86
Real Estate Strategy(8) 1.33 1.31 12.05 12.05 115.66
Diversified Strategy(7) 2.20 2.02 13.12 12.53 190.00
Retail Banking Strategy(2) 0.27 0.25 16.69 16.24 261.20
Companies Issuing Dividends(54) 1.60 1.56 15.87 14.70 186.54
Companies Without Dividends(20) 0.77 0.76 12.89 12.88 115.43
Equity/Assets [6%(9) 1.31 1.11 9.85 9.62 178.62
Equity/Assets 6-12%(49) 1.57 1.53 15.68 14.43 192.17
Equity/Assets >12%(16) 0.78 0.87 15.85 15.85 84.90
Converted Last 3 Mths (no MHC)(1) 0.62 0.66 13.15 13.15 46.25
Actively Traded Companies(28) 1.70 1.70 15.63 14.85 193.23
Market Value Below $20 Million(10) 1.16 1.07 15.76 15.22 179.64
Holding Company Structure(46) 1.48 1.49 15.32 14.53 160.57
Assets Over $1 Billion(17) 2.07 2.01 16.36 14.91 208.17
Assets $500 Million-$1 Billion(18) 1.43 1.29 16.76 15.48 181.35
Assets $250-$500 Million(22) 1.08 1.17 13.52 13.05 146.89
Assets less than $250 Million(17) 1.02 0.96 14.02 13.68 137.59
Goodwill Companies(36) 1.62 1.56 16.53 14.66 214.91
Non-Goodwill Companies(37) 1.18 1.16 13.85 13.85 129.19
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by
public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(19) 17.03 4,624 24.6 18.44 14.64 17.06 -0.13 123.75 -0.76
BIF-Insured Thrifts(2) 19.31 21,894 170.9 20.69 13.94 18.13 5.29 260.48 17.37
NASDAQ Listed OTC Companies(21) 17.26 6,351 39.2 18.67 14.57 17.16 0.41 169.33 1.15
Florida Companies(3) 21.58 5,511 54.3 22.37 16.67 21.46 0.54 0.00 5.25
Mid-Atlantic Companies(8) 14.62 7,525 25.4 16.71 12.75 14.52 0.87 82.50 -5.09
Mid-West Companies(7) 16.16 1,942 11.7 17.48 14.32 16.29 -0.74 165.00 -2.77
New England Companies(1) 28.37 40,516 335.2 28.37 18.62 26.25 8.08 260.48 49.32
North-West Companies(1) 16.25 2,196 12.8 17.00 14.09 16.25 0.00 0.00 11.76
South-East Companies(1) 20.25 1,505 14.3 21.44 19.25 20.75 -2.41 0.00 0.00
Thrift Strategy(19) 16.69 4,684 24.2 18.22 14.37 16.71 0.01 123.75 -2.31
Mortgage Banker Strategy(1) 16.25 2,196 12.8 17.00 14.09 16.25 0.00 0.00 11.76
Diversified Strategy(1) 28.37 40,516 335.2 28.37 18.62 26.25 8.08 260.48 49.32
Companies Issuing Dividends(20) 17.10 6,606 40.5 18.52 14.33 16.97 0.56 169.33 1.15
Companies Without Dividends(1) 20.25 1,505 14.3 21.44 19.25 20.75 -2.41 0.00 0.00
Equity/Assets [6%(1) 14.25 1,624 10.7 17.25 14.25 15.25 -6.56 0.00 -10.21
Equity/Assets 6-12%(14) 18.39 8,080 50.8 19.78 15.06 18.18 0.98 169.33 2.53
Equity/Assets >12%(6) 14.67 2,454 12.4 15.84 13.27 14.70 0.21 0.00 -0.85
Actively Traded Companies(1) 18.25 6,514 36.5 18.25 14.50 18.25 0.00 82.50 10.61
Market Value Below $20 Million(1) 12.00 1,272 6.7 14.12 11.50 12.25 -2.04 0.00 -13.48
Holding Company Structure(1) 18.25 6,514 36.5 18.25 14.50 18.25 0.00 82.50 10.61
Assets Over $1 Billion(4) 22.25 20,011 122.7 23.62 16.97 21.47 3.49 260.48 13.00
Assets $500 Million-$1 Billion(5) 17.19 5,294 38.1 18.19 13.63 17.22 -0.17 82.50 2.68
Assets $250-$500 Million(4) 19.00 2,113 15.5 20.25 16.90 19.25 -1.64 165.00 -1.50
Assets less than $250 Million(8) 13.92 2,169 9.8 15.63 12.68 13.94 0.19 0.00 -4.98
Goodwill Companies(10) 19.83 10,959 68.8 20.85 15.70 19.50 1.41 169.33 7.93
Non-Goodwill Companies(11) 15.15 2,581 15.0 16.88 13.65 15.25 -0.41 0.00 -4.96
MHC Institutions(21) 17.26 6,351 39.2 18.67 14.57 17.16 0.41 169.33 1.15
MHC Converted Last 3 Months(1) 20.25 1,505 14.3 21.44 19.25 20.75 -2.41 0.00 0.00
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(19) 0.77 0.95 13.40 13.04 133.97
BIF-Insured Thrifts(2) 0.88 0.80 11.53 11.52 124.80
NASDAQ Listed OTC Companies(21) 0.78 0.93 13.21 12.89 133.05
Florida Companies(3) 1.20 1.40 14.86 14.57 154.73
Mid-Atlantic Companies(8) 0.35 0.65 11.95 11.35 120.11
Mid-West Companies(7) 0.73 0.85 13.04 13.01 135.11
New England Companies(1) 1.91 1.53 14.76 14.74 178.61
North-West Companies(1) 1.23 1.13 10.73 9.56 97.39
South-East Companies(1) 1.36 1.36 19.18 19.18 134.33
Thrift Strategy(19) 0.69 0.89 13.26 12.97 132.51
Mortgage Banker Strategy(1) 1.23 1.13 10.73 9.56 97.39
Diversified Strategy(1) 1.91 1.53 14.76 14.74 178.61
Companies Issuing Dividends(20) 0.75 0.91 12.90 12.55 132.99
Companies Without Dividends(1) 1.36 1.36 19.18 19.18 134.33
Equity/Assets [6%(1) 1.24 1.27 13.78 13.78 232.29
Equity/Assets 6-12%(14) 0.75 0.98 13.49 13.02 144.66
Equity/Assets >12%(6) 0.77 0.74 12.33 12.33 80.70
Actively Traded Companies(1) 0.69 1.25 13.85 12.14 149.64
Market Value Below $20 Million(1) 0.21 0.52 13.01 12.98 112.98
Holding Company Structure(1) 0.69 1.25 13.85 12.14 149.64
Assets Over $1 Billion(4) 1.24 1.34 13.36 12.54 152.68
Assets $500 Million-$1 Billion(5) 0.73 0.98 14.31 13.85 153.00
Assets $250-$500 Million(4) 1.00 1.17 15.37 15.33 180.54
Assets less than $250 Million(8) 0.47 0.59 11.51 11.36 89.53
Goodwill Companies(10) 0.98 1.18 13.60 12.88 148.40
Non-Goodwill Companies(11) 0.62 0.73 12.89 12.89 120.50
MHC Institutions(21) 0.78 0.93 13.21 12.89 133.05
MHC Converted Last 3 Months(1) 1.36 1.36 19.18 19.18 134.33
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by
public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA 31.37 105,496 3,309.4 31.50 21.88 31.12 0.80 67.31 18.38
CAL CalFed Inc. of Los Angeles CA(8) 23.62 49,427 1,167.5 23.62 14.62 23.37 1.07 16.99 49.97
CSA Coast Savings Financial of CA 33.62 18,584 624.8 35.12 26.50 33.12 1.51 190.83 -2.89
CFB Commercial Federal Corp. of NE 45.12 13,857 625.2 45.12 34.50 43.62 3.44 ***.** 19.52
DME Dime Savings Bank, FSB of NY* 15.25 106,447 1,623.3 16.50 10.50 16.50 -7.58 51.59 31.24
DSL Downey Financial Corp. of CA 26.75 16,973 454.0 26.75 20.25 25.87 3.40 56.07 22.99
FRC First Republic Bancorp of CA* 16.62 7,361 122.3 17.25 11.00 16.37 1.53 269.33 26.68
FED FirstFed Fin. Corp. of CA 22.00 10,518 231.4 23.37 12.37 20.50 7.32 36.22 55.81
GLN Glendale Fed. Bk, FSB of CA 20.00 47,166 943.3 20.25 15.63 20.25 -1.23 23.08 13.51
GDW Golden West Fin. Corp. of CA 65.37 57,376 3,750.7 65.37 49.50 64.75 0.96 149.60 18.32
GWF Great Western Fin. Corp. of CA 28.75 137,432 3,951.2 29.12 21.12 29.12 -1.27 65.52 13.32
GPT GreenPoint Fin. Corp. of NY* 46.62 47,656 2,221.7 48.75 24.00 46.88 -0.55 N.A. 74.28
SFB Standard Fed. Bancorp of MI 55.25 31,192 1,723.4 55.25 36.62 53.87 2.56 493.45 40.34
TCB TCF Financial Corp. of MN 40.63 34,870 1,416.8 41.12 29.25 39.37 3.20 512.82 22.68
WES Westcorp Inc. of Orange CA 22.50 25,985 584.7 23.87 15.24 23.25 -3.23 206.96 27.70
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares of LA* 14.75 2,731 40.3 14.75 11.69 14.12 4.46 N.A. N.A.
BKC American Bank of Waterbury CT* 29.37 2,291 67.3 29.50 23.37 28.50 3.05 56.64 7.78
BFD BostonFed Bancorp of MA 14.12 6,590 93.1 14.12 11.50 14.00 0.86 N.A. 20.17
CFX Cheshire Fin. Corp. of NH* 15.37 12,257 188.4 16.50 12.50 15.00 2.47 29.16 -1.66
CZF Citisave Fin. Corp. of LA 13.50 962 13.0 16.50 13.50 13.50 0.00 N.A. -8.47
CBK Citizens First Fin.Corp. of IL 12.50 2,817 35.2 12.50 9.50 12.12 3.14 N.A. N.A.
ESX Essex Bancorp of VA(8) 2.06 1,052 2.2 4.75 1.62 1.88 9.57 -87.70 9.57
FCB Falmouth Co-Op Bank of MA* 13.75 1,455 20.0 13.75 10.25 13.25 3.77 N.A. N.A.
GAF GA Financial Corp. of PA 14.12 8,900 125.7 14.12 10.25 13.62 3.67 N.A. N.A.
KNK Kankakee Bancorp of IL 24.00 1,415 34.0 24.00 18.37 22.75 5.49 140.00 27.19
KYF Kentucky First Bancorp of KY 15.00 1,389 20.8 15.25 11.37 15.12 -0.79 N.A. 21.26
NYB New York Bancorp, Inc. of NY 34.00 11,099 377.4 36.25 20.12 34.87 -2.49 379.55 51.11
PDB Piedmont Bancorp of NC 18.25 2,751 50.2 18.25 12.00 16.00 14.06 N.A. 46.00
PLE Pinnacle Bank of AL 17.87 890 15.9 19.00 15.50 17.87 0.00 164.74 -0.72
SSB Scotland Bancorp of NC 13.25 1,840 24.4 13.87 11.62 12.87 2.95 N.A. N.A.
SZB SouthFirst Bancshares of AL 12.50 863 10.8 16.00 11.37 12.50 0.00 N.A. -19.35
SRN Southern Banc Company of AL 13.50 1,382 18.7 13.75 11.37 13.62 -0.88 N.A. 4.90
SSM Stone Street Bancorp of NC 20.00 1,825 36.5 20.00 16.25 19.87 0.65 N.A. N.A.
TSH Teche Holding Company of LA 13.50 3,541 47.8 14.12 12.00 13.37 0.97 N.A. -1.82
FTF Texarkana Fst. Fin. Corp of AR 14.37 1,952 28.1 16.87 13.25 14.25 0.84 N.A. 1.77
THR Three Rivers Fin. Corp. of MI 13.87 851 11.8 14.00 11.87 13.87 0.00 N.A. 13.22
TBK Tolland Bank of CT* 12.87 1,157 14.9 13.25 9.06 13.12 -1.91 77.52 35.47
WSB Washington SB, FSB of MD 4.50 4,220 19.0 5.69 4.38 4.62 -2.60 260.00 -10.00
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN 30.12 671 20.2 31.50 26.00 30.12 0.00 N.A. 3.26
AFED AFSALA Bancorp of NY 12.00 1,455 17.5 12.12 11.31 11.62 3.27 N.A. N.A.
ALBK ALBANK Fin. Corp. of Albany NY 28.62 13,100 374.9 30.62 22.92 28.56 0.21 23.10 14.48
AMFC AMB Financial Corp. of IN 12.50 1,124 14.1 12.94 9.75 12.62 -0.95 N.A. N.A.
ASBP ASB Financial Corp. of OH 15.12 1,714 25.9 16.50 13.50 15.25 -0.85 N.A. -4.73
ABBK Abington Savings Bank of MA(8)* 20.37 1,887 38.4 21.25 14.50 21.25 -4.14 207.70 18.09
AABC Access Anytime Bancorp of NM 5.75 696 4.0 7.00 5.25 5.75 0.00 -14.81 -14.81
AADV Advantage Bancorp of WI 32.75 3,393 111.1 34.50 27.40 31.25 4.80 255.98 8.44
AFCB Affiliated Comm BC, Inc of MA 22.12 5,095 112.7 23.00 16.06 22.25 -0.58 N.A. 27.35
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA 0.62 2.07 18.86 15.82 479.53
CAL CalFed Inc. of Los Angeles CA(8) 1.01 1.60 13.24 13.24 285.81
CSA Coast Savings Financial of CA 0.54 2.12 22.24 21.89 460.02
CFB Commercial Federal Corp. of NE 2.89 4.14 25.95 23.19 481.18
DME Dime Savings Bank, FSB of NY* 0.73 0.98 9.32 9.23 183.61
DSL Downey Financial Corp. of CA 1.89 1.67 23.09 22.70 277.63
FRC First Republic Bancorp of CA* 1.45 1.36 16.04 16.02 288.30
FED FirstFed Fin. Corp. of CA 0.23 1.15 17.49 17.21 399.00
GLN Glendale Fed. Bk, FSB of CA -0.14 1.14 16.87 15.65 320.24
GDW Golden West Fin. Corp. of CA 6.18 7.59 39.57 39.57 645.07
GWF Great Western Fin. Corp. of CA 1.35 2.18 17.84 15.69 316.87
GPT GreenPoint Fin. Corp. of NY* 2.48 2.42 29.76 16.44 281.40
SFB Standard Fed. Bancorp of MI 2.86 3.85 28.72 23.37 492.23
TCB TCF Financial Corp. of MN 2.40 2.84 14.98 14.35 204.03
WES Westcorp Inc. of Orange CA 1.30 0.52 12.10 12.06 122.43
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares of LA* -0.27 0.60 16.67 16.67 94.34
BKC American Bank of Waterbury CT* 2.76 1.87 19.96 19.01 239.19
BFD BostonFed Bancorp of MA 0.34 0.55 13.48 13.48 120.92
CFX Cheshire Fin. Corp. of NH* 0.76 0.65 7.57 6.79 83.69
CZF Citisave Fin. Corp. of LA 0.63 0.84 12.58 12.57 78.62
CBK Citizens First Fin.Corp. of IL 0.21 0.44 14.32 14.32 94.57
ESX Essex Bancorp of VA(8) -5.04 -4.67 0.54 -1.53 290.14
FCB Falmouth Co-Op Bank of MA* 0.33 0.33 14.94 14.94 60.82
GAF GA Financial Corp. of PA 0.44 0.69 14.26 14.26 66.17
KNK Kankakee Bancorp of IL 1.05 1.49 24.99 23.25 249.42
KYF Kentucky First Bancorp of KY 0.52 0.68 13.78 13.78 61.92
NYB New York Bancorp, Inc. of NY 3.12 2.94 14.27 14.27 262.92
PDB Piedmont Bancorp of NC 0.57 0.70 13.54 13.54 48.01
PLE Pinnacle Bank of AL 1.08 1.70 16.65 16.07 215.35
SSB Scotland Bancorp of NC 0.45 0.45 13.43 13.43 38.31
SZB SouthFirst Bancshares of AL 0.57 0.76 15.12 15.12 104.92
SRN Southern Banc Company of AL 0.17 0.46 14.22 14.07 78.06
SSM Stone Street Bancorp of NC 0.67 0.83 20.48 20.48 58.29
TSH Teche Holding Company of LA 0.71 1.03 14.76 14.76 107.20
FTF Texarkana Fst. Fin. Corp of AR 1.51 1.51 16.93 16.93 84.05
THR Three Rivers Fin. Corp. of MI 0.79 0.72 15.02 14.96 102.41
TBK Tolland Bank of CT* 1.19 1.03 12.43 11.94 197.11
WSB Washington SB, FSB of MD 0.56 0.51 5.10 5.10 58.47
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN 6.92 -0.65 31.52 31.52 384.44
AFED AFSALA Bancorp of NY 0.61 0.61 14.05 14.05 102.70
ALBK ALBANK Fin. Corp. of Albany NY 1.89 2.41 23.97 20.58 267.92
AMFC AMB Financial Corp. of IN 0.33 0.52 14.40 14.40 74.33
ASBP ASB Financial Corp. of OH 0.37 0.58 14.79 14.79 66.68
ABBK Abington Savings Bank of MA(8)* 1.80 1.51 17.17 15.27 256.53
AABC Access Anytime Bancorp of NM 0.57 0.44 7.98 7.98 161.55
AADV Advantage Bancorp of WI 2.59 2.32 27.74 24.14 293.62
AFCB Affiliated Comm BC, Inc of MA 1.29 1.53 19.01 18.87 193.11
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ALBC Albion Banc Corp. of Albion NY 16.87 252 4.3 18.00 15.87 16.87 0.00 29.77 2.24
ATSB AmTrust Capital Corp. of IN 10.00 528 5.3 11.25 8.50 10.00 0.00 N.A. -2.44
AHCI Ambanc Holding Co. of NY* 10.50 5,422 56.9 10.75 9.38 10.50 0.00 N.A. 3.86
ASBI Ameriana Bancorp of IN 15.00 3,278 49.2 15.25 12.87 14.75 1.69 62.51 5.26
AFFFZ America First Fin. Fund of CA 29.06 6,011 174.7 30.75 25.87 29.50 -1.49 54.99 -2.32
AMFB American Federal Bank of SC 18.81 10,932 205.6 18.87 14.25 18.75 0.32 296.00 23.34
ANBK American Nat'l Bancorp of MD 11.75 3,781 44.4 12.62 9.50 11.75 0.00 N.A. 20.51
ABCW Anchor Bancorp Wisconsin of WI 35.00 4,629 162.0 36.25 30.25 34.75 0.72 19.17 -2.43
ANDB Andover Bancorp, Inc. of MA* 27.25 5,118 139.5 27.62 17.08 26.87 1.41 153.49 54.83
ASFC Astoria Financial Corp. of NY 35.62 21,511 766.2 35.62 21.50 34.12 4.40 35.70 56.16
AVND Avondale Fin. Corp. of IL 14.62 3,603 52.7 15.25 12.50 14.25 2.60 N.A. 0.83
BFSI BFS Bankorp, Inc. of NY 51.00 1,635 83.4 55.00 35.00 50.75 0.49 462.91 44.68
BKCT Bancorp Connecticut of CT* 22.50 2,665 60.0 23.75 14.17 21.75 3.45 157.14 52.13
BPLS Bank Plus Corp. of CA 11.62 18,243 212.0 11.75 8.00 11.25 3.29 N.A. 29.11
BWFC Bank West Fin. Corp. of MI 10.37 2,200 22.8 12.25 8.94 10.50 -1.24 N.A. 2.47
BANC BankAtlantic Bancorp of FL 13.00 14,720 191.4 13.75 10.08 13.19 -1.44 150.00 8.33
BKUNA BankUnited SA of FL 8.37 5,703 47.7 9.25 6.12 8.87 -5.64 54.14 36.76
BKCO Bankers Corp. of NJ* 19.12 12,378 236.7 19.62 16.25 19.25 -0.68 205.92 17.66
BVFS Bay View Capital Corp. of CA 40.75 6,640 270.6 41.25 26.50 40.25 1.24 106.33 42.98
BFSB Bedford Bancshares of VA 17.75 1,161 20.6 18.25 16.00 17.75 0.00 69.05 2.19
BSBC Branford SB of CT* 3.50 6,559 23.0 3.50 2.62 3.37 3.86 65.09 21.95
BRFC Bridgeville SB, FSB of PA(8) 15.25 1,124 17.1 15.50 13.00 15.25 0.00 7.02 5.17
BYFC Broadway Fin. Corp. of CA 9.00 893 8.0 11.00 9.00 10.50 -14.29 N.A. N.A.
CBCO CB Bancorp of Michigan City IN 25.50 1,162 29.6 25.50 16.25 25.50 0.00 131.82 41.67
CBES CBES Bancorp of MO 13.25 1,025 13.6 13.75 12.62 13.44 -1.41 N.A. N.A.
CCFH CCF Holding Company of GA 14.50 1,131 16.4 14.87 11.31 14.50 0.00 N.A. 13.73
CENF CENFED Financial Corp. of CA 27.75 5,101 141.6 28.25 20.45 26.50 4.72 76.98 27.18
CFSB CFSB Bancorp of Lansing MI 18.25 4,826 88.1 21.82 17.73 18.00 1.39 102.78 -6.65
CKFB CKF Bancorp of Danville KY 19.75 941 18.6 20.75 18.00 19.75 0.00 N.A. 2.60
CNSB CNS Bancorp of MO 14.00 1,653 23.1 14.00 11.00 14.00 0.00 N.A. N.A.
CSBF CSB Financial Group Inc of IL 10.06 1,035 10.4 10.12 8.81 10.06 0.00 N.A. 5.89
CFHC California Fin. Hld. Co. of CA 23.50 4,721 110.9 24.87 18.87 23.50 0.00 123.81 14.63
CBCI Calumet Bancorp of Chicago IL 30.50 2,377 72.5 31.50 27.25 28.50 7.02 50.62 9.91
CAFI Camco Fin. Corp. of OH 16.50 2,076 34.3 19.29 15.75 16.00 3.13 N.A. -3.73
CMRN Cameron Fin. Corp. of MO 15.25 2,850 43.5 15.31 13.50 15.00 1.67 N.A. 6.12
CAPS Capital Savings Bancorp of MO 25.00 938 23.5 25.75 17.75 24.75 1.01 88.68 35.14
CARV Carver FSB of New York, NY 7.62 2,314 17.6 9.62 7.50 7.62 0.00 21.92 -15.33
CASB Cascade SB of Everett WA 15.00 2,051 30.8 17.50 12.40 15.00 0.00 17.19 12.78
CATB Catskill Fin. Corp. of NY* 13.00 5,687 73.9 13.12 9.87 13.00 0.00 N.A. N.A.
CNIT Cenit Bancorp of Norfolk VA 39.62 1,633 64.7 40.50 31.75 39.75 -0.33 149.50 7.81
CTBK Center Banks, Inc. of NY* 15.25 946 14.4 16.00 13.12 14.75 3.39 38.64 8.46
CEBK Central Co-Op. Bank of MA* 16.37 1,965 32.2 17.75 11.87 15.50 5.61 211.81 9.13
CJFC Central Jersey Fin. Corp of NJ(8) 37.25 2,668 99.4 37.25 21.00 36.25 2.76 299.68 49.00
CBSB Charter Financial Inc. of IL 12.75 4,874 62.1 13.00 10.68 13.00 -1.92 N.A. 17.95
COFI Charter One Financial of OH 43.00 46,765 2,010.9 43.75 27.14 41.75 2.99 145.71 47.41
CVAL Chester Valley Bancorp of PA 19.50 1,636 31.9 20.00 17.26 18.25 6.85 72.11 6.38
CTZN CitFed Bancorp of Dayton OH 48.25 5,721 276.0 48.75 32.62 48.75 -1.03 436.11 39.86
CLAS Classic Bancshares of KY 11.69 1,322 15.5 12.12 10.37 11.25 3.91 N.A. -0.51
CMSB Cmnwealth Bancorp of PA 13.50 17,953 242.4 13.50 9.75 13.37 0.97 N.A. 20.43
CBSA Coastal Bancorp of Houston TX 21.62 4,964 107.3 23.50 16.37 21.62 0.00 N.A. 23.54
CFCP Coastal Fin. Corp. of SC 21.00 3,436 72.2 22.00 12.48 21.75 -3.45 110.00 66.14
COFD Collective Bancorp Inc. of NJ 33.75 20,372 687.6 33.75 22.50 33.00 2.27 342.91 33.03
CMSV Commty. Svgs, MHC of FL(47.6) 17.25 4,879 41.1 17.75 14.25 17.25 0.00 N.A. 1.47
CBIN Community Bank Shares of IN 12.25 1,984 24.3 14.75 12.00 12.75 -3.92 N.A. -14.04
CBNH Community Bankshares Inc of NH* 19.37 2,429 47.0 19.75 17.12 18.75 3.31 416.53 2.65
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ALBC Albion Banc Corp. of Albion NY 0.56 0.55 23.70 23.70 229.30
ATSB AmTrust Capital Corp. of IN 0.63 0.04 13.66 13.66 136.16
AHCI Ambanc Holding Co. of NY* 0.23 0.21 13.80 13.80 84.65
ASBI Ameriana Bancorp of IN 0.71 1.06 13.27 13.25 121.94
AFFFZ America First Fin. Fund of CA 1.73 2.92 25.54 25.02 370.59
AMFB American Federal Bank of SC 1.58 1.73 9.81 9.05 126.43
ANBK American Nat'l Bancorp of MD 0.41 0.50 12.50 12.50 122.00
ABCW Anchor Bancorp Wisconsin of WI 2.57 3.54 23.88 23.24 408.64
ANDB Andover Bancorp, Inc. of MA* 2.31 2.38 18.10 18.10 234.23
ASFC Astoria Financial Corp. of NY 1.61 2.44 26.32 21.56 337.79
AVND Avondale Fin. Corp. of IL 1.02 0.73 16.33 16.33 164.52
BFSI BFS Bankorp, Inc. of NY 5.65 6.64 30.71 30.71 393.38
BKCT Bancorp Connecticut of CT* 1.74 1.72 16.38 16.38 150.99
BPLS Bank Plus Corp. of CA -3.71 -3.08 8.66 8.64 182.16
BWFC Bank West Fin. Corp. of MI 0.55 0.25 12.19 12.19 62.72
BANC BankAtlantic Bancorp of FL 1.32 0.93 9.62 8.93 134.19
BKUNA BankUnited SA of FL 1.35 0.98 7.95 7.51 140.55
BKCO Bankers Corp. of NJ* 1.74 1.98 15.15 14.87 188.25
BVFS Bay View Capital Corp. of CA -0.39 2.18 29.17 27.53 516.29
BFSB Bedford Bancshares of VA 1.29 1.29 15.96 15.96 104.89
BSBC Branford SB of CT* 0.26 0.26 2.45 2.45 26.83
BRFC Bridgeville SB, FSB of PA(8) 0.48 0.61 14.12 14.12 48.79
BYFC Broadway Fin. Corp. of CA 0.35 0.39 14.61 14.61 125.27
CBCO CB Bancorp of Michigan City IN 2.29 2.27 16.63 16.63 168.38
CBES CBES Bancorp of MO 0.75 0.57 16.16 16.16 95.79
CCFH CCF Holding Company of GA 0.68 0.65 14.86 14.86 70.14
CENF CENFED Financial Corp. of CA 2.14 2.68 21.35 21.31 423.64
CFSB CFSB Bancorp of Lansing MI 1.12 1.58 13.02 13.02 168.25
CKFB CKF Bancorp of Danville KY 0.79 0.79 16.05 16.05 63.65
CNSB CNS Bancorp of MO 0.20 0.35 14.60 14.60 59.83
CSBF CSB Financial Group Inc of IL 0.32 0.32 12.30 12.30 39.82
CFHC California Fin. Hld. Co. of CA 1.00 1.71 18.32 18.26 283.71
CBCI Calumet Bancorp of Chicago IL 2.07 2.71 33.48 33.48 207.31
CAFI Camco Fin. Corp. of OH 1.32 1.50 13.81 13.81 182.12
CMRN Cameron Fin. Corp. of MO 0.97 0.95 16.26 16.26 61.70
CAPS Capital Savings Bancorp of MO 1.38 2.05 20.81 20.81 246.53
CARV Carver FSB of New York, NY 0.32 0.29 15.07 14.37 156.60
CASB Cascade SB of Everett WA 0.77 0.77 10.04 10.04 165.96
CATB Catskill Fin. Corp. of NY* 0.58 0.58 14.49 14.49 49.90
CNIT Cenit Bancorp of Norfolk VA 1.91 2.13 29.22 28.18 401.57
CTBK Center Banks, Inc. of NY* 1.48 1.41 16.78 16.78 255.71
CEBK Central Co-Op. Bank of MA* 0.62 0.66 15.82 13.80 158.24
CJFC Central Jersey Fin. Corp of NJ(8) 1.94 1.89 20.99 19.60 175.90
CBSB Charter Financial Inc. of IL 0.74 0.73 13.09 12.17 75.29
COFI Charter One Financial of OH 0.56 3.34 19.48 17.99 295.65
CVAL Chester Valley Bancorp of PA 1.00 1.50 15.36 15.36 173.83
CTZN CitFed Bancorp of Dayton OH 2.07 3.17 30.59 26.79 480.27
CLAS Classic Bancshares of KY 0.36 0.31 14.75 14.75 52.01
CMSB Cmnwealth Bancorp of PA 0.62 0.54 12.67 9.65 114.13
CBSA Coastal Bancorp of Houston TX 1.32 2.23 18.26 15.04 576.04
CFCP Coastal Fin. Corp. of SC 1.29 1.13 8.04 8.04 131.78
COFD Collective Bancorp Inc. of NJ 2.24 2.77 17.87 16.73 257.83
CMSV Commty. Svgs, MHC of FL(47.6) 1.08 1.10 15.39 15.39 128.31
CBIN Community Bank Shares of IN 0.95 0.93 13.00 13.00 117.61
CBNH Community Bankshares Inc of NH* 1.72 1.40 16.18 16.18 225.91
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
CFTP Community Fed. Bancorp of MS 16.25 4,629 75.2 16.37 12.25 16.25 0.00 N.A. N.A.
CFFC Community Fin. Corp. of VA 21.50 1,272 27.3 22.50 15.25 22.50 -4.44 207.14 19.44
CIBI Community Inv. Bancorp of OH 16.50 666 11.0 18.25 14.25 17.25 -4.35 N.A. 8.20
COOP Cooperative Bk.for Svgs. of NC 19.00 1,492 28.3 22.00 16.50 19.75 -3.80 90.00 -7.32
CNSK Covenant Bank for Svgs. of NJ* 13.00 1,960 25.5 14.25 10.89 13.75 -5.45 N.A. -1.66
CRZY Crazy Woman Creek Bncorp of WY 11.75 1,058 12.4 12.00 10.00 11.69 0.51 N.A. N.A.
DNFC D&N Financial Corp. of MI 15.06 7,587 114.3 15.25 11.37 14.87 1.28 72.11 24.26
DSBC DS Bancor Inc. of Derby CT(8)* 41.25 3,032 125.1 41.37 24.00 41.12 0.32 150.76 61.76
DFIN Damen Fin. Corp. of Chicago IL 12.50 3,967 49.6 12.56 11.00 12.25 2.04 N.A. 9.94
DIME Dime Community Bancorp of NY 14.12 14,547 205.4 14.12 11.69 14.00 0.86 N.A. N.A.
DIBK Dime Financial Corp. of CT* 18.37 5,129 94.2 18.37 11.75 18.00 2.06 74.95 36.07
EGLB Eagle BancGroup of IL 13.25 1,303 17.3 13.75 10.50 13.75 -3.64 N.A. N.A.
EBSI Eagle Bancshares of Tucker GA 15.75 4,552 71.7 19.00 14.37 15.25 3.28 117.24 -17.11
EGFC Eagle Financial Corp. of CT 26.75 4,517 120.8 27.75 22.25 26.50 0.94 205.71 1.90
ETFS East Texas Fin. Serv. of TX 15.00 1,134 17.0 16.75 14.25 15.00 0.00 N.A. -7.69
EBCP Eastern Bancorp of NH(8) 22.25 3,652 81.3 24.00 15.17 22.00 1.14 77.29 24.79
ESBK Elmira SB of Elmira NY* 15.25 706 10.8 18.75 14.75 15.50 -1.61 6.12 -18.67
EIRE Emerald Island Bancorp, MA* 17.62 1,766 31.1 17.62 14.00 16.75 5.19 131.23 8.43
EFBI Enterprise Fed. Bancorp of OH 14.50 2,074 30.1 16.75 12.75 14.75 -1.69 N.A. -1.69
EQSB Equitable FSB of Wheaton MD 27.50 600 16.5 27.50 21.00 26.62 3.31 N.A. 10.00
FFFG F.F.O. Financial Group of FL 2.75 8,430 23.2 3.13 2.25 2.75 0.00 -66.91 7.42
FCBF FCB Fin. Corp. of Neenah WI 19.25 2,460 47.4 19.25 16.75 19.25 0.00 N.A. 4.05
FFBS FFBS Bancorp of Columbus MS 22.00 1,570 34.5 24.25 16.50 22.00 0.00 N.A. 29.41
FFDF FFD Financial Corp. of OH 13.50 1,455 19.6 13.50 10.00 12.50 8.00 N.A. N.A.
FFLC FFLC Bancorp of Leesburg FL 20.00 2,525 50.5 20.25 17.25 20.25 -1.23 N.A. 6.67
FFFC FFVA Financial Corp. of VA 20.00 5,023 100.5 20.75 13.37 20.75 -3.61 N.A. 45.45
FFWC FFW Corporation of Wabash IN 21.00 702 14.7 21.25 16.50 21.00 0.00 N.A. 6.33
FFYF FFY Financial Corp. of OH 24.87 5,117 127.3 25.12 20.62 24.87 0.00 N.A. 18.43
FMCO FMS Financial Corp. of NJ 16.75 2,468 41.3 17.50 14.75 17.00 -1.47 86.11 -1.47
FFHH FSF Financial Corp. of MN 14.00 3,478 48.7 14.12 11.37 13.75 1.82 N.A. 7.69
FMLY Family Bancorp of Haverhill MA(8)* 31.12 4,310 134.1 31.50 17.00 30.37 2.47 497.31 74.15
FOBC Fed One Bancorp of Wheeling WV 15.37 2,493 38.3 16.62 13.25 16.00 -3.94 53.70 1.65
FFRV Fid. Fin. Bkshrs. Corp. of VA(8) 23.00 2,299 52.9 24.00 12.00 23.50 -2.13 162.86 65.83
FBCI Fidelity Bancorp of Chicago IL 17.25 2,931 50.6 17.25 14.50 16.87 2.25 N.A. 12.23
FSBI Fidelity Bancorp, Inc. of PA 18.75 1,370 25.7 20.50 14.77 19.00 -1.32 142.56 25.00
FFFL Fidelity FSB, MHC of FL(47.2) 16.50 6,720 52.3 17.25 12.00 16.37 0.79 N.A. 1.54
FFED Fidelity Fed. Bancorp of IN 10.50 2,494 26.2 14.77 10.25 10.50 0.00 48.94 -28.91
FFOH Fidelity Financial of OH 11.12 4,077 45.3 11.12 7.95 10.25 8.49 N.A. 2.11
FIBC Financial Bancorp of NY 14.25 1,791 25.5 16.25 12.37 14.25 0.00 N.A. 3.64
FBSI First Bancshares of MO 15.25 1,269 19.4 16.81 15.00 15.50 -1.61 19.61 -4.69
FBBC First Bell Bancorp of PA 15.63 7,758 121.3 15.87 13.12 15.50 0.84 N.A. 16.90
FBER First Bergen Bancorp of NJ 11.75 3,174 37.3 12.00 9.00 11.50 2.17 N.A. N.A.
FCIT First Cit. Fin. Corp of MD 18.25 2,927 53.4 19.09 15.46 19.00 -3.95 110.01 5.67
FFBA First Colorado Bancorp of Co 16.00 19,031 304.5 16.25 10.47 16.00 0.00 384.85 45.59
FDEF First Defiance Fin.Corp. of OH 11.50 9,912 114.0 11.75 9.87 11.37 1.14 N.A. 13.64
FESX First Essex Bancorp of MA* 13.25 6,059 80.3 13.50 10.00 12.62 4.99 120.83 16.53
FFES First FS&LA of E. Hartford CT 23.25 2,615 60.8 23.25 16.50 20.00 16.25 257.69 16.25
FSSB First FS&LA of San Bern. CA 9.50 328 3.1 12.75 9.50 9.50 0.00 -5.00 -24.00
FFSX First FS&LA. MHC of IA (45.0) 26.50 1,883 20.0 26.50 21.36 26.50 0.00 165.00 8.96
FFML First Family Bank, FSB of FL(8) 21.50 545 11.7 23.00 18.50 21.75 -1.15 230.77 2.38
FFSW First Fed Fin. Serv. of OH 37.25 3,612 134.5 37.25 21.14 36.50 2.05 119.12 72.53
BDJI First Fed. Bancorp. of MN 16.50 701 11.6 17.00 12.25 16.75 -1.49 N.A. 20.00
FFBH First Fed. Bancshares of AR 16.00 5,154 82.5 16.00 12.75 15.87 0.82 N.A. N.A.
FFEC First Fed. Bancshares of WI(8) 18.12 6,855 124.2 18.16 13.62 18.03 0.50 N.A. 18.82
FTFC First Fed. Capital Corp. of WI 23.75 6,231 148.0 23.75 17.62 22.75 4.40 111.11 31.94
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
CFTP Community Fed. Bancorp of MS 0.51 0.50 14.37 14.37 43.56
CFFC Community Fin. Corp. of VA 1.62 1.62 17.53 17.53 124.87
CIBI Community Inv. Bancorp of OH 1.33 1.27 17.25 17.25 137.82
COOP Cooperative Bk.for Svgs. of NC -2.41 -0.16 16.89 16.89 219.30
CNSK Covenant Bank for Svgs. of NJ* 1.22 1.02 8.72 8.72 181.03
CRZY Crazy Woman Creek Bncorp of WY 0.34 0.44 14.62 14.62 48.69
DNFC D&N Financial Corp. of MI 1.19 1.55 10.30 10.16 185.60
DSBC DS Bancor Inc. of Derby CT(8)* 3.05 2.84 28.53 27.72 415.38
DFIN Damen Fin. Corp. of Chicago IL 0.51 0.50 13.85 13.85 59.82
DIME Dime Community Bancorp of NY 0.46 0.58 14.79 12.86 84.25
DIBK Dime Financial Corp. of CT* 2.29 2.47 11.58 11.10 134.89
EGLB Eagle BancGroup of IL -0.52 -0.10 16.75 16.75 125.66
EBSI Eagle Bancshares of Tucker GA 1.15 1.14 12.57 12.57 136.53
EGFC Eagle Financial Corp. of CT 3.73 1.82 22.66 16.55 310.48
ETFS East Texas Fin. Serv. of TX 0.83 0.76 19.24 19.24 101.71
EBCP Eastern Bancorp of NH(8) 1.64 1.25 17.77 16.77 230.16
ESBK Elmira SB of Elmira NY* 0.58 0.54 19.93 19.06 312.61
EIRE Emerald Island Bancorp, MA* 1.19 1.28 15.18 15.18 222.19
EFBI Enterprise Fed. Bancorp of OH 0.90 0.62 15.23 15.21 103.12
EQSB Equitable FSB of Wheaton MD 3.30 3.28 23.64 23.64 446.29
FFFG F.F.O. Financial Group of FL 0.07 0.22 2.23 2.23 36.90
FCBF FCB Fin. Corp. of Neenah WI 1.04 1.02 19.18 19.18 103.93
FFBS FFBS Bancorp of Columbus MS 0.85 1.10 15.69 15.69 80.08
FFDF FFD Financial Corp. of OH 0.34 0.47 14.72 14.72 58.72
FFLC FFLC Bancorp of Leesburg FL 0.82 1.09 21.58 21.58 133.07
FFFC FFVA Financial Corp. of VA 1.06 1.34 15.68 15.35 105.53
FFWC FFW Corporation of Wabash IN 1.89 2.28 22.04 22.04 220.16
FFYF FFY Financial Corp. of OH 0.93 1.43 19.98 19.98 117.76
FMCO FMS Financial Corp. of NJ 1.07 1.79 13.71 13.40 210.11
FFHH FSF Financial Corp. of MN 0.48 0.67 13.70 13.70 101.97
FMLY Family Bancorp of Haverhill MA(8)* 1.78 1.86 16.92 15.65 212.95
FOBC Fed One Bancorp of Wheeling WV 0.95 1.35 15.99 15.18 136.99
FFRV Fid. Fin. Bkshrs. Corp. of VA(8) 0.92 1.31 12.07 12.06 143.21
FBCI Fidelity Bancorp of Chicago IL 1.03 1.03 16.99 16.93 155.88
FSBI Fidelity Bancorp, Inc. of PA 1.40 1.38 15.73 15.65 231.62
FFFL Fidelity FSB, MHC of FL(47.2) 0.78 0.73 11.99 11.86 121.56
FFED Fidelity Fed. Bancorp of IN 0.34 0.44 5.03 5.03 104.99
FFOH Fidelity Financial of OH 0.36 0.54 12.46 12.46 62.76
FIBC Financial Bancorp of NY 0.64 1.19 14.40 14.32 148.95
FBSI First Bancshares of MO 0.91 0.90 18.70 18.67 113.22
FBBC First Bell Bancorp of PA 0.99 1.14 13.71 13.71 74.37
FBER First Bergen Bancorp of NJ 0.27 0.36 13.54 13.54 79.43
FCIT First Cit. Fin. Corp of MD 0.99 1.41 13.51 13.51 228.38
FFBA First Colorado Bancorp of Co 0.83 0.83 12.88 12.72 78.89
FDEF First Defiance Fin.Corp. of OH 0.49 0.64 12.17 12.17 52.89
FESX First Essex Bancorp of MA* 1.34 1.15 10.67 10.67 143.45
FFES First FS&LA of E. Hartford CT 1.54 2.34 22.05 22.00 360.48
FSSB First FS&LA of San Bern. CA -3.47 -4.03 14.44 13.72 312.30
FFSX First FS&LA. MHC of IA (45.0) 0.94 1.63 19.39 19.21 243.31
FFML First Family Bank, FSB of FL(8) 2.57 1.36 16.38 16.38 291.83
FFSW First Fed Fin. Serv. of OH 2.93 2.02 16.47 13.35 289.20
BDJI First Fed. Bancorp. of MN 0.45 1.00 17.58 17.58 153.00
FFBH First Fed. Bancshares of AR 0.58 0.88 16.17 16.17 98.88
FFEC First Fed. Bancshares of WI(8) 0.67 0.88 14.27 13.73 106.32
FTFC First Fed. Capital Corp. of WI 2.04 1.51 15.29 14.42 222.94
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FFKY First Fed. Fin. Corp. of KY 19.75 4,197 82.9 22.00 15.25 21.25 -7.06 25.40 28.50
FFBZ First Federal Bancorp of OH 29.25 785 23.0 29.50 19.25 29.00 0.86 192.50 44.44
FFWM First Fin. Corp of Western MD 28.25 2,124 60.0 28.75 17.75 27.75 1.80 182.50 43.04
FFCH First Fin. Holdings Inc. of SC 22.25 6,377 141.9 22.25 17.50 21.50 3.49 81.63 15.58
FFBI First Financial Bancorp of IL 15.50 466 7.2 16.25 15.25 15.50 0.00 N.A. -3.13
FFHC First Financial Corp. of WI 28.50 29,915 852.6 29.87 19.50 28.13 1.32 80.95 23.91
FFHS First Franklin Corp. of OH 17.25 1,158 20.0 17.25 13.50 16.25 6.15 31.48 8.70
FGHC First Georgia Hold. Corp of GA 6.25 2,024 12.7 7.83 5.67 6.75 -7.41 63.19 -18.51
FSPG First Home SB, SLA of NJ 19.00 2,030 38.6 19.00 17.50 18.75 1.33 216.67 0.00
FFSL First Independence Corp. of KS 20.25 583 11.8 21.25 17.62 20.00 1.25 N.A. 8.00
FISB First Indiana Corp. of IN 24.75 8,294 205.3 25.19 19.79 24.62 0.53 83.33 15.33
FKFS First Keystone Fin. Corp of PA 19.25 1,292 24.9 20.87 16.75 19.62 -1.89 N.A. -7.76
FLKY First Lancaster Bncshrs of KY 15.75 959 15.1 16.00 13.12 15.25 3.28 N.A. N.A.
FLFC First Liberty Fin. Corp. of GA 18.81 6,003 112.9 18.87 13.50 17.62 6.75 270.28 32.75
CASH First Midwest Fin. Corp. of IA 23.75 1,779 42.3 24.50 21.75 23.75 0.00 N.A. 1.06
FMBD First Mutual Bancorp of IL 14.00 3,845 53.8 14.75 11.62 13.75 1.82 N.A. 2.79
FMSB First Mutual SB of Bellevue WA* 17.25 2,453 42.3 17.25 10.42 15.87 8.70 122.58 27.40
FNGB First Northern Cap. Corp of WI 18.50 4,381 81.0 18.62 15.25 18.50 0.00 27.06 12.12
FFPB First Palm Beach Bancorp of FL 24.87 5,181 128.9 25.37 19.94 23.87 4.19 N.A. 17.76
FSNJ First SB of NJ, MHC (45.0) 16.75 3,062 22.7 19.50 13.75 17.00 -1.47 N.A. -2.90
FSLA First SB, SLA MHC of NJ (37.6) 18.25 6,514 36.5 18.25 14.50 18.25 0.00 82.50 10.61
SOPN First SB, SSB, Moore Co. of NC 18.00 3,744 67.4 19.75 16.75 18.00 0.00 N.A. 1.07
FWWB First Savings Bancorp of WA* 17.12 10,474 179.3 17.37 12.37 16.87 1.48 N.A. 30.49
SHEN First Shenango Bancorp of PA 22.06 2,258 49.8 22.50 19.50 22.12 -0.27 N.A. 7.61
FSFC First So.east Fin. Corp. of SC 10.25 4,388 45.0 20.12 9.12 10.00 2.50 N.A. -46.05
FSFI First State Fin. Serv. of NJ(8) 14.00 3,929 55.0 14.12 10.00 13.62 2.79 244.83 2.79
FFDP FirstFed Bancshares of IL 16.75 3,277 54.9 17.62 14.00 17.00 -1.47 151.50 18.21
FLAG Flag Financial Corp of GA 11.50 2,036 23.4 15.00 9.75 11.25 2.22 17.35 -16.36
FFPC Florida First Bancorp of FL(8) 11.12 3,396 37.8 11.50 7.00 11.12 0.00 491.49 50.88
FFIC Flushing Fin. Corp. of NY* 17.87 8,240 147.2 18.62 14.12 18.00 -0.72 N.A. 16.27
FBHC Fort Bend Holding Corp. of TX 21.75 819 17.8 21.75 16.87 20.25 7.41 N.A. 20.83
FTSB Fort Thomas Fin. Corp. of KY 14.00 1,574 22.0 17.75 11.25 14.50 -3.45 N.A. 15.51
FKKY Frankfort First Bancorp of KY 11.50 3,440 39.6 15.87 10.00 11.00 4.55 N.A. -13.21
FTNB Fulton Bancorp of MO 14.75 1,719 25.4 14.75 12.50 14.25 3.51 N.A. N.A.
GFSB GFS Bancorp of Grinnell IA 20.25 503 10.2 21.00 18.75 20.62 -1.79 N.A. 1.25
GUPB GFSB Bancorp of Gallup NM 14.31 949 13.6 15.25 13.00 14.31 0.00 N.A. 0.42
GWBC Gateway Bancorp of KY 14.00 1,114 15.6 16.25 13.00 14.00 0.00 N.A. -1.75
GBCI Glacier Bancorp of MT 24.25 3,374 81.8 25.25 17.73 25.00 -3.00 402.07 31.72
GLBK Glendale Co-op. Bank of MA* 20.00 247 4.9 21.00 15.00 17.00 17.65 N.A. 6.67
GFCO Glenway Financial Corp. of OH 20.00 1,131 22.6 23.33 17.86 18.50 8.11 N.A. -14.27
GTPS Great American Bancorp of IL 14.62 1,850 27.0 15.12 13.19 14.25 2.60 N.A. 0.41
GTFN Great Financial Corp. of KY 29.25 14,184 414.9 29.62 21.25 29.50 -0.85 N.A. 24.47
GSBC Great Southern Bancorp of MO 17.12 8,812 150.9 17.50 11.25 16.50 3.76 486.30 38.40
GDVS Greater DV SB,MHC of PA(19.9)* 10.25 3,272 6.7 13.00 9.25 10.00 2.50 N.A. -14.58
GRTR Greater New York SB of NY* 12.00 13,388 160.7 13.00 10.12 12.25 -2.04 28.89 0.00
GSFC Green Street Fin. Corp. of NC 15.37 4,298 66.1 15.56 12.12 15.37 0.00 N.A. N.A.
GROV GroveBank for Savings of MA(8)* 48.87 1,542 75.4 48.87 23.25 48.75 0.25 450.96 97.45
GFED Guaranty FS&LA,MHC of MO(31.1) 11.12 3,125 8.7 12.50 9.75 10.75 3.44 N.A. -6.32
GSLC Guaranty Svgs & Loan FA of VA 8.25 919 7.6 9.50 7.12 8.50 -2.94 N.A. 6.45
HEMT HF Bancorp of Hemet CA 11.25 6,282 70.7 11.25 9.25 10.75 4.65 N.A. 13.98
HFFC HF Financial Corp. of SD 16.87 3,017 50.9 17.50 13.44 16.75 0.72 237.40 10.62
HFNC HFNC Financial Corp. of NC 18.00 17,192 309.5 18.25 13.12 17.87 0.73 N.A. 37.20
HMNF HMN Financial, Inc. of MN 17.87 4,921 87.9 18.25 14.50 18.25 -2.08 N.A. 11.69
HALL Hallmark Capital Corp. of WI 17.50 1,443 25.3 17.75 14.50 17.50 0.00 N.A. 12.90
HARB Harbor FSB, MHC of FL (45.7) 31.00 4,934 69.4 32.12 23.75 30.75 0.81 N.A. 12.73
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FFKY First Fed. Fin. Corp. of KY 1.03 1.17 11.75 10.98 85.13
FFBZ First Federal Bancorp of OH 2.50 2.46 17.86 17.84 226.47
FFWM First Fin. Corp of Western MD 1.34 1.86 19.01 19.01 162.67
FFCH First Fin. Holdings Inc. of SC 1.74 1.76 15.26 15.26 238.86
FFBI First Financial Bancorp of IL 1.17 1.02 16.89 16.89 202.76
FFHC First Financial Corp. of WI 1.66 2.33 13.41 12.95 187.05
FFHS First Franklin Corp. of OH 0.52 1.15 17.07 16.92 188.54
FGHC First Georgia Hold. Corp of GA 0.60 0.60 5.91 5.26 71.16
FSPG First Home SB, SLA of NJ 2.09 2.54 15.50 15.15 240.00
FFSL First Independence Corp. of KS 1.93 1.93 22.38 22.38 181.43
FISB First Indiana Corp. of IN 1.62 1.86 16.30 16.07 179.10
FKFS First Keystone Fin. Corp of PA 1.17 1.27 17.74 17.74 224.88
FLKY First Lancaster Bncshrs of KY 0.30 0.30 13.99 13.99 42.47
FLFC First Liberty Fin. Corp. of GA 1.60 1.28 11.39 9.65 165.12
CASH First Midwest Fin. Corp. of IA 1.76 1.74 21.94 20.49 192.30
FMBD First Mutual Bancorp of IL 0.35 0.54 16.40 16.40 82.28
FMSB First Mutual SB of Bellevue WA* 1.51 1.45 10.42 10.42 157.51
FNGB First Northern Cap. Corp of WI 0.70 1.08 15.84 15.84 138.78
FFPB First Palm Beach Bancorp of FL 1.88 1.78 21.93 21.37 277.56
FSNJ First SB of NJ, MHC (45.0) 0.38 0.85 16.01 16.01 212.49
FSLA First SB, SLA MHC of NJ (37.6) 0.69 1.25 13.85 12.14 149.64
SOPN First SB, SSB, Moore Co. of NC 0.87 1.08 17.90 17.90 70.30
FWWB First Savings Bancorp of WA* 0.60 0.57 14.72 14.72 70.95
SHEN First Shenango Bancorp of PA 1.18 1.60 20.42 20.42 170.10
FSFC First So.east Fin. Corp. of SC -0.03 0.67 7.55 7.55 75.05
FSFI First State Fin. Serv. of NJ(8) 0.02 -0.19 10.17 9.61 169.49
FFDP FirstFed Bancshares of IL 0.44 0.54 15.76 15.02 183.98
FLAG Flag Financial Corp of GA 0.98 0.83 10.73 10.73 112.33
FFPC Florida First Bancorp of FL(8) 0.52 0.77 6.12 6.12 87.53
FFIC Flushing Fin. Corp. of NY* 0.73 0.69 16.37 16.37 93.46
FBHC Fort Bend Holding Corp. of TX 2.06 1.82 21.99 21.99 311.04
FTSB Fort Thomas Fin. Corp. of KY 0.74 0.74 13.75 13.75 56.46
FKKY Frankfort First Bancorp of KY 0.32 0.43 9.84 9.84 37.42
FTNB Fulton Bancorp of MO 0.67 0.65 13.92 13.92 61.05
GFSB GFS Bancorp of Grinnell IA 1.47 1.94 19.59 19.59 169.40
GUPB GFSB Bancorp of Gallup NM 0.84 0.84 16.19 16.19 77.19
GWBC Gateway Bancorp of KY 0.54 0.74 15.64 15.64 62.38
GBCI Glacier Bancorp of MT 1.61 1.81 11.54 11.53 122.12
GLBK Glendale Co-op. Bank of MA* 1.16 0.97 23.71 23.71 149.55
GFCO Glenway Financial Corp. of OH 1.37 1.39 23.68 23.17 246.52
GTPS Great American Bancorp of IL 0.42 0.41 17.95 17.95 65.16
GTFN Great Financial Corp. of KY 1.27 1.29 19.27 18.48 199.57
GSBC Great Southern Bancorp of MO 1.28 1.19 7.69 7.57 75.82
GDVS Greater DV SB,MHC of PA(19.9)* -0.15 0.07 8.30 8.30 70.99
GRTR Greater New York SB of NY* 1.40 0.83 11.13 11.13 189.78
GSFC Green Street Fin. Corp. of NC 0.49 0.49 14.60 14.60 41.64
GROV GroveBank for Savings of MA(8)* 3.37 3.16 25.21 25.20 388.14
GFED Guaranty FS&LA,MHC of MO(31.1) 0.56 0.30 8.51 8.51 59.25
GSLC Guaranty Svgs & Loan FA of VA 0.70 0.43 6.93 6.93 112.04
HEMT HF Bancorp of Hemet CA 0.21 0.21 13.73 13.72 120.08
HFFC HF Financial Corp. of SD 1.11 1.39 16.51 16.46 183.67
HFNC HFNC Financial Corp. of NC 0.46 0.58 14.41 14.41 49.16
HMNF HMN Financial, Inc. of MN 1.21 1.05 17.73 17.73 112.78
HALL Hallmark Capital Corp. of WI 0.98 1.32 18.82 18.82 268.64
HARB Harbor FSB, MHC of FL (45.7) 1.75 2.36 17.19 16.47 214.32
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HRBF Harbor Federal Bancorp of MD 15.50 1,754 27.2 15.87 12.37 15.50 0.00 55.00 6.90
HFSA Hardin Bancorp of Hardin MO 12.25 1,005 12.3 12.87 11.00 12.25 0.00 N.A. -3.92
HARL Harleysville SA of PA 18.62 1,292 24.1 19.75 15.00 18.62 0.00 4.90 24.13
HARS Harris SB, MHC of PA (23.1) 16.75 11,216 41.9 20.50 14.75 16.25 3.08 N.A. -16.25
HFFB Harrodsburg 1st Fin Bcrp of KY 18.62 2,159 40.2 19.00 13.00 19.00 -2.00 N.A. 24.13
HHFC Harvest Home Fin. Corp. of OH 9.56 935 8.9 13.75 9.25 9.87 -3.14 N.A. -21.96
HAVN Haven Bancorp of Woodhaven NY 27.25 4,323 117.8 28.87 21.88 27.62 -1.34 N.A. 15.37
HVFD Haverfield Corp. of OH 19.50 1,907 37.2 19.75 13.50 19.25 1.30 25.81 44.44
HTHR Hawthorne Fin. Corp. of CA 7.75 2,599 20.1 9.25 4.38 7.75 0.00 -71.82 55.00
HBNK Highland Federal Bank of CA 16.75 2,296 38.5 17.00 11.00 16.25 3.08 N.A. 8.06
HIFS Hingham Inst. for Sav. of MA* 17.00 1,297 22.0 17.00 13.00 15.50 9.68 272.81 15.25
HNFC Hinsdale Financial Corp. of IL 24.81 2,695 66.9 26.75 21.00 24.00 3.37 148.10 15.40
HBEI Home Bancorp of Elgin IL 12.62 7,009 88.5 12.62 11.81 12.50 0.96 N.A. N.A.
HBFW Home Bancorp of Fort Wayne IN 17.50 2,887 50.5 18.00 13.75 17.50 0.00 N.A. 14.75
HBBI Home Building Bancorp of IN 17.50 312 5.5 21.25 16.25 17.50 0.00 N.A. 6.06
HOMF Home Fed Bancorp of Seymour IN 31.50 2,226 70.1 32.00 24.50 31.00 1.61 110.00 18.87
HWEN Home Financial Bancorp of IN 12.50 506 6.3 13.75 9.87 13.00 -3.85 N.A. N.A.
HOFL Home Financial Corp. of FL(8) 15.81 24,717 390.8 16.25 12.62 15.87 -0.38 216.20 2.00
HPBC Home Port Bancorp, Inc. of MA* 16.50 1,842 30.4 16.50 11.25 16.00 3.13 106.25 40.43
HMCI Homecorp, Inc. of Rockford IL 18.25 1,129 20.6 19.87 16.50 19.87 -8.15 82.50 9.81
LOAN Horizon Bancorp, Inc of TX(8)* 18.50 1,387 25.7 18.50 7.87 16.25 13.85 N.A. 105.56
HZFS Horizon Fin'l. Services of IA 14.75 448 6.6 16.37 14.00 14.75 0.00 N.A. -3.28
HRZB Horizon Financial Corp. of WA* 13.37 6,493 86.8 14.00 11.75 13.25 0.91 -0.45 2.85
IBSF IBS Financial Corp. of NJ 16.12 11,002 177.4 16.25 12.50 16.12 0.00 N.A. 18.18
ISBF ISB Financial Corp. of LA 16.87 7,122 120.1 17.12 13.62 16.75 0.72 N.A. 12.47
ITLA Imperial Thrift & Loan of CA* 15.00 7,820 117.3 15.25 11.75 14.75 1.69 N.A. 22.45
IFSB Independence FSB of DC 7.50 1,279 9.6 9.25 6.75 7.50 0.00 275.00 -11.14
INCB Indiana Comm. Bank, SB of IN 16.00 922 14.8 16.75 12.50 16.00 0.00 N.A. 4.92
IFSL Indiana Federal Corp. of IN(8) 23.00 4,737 109.0 23.00 16.25 19.50 17.95 205.04 8.24
INBI Industrial Bancorp of OH 12.37 5,554 68.7 16.00 9.87 12.69 -2.52 N.A. -10.04
IWBK Interwest SB of Oak Harbor WA 30.25 7,918 239.5 31.00 18.37 30.12 0.43 202.50 48.50
IPSW Ipswich SB of Ipswich MA* 11.00 1,183 13.0 12.62 7.00 10.87 1.20 N.A. 33.33
IROQ Iroquois Bancorp of Auburn NY* 16.37 2,331 38.2 17.00 13.00 16.25 0.74 133.86 25.92
JSBF JSB Financial, Inc. of NY 36.31 10,052 365.0 37.12 31.12 36.50 -0.52 215.74 14.83
JXVL Jacksonville Bancorp of TX 13.25 2,664 35.3 13.25 9.38 13.00 1.92 N.A. 13.83
JXSB Jcksnville SB,MHC of IL(43.3%) 12.00 1,272 6.7 14.12 11.50 12.25 -2.04 N.A. -13.48
JSBA Jefferson Svgs Bancorp of MO 22.87 4,182 95.6 30.75 22.25 22.75 0.53 N.A. -17.59
JOAC Joachim Bancorp of MO 15.00 760 11.4 15.25 11.50 14.75 1.69 N.A. 11.11
KSAV KS Bancorp of Kenly NC 21.00 663 13.9 21.00 17.12 21.00 0.00 N.A. 20.00
KSBK KSB Bancorp of Kingfield ME* 22.25 411 9.1 22.25 16.59 21.25 4.71 N.A. 27.14
KFBI Klamath First Bancorp of OR 14.62 12,233 178.8 15.00 12.56 14.75 -0.88 N.A. 6.33
LBFI L&B Financial of S. Springs TX(8) 17.25 1,584 27.3 17.75 13.75 17.25 0.00 N.A. 21.05
LSBI LSB Fin. Corp. of Lafayette IN 18.87 918 17.3 18.87 14.50 18.75 0.64 N.A. 9.39
LVSB Lakeview SB of Paterson NJ 23.25 2,492 57.9 24.32 14.57 23.00 1.09 N.A. 50.10
LARK Landmark Bancshares of KS 16.50 1,853 30.6 17.00 13.50 17.00 -2.94 N.A. 20.00
LARL Laurel Capital Group of PA 15.75 1,514 23.8 16.25 14.50 16.25 -3.08 23.05 1.61
LSBX Lawrence Savings Bank of MA* 8.00 4,250 34.0 8.00 4.62 7.12 12.36 132.56 73.16
LFED Leeds FSB, MHC of MD (35.3) 14.00 3,448 17.5 15.25 13.00 14.00 0.00 N.A. -1.75
LXMO Lexington B&L Fin. Corp. of MO 12.06 1,265 15.3 12.25 9.50 11.87 1.60 N.A. N.A.
LBCI Liberty Bancorp of Chicago IL(8) 24.00 2,477 59.4 26.75 22.25 23.75 1.05 140.00 -4.95
LIFB Life Bancorp of Norfolk VA 17.12 9,847 168.6 18.00 14.00 17.00 0.71 N.A. 14.13
LFBI Little Falls Bancorp of NJ 11.50 2,890 33.2 12.00 9.50 11.50 0.00 N.A. N.A.
LOGN Logansport Fin. Corp. of IN 14.25 1,322 18.8 14.75 12.37 14.75 -3.39 N.A. 9.62
LONF London Financial Corp. of OH 12.00 529 6.3 12.37 9.75 12.25 -2.04 N.A. N.A.
LISB Long Island Bancorp of NY 30.75 24,644 757.8 32.87 24.50 30.50 0.82 N.A. 16.61
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HRBF Harbor Federal Bancorp of MD 0.55 0.55 15.84 15.84 114.61
HFSA Hardin Bancorp of Hardin MO 0.37 0.66 14.66 14.66 87.37
HARL Harleysville SA of PA 1.21 1.95 15.18 15.18 244.19
HARS Harris SB, MHC of PA (23.1) 0.53 0.72 13.32 11.19 137.46
HFFB Harrodsburg 1st Fin Bcrp of KY 0.57 0.57 14.28 14.28 50.75
HHFC Harvest Home Fin. Corp. of OH 0.60 0.60 13.83 13.83 78.08
HAVN Haven Bancorp of Woodhaven NY 1.99 3.01 21.73 21.60 361.95
HVFD Haverfield Corp. of OH 0.72 1.52 14.47 14.45 183.85
HTHR Hawthorne Fin. Corp. of CA 1.76 0.03 13.29 13.23 292.87
HBNK Highland Federal Bank of CA -0.18 0.43 14.57 14.57 204.34
HIFS Hingham Inst. for Sav. of MA* 1.49 1.49 14.45 14.45 148.95
HNFC Hinsdale Financial Corp. of IL 1.14 1.71 20.58 19.99 241.52
HBEI Home Bancorp of Elgin IL 0.06 0.31 14.12 14.12 52.87
HBFW Home Bancorp of Fort Wayne IN 0.91 0.91 16.96 16.96 109.42
HBBI Home Building Bancorp of IN -0.44 0.03 17.62 17.62 136.41
HOMF Home Fed Bancorp of Seymour IN 3.30 2.91 23.14 22.29 283.03
HWEN Home Financial Bancorp of IN 0.36 0.52 15.31 15.31 76.45
HOFL Home Financial Corp. of FL(8) 0.60 0.76 12.20 12.20 49.19
HPBC Home Port Bancorp, Inc. of MA* 1.64 1.65 10.66 10.66 102.41
HMCI Homecorp, Inc. of Rockford IL 0.29 0.99 18.09 18.09 301.55
LOAN Horizon Bancorp, Inc of TX(8)* 1.29 0.99 8.38 8.13 101.32
HZFS Horizon Fin'l. Services of IA 0.21 0.54 18.37 18.37 171.10
HRZB Horizon Financial Corp. of WA* 1.14 1.11 12.28 12.28 77.06
IBSF IBS Financial Corp. of NJ 0.70 0.71 13.55 13.55 68.06
ISBF ISB Financial Corp. of LA 1.02 1.01 16.50 16.03 96.40
ITLA Imperial Thrift & Loan of CA* 0.85 0.85 10.72 10.72 85.62
IFSB Independence FSB of DC 0.99 0.46 13.21 11.37 206.20
INCB Indiana Comm. Bank, SB of IN 0.54 0.54 12.44 12.44 98.27
IFSL Indiana Federal Corp. of IN(8) 1.07 1.50 14.77 13.78 170.81
INBI Industrial Bancorp of OH 0.42 0.78 10.92 10.92 57.68
IWBK Interwest SB of Oak Harbor WA 1.37 1.98 14.02 13.66 216.24
IPSW Ipswich SB of Ipswich MA* 1.56 1.29 7.90 7.90 133.66
IROQ Iroquois Bancorp of Auburn NY* 1.26 1.71 12.17 10.90 203.21
JSBF JSB Financial, Inc. of NY 2.49 2.49 33.10 33.10 151.82
JXVL Jacksonville Bancorp of TX 0.72 0.72 13.37 13.37 81.73
JXSB Jcksnville SB,MHC of IL(43.3%) 0.21 0.52 13.01 12.98 112.98
JSBA Jefferson Svgs Bancorp of MO 1.74 1.58 19.67 16.17 269.10
JOAC Joachim Bancorp of MO 0.19 0.33 14.05 14.05 47.54
KSAV KS Bancorp of Kenly NC 1.13 1.58 20.84 20.82 145.02
KSBK KSB Bancorp of Kingfield ME* 2.76 2.76 22.00 20.37 322.46
KFBI Klamath First Bancorp of OR 0.69 0.69 13.23 13.23 51.50
LBFI L&B Financial of S. Springs TX(8) 0.92 0.87 15.65 15.65 90.99
LSBI LSB Fin. Corp. of Lafayette IN 0.90 0.82 18.21 18.21 193.73
LVSB Lakeview SB of Paterson NJ 2.00 1.20 18.17 13.96 182.65
LARK Landmark Bancshares of KS 0.76 1.01 17.48 17.48 115.34
LARL Laurel Capital Group of PA 1.36 1.80 13.88 13.88 133.36
LSBX Lawrence Savings Bank of MA* 1.09 1.09 6.38 6.38 77.71
LFED Leeds FSB, MHC of MD (35.3) 0.81 0.81 12.82 12.82 79.26
LXMO Lexington B&L Fin. Corp. of MO 0.43 0.43 14.81 14.81 48.45
LBCI Liberty Bancorp of Chicago IL(8) 0.86 1.66 25.55 25.48 268.11
LIFB Life Bancorp of Norfolk VA 0.77 1.11 14.77 14.28 142.66
LFBI Little Falls Bancorp of NJ 0.12 0.48 14.45 13.31 97.09
LOGN Logansport Fin. Corp. of IN 0.71 0.89 12.05 12.05 60.31
LONF London Financial Corp. of OH 0.52 0.52 15.02 15.02 70.30
LISB Long Island Bancorp of NY 1.87 1.70 21.17 21.17 211.86
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
MAFB MAF Bancorp of IL 30.50 10,485 319.8 31.00 22.25 30.75 -0.81 258.82 22.00
MBLF MBLA Financial Corp. of MO(8) 20.50 1,354 27.8 26.00 17.50 21.50 -4.65 N.A. 5.83
MFBC MFB Corp. of Mishawaka IN 16.00 1,974 31.6 19.25 13.75 16.25 -1.54 N.A. 8.47
MLBC ML Bancorp of Villanova PA 14.25 11,869 169.1 14.37 10.62 13.87 2.74 N.A. 28.15
MBB MSB Bancorp of Middletown NY* 17.87 2,834 50.6 23.00 15.00 18.00 -0.72 78.70 -3.41
MSBF MSB Financial Corp. of MI 18.50 654 12.1 19.75 15.75 18.50 0.00 N.A. -2.63
MGNL Magna Bancorp of MS 18.50 13,741 254.2 22.50 14.25 18.00 2.78 270.00 28.74
MARN Marion Capital Holdings of IN 21.50 1,843 39.6 21.50 19.25 20.50 4.88 N.A. 7.50
MFCX Marshalltown Fin. Corp. of IA(8) 15.50 1,411 21.9 16.75 15.25 15.25 1.64 N.A. -1.59
MFSL Maryland Fed. Bancorp of MD 33.00 2,988 98.6 34.38 28.25 32.75 0.76 214.29 10.00
MASB MassBank Corp. of Reading MA* 35.75 2,684 96.0 37.00 30.75 36.50 -2.05 189.94 12.60
MFLR Mayflower Co-Op. Bank of MA* 15.75 889 14.0 15.75 10.75 15.75 0.00 215.00 43.18
MECH Mechanics SB of Hartford CT* 15.87 5,290 84.0 16.37 11.00 16.25 -2.34 N.A. N.A.
MDBK Medford Savings Bank of MA* 25.00 4,534 113.4 26.25 19.75 25.62 -2.42 257.14 16.28
MERI Meritrust FSB of Thibodaux LA 31.00 774 24.0 34.00 27.50 31.00 0.00 N.A. 0.00
MWBX Metro West of MA* 4.12 13,889 57.2 4.50 3.50 4.31 -4.41 0.00 0.00
MSEA Metropolitan Bancorp of WA(8) 18.06 3,634 65.6 18.25 12.50 17.75 1.75 148.42 38.92
MCBS Mid Continent Bancshares of KS 21.50 2,032 43.7 22.75 17.37 18.75 14.67 N.A. 16.22
MIFC Mid Iowa Financial Corp. of IA 6.37 1,683 10.7 7.87 5.87 6.25 1.92 27.40 -17.81
MCBN Mid-Coast Bancorp of ME 19.50 230 4.5 20.25 17.12 19.50 0.00 241.51 13.90
MIDC Midconn Bank of Kensington CT* 19.00 1,936 36.8 20.00 13.00 19.25 -1.30 80.95 35.71
MWBI Midwest Bancshares, Inc. of IA 27.00 349 9.4 27.12 24.50 27.00 0.00 170.00 4.85
MWFD Midwest Fed. Fin. Corp of WI 21.75 1,635 35.6 24.50 9.25 22.25 -2.25 335.00 102.33
MFFC Milton Fed. Fin. Corp. of OH 13.25 2,264 30.0 17.12 11.50 13.00 1.92 N.A. -18.46
MIVI Miss. View Hold. Co. of MN 11.87 910 10.8 12.75 10.75 12.25 -3.10 N.A. 4.40
MBSP Mitchell Bancorp of NC* 12.37 980 12.1 12.75 10.19 12.12 2.06 N.A. N.A.
MBBC Monterey Bay Bancorp of CA 15.12 3,307 50.0 15.63 11.00 15.00 0.80 N.A. 30.12
MORG Morgan Financial Corp. of CO 11.50 778 8.9 13.00 10.50 12.00 -4.17 N.A. -8.00
MFSB Mutual Bancompany of MO(8) 22.25 333 7.4 22.31 16.75 22.25 0.00 N.A. 23.61
MSBK Mutual SB, FSB of Bay City MI 5.75 4,274 24.6 6.81 5.12 5.25 9.52 -34.29 -4.17
NHTB NH Thrift Bancshares of NH 12.06 1,698 20.5 13.37 9.25 11.62 3.79 161.04 19.17
NSLB NS&L Bancorp of Neosho MO 13.50 843 11.4 13.50 12.00 13.37 0.97 N.A. 1.89
NMSB Newmil Bancorp. of CT* 8.25 4,042 33.3 8.75 6.25 8.25 0.00 29.51 17.86
NFSL Newnan SB, FSB of Newnan GA 26.75 1,459 39.0 26.75 15.25 26.75 0.00 114.00 55.07
NASB North American SB of MO 31.75 2,268 72.0 33.75 29.00 30.75 3.25 647.06 -0.78
NBSI North Bancshares of Chicago IL 16.50 1,072 17.7 16.50 13.37 16.50 0.00 N.A. 22.22
FFFD North Central Bancshares of IA 12.75 4,011 51.1 13.06 10.12 12.81 -0.47 N.A. 20.85
NEBC Northeast Bancorp of ME* 13.00 1,230 16.0 13.50 11.00 13.00 0.00 10.64 13.04
NEIB Northeast Indiana Bncrp of IN 13.12 1,954 25.6 13.50 11.50 13.12 0.00 N.A. 9.33
NSBK Northside SB of Bronx NY(8)* 48.37 4,854 234.8 50.00 29.00 48.00 0.77 203.26 58.59
NWEQ Northwest Equity Corp. of WI 11.62 929 10.8 12.25 9.87 11.50 1.04 N.A. 6.90
NWSB Northwest SB, MHC of PA(29.9) 12.87 23,376 44.4 13.50 10.75 12.62 1.98 N.A. 6.19
NSSY Norwalk Savings Society of CT* 23.12 2,385 55.1 23.62 18.00 23.25 -0.56 N.A. 21.68
NSSB Norwich Financial Corp. of CT* 20.37 5,385 109.7 20.50 12.25 19.87 2.52 191.00 58.28
NTMG Nutmeg FS&LA of CT 7.50 710 5.3 8.00 6.25 7.25 3.45 N.A. 12.44
OHSL OHSL Financial Corp. of OH 20.00 1,223 24.5 22.00 19.25 20.50 -2.44 N.A. -6.98
OSBF OSB Fin. Corp. of Oshkosh WI(8) 25.75 1,160 29.9 26.00 22.75 24.00 7.29 123.91 8.42
OCFC Ocean Fin. Corp. of NJ 25.75 8,388 216.0 25.75 19.62 25.12 2.51 N.A. N.A.
OFCP Ottawa Financial Corp. of MI 16.25 5,179 84.2 16.75 15.37 16.12 0.81 N.A. 3.97
PFFB PFF Bancorp of Pomona CA 13.12 19,837 260.3 13.12 10.37 13.00 0.92 N.A. N.A.
PVFC PVF Capital Corp. of OH 15.25 2,323 35.4 15.75 9.67 15.25 0.00 246.59 25.31
PCCI Pacific Crest Capital of CA* 10.00 2,960 29.6 10.00 7.00 9.75 2.56 N.A. 37.93
PALM Palfed, Inc. of Aiken SC 14.75 5,228 77.1 14.75 11.37 13.12 12.42 -4.03 24.26
PBCI Pamrapo Bancorp, Inc. of NJ 18.87 3,231 61.0 24.25 18.25 19.87 -5.03 235.17 -12.23
PFED Park Bancorp of Chicago IL 12.00 2,701 32.4 12.12 10.19 11.75 2.13 N.A. N.A.
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
MAFB MAF Bancorp of IL 1.21 2.11 23.07 19.73 301.63
MBLF MBLA Financial Corp. of MO(8) 0.85 1.12 20.67 20.67 167.94
MFBC MFB Corp. of Mishawaka IN 0.71 0.70 19.09 19.09 106.67
MLBC ML Bancorp of Villanova PA 1.11 1.04 11.63 11.26 159.14
MBB MSB Bancorp of Middletown NY* 0.83 0.91 24.74 12.24 304.61
MSBF MSB Financial Corp. of MI 1.22 1.50 19.26 19.26 96.07
MGNL Magna Bancorp of MS 1.25 1.54 9.16 8.72 94.77
MARN Marion Capital Holdings of IN 1.09 1.37 21.49 21.49 94.74
MFCX Marshalltown Fin. Corp. of IA(8) 0.05 0.36 13.71 13.71 88.01
MFSL Maryland Fed. Bancorp of MD 2.95 2.06 31.68 31.18 377.66
MASB MassBank Corp. of Reading MA* 3.46 3.26 32.59 32.59 327.55
MFLR Mayflower Co-Op. Bank of MA* 1.10 1.06 12.52 12.24 129.22
MECH Mechanics SB of Hartford CT* -1.63 -1.60 12.90 12.90 137.57
MDBK Medford Savings Bank of MA* 2.22 2.19 19.97 18.32 222.36
MERI Meritrust FSB of Thibodaux LA 1.59 2.70 21.67 21.67 298.52
MWBX Metro West of MA* 0.45 0.45 2.76 2.76 35.91
MSEA Metropolitan Bancorp of WA(8) 1.08 1.64 14.01 12.72 207.22
MCBS Mid Continent Bancshares of KS 1.72 1.52 18.06 18.05 154.41
MIFC Mid Iowa Financial Corp. of IA 0.62 0.62 6.42 6.41 68.48
MCBN Mid-Coast Bancorp of ME 0.82 1.39 21.37 21.37 243.29
MIDC Midconn Bank of Kensington CT* 0.96 1.20 18.00 15.16 185.14
MWBI Midwest Bancshares, Inc. of IA 2.58 3.86 25.98 25.98 394.58
MWFD Midwest Fed. Fin. Corp of WI 1.36 1.09 10.34 9.88 114.74
MFFC Milton Fed. Fin. Corp. of OH 0.76 0.70 14.91 14.91 78.75
MIVI Miss. View Hold. Co. of MN 0.99 0.93 14.01 14.01 76.18
MBSP Mitchell Bancorp of NC* 0.30 0.29 14.34 14.34 37.03
MBBC Monterey Bay Bancorp of CA 0.31 0.30 14.15 14.00 95.96
MORG Morgan Financial Corp. of CO 0.68 0.90 12.19 12.19 96.47
MFSB Mutual Bancompany of MO(8) 0.34 0.39 18.73 18.73 160.09
MSBK Mutual SB, FSB of Bay City MI 0.12 -0.08 9.23 9.23 158.53
NHTB NH Thrift Bancshares of NH 0.60 0.90 11.31 11.31 155.49
NSLB NS&L Bancorp of Neosho MO 0.66 0.60 15.84 15.84 67.96
NMSB Newmil Bancorp. of CT* 0.58 0.57 7.96 7.96 75.75
NFSL Newnan SB, FSB of Newnan GA 2.56 2.23 14.22 14.15 111.17
NASB North American SB of MO 3.68 3.48 22.21 21.37 326.41
NBSI North Bancshares of Chicago IL 0.36 0.66 16.50 16.50 109.03
FFFD North Central Bancshares of IA 0.74 0.74 13.90 13.90 48.44
NEBC Northeast Bancorp of ME* 0.97 0.57 13.13 11.05 180.72
NEIB Northeast Indiana Bncrp of IN 0.84 0.84 14.91 14.91 78.88
NSBK Northside SB of Bronx NY(8)* 3.99 3.49 26.27 26.05 337.68
NWEQ Northwest Equity Corp. of WI 0.66 0.86 12.48 12.48 102.80
NWSB Northwest SB, MHC of PA(29.9) 0.75 0.76 8.16 7.74 80.32
NSSY Norwalk Savings Society of CT* 1.76 1.39 18.60 18.60 255.56
NSSB Norwich Financial Corp. of CT* 1.12 1.09 13.90 12.59 128.96
NTMG Nutmeg FS&LA of CT 0.82 0.42 7.35 7.35 128.39
OHSL OHSL Financial Corp. of OH 0.96 1.44 20.58 20.58 177.95
OSBF OSB Fin. Corp. of Oshkosh WI(8) 0.08 1.01 26.76 26.76 215.92
OCFC Ocean Fin. Corp. of NJ 1.27 1.30 26.36 26.36 140.55
OFCP Ottawa Financial Corp. of MI 0.48 0.98 14.55 11.50 159.74
PFFB PFF Bancorp of Pomona CA -0.06 0.32 14.46 14.30 125.30
PVFC PVF Capital Corp. of OH 1.30 1.68 9.67 9.67 148.63
PCCI Pacific Crest Capital of CA* 1.08 0.92 8.10 8.10 89.57
PALM Palfed, Inc. of Aiken SC 0.45 0.73 10.10 9.63 126.22
PBCI Pamrapo Bancorp, Inc. of NJ 0.97 1.38 16.91 16.77 112.34
PFED Park Bancorp of Chicago IL 0.50 0.53 15.01 15.01 64.36
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
PVSA Parkvale Financial Corp of PA 25.25 4,042 102.1 25.50 19.60 25.25 0.00 204.95 14.77
PBIX Patriot Bank Corp. of PA 13.62 4,691 63.9 13.85 10.26 13.37 1.87 N.A. 26.93
PEEK Peekskill Fin. Corp. of NY 13.50 3,820 51.6 14.50 11.12 14.25 -5.26 N.A. 11.39
PFSB PennFed Fin. Services of NJ 20.25 4,853 98.3 20.50 13.75 20.25 0.00 N.A. 37.29
PWBC PennFirst Bancorp of PA 13.50 3,909 52.8 14.75 11.87 13.62 -0.88 69.17 0.00
PWBK Pennwood SB of PA* 12.25 610 7.5 12.25 9.00 12.00 2.08 N.A. N.A.
PBKB People's SB of Brockton MA* 11.50 3,395 39.0 11.62 7.62 11.25 2.22 93.60 9.52
PFDC Peoples Bancorp of Auburn IN 20.00 2,346 46.9 21.50 18.75 20.50 -2.44 14.29 -3.01
PBCT Peoples Bank, MHC of CT(32.3)* 28.37 40,516 335.2 28.37 18.62 26.25 8.08 260.48 49.32
PFFC Peoples Fin. Corp. of OH 12.12 1,491 18.1 12.75 10.87 12.12 0.00 N.A. N.A.
PHBK Peoples Heritage Fin Grp of ME* 24.62 25,200 620.4 25.06 19.00 24.37 1.03 60.81 8.22
PBNB Peoples Sav. Fin. Corp. of CT* 27.50 1,905 52.4 30.19 19.00 27.25 0.92 178.62 42.86
PERM Permanent Bancorp of IN 17.75 2,135 37.9 18.00 14.00 18.00 -1.39 N.A. 9.23
PMFI Perpetual Midwest Fin. of IA 19.00 1,917 36.4 22.00 16.00 19.25 -1.30 N.A. 15.15
PERT Perpetual of SC, MHC (46.8%) 20.25 1,505 14.3 21.44 19.25 20.75 -2.41 N.A. N.A.
PCBC Perry Co. Fin. Corp. of MO 17.25 853 14.7 21.50 15.50 17.25 0.00 N.A. -11.54
PHFC Pittsburgh Home Fin. of PA 12.25 2,182 26.7 12.50 9.50 12.37 -0.97 N.A. N.A.
PFSL Pocahnts Fed, MHC of AR (46.4) 14.25 1,624 10.7 17.25 14.25 15.25 -6.56 N.A. -10.21
POBS Portsmouth Bank Shrs Inc of NH(8)* 13.00 5,740 74.6 15.20 12.62 13.00 0.00 24.88 -13.74
PKPS Poughkeepsie SB of NY 5.12 12,552 64.3 5.63 4.62 5.25 -2.48 -33.94 -2.48
PRBC Prestige Bancorp of PA 12.37 963 11.9 12.50 9.75 12.50 -1.04 N.A. N.A.
PETE Primary Bank of NH* 14.62 1,975 28.9 14.62 11.75 13.25 10.34 N.A. 15.85
PSAB Prime Bancorp, Inc. of PA 18.75 3,725 69.8 20.68 17.50 18.75 0.00 170.17 -7.41
PFNC Progress Financial Corp. of PA 8.13 3,730 30.3 8.13 5.12 8.00 1.63 -26.16 44.40
PSBK Progressive Bank, Inc. of NY* 35.00 2,599 91.0 36.00 25.75 35.37 -1.05 161.78 18.64
PROV Provident Fin. Holdings of CA 13.62 5,125 69.8 13.62 10.12 13.25 2.79 N.A. N.A.
PULB Pulaski SB, MHC of MO (29.0) 14.50 2,094 8.7 16.50 12.25 14.50 0.00 N.A. -3.33
PULS Pulse Bancorp of S. River NJ 15.50 3,050 47.3 18.00 14.50 16.25 -4.62 25.30 -8.82
QCFB QCF Bancorp of Virginia MN 16.12 1,783 28.7 16.12 13.87 15.87 1.58 N.A. 9.29
QCBC Quaker City Bancorp of CA 17.31 3,801 65.8 17.50 12.62 17.12 1.11 130.80 24.80
QCSB Queens County SB of NY* 45.25 7,670 347.1 45.50 29.25 44.87 0.85 N.A. 52.51
RCSB RCSB Financial, Inc. of NY* 29.50 15,386 453.9 29.50 21.56 29.12 1.30 139.64 24.21
RARB Raritan Bancorp. of Raritan NJ* 23.50 1,531 36.0 23.50 20.25 23.50 0.00 141.03 9.30
REDF RedFed Bancorp of Redlands CA 12.50 7,083 88.5 12.62 8.37 12.50 0.00 N.A. 23.52
RELY Reliance Bancorp of NY 18.37 8,912 163.7 19.50 13.12 18.25 0.66 N.A. 25.65
RELI Reliance Bancshares Inc of WI* 10.12 2,562 25.9 10.12 7.50 9.50 6.53 N.A. N.A.
RFED Roosevelt Fin. Grp. Inc. of MO 18.44 42,158 777.4 19.75 15.63 17.87 3.19 372.82 -4.80
RVSB Rvrview SB,FSB MHC of WA(40.3) 16.25 2,196 12.8 17.00 14.09 16.25 0.00 N.A. 11.76
SCCB S. Carolina Comm. Bnshrs of SC 15.00 735 11.0 18.37 15.00 15.00 0.00 N.A. -17.22
SBFL SB Fing. Lakes MHC of NY(33.0) 13.50 1,785 8.0 17.00 13.25 13.50 0.00 N.A. -16.92
SFED SFS Bancorp of Schenectady NY 16.00 1,292 20.7 16.00 11.50 15.50 3.23 N.A. 23.08
SGVB SGV Bancorp of W. Covina CA 10.47 2,591 27.1 10.50 7.75 10.37 0.96 N.A. 7.38
SISB SIS Bank of Sprinfield MA* 22.87 5,723 130.9 23.62 16.12 22.37 2.24 N.A. 39.71
SJSB SJS Bancorp of St. Joseph MI(8) 25.50 952 24.3 25.62 18.50 25.50 0.00 N.A. 29.11
SWCB Sandwich Co-Op. Bank of MA* 30.25 1,881 56.9 30.25 17.00 28.75 5.22 250.93 65.75
SFBM Security Bancorp of MT(8) 29.25 1,485 43.4 30.00 20.00 29.25 0.00 277.42 39.29
SECP Security Capital Corp. of WI 67.50 9,205 621.3 68.00 54.75 66.25 1.89 N.A. 12.03
SFSL Security First Corp. of OH 17.00 4,972 84.5 17.00 11.50 16.75 1.49 7.94 19.30
SMFC Sho-Me Fin. Corp. of MO 21.75 1,646 35.8 22.00 14.50 21.75 0.00 N.A. 45.00
SOBI Sobieski Bancorp of S. Bend IN 13.50 894 12.1 13.75 11.75 13.50 0.00 N.A. 3.85
SOSA Somerset Savings Bank of MA(8)* 2.00 16,652 33.3 2.12 1.12 2.00 0.00 -60.94 45.99
SSFC South Street Fin. Corp. of NC* 13.00 4,497 58.5 13.00 12.12 12.25 6.12 N.A. N.A.
SMBC Southern Missouri Bncrp of MO 14.12 1,701 24.0 16.37 13.50 14.00 0.86 N.A. -5.87
SWBI Southwest Bancshares of IL 18.37 2,655 48.8 18.67 17.33 18.00 2.06 83.70 3.96
SVRN Sovereign Bancorp of PA 12.87 49,334 634.9 12.87 9.29 12.25 5.06 187.92 33.51
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
PVSA Parkvale Financial Corp of PA 1.65 2.32 16.96 16.90 228.69
PBIX Patriot Bank Corp. of PA 0.39 0.40 11.51 11.51 89.05
PEEK Peekskill Fin. Corp. of NY 0.52 0.67 14.38 14.38 48.82
PFSB PennFed Fin. Services of NJ 1.12 1.76 18.58 14.91 235.42
PWBC PennFirst Bancorp of PA 0.73 1.11 12.52 11.35 179.28
PWBK Pennwood SB of PA* 0.52 0.76 14.83 14.83 78.37
PBKB People's SB of Brockton MA* 0.87 0.53 8.18 7.77 154.48
PFDC Peoples Bancorp of Auburn IN 1.72 1.71 18.46 18.46 118.48
PBCT Peoples Bank, MHC of CT(32.3)* 1.91 1.53 14.76 14.74 178.61
PFFC Peoples Fin. Corp. of OH 0.36 0.41 15.57 15.57 61.29
PHBK Peoples Heritage Fin Grp of ME* 1.72 1.88 14.96 13.46 176.84
PBNB Peoples Sav. Fin. Corp. of CT* 2.10 2.16 23.62 22.00 241.45
PERM Permanent Bancorp of IN 0.68 0.68 18.87 18.63 192.61
PMFI Perpetual Midwest Fin. of IA 0.36 0.76 17.68 17.68 206.42
PERT Perpetual of SC, MHC (46.8%) 1.36 1.36 19.18 19.18 134.33
PCBC Perry Co. Fin. Corp. of MO 0.89 0.89 18.44 18.44 92.00
PHFC Pittsburgh Home Fin. of PA 0.46 0.46 13.93 13.93 84.33
PFSL Pocahnts Fed, MHC of AR (46.4) 1.24 1.27 13.78 13.78 232.29
POBS Portsmouth Bank Shrs Inc of NH(8)* 1.06 0.86 11.66 11.66 46.80
PKPS Poughkeepsie SB of NY 0.98 1.56 5.59 5.59 68.58
PRBC Prestige Bancorp of PA 0.03 0.38 15.77 15.77 108.39
PETE Primary Bank of NH* -0.04 -0.05 13.45 13.41 209.79
PSAB Prime Bancorp, Inc. of PA 1.65 1.54 15.58 14.61 173.04
PFNC Progress Financial Corp. of PA 0.56 0.69 5.01 4.98 98.44
PSBK Progressive Bank, Inc. of NY* 3.54 3.65 27.98 24.49 340.92
PROV Provident Fin. Holdings of CA 0.23 -0.01 16.57 16.57 113.20
PULB Pulaski SB, MHC of MO (29.0) 0.73 0.69 10.82 10.82 85.68
PULS Pulse Bancorp of S. River NJ 1.14 1.73 12.61 12.61 164.75
QCFB QCF Bancorp of Virginia MN 1.28 1.28 17.81 17.81 81.66
QCBC Quaker City Bancorp of CA 0.40 0.91 17.54 17.48 194.16
QCSB Queens County SB of NY* 2.92 2.92 26.95 26.95 172.86
RCSB RCSB Financial, Inc. of NY* 2.56 2.25 18.08 17.47 263.14
RARB Raritan Bancorp. of Raritan NJ* 1.89 2.09 18.13 17.76 231.34
REDF RedFed Bancorp of Redlands CA -0.94 -0.57 9.86 9.86 122.30
RELY Reliance Bancorp of NY 0.89 1.46 16.78 11.33 205.28
RELI Reliance Bancshares Inc of WI* 0.29 0.29 11.06 11.06 19.67
RFED Roosevelt Fin. Grp. Inc. of MO 1.42 1.80 10.70 10.15 221.26
RVSB Rvrview SB,FSB MHC of WA(40.3) 1.23 1.13 10.73 9.56 97.39
SCCB S. Carolina Comm. Bnshrs of SC 0.66 0.66 16.75 16.75 60.10
SBFL SB Fing. Lakes MHC of NY(33.0) -0.58 0.10 11.22 11.22 110.61
SFED SFS Bancorp of Schenectady NY 0.88 0.90 17.25 17.25 127.22
SGVB SGV Bancorp of W. Covina CA 0.23 0.23 12.19 12.19 129.70
SISB SIS Bank of Sprinfield MA* 4.06 4.07 16.96 16.96 224.46
SJSB SJS Bancorp of St. Joseph MI(8) 0.89 0.88 17.76 17.76 159.56
SWCB Sandwich Co-Op. Bank of MA* 1.97 1.83 19.68 18.49 239.18
SFBM Security Bancorp of MT(8) 1.32 1.57 20.83 17.94 257.45
SECP Security Capital Corp. of WI 3.53 3.64 60.73 60.73 373.42
SFSL Security First Corp. of OH 0.93 1.32 11.19 10.97 120.64
SMFC Sho-Me Fin. Corp. of MO 1.12 1.48 18.10 18.10 177.46
SOBI Sobieski Bancorp of S. Bend IN 0.37 0.37 15.72 15.72 88.21
SOSA Somerset Savings Bank of MA(8)* 0.14 0.14 1.74 1.74 30.67
SSFC South Street Fin. Corp. of NC* 0.62 0.66 13.15 13.15 46.25
SMBC Southern Missouri Bncrp of MO 0.86 0.81 15.42 15.42 93.97
SWBI Southwest Bancshares of IL 1.12 1.54 14.71 14.71 141.72
SVRN Sovereign Bancorp of PA 0.85 1.18 7.37 5.05 189.82
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Market Capitalization Price Change Data
----------------------- -----------------------------------------------
52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
STFR St. Francis Cap. Corp. of WI 25.75 5,659 145.7 28.00 22.25 26.25 -1.90 N.A. 10.75
SPBC St. Paul Bancorp, Inc. of IL 26.94 18,082 487.1 27.37 22.25 27.12 -0.66 59.69 5.65
STND Standard Fin. of Chicago IL 19.50 16,197 315.8 19.75 13.50 19.62 -0.61 N.A. 33.38
SFFC StateFed Financial Corp. of IA 17.25 813 14.0 19.25 15.00 16.75 2.99 N.A. -4.80
SFIN Statewide Fin. Corp. of NJ 13.37 5,058 67.6 13.37 11.25 12.75 4.86 N.A. 2.37
STSA Sterling Financial Corp. of WA 13.75 5,537 76.1 15.00 12.75 13.75 0.00 51.27 0.00
SSBK Strongsville SB of OH 21.75 2,531 55.0 22.50 18.50 21.25 2.35 N.A. 11.54
SFSB SuburbFed Fin. Corp. of IL 19.75 1,253 24.7 20.50 16.00 20.12 -1.84 196.10 19.70
SBCN Suburban Bancorp. of OH 15.25 1,475 22.5 18.50 14.25 16.12 -5.40 N.A. -17.57
THRD TF Financial Corp. of PA 15.87 4,288 68.1 16.25 13.75 15.87 0.00 N.A. 3.25
ROSE TR Financial Corp. of NY 30.37 8,957 272.0 31.12 23.37 29.87 1.67 N.A. 19.10
TPNZ Tappan Zee Fin. Corp. of NY 13.50 1,539 20.8 13.62 11.37 13.12 2.90 N.A. 6.97
PTRS The Potters S&L Co. of OH 17.50 506 8.9 18.50 15.50 18.25 -4.11 N.A. 2.58
TSBS Trenton SB, FSB MHC of NJ(35.0(8) 14.06 9,037 43.8 15.50 12.37 14.37 -2.16 N.A. 8.15
TRIC Tri-County Bancorp of WY 18.25 609 11.1 19.00 16.50 19.00 -3.95 N.A. 10.61
THBC Troy Hill Bancorp of PA(8) 20.06 1,068 21.4 20.06 12.75 20.00 0.30 N.A. 54.31
TWIN Twin City Bancorp of TN 17.00 861 14.6 18.25 16.00 18.00 -5.56 N.A. 0.00
UFRM United FS&LA of Rocky Mount NC 8.06 3,065 24.7 8.50 7.00 7.50 7.47 148.00 7.47
UBMT United SB, FA of MT 19.25 1,223 23.5 19.50 17.25 19.00 1.32 83.33 10.00
VABF Va. Beach Fed. Fin. Corp of VA 8.75 4,967 43.5 9.25 6.81 9.00 -2.78 86.57 12.90
VFFC Virginia First Savings of VA 14.00 5,743 80.4 14.25 10.50 14.00 0.00 ***.** 23.13
WHGB WHG Bancshares of MD 13.00 1,620 21.1 13.75 10.87 13.06 -0.46 N.A. N.A.
WSFS WSFS Financial Corp. of DE* 9.87 13,842 136.6 10.00 6.75 9.87 0.00 36.14 9.67
WVFC WVS Financial Corp. of PA* 22.37 1,737 38.9 22.75 18.25 22.19 0.81 N.A. 17.00
WLDN Walden Bancorp of MA(8)* 32.25 5,115 165.0 32.87 17.75 31.75 1.57 352.95 69.74
WRNB Warren Bancorp of Peabody MA* 13.50 3,654 49.3 13.50 10.25 13.00 3.85 300.59 20.00
WFSL Washington FS&LA of Seattle WA 24.75 40,695 1,007.2 24.87 19.69 24.62 0.53 69.64 6.22
WAMU Washington Mutual Inc. of WA* 43.12 72,155 3,111.3 43.12 26.25 42.00 2.67 132.33 49.36
WYNE Wayne Bancorp of NJ 13.87 2,231 30.9 14.75 10.75 13.69 1.31 N.A. N.A.
WAYN Wayne S&L Co., MHC of OH(46.7) 21.25 1,496 14.0 22.00 19.00 21.25 0.00 N.A. -3.01
WCFB Webster CityFSB,MHC of IA(45.2 13.50 2,100 12.8 13.50 12.12 13.50 0.00 N.A. 8.00
WBST Webster Financial Corp. of CT 35.00 8,108 283.8 35.87 25.00 34.62 1.10 270.76 18.64
WEFC Wells Fin. Corp. of Wells MN 12.62 2,078 26.2 13.25 10.00 13.00 -2.92 N.A. 14.73
WCBI WestCo Bancorp of IL 21.75 2,601 56.6 22.25 17.67 21.50 1.16 117.50 21.99
WSTR WesterFed Fin. Corp. of MT 17.12 4,395 75.2 17.44 13.87 17.19 -0.41 N.A. 3.01
WOFC Western Ohio Fin. Corp. of OH 21.00 2,309 48.5 24.37 19.50 20.25 3.70 N.A. -9.68
WWFC Westwood Fin. Corp. of NJ 15.25 647 9.9 15.25 10.25 13.75 10.91 N.A. N.A.
WEHO Westwood Hmstd Fin Corp of OH 11.31 2,843 32.2 11.87 10.37 11.87 -4.72 N.A. N.A.
WFCO Winton Financial Corp. of OH(8) 11.25 1,986 22.3 15.00 10.87 13.50 -16.67 N.A. 3.50
FFWD Wood Bancorp of OH 17.00 1,498 25.5 17.00 11.17 17.00 0.00 N.A. 41.67
YFCB Yonkers Fin. Corp. of NY 12.81 3,571 45.7 13.00 9.31 12.87 -0.47 N.A. N.A.
YFED York Financial Corp. of PA 17.75 7,416 131.6 18.41 14.54 17.25 2.90 87.83 15.71
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
STFR St. Francis Cap. Corp. of WI 2.57 1.88 23.09 22.04 235.01
SPBC St. Paul Bancorp, Inc. of IL 1.37 2.08 20.55 20.48 236.49
STND Standard Fin. of Chicago IL 0.74 1.01 16.26 16.23 144.45
SFFC StateFed Financial Corp. of IA 1.09 1.09 18.36 18.36 94.35
SFIN Statewide Fin. Corp. of NJ 0.66 0.78 13.28 13.24 134.13
STSA Sterling Financial Corp. of WA 0.05 0.69 10.78 8.83 276.56
SSBK Strongsville SB of OH 1.28 1.68 16.56 16.24 214.22
SFSB SuburbFed Fin. Corp. of IL 0.66 1.42 20.26 20.15 311.98
SBCN Suburban Bancorp. of OH 0.65 0.88 17.44 17.44 136.99
THRD TF Financial Corp. of PA 0.77 1.07 16.72 14.51 154.64
ROSE TR Financial Corp. of NY 3.24 2.60 22.26 22.26 350.62
TPNZ Tappan Zee Fin. Corp. of NY 0.54 0.51 14.53 14.53 74.59
PTRS The Potters S&L Co. of OH 0.06 0.89 20.36 20.36 248.02
TSBS Trenton SB, FSB MHC of NJ(35.0(8) 0.95 0.74 11.24 11.00 57.99
TRIC Tri-County Bancorp of WY 1.06 1.03 20.37 20.37 125.97
THBC Troy Hill Bancorp of PA(8) 1.02 0.95 16.89 16.89 86.31
TWIN Twin City Bancorp of TN 0.94 1.19 15.58 15.58 124.35
UFRM United FS&LA of Rocky Mount NC 0.66 0.56 6.73 6.73 83.36
UBMT United SB, FA of MT 1.33 1.26 20.04 20.04 85.20
VABF Va. Beach Fed. Fin. Corp of VA 0.04 0.27 8.03 8.03 121.61
VFFC Virginia First Savings of VA 1.78 1.78 10.64 10.32 136.05
WHGB WHG Bancshares of MD 0.43 0.43 14.36 14.36 60.23
WSFS WSFS Financial Corp. of DE* 1.97 1.18 5.36 5.29 94.85
WVFC WVS Financial Corp. of PA* 1.76 2.16 19.72 19.72 153.03
WLDN Walden Bancorp of MA(8)* 2.09 2.32 18.58 16.00 205.16
WRNB Warren Bancorp of Peabody MA* 1.68 1.65 8.88 8.88 96.86
WFSL Washington FS&LA of Seattle WA 1.96 2.18 14.20 13.52 125.69
WAMU Washington Mutual Inc. of WA* 2.72 3.01 19.63 17.69 310.63
WYNE Wayne Bancorp of NJ 0.54 0.65 16.17 16.17 96.07
WAYN Wayne S&L Co., MHC of OH(46.7) 1.02 0.96 15.50 15.50 167.29
WCFB Webster CityFSB,MHC of IA(45.2 0.40 0.55 10.30 10.30 45.00
WBST Webster Financial Corp. of CT 2.50 2.46 24.40 18.61 473.26
WEFC Wells Fin. Corp. of Wells MN 0.79 0.79 13.36 13.36 92.29
WCBI WestCo Bancorp of IL 1.17 1.58 18.34 18.34 118.33
WSTR WesterFed Fin. Corp. of MT 1.04 0.99 17.89 17.89 128.31
WOFC Western Ohio Fin. Corp. of OH 1.00 0.82 24.09 22.66 144.01
WWFC Westwood Fin. Corp. of NJ 1.04 1.04 14.98 13.11 141.36
WEHO Westwood Hmstd Fin Corp of OH 0.27 0.42 13.61 13.61 43.18
WFCO Winton Financial Corp. of OH(8) 1.11 0.94 10.62 10.34 142.41
FFWD Wood Bancorp of OH 0.85 1.10 13.40 13.40 101.72
YFCB Yonkers Fin. Corp. of NY 0.52 0.52 13.73 13.73 68.00
YFED York Financial Corp. of PA 0.89 1.22 12.37 12.37 155.67
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1
Weekly Thrift Market Line - Part Two
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
SAIF-Insured Thrifts(323) 13.07 12.88 0.72 6.38 5.38 0.84 7.45 0.86 128.96 0.84
NYSE Traded Companies(12) 6.09 5.72 0.53 7.71 4.40 0.69 11.18 1.43 66.14 1.15
AMEX Traded Companies(17) 17.34 17.26 0.76 5.73 4.63 0.95 6.93 0.53 125.45 0.65
NASDAQ Listed OTC Companies(294) 13.10 12.91 0.73 6.36 5.46 0.83 7.33 0.85 131.49 0.84
California Companies(25) 7.67 7.54 0.11 1.08 3.43 0.23 3.09 2.28 49.27 1.27
Florida Companies(8) 8.60 8.39 0.76 11.40 8.10 0.75 10.58 1.07 75.73 1.00
Mid-Atlantic Companies(66) 11.30 10.91 0.73 7.60 6.18 0.86 9.03 1.05 93.91 1.02
Mid-West Companies(151) 14.57 14.43 0.77 6.14 5.17 0.88 7.06 0.57 164.21 0.70
New England Companies(10) 8.34 7.97 0.60 7.87 6.79 0.60 7.55 0.69 91.47 0.99
North-West Companies(6) 10.68 10.40 0.87 7.78 4.53 1.02 10.20 0.49 136.82 0.70
South-East Companies(42) 15.10 14.96 0.88 7.21 5.06 1.03 8.27 1.04 108.74 0.84
South-West Companies(7) 11.90 11.81 0.71 6.73 7.05 0.70 7.03 0.67 85.89 0.72
Western Companies (Excl CA)(8) 17.44 17.41 1.04 6.91 5.63 1.11 7.42 0.49 167.07 0.64
Thrift Strategy(249) 14.59 14.42 0.73 5.77 5.08 0.85 6.70 0.74 137.95 0.78
Mortgage Banker Strategy(39) 7.55 7.21 0.74 9.60 6.87 0.72 9.69 1.21 94.83 0.93
Real Estate Strategy(16) 8.57 8.48 0.49 3.91 5.70 0.78 8.21 1.92 105.49 1.33
Diversified Strategy(15) 7.93 7.72 0.79 9.82 5.23 1.00 13.22 0.91 97.56 1.19
Retail Banking Strategy(4) 8.64 8.39 0.59 7.50 7.86 0.54 7.01 0.95 83.55 0.90
Companies Issuing Dividends(255) 13.12 12.90 0.80 7.16 5.69 0.91 8.18 0.78 123.23 0.82
Companies Without Dividends(68) 12.88 12.78 0.40 3.25 4.05 0.52 4.52 1.20 151.80 0.92
Equity/Assets [6%(33) 5.09 4.76 0.33 6.60 6.36 0.43 8.33 1.67 78.58 1.02
Equity/Assets 6-12%(152) 8.63 8.35 0.68 7.86 6.10 0.80 9.20 0.95 134.76 0.97
Equity/Assets >12%(138) 19.70 19.63 0.86 4.72 4.38 0.97 5.35 0.59 134.40 0.67
Converted Last 3 Mths (no MHC)(6) 22.83 22.83 0.64 3.15 3.52 0.76 3.73 0.44 244.13 0.57
Actively Traded Companies(52) 8.43 8.15 0.76 9.12 6.32 0.95 11.71 1.32 90.20 0.96
Market Value Below $20 Million(75) 15.48 15.41 0.65 4.56 5.18 0.73 5.03 0.74 102.51 0.67
Holding Company Structure(279) 13.64 13.45 0.71 6.00 5.07 0.84 7.16 0.82 130.64 0.81
Assets Over $1 Billion(65) 7.99 7.46 0.66 8.20 5.84 0.79 10.28 1.03 86.40 0.97
Assets $500 Million-$1 Billion(57) 11.00 10.79 0.74 7.55 6.08 0.87 8.57 1.14 132.15 0.98
Assets $250-$500 Million(73) 11.26 11.10 0.63 5.95 5.11 0.77 7.18 0.85 164.68 0.86
Assets less than $250 Million(128) 17.62 17.59 0.80 5.15 4.98 0.88 5.62 0.67 130.90 0.71
Goodwill Companies(132) 8.93 8.45 0.67 7.63 6.09 0.78 9.01 1.03 104.20 0.94
Non-Goodwill Companies(191) 15.87 15.87 0.76 5.52 4.90 0.87 6.39 0.74 146.67 0.78
Acquirors of FSLIC Cases(14) 6.82 6.44 0.71 9.50 6.89 0.95 13.31 1.44 53.58 0.84
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
SAIF-Insured Thrifts(323) 16.20 113.84 14.04 116.69 15.48 0.35 1.87 30.73
NYSE Traded Companies(12) 16.46 155.62 10.30 169.13 14.51 0.47 1.34 23.38
AMEX Traded Companies(17) 17.28 108.10 18.03 108.88 16.23 0.39 2.44 47.35
NASDAQ Listed OTC Companies(294) 16.15 112.64 13.96 115.21 15.48 0.35 1.86 30.15
California Companies(25) 15.13 117.07 8.57 120.75 15.41 0.27 0.98 19.17
Florida Companies(8) 13.42 113.96 9.42 117.88 13.47 0.19 0.95 16.28
Mid-Atlantic Companies(66) 15.99 113.68 12.14 117.86 14.39 0.35 1.87 32.00
Mid-West Companies(151) 16.53 110.94 15.16 112.48 16.09 0.35 1.85 28.56
New England Companies(10) 15.76 108.15 8.77 118.08 14.78 0.47 2.34 34.93
North-West Companies(6) 18.84 155.50 15.22 164.03 17.45 0.34 1.47 25.09
South-East Companies(42) 16.10 122.02 17.72 124.61 15.30 0.41 2.36 41.46
South-West Companies(7) 15.09 92.47 10.63 96.69 14.98 0.30 1.84 30.84
Western Companies (Excl CA)(8) 16.57 112.92 18.09 113.17 15.96 0.49 2.84 44.41
Thrift Strategy(249) 16.86 106.84 14.98 108.94 15.93 0.35 1.97 33.21
Mortgage Banker Strategy(39) 13.75 134.44 10.00 141.83 14.23 0.33 1.49 20.55
Real Estate Strategy(16) 12.06 125.18 10.34 126.40 13.74 0.18 0.82 14.54
Diversified Strategy(15) 17.05 170.89 13.91 177.00 13.66 0.68 2.38 38.80
Retail Banking Strategy(4) 11.52 105.28 9.23 108.08 15.35 0.14 1.28 21.76
Companies Issuing Dividends(255) 16.33 117.39 14.51 120.61 15.31 0.44 2.34 38.80
Companies Without Dividends(68) 15.37 99.76 12.17 101.25 16.45 0.00 0.00 0.00
Equity/Assets [6%(33) 13.09 139.19 7.10 144.31 14.03 0.29 1.17 14.12
Equity/Assets 6-12%(152) 15.19 122.53 10.57 127.54 13.88 0.39 1.90 29.42
Equity/Assets >12%(138) 18.43 98.77 19.38 99.22 18.03 0.32 2.00 36.11
Converted Last 3 Mths (no MHC)(6) 19.78 87.28 19.92 87.28 21.87 0.00 0.00 0.00
Actively Traded Companies(52) 14.91 141.27 11.65 147.89 13.08 0.51 2.00 27.35
Market Value Below $20 Million(75) 16.06 91.01 14.08 91.70 16.47 0.27 1.80 30.74
Holding Company Structure(279) 16.72 113.00 14.50 115.70 15.75 0.36 1.91 31.67
Assets Over $1 Billion(65) 15.81 144.25 11.20 153.72 14.45 0.50 1.80 28.64
Assets $500 Million-$1 Billion(57) 15.06 117.00 12.67 120.40 14.29 0.31 1.66 27.83
Assets $250-$500 Million(73) 16.34 111.11 12.22 112.85 15.19 0.32 1.90 27.07
Assets less than $250 Million(128) 16.93 98.27 17.12 98.67 16.93 0.31 1.98 35.09
Goodwill Companies(132) 15.64 128.52 11.17 135.91 14.34 0.41 1.82 28.71
Non-Goodwill Companies(191) 16.69 103.94 15.98 103.94 16.41 0.32 1.90 32.19
Acquirors of FSLIC Cases(14) 13.61 140.95 10.14 152.43 12.93 0.47 1.93 22.86
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
BIF-Insured Thrifts(74) 11.34 10.99 0.92 10.30 7.33 0.90 9.80 1.50 93.63 1.42
NYSE Traded Companies(3) 7.07 5.48 0.58 8.44 6.28 0.61 9.09 2.53 29.93 1.19
AMEX Traded Companies(5) 13.19 12.87 0.64 7.41 4.83 0.69 6.97 1.48 99.16 1.46
NASDAQ Listed OTC Companies(66) 11.40 11.12 0.97 10.65 7.61 0.94 10.08 1.44 97.23 1.42
California Companies(3) 9.04 9.04 0.94 13.13 8.40 0.87 12.15 2.36 48.98 1.47
Mid-Atlantic Companies(20) 10.54 9.94 0.88 10.27 7.48 0.87 9.61 1.92 70.49 1.35
Mid-West Companies(1) 56.23 56.23 1.47 2.62 2.87 1.47 2.62 0.00 0.00 0.55
New England Companies(42) 9.12 8.81 0.93 10.87 7.82 0.88 10.23 1.28 105.44 1.58
North-West Companies(4) 12.40 12.25 1.14 11.54 6.77 1.13 11.63 0.39 193.67 0.96
South-East Companies(3) 28.28 28.28 0.62 1.73 1.79 0.95 3.55 0.99 91.69 0.71
Thrift Strategy(47) 13.16 12.71 0.88 8.61 6.63 0.89 8.46 1.36 92.99 1.37
Mortgage Banker Strategy(10) 6.86 6.64 0.84 11.80 8.21 0.80 11.39 1.41 76.81 1.16
Real Estate Strategy(8) 10.38 10.38 1.22 13.32 8.26 1.20 12.98 1.63 109.69 1.71
Diversified Strategy(7) 6.88 6.62 1.33 20.33 12.13 1.15 16.96 2.42 109.48 1.94
Retail Banking Strategy(2) 6.39 6.24 0.08 1.30 1.76 0.07 1.16 1.16 59.65 1.03
Companies Issuing Dividends(54) 9.07 8.58 0.97 11.11 8.02 0.95 10.67 1.38 102.39 1.41
Companies Without Dividends(20) 16.84 16.83 0.80 8.31 5.66 0.81 7.67 1.80 72.29 1.44
Equity/Assets [6%(9) 5.52 5.39 0.91 16.32 10.50 0.73 12.99 3.02 42.35 1.54
Equity/Assets 6-12%(49) 8.38 7.86 0.91 10.84 7.84 0.89 10.53 1.28 99.23 1.50
Equity/Assets >12%(16) 22.73 22.73 0.96 5.56 4.23 1.05 6.04 1.31 108.26 1.13
Converted Last 3 Mths (no MHC)(1) 28.43 28.43 1.34 4.71 4.77 1.43 5.02 0.00 0.00 0.40
Actively Traded Companies(28) 8.44 8.06 0.99 11.78 8.39 0.98 11.68 1.23 94.50 1.46
Market Value Below $20 Million(10) 12.24 12.00 0.74 8.46 7.63 0.69 7.62 1.40 61.04 1.19
Holding Company Structure(46) 12.69 12.36 1.05 10.94 7.77 1.05 10.65 1.18 109.26 1.44
Assets Over $1 Billion(17) 7.95 7.35 1.12 14.57 9.15 1.05 13.31 2.00 80.04 1.49
Assets $500 Million-$1 Billion(18) 10.48 10.01 0.88 9.15 6.50 0.80 8.18 1.28 110.25 1.52
Assets $250-$500 Million(22) 10.38 10.14 0.83 9.72 6.93 0.89 10.11 1.41 96.94 1.45
Assets less than $250 Million(17) 16.31 16.16 0.91 8.35 7.03 0.89 7.85 1.33 86.78 1.22
Goodwill Companies(36) 7.78 6.99 0.84 11.02 7.61 0.80 10.29 1.37 82.63 1.40
Non-Goodwill Companies(37) 13.01 13.01 0.97 9.91 7.23 0.98 9.59 1.62 102.79 1.45
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
BIF-Insured Thrifts(74) 13.26 125.62 13.25 130.24 13.96 0.37 1.84 24.07
NYSE Traded Companies(3) 17.05 141.30 10.21 134.48 15.68 0.27 0.57 10.75
AMEX Traded Companies(5) 13.89 126.85 15.08 133.83 19.11 0.46 2.15 19.79
NASDAQ Listed OTC Companies(66) 12.98 124.68 13.25 129.78 13.43 0.37 1.88 25.05
California Companies(3) 12.79 122.33 11.48 122.38 13.58 0.00 0.00 0.00
Mid-Atlantic Companies(20) 14.84 122.02 12.07 127.08 13.65 0.40 1.71 21.52
Mid-West Companies(1) 0.00 91.50 51.45 91.50 0.00 0.00 0.00 0.00
New England Companies(42) 12.21 128.69 11.50 133.76 13.75 0.43 2.27 29.37
North-West Companies(4) 13.00 152.60 16.58 158.62 12.76 0.44 1.89 29.24
South-East Companies(3) 20.97 91.20 25.72 91.20 22.14 0.00 0.00 0.00
Thrift Strategy(47) 13.84 117.02 14.28 121.78 14.58 0.38 1.88 26.77
Mortgage Banker Strategy(10) 13.33 146.30 10.21 151.15 13.72 0.38 1.85 15.30
Real Estate Strategy(8) 13.12 140.37 14.96 140.37 13.24 0.30 1.56 19.12
Diversified Strategy(7) 9.88 155.87 10.66 163.35 11.23 0.39 1.71 20.82
Retail Banking Strategy(2) 0.00 92.61 5.92 94.52 0.00 0.32 2.10 0.00
Companies Issuing Dividends(54) 12.95 130.85 11.81 137.45 13.67 0.53 2.60 32.82
Companies Without Dividends(20) 14.34 112.93 16.74 113.17 14.91 0.00 0.00 0.00
Equity/Assets [6%(9) 11.23 140.33 7.71 143.73 12.89 0.13 1.03 11.16
Equity/Assets 6-12%(49) 12.45 130.88 11.00 137.56 13.32 0.49 2.39 31.18
Equity/Assets >12%(16) 18.47 103.03 22.51 103.03 17.66 0.17 0.72 12.15
Converted Last 3 Mths (no MHC)(1) 20.97 98.86 28.11 98.86 19.70 0.00 0.00 0.00
Actively Traded Companies(28) 12.48 134.32 11.14 140.89 13.11 0.52 2.39 30.83
Market Value Below $20 Million(10) 13.09 98.93 11.43 102.67 14.29 0.24 1.60 14.87
Holding Company Structure(46) 13.00 126.35 14.73 132.72 13.32 0.42 2.03 25.67
Assets Over $1 Billion(17) 12.99 155.07 12.44 161.82 13.41 0.50 1.86 20.96
Assets $500 Million-$1 Billion(18) 13.84 124.36 12.85 132.93 14.62 0.46 2.18 31.45
Assets $250-$500 Million(22) 12.91 122.08 11.86 125.68 13.87 0.34 1.77 27.44
Assets less than $250 Million(17) 13.39 105.44 16.06 107.77 14.07 0.23 1.58 15.83
Goodwill Companies(36) 13.59 133.72 10.39 144.58 14.67 0.53 2.38 32.42
Non-Goodwill Companies(37) 12.96 119.88 14.53 119.88 13.29 0.25 1.44 18.22
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(19) 11.26 10.99 0.66 5.87 4.40 0.77 7.01 0.48 156.72 0.81
BIF-Insured Thrifts(2) 9.98 9.97 0.45 6.13 2.63 0.49 6.00 2.17 65.43 2.02
NASDAQ Listed OTC Companies(21) 11.13 10.88 0.64 5.89 4.23 0.74 6.91 0.68 145.98 0.93
Florida Companies(3) 9.96 9.81 0.82 8.08 5.54 0.91 9.21 0.46 119.35 0.80
Mid-Atlantic Companies(8) 10.66 10.20 0.35 2.92 2.15 0.60 5.33 1.11 107.77 1.10
Mid-West Companies(7) 12.08 12.07 0.64 5.72 4.55 0.69 6.26 0.33 206.72 0.76
New England Companies(1) 8.26 8.25 1.10 13.97 6.73 0.88 11.19 1.42 85.13 1.82
North-West Companies(1) 11.02 9.82 1.31 12.07 7.57 1.21 11.09 0.22 151.63 0.51
South-East Companies(1) 14.28 14.28 1.01 7.09 6.72 1.01 7.09 0.00 0.00 0.00
Thrift Strategy(19) 11.30 11.09 0.58 5.10 3.90 0.71 6.44 0.66 149.66 0.91
Mortgage Banker Strategy(1) 11.02 9.82 1.31 12.07 7.57 1.21 11.09 0.22 151.63 0.51
Diversified Strategy(1) 8.26 8.25 1.10 13.97 6.73 0.88 11.19 1.42 85.13 1.82
Companies Issuing Dividends(20) 10.97 10.71 0.62 5.83 4.10 0.73 6.90 0.68 145.98 0.93
Companies Without Dividends(1) 14.28 14.28 1.01 7.09 6.72 1.01 7.09 0.00 0.00 0.00
Equity/Assets [6%(1) 5.93 5.93 0.56 9.39 8.70 0.57 9.62 0.37 108.37 1.15
Equity/Assets 6-12%(14) 9.74 9.39 0.53 5.53 3.59 0.70 7.11 0.81 105.52 0.98
Equity/Assets >12%(6) 16.07 16.07 0.95 6.20 5.11 0.92 5.81 0.23 333.88 0.71
Actively Traded Companies(1) 9.26 8.11 0.47 4.99 3.78 0.85 9.04 0.75 70.10 1.01
Market Value Below $20 Million(1) 11.52 11.49 0.19 1.60 1.75 0.47 3.96 0.37 131.69 0.59
Holding Company Structure(1) 9.26 8.11 0.47 4.99 3.78 0.85 9.04 0.75 70.10 1.01
Assets Over $1 Billion(4) 9.03 8.43 0.87 9.49 5.34 0.94 10.10 0.91 117.09 1.24
Assets $500 Million-$1 Billion(5) 9.66 9.35 0.56 5.25 4.26 0.70 6.89 0.65 67.02 0.82
Assets $250-$500 Million(4) 9.84 9.82 0.66 6.88 5.71 0.73 7.73 0.24 214.25 0.59
Assets less than $250 Million(8) 13.57 13.41 0.55 3.93 2.91 0.67 4.91 0.89 167.56 1.02
Goodwill Companies(10) 9.53 8.98 0.73 7.56 4.75 0.85 8.79 0.57 134.22 0.88
Non-Goodwill Companies(11) 12.45 12.45 0.57 4.53 3.80 0.66 5.37 0.78 156.44 0.98
MHC Institutions(21) 11.13 10.88 0.64 5.89 4.23 0.74 6.91 0.68 145.98 0.93
MHC Converted Last 3 Months(1) 14.28 14.28 1.01 7.09 6.72 1.01 7.09 0.00 0.00 0.00
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(19) 17.22 127.87 14.30 132.34 18.17 0.61 3.67 49.15
BIF-Insured Thrifts(2) 14.85 157.85 15.16 157.98 18.54 0.62 3.31 46.07
NASDAQ Listed OTC Companies(21) 17.02 130.87 14.39 134.90 18.19 0.61 3.63 48.81
Florida Companies(3) 18.28 143.35 13.83 146.48 17.14 0.93 4.45 71.32
Mid-Atlantic Companies(8) 17.22 124.70 13.23 131.99 18.36 0.46 3.21 50.32
Mid-West Companies(7) 18.01 123.59 15.15 123.81 19.71 0.72 4.62 66.01
New England Companies(1) 14.85 192.21 15.88 192.47 18.54 0.88 3.10 46.07
North-West Companies(1) 13.21 151.44 16.69 169.98 14.38 0.22 1.35 17.89
South-East Companies(1) 14.89 105.58 15.07 105.58 14.89 0.00 0.00 0.00
Thrift Strategy(19) 17.62 126.31 14.18 129.76 18.42 0.62 3.79 53.62
Mortgage Banker Strategy(1) 13.21 151.44 16.69 169.98 14.38 0.22 1.35 17.89
Diversified Strategy(1) 14.85 192.21 15.88 192.47 18.54 0.88 3.10 46.07
Companies Issuing Dividends(20) 17.22 132.20 14.35 136.45 18.40 0.64 3.82 54.91
Companies Without Dividends(1) 14.89 105.58 15.07 105.58 14.89 0.00 0.00 0.00
Equity/Assets [6%(1) 11.49 103.41 6.13 103.41 11.22 0.84 5.89 67.74
Equity/Assets 6-12%(14) 17.27 135.96 13.09 141.72 18.36 0.61 3.27 51.21
Equity/Assets >12%(6) 17.97 122.11 19.69 122.11 19.43 0.57 4.18 32.14
Actively Traded Companies(1) 0.00 131.77 12.20 150.33 14.60 0.40 2.19 57.97
Market Value Below $20 Million(1) 0.00 92.24 10.62 92.45 23.08 0.40 3.33 0.00
Holding Company Structure(1) 0.00 131.77 12.20 150.33 14.60 0.40 2.19 57.97
Assets Over $1 Billion(4) 16.58 164.00 14.64 174.16 17.97 0.75 3.23 52.44
Assets $500 Million-$1 Billion(5) 18.56 121.52 11.77 126.54 18.15 0.63 3.67 66.02
Assets $250-$500 Million(4) 16.54 121.60 11.85 121.92 16.72 0.79 4.45 67.74
Assets less than $250 Million(8) 16.96 123.60 16.84 125.95 19.58 0.44 3.40 27.39
Goodwill Companies(10) 16.82 145.08 13.61 154.05 18.09 0.61 3.04 46.63
Non-Goodwill Companies(11) 17.17 119.23 15.02 119.23 18.31 0.61 4.11 51.53
MHC Institutions(21) 17.02 130.87 14.39 134.90 18.19 0.61 3.63 48.81
MHC Converted Last 3 Months(1) 14.89 105.58 15.07 105.58 14.89 0.00 0.00 0.00
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA 3.93 3.30 0.13 2.91 1.98 0.44 9.73 2.14 36.71 1.23
CAL CalFed Inc. of Los Angeles CA(8) 4.63 4.63 0.35 7.84 4.28 0.56 12.42 1.16 103.40 1.66
CSA Coast Savings Financial of CA 4.83 4.76 0.12 2.40 1.61 0.47 9.42 1.53 48.84 1.08
CFB Commercial Federal Corp. of NE 5.39 4.82 0.62 10.78 6.41 0.88 15.44 1.07 69.60 1.01
DME Dime Savings Bank, FSB of NY* 5.08 5.03 0.39 7.96 4.79 0.53 10.69 2.45 24.13 1.09
DSL Downey Financial Corp. of CA 8.32 8.18 0.68 8.41 7.07 0.60 7.43 NA NA 0.68
FRC First Republic Bancorp of CA* 5.56 5.56 0.54 9.54 8.72 0.51 8.95 2.22 38.76 0.97
FED FirstFed Fin. Corp. of CA 4.38 4.31 0.06 1.27 1.05 0.29 6.34 2.15 NA NA
GLN Glendale Fed. Bk, FSB of CA 5.27 4.89 -0.04 -0.86 -0.70 0.36 6.98 1.76 66.27 1.56
GDW Golden West Fin. Corp. of CA 6.13 6.13 1.00 15.50 9.45 1.23 19.03 1.37 35.24 0.59
GWF Great Western Fin. Corp. of CA 5.63 4.95 0.42 7.48 4.70 0.68 12.07 1.79 41.34 1.03
GPT GreenPoint Fin. Corp. of NY* 10.58 5.84 0.82 7.83 5.32 0.80 7.64 2.91 26.91 1.52
SFB Standard Fed. Bancorp of MI 5.83 4.75 0.63 9.71 5.18 0.85 13.07 0.59 53.01 0.43
TCB TCF Financial Corp. of MN 7.34 7.03 1.17 16.06 5.91 1.39 19.01 0.76 132.47 1.36
WES Westcorp Inc. of Orange CA 9.88 9.85 1.09 11.13 5.78 0.44 4.45 1.16 111.77 2.49
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares of LA* 17.67 17.67 -0.29 -1.62 -1.83 0.64 3.60 0.56 159.79 1.32
BKC American Bank of Waterbury CT* 8.34 7.95 1.24 14.18 9.40 0.84 9.61 2.39 38.52 1.42
BFD BostonFed Bancorp of MA 11.15 11.15 0.32 2.87 2.41 0.52 4.64 0.54 97.04 0.63
CFX Cheshire Fin. Corp. of NH* 9.05 8.11 1.00 10.33 4.94 0.86 8.83 NA NA 1.47
CZF Citisave Fin. Corp. of LA 16.00 15.99 0.78 4.47 4.67 1.04 5.97 0.22 40.85 0.15
CBK Citizens First Fin.Corp. of IL 15.14 15.14 0.25 2.32 1.68 0.52 4.87 NA NA 0.24
ESX Essex Bancorp of VA(8) 0.19 -0.53 -1.65 -44.64 NM -1.53 -41.36 2.34 77.62 2.15
FCB Falmouth Co-Op Bank of MA* 24.56 24.56 0.59 3.97 2.40 0.59 3.97 NA NA 1.24
GAF GA Financial Corp. of PA 21.55 21.55 0.72 4.10 3.12 1.13 6.43 0.19 85.78 0.42
KNK Kankakee Bancorp of IL 10.02 9.32 0.42 4.14 4.38 0.60 5.87 0.90 74.47 0.99
KYF Kentucky First Bancorp of KY 22.25 22.25 0.90 3.71 3.47 1.17 4.85 0.09 486.84 0.81
NYB New York Bancorp, Inc. of NY 5.43 5.43 1.26 21.86 9.18 1.19 20.60 NA NA 1.04
PDB Piedmont Bancorp of NC 28.20 28.20 1.28 4.82 3.12 1.57 5.92 0.76 62.96 0.66
PLE Pinnacle Bank of AL 7.73 7.46 0.50 6.42 6.04 0.79 10.11 0.83 82.73 1.01
SSB Scotland Bancorp of NC 35.06 35.06 1.29 6.03 3.40 1.29 6.03 NA NA 0.50
SZB SouthFirst Bancshares of AL 14.41 14.41 0.57 3.47 4.56 0.75 4.63 0.52 53.93 0.41
SRN Southern Banc Company of AL 18.22 18.02 0.22 1.24 1.26 0.58 3.36 NA NA 0.24
SSM Stone Street Bancorp of NC 35.13 35.13 1.22 4.38 3.35 1.51 5.42 0.17 272.78 0.61
TSH Teche Holding Company of LA 13.77 13.77 0.72 4.30 5.26 1.04 6.24 NA NA 1.00
FTF Texarkana Fst. Fin. Corp of AR 20.14 20.14 1.82 10.01 10.51 1.82 10.01 0.33 213.97 0.87
THR Three Rivers Fin. Corp. of MI 14.67 14.61 0.82 5.92 5.70 0.75 5.40 0.69 73.26 0.78
TBK Tolland Bank of CT* 6.31 6.06 0.63 10.20 9.25 0.54 8.83 NA NA 1.87
WSB Washington SB, FSB of MD 8.72 8.72 0.91 11.57 12.44 0.83 10.54 0.95 49.34 0.96
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN 8.20 8.20 1.72 22.62 22.97 -0.16 -2.12 0.44 79.07 0.51
AFED AFSALA Bancorp of NY 13.68 13.68 0.59 4.34 5.08 0.59 4.34 0.59 96.04 1.10
ALBK ALBANK Fin. Corp. of Albany NY 8.95 7.68 0.77 7.76 6.60 0.98 9.90 1.15 69.91 1.12
AMFC AMB Financial Corp. of IN 19.37 19.37 0.49 3.04 2.64 0.76 4.79 0.43 98.60 0.56
ASBP ASB Financial Corp. of OH 22.18 22.18 0.57 2.44 2.45 0.89 3.83 1.89 40.89 1.25
ABBK Abington Savings Bank of MA(8)* 6.69 5.95 0.72 10.94 8.84 0.61 9.18 0.27 135.80 0.59
AABC Access Anytime Bancorp of NM 4.94 4.94 0.34 7.22 9.91 0.26 5.57 1.49 23.28 1.01
AADV Advantage Bancorp of WI 9.45 8.22 0.90 9.33 7.91 0.81 8.36 0.55 101.88 1.02
AFCB Affiliated Comm BC, Inc of MA 9.84 9.77 0.74 6.73 5.83 0.87 7.98 0.62 119.38 1.19
ALBC Albion Banc Corp. of Albion NY 10.34 10.34 0.24 2.34 3.32 0.24 2.30 0.76 55.48 0.52
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA NM 166.33 6.54 198.29 15.15 0.88 2.81 NM
CAL CalFed Inc. of Los Angeles CA(8) 23.39 178.40 8.26 178.40 14.76 0.00 0.00 0.00
CSA Coast Savings Financial of CA NM 151.17 7.31 153.59 15.86 0.00 0.00 0.00
CFB Commercial Federal Corp. of NE 15.61 173.87 9.38 194.57 10.90 0.40 0.89 13.84
DME Dime Savings Bank, FSB of NY* 20.89 163.63 8.31 165.22 15.56 0.00 0.00 0.00
DSL Downey Financial Corp. of CA 14.15 115.85 9.64 117.84 16.02 0.48 1.79 25.40
FRC First Republic Bancorp of CA* 11.46 103.62 5.76 103.75 12.22 0.00 0.00 0.00
FED FirstFed Fin. Corp. of CA NM 125.79 5.51 127.83 19.13 0.00 0.00 0.00
GLN Glendale Fed. Bk, FSB of CA NM 118.55 6.25 127.80 17.54 0.00 0.00 NM
GDW Golden West Fin. Corp. of CA 10.58 165.20 10.13 165.20 8.61 0.44 0.67 7.12
GWF Great Western Fin. Corp. of CA 21.30 161.15 9.07 183.24 13.19 1.00 3.48 74.07
GPT GreenPoint Fin. Corp. of NY* 18.80 156.65 16.57 NM 19.26 0.80 1.72 32.26
SFB Standard Fed. Bancorp of MI 19.32 192.37 11.22 236.41 14.35 0.80 1.45 27.97
TCB TCF Financial Corp. of MN 16.93 NM 19.91 NM 14.31 0.75 1.85 31.25
WES Westcorp Inc. of Orange CA 17.31 185.95 18.38 186.57 NM 0.40 1.78 30.77
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares of LA* NM 88.48 15.63 88.48 24.58 0.00 0.00 NM
BKC American Bank of Waterbury CT* 10.64 147.14 12.28 154.50 15.71 1.36 4.63 49.28
BFD BostonFed Bancorp of MA NM 104.75 11.68 104.75 NM 0.20 1.42 58.82
CFX Cheshire Fin. Corp. of NH* 20.22 203.04 18.37 226.36 23.65 0.80 5.20 NM
CZF Citisave Fin. Corp. of LA 21.43 107.31 17.17 107.40 16.07 0.30 2.22 47.62
CBK Citizens First Fin.Corp. of IL NM 87.29 13.22 87.29 NM 0.00 0.00 0.00
ESX Essex Bancorp of VA(8) NM NM 0.71 NM NM 0.00 0.00 NM
FCB Falmouth Co-Op Bank of MA* NM 92.03 22.61 92.03 NM 0.00 0.00 0.00
GAF GA Financial Corp. of PA NM 99.02 21.34 99.02 20.46 0.32 2.27 72.73
KNK Kankakee Bancorp of IL 22.86 96.04 9.62 103.23 16.11 0.40 1.67 38.10
KYF Kentucky First Bancorp of KY NM 108.85 24.22 108.85 22.06 0.50 3.33 NM
NYB New York Bancorp, Inc. of NY 10.90 238.26 12.93 238.26 11.56 0.80 2.35 25.64
PDB Piedmont Bancorp of NC NM 134.79 38.01 134.79 NM 0.48 2.63 NM
PLE Pinnacle Bank of AL 16.55 107.33 8.30 111.20 10.51 0.72 4.03 66.67
SSB Scotland Bancorp of NC NM 98.66 34.59 98.66 NM 0.30 2.26 66.67
SZB SouthFirst Bancshares of AL 21.93 82.67 11.91 82.67 16.45 0.50 4.00 NM
SRN Southern Banc Company of AL NM 94.94 17.29 95.95 NM 0.35 2.59 NM
SSM Stone Street Bancorp of NC NM 97.66 34.31 97.66 24.10 0.44 2.20 65.67
TSH Teche Holding Company of LA 19.01 91.46 12.59 91.46 13.11 0.50 3.70 70.42
FTF Texarkana Fst. Fin. Corp of AR 9.52 84.88 17.10 84.88 9.52 0.45 3.13 29.80
THR Three Rivers Fin. Corp. of MI 17.56 92.34 13.54 92.71 19.26 0.30 2.16 37.97
TBK Tolland Bank of CT* 10.82 103.54 6.53 107.79 12.50 0.12 0.93 10.08
WSB Washington SB, FSB of MD 8.04 88.24 7.70 88.24 8.82 0.10 2.22 17.86
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN 4.35 95.56 7.83 95.56 NM 0.40 1.33 5.78
AFED AFSALA Bancorp of NY 19.67 85.41 11.68 85.41 19.67 0.00 0.00 0.00
ALBK ALBANK Fin. Corp. of Albany NY 15.14 119.40 10.68 139.07 11.88 0.48 1.68 25.40
AMFC AMB Financial Corp. of IN NM 86.81 16.82 86.81 24.04 0.24 1.92 72.73
ASBP ASB Financial Corp. of OH NM 102.23 22.68 102.23 NM 0.40 2.65 NM
ABBK Abington Savings Bank of MA(8)* 11.32 118.64 7.94 133.40 13.49 0.40 1.96 22.22
AABC Access Anytime Bancorp of NM 10.09 72.06 3.56 72.06 13.07 0.00 0.00 0.00
AADV Advantage Bancorp of WI 12.64 118.06 11.15 135.67 14.12 0.32 0.98 12.36
AFCB Affiliated Comm BC, Inc of MA 17.15 116.36 11.45 117.22 14.46 0.60 2.71 46.51
ALBC Albion Banc Corp. of Albion NY NM 71.18 7.36 71.18 NM 0.31 1.84 55.36
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ATSB AmTrust Capital Corp. of IN 10.03 10.03 0.47 4.40 6.30 0.03 0.28 NA NA 0.95
AHCI Ambanc Holding Co. of NY* 16.30 16.30 0.32 2.22 2.19 0.29 2.03 3.65 25.93 1.65
ASBI Ameriana Bancorp of IN 10.88 10.87 0.61 5.14 4.73 0.91 7.67 0.48 58.85 0.39
AFFFZ America First Fin. Fund of CA 6.89 6.75 0.45 6.64 5.95 0.75 11.21 0.58 54.76 0.50
AMFB American Federal Bank of SC 7.76 7.16 1.29 16.14 8.40 1.42 17.67 0.54 140.66 1.27
ANBK American Nat'l Bancorp of MD 10.25 10.25 0.35 3.48 3.49 0.43 4.24 NA NA 1.56
ABCW Anchor Bancorp Wisconsin of WI 5.84 5.69 0.67 10.05 7.34 0.92 13.84 0.75 157.67 1.54
ANDB Andover Bancorp, Inc. of MA* 7.73 7.73 1.03 13.57 8.48 1.06 13.98 1.30 77.05 1.40
ASFC Astoria Financial Corp. of NY 7.79 6.38 0.51 6.06 4.52 0.77 9.18 0.66 29.39 0.55
AVND Avondale Fin. Corp. of IL 9.93 9.93 0.63 5.82 6.98 0.45 4.16 NA NA 1.46
BFSI BFS Bankorp, Inc. of NY 7.81 7.81 1.57 20.19 11.08 1.84 23.72 1.04 90.39 1.03
BKCT Bancorp Connecticut of CT* 10.85 10.85 1.17 10.76 7.73 1.16 10.64 1.45 84.76 1.98
BPLS Bank Plus Corp. of CA 4.75 4.74 -2.04 -38.41 NM -1.69 -31.88 3.35 56.47 2.24
BWFC Bank West Fin. Corp. of MI 19.44 19.44 0.87 4.38 5.30 0.40 1.99 0.03 386.05 0.17
BANC BankAtlantic Bancorp of FL 7.17 6.65 1.09 15.70 10.15 0.77 11.06 0.76 118.19 1.52
BKUNA BankUnited SA of FL 5.66 5.34 1.14 25.57 16.13 0.83 18.56 0.79 33.85 0.34
BKCO Bankers Corp. of NJ* 8.05 7.90 1.05 11.58 9.10 1.20 13.18 1.20 25.55 0.43
BVFS Bay View Capital Corp. of CA 5.65 5.33 -0.08 -1.25 -0.96 0.46 6.98 NA NA 1.49
BFSB Bedford Bancshares of VA 15.22 15.22 1.29 7.96 7.27 1.29 7.96 0.85 61.70 0.61
BSBC Branford SB of CT* 9.13 9.13 0.97 11.21 7.43 0.97 11.21 2.19 96.45 2.95
BRFC Bridgeville SB, FSB of PA(8) 28.94 28.94 0.98 3.41 3.15 1.25 4.33 0.21 128.21 0.74
BYFC Broadway Fin. Corp. of CA 11.66 11.66 0.28 3.67 3.89 0.32 4.09 2.42 33.23 0.97
CBCO CB Bancorp of Michigan City IN 9.88 9.88 1.39 14.63 8.98 1.38 14.50 NA NA 2.02
CBES CBES Bancorp of MO 16.87 16.87 0.78 4.64 5.66 0.60 3.53 0.17 139.51 0.29
CCFH CCF Holding Company of GA 21.19 21.19 0.96 5.14 4.69 0.92 4.92 0.92 59.37 0.89
CENF CENFED Financial Corp. of CA 5.04 5.03 0.51 10.37 7.71 0.64 12.98 1.34 49.80 0.94
CFSB CFSB Bancorp of Lansing MI 7.74 7.74 0.70 8.57 6.14 0.98 12.09 0.20 271.42 0.64
CKFB CKF Bancorp of Danville KY 25.22 25.22 1.28 4.72 4.00 1.28 4.72 1.47 13.42 0.22
CNSB CNS Bancorp of MO 24.40 24.40 0.36 2.18 1.43 0.63 3.82 0.33 111.42 0.62
CSBF CSB Financial Group Inc of IL 30.89 30.89 0.82 4.53 3.18 0.82 4.53 0.70 37.37 0.47
CFHC California Fin. Hld. Co. of CA 6.46 6.44 0.37 5.50 4.26 0.62 9.40 1.21 45.60 0.76
CBCI Calumet Bancorp of Chicago IL 16.15 16.15 0.98 5.93 6.79 1.28 7.76 1.29 86.03 1.45
CAFI Camco Fin. Corp. of OH 7.58 7.58 0.78 9.70 8.00 0.88 11.02 NA NA 0.34
CMRN Cameron Fin. Corp. of MO 26.35 26.35 1.60 5.81 6.36 1.56 5.69 0.96 74.48 0.85
CAPS Capital Savings Bancorp of MO 8.44 8.44 0.63 6.34 5.52 0.93 9.42 0.20 141.28 0.38
CARV Carver FSB of New York, NY 9.62 9.18 0.20 2.12 4.20 0.18 1.92 0.72 36.31 1.11
CASB Cascade SB of Everett WA 6.05 6.05 0.49 7.79 5.13 0.49 7.79 0.51 168.34 1.19
CATB Catskill Fin. Corp. of NY* 29.04 29.04 1.18 6.57 4.46 1.18 6.57 0.61 106.20 1.47
CNIT Cenit Bancorp of Norfolk VA 7.28 7.02 0.50 6.96 4.82 0.55 7.76 0.82 71.39 1.03
CTBK Center Banks, Inc. of NY* 6.56 6.56 0.64 9.21 9.70 0.61 8.77 1.59 54.86 1.03
CEBK Central Co-Op. Bank of MA* 10.00 8.72 0.38 3.98 3.79 0.41 4.24 1.79 51.21 1.27
CJFC Central Jersey Fin. Corp of NJ(8) 11.93 11.14 1.11 9.81 5.21 1.08 9.56 1.68 38.04 1.37
CBSB Charter Financial Inc. of IL 17.39 16.16 1.17 6.86 5.80 1.15 6.77 0.52 130.13 0.94
COFI Charter One Financial of OH 6.59 6.08 0.21 3.26 1.30 1.28 19.42 0.37 129.94 0.84
CVAL Chester Valley Bancorp of PA 8.84 8.84 0.60 6.54 5.13 0.90 9.81 0.76 127.23 1.14
CTZN CitFed Bancorp of Dayton OH 6.37 5.58 0.46 6.83 4.29 0.71 10.47 0.91 71.24 1.12
CLAS Classic Bancshares of KY 28.36 28.36 0.73 3.24 3.08 0.63 2.79 0.64 65.76 0.61
CMSB Cmnwealth Bancorp of PA 11.10 8.46 0.70 7.29 4.59 0.61 6.35 0.40 122.42 0.95
CBSA Coastal Bancorp of Houston TX 3.17 2.61 0.24 7.11 6.11 0.40 12.02 0.59 39.07 0.54
CFCP Coastal Fin. Corp. of SC 6.10 6.10 1.04 17.09 6.14 0.91 14.97 0.15 598.96 1.06
COFD Collective Bancorp Inc. of NJ 6.93 6.49 0.89 12.89 6.64 1.11 15.94 0.43 55.96 0.47
CMSV Commty. Svgs, MHC of FL(47.6) 11.99 11.99 0.89 7.13 6.26 0.90 7.27 0.53 68.77 0.63
CBIN Community Bank Shares of IN 11.05 11.05 0.87 7.46 7.76 0.85 7.31 0.12 218.57 0.48
CBNH Community Bankshares Inc of NH* 7.16 7.16 0.86 11.90 8.88 0.70 9.69 0.38 178.91 1.02
CFTP Community Fed. Bancorp of MS 32.99 32.99 1.32 5.80 3.14 1.30 5.68 0.46 62.11 0.50
CFFC Community Fin. Corp. of VA 14.04 14.04 1.31 9.71 7.53 1.31 9.71 0.49 125.93 0.69
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ATSB AmTrust Capital Corp. of IN 15.87 73.21 7.34 73.21 NM 0.00 0.00 0.00
AHCI Ambanc Holding Co. of NY* NM 76.09 12.40 76.09 NM 0.00 0.00 0.00
ASBI Ameriana Bancorp of IN 21.13 113.04 12.30 113.21 14.15 0.56 3.73 NM
AFFFZ America First Fin. Fund of CA 16.80 113.78 7.84 116.15 9.95 1.60 5.51 NM
AMFB American Federal Bank of SC 11.91 191.74 14.88 207.85 10.87 0.40 2.13 25.32
ANBK American Nat'l Bancorp of MD NM 94.00 9.63 94.00 23.50 0.12 1.02 29.27
ABCW Anchor Bancorp Wisconsin of WI 13.62 146.57 8.56 150.60 9.89 0.50 1.43 19.46
ANDB Andover Bancorp, Inc. of MA* 11.80 150.55 11.63 150.55 11.45 0.60 2.20 25.97
ASFC Astoria Financial Corp. of NY 22.12 135.33 10.55 165.21 14.60 0.44 1.24 27.33
AVND Avondale Fin. Corp. of IL 14.33 89.53 8.89 89.53 20.03 0.00 0.00 0.00
BFSI BFS Bankorp, Inc. of NY 9.03 166.07 12.96 166.07 7.68 0.00 0.00 0.00
BKCT Bancorp Connecticut of CT* 12.93 137.36 14.90 137.36 13.08 0.80 3.56 45.98
BPLS Bank Plus Corp. of CA NM 134.18 6.38 134.49 NM 0.00 0.00 NM
BWFC Bank West Fin. Corp. of MI 18.85 85.07 16.53 85.07 NM 0.28 2.70 50.91
BANC BankAtlantic Bancorp of FL 9.85 135.14 9.69 145.58 13.98 0.15 1.15 11.36
BKUNA BankUnited SA of FL 6.20 105.28 5.96 111.45 8.54 0.00 0.00 0.00
BKCO Bankers Corp. of NJ* 10.99 126.20 10.16 128.58 9.66 0.64 3.35 36.78
BVFS Bay View Capital Corp. of CA NM 139.70 7.89 148.02 18.69 0.60 1.47 NM
BFSB Bedford Bancshares of VA 13.76 111.22 16.92 111.22 13.76 0.44 2.48 34.11
BSBC Branford SB of CT* 13.46 142.86 13.05 142.86 13.46 0.08 2.29 30.77
BRFC Bridgeville SB, FSB of PA(8) NM 108.00 31.26 108.00 25.00 0.32 2.10 66.67
BYFC Broadway Fin. Corp. of CA NM 61.60 7.18 61.60 23.08 0.20 2.22 57.14
CBCO CB Bancorp of Michigan City IN 11.14 153.34 15.14 153.34 11.23 1.30 5.10 56.77
CBES CBES Bancorp of MO 17.67 81.99 13.83 81.99 23.25 0.00 0.00 0.00
CCFH CCF Holding Company of GA 21.32 97.58 20.67 97.58 22.31 0.40 2.76 58.82
CENF CENFED Financial Corp. of CA 12.97 129.98 6.55 130.22 10.35 0.36 1.30 16.82
CFSB CFSB Bancorp of Lansing MI 16.29 140.17 10.85 140.17 11.55 0.48 2.63 42.86
CKFB CKF Bancorp of Danville KY 25.00 123.05 31.03 123.05 25.00 0.44 2.23 55.70
CNSB CNS Bancorp of MO NM 95.89 23.40 95.89 NM 0.00 0.00 0.00
CSBF CSB Financial Group Inc of IL NM 81.79 25.26 81.79 NM 0.00 0.00 0.00
CFHC California Fin. Hld. Co. of CA 23.50 128.28 8.28 128.70 13.74 0.44 1.87 44.00
CBCI Calumet Bancorp of Chicago IL 14.73 91.10 14.71 91.10 11.25 0.00 0.00 0.00
CAFI Camco Fin. Corp. of OH 12.50 119.48 9.06 119.48 11.00 0.46 2.79 34.85
CMRN Cameron Fin. Corp. of MO 15.72 93.79 24.72 93.79 16.05 0.28 1.84 28.87
CAPS Capital Savings Bancorp of MO 18.12 120.13 10.14 120.13 12.20 0.48 1.92 34.78
CARV Carver FSB of New York, NY 23.81 50.56 4.87 53.03 NM 0.00 0.00 0.00
CASB Cascade SB of Everett WA 19.48 149.40 9.04 149.40 19.48 0.00 0.00 0.00
CATB Catskill Fin. Corp. of NY* 22.41 89.72 26.05 89.72 22.41 0.00 0.00 0.00
CNIT Cenit Bancorp of Norfolk VA 20.74 135.59 9.87 140.60 18.60 1.00 2.52 52.36
CTBK Center Banks, Inc. of NY* 10.30 90.88 5.96 90.88 10.82 0.40 2.62 27.03
CEBK Central Co-Op. Bank of MA* NM 103.48 10.35 118.62 24.80 0.32 1.95 51.61
CJFC Central Jersey Fin. Corp of NJ(8) 19.20 177.47 21.18 190.05 19.71 1.26 3.38 64.95
CBSB Charter Financial Inc. of IL 17.23 97.40 16.93 104.77 17.47 0.24 1.88 32.43
COFI Charter One Financial of OH NM 220.74 14.54 239.02 12.87 0.92 2.14 NM
CVAL Chester Valley Bancorp of PA 19.50 126.95 11.22 126.95 13.00 0.42 2.15 42.00
CTZN CitFed Bancorp of Dayton OH 23.31 157.73 10.05 180.10 15.22 0.48 0.99 23.19
CLAS Classic Bancshares of KY NM 79.25 22.48 79.25 NM 0.24 2.05 66.67
CMSB Cmnwealth Bancorp of PA 21.77 106.55 11.83 139.90 25.00 0.24 1.78 38.71
CBSA Coastal Bancorp of Houston TX 16.38 118.40 3.75 143.75 9.70 0.40 1.85 30.30
CFCP Coastal Fin. Corp. of SC 16.28 NM 15.94 NM 18.58 0.44 2.10 34.11
COFD Collective Bancorp Inc. of NJ 15.07 188.86 13.09 201.73 12.18 1.00 2.96 44.64
CMSV Commty. Svgs, MHC of FL(47.6) 15.97 112.09 13.44 112.09 15.68 0.80 4.64 74.07
CBIN Community Bank Shares of IN 12.89 94.23 10.42 94.23 13.17 0.34 2.78 35.79
CBNH Community Bankshares Inc of NH* 11.26 119.72 8.57 119.72 13.84 0.64 3.30 37.21
CFTP Community Fed. Bancorp of MS NM 113.08 37.30 113.08 NM 0.30 1.85 58.82
CFFC Community Fin. Corp. of VA 13.27 122.65 17.22 122.65 13.27 0.52 2.42 32.10
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
CIBI Community Inv. Bancorp of OH 12.52 12.52 1.02 7.34 8.06 0.98 7.01 0.78 64.02 0.69
COOP Cooperative Bk.for Svgs. of NC 7.70 7.70 -1.14 -12.66 -12.68 -0.08 -0.84 0.42 56.37 0.31
CNSK Covenant Bank for Svgs. of NJ* 4.82 4.82 0.75 14.22 9.38 0.63 11.89 2.02 37.45 1.35
CRZY Crazy Woman Creek Bncorp of WY 30.03 30.03 0.80 3.09 2.89 1.04 3.99 0.12 452.46 1.06
DNFC D&N Financial Corp. of MI 5.55 5.47 0.71 12.74 7.90 0.93 16.60 0.66 112.57 0.94
DSBC DS Bancor Inc. of Derby CT(8)* 6.87 6.67 0.74 11.24 7.39 0.69 10.46 2.02 28.99 0.83
DFIN Damen Fin. Corp. of Chicago IL 23.15 23.15 0.91 4.83 4.08 0.89 4.73 0.20 69.57 0.36
DIME Dime Community Bancorp of NY 17.55 15.26 0.52 3.13 3.26 0.65 3.94 1.03 68.42 1.41
DIBK Dime Financial Corp. of CT* 8.58 8.23 1.76 21.77 12.47 1.89 23.48 1.01 197.32 3.33
EGLB Eagle BancGroup of IL 13.33 13.33 -0.44 -5.05 -3.92 -0.08 -0.97 1.76 31.80 0.87
EBSI Eagle Bancshares of Tucker GA 9.21 9.21 0.93 11.79 7.30 0.93 11.69 1.45 41.45 0.86
EGFC Eagle Financial Corp. of CT 7.30 5.33 1.28 17.47 13.94 0.62 8.52 1.17 54.16 1.11
ETFS East Texas Fin. Serv. of TX 18.92 18.92 0.81 4.18 5.53 0.74 3.82 0.23 106.64 0.62
EBCP Eastern Bancorp of NH(8) 7.72 7.29 0.71 9.62 7.37 0.54 7.33 1.51 23.99 0.64
ESBK Elmira SB of Elmira NY* 6.38 6.10 0.18 2.90 3.80 0.17 2.70 0.92 73.59 0.89
EIRE Emerald Island Bancorp, MA* 6.83 6.83 0.59 8.77 6.75 0.63 9.43 0.23 281.89 1.04
EFBI Enterprise Fed. Bancorp of OH 14.77 14.75 0.92 5.37 6.21 0.63 3.70 0.04 510.67 0.27
EQSB Equitable FSB of Wheaton MD 5.30 5.30 0.78 14.99 12.00 0.78 14.90 1.00 21.61 0.31
FFFG F.F.O. Financial Group of FL 6.04 6.04 0.20 3.17 2.55 0.62 9.95 2.94 55.67 2.35
FCBF FCB Fin. Corp. of Neenah WI 18.45 18.45 1.03 5.30 5.40 1.01 5.20 0.11 408.42 0.52
FFBS FFBS Bancorp of Columbus MS 19.59 19.59 1.08 5.51 3.86 1.40 7.13 0.63 83.16 0.77
FFDF FFD Financial Corp. of OH 25.07 25.07 0.68 3.69 2.52 0.95 5.10 0.15 116.80 0.29
FFLC FFLC Bancorp of Leesburg FL 16.22 16.22 0.63 3.72 4.10 0.84 4.95 0.23 133.73 0.48
FFFC FFVA Financial Corp. of VA 14.86 14.55 1.03 6.31 5.30 1.31 7.97 0.44 143.89 1.04
FFWC FFW Corporation of Wabash IN 10.01 10.01 0.90 8.36 9.00 1.08 10.09 0.10 312.66 0.48
FFYF FFY Financial Corp. of OH 16.97 16.97 0.82 4.56 3.74 1.26 7.01 0.84 69.96 0.78
FMCO FMS Financial Corp. of NJ 6.53 6.38 0.52 7.93 6.39 0.87 13.26 NA NA 0.91
FFHH FSF Financial Corp. of MN 13.44 13.44 0.51 3.25 3.43 0.71 4.54 0.06 354.34 0.36
FMLY Family Bancorp of Haverhill MA(8)* 7.95 7.35 0.86 11.09 5.72 0.90 11.59 0.68 112.19 1.48
FOBC Fed One Bancorp of Wheeling WV 11.67 11.08 0.70 5.75 6.18 1.00 8.17 0.27 151.30 1.07
FFRV Fid. Fin. Bkshrs. Corp. of VA(8) 8.43 8.42 0.66 7.78 4.00 0.94 11.07 1.14 84.83 1.16
FBCI Fidelity Bancorp of Chicago IL 10.90 10.86 0.73 5.74 5.97 0.73 5.74 0.61 17.59 0.15
FSBI Fidelity Bancorp, Inc. of PA 6.79 6.76 0.65 8.71 7.47 0.64 8.58 0.43 108.80 1.01
FFFL Fidelity FSB, MHC of FL(47.2) 9.86 9.76 0.67 6.58 4.73 0.63 6.16 0.34 81.03 0.36
FFED Fidelity Fed. Bancorp of IN 4.79 4.79 0.31 6.17 3.24 0.40 7.99 0.17 415.56 0.83
FFOH Fidelity Financial of OH 19.85 19.85 0.60 3.45 3.24 0.91 5.18 0.42 77.55 0.43
FIBC Financial Bancorp of NY 9.67 9.61 0.46 4.29 4.49 0.85 7.98 3.44 17.16 1.11
FBSI First Bancshares of MO 16.52 16.49 0.84 4.82 5.97 0.83 4.77 0.57 63.49 0.44
FBBC First Bell Bancorp of PA 18.43 18.43 1.41 6.72 6.33 1.63 7.74 0.10 114.26 0.13
FBER First Bergen Bancorp of NJ 17.05 17.05 0.36 3.28 2.30 0.48 4.37 3.36 43.40 3.23
FCIT First Cit. Fin. Corp of MD 5.92 5.92 0.46 7.45 5.42 0.66 10.62 2.58 41.67 1.50
FFBA First Colorado Bancorp of Co 16.33 16.12 1.09 8.24 5.19 1.09 8.24 0.22 102.47 0.32
FDEF First Defiance Fin.Corp. of OH 23.01 23.01 0.93 3.75 4.26 1.21 4.90 0.23 168.53 0.49
FESX First Essex Bancorp of MA* 7.44 7.44 0.97 13.15 10.11 0.84 11.29 0.55 140.92 1.18
FFES First FS&LA of E. Hartford CT 6.12 6.10 0.44 6.92 6.62 0.67 10.51 0.65 42.48 1.53
FSSB First FS&LA of San Bern. CA 4.62 4.39 -1.10 -20.21 NM -1.28 -23.47 3.31 32.04 1.57
FFSX First FS&LA. MHC of IA (45.0) 7.97 7.90 0.40 4.87 3.55 0.69 8.44 0.13 288.03 0.54
FFML First Family Bank, FSB of FL(8) 5.61 5.61 0.89 17.02 11.95 0.47 9.01 NA NA 0.62
FFSW First Fed Fin. Serv. of OH 5.70 4.62 1.10 20.04 7.87 0.76 13.82 0.16 155.53 0.35
BDJI First Fed. Bancorp. of MN 11.49 11.49 0.31 2.22 2.73 0.68 4.94 0.38 112.10 0.88
FFBH First Fed. Bancshares of AR 16.35 16.35 0.63 5.48 3.63 0.95 8.32 0.15 159.31 0.31
FFEC First Fed. Bancshares of WI(8) 13.42 12.91 0.69 4.76 3.70 0.91 6.25 0.03 398.60 0.16
FTFC First Fed. Capital Corp. of WI 6.86 6.47 0.95 13.99 8.59 0.71 10.36 0.11 523.40 0.83
FFKY First Fed. Fin. Corp. of KY 13.80 12.90 1.24 8.81 5.22 1.41 10.01 0.54 92.15 0.57
FFBZ First Federal Bancorp of OH 7.89 7.88 1.13 14.90 8.55 1.12 14.66 0.56 155.47 0.98
FFWM First Fin. Corp of Western MD 11.69 11.69 0.86 7.04 4.74 1.19 9.77 1.75 129.77 2.82
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
CIBI Community Inv. Bancorp of OH 12.41 95.65 11.97 95.65 12.99 0.40 2.42 30.08
COOP Cooperative Bk.for Svgs. of NC NM 112.49 8.66 112.49 NM 0.00 0.00 NM
CNSK Covenant Bank for Svgs. of NJ* 10.66 149.08 7.18 149.08 12.75 0.00 0.00 0.00
CRZY Crazy Woman Creek Bncorp of WY NM 80.37 24.13 80.37 NM 0.40 3.40 NM
DNFC D&N Financial Corp. of MI 12.66 146.21 8.11 148.23 9.72 0.00 0.00 0.00
DSBC DS Bancor Inc. of Derby CT(8)* 13.52 144.58 9.93 148.81 14.52 0.24 0.58 7.87
DFIN Damen Fin. Corp. of Chicago IL 24.51 90.25 20.90 90.25 25.00 0.24 1.92 47.06
DIME Dime Community Bancorp of NY NM 95.47 16.76 109.80 24.34 0.00 0.00 0.00
DIBK Dime Financial Corp. of CT* 8.02 158.64 13.62 165.50 7.44 0.32 1.74 13.97
EGLB Eagle BancGroup of IL NM 79.10 10.54 79.10 NM 0.00 0.00 NM
EBSI Eagle Bancshares of Tucker GA 13.70 125.30 11.54 125.30 13.82 0.60 3.81 52.17
EGFC Eagle Financial Corp. of CT 7.17 118.05 8.62 161.63 14.70 0.92 3.44 24.66
ETFS East Texas Fin. Serv. of TX 18.07 77.96 14.75 77.96 19.74 0.20 1.33 24.10
EBCP Eastern Bancorp of NH(8) 13.57 125.21 9.67 132.68 17.80 0.00 0.00 0.00
ESBK Elmira SB of Elmira NY* NM 76.52 4.88 80.01 NM 0.64 4.20 NM
EIRE Emerald Island Bancorp, MA* 14.81 116.07 7.93 116.07 13.77 0.28 1.59 23.53
EFBI Enterprise Fed. Bancorp of OH 16.11 95.21 14.06 95.33 23.39 0.00 0.00 0.00
EQSB Equitable FSB of Wheaton MD 8.33 116.33 6.16 116.33 8.38 0.00 0.00 0.00
FFFG F.F.O. Financial Group of FL NM 123.32 7.45 123.32 12.50 0.00 0.00 0.00
FCBF FCB Fin. Corp. of Neenah WI 18.51 100.36 18.52 100.36 18.87 0.72 3.74 69.23
FFBS FFBS Bancorp of Columbus MS NM 140.22 27.47 140.22 20.00 0.50 2.27 58.82
FFDF FFD Financial Corp. of OH NM 91.71 22.99 91.71 NM 0.20 1.48 58.82
FFLC FFLC Bancorp of Leesburg FL 24.39 92.68 15.03 92.68 18.35 0.40 2.00 48.78
FFFC FFVA Financial Corp. of VA 18.87 127.55 18.95 130.29 14.93 0.40 2.00 37.74
FFWC FFW Corporation of Wabash IN 11.11 95.28 9.54 95.28 9.21 0.60 2.86 31.75
FFYF FFY Financial Corp. of OH NM 124.47 21.12 124.47 17.39 0.70 2.81 NM
FMCO FMS Financial Corp. of NJ 15.65 122.17 7.97 125.00 9.36 0.20 1.19 18.69
FFHH FSF Financial Corp. of MN NM 102.19 13.73 102.19 20.90 0.50 3.57 NM
FMLY Family Bancorp of Haverhill MA(8)* 17.48 183.92 14.61 198.85 16.73 0.48 1.54 26.97
FOBC Fed One Bancorp of Wheeling WV 16.18 96.12 11.22 101.25 11.39 0.58 3.77 61.05
FFRV Fid. Fin. Bkshrs. Corp. of VA(8) 25.00 190.56 16.06 190.71 17.56 0.20 0.87 21.74
FBCI Fidelity Bancorp of Chicago IL 16.75 101.53 11.07 101.89 16.75 0.24 1.39 23.30
FSBI Fidelity Bancorp, Inc. of PA 13.39 119.20 8.10 119.81 13.59 0.32 1.71 22.86
FFFL Fidelity FSB, MHC of FL(47.2) 21.15 137.61 13.57 139.12 22.60 0.80 4.85 NM
FFED Fidelity Fed. Bancorp of IN NM 208.75 10.00 208.75 23.86 0.80 7.62 NM
FFOH Fidelity Financial of OH NM 89.25 17.72 89.25 20.59 0.20 1.80 55.56
FIBC Financial Bancorp of NY 22.27 98.96 9.57 99.51 11.97 0.30 2.11 46.88
FBSI First Bancshares of MO 16.76 81.55 13.47 81.68 16.94 0.20 1.31 21.98
FBBC First Bell Bancorp of PA 15.79 114.00 21.02 114.00 13.71 0.40 2.56 40.40
FBER First Bergen Bancorp of NJ NM 86.78 14.79 86.78 NM 0.12 1.02 44.44
FCIT First Cit. Fin. Corp of MD 18.43 135.09 7.99 135.09 12.94 0.00 0.00 0.00
FFBA First Colorado Bancorp of Co 19.28 124.22 20.28 125.79 19.28 0.32 2.00 38.55
FDEF First Defiance Fin.Corp. of OH 23.47 94.49 21.74 94.49 17.97 0.28 2.43 57.14
FESX First Essex Bancorp of MA* 9.89 124.18 9.24 124.18 11.52 0.48 3.62 35.82
FFES First FS&LA of E. Hartford CT 15.10 105.44 6.45 105.68 9.94 0.60 2.58 38.96
FSSB First FS&LA of San Bern. CA NM 65.79 3.04 69.24 NM 0.00 0.00 NM
FFSX First FS&LA. MHC of IA (45.0) NM 136.67 10.89 137.95 16.26 0.72 2.72 NM
FFML First Family Bank, FSB of FL(8) 8.37 131.26 7.37 131.26 15.81 0.00 0.00 0.00
FFSW First Fed Fin. Serv. of OH 12.71 226.17 12.88 NM 18.44 0.48 1.29 16.38
BDJI First Fed. Bancorp. of MN NM 93.86 10.78 93.86 16.50 0.00 0.00 0.00
FFBH First Fed. Bancshares of AR NM 98.95 16.18 98.95 18.18 0.00 0.00 0.00
FFEC First Fed. Bancshares of WI(8) NM 126.98 17.04 131.97 20.59 0.28 1.55 41.79
FTFC First Fed. Capital Corp. of WI 11.64 155.33 10.65 164.70 15.73 0.64 2.69 31.37
FFKY First Fed. Fin. Corp. of KY 19.17 168.09 23.20 179.87 16.88 0.48 2.43 46.60
FFBZ First Federal Bancorp of OH 11.70 163.77 12.92 163.96 11.89 0.44 1.50 17.60
FFWM First Fin. Corp of Western MD 21.08 148.61 17.37 148.61 15.19 0.48 1.70 35.82
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FFCH First Fin. Holdings Inc. of SC 6.39 6.39 0.78 11.84 7.82 0.79 11.98 1.32 54.66 0.88
FFBI First Financial Bancorp of IL 8.33 8.33 0.67 6.85 7.55 0.58 5.97 0.31 128.57 0.53
FFHC First Financial Corp. of WI 7.17 6.92 0.90 12.68 5.82 1.27 17.80 0.29 147.30 0.67
FFHS First Franklin Corp. of OH 9.05 8.97 0.28 2.99 3.01 0.62 6.61 0.52 81.80 0.62
FGHC First Georgia Hold. Corp of GA 8.31 7.39 0.87 10.71 9.60 0.87 10.71 1.34 51.51 0.82
FSPG First Home SB, SLA of NJ 6.46 6.31 0.91 14.05 11.00 1.11 17.07 0.78 98.58 1.42
FFSL First Independence Corp. of KS 12.34 12.34 1.10 8.52 9.53 1.10 8.52 NA NA 1.01
FISB First Indiana Corp. of IN 9.10 8.97 0.90 10.21 6.55 1.03 11.72 1.76 63.33 1.34
FKFS First Keystone Fin. Corp of PA 7.89 7.89 0.54 6.39 6.08 0.59 6.94 2.53 20.51 0.89
FLKY First Lancaster Bncshrs of KY 32.94 32.94 0.80 1.89 1.90 0.80 1.89 0.83 31.75 0.31
FLFC First Liberty Fin. Corp. of GA 6.90 5.84 1.03 15.28 8.51 0.83 12.23 1.22 66.75 1.09
CASH First Midwest Fin. Corp. of IA 11.41 10.66 1.05 8.17 7.41 1.03 8.07 0.20 268.44 0.81
FMBD First Mutual Bancorp of IL 19.93 19.93 0.47 1.94 2.50 0.72 2.99 0.14 275.66 0.46
FMSB First Mutual SB of Bellevue WA* 6.62 6.62 1.03 15.46 8.75 0.99 14.84 NA NA 1.07
FNGB First Northern Cap. Corp of WI 11.41 11.41 0.53 4.29 3.78 0.82 6.62 0.12 385.97 0.51
FFPB First Palm Beach Bancorp of FL 7.90 7.70 0.73 8.85 7.56 0.69 8.38 0.64 37.19 0.31
FSNJ First SB of NJ, MHC (45.0) 7.53 7.53 0.19 2.28 2.27 0.43 5.10 0.96 48.20 1.28
FSLA First SB, SLA MHC of NJ (37.6) 9.26 8.11 0.47 4.99 3.78 0.85 9.04 0.75 70.10 1.01
SOPN First SB, SSB, Moore Co. of NC 25.46 25.46 1.26 4.87 4.83 1.57 6.05 0.10 224.72 0.33
FWWB First Savings Bancorp of WA* 20.75 20.75 1.11 6.80 3.50 1.05 6.46 0.21 271.52 0.99
SHEN First Shenango Bancorp of PA 12.00 12.00 0.75 5.69 5.35 1.02 7.72 0.50 140.23 1.04
FSFC First So.east Fin. Corp. of SC 10.06 10.06 -0.04 -0.24 -0.29 0.85 5.30 0.07 577.21 0.50
FSFI First State Fin. Serv. of NJ(8) 6.00 5.67 0.01 0.19 0.14 -0.12 -1.79 4.24 32.21 1.67
FFDP FirstFed Bancshares of IL 8.57 8.16 0.24 2.62 2.63 0.29 3.21 0.14 167.24 0.37
FLAG Flag Financial Corp of GA 9.55 9.55 0.87 9.26 8.52 0.74 7.84 3.56 23.68 1.22
FFPC Florida First Bancorp of FL(8) 6.99 6.99 0.58 8.57 4.68 0.86 12.69 0.78 149.31 2.01
FFIC Flushing Fin. Corp. of NY* 17.52 17.52 0.84 5.00 4.09 0.79 4.73 NA NA 1.46
FBHC Fort Bend Holding Corp. of TX 7.07 7.07 0.70 9.62 9.47 0.62 8.50 NA NA NA
FTSB Fort Thomas Fin. Corp. of KY 24.35 24.35 1.33 5.37 5.29 1.33 5.37 1.27 28.12 0.42
FKKY Frankfort First Bancorp of KY 26.30 26.30 0.81 2.52 2.78 1.09 3.39 0.16 48.04 0.09
FTNB Fulton Bancorp of MO 22.80 22.80 1.10 4.81 4.54 1.06 4.67 0.92 99.36 1.02
GFSB GFS Bancorp of Grinnell IA 11.56 11.56 0.91 7.59 7.26 1.20 10.02 NA NA NA
GUPB GFSB Bancorp of Gallup NM 20.97 20.97 1.25 5.01 5.87 1.25 5.01 0.21 204.64 0.79
GWBC Gateway Bancorp of KY 25.07 25.07 0.83 3.26 3.86 1.14 4.47 0.45 25.80 0.44
GBCI Glacier Bancorp of MT 9.45 9.44 1.37 14.32 6.64 1.54 16.10 0.29 173.40 0.70
GLBK Glendale Co-op. Bank of MA* 15.85 15.85 0.79 4.97 5.80 0.66 4.16 0.30 96.33 0.70
GFCO Glenway Financial Corp. of OH 9.61 9.40 0.57 5.93 6.85 0.57 6.01 0.40 54.93 0.28
GTPS Great American Bancorp of IL 27.55 27.55 0.68 2.55 2.87 0.66 2.49 0.19 115.42 0.30
GTFN Great Financial Corp. of KY 9.66 9.26 0.70 6.47 4.34 0.71 6.57 3.23 14.46 0.65
GSBC Great Southern Bancorp of MO 10.14 9.98 1.73 17.20 7.48 1.61 15.99 2.36 91.04 2.56
GDVS Greater DV SB,MHC of PA(19.9)* 11.69 11.69 -0.21 -1.72 -1.46 0.10 0.80 2.91 45.73 2.22
GRTR Greater New York SB of NY* 5.86 5.86 0.73 13.04 11.67 0.43 7.73 8.83 9.73 2.09
GSFC Green Street Fin. Corp. of NC 35.06 35.06 1.25 6.90 3.19 1.25 6.90 0.20 66.01 0.19
GROV GroveBank for Savings of MA(8)* 6.50 6.49 0.90 14.23 6.90 0.84 13.34 0.58 100.00 0.77
GFED Guaranty FS&LA,MHC of MO(31.1) 14.36 14.36 0.97 6.60 5.04 0.52 3.54 0.21 533.67 1.54
GSLC Guaranty Svgs & Loan FA of VA 6.19 6.19 0.68 11.24 8.48 0.42 6.90 1.39 51.54 0.93
HEMT HF Bancorp of Hemet CA 11.43 11.43 0.19 1.70 1.87 0.19 1.70 NA NA NA
HFFC HF Financial Corp. of SD 8.99 8.96 0.60 6.62 6.58 0.75 8.29 0.59 127.45 0.96
HFNC HFNC Financial Corp. of NC 29.31 29.31 1.02 3.72 2.56 1.28 4.68 1.15 80.19 1.39
HMNF HMN Financial, Inc. of MN 15.72 15.72 1.10 6.50 6.77 0.96 5.64 0.09 447.23 0.70
HALL Hallmark Capital Corp. of WI 7.01 7.01 0.41 5.32 5.60 0.56 7.17 0.05 715.63 0.56
HARB Harbor FSB, MHC of FL (45.7) 8.02 7.68 0.90 10.52 5.65 1.21 14.19 0.50 208.24 1.41
HRBF Harbor Federal Bancorp of MD 13.82 13.82 0.56 3.23 3.55 0.56 3.23 0.42 51.96 0.35
HFSA Hardin Bancorp of Hardin MO 16.78 16.78 0.44 2.40 3.02 0.78 4.28 0.19 90.18 0.29
HARL Harleysville SA of PA 6.22 6.22 0.54 8.12 6.50 0.88 13.09 0.09 602.74 0.75
HARS Harris SB, MHC of PA (23.1) 9.69 8.14 0.46 3.98 3.16 0.63 5.41 0.82 57.89 0.78
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FFCH First Fin. Holdings Inc. of SC 12.79 145.81 9.32 145.81 12.64 0.72 3.24 41.38
FFBI First Financial Bancorp of IL 13.25 91.77 7.64 91.77 15.20 0.00 0.00 0.00
FFHC First Financial Corp. of WI 17.17 212.53 15.24 220.08 12.23 0.60 2.11 36.14
FFHS First Franklin Corp. of OH NM 101.05 9.15 101.95 15.00 0.32 1.86 61.54
FGHC First Georgia Hold. Corp of GA 10.42 105.75 8.78 118.82 10.42 0.00 0.00 0.00
FSPG First Home SB, SLA of NJ 9.09 122.58 7.92 125.41 7.48 0.48 2.53 22.97
FFSL First Independence Corp. of KS 10.49 90.48 11.16 90.48 10.49 0.40 1.98 20.73
FISB First Indiana Corp. of IN 15.28 151.84 13.82 154.01 13.31 0.56 2.26 34.57
FKFS First Keystone Fin. Corp of PA 16.45 108.51 8.56 108.51 15.16 0.20 1.04 17.09
FLKY First Lancaster Bncshrs of KY NM 112.58 37.09 112.58 NM 0.00 0.00 0.00
FLFC First Liberty Fin. Corp. of GA 11.76 165.14 11.39 194.92 14.70 0.35 1.86 21.88
CASH First Midwest Fin. Corp. of IA 13.49 108.25 12.35 115.91 13.65 0.44 1.85 25.00
FMBD First Mutual Bancorp of IL NM 85.37 17.02 85.37 NM 0.32 2.29 NM
FMSB First Mutual SB of Bellevue WA* 11.42 165.55 10.95 165.55 11.90 0.20 1.16 13.25
FNGB First Northern Cap. Corp of WI NM 116.79 13.33 116.79 17.13 0.60 3.24 NM
FFPB First Palm Beach Bancorp of FL 13.23 113.41 8.96 116.38 13.97 0.40 1.61 21.28
FSNJ First SB of NJ, MHC (45.0) NM 104.62 7.88 104.62 19.71 0.50 2.99 NM
FSLA First SB, SLA MHC of NJ (37.6) NM 131.77 12.20 150.33 14.60 0.40 2.19 57.97
SOPN First SB, SSB, Moore Co. of NC 20.69 100.56 25.60 100.56 16.67 0.68 3.78 NM
FWWB First Savings Bancorp of WA* NM 116.30 24.13 116.30 NM 0.20 1.17 33.33
SHEN First Shenango Bancorp of PA 18.69 108.03 12.97 108.03 13.79 0.48 2.18 40.68
FSFC First So.east Fin. Corp. of SC NM 135.76 13.66 135.76 15.30 0.20 1.95 NM
FSFI First State Fin. Serv. of NJ(8) NM 137.66 8.26 145.68 NM 0.22 1.57 NM
FFDP FirstFed Bancshares of IL NM 106.28 9.10 111.52 NM 0.40 2.39 NM
FLAG Flag Financial Corp of GA 11.73 107.18 10.24 107.18 13.86 0.34 2.96 34.69
FFPC Florida First Bancorp of FL(8) 21.38 181.70 12.70 181.70 14.44 0.24 2.16 46.15
FFIC Flushing Fin. Corp. of NY* 24.48 109.16 19.12 109.16 NM 0.16 0.90 21.92
FBHC Fort Bend Holding Corp. of TX 10.56 98.91 6.99 98.91 11.95 0.28 1.29 13.59
FTSB Fort Thomas Fin. Corp. of KY 18.92 101.82 24.80 101.82 18.92 0.25 1.79 33.78
FKKY Frankfort First Bancorp of KY NM 116.87 30.73 116.87 NM 0.36 3.13 NM
FTNB Fulton Bancorp of MO 22.01 105.96 24.16 105.96 22.69 0.00 0.00 0.00
GFSB GFS Bancorp of Grinnell IA 13.78 103.37 11.95 103.37 10.44 0.40 1.98 27.21
GUPB GFSB Bancorp of Gallup NM 17.04 88.39 18.54 88.39 17.04 0.40 2.80 47.62
GWBC Gateway Bancorp of KY NM 89.51 22.44 89.51 18.92 0.40 2.86 74.07
GBCI Glacier Bancorp of MT 15.06 210.14 19.86 210.32 13.40 0.64 2.64 39.75
GLBK Glendale Co-op. Bank of MA* 17.24 84.35 13.37 84.35 20.62 0.00 0.00 0.00
GFCO Glenway Financial Corp. of OH 14.60 84.46 8.11 86.32 14.39 0.68 3.40 49.64
GTPS Great American Bancorp of IL NM 81.45 22.44 81.45 NM 0.40 2.74 NM
GTFN Great Financial Corp. of KY 23.03 151.79 14.66 158.28 22.67 0.48 1.64 37.80
GSBC Great Southern Bancorp of MO 13.38 222.63 22.58 226.16 14.39 0.40 2.34 31.25
GDVS Greater DV SB,MHC of PA(19.9)* NM 123.49 14.44 123.49 NM 0.36 3.51 NM
GRTR Greater New York SB of NY* 8.57 107.82 6.32 107.82 14.46 0.20 1.67 14.29
GSFC Green Street Fin. Corp. of NC NM 105.27 36.91 105.27 NM 0.40 2.60 NM
GROV GroveBank for Savings of MA(8)* 14.50 193.85 12.59 193.93 15.47 0.72 1.47 21.36
GFED Guaranty FS&LA,MHC of MO(31.1) 19.86 130.67 18.77 130.67 NM 0.36 3.24 64.29
GSLC Guaranty Svgs & Loan FA of VA 11.79 119.05 7.36 119.05 19.19 0.10 1.21 14.29
HEMT HF Bancorp of Hemet CA NM 81.94 9.37 82.00 NM 0.00 0.00 0.00
HFFC HF Financial Corp. of SD 15.20 102.18 9.18 102.49 12.14 0.36 2.13 32.43
HFNC HFNC Financial Corp. of NC NM 124.91 36.62 124.91 NM 0.20 1.11 43.48
HMNF HMN Financial, Inc. of MN 14.77 100.79 15.85 100.79 17.02 0.00 0.00 0.00
HALL Hallmark Capital Corp. of WI 17.86 92.99 6.51 92.99 13.26 0.00 0.00 0.00
HARB Harbor FSB, MHC of FL (45.7) 17.71 180.34 14.46 188.22 13.14 1.20 3.87 68.57
HRBF Harbor Federal Bancorp of MD NM 97.85 13.52 97.85 NM 0.40 2.58 72.73
HFSA Hardin Bancorp of Hardin MO NM 83.56 14.02 83.56 18.56 0.40 3.27 NM
HARL Harleysville SA of PA 15.39 122.66 7.63 122.66 9.55 0.44 2.36 36.36
HARS Harris SB, MHC of PA (23.1) NM 125.75 12.19 149.69 23.26 0.58 3.46 NM
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HFFB Harrodsburg 1st Fin Bcrp of KY 28.14 28.14 1.17 4.61 3.06 1.17 4.61 0.58 46.70 0.39
HHFC Harvest Home Fin. Corp. of OH 17.71 17.71 0.80 4.34 6.28 0.80 4.34 0.19 75.00 0.26
HAVN Haven Bancorp of Woodhaven NY 6.00 5.97 0.57 9.09 7.30 0.86 13.74 1.01 64.99 1.38
HVFD Haverfield Corp. of OH 7.87 7.86 0.40 4.91 3.69 0.84 10.36 NA NA 0.94
HTHR Hawthorne Fin. Corp. of CA 4.54 4.52 0.62 15.77 22.71 0.01 0.27 10.26 20.17 2.39
HBNK Highland Federal Bank of CA 7.13 7.13 -0.09 -1.31 -1.07 0.22 3.12 3.30 46.96 2.00
HIFS Hingham Inst. for Sav. of MA* 9.70 9.70 1.07 10.69 8.76 1.07 10.69 0.78 88.21 0.90
HNFC Hinsdale Financial Corp. of IL 8.52 8.28 0.45 5.68 4.59 0.68 8.52 0.17 211.76 0.41
HBEI Home Bancorp of Elgin IL 26.71 26.71 0.13 0.80 0.48 0.68 4.14 0.49 50.03 0.35
HBFW Home Bancorp of Fort Wayne IN 15.50 15.50 0.84 5.00 5.20 0.84 5.00 0.04 NA 0.57
HBBI Home Building Bancorp of IN 12.92 12.92 -0.32 -2.31 -2.51 0.02 0.16 0.35 51.68 0.27
HOMF Home Fed Bancorp of Seymour IN 8.18 7.88 1.22 15.14 10.48 1.08 13.35 0.46 108.25 0.58
HWEN Home Financial Bancorp of IN 20.03 20.03 0.50 4.10 2.88 0.72 5.92 0.96 44.47 0.58
HOFL Home Financial Corp. of FL(8) 24.80 24.80 1.22 4.79 3.80 1.55 6.07 0.38 77.58 1.65
HPBC Home Port Bancorp, Inc. of MA* 10.41 10.41 1.73 15.77 9.94 1.74 15.87 0.40 307.31 1.54
HMCI Homecorp, Inc. of Rockford IL 6.00 6.00 0.10 1.59 1.59 0.33 5.44 3.64 11.70 0.53
LOAN Horizon Bancorp, Inc of TX(8)* 8.27 8.02 1.42 16.41 6.97 1.09 12.60 0.38 135.94 0.72
HZFS Horizon Fin'l. Services of IA 10.74 10.74 0.13 1.11 1.42 0.33 2.85 NA NA NA
HRZB Horizon Financial Corp. of WA* 15.94 15.94 1.52 9.43 8.53 1.48 9.18 NA NA 0.81
IBSF IBS Financial Corp. of NJ 19.91 19.91 1.04 4.97 4.34 1.06 5.04 0.07 194.63 0.57
ISBF ISB Financial Corp. of LA 17.12 16.63 1.18 6.14 6.05 1.17 6.08 NA NA 0.86
ITLA Imperial Thrift & Loan of CA* 12.52 12.52 1.08 13.91 5.67 1.08 13.91 2.62 55.05 1.74
IFSB Independence FSB of DC 6.41 5.51 0.49 7.76 13.20 0.23 3.61 NA NA 0.38
INCB Indiana Comm. Bank, SB of IN 12.66 12.66 0.54 3.67 3.38 0.54 3.67 1.23 54.52 0.81
IFSL Indiana Federal Corp. of IN(8) 8.65 8.07 0.68 7.23 4.65 0.96 10.14 NA NA 1.12
INBI Industrial Bancorp of OH 18.93 18.93 0.73 3.38 3.40 1.36 6.27 0.46 101.75 0.54
IWBK Interwest SB of Oak Harbor WA 6.48 6.32 0.77 11.23 4.53 1.11 16.23 0.54 87.60 0.82
IPSW Ipswich SB of Ipswich MA* 5.91 5.91 1.33 21.97 14.18 1.10 18.17 1.81 47.96 1.19
IROQ Iroquois Bancorp of Auburn NY* 5.99 5.36 0.65 10.75 7.70 0.88 14.59 0.92 72.68 0.91
JSBF JSB Financial, Inc. of NY 21.80 21.80 1.63 7.43 6.86 1.63 7.43 1.30 25.17 0.60
JXVL Jacksonville Bancorp of TX 16.36 16.36 0.94 7.25 5.43 0.94 7.25 0.82 55.80 0.64
JXSB Jcksnville SB,MHC of IL(43.3%) 11.52 11.49 0.19 1.60 1.75 0.47 3.96 0.37 131.69 0.59
JSBA Jefferson Svgs Bancorp of MO 7.31 6.01 0.63 9.06 7.61 0.57 8.22 NA NA 0.67
JOAC Joachim Bancorp of MO 29.55 29.55 0.41 1.53 1.27 0.71 2.66 0.33 63.87 0.32
KSAV KS Bancorp of Kenly NC 14.37 14.36 0.82 5.34 5.38 1.15 7.47 0.55 55.53 0.37
KSBK KSB Bancorp of Kingfield ME* 6.82 6.32 0.89 13.40 12.40 0.89 13.40 1.38 47.56 0.90
KFBI Klamath First Bancorp of OR 25.69 25.69 1.43 5.90 4.72 1.43 5.90 0.05 297.35 0.20
LBFI L&B Financial of S. Springs TX(8) 17.20 17.20 1.03 5.76 5.33 0.98 5.44 0.42 123.93 1.13
LSBI LSB Fin. Corp. of Lafayette IN 9.40 9.40 0.50 4.76 4.77 0.46 4.33 1.37 70.21 1.09
LVSB Lakeview SB of Paterson NJ 9.95 7.64 1.15 10.31 8.60 0.69 6.19 NA NA 1.85
LARK Landmark Bancshares of KS 15.16 15.16 0.69 4.20 4.61 0.92 5.58 0.19 193.45 0.59
LARL Laurel Capital Group of PA 10.41 10.41 1.06 10.06 8.63 1.40 13.31 0.64 148.64 1.27
LSBX Lawrence Savings Bank of MA* 8.21 8.21 1.46 18.83 13.63 1.46 18.83 0.85 129.65 2.42
LFED Leeds FSB, MHC of MD (35.3) 16.17 16.17 1.06 6.50 5.79 1.06 6.50 0.04 375.00 0.24
LXMO Lexington B&L Fin. Corp. of MO 30.57 30.57 1.04 5.72 3.57 1.04 5.72 0.98 33.39 0.49
LBCI Liberty Bancorp of Chicago IL(8) 9.53 9.50 0.32 3.31 3.58 0.62 6.40 0.10 508.37 0.72
LIFB Life Bancorp of Norfolk VA 10.35 10.01 0.63 4.95 4.50 0.91 7.14 0.38 196.63 1.76
LFBI Little Falls Bancorp of NJ 14.88 13.71 0.13 1.08 1.04 0.51 4.32 1.18 28.24 0.84
LOGN Logansport Fin. Corp. of IN 19.98 19.98 1.23 4.85 4.98 1.54 6.08 0.36 81.47 0.42
LONF London Financial Corp. of OH 21.37 21.37 0.78 5.39 4.33 0.78 5.39 0.21 242.86 0.68
LISB Long Island Bancorp of NY 9.99 9.99 0.93 8.80 6.08 0.85 8.00 NA NA 1.08
MAFB MAF Bancorp of IL 7.65 6.54 0.53 7.80 3.97 0.92 13.60 0.47 119.22 0.74
MBLF MBLA Financial Corp. of MO(8) 12.31 12.31 0.57 4.07 4.15 0.75 5.36 0.19 127.59 0.50
MFBC MFB Corp. of Mishawaka IN 17.90 17.90 0.72 3.67 4.44 0.71 3.62 0.06 258.14 0.24
MLBC ML Bancorp of Villanova PA 7.31 7.08 0.74 9.25 7.79 0.69 8.67 0.61 129.89 1.81
MBB MSB Bancorp of Middletown NY* 8.12 4.02 0.44 4.93 4.64 0.48 5.40 0.63 29.59 0.51
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HFFB Harrodsburg 1st Fin Bcrp of KY NM 130.39 36.69 130.39 NM 0.40 2.15 70.18
HHFC Harvest Home Fin. Corp. of OH 15.93 69.13 12.24 69.13 15.93 0.40 4.18 66.67
HAVN Haven Bancorp of Woodhaven NY 13.69 125.40 7.53 126.16 9.05 0.60 2.20 30.15
HVFD Haverfield Corp. of OH NM 134.76 10.61 134.95 12.83 0.54 2.77 NM
HTHR Hawthorne Fin. Corp. of CA 4.40 58.31 2.65 58.58 NM 0.00 0.00 0.00
HBNK Highland Federal Bank of CA NM 114.96 8.20 114.96 NM 0.00 0.00 NM
HIFS Hingham Inst. for Sav. of MA* 11.41 117.65 11.41 117.65 11.41 0.36 2.12 24.16
HNFC Hinsdale Financial Corp. of IL 21.76 120.55 10.27 124.11 14.51 0.00 0.00 0.00
HBEI Home Bancorp of Elgin IL NM 89.38 23.87 89.38 NM 0.00 0.00 0.00
HBFW Home Bancorp of Fort Wayne IN 19.23 103.18 15.99 103.18 19.23 0.20 1.14 21.98
HBBI Home Building Bancorp of IN NM 99.32 12.83 99.32 NM 0.30 1.71 NM
HOMF Home Fed Bancorp of Seymour IN 9.55 136.13 11.13 141.32 10.82 0.50 1.59 15.15
HWEN Home Financial Bancorp of IN NM 81.65 16.35 81.65 24.04 0.00 0.00 0.00
HOFL Home Financial Corp. of FL(8) NM 129.59 32.14 129.59 20.80 0.00 0.00 0.00
HPBC Home Port Bancorp, Inc. of MA* 10.06 154.78 16.11 154.78 10.00 0.80 4.85 48.78
HMCI Homecorp, Inc. of Rockford IL NM 100.88 6.05 100.88 18.43 0.00 0.00 0.00
LOAN Horizon Bancorp, Inc of TX(8)* 14.34 220.76 18.26 227.55 18.69 0.16 0.86 12.40
HZFS Horizon Fin'l. Services of IA NM 80.29 8.62 80.29 NM 0.32 2.17 NM
HRZB Horizon Financial Corp. of WA* 11.73 108.88 17.35 108.88 12.05 0.40 2.99 35.09
IBSF IBS Financial Corp. of NJ 23.03 118.97 23.68 118.97 22.70 0.32 1.99 45.71
ISBF ISB Financial Corp. of LA 16.54 102.24 17.50 105.24 16.70 0.34 2.02 33.33
ITLA Imperial Thrift & Loan of CA* 17.65 139.93 17.52 139.93 17.65 0.00 0.00 0.00
IFSB Independence FSB of DC 7.58 56.78 3.64 65.96 16.30 0.22 2.93 22.22
INCB Indiana Comm. Bank, SB of IN NM 128.62 16.28 128.62 NM 0.35 2.19 64.81
IFSL Indiana Federal Corp. of IN(8) 21.50 155.72 13.47 166.91 15.33 0.72 3.13 67.29
INBI Industrial Bancorp of OH NM 113.28 21.45 113.28 15.86 0.40 3.23 NM
IWBK Interwest SB of Oak Harbor WA 22.08 215.76 13.99 221.45 15.28 0.52 1.72 37.96
IPSW Ipswich SB of Ipswich MA* 7.05 139.24 8.23 139.24 8.53 0.20 1.82 12.82
IROQ Iroquois Bancorp of Auburn NY* 12.99 134.51 8.06 150.18 9.57 0.32 1.95 25.40
JSBF JSB Financial, Inc. of NY 14.58 109.70 23.92 109.70 14.58 1.20 3.30 48.19
JXVL Jacksonville Bancorp of TX 18.40 99.10 16.21 99.10 18.40 0.50 3.77 69.44
JXSB Jcksnville SB,MHC of IL(43.3%) NM 92.24 10.62 92.45 23.08 0.40 3.33 NM
JSBA Jefferson Svgs Bancorp of MO 13.14 116.27 8.50 141.43 14.47 0.32 1.40 18.39
JOAC Joachim Bancorp of MO NM 106.76 31.55 106.76 NM 0.50 3.33 NM
KSAV KS Bancorp of Kenly NC 18.58 100.77 14.48 100.86 13.29 0.60 2.86 53.10
KSBK KSB Bancorp of Kingfield ME* 8.06 101.14 6.90 109.23 8.06 0.20 0.90 7.25
KFBI Klamath First Bancorp of OR 21.19 110.51 28.39 110.51 21.19 0.28 1.92 40.58
LBFI L&B Financial of S. Springs TX(8) 18.75 110.22 18.96 110.22 19.83 0.40 2.32 43.48
LSBI LSB Fin. Corp. of Lafayette IN 20.97 103.62 9.74 103.62 23.01 0.32 1.70 35.56
LVSB Lakeview SB of Paterson NJ 11.63 127.96 12.73 166.55 19.38 0.23 0.99 11.50
LARK Landmark Bancshares of KS 21.71 94.39 14.31 94.39 16.34 0.40 2.42 52.63
LARL Laurel Capital Group of PA 11.58 113.47 11.81 113.47 8.75 0.44 2.79 32.35
LSBX Lawrence Savings Bank of MA* 7.34 125.39 10.29 125.39 7.34 0.00 0.00 0.00
LFED Leeds FSB, MHC of MD (35.3) 17.28 109.20 17.66 109.20 17.28 0.68 4.86 NM
LXMO Lexington B&L Fin. Corp. of MO NM 81.43 24.89 81.43 NM 0.00 0.00 0.00
LBCI Liberty Bancorp of Chicago IL(8) NM 93.93 8.95 94.19 14.46 0.60 2.50 69.77
LIFB Life Bancorp of Norfolk VA 22.23 115.91 12.00 119.89 15.42 0.44 2.57 57.14
LFBI Little Falls Bancorp of NJ NM 79.58 11.84 86.40 23.96 0.10 0.87 NM
LOGN Logansport Fin. Corp. of IN 20.07 118.26 23.63 118.26 16.01 0.40 2.81 56.34
LONF London Financial Corp. of OH 23.08 79.89 17.07 79.89 23.08 0.24 2.00 46.15
LISB Long Island Bancorp of NY 16.44 145.25 14.51 145.25 18.09 0.40 1.30 21.39
MAFB MAF Bancorp of IL NM 132.21 10.11 154.59 14.45 0.36 1.18 29.75
MBLF MBLA Financial Corp. of MO(8) 24.12 99.18 12.21 99.18 18.30 0.40 1.95 47.06
MFBC MFB Corp. of Mishawaka IN 22.54 83.81 15.00 83.81 22.86 0.32 2.00 45.07
MLBC ML Bancorp of Villanova PA 12.84 122.53 8.95 126.55 13.70 0.38 2.67 34.23
MBB MSB Bancorp of Middletown NY* 21.53 72.23 5.87 146.00 19.64 0.60 3.36 72.29
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
MSBF MSB Financial Corp. of MI 20.05 20.05 1.40 6.17 6.59 1.72 7.59 0.78 72.91 0.61
MGNL Magna Bancorp of MS 9.67 9.20 1.36 13.84 6.76 1.67 17.05 3.81 19.52 1.09
MARN Marion Capital Holdings of IN 22.68 22.68 1.14 4.80 5.07 1.43 6.03 0.95 121.70 1.37
MFCX Marshalltown Fin. Corp. of IA(8) 15.58 15.58 0.06 0.36 0.32 0.41 2.63 NA NA 0.19
MFSL Maryland Fed. Bancorp of MD 8.39 8.26 0.79 9.63 8.94 0.55 6.72 0.48 84.24 0.46
MASB MassBank Corp. of Reading MA* 9.95 9.95 1.07 10.64 9.68 1.01 10.02 0.27 100.30 0.94
MFLR Mayflower Co-Op. Bank of MA* 9.69 9.47 0.91 9.03 6.98 0.88 8.70 1.13 82.25 1.44
MECH Mechanics SB of Hartford CT* 9.38 9.38 -1.23 -18.56 -10.27 -1.21 -18.22 2.38 49.97 1.72
MDBK Medford Savings Bank of MA* 8.98 8.24 1.03 11.54 8.88 1.02 11.38 0.53 139.29 1.34
MERI Meritrust FSB of Thibodaux LA 7.26 7.26 0.55 7.37 5.13 0.93 12.52 NA NA NA
MWBX Metro West of MA* 7.69 7.69 1.31 17.51 10.92 1.31 17.51 2.21 46.46 1.39
MSEA Metropolitan Bancorp of WA(8) 6.76 6.14 0.52 7.73 5.98 0.80 11.73 NA NA 1.76
MCBS Mid Continent Bancshares of KS 11.70 11.69 1.25 9.60 8.00 1.10 8.49 0.10 124.51 0.24
MIFC Mid Iowa Financial Corp. of IA 9.38 9.36 0.93 9.97 9.73 0.93 9.97 0.05 513.21 0.44
MCBN Mid-Coast Bancorp of ME 8.78 8.78 0.34 3.85 4.21 0.58 6.53 0.41 120.43 0.60
MIDC Midconn Bank of Kensington CT* 9.72 8.19 0.51 5.40 5.05 0.64 6.75 1.96 27.19 0.68
MWBI Midwest Bancshares, Inc. of IA 6.58 6.58 0.66 9.61 9.56 0.99 14.37 0.47 103.85 0.82
MWFD Midwest Fed. Fin. Corp of WI 9.01 8.61 1.28 13.49 6.25 1.03 10.81 0.19 386.54 1.03
MFFC Milton Fed. Fin. Corp. of OH 18.93 18.93 1.04 4.79 5.74 0.95 4.41 0.40 56.05 0.36
MIVI Miss. View Hold. Co. of MN 18.39 18.39 1.30 6.73 8.34 1.22 6.33 0.51 249.15 2.04
MBSP Mitchell Bancorp of NC* 38.73 38.73 0.81 2.09 2.43 0.78 2.02 1.41 23.59 0.41
MBBC Monterey Bay Bancorp of CA 14.75 14.59 0.32 2.13 2.05 0.31 2.06 0.61 69.77 0.59
MORG Morgan Financial Corp. of CO 12.64 12.64 0.74 5.16 5.91 0.97 6.83 1.29 12.36 0.22
MFSB Mutual Bancompany of MO(8) 11.70 11.70 0.20 1.83 1.53 0.23 2.10 0.01 NA 0.45
MSBK Mutual SB, FSB of Bay City MI 5.82 5.82 0.07 1.30 2.09 -0.05 -0.87 0.13 208.44 0.73
NHTB NH Thrift Bancshares of NH 7.27 7.27 0.40 5.27 4.98 0.60 7.90 NA NA 0.79
NSLB NS&L Bancorp of Neosho MO 23.31 23.31 0.97 4.06 4.89 0.88 3.69 0.02 390.91 0.14
NMSB Newmil Bancorp. of CT* 10.51 10.51 0.77 7.14 7.03 0.76 7.02 1.86 86.77 3.07
NFSL Newnan SB, FSB of Newnan GA 12.79 12.73 2.23 19.65 9.57 1.95 17.11 1.26 66.63 1.04
NASB North American SB of MO 6.80 6.55 1.25 17.53 11.59 1.18 16.58 3.12 24.45 0.89
NBSI North Bancshares of Chicago IL 15.13 15.13 0.34 1.96 2.18 0.62 3.60 NA NA 0.30
FFFD North Central Bancshares of IA 28.70 28.70 1.63 7.51 5.80 1.63 7.51 0.21 448.67 1.17
NEBC Northeast Bancorp of ME* 7.27 6.11 0.56 7.37 7.46 0.33 4.33 1.40 81.78 1.50
NEIB Northeast Indiana Bncrp of IN 18.90 18.90 1.18 5.48 6.40 1.18 5.48 0.20 320.13 0.73
NSBK Northside SB of Bronx NY(8)* 7.78 7.71 1.21 15.88 8.25 1.05 13.89 0.41 85.58 1.02
NWEQ Northwest Equity Corp. of WI 12.14 12.14 0.70 5.17 5.68 0.91 6.73 1.19 39.21 0.58
NWSB Northwest SB, MHC of PA(29.9) 10.16 9.64 1.04 9.48 5.83 1.05 9.61 NA NA 0.93
NSSY Norwalk Savings Society of CT* 7.28 7.28 0.79 9.74 7.61 0.63 7.69 2.17 31.53 1.01
NSSB Norwich Financial Corp. of CT* 10.78 9.76 0.87 8.07 5.50 0.85 7.86 1.66 134.62 3.29
NTMG Nutmeg FS&LA of CT 5.72 5.72 0.67 11.55 10.93 0.34 5.92 NA NA 0.49
OHSL OHSL Financial Corp. of OH 11.57 11.57 0.57 4.63 4.80 0.85 6.95 0.22 107.97 0.33
OSBF OSB Fin. Corp. of Oshkosh WI(8) 12.39 12.39 0.04 0.29 0.31 0.46 3.66 0.17 249.07 0.63
OCFC Ocean Fin. Corp. of NJ 18.75 18.75 0.90 4.82 4.93 0.92 4.93 0.94 54.53 0.95
OFCP Ottawa Financial Corp. of MI 9.11 7.20 0.40 3.14 2.95 0.83 6.42 0.32 113.73 0.44
PFFB PFF Bancorp of Pomona CA 11.54 11.41 -0.06 -0.55 -0.46 0.30 2.92 1.93 53.40 1.42
PVFC PVF Capital Corp. of OH 6.51 6.51 0.93 14.19 8.52 1.21 18.34 0.68 107.66 0.82
PCCI Pacific Crest Capital of CA* 9.04 9.04 1.19 15.95 10.80 1.02 13.59 2.24 53.13 1.69
PALM Palfed, Inc. of Aiken SC 8.00 7.63 0.37 4.51 3.05 0.59 7.31 3.44 34.31 1.51
PBCI Pamrapo Bancorp, Inc. of NJ 15.05 14.93 0.85 5.46 5.14 1.21 7.77 3.45 23.22 1.35
PFED Park Bancorp of Chicago IL 23.32 23.32 0.78 3.33 4.17 0.82 3.53 0.17 190.11 0.79
PVSA Parkvale Financial Corp of PA 7.42 7.39 0.73 9.98 6.53 1.03 14.04 0.26 596.13 2.23
PBIX Patriot Bank Corp. of PA 12.93 12.93 0.62 4.55 2.86 0.64 4.66 0.13 331.63 0.78
PEEK Peekskill Fin. Corp. of NY 29.46 29.46 1.08 3.90 3.85 1.40 5.03 1.31 25.21 1.42
PFSB PennFed Fin. Services of NJ 7.89 6.33 0.53 5.88 5.53 0.84 9.24 0.86 28.23 0.38
PWBC PennFirst Bancorp of PA 6.98 6.33 0.42 5.51 5.41 0.64 8.38 0.59 75.76 1.46
PWBK Pennwood SB of PA* 18.92 18.92 0.66 3.51 4.24 0.97 5.12 2.65 41.44 2.00
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
MSBF MSB Financial Corp. of MI 15.16 96.05 19.26 96.05 12.33 0.50 2.70 40.98
MGNL Magna Bancorp of MS 14.80 201.97 19.52 212.16 12.01 0.60 3.24 48.00
MARN Marion Capital Holdings of IN 19.72 100.05 22.69 100.05 15.69 0.80 3.72 73.39
MFCX Marshalltown Fin. Corp. of IA(8) NM 113.06 17.61 113.06 NM 0.00 0.00 0.00
MFSL Maryland Fed. Bancorp of MD 11.19 104.17 8.74 105.84 16.02 0.66 2.00 22.37
MASB MassBank Corp. of Reading MA* 10.33 109.70 10.91 109.70 10.97 0.96 2.69 27.75
MFLR Mayflower Co-Op. Bank of MA* 14.32 125.80 12.19 128.68 14.86 0.48 3.05 43.64
MECH Mechanics SB of Hartford CT* NM 123.02 11.54 123.02 NM 0.00 0.00 NM
MDBK Medford Savings Bank of MA* 11.26 125.19 11.24 136.46 11.42 0.68 2.72 30.63
MERI Meritrust FSB of Thibodaux LA 19.50 143.05 10.38 143.05 11.48 0.60 1.94 37.74
MWBX Metro West of MA* 9.16 149.28 11.47 149.28 9.16 0.10 2.43 22.22
MSEA Metropolitan Bancorp of WA(8) 16.72 128.91 8.72 141.98 11.01 0.00 0.00 0.00
MCBS Mid Continent Bancshares of KS 12.50 119.05 13.92 119.11 14.14 0.40 1.86 23.26
MIFC Mid Iowa Financial Corp. of IA 10.27 99.22 9.30 99.38 10.27 0.08 1.26 12.90
MCBN Mid-Coast Bancorp of ME 23.78 91.25 8.02 91.25 14.03 0.52 2.67 63.41
MIDC Midconn Bank of Kensington CT* 19.79 105.56 10.26 125.33 15.83 0.60 3.16 62.50
MWBI Midwest Bancshares, Inc. of IA 10.47 103.93 6.84 103.93 6.99 0.60 2.22 23.26
MWFD Midwest Fed. Fin. Corp of WI 15.99 210.35 18.96 220.14 19.95 0.30 1.38 22.06
MFFC Milton Fed. Fin. Corp. of OH 17.43 88.87 16.83 88.87 18.93 0.56 4.23 73.68
MIVI Miss. View Hold. Co. of MN 11.99 84.73 15.58 84.73 12.76 0.16 1.35 16.16
MBSP Mitchell Bancorp of NC* NM 86.26 33.41 86.26 NM 0.00 0.00 0.00
MBBC Monterey Bay Bancorp of CA NM 106.86 15.76 108.00 NM 0.10 0.66 32.26
MORG Morgan Financial Corp. of CO 16.91 94.34 11.92 94.34 12.78 0.24 2.09 35.29
MFSB Mutual Bancompany of MO(8) NM 118.79 13.90 118.79 NM 0.00 0.00 0.00
MSBK Mutual SB, FSB of Bay City MI NM 62.30 3.63 62.30 NM 0.00 0.00 0.00
NHTB NH Thrift Bancshares of NH 20.10 106.63 7.76 106.63 13.40 0.50 4.15 NM
NSLB NS&L Bancorp of Neosho MO 20.45 85.23 19.86 85.23 22.50 0.50 3.70 NM
NMSB Newmil Bancorp. of CT* 14.22 103.64 10.89 103.64 14.47 0.24 2.91 41.38
NFSL Newnan SB, FSB of Newnan GA 10.45 188.12 24.06 189.05 12.00 0.44 1.64 17.19
NASB North American SB of MO 8.63 142.95 9.73 148.57 9.12 0.63 1.98 17.12
NBSI North Bancshares of Chicago IL NM 100.00 15.13 100.00 25.00 0.40 2.42 NM
FFFD North Central Bancshares of IA 17.23 91.73 26.32 91.73 17.23 0.25 1.96 33.78
NEBC Northeast Bancorp of ME* 13.40 99.01 7.19 117.65 22.81 0.32 2.46 32.99
NEIB Northeast Indiana Bncrp of IN 15.62 87.99 16.63 87.99 15.62 0.32 2.44 38.10
NSBK Northside SB of Bronx NY(8)* 12.12 184.13 14.32 185.68 13.86 1.00 2.07 25.06
NWEQ Northwest Equity Corp. of WI 17.61 93.11 11.30 93.11 13.51 0.40 3.44 60.61
NWSB Northwest SB, MHC of PA(29.9) 17.16 157.72 16.02 166.28 16.93 0.32 2.49 42.67
NSSY Norwalk Savings Society of CT* 13.14 124.30 9.05 124.30 16.63 0.20 0.87 11.36
NSSB Norwich Financial Corp. of CT* 18.19 146.55 15.80 161.80 18.69 0.48 2.36 42.86
NTMG Nutmeg FS&LA of CT 9.15 102.04 5.84 102.04 17.86 0.15 2.00 18.29
OHSL OHSL Financial Corp. of OH 20.83 97.18 11.24 97.18 13.89 0.76 3.80 NM
OSBF OSB Fin. Corp. of Oshkosh WI(8) NM 96.23 11.93 96.23 NM 0.64 2.49 NM
OCFC Ocean Fin. Corp. of NJ 20.28 97.69 18.32 97.69 19.81 0.00 0.00 0.00
OFCP Ottawa Financial Corp. of MI NM 111.68 10.17 141.30 16.58 0.36 2.22 NM
PFFB PFF Bancorp of Pomona CA NM 90.73 10.47 91.75 NM 0.00 0.00 NM
PVFC PVF Capital Corp. of OH 11.73 157.70 10.26 157.70 9.08 0.00 0.00 0.00
PCCI Pacific Crest Capital of CA* 9.26 123.46 11.16 123.46 10.87 0.00 0.00 0.00
PALM Palfed, Inc. of Aiken SC NM 146.04 11.69 153.17 20.21 0.08 0.54 17.78
PBCI Pamrapo Bancorp, Inc. of NJ 19.45 111.59 16.80 112.52 13.67 0.90 4.77 NM
PFED Park Bancorp of Chicago IL 24.00 79.95 18.65 79.95 22.64 0.00 0.00 0.00
PVSA Parkvale Financial Corp of PA 15.30 148.88 11.04 149.41 10.88 0.52 2.06 31.52
PBIX Patriot Bank Corp. of PA NM 118.33 15.29 118.33 NM 0.32 2.35 NM
PEEK Peekskill Fin. Corp. of NY NM 93.88 27.65 93.88 20.15 0.36 2.67 69.23
PFSB PennFed Fin. Services of NJ 18.08 108.99 8.60 135.81 11.51 0.28 1.38 25.00
PWBC PennFirst Bancorp of PA 18.49 107.83 7.53 118.94 12.16 0.36 2.67 49.32
PWBK Pennwood SB of PA* 23.56 82.60 15.63 82.60 16.12 0.00 0.00 0.00
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
PBKB People's SB of Brockton MA* 5.30 5.03 0.75 13.20 7.57 0.46 8.04 NA NA 1.79
PFDC Peoples Bancorp of Auburn IN 15.58 15.58 1.45 9.56 8.60 1.44 9.50 0.34 94.20 0.40
PBCT Peoples Bank, MHC of CT(32.3)* 8.26 8.25 1.10 13.97 6.73 0.88 11.19 1.42 85.13 1.82
PFFC Peoples Fin. Corp. of OH 25.40 25.40 0.59 2.31 2.97 0.67 2.63 NA NA 0.47
PHBK Peoples Heritage Fin Grp of ME* 8.46 7.61 1.19 13.96 6.99 1.30 15.26 1.14 120.91 1.89
PBNB Peoples Sav. Fin. Corp. of CT* 9.78 9.11 0.95 9.01 7.64 0.97 9.27 NA NA 0.61
PERM Permanent Bancorp of IN 9.80 9.67 0.38 3.49 3.83 0.38 3.49 1.66 33.07 1.07
PMFI Perpetual Midwest Fin. of IA 8.57 8.57 0.18 1.94 1.89 0.39 4.11 0.46 147.80 0.88
PERT Perpetual of SC, MHC (46.8%) 14.28 14.28 1.01 7.09 6.72 1.01 7.09 NA NA NA
PCBC Perry Co. Fin. Corp. of MO 20.04 20.04 0.99 4.85 5.16 0.99 4.85 NA NA 0.09
PHFC Pittsburgh Home Fin. of PA 16.52 16.52 0.57 7.92 3.76 0.57 7.92 1.31 47.36 0.90
PFSL Pocahnts Fed, MHC of AR (46.4) 5.93 5.93 0.56 9.39 8.70 0.57 9.62 0.37 108.37 1.15
POBS Portsmouth Bank Shrs Inc of NH(8)* 24.91 24.91 2.27 9.02 8.15 1.85 7.32 0.29 89.58 0.76
PKPS Poughkeepsie SB of NY 8.15 8.15 1.48 18.01 19.14 2.36 28.68 4.49 21.98 1.33
PRBC Prestige Bancorp of PA 14.55 14.55 0.03 0.28 0.24 0.38 3.52 0.18 170.81 0.43
PETE Primary Bank of NH* 6.41 6.39 -0.02 -0.31 -0.27 -0.02 -0.39 1.40 45.71 1.16
PSAB Prime Bancorp, Inc. of PA 9.00 8.44 1.02 10.92 8.80 0.95 10.19 NA NA 1.00
PFNC Progress Financial Corp. of PA 5.09 5.06 0.59 11.76 6.89 0.73 14.50 0.98 61.67 0.96
PSBK Progressive Bank, Inc. of NY* 8.21 7.18 1.14 13.10 10.11 1.17 13.50 1.05 94.69 1.53
PROV Provident Fin. Holdings of CA 14.64 14.64 0.21 2.06 1.69 -0.01 -0.09 NA NA NA
PULB Pulaski SB, MHC of MO (29.0) 12.63 12.63 0.84 6.93 5.03 0.79 6.55 NA NA 0.31
PULS Pulse Bancorp of S. River NJ 7.65 7.65 0.74 7.33 7.35 1.12 11.12 1.23 39.65 1.79
QCFB QCF Bancorp of Virginia MN 21.81 21.81 1.52 7.75 7.94 1.52 7.75 0.14 659.90 2.66
QCBC Quaker City Bancorp of CA 9.03 9.00 0.22 2.25 2.31 0.49 5.11 1.81 61.38 1.30
QCSB Queens County SB of NY* 15.59 15.59 1.77 10.50 6.45 1.77 10.50 0.72 98.47 0.83
RCSB RCSB Financial, Inc. of NY* 6.87 6.64 1.01 12.24 8.68 0.88 10.76 0.74 94.44 1.37
RARB Raritan Bancorp. of Raritan NJ* 7.84 7.68 0.83 11.06 8.04 0.92 12.23 0.44 183.19 1.26
REDF RedFed Bancorp of Redlands CA 8.06 8.06 -0.77 -12.38 -7.52 -0.46 -7.51 NA NA 1.40
RELY Reliance Bancorp of NY 8.17 5.52 0.52 5.16 4.84 0.85 8.46 0.97 25.31 0.54
RELI Reliance Bancshares Inc of WI* 56.23 56.23 1.47 2.62 2.87 1.47 2.62 NA NA 0.55
RFED Roosevelt Fin. Grp. Inc. of MO 4.84 4.59 0.66 14.17 7.70 0.83 17.96 0.83 28.67 0.51
RVSB Rvrview SB,FSB MHC of WA(40.3) 11.02 9.82 1.31 12.07 7.57 1.21 11.09 0.22 151.63 0.51
SCCB S. Carolina Comm. Bnshrs of SC 27.87 27.87 1.10 3.75 4.40 1.10 3.75 1.44 46.00 0.87
SBFL SB Fing. Lakes MHC of NY(33.0) 10.14 10.14 -0.57 -5.05 -4.30 0.10 0.87 1.15 49.69 1.27
SFED SFS Bancorp of Schenectady NY 13.56 13.56 0.68 4.85 5.50 0.70 4.96 0.71 53.64 0.56
SGVB SGV Bancorp of W. Covina CA 9.40 9.40 0.20 1.82 2.20 0.20 1.82 1.36 23.10 0.41
SISB SIS Bank of Sprinfield MA* 7.56 7.56 2.02 27.49 17.75 2.03 27.56 0.59 203.71 2.55
SJSB SJS Bancorp of St. Joseph MI(8) 11.13 11.13 0.59 4.91 3.49 0.59 4.85 0.28 152.36 0.65
SWCB Sandwich Co-Op. Bank of MA* 8.23 7.73 0.86 10.37 6.51 0.80 9.64 1.07 75.46 1.24
SFBM Security Bancorp of MT(8) 8.09 6.97 0.53 6.24 4.51 0.63 7.42 0.39 86.91 0.61
SECP Security Capital Corp. of WI 16.26 16.26 0.99 5.80 5.23 1.02 5.98 0.10 NA 1.52
SFSL Security First Corp. of OH 9.28 9.09 0.90 9.98 5.47 1.28 14.16 0.21 377.44 0.89
SMFC Sho-Me Fin. Corp. of MO 10.20 10.20 0.69 5.99 5.15 0.92 7.91 0.06 980.22 0.70
SOBI Sobieski Bancorp of S. Bend IN 17.82 17.82 0.43 2.31 2.74 0.43 2.31 0.11 222.22 0.38
SOSA Somerset Savings Bank of MA(8)* 5.67 5.67 0.46 8.38 7.00 0.46 8.38 8.41 14.61 1.58
SSFC South Street Fin. Corp. of NC* 28.43 28.43 1.34 4.71 4.77 1.43 5.02 NA NA 0.40
SMBC Southern Missouri Bncrp of MO 16.41 16.41 0.94 5.47 6.09 0.88 5.15 0.38 103.47 0.65
SWBI Southwest Bancshares of IL 10.38 10.38 0.82 6.91 6.10 1.13 9.49 0.22 93.24 0.30
SVRN Sovereign Bancorp of PA 3.88 2.66 0.49 12.20 6.60 0.68 16.93 0.68 53.74 0.57
STFR St. Francis Cap. Corp. of WI 9.83 9.38 1.17 10.83 9.98 0.86 7.93 0.27 118.34 0.74
SPBC St. Paul Bancorp, Inc. of IL 8.69 8.66 0.59 6.56 5.09 0.90 9.95 0.57 149.12 1.19
STND Standard Fin. of Chicago IL 11.26 11.24 0.55 4.41 3.79 0.75 6.02 0.16 176.36 0.47
SFFC StateFed Financial Corp. of IA 19.46 19.46 1.21 6.02 6.32 1.21 6.02 1.05 29.70 0.38
SFIN Statewide Fin. Corp. of NJ 9.90 9.87 0.58 5.52 4.94 0.68 6.53 1.25 40.30 1.25
STSA Sterling Financial Corp. of WA 3.90 3.19 0.02 0.44 0.36 0.25 6.02 0.58 93.09 0.88
SSBK Strongsville SB of OH 7.73 7.58 0.64 7.81 5.89 0.83 10.26 0.42 62.45 0.34
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
PBKB People's SB of Brockton MA* 13.22 140.59 7.44 148.01 21.70 0.32 2.78 36.78
PFDC Peoples Bancorp of Auburn IN 11.63 108.34 16.88 108.34 11.70 0.60 3.00 34.88
PBCT Peoples Bank, MHC of CT(32.3)* 14.85 192.21 15.88 192.47 18.54 0.88 3.10 46.07
PFFC Peoples Fin. Corp. of OH NM 77.84 19.77 77.84 NM 0.00 0.00 0.00
PHBK Peoples Heritage Fin Grp of ME* 14.31 164.57 13.92 182.91 13.10 0.68 2.76 39.53
PBNB Peoples Sav. Fin. Corp. of CT* 13.10 116.43 11.39 125.00 12.73 0.92 3.35 43.81
PERM Permanent Bancorp of IN NM 94.06 9.22 95.28 NM 0.30 1.69 44.12
PMFI Perpetual Midwest Fin. of IA NM 107.47 9.20 107.47 25.00 0.30 1.58 NM
PERT Perpetual of SC, MHC (46.8%) 14.89 105.58 15.07 105.58 14.89 0.00 0.00 0.00
PCBC Perry Co. Fin. Corp. of MO 19.38 93.55 18.75 93.55 19.38 0.30 1.74 33.71
PHFC Pittsburgh Home Fin. of PA NM 87.94 14.53 87.94 NM 0.20 1.63 43.48
PFSL Pocahnts Fed, MHC of AR (46.4) 11.49 103.41 6.13 103.41 11.22 0.84 5.89 67.74
POBS Portsmouth Bank Shrs Inc of NH(8)* 12.26 111.49 27.78 111.49 15.12 0.60 4.62 56.60
PKPS Poughkeepsie SB of NY 5.22 91.59 7.47 91.59 3.28 0.10 1.95 10.20
PRBC Prestige Bancorp of PA NM 78.44 11.41 78.44 NM 0.00 0.00 0.00
PETE Primary Bank of NH* NM 108.70 6.97 109.02 NM 0.00 0.00 NM
PSAB Prime Bancorp, Inc. of PA 11.36 120.35 10.84 128.34 12.18 0.68 3.63 41.21
PFNC Progress Financial Corp. of PA 14.52 162.28 8.26 163.25 11.78 0.08 0.98 14.29
PSBK Progressive Bank, Inc. of NY* 9.89 125.09 10.27 142.92 9.59 0.80 2.29 22.60
PROV Provident Fin. Holdings of CA NM 82.20 12.03 82.20 NM 0.00 0.00 0.00
PULB Pulaski SB, MHC of MO (29.0) 19.86 134.01 16.92 134.01 21.01 1.00 6.90 NM
PULS Pulse Bancorp of S. River NJ 13.60 122.92 9.41 122.92 8.96 0.70 4.52 61.40
QCFB QCF Bancorp of Virginia MN 12.59 90.51 19.74 90.51 12.59 0.00 0.00 0.00
QCBC Quaker City Bancorp of CA NM 98.69 8.92 99.03 19.02 0.00 0.00 0.00
QCSB Queens County SB of NY* 15.50 167.90 26.18 167.90 15.50 1.00 2.21 34.25
RCSB RCSB Financial, Inc. of NY* 11.52 163.16 11.21 168.86 13.11 0.60 2.03 23.44
RARB Raritan Bancorp. of Raritan NJ* 12.43 129.62 10.16 132.32 11.24 0.60 2.55 31.75
REDF RedFed Bancorp of Redlands CA NM 126.77 10.22 126.77 NM 0.00 0.00 NM
RELY Reliance Bancorp of NY 20.64 109.48 8.95 162.14 12.58 0.56 3.05 62.92
RELI Reliance Bancshares Inc of WI* NM 91.50 51.45 91.50 NM 0.00 0.00 0.00
RFED Roosevelt Fin. Grp. Inc. of MO 12.99 172.34 8.33 181.67 10.24 0.62 3.36 43.66
RVSB Rvrview SB,FSB MHC of WA(40.3) 13.21 151.44 16.69 169.98 14.38 0.22 1.35 17.89
SCCB S. Carolina Comm. Bnshrs of SC 22.73 89.55 24.96 89.55 22.73 0.60 4.00 NM
SBFL SB Fing. Lakes MHC of NY(33.0) NM 120.32 12.21 120.32 NM 0.40 2.96 NM
SFED SFS Bancorp of Schenectady NY 18.18 92.75 12.58 92.75 17.78 0.24 1.50 27.27
SGVB SGV Bancorp of W. Covina CA NM 85.89 8.07 85.89 NM 0.00 0.00 0.00
SISB SIS Bank of Sprinfield MA* 5.63 134.85 10.19 134.85 5.62 0.00 0.00 0.00
SJSB SJS Bancorp of St. Joseph MI(8) NM 143.58 15.98 143.58 NM 0.44 1.73 49.44
SWCB Sandwich Co-Op. Bank of MA* 15.36 153.71 12.65 163.60 16.53 1.20 3.97 60.91
SFBM Security Bancorp of MT(8) 22.16 140.42 11.36 163.04 18.63 0.66 2.26 50.00
SECP Security Capital Corp. of WI 19.12 111.15 18.08 111.15 18.54 0.90 1.33 25.50
SFSL Security First Corp. of OH 18.28 151.92 14.09 154.97 12.88 0.44 2.59 47.31
SMFC Sho-Me Fin. Corp. of MO 19.42 120.17 12.26 120.17 14.70 0.00 0.00 0.00
SOBI Sobieski Bancorp of S. Bend IN NM 85.88 15.30 85.88 NM 0.00 0.00 0.00
SOSA Somerset Savings Bank of MA(8)* 14.29 114.94 6.52 114.94 14.29 0.00 0.00 0.00
SSFC South Street Fin. Corp. of NC* 20.97 98.86 28.11 98.86 19.70 0.00 0.00 0.00
SMBC Southern Missouri Bncrp of MO 16.42 91.57 15.03 91.57 17.43 0.50 3.54 58.14
SWBI Southwest Bancshares of IL 16.40 124.88 12.96 124.88 11.93 0.48 2.61 42.86
SVRN Sovereign Bancorp of PA 15.14 174.63 6.78 NM 10.91 0.08 0.62 9.41
STFR St. Francis Cap. Corp. of WI 10.02 111.52 10.96 116.83 13.70 0.48 1.86 18.68
SPBC St. Paul Bancorp, Inc. of IL 19.66 131.09 11.39 131.54 12.95 0.48 1.78 35.04
STND Standard Fin. of Chicago IL NM 119.93 13.50 120.15 19.31 0.32 1.64 43.24
SFFC StateFed Financial Corp. of IA 15.83 93.95 18.28 93.95 15.83 0.40 2.32 36.70
SFIN Statewide Fin. Corp. of NJ 20.26 100.68 9.97 100.98 17.14 0.40 2.99 60.61
STSA Sterling Financial Corp. of WA NM 127.55 4.97 155.72 19.93 0.00 0.00 0.00
SSBK Strongsville SB of OH 16.99 131.34 10.15 133.93 12.95 0.48 2.21 37.50
</TABLE>
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of November 15, 1996
<TABLE>
<CAPTION>
Key Financial Ratios Asset Quality Ratios
---------------------------------------------------------- -----------------------
Tang. Reported Earnings Core Earnings
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SFSB SuburbFed Fin. Corp. of IL 6.49 6.46 0.22 3.20 3.34 0.48 6.89 0.28 84.20 0.42
SBCN Suburban Bancorp. of OH 12.73 12.73 0.48 3.66 4.26 0.65 4.95 0.13 NA 1.94
THRD TF Financial Corp. of PA 10.81 9.38 0.62 4.46 4.85 0.87 6.19 0.32 79.91 0.57
ROSE TR Financial Corp. of NY 6.35 6.35 0.97 14.97 10.67 0.78 12.01 NA NA 0.86
TPNZ Tappan Zee Fin. Corp. of NY 19.48 19.48 0.79 5.99 4.00 0.75 5.66 NA NA 1.22
PTRS The Potters S&L Co. of OH 8.21 8.21 0.03 0.28 0.34 0.39 4.17 2.20 76.26 3.61
TSBS Trenton SB, FSB MHC of NJ(35.0(8) 19.38 18.97 1.66 8.70 6.76 1.29 6.78 NA NA 0.52
TRIC Tri-County Bancorp of WY 16.17 16.17 0.94 4.96 5.81 0.91 4.82 0.22 252.73 1.31
THBC Troy Hill Bancorp of PA(8) 19.57 19.57 1.33 6.17 5.08 1.24 5.75 1.76 51.78 1.12
TWIN Twin City Bancorp of TN 12.53 12.53 0.78 5.80 5.53 0.99 7.34 0.53 37.63 0.27
UFRM United FS&LA of Rocky Mount NC 8.07 8.07 0.79 10.05 8.19 0.67 8.52 1.17 99.00 1.74
UBMT United SB, FA of MT 23.52 23.52 1.53 6.66 6.91 1.45 6.31 0.80 8.99 0.24
VABF Va. Beach Fed. Fin. Corp of VA 6.60 6.60 0.03 0.49 0.46 0.21 3.29 1.42 51.34 1.00
VFFC Virginia First Savings of VA 7.82 7.59 1.40 18.18 12.71 1.40 18.18 2.32 44.65 1.17
WHGB WHG Bancshares of MD 23.84 23.84 0.75 4.87 3.31 0.75 4.87 0.60 30.56 0.24
WSFS WSFS Financial Corp. of DE* 5.65 5.58 2.16 39.88 19.96 1.29 23.89 2.86 65.77 2.95
WVFC WVS Financial Corp. of PA* 12.89 12.89 1.24 8.73 7.87 1.52 10.71 0.36 204.24 1.31
WLDN Walden Bancorp of MA(8)* 9.06 7.80 1.09 11.91 6.48 1.21 13.22 0.89 120.99 1.79
WRNB Warren Bancorp of Peabody MA* 9.17 9.17 1.73 19.58 12.44 1.70 19.23 1.75 73.15 2.03
WFSL Washington FS&LA of Seattle WA 11.30 10.76 1.63 13.52 7.92 1.81 15.03 0.79 37.73 0.41
WAMU Washington Mutual Inc. of WA* 6.32 5.69 0.90 14.48 6.31 0.99 16.03 0.56 115.82 0.98
WYNE Wayne Bancorp of NJ 16.83 16.83 0.56 3.34 3.89 0.68 4.02 1.17 61.42 1.26
WAYN Wayne S&L Co., MHC of OH(46.7) 9.27 9.27 0.62 6.77 4.80 0.58 6.37 0.42 85.58 0.43
WCFB Webster CityFSB,MHC of IA(45.2 22.89 22.89 0.87 3.89 2.96 1.20 5.35 0.45 92.96 0.73
WBST Webster Financial Corp. of CT 5.16 3.93 0.60 11.84 7.14 0.59 11.65 0.85 110.74 1.45
WEFC Wells Fin. Corp. of Wells MN 14.48 14.48 0.85 5.77 6.26 0.85 5.77 0.37 82.60 0.34
WCBI WestCo Bancorp of IL 15.50 15.50 0.99 6.36 5.38 1.33 8.58 0.53 54.54 0.40
WSTR WesterFed Fin. Corp. of MT 13.94 13.94 0.80 5.94 6.07 0.76 5.65 NA NA NA
WOFC Western Ohio Fin. Corp. of OH 16.73 15.74 0.89 3.91 4.76 0.73 3.21 0.65 60.52 0.57
WWFC Westwood Fin. Corp. of NJ 10.60 9.27 0.74 6.94 6.82 0.74 6.94 0.02 NA 0.55
WEHO Westwood Hmstd Fin Corp of OH 31.52 31.52 0.63 1.98 2.39 0.97 3.09 0.01 835.71 0.16
WFCO Winton Financial Corp. of OH(8) 7.46 7.26 0.93 12.27 9.87 0.78 10.39 0.44 70.82 0.37
FFWD Wood Bancorp of OH 13.17 13.17 0.89 6.32 5.00 1.15 8.18 0.29 120.40 0.45
YFCB Yonkers Fin. Corp. of NY 20.19 20.19 0.86 8.20 4.06 0.86 8.20 1.27 27.87 1.00
YFED York Financial Corp. of PA 7.95 7.95 0.61 7.26 5.01 0.84 9.95 2.45 25.75 0.73
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
----------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- ------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
SFSB SuburbFed Fin. Corp. of IL NM 97.48 6.33 98.01 13.91 0.32 1.62 48.48
SBCN Suburban Bancorp. of OH 23.46 87.44 11.13 87.44 17.33 0.60 3.93 NM
THRD TF Financial Corp. of PA 20.61 94.92 10.26 109.37 14.83 0.32 2.02 41.56
ROSE TR Financial Corp. of NY 9.37 136.43 8.66 136.43 11.68 0.80 2.63 24.69
TPNZ Tappan Zee Fin. Corp. of NY 25.00 92.91 18.10 92.91 NM 0.20 1.48 37.04
PTRS The Potters S&L Co. of OH NM 85.95 7.06 85.95 19.66 0.28 1.60 NM
TSBS Trenton SB, FSB MHC of NJ(35.0(8) 14.80 125.09 24.25 127.82 19.00 0.35 2.49 36.84
TRIC Tri-County Bancorp of WY 17.22 89.59 14.49 89.59 17.72 0.50 2.74 47.17
THBC Troy Hill Bancorp of PA(8) 19.67 118.77 23.24 118.77 21.12 0.40 1.99 39.22
TWIN Twin City Bancorp of TN 18.09 109.11 13.67 109.11 14.29 0.64 3.76 68.09
UFRM United FS&LA of Rocky Mount NC 12.21 119.76 9.67 119.76 14.39 0.20 2.48 30.30
UBMT United SB, FA of MT 14.47 96.06 22.59 96.06 15.28 0.92 4.78 69.17
VABF Va. Beach Fed. Fin. Corp of VA NM 108.97 7.20 108.97 NM 0.16 1.83 NM
VFFC Virginia First Savings of VA 7.87 131.58 10.29 135.66 7.87 0.10 0.71 5.62
WHGB WHG Bancshares of MD NM 90.53 21.58 90.53 NM 0.20 1.54 46.51
WSFS WSFS Financial Corp. of DE* 5.01 184.14 10.41 186.58 8.36 0.00 0.00 0.00
WVFC WVS Financial Corp. of PA* 12.71 113.44 14.62 113.44 10.36 0.80 3.58 45.45
WLDN Walden Bancorp of MA(8)* 15.43 173.57 15.72 201.56 13.90 0.64 1.98 30.62
WRNB Warren Bancorp of Peabody MA* 8.04 152.03 13.94 152.03 8.18 0.44 3.26 26.19
WFSL Washington FS&LA of Seattle WA 12.63 174.30 19.69 183.06 11.35 0.92 3.72 46.94
WAMU Washington Mutual Inc. of WA* 15.85 219.66 13.88 243.75 14.33 0.96 2.23 35.29
WYNE Wayne Bancorp of NJ NM 85.78 14.44 85.78 21.34 0.00 0.00 0.00
WAYN Wayne S&L Co., MHC of OH(46.7) 20.83 137.10 12.70 137.10 22.14 0.92 4.33 NM
WCFB Webster CityFSB,MHC of IA(45.2 NM 131.07 30.00 131.07 24.55 0.80 5.93 NM
WBST Webster Financial Corp. of CT 14.00 143.44 7.40 188.07 14.23 0.72 2.06 28.80
WEFC Wells Fin. Corp. of Wells MN 15.97 94.46 13.67 94.46 15.97 0.00 0.00 0.00
WCBI WestCo Bancorp of IL 18.59 118.59 18.38 118.59 13.77 0.48 2.21 41.03
WSTR WesterFed Fin. Corp. of MT 16.46 95.70 13.34 95.70 17.29 0.38 2.22 36.54
WOFC Western Ohio Fin. Corp. of OH 21.00 87.17 14.58 92.67 NM 1.00 4.76 NM
WWFC Westwood Fin. Corp. of NJ 14.66 101.80 10.79 116.32 14.66 0.20 1.31 19.23
WEHO Westwood Hmstd Fin Corp of OH NM 83.10 26.19 83.10 NM 0.00 0.00 0.00
WFCO Winton Financial Corp. of OH(8) 10.14 105.93 7.90 108.80 11.97 0.42 3.73 37.84
FFWD Wood Bancorp of OH 20.00 126.87 16.71 126.87 15.45 0.36 2.12 42.35
YFCB Yonkers Fin. Corp. of NY 24.63 93.30 18.84 93.30 24.63 0.20 1.56 38.46
YFED York Financial Corp. of PA 19.94 143.49 11.40 143.49 14.55 0.60 3.38 67.42
</TABLE>
<PAGE>
EXHIBIT IV-2
Historical Stock Price Indices
<PAGE>
Historical Stock Price Indices(1)
SNL SNL
NASDAQ Thrift Bank
Year/Qtr. Ended DJIA S&P 500 Composite Index Index
- --------------- ---- ------- --------- ----- -----
1991: Quarter 1 2881.1 375.2 482.3 125.5 66.0
Quarter 2 2957.7 371.2 475.9 130.5 82.0
Quarter 3 3018.2 387.9 526.9 141.8 90.7
Quarter 4 3168.0 417.1 586.3 144.7 103.1
1992: Quarter 1 3235.5 403.7 603.8 157.0 113.3
Quarter 2 3318.5 408.1 563.6 173.3 119.7
Quarter 3 3271.7 417.8 583.3 167.0 117.1
Quarter 4 3301.1 435.7 677.0 201.1 136.7
1993: Quarter 1 3435.1 451.7 690.1 228.2 151.4
Quarter 2 3516.1 450.5 704.0 219.8 147.0
Quarter 3 3555.1 458.9 762.8 258.4 154.3
Quarter 4 3754.1 466.5 776.8 252.5 146.2
1994: Quarter 1 3625.1 445.8 743.5 241.6 143.1
Quarter 2 3625.0 444.3 706.0 269.6 152.6
Quarter 3 3843.2 462.6 764.3 279.7 149.2
Quarter 4 3834.4 459.3 752.0 244.7 137.6
1995: Quarter 1 4157.7 500.7 817.2 278.4 152.1
Quarter 2 4556.1 544.8 933.5 313.5 171.7
Quarter 3 4789.1 584.4 1,043.5 362.3 195.3
Quarter 4 5117.1 615.9 1,052.1 376.5 207.6
1996: Quarter 1 5587.1 645.5 1,101.4 382.1 225.1
Quarter 2 5654.6 670.6 1,185.0 387.2 224.7
Quarter 3 5882.2 687.3 1,226.9 429.3 249.2
November 15, 1996 6348.0 737.6 1,261.8 468.1 274.3
(1) End of period data.
Sources: SNL Securities; Wall Street Journal.
<PAGE>
EXHIBIT IV-3
Historical Thrift Stock Indices
<PAGE>
MONTHLY MARKET REPORT
Index Values
<TABLE>
<CAPTION>
Index Values Percent Change
---------------------------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10/31/96 9/30/96 12/29/95 11/1/95 1 Month Y/D 52 Week
-------- ------- -------- ------- ------- --- -------
All Pub. Traded Thrifts 456.7 429.3 376.5 355.9 6.4 21.3 28.3
MHC Index 476.5 462.9 458.5 465.1 2.9 3.9 2.5
Insurance Indices
- ----------------------------------------------------------------------------------------------------------
SAIF Thrifts 414.5 393.4 356.4 335.2 5.4 16.3 23.7
BIF Thrifts 583.5 537.1 436.9 418.1 8.6 33.6 39.6
Stock Exchange Indices
- -----------------------------------------------------------------------------------------------------------
AMEX Thrifts 148.5 145.6 137.7 133.7 2.0 7.8 11.1
NYSE Thrifts 265.9 243.2 257.6 235.7 9.3 3.2 12.8
OTC Thrifts 533.0 510.4 449.5 430.6 4.4 18.6 23.8
Geographical Indices
- ----------------------------------------------------------------------------------------------------------
New England Thrifts 386.6 378.7 316.1 303.8 2.1 22.3 27.3
Mid-Atlantic Thrifts 911.9 845.8 720.1 697.5 7.8 26.6 30.7
Southwestern Thrifts 298.2 286.6 241.7 252.3 4.1 23.4 18.2
Midwestern Thrifts 1,085.4 1,032.8 951.5 890.0 5.1 14.1 22.0
Southeastern Thrifts 433.9 425.3 367.2 360.2 2.0 18.2 20.5
Western Thrifts 455.0 422.6 380.4 349.0 7.7 19.6 30.4
Asset Size Indices
- ----------------------------------------------------------------------------------------------------------
Less than $250M 570.6 570.6 538.4 523.6 0.0 6.0 9.0
$250M to $500M 738.1 719.7 680.3 662.8 2.6 8.5 11.4
$500M to $1B 489.0 477.5 431.4 418.8 2.4 13.3 16.8
$1B to $5B 508.9 489.5 421.7 400.5 4.0 20.7 27.1
Over $5B 290.3 265.9 233.5 215.8 9.2 24.3 34.5
Comparative Indices
- -----------------------------------------------------------------------------------------------------------
Dow Jones Industrials 6,029.4 5,882.2 5,117.1 4,766.7 2.5 17.8 26.5
S&P 500 705.3 687.3 615.9 584.2 2.6 14.5 20.7
</TABLE>
All SNL indices are market-value weights i.e., an institution, is proportionate
to that institution's market capitalization. All SNL thrift indices, except for
the SNL MHC Index began at 100 on March 30, 1984. The SNL MHC Index began at
201,082 on Dec. 31, 1992, the level of the SNL Thrift Index on that date. On
March 30, 1984, the S&P 500 closed at 159.0 and the Dow Jones industrials stood
at 1164.9.
New England; CT, ME, MA, NH, RI, VT; Mid-Atlantic; DE, DC, PA, MD, NJ, NY,
PR; Southwest; CO, LA, NM, OK, TX, UT; Midwest; IA, IL, IN, KS. KY, MI, MN,
MO, ND, NE, OH, SD, WI; Southeast; AL, AR, FL, GA, MS, NC, SC, TN, VA, WV;
West; AZ, AK, CA, HI, ID, MT, NV, OR, WA, WY
Source: SNL Securities Nov-96 NOVEMBER 1996
<PAGE>
EXHIBIT IV-4
Market Area Acquisition Activity
<PAGE>
RP Financial, LC.
-------------------------------------------------------------------------
Completed and Pending Acquisitions of Thrifts in Illinois, 1994 - Present
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Transactions Target Company's Financial Data
At Completion Date
- -----------------------------------------------------------------------------------------------------------------------------------
Date Announced/ Target/State Pooling/ Equity/ T.T. T.T. NPAs/(1) Reserves/
Completed Acquiror/State Purchase Assets Assets ROAA ROAE Assets NPAs
--------- -------------- -------- ------ ------ ---- ---- ------ ----
($000) (%) (%) (%) (%) (%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C>
08/13/96 Home Federal Savings Bank/IL Purchase $32,329 14.15% 0.66% 4.56% 0.00% NA
Pending Charter Financial, Inc/IL
08/02/96 Liberty Bancorp, Inc/IL Purchase $651,198 9.83% 0.57% 5.89% 0.06% 922.51%
Pending Hinsdale Financial Corp/IL
08/15/96 LCS Bancorp, Inc/IL Purchase $18,869 9.47% 0.38% 4.10% 0.03% 1800.00%
Pending Jacksonville Svgs Bank/IL
04/22/96 Financial Security Corp/IL Pooling $277,057 13.99% 0.75% 5.68% 2.00% 54.14%
09/30/96 Pinnacle Bancgroup/IL
1/26/96 Barrington Bancorp, Barrington NA $67,775 16.98% 0.69% 4.12% 0.63% 83.96%
Pending First Chicago NBD Corp./IL
12/14/95 Bell Bancorp, Chicago Purchase $1,901,498 15.74% 0.64% 4.12% 0.91% 60.13%
06/07/96 Standard Federal Bank/IL
11/29/95 N.S. Bancorp, Chicago Purchase $1,153,392 20.39% 1.87% 9.21% 0.30% 230.61%
05/30/96 MAF Bancorp/IL
09/15/95 Metro Savings Bank, Wood River Pooling $83,511 6.82% 0.10% 1.52% 0.27% 229.56%
03/07/96 Mercantile Bancorp/IL
10/12/94 First Robinson Bncp., Robinson Pooling $106,506 9.72% 1.12% 12.63% 0.05% 1084.62%
11/01/95 Ambanc Corp./IL
01/09/95 Deerbank Corp., Deerfield Pooling $757,787 8.19% 1.13% 14.40% 0.41% 149.97%
07/03/95 NBD Bancorp/MI
11/08/94 Peoples FS&LA, Chicago Purchase $32,385 18.91% 0.57% 3.28% 0.39% 44.34%
04/10/95 Mid-Citco, Inc./IL
08/26/94 First Moline Financial, Moline Pooling $83,264 6.96% 0.69% 9.07% 0.55% 48.11%
03/23/95 Firstar Corporation/WI
10/26/94 FirstRock Bancorp, Rockford Pooling $398,118 12.40% 1.16% 9.78% 0.65% 105.26%
02/28/95 First Financial Corp./WI
07/27/94 King City FSB, Mt. Vernon Pooling $176,281 6.00% 0.46% 7.86% 0.13% 658.55%
02/01/95 CNB Bancshares/IN
03/24/94 AmeriFed Fin. Corp., Joliet Purchase $909,733 10.23% 0.86% 8.50% 0.53% 92.29%
01/09/95 NBD Bancorp/MI
07/26/94 River Valley FSB, Peoria Purchase $502,718 5.73% 0.27% 4.10% 0.65% 27.99%
01/04/95 First Bank, Inc./MO
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Transactions Acquisition Terms Control Premium Acquisition Pricing
At Completion Date
- -----------------------------------------------------------------------------------------------------------------------------------
Offer Price/
Total Offer Cash One Day
Date Announced/ Target/State Deal Price/ Debt Pre-Offer
Completed Acquiror/State Value Share Stock Price P/B P/TB P/A P/E
--------- -------------- ----- ----- ----- ----- --- ---- --- ---
($Mil) ($) (x) (%) (%) (%) (x)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
08/13/96 Home Federal Savings Bank/IL $6.3 $21.00 Cash NA 129% 129% 19.50% 16.70
Pending Charter Financial, Inc/IL
08/02/96 Liberty Bancorp, Inc/IL $60.1 $24.51 Stock 1.02 95% 95% 9.32% 18.43
Pending Hinsdale Financial Corp/IL
08/15/96 LCS Bancorp, Inc/IL NA $17.75 Cash Not Traded NA NA NA NA
Pending Jacksonville Svgs Bank/IL
04/22/96 Financial Security Corp/IL $43.4 NA Cash & NA 109% 109% 16.79% 20.70
09/30/96 Pinnacle Bancgroup/IL Stock
1/26/96 Barrington Bancorp, Barrington $17.1 $25.85 Stock 1.33 149% 149% 25.26% 35.90
Pending First Chicago NBD Corp./IL
12/14/95 Bell Bancorp, Chicago $362.8 $37.50 Cash 1.14 112% 112% 18.71% 29.76
06/07/96 Standard Federal Bank/IL
11/29/95 N.S. Bancorp, Chicago $267.0 $41.29 Cash & 1.14 107% 107% 23.15% 12.51
05/30/96 MAF Bancorp/IL Stock
09/15/95 Metro Savings Bank, Wood River $9.0 $46.42 Stock Not Traded 156% 156% 10.88% 12.85
03/07/96 Mercantile Bancorp/IL
10/12/94 First Robinson Bncp., Robinson $20.4 $170.87 Stock Not Traded 197% 198% 19.15% 20.54
11/01/95 Ambanc Corp./IL
01/09/95 Deerbank Corp., Deerfield $119.8 $45.00 Stock 1.33 185% 186% 15.81% 14.20
07/03/95 NBD Bancorp/MI
11/08/94 Peoples FS&LA, Chicago $5.9 $19.00 Cash Not Traded 96% 96% 18.22% 30.26
04/10/95 Mid-Citco, Inc./IL
08/26/94 First Moline Financial, Moline $9.2 $31.00 Stock Not Traded 159% 159% 11.05% 16.46
03/23/95 Firstar Corporation/WI
10/26/94 FirstRock Bancorp, Rockford $64.7 $27.10 Stock 1.22 133% 133% 16.25% 14.19
02/28/95 First Financial Corp./WI
07/27/94 King City FSB, Mt. Vernon $19.8 $35.34 Stock 1.34 188% 199% 11.23% NM
02/01/95 CNB Bancshares/IN
03/24/94 AmeriFed Fin. Corp., Joliet $148.7 $45.00 Stock 1.37 156% 163% 16.35% 19.40
01/09/95 NBD Bancorp/MI
07/26/94 River Valley FSB, Peoria $37.4 $247.81 Cash Not Traded 129% 129% 7.44% NM
01/04/95 First Bank, Inc./MO
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
RP Financial, LC.
-------------------------------------------------------------------------
Completed and Pending Acquisitions of Thrifts in Illinois, 1994 - Present
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Transactions Target Company's Financial Data
At Completion Date
- -----------------------------------------------------------------------------------------------------------------------------------
Date Announced/ Target/State Pooling/ Equity/ T.T. T.T. NPAs/(1) Reserves/
Completed Acquiror/State Purchase Assets Assets ROAA ROAE Assets NPAs
--------- -------------- -------- ------ ------ ---- ---- ------ ----
($000) (%) (%) (%) (%) (%)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C>
05/04/94 Amity Bancshares, Tinley Park Purchase $132,034 14.98% 0.75% 5.15% 0.05% 540.30%
12/19/94 Advantage Bancorp/WI
07/06/93 Cragin Fin. Corp., Chicago Purchase $2,766,011 12.73% 1.23% 10.46% 0.98% 82.41%
06/06/94 ABN-AMRO Holdings/IL
10/12/93 LGF Bancorp, LaGrange Pooling $416,511 10.29% 0.88% 8.81% 0.46% 24.81%
04/29/94 First of America Bank Corp./MI
06/17/93 Heart of IL Bk. FSB, Sprg. Vly. Purchase $70,178 8.36% 1.63% 23.95% 0.36% 106.87%
01/07/94 Princeton National Bancorp/IL
AVERAGE $526,858 11.59% 0.82% 7.86% 0.47% 334.02%
MEDIAN $226,669 10.26% 0.72% 6.88% 0.40% 105.26%
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Transactions Acquisition Terms Control Premium Acquisition Pricing
At Completion Date
- -----------------------------------------------------------------------------------------------------------------------------------
Offer Price/
Total Offer Cash One Day
Date Announced/ Target/State Deal Price/ Debt Pre-Offer
Completed Acquiror/State Value Share Stock Price P/B P/TB P/A P/E
--------- -------------- ----- ----- ----- ----- --- ---- --- ---
($Mil) ($) (x) (%) (%) (%) (x)
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
05/04/94 Amity Bancshares, Tinley Park $24.8 $36.25 Cash 1.10 126% 126% 18.78% 25.00
12/19/94 Advantage Bancorp/WI
07/06/93 Cragin Fin. Corp., Chicago $563.3 $38.00 Cash 1.51 150% 163% 20.37% 15.45
06/06/94 ABN-AMRO Holdings/IL
10/12/93 LGF Bancorp, LaGrange $70.8 $33.16 Stock 1.19 142% 142% 17.00% 16.30
04/29/94 First of America Bank Corp./MI
06/17/93 Heart of IL Bk. FSB, Sprg. Vly. $6.6 NA Stock Not Traded 112% 124% 9.40% 5.26
01/07/94 Princeton National Bancorp/IL
$97.7 $52.38 1.24 138% 141% 16.03% 19.20
$37.4 $34.25 1.22 133% 133% 16.79% 16.70
</TABLE>
(1) NPAs consist of REO, non-accruing loans, and loans 90+ days delinquent.
November 8, 1996
<PAGE>
EXHIBIT IV-5
American Savings Bank of Danville
Director and Senior Management Summary Resumes
<PAGE>
American Savings Bank of Danville
Director and Senior Management Summary Resumes
Thomas B. Meyer Mr Meyer is an attorney in private practice in
Danville, Illinois. He has served as Chairman of the Board since 1992.
Merrill G. Norton Mr. Norton has served as the Bank's president and
chief executive officer since 1992. He was the sole proprietor of Merrill G.
Norton, C.P.A. from 1973 to 1992.
Carl W. Busby Mr. Busby is an auctioneer, farm and real estate
appraiser and agriculture real estate salesman. He is the president and owner
with his wife of Busby Farms, Inc. and Busby Land and Auction Co., Inc.
Dr. Robert L. Ewbank Dr. Ewbank has been a medical consultant since
1995 when he retired from his oral and maxillofacial surgery practice in
Danville, Illinois.
William T. Ingram Mr. Ingram operates a number of businesses in the
Danville, Illinois area, including Automobile Diagnostics, Quick Air Freight,
Ingram's Quicklube and Ingram's Apartments.
Source: American Savings' prospectus.
<PAGE>
EXHIBIT IV-6
American Savings Bank of Danville
Pro Forma Regulatory Capital Ratios
<PAGE>
EXHIBIT IV-6
American Savings Bank of Danville
Pro Forma Regulatory Capital Ratios
<TABLE>
<CAPTION>
Pro Forma at September 30, 1996 Based on
-----------------------------------------------------------------------
Historical at 255,000 Shares 300,000 Shares 345,000 Shares
September 30, 1996 (Minimum of Range) (Midpoint of Range) (Maximum of Range)
--------------------- ---------------------- ---------------------- ---------------------
Percent Percent Percent Percent
Amount of Assets (1) Amount of Assets (1) Amount of Assets (1) Amount of Assets (1)
------ ------------- ------ ------------- ------ ------------- ------ -------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Company:
Tier 1 risk-weighted level -- --% $4,351 25.01% $4,740 26.95% $5,129 28.84%
Requirement.............. -- -- 696 4.00% 704 4.00% 711 4.00%
------ ------ ------ ------ ------ ------
Excess................... -- -- $3,655 21.01% $4,036 22.95% $4,418 24.84%
====== ===== ====== ===== ====== =====
Tier 1 adjusted total level -- -- $4,351 11.63% $4,730 12.53% $5,129 13.42%
Requirement.............. -- -- 1,123 3.00% 1,134 3.00% 1,146 3.00%
------ ----- ----- ----- ----- ------
Excess................... -- -- $3,228 8.63% $3,606 9.53% $3,983 10.42%
====== ===== ====== ===== ====== =====
Total risk-based level..... -- -- $4,494 25.84% $4,883 27.76% $5,272 29.65%
Requirement.............. -- -- 1.392 8.00% 1,407 8.00% 1,423 8.00%
------ ------ ------ ------ ------ ------
Excess................... -- -- $3,102 17.84% $3,476 19.76% $3,849 21.65%
====== ===== ====== ===== ====== =====
The Bank:
Tier 1 risk-weighted level. $2,371 14.45% $3,780 21.96% $4,058 23.36% $4,336 24.74%
Requirement.............. 656 4.00% 688 4.00% 695 4.00% 701 4.00%
------ ----- ------ ----- ------ ----- ------ -----
Excess................... $1,715 10.45% $3,092 17.96% $3,363 19.36% $3,635 20.74%
====== ===== ====== ===== ====== ===== ====== =====
Tier 1 adjusted total level $2,371 6.69% $3,780 10.20% $4,058 10.86% $4,336 11.50%
Requirement(2)........... 1,418 4.00% 1,482 4.00% 1,495 4.00% 1,508 4.00%
----- ---- ----- ---- ----- ---- ----- -----
Excess................... $ 953 2.69% $2,298 6.20% $2,563 6.86% $2,828 7.50%
====== ==== ====== ===== ====== ===== ====== =====
Total risk-based level..... $2,514 15.33% $3,923 22.79% $4,201 24.19% $4,479 25.56%
Requirement.............. 1,312 8.00% 1,377 8.00% 1,389 8.00% 1,402 8.00%
------ ----- ------ ----- ------ ----- ------ -----
Excess................... $1,202 7.33% $2,546 14.79% $2,812 16.19% $3,077 17.56%
====== ===== ====== ===== ====== ===== ====== =====
</TABLE>
Pro Forma at September 30, 1996
Based on
-------------------------------
396,750 Shares
(Maximum As Adjusted)
----------------------
Percent
Amount of Assets (1)
------ -------------
(Dollars in Thousands)
The Company:
Tier 1 risk-weighted level $5,576 30.98%
Requirement.............. 720 4.00%
------ ------
Excess................... $4,856 26.98%
====== =====
Tier 1 adjusted total level 5,576 14.42%
Requirement.............. 1,160 3.00%
------ ------
Excess................... $4,416 11.42%
====== =====
Total risk-based level..... $5,718 31.76%
Requirement.............. 1,440 8.00%
------ ------
Excess................... $4,278 23.76%
====== =====
The Bank:
Tier 1 risk-weighted level. $4,655 26.29%
Requirement.............. 708 4.00%
------ ------
Excess................... $3,947 22.29%
====== =====
Tier 1 adjusted total Level $4,655 12.24%
Requirement(2)........... 1,522 4.00%
------ -----
Excess................... $3,133 8.24%
====== =====
Total risk-based level..... $4,798 27.10%
Requirement.............. 1,416 8.00%
----- -----
Excess................... $3,382 19.10%
====== =====
- ----------
(1) Average or risk-weighted assets, as appropriate.
(2) Reflects the minimum FDIC requirements. The FDIC could require the Bank to
hold a Tier 1 leverage ratio of up to 5.0%
Source: American Savings' prospectus.
<PAGE>
EXHIBIT IV-7
American Savings Bank of Danville
Pro Forma Analysis Sheet
<PAGE>
RP Financial, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-7
PRO FORMA ANALYSIS SHEET -- PAGE 1
American Savings Bank
Prices as of November 15, 1996
<TABLE>
<CAPTION>
Comparable All IL All SAIF
Companies Companies Companies
--------------- --------------- ---------------
Price Multiple: Symbol Subject(1) Mean Median Mean Median Mean Median
- -------------- ------ ---------- ---- ------ ---- ------ ---- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Price-earnings ratio = P/E ***.**x 19.23x 19.26x 18.67x 19.66x 16.26x 17.22x
Price-core earnings = P/CORE 18.57x 20.27x 22.86x 16.98x 16.75x 15.64x 15.69x
Price-book ratio = P/B 63.51% 91.34% 93.10% 99.74% 96.76% 114.64% 109.34%
Price-tng book ratio = P/TB 63.56% 91.47% 93.29% 101.71% 99.01% 117.58% 111.15%
Price-assets ratio = P/A 7.93% 11.74% 11.81% 13.92% 13.09% 14.06% 12.46%
</TABLE>
<TABLE>
<CAPTION>
Valuation Parameters
- --------------------
<S> <C> <C> <C>
Pre-Conv Earnings (Y) $ -71,000 Est ESOP Borrowings (E) $ 240,000
Pre-Conv Book Value (B) $ 2,355,000 Cost of ESOP Borrowings (S) 0.00% (4)
Pre-Conv Assets (A) $ 35,459,000 Amort of ESOP Borrowings (T) 10 Years
Reinvestment Rate(2) (R) 4.32% Recognition Plans Amount (M) $ 120,000
Est Conversion Exp(3) (X) 271,000 Recognition Plans Expense (N) $ 24,000
Proceeds Not Reinvested (Z) $ 360,000
</TABLE>
Calculation of Pro Forma Value After Conversion
- -----------------------------------------------
1. V = P/E (Y-R(X+Z)-ES-(1-TAX)E/T-(1-TAX)N)) V = $ 3,000,000
----------------------------------------
1-(P/E)R
2. V = P/B (B-X-E-M) V = $ 3,000,582
------------------
1-P/B
3. V = P/A (A-X-M-E) V = $ 2,999,740
------------------
1-P/A
Total Price Total
Conclusion Shares Per Share Value
- ---------- -------- --------- --------
Appraised Value 300,000 $10.00 $ 3,000,000
RANGE:
- ------
- - Minimum 255,000 $10.00 $ 2,550,000
- - Maximum 345,000 $10.00 $ 3,450,000
- - Superrange 396,750 $10.00 $ 3,967,500
(1) Pricing ratios shown reflect the midpoint appraised value.
(2) Net return assumes a reinvestment rate of 6.54 percent, and a tax rate of
34.00 percent.
(3) Conversion expenses reflect estimated expenses as presented in offering
document.
(4) Assumes a borrowings cost of 0.00 percent and a tax rate of 34.00 percent.
<PAGE>
RP Financial, Inc.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-7
PRO FORMA ANALYSIS SHEET -- PAGE 2
American Savings Bank
Prices as of November 15, 1996
Mean Pricing Median Pricing
----------------- -----------------
Valuation Approach Subject Peers (Disc) Peers (Disc)
- ------------------ --------- ------- ------- ------- -------
P/E Price-earnings -7067.40x 19.23x NM % 19.26x NM %
P/CORE Price-core earnings 18.57x 20.27x -8.41% 22.86x -18.77%
P/B Price-book 63.51% 91.34% -30.47% 93.10% -31.79%
P/TB Price-tang. book 63.56% 91.47% -30.51% 93.29% -31.87%
P/A Price-assets 7.93% 11.74% -32.48% 11.81% -32.83%
Average Premium (Discount) -25.47% -28.81%
<PAGE>
EXHIBIT IV-8
American Savings Bank of Danville
Pro Forma Effect of Conversion Proceeds
<PAGE>
RP Financial, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
American Savings Bank
At the Minimum of the Range
1. Conversion Proceeds
Pro-forma market value ------------------------------ $ 2,550,000
Less: Estimated offering expenses --------------- 264,000
------------
Net Conversion Proceeds ----------------------------- $ 2,286,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds ----------------------------- $ 2,286,000
Less: Held in Non-Earning Assets(5)(1) ---------- 306,000
------------
Net Proceeds Reinvested ----------------------------- $ 1,980,000
Estimated net incremental rate of return ------------ 4.32%
------------
Earnings Increase ----------------------------------- $ 85,465
Less: Estimated cost of ESOP borrowings(1) ------ 0
Less: Amortization of ESOP borrowings(2) -------- 13,464
Less: Recognition Plans Expense(4)--------------- 13,464
------------
Net Earnings Increase ------------------------------- $ 58,537
3. Pro-Forma Earnings (rounded)
Period Before Conversion After Conversion
------ ----------------- ----------------
12 Months ended September 30, 1996 $ -71,000 $ -12,463
12 Months ended September 30, 1996 (Core) $ 91,000 $ 149,537
4. Pro-Forma Net Worth (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ---------------
<S> <C> <C> <C>
September 30, 1996 $ 2,355,000 $ 1,980,000 (3)(4) $ 4,335,000
September 30, 1996 (Tangible) $ 2,351,000 $ 1,980,000 (3)(4) $ 4,331,000
</TABLE>
5. Pro-Forma Net Assets (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ---------------
<S> <C> <C> <C>
September 30, 1996 $ 35,459,000 $ 1,980,000 $ 37,439,000
</TABLE>
NOTE: Shares for calculating per share amounts: 255,000
(1) Estimated ESOP borrowings of $ 204,000 with an after-tax cost of 0.00
percent, assuming a borrowing cost of 0.00 percent and a tax rate of 34.00
percent. ESOP financed by holding company - excluded from reinvestment and
total assets.
(2) ESOP borrowings are amortized over 10 years, amortization is tax-effected.
(3) ESOP borrowings of $ 204,000 are omitted from net worth.
(4) $ 102,000 purchased by the Recognition Plans with an estimated pre-tax
expense of $ 20,400 and a tax rate of 34.00 percent.
(5) Stock purchased by Recognition Plans does not generate reinvestment income.
<PAGE>
RP Financial, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
American Savings Bank
At the Midpoint of the Range
1. Conversion Proceeds
Pro-forma market value ------------------------------ $ 3,000,000
Less: Estimated offering expenses --------------- 271,000
------------
Net Conversion Proceeds ----------------------------- $ 2,729,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds ----------------------------- $ 2,729,000
Less: Held in Non-Earning Assets(5)(1) ---------- 360,000
------------
Net Proceeds Reinvested ----------------------------- $ 2,369,000
Estimated net incremental rate of return ------------ 4.32%
------------
Earnings Increase ----------------------------------- $ 102,256
Less: Estimated cost of ESOP borrowings(1) ------ 0
Less: Amortization of ESOP borrowings(2) -------- 15,840
Less: Recognition Plans Expense(4)--------------- 15,840
------------
Net Earnings Increase ------------------------------- $ 70,576
3. Pro-Forma Earnings (rounded)
Period Before Conversion After Conversion
------ ----------------- ----------------
12 Months ended September 30, 1996 $ -71,000 $ -424
12 Months ended September 30, 1996 (Core) $ 91,000 $ 161,576
4. Pro-Forma Net Worth (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ---------------
<S> <C> <C> <C>
September 30, 1996 $ 2,355,000 $ 2,369,000 (3)(4) $ 4,724,000
September 30, 1996 (Tangible) $ 2,351,000 $ 2,369,000 (3)(4) $ 4,720,000
</TABLE>
5. Pro-Forma Net Assets (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ---------------
<S> <C> <C> <C>
September 30, 1996 $ 35,459,000 $ 2,369,000 $ 37,828,000
</TABLE>
NOTE: Shares for calculating per share amounts: 300,000
(1) Estimated ESOP borrowings of $ 240,000 with an after-tax cost of 0.00
percent, assuming a borrowing cost of 0.00 percent and a tax rate of 34.00
percent. ESOP financed by holding company - excluded from reinvestment and
total assets.
(2) ESOP borrowings are amortized over 10 years, amortization is tax-effected.
(3) ESOP borrowings of $ 240,000 are omitted from net worth.
(4) $ 120,000 purchased by the Recognition Plans with an estimated pre-tax
expense of $ 24,000 and a tax rate of 34.00 percent.
(5) Stock purchased by Recognition Plans does not generate reinvestment income.
<PAGE>
RP Financial, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
American Savings Bank
At the Maximum of the Range
1. Conversion Proceeds
Pro-forma market value ------------------------------ $ 3,450,000
Less: Estimated offering expenses --------------- 278,000
------------
Net Conversion Proceeds ----------------------------- $ 3,172,000
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds ----------------------------- $ 3,172,000
Less: Held in Non-Earning Assets(5)(1) ---------- 414,000
------------
Net Proceeds Reinvested ----------------------------- $ 2,758,000
Estimated net incremental rate of return ------------ 4.32%
------------
Earnings Increase ----------------------------------- $ 119,046
Less: Estimated cost of ESOP borrowings(1) ------ 0
Less: Amortization of ESOP borrowings(2) -------- 18,216
Less: Recognition Plans Expense(4)--------------- 18,216
------------
Net Earnings Increase ------------------------------- $ 82,614
3. Pro-Forma Earnings (rounded)
Period Before Conversion After Conversion
------ ----------------- ----------------
12 Months ended September 30, 1996 $ -71,000 $ 11,614
12 Months ended September 30, 1996 (Core) $ 91,000 $ 173,614
4. Pro-Forma Net Worth (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ---------------
<S> <C> <C> <C>
September 30, 1996 $ 2,355,000 $ 2,758,000 (3)(4) $ 5,113,000
September 30, 1996 (Tangible) $ 2,351,000 $ 2,758,000 (3)(4) $ 5,109,000
</TABLE>
5. Pro-Forma Net Assets (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ---------------
<S> <C> <C> <C>
September 30, 1996 $ 35,459,000 $ 2,758,000 $ 38,217,000
</TABLE>
NOTE: Shares for calculating per share amounts: 345,000
(1) Estimated ESOP borrowings of $ 276,000 with an after-tax cost of 0.00
percent, assuming a borrowing cost of 0.00 percent and a tax rate of 34.00
percent. ESOP financed by holding company - excluded from reinvestment and
total assets.
(2) ESOP borrowings are amortized over 10 years, amortization is tax-effected.
(3) ESOP borrowings of $ 276,000 are omitted from net worth.
(4) $ 138,000 purchased by the Recognition Plans with an estimated pre-tax
expense of $ 27,600 and a tax rate of 34.00 percent.
(5) Stock purchased by Recognition Plans does not generate reinvestment income.
<PAGE>
RP Financial, LC.
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-8
PRO FORMA EFFECT OF CONVERSION PROCEEDS
American Savings Bank
At the Superrange Maximum
1. Conversion Proceeds
Pro-forma market value ------------------------------ $ 3,967,500
Less: Estimated offering expenses --------------- 287,000
------------
Net Conversion Proceeds ----------------------------- $ 3,680,500
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds ----------------------------- $ 3,680,500
Less: Held in Non-Earning Assets(5)(1) ---------- 476,100
------------
Net Proceeds Reinvested ----------------------------- $ 3,204,400
Estimated net incremental rate of return ------------ 4.32%
------------
Earnings Increase ----------------------------------- $ 138,315
Less: Estimated cost of ESOP borrowings(1) ------ 0
Less: Amortization of ESOP borrowings(2) -------- 20,948
Less: Recognition Plans Expense(4)--------------- 20,948
------------
Net Earnings Increase ------------------------------- $ 96,418
3. Pro-Forma Earnings (rounded)
Period Before Conversion After Conversion
------ ----------------- ----------------
12 Months ended September 30, 1996 $ -71,000 $ 25,418
12 Months ended September 30, 1996 (Core) $ 91,000 $ 187,418
4. Pro-Forma Net Worth (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ---------------
<S> <C> <C> <C>
September 30, 1996 $ 2,355,000 $ 3,204,400 (3)(4) $ 5,559,400
September 30, 1996 (Tangible) $ 2,351,000 $ 3,204,400 (3)(4) $ 5,555,400
</TABLE>
5. Pro-Forma Net Assets (rounded)
<TABLE>
<CAPTION>
Date Before Conversion Conversion Proceeds After Conversion
---- ----------------- ------------------- ---------------
<S> <C> <C> <C>
September 30, 1996 $ 35,459,000 $ 3,204,400 $ 38,663,400
</TABLE>
NOTE: Shares for calculating per share amounts: 396,750
(1) Estimated ESOP borrowings of $ 317,400 with an after-tax cost of 0.00
percent, assuming a borrowing cost of 0.00 percent and a tax rate of 34.00
percent. ESOP financed by holding company - excluded from reinvestment and
total assets.
(2) ESOP borrowings are amortized over 10 years, amortization is tax-effected.
(3) ESOP borrowings of $ 317,400 are omitted from net worth.
(4) $ 158,700 purchased by the Recognition Plans with an estimated pre-tax
expense of $ 31,740 and a tax rate of 34.00 percent.
(5) Stock purchased by Recognition Plans does not generate reinvestment income.
<PAGE>
EXHIBIT IV-9
Peer Group Core Earnings Analysis
<PAGE>
RP FINANCIAL, LC.
- -----------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Core Earnings Analysis
Comparable Institution Analysis
For the Twelve Months Ended September 30, 1996
<TABLE>
<CAPTION>
Estimated
Net Income Less: Net Tax Effect Less: Extd Core Income Estimated
to Common Gains(Loss) @ 34% Items to Common Shares Core EPS
---------- ----------- ---------- ---------- ---------- ---------- -------
($000) ($000) $000) ($000) ($000) ($000) ($)
Comparable Group
- ----------------
<C> <S> <C> <C> <C> <C> <C> <C> <C>
ATSB AmTrust Capital Corp. of IN(1) 333 -476 162 0 19 528 0.04
BDJI First Fed. Bancorp. of MN 316 583 -198 0 701 701 1.00
FFHS First Franklin Corp. of OH 598 1,103 -375 0 1,326 1,158 1.15
HBBI Home Building Bancorp of IN -137 223 -76 0 10 312 0.03
HZFS Horizon Fin'l. Services of IA 96 222 -75 0 243 448 0.54
LSBI LSB Fin. Corp. of Lafayette IN 826 -116 39 0 749 918 0.82
MFBC MFB Corp. of Mishawaka IN(1) 1,411 -46 16 0 1,381 1,974 0.70
NBSI North Bancshares of Chicago IL 390 473 -161 0 702 1,072 0.66
SOBI Sobieski Bancorp of S. Bend IN(1) 335 0 0 0 335 894 0.37
THR Three Rivers Fin. Corp. of MI(1) 670 -85 29 0 614 851 0.72
</TABLE>
(1) Financial information is for the quarter ending June 30, 1996.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, Inc. calculations. The information
provided in this table has been obtained from sources we believe are
reliable, but we cannot guarantee the accuracy or completeness of such
information.
Copyright (c) 1995 by RP Financial, LC.
<PAGE>
EXHIBIT V-1
RP Financial, LC.
Firm Qualifications Statement
<PAGE>
FIRM QUALIFICATION STATEMENT
RP Financial provides financial and management consulting and valuation services
to the financial services industry nationwide, particularly federally-insured
financial institutions. RP Financial establishes long- term client relationships
through its wide array of services, emphasis on quality and timeliness, hands-on
involvement by our principals and senior consulting staff, and careful
structuring of strategic plans and transactions. RP Financial's staff draws from
backgrounds in consulting, regulatory agencies and investment banking, thereby
providing our clients with considerable resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's strategic and capital planning services are designed to provide
effective workable plans with quantifiable results. Through a program referred
to as SAFE, Strategic Alternatives Financial Evaluations, RP Financial analyzes
strategic options which will enhance shareholder value or otherwise achieve
desired results. Our planning services involve conducting situation analyses and
establishing mission statements, strategic goals and objectives, with overall
emphasis on enhancement of franchise value, capital management and planning,
earnings improvement and operational issues. Our planning services include the
development of strategies in the following areas: capital formation and
management, asset/liability targets, profitability and return on equity. Our
proprietary financial simulation model provides the basis for evaluating the
financial impact of alternative strategies as well as assessing the feasibility
and compatibility of such strategies with regulations and/or other guidelines.
MERGER AND ACQUISITION SERVICES
RP Financial's merger and acquisition (M&A) services include targeting
candidates and potential acquirors, assessing acquisition merit, conducting
detailed due diligence, negotiating and structuring transactions, preparing
merger business plans and financial simulations, rendering fairness opinions and
assisting in implementing post- acquisition strategies. Through our financial
simulations, comprehensive in-house data bases, valuation expertise and
regulatory knowledge, RP Financial's M&A consulting focuses on structuring
transactions to enhance shareholder returns.
VALUATION SERVICES
RP Financial's extensive valuation practice includes valuations for a variety of
purposes including mergers and acquisitions, mutual-to-stock conversions, ESOPs,
subsidiary and related industry companies, mark-to- market transactions, loan
and servicing portfolios, non-traded securities, deposit portfolios and core
deposits. Our principals and staff are highly experienced in performing
valuation appraisals which conform with regulatory guidelines and appraisal
industry standards. RP Financial is the nation's leading valuation firm for
mutual-to-stockconversions of thrift institutions.
OTHER CONSULTING SERVICES AND DATA BASES
RP Financial offers a variety of other services including branching strategies,
feasibility studies and special research studies, which are complemented by our
quantitative and computer skills. RP Financial's consulting services are aided
by its in-house data base resources for commercial banks and savings
institutions and proprietary valuation and financial simulation models.
RP Financial's Key Personnel (Years of Relevant Experience)
Ronald S. Riggins, Managing Director (16)
William E. Pommerening, Managing Director (11)
Gregory E. Dunn, Senior Vice President (15)
James P. Hennessey, Senior Vice President (10)
James J. Oren, Vice President (9)
Timothy M. Biddle, Vice President (7)
Alan P. Carruthers, Director-Community Banking (15)
<PAGE>
A PROPERLY COMPLETED ORIGINAL STOCK ORDER FORM
MUST BE USED TO SUBSCRIBE. NO COPIES OF THIS FORM
WILL BE ACCEPTED.
Vermilion Bancorp, Inc.
Stock Order Form
================================================================================
---------------------
Expiration Date:
March __, 1997
12:00 noon
---------------------
CONVERSION CENTER
714 Vermillion Street
Danville, Illinois
Note: Please read the Stock Order Form Instructions and
Guide as you complete this form.
================================================================================
(1) Number of Shares Subscription Price (2) Total Payment Due
- -------------------- ------------------------
$10.00
- -------------------- ------------------------
The minimum number of shares that may be subscribed for is 25. In the
Subscription Offering, the maximum amount of shares that any Eligible Account
Holder, Supplemental Eligible Account Holder or other Member (or persons
exercising Subscription Rights through a single account) may purchase cannot
exceed $50,000 of Common Stock. In addition, no person, together with
associates of and persons acting in concert with such person, may purchase
more than $150,000 of Common Stock offered in the Conversion. Subscribers are
urged to read the attached Stock Order Form Instructions and Guide-Items 1
and 2 for a description of the maximum purchase limitations in the Conversion
applicable to all persons and associates and persons acting in concert.
================================================================================
Method of Payment Purchaser Information
(3) |_| Enclosed is a check, bank (5)a |_| Check here if you are a director,
draft or money order made officer or employee of American
payable to American Savings Savings Bank of Danville or a
Bank of Danville. member of such person's immediate
family.
- ---------- Cash can be used only if (5)b Enter information for all accounts
$ presented in person at you had at the Eligibility Record Date
- ---------- the Conversion Center (July 31, 1995) Supplemental Eligibility
Record Date (December 31, 1996) and the
cut off date for Other Members February
__, 1997).
(4) |_| The undersigned authorizes
withdrawal from this
(these) account(s) at
American Savings Bank of
Danville.
Account Title
Title Account Date
(Name on Accts) Number Opened
----------------------------------------
Account Number Amount
___________________________________ ________________________________________
$
___________________________________ ________________________________________
$
___________________________________ ________________________________________
$
___________________________________ ________________________________________
$
___________________________________ ________________________________________
Total Withdrawal Amount $
________ ________________________________________
There is no penalty for early If additional space is needed,
withdrawal used for this payment. please utilize the back of this
order form.
Stock Registration
(6) Form of Stock Ownership:
|_| Individual |_| Joint tenants |_| Tenants in common |_| UTMA
|_| Fiduciary |_| Corporation or partnership |_| Other___________
(i.e., trust, estate, etc.)
- --------------------------------------------------------------------------------
(7) Name(s) in which your stock is Social Security No. or Tax ID No.
to be registered (Please Print Clearly)
- --------------------------------------------------------------------------------
Name(s) in which your stock is to be registered (Please Print Clearly)
- --------------------------------------------------------------------------------
Street Address/City/State/Zip Code County of Residence
- --------------------------------------------------------------------------------
------------------------- --------------------------
Telephone Information (8) Daytime Phone Evening Phone
( ) ( )
------------------------- --------------------------
NASD Affiliation
(9) |_| Check here if you are a member of the National Association of Securities
Dealers, Inc. ("NASD"), a person associated with an NASD member, a member of the
immediate family of any such person to whose support such person contributes,
directly or indirectly, or the holder of an account in which an NASD member or
person associated with an NASD member has a beneficial interest. To comply with
conditions under which an exemption from the NASD's Interpretation With Respect
to Free-Riding and Withholding is available, you agree, if you have checked the
NASD Affiliation box, (i) not to sell, transfer or hypothecate the stock for a
period of [120] days following issuance, and (ii) to report this subscription in
writing to the applicable NASD member within one day of payment therefor.
(10) |_| Check here, and complete the reverse side of this Form, if you or any
associate (as defined on the reverse side of this Form) or persons acting in
concert with you have submitted other orders for shares in the Subscription
and/or Community Offerings.
Acknowledgement
(11) To be effective, this fully completed Stock Order Form must be actually
received by American Savings Bank of Danville no later than 12:00 noon, Illinois
Time, on March __, 1997 unless extended, otherwise this Stock Order Form and all
subscription rights will be void. Completed Stock Order Forms, together with the
required payment or withdrawal authorization, may be delivered to American
Savings Bank of Danville or may be mailed to the address indicated on the
enclosed business reply envelope. It is understood that this Stock Order Form
will be accepted in accordance with, and subject to, the terms and conditions of
the Plan of Conversion of American Savings Bank of Danville described in the
accompanying Prospectus, receipt of which is hereby acknowledged at least 48
hours prior to delivery of this Stock Order Form to American Savings Bank of
Danville.
The undersigned agrees that after receipt by American Savings Bank of Danville,
this order form may not be modified, withdrawn or cancelled without the Bank's
consent and if authorization to withdraw from the deposit accounts at the Bank
has been given as payment for shares the amount authorized for withdrawal shall
not otherwise be available for withdrawal by the undersigned.
Under penalty of perjury, I certify that the Social Security or Tax ID Number
and the information provided under numbers 7 and 9 of this Stock Order Form are
true, correct and complete and that I am not subject to back-up withholding
because: (i) I am exempt from backup withholding; (ii) I have not been notified
by the Internal Revenue Service ("IRS") that I am subject to backup withholding
as a result of failure to report all interest or dividends; or (iii) the IRS has
notified me that I am no longer subject to backup withholding.
- --------------------------------------------------------------------------------
(12) Signature Date Signature Date
- --------------------------------------------------------------------------------
Item (5)b--continued
Account Title (Names on Accts) Account Number Date Opened
-----------------------------------------------------------------
-----------------------------------------------------------------
<PAGE>
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
Item (10)--continued
List below all other orders submitted by you or associates (as defined below) or
by persons acting in concert with you.
Name(s) listed on other Order Form Number of Shares Ordered
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ----------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ----------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ----------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ----------------------------------------------
- --------------------------------------------------------------------------------
"Associate" is defined as: (i) a corporation or organization (other than the
Bank, a majority-owned subsidiary of the Bank or the Company) of which such
person is an officer or a partner or is, directly or indirectly, the beneficial
owner of 10% or more of any class of equity securities; (ii) any trust or other
estate in which such person has a substantial beneficial interest or as to which
such person serves as a trustee or in a similar fiduciary capacity; and (iii)
any relative or spouse of such person, or any relative of such spouse of such
person, who has the same home as such person or who is a director or officer of
the Bank or the Company or any subsidiaries thereof. Directors of of the Bank or
the Company are not treated as associates solely because of their Board
membership.
<PAGE>
REQUEST FOR ADDITIONAL
INFORMATION ABOUT
THE CONVERSION
Please send me the Plan of Conversion, including the proposed Amended and
Restated Articles of Incorporation and Bylaws of American Savings Bank of
Danville.
I understand this request for information does not obligate me to purchase any
shares of common stock.
Business
Name:_______________________________________ Phone (___)______________
Address: __________________________________ Home
Phone (___)_______________
__________________________________
__________________________________
__________________________________
<PAGE>
(Introductory Letter to Customer)
(American Savings Bank of Danville Letterhead)
_______, 1997
Name
Address
City, State, Zip
Dear ______________:
You may have read recently in the newspaper that American Savings Bank of
Danville will soon be converting from a mutual to a stock institution. This
conversion will allow customers the opportunity to subscribe for shares of
common stock of Vermilion Bancorp, Inc., recently incorporated for the purpose
of becoming American Savings Bank 's holding company.
As a customer, you should have recently received a Prospectus and a Stock
Order Form which will allow you to subscribe for shares of Vermilion Bancorp,
Inc. should you so desire. In addition, we will be holding several presentations
for customers of American Savings Bank in order to review the conversion and the
merits of becoming a shareholder in Vermilion Bancorp, Inc. You will receive an
invitation shortly.
If you have any questions please feel free to call the American Savings
Bank Stock Information Center in Danville collect at (217) . We look forward to
seeing you at our presentation in a couple of weeks.
Sincerely,
Merrill G. Norton
President
This letter is neither an offer to sell nor a solicitation of an offer to buy
the shares of common stock of Vermilion Bancorp, Inc. The offer is made only by
the Prospectus, which was recently mailed to you. The shares of Vermilion
Bancorp, Inc. are not deposits and will not be insured by the Federal Deposit
Insurance Corporation or any other governmental agency.
<PAGE>
(Introductory Letter to Non-customer)
(American Savings Bank of Danville Letterhead)
_______, 1997
Name
Address
City, State, Zip
Dear ______________:
You may have read recently in the newspaper that American Savings Bank of
Danville will soon be converting from a mutual to a stock institution. This
conversion will allow customers and local community members the opportunity to
subscribe for shares in our proposed holding company, Vermilion Bancorp, Inc.
Enclosed are a Prospectus and Stock Order Form which will allow you to
order shares of common stock of Vermilion Bancorp, Inc. should you so desire. In
addition, we will be holding several presentations for friends of American
Savings Bank in order to review the Conversion and the merits of becoming a
shareholder in Vermilion Bancorp, Inc. You will receive an invitation shortly.
If you have any questions please feel free to call the American Savings
Bank Stock Information Center in Danville collect at (217) . We look forward to
seeing you at our presentation in a couple of weeks.
Sincerely,
Merrill G. Norton
President
This letter is neither an offer to sell nor a solicitation of an offer to buy
the shares of common stock of Vermilion Bancorp, Inc. The offer is made only by
the Prospectus, which was recently mailed to you. The shares of Vermilion
Bancorp, Inc. are not deposits and will not be insured by the Federal Deposit
Insurance Corporation or any other governmental agency.
<PAGE>
American Savings Bank of Danville
cordially invites you
to attend a brief presentation
followed by a
question and answer session
regarding the stock offering
of Vermilion Bancorp, Inc.
Please join us at
Place
Address
on
Date
at _____ p.m.
R.S.V.P.
(217) ___-
This invitation is neither an offer to sell nor a solicitation
of an offer to buy shares of common stock of Vermilion Bancorp, Inc.
The offer is made only by the Prospectus which was recently mailed to you.
The shares of Vermilion Bancorp, Inc. will not be insured
by the Federal Deposit Insurance Corporation or any other governmental agency.
<PAGE>
(Thank You Letter)
(American Savings Bank of Danville Letterhead)
___________, 1997
Name
Address
City, State, Zip
Dear ___________:
On behalf of the directors and officers of American Savings Bank of
Danville, I would like to thank you for attending our recent presentation
regarding the stock offering of American Savings Bank 's proposed holding
company, Vermilion Bancorp, Inc. We are enthusiastic about the stock offering
and look forward to completing the Subscription Offering on _________, 1997.
I hope that you will join me as a shareholder, and once again thank you for
your interest.
Sincerely,
Director
This letter is neither an offer to sell nor a solicitation of an offer to buy
the shares of common stock of Vermilion Bancorp, Inc. The offer is made only by
the Prospectus, which was recently mailed to you. The shares of Vermilion
Bancorp, Inc. are not deposits and will not be insured by the Federal Deposit
Insurance Corporation or any other governmental agency.
<PAGE>
(Sorry You Were Unable to Attend)
(American Savings Bank of Danville Letterhead)
___________, 1997
Name
Address
City, State, Zip
Dear ____________:
I am sorry you were unable to attend our recent presentation regarding
American Savings Bank 's mutual-to-stock conversion. The directors and officers
are committed to contributing to long- term shareholder value, and we are
personally intending to invest an aggregate of $ of our own funds in American
Savings Bank 's proposed holding company, Vermilion Bancorp, Inc. We are
enthusiastic about the offering of Vermilion Bancorp, Inc. common stock and look
forward to completing the Subscription Offering on _____, 1997.
We have established a Stock Information Center in our main office in
Danville to assist you with any questions regarding the conversion and
Subscription Offering. Should you require any assistance between now and ______,
I encourage you to either stop by or call our Stock Information Center collect
at (217) .
I hope you will join me as a shareholder of Vermilion Bancorp, Inc.
Sincerely,
Director
This letter is neither an offer to sell nor a solicitation of an offer to buy
the shares of common stock of Vermilion Bancorp, Inc. The offer is made only by
the Prospectus, which was recently mailed to you. The shares of Vermilion
Bancorp, Inc. are not deposits and will not be insured by the Federal Deposit
Insurance Corporation or any other governmental agency.
<PAGE>
(Final Reminder Letter)
(American Savings Bank of Danville Letterhead)
___________, 1997
Name
Address
City, State, Zip
Dear _________:
Just a quick note to remind you that the deadline for purchasing shares in
Vermilion Bancorp, Inc., the proposed holding company for American Savings Bank
of Danville, is quickly approaching. I hope you will join me in becoming a
shareholder of Illinois's newest publicly owned financial institution holding
company.
The deadline for purchasing shares in the Subscription Offering is ______,
1997. If you have any questions, I hope you will call our Stock Information
Center in Danville collect at (217) .
Once again, I look forward to having you join me as a shareholder in
Vermilion Bancorp, Inc.
Sincerely,
Director
This letter is neither an offer to sell nor a solicitation of an offer to buy
the shares of common stock of Vermilion Bancorp, Inc. The offer is made only by
the Prospectus, which was recently mailed to you. The shares of Vermilion
Bancorp, Inc. are not deposits and will not be insured by the Federal Deposit
Insurance Corporation or any other governmental agency.
<PAGE>
QUESTIONS AND ANSWERS
REGARDING
THE PLAN OF CONVERSION
The Board of Directors of American Savings Bank of Danville ("the Bank or
American Savings") unanimously approved a Plan of Conversion, pursuant to which
the Bank will convert from an Illinois-chartered mutual savings bank to an
Illinois-chartered stock savings bank (the "Conversion") and simultaneously
become a wholly-owned subsidiary of Vermilion Bancorp, Inc., a Delaware
corporation organized at the direction of the Bank to own all of the outstanding
stock of American Savings. Shares of common stock of the holding company are
being offered to American Savings Bank 's Eligible Account Holders, American
Savings Bank's Employee Stock Ownership Plan (the "ESOP"), Supplemental Eligible
Account Holders, and Other Voting Members, through a Subscription Offering. Any
shares remaining after the Subscription Offering are being offered in a
Community Offering with preference given to natural persons residing in
Vermilion County, Illinois.
This brochure is provided to answer some of the most frequently asked
questions regarding the Conversion. Following the Conversion, the Bank will
continue to provide financial services to its depositors, borrowers and other
customers and operate with its existing management and employees. The Conversion
will not affect the terms, balances, interest rates or existing federal deposit
insurance coverage or the terms or conditions of any loans to existing borrowers
under their individual contract arrangements with American Savings.
For complete information regarding the Conversion, see the accompanying
Prospectus of Vermilion Bancorp, Inc. dated ________, 1997. Additional copies of
the Prospectus may be obtained by calling the Stock Information Center collect
at (217) .
This announcement is neither an offer to sell nor a solicitation of an
offer to buy shares of common stock of Vermilion Bancorp, Inc. The offer is made
only by the Prospectus. The shares have not been approved or disapproved by the
Securities and Exchange Commission, The Office of Banks and Real Estate of the
State of Illinois or the Federal Deposit Insurance Corporation "FDIC", nor has
Commission, Office or Corporation passed upon the accuracy or adequacy of the
Prospectus. Any representation to the contrary is unlawful. The common shares
are not deposits and will not be insured by the Federal Deposit Insurance
Corporation or any other governmental agency.
<PAGE>
QUESTIONS AND ANSWERS
Vermilion Bancorp, Inc.
Proposed Holding Company for
American Savings Bank of Danville
Questions and Answers Regarding the Conversion
MUTUAL TO STOCK CONVERSION
1. Q. What is a "Conversion"?
A. A conversion is a change in the legal form of organization from a mutual
to a stock savings institution. American Savings Bank of Danville
currently operates as an Illinois-chartered mutual savings bank with no
stockholders. Through the Conversion, American Savings will become an
Illinois chartered savings bank.
2. Q. Why is American Savings Bank converting?
A. As an Illinois-chartered mutual savings bank, American Savings does not
have stockholders and has no authority to issue stock. By converting to
the stock form of organization, American Savings will be structured in
the form used by commercial banks, most business entities and a growing
number of savings institutions. The Conversion will be important to the
future growth and performance of the Bank by providing a larger capital
base on which it may operate, enhance future access to capital markets
and, if desired, enhance American Savings' ability to diversify into
other financial services related activities.
3. Q. What effect will the Conversion have on deposit accounts and loans?
A. The terms and balances of accounts in American Savings and interest rates
paid on such accounts will not be affected by the Conversion. Such
accounts will continue to be insured by the Federal Deposit Insurance
Corporation ("FDIC") up to the maximum amount permitted by law. The
Conversion also will not affect the terms or conditions of any loans to
existing borrowers or the rights and obligations of these borrowers under
their individual contractual arrangements with American Savings.
4. Q. Will the Conversion cause any changes in American Savings Bank's
personnel?
A. Both before and after the Conversion, the Bank's business of accepting
deposits, making loans and providing financial services will continue
without interruption with the same board of directors, management and
staff.
5. Q. What approvals must be received before the Conversion becomes effective?
A. First, the Board of Directors of American Savings must approve the Plan
of Conversion; the Plan of Conversion was unanimously approved on ,
<PAGE>
1996. Second, the Federal Deposit Insurance Corporation must approve the
applications required to effect the Conversion. These approvals have been
obtained. Third, the Plan of Conversion and proposed Illinois Stock
Charter must be approved by a majority of all votes eligible to be cast
by American Saving's voting members. A Special Meeting of voting members
will be held on _________, 1997, to consider and vote upon the Plan of
Conversion.
THE HOLDING COMPANY
6. Q. What is a holding company?
A. A holding company is a corporation which owns other companies. Concurrent
with the consummation of the Conversion, American Savings will become a
subsidiary of Vermilion Bancorp, Inc., a holding company organized at the
direction of American Saving's Board of Directors to own all of the
outstanding stock of American Savings.
7. Q. If I decide to subscribe for stock in this offering, will I be
subscribing for stock in Vermilion Bancorp, Inc. or American Savings?
A. You will be subscribing for stock in Vermilion Bancorp, Inc. However,
Vermilion Bancorp, Inc., as a holding company, will own 100% of the
capital stock of American Savings.
8. Q. Why did the Board of Directors cause the formation of Vermilion Bancorp,
Inc.?
A. The Board of Directors believes that the Conversion of American Savings
and the formation of Vermilion Bancorp, Inc. will result in a stronger
financial institution with the ability to provide additional flexibility
to diversify American Savings' business activities through existing or
newly formed subsidiaries, or through acquisition or merger, although
there are no current arrangements or understandings with respect to such
acquisitions or mergers. Vermilion Bancorp, Inc. will also be able to use
stock-related incentive programs to attract and retain executive and
other personnel for itself and its subsidiaries.
ABOUT BECOMING A STOCKHOLDER
9. Q. What are the Subscription Offering and the Community Offering?
A. Under the Plan of Conversion, Vermilion Bancorp, Inc. is offering shares
of its common stock in the Subscription Offering to the Eligible Account
Holders, the ESOP, the Supplemental Eligible Account Holders and the
Other Voting Members of American Savings Bank. Subject to the prior
rights of holders of subscription rights, any shares of Common Stock not
subscribed for in the Subscription Offering are being offered at the same
price in the Community Offering to members of the general public, giving
preference to natural persons residing in Vermilion County, Illinois. If
necessary, Trident Securities, Inc.
<PAGE>
may enter into agreements with other dealers to assist in the sale of
shares in the Community Offering.
10. Q. Must I pay a commission to purchase shares in conjunction with the
Subscription Offering and the Community Offering?
A. No. You will not pay a commission if the shares are purchased in the
Subscription Offering or the Community Offering.
11. Q. How many shares of Vermilion Bancorp, Inc. will be issued through
American Savings Bank 's Conversion?
A. It is currently expected that between 255,000 and 345,000 shares of
common stock will be sold at a price of $10.00 per share. The appraised
midpoint of the offering is 300,000 shares at $10.00 per share, or $3.0
million. All subscribers will subscribe for shares at the subscription
price of $10.00 per share.
12. Q. How was the price determined?
A. The aggregate price of the common stock being offered was determined by
RP Financial, LC, an independent appraisal firm specializing in the
savings industry and approved by the FDIC.
13. Q. Who is entitled to buy shares in the Conversion?
A. The shares of Vermilion Bancorp, Inc. to be issued in the Conversion are
being offered in the Subscription Offering in the following order of
priority to: (1) Eligible Account Holders (depositors with aggregate
account balances of $50 or more at American Savings on July 31, 1995);
(2) American Saving's Tax-Qualified Employee Stock Ownership Plan (the
ESOP); (3) Supplemental Eligible Account Holders (depositors with
aggregate account balances of $50 or more at American Savings on December
31, 1996); and (4) Other Voting Members (depositors who are not Eligible
Account Holders or Supplemental Eligible Account Holders). Subject to the
prior rights of holders of subscription rights, any shares of Common
Stock not subscribed for in the Subscription Offering are being offered
at the same price in the Community Offering to members of the general
public, with preference given to natural persons who reside in Vermilion
County, Illinois. If necessary, Trident Securities, Inc. may enter into
agreements with other dealers to assist in the sale of shares in the
Community Offering.
14. Q. Are the subscription rights transferable to another party?
A. No. Subscription rights granted to American Saving's Eligible Account
Holders, Supplemental Eligible Account Holders and Other Voting Members
in the Conversion are not transferable. Please call the Stock Information
Center at (217) if you are approached by any person(s) attempting to get
you to transfer your rights. Federal and State regulations prohibit any
person from transferring their subscription rights or entering into any
agreement directly or
<PAGE>
indirectly, to transfer the legal ownership of the right to priority or
the underlying security.
15. Q. What is the minimum and maximum number of shares that I can subscribe for
in the Conversion?
A. The minimum number of shares is 25. No person(s) exercising subscription
rights through a single account may subscribe for more than 5,000 shares.
The maximum number of shares for any person or entity, together with
associates or persons acting in concert, is 15,000.
16. Q. Are the executive officers and directors of American Savings subscribing
for a significant amount of the common stock of Vermilion Bancorp, Inc.?
A. Directors, and executive officers currently intend to subscribe for
approximately 65,000 shares or $650,000. The purchase price paid by
directors and officers will be the same $10.00 per share price as that
paid by those persons who order in the Subscription Offering or the
Community Offering.
17. Q. How do I subscribe for shares?
A. To subscribe for shares in the Subscription Offering, you should send or
deliver the subscription stock order form and payment (or appropriate
instructions for withdrawal from permitted deposit accounts as described
below) to American Savings in the postage-paid envelope provided, so that
the stock order form and payment, or instructions for payment, are
received prior to the expiration of the Subscription Offering, which will
be 12:00 noon, Central Time on ___________, 1997, unless extended.
Payment for shares may be made in cash (only if delivered in person), by
check or by money order. Alternatively, subscribers who have savings
accounts with American Savings Bank may include instructions on the stock
order form requesting withdrawal from such deposit account to purchase
shares of Vermilion Bancorp, Inc. Withdrawals from savings accounts may
be made without incurring an early withdrawal penalty.
If you wish to subscribe for shares in the Community Offering, you should
send or deliver to American Savings Bank 's office a stock order form
with payment by 12:00 noon, Central Time, on _______, 1997. The Community
Offering may close any date thereafter, at the discretion of American
Savings Bank , on or before ________, 1996.
18. Q. May I use funds currently held in a retirement account to subscribe for
shares?
A. Your retirement account at American Savings has an opportunity to
subscribe for Vermilion Bancorp, Inc. common shares in the Subscription
Offering. If you are interested in using funds held in your American
Savings retirement account, the Stock Information Center can assist you
in transferring those funds
<PAGE>
to a self-directed IRA and directing the trustee to purchase the shares.
This process may be done without an early withdrawal penalty and
generally without a negative tax consequence to your retirement account.
If you wish to subscribe for shares using your American Savings Bank IRA,
then you must contact the Stock Information Center at (217) ___-____ so
that all required paperwork is completed no later than _____, 1997.
19. Q. Will I receive interest on funds I submit for a subscription?
A. Yes. American Savings will pay interest at not less than its current
passbook rate from the date the funds are received until completion of
the Subscription Offering and the Community Offering.
20. Q. May I obtain a loan from American Savings to pay for shares subscribed
for in the Conversion?
A. No. Federal regulations do not allow American Savings to make loans for
this purpose. However, federal regulations do not prohibit you from
obtaining a loan from another source for the purpose of purchasing shares
of Vermilion Bancorp, Inc.
21. Q. If I obtain shares in the Conversion, how would I go about buying
additional shares, or selling shares in the aftermarket?
A. Because Vermilion Bancorp, Inc. is a newly organized company, there is no
established market for its shares at this time. Vermilion Bancorp intends
to apply to have the common stock listed on the National Daily Quotation
Service "pink sheets" published by the National Quotation Bureau, Inc. An
active and liquid trading market for the securities of any issuer,
including the common stock, depends upon the presence in the market of
both willing buyers and willing sellers at any given time. Because of the
limited size of the offerings, it is unlikely that an active and liquid
trading market for the common stock will develop, or once developed, will
continue, and there can be no assurance that purchasers of the common
stock will be able to sell their shares at or above the purchase price.
Investors should have a long term investment intent.
22. Q. What is Vermilion Bancorp, Inc.'s Dividend Policy?
A. The Board of Directors of Vermilion Bancorp, Inc. intends to consider,
following the Conversion, a policy of paying annual cash dividends on its
common stock. However, no decision has been made as to the amount or
timing of such dividends, if any. Declarations and payments of dividends
by the Board of Directors will depend upon business, market and
regulatory factors. From time to time, the Board of Directors may
determine to pay special cash dividends. No assurances can be given that
any dividends will be declared or, if declared, what the amount of
dividends will be or whether such dividends, once declared, will
continue.
<PAGE>
23. Q. Will the FDIC insure the shares of Vermilion Bancorp, Inc.?
A. No. The shares of Vermilion Bancorp, Inc. being offered are not savings
accounts or savings deposits and are not insured by the FDIC or any other
governmental agency.
24. Q. If I subscribe for shares and later change my mind, will I be able to get
a refund?
A. No. Your order cannot be canceled or withdrawn once it has been received
by American Savings Bank.
ABOUT VOTING "FOR" THE PLAN OF CONVERSION
25. Q. Am I eligible to vote at the Special Meeting of Members to be held to
consider the Plan of Conversion?
A. At the Special Meeting of Members to be held on ________, 1997, you are
eligible to vote if you are one of the "Voting Members," who are holders
of American Savings' deposits as of _______, 1997. If you are a Voting
Member, you should have received a Proxy Statement and proxy card with
which to vote.
26. Q. How many votes do I have as a Voting Member?
A. Each member will be entitled to cast one vote for each $100, or fraction
thereof, of deposit accounts in American Savings Bank as of 1997 up to
1,000 votes.
27. Q. If I vote "against" the Plan of Conversion and it is approved, will I be
prohibited from buying shares of Vermilion Bancorp, Inc. during the
Subscription Offering?
A. No. Voting against the Plan of Conversion in no way restricts you from
purchasing Vermilion Bancorp, Inc. common shares in the Subscription
Offering.
28. Q. Did the Board of Directors of American Savings unanimously approve the
Conversion?
A. Yes. American Saving's Board of Directors unanimously approved the Plan
of Conversion and urges that all Voting Members vote "For" approval of
the Plan of Conversion.
29. Q. What happens if American Savings does not get enough votes to approve the
Plan of Conversion?
A. American Savings' Conversion would not take place, and American Savings
would remain an Illinois chartered mutual savings bank.
<PAGE>
30. Q. What is a Proxy Card?
A. A proxy card gives you the ability to vote without attending the Special
Meeting in person. American Savings encourages you to sign and return the
proxy card in each mailing packet you receive. You may attend the Special
Meeting and vote, even if you have returned your proxy card, if you
choose to do so. However, if you are unable to attend, you still are
represented by proxy.
31. Q. How does the Conversion affect me?
A. The Conversion is intended, among other things, to help American Savings
maintain and expand its many services to you and American Savings'
community. You will also have the opportunity to invest in American
Savings through purchasing shares of Vermilion Bancorp, Inc. However,
there is no obligation to do so. The purchase of shares is strictly
optional.
32. Q. How can I obtain further information concerning the Conversion?
A. You may call the Stock Information Center collect at (217) for further
information or an additional copy of the Prospectus, Stock Order Form,
Proxy Statement and Proxy Card.
THIS INFORMATION DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY VERMILION BANCORP, INC. COMMON STOCK. THE OFFER IS MADE ONLY BY
MEANS OF THE PROSPECTUS. ADDITIONAL COPIES OF THE PROSPECTUS MAY BE OBTAINED BY
CALLING THE STOCK INFORMATION CENTER AT (217) .
THE COMMON STOCK OF VERMILION BANCORP, INC. BEING OFFERED IN THE
SUBSCRIPTION OFFERING AND THE COMMUNITY OFFERING, IF ANY, ARE NOT SAVINGS OR
DEPOSIT ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
<PAGE>
================================================================================
P R O X Y R E M I N D E R
(LOGO)
================================================================================
YOUR VOTE ON OUR CONVERSION PLAN HAS NOT BEEN RECEIVED.
YOUR VOTE IS VERY IMPORTANT, PARTICULARLY SINCE FAILURE TO VOTE IS EQUIVALENT TO
VOTING "AGAINST" THE PLAN OF CONVERSION.
VOTING "FOR" THE PLAN OF CONVERSION WILL NOT AFFECT THE INSURANCE OF YOUR
ACCOUNTS. ACCOUNTS WILL CONTINUE TO BE INSURED UP TO APPLICABLE LIMITS BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, AN AGENCY OF THE U.S. GOVERNMENT.
REMEMBER, VOTING "FOR" THE PLAN OF CONVERSION DOES NOT OBLIGATE YOU TO BUY ANY
COMMON STOCK OF VERMILION BANCORP, INC.
PLEASE ACT PROMPTLY! THE SPECIAL MEETING OF MEMBERS IS SCHEDULED FOR __________,
1997. PLEASE SIGN THE ENCLOSED PROXY CARD AND MAIL, OR DELIVER, THE PROXY CARD
TO AMERICAN SAVINGS BANK OF DANVILLE.
WE RECOMMEND THAT YOU VOTE "FOR" THE PLAN OF CONVERSION. IF YOU HAVE ANY
QUESTIONS PLEASE CALL THE STOCK INFORMATION CENTER (217) .
THANK YOU!
THE BOARD OF DIRECTORS AND MANAGEMENT OF
AMERICAN SAVINGS BANK OF DANVILLE
================================================================================
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
714 North Vermilion Street
Danville, Illinois 61832
(217) 442-0207
NOTICE OF SPECIAL MEETING OF MEMBERS
To Be Held on March __, 1997
NOTICE IS HEREBY GIVEN that a special meeting ("Special Meeting") of the
members of American Savings Bank of Danville (the "Savings Bank") will be held
at the headquarters office of the Bank located at 714 North Vermilion Street,
Danville, Illinois on March __, 1997 at __:00 _.m., Central Time, to consider
and vote upon:
1. The approval of a Plan of Conversion ("Plan of Conversion") pursuant
to which the Bank would be converted from an Illinois-chartered
mutual savings bank to an Illinois-chartered stock savings bank and
issue all of its capital stock to a holding company, Vermilion
Bancorp, Inc., and the transactions provided for in such Plan of
Conversion, including the adoption of Amended and Restated Articles
of Incorporation and Bylaws of the Bank; and
2. Such other business as may properly come before the Special Meeting
or any adjournment thereof. Except with respect to procedural
matters incident to the conduct of the meeting, management is not
aware of any other such business.
The Board of Directors has fixed February __, 1997 as the voting record
date for the determination of members entitled to notice of and to vote at the
Special Meeting and at any adjournment thereof. Only those members of the Bank
of record as of the close of business on that date will be entitled to vote at
the Special Meeting or at any such adjournment.
By Order of the Board of Directors
Merrill G. Norton
President
Danville, Illinois
February __, 1997
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU SIGN, DATE AND MARK THE ENCLOSED
PROXY CARD IN FAVOR OF THE ADOPTION OF THE PLAN OF CONVERSION AND RETURN IT IN
THE ENCLOSED SELF-ADDRESSED, POSTAGE-PAID ENVELOPE. THIS WILL NOT PREVENT YOU
FROM VOTING IN PERSON IF YOU ATTEND THE SPECIAL MEETING.
IF YOU WOULD LIKE A MORE DETAILED DESCRIPTION OF THE PROPOSED TRANSACTION, YOU
MAY OBTAIN A COPY OF THE PLAN OF CONVERSION AND THE PROPOSED AMENDED AND
RESTATED ARTICLES OF INCORPORATION AND BYLAWS, BY RETURNING THE ENCLOSED REQUEST
CARD IN THE POSTAGE-PAID ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE>
AMERICAN SAVINGS BANK OF DANVILLE
----------
PROXY STATEMENT
----------
SPECIAL MEETING OF MEMBERS
To Be Held On March __, 1997
INTRODUCTION
This Proxy Statement is being furnished to you in connection with the
solicitation by the Board of Directors of American Savings Bank of Danville
("American" or the "Savings Bank") of proxies to be voted at the Special Meeting
of Members of the Savings Bank (the "Special Meeting") to be held on March __,
1997, at the main office of the Savings Bank located at 714 Vermilion Street,
Danville, Illinois 61832, at _0:00 _.m., Central Time, and at any adjournments
thereof. This Special Meeting is being held for the purpose of considering and
voting upon a plan of conversion and any amendment thereto (the "Plan" or the
"Plan of Conversion") under which the Savings Bank would be converted from its
present Illinois-chartered mutual form of organization to an Illinois-chartered
stock savings bank. In connection with the conversion, the Savings Bank will
concurrently sell its capital stock to Vermilion Bancorp, Inc., a Delaware
corporation (the "Company"), which will sell its shares of common stock, par
value $.01 per share (the "Common Stock") to the public in a subscription
offering (the "Subscription Offering") and, if necessary, in a community
offering (the "Community Offering") and a syndicated community offering (the
"Syndicated Community Offering") (collectively, the "Offerings"). The
simultaneous conversion of the Savings Bank to stock form, the issuance of the
Savings Bank's capital stock to the Company, and the offer and sale of the
Common Stock by the Company, all pursuant to the Plan, are referred to herein as
the "Conversion." References to the Savings Bank shall include the Savings Bank
in either its mutual or stock form as indicated by the context.
Voting in favor of or against the Plan of Conversion includes a vote for
or against the adoption of the Amended and Restated Articles of Incorporation
and the Amended and Restated Bylaws of the Savings Bank.
This Proxy Statement is a summary of information about the Savings Bank
and the proposed Conversion. A more detailed description of the Company, the
Savings Bank and the proposed Conversion is included in the Prospectus which was
included in the packet containing this Proxy Statement. Additional information
may be obtained at the Savings Bank's office and certain other information is
available for review and copying at certain of the regulators reviewing the
Conversion. See "Additional Information" and "Available Information."
Voting in favor of the Plan of Conversion will not obligate any person to
purchase Common Stock.
VOTING RIGHTS AND VOTE REQUIRED FOR APPROVAL
The Board of Directors has fixed February __, 1997 as the voting record
date ("Voting Record Date") for the determination of members entitled to notice
of and to vote at the Special Meeting and at any adjournment thereof. All of the
Savings Bank's depositors are members of the Savings Bank under its current
Illinois mutual charter. All of the Savings Bank's members as of the close of
business on the Voting Record Date who continue to be members on the date of the
Special Meeting or any adjournment thereof will be entitled to vote at the
Special Meeting or such adjournment.
Each member will be entitled at the Special Meeting to cast one vote for
each $100, or fraction thereof, of the aggregate withdrawal value of all of
their deposit accounts in the Savings Bank as of the Voting Record Date. If
there are not sufficient votes for approval of the Plan at the time of the
Special Meeting, the Special Meeting may be adjourned to permit further
solicitation of proxies.
<PAGE>
-2-
As of the Voting Record Date, the Savings Bank had approximately ______
deposit accounts, the holders of which are entitled to cast a total of
approximately ______ votes at the Special Meeting.
This Proxy Statement and related materials are first being mailed to
Members on or about February __, 1997.
The affirmative vote of two-thirds of the total votes eligible to be cast
at the Special Meeting is required for approval of the Plan of Conversion.
PROXIES
The Board of Directors of the Savings Bank is soliciting the proxy which
accompanies this Proxy Statement for use at the Special Meeting. Each proxy
solicited hereby, if properly executed, duly returned before the Special Meeting
and not revoked prior to or at the Special Meeting, will be voted at the Special
Meeting in accordance with the Members' instructions indicated thereon. If no
contrary instructions are given, the executed proxy will be voted in favor of
the Plan of Conversion. If any other matters properly come before the Special
Meeting, the persons named as proxies will vote upon such matters according to
their discretion. Except with respect to procedural matters incident to the
conduct of the meeting, no additional matters are expected to come before the
Special Meeting.
Any Member giving a proxy may revoke it at any time before it is voted by
delivering to the Secretary of the Savings Bank either a written revocation of
the proxy, or a duly executed proxy bearing a later date, or by voting in person
at the Special Meeting. Proxies are being solicited only for use at the Special
Meeting and any and all adjournments thereof and will not be used for any other
meeting.
The Bank's Board of Directors holds proxies granted to it by members of
the Savings Bank ("running proxies") which it generally may cast at members'
meetings and through which it may exercise control over the business affairs of
the Savings Bank. However, federal regulations prohibit the use of running
proxies at any members' meeting at which a mutual-to-stock conversion is voted
on by the members.
Proxies may be solicited by officers, directors and employees of the
Savings Bank personally, by telephone or further correspondence without
additional compensation. The Company and the Bank have engaged Trident
Securities, Inc. to, among other things, assist in the solicitation of proxies
for use at the Special Meeting.
Deposits held in a trust or other fiduciary capacity may be voted by the
trustee or other fiduciary to whom voting rights are delegated under the trust
instrument or other governing document or applicable law. In the case of IRA and
Keogh trusts established at the Savings Bank, the beneficiary may direct the
trustee's vote on the Plan of Conversion by returning a completed proxy card to
the Savings Bank. If no proxy card is returned, the trustee will vote in favor
of approval of the Plan of Conversion on behalf of such beneficiary.
The Board of Directors urges you to mark, sign, date and return the
enclosed proxy card in the enclosed postage-paid envelope as soon as possible,
even if you do not intend to purchase Common Stock. This will ensure that your
vote will be counted.
THE OFFICE OF THE ILLINOIS COMMISSIONER OF BANKS AND REAL ESTATE (THE
"COMMISSIONER") HAS APPROVED THE PLAN OF CONVERSION SUBJECT TO THE APPROVAL OF
THE SAVINGS BANK'S MEMBERS AND THE SATISFACTION OF CERTAIN OTHER CONDITIONS.
HOWEVER, COMMISSIONER APPROVAL DOES NOT CONSTITUTE A RECOMMENDATION OR
ENDORSEMENT OF THE PLAN BY THE COMMISSIONER.
<PAGE>
-3-
VERMILION BANCORP, INC.
The Company is a Delaware corporation organized at the direction of the
Board of Directors of the Bank for the purpose of acquiring all of the capital
stock to be issued by the Bank in the Conversion. The Company has applied for
the approval of the Federal Reserve Board and the Commissioner, to be the
holding company for the Bank. Upon consummation of the Conversion, the Company's
business will consist of being the holding company for the Bank and the Company
will have no significant assets other than the shares of the Bank's common stock
acquired in the Conversion and 25% of the net proceeds of the Conversion
retained by the Company, a portion of which will be used to fund the loan to the
ESOP, and will have no significant liabilities. See "Use of Proceeds." The
management of the Company is set forth under "Management of the Company."
Initially, the Company will neither own nor lease any property, but will instead
use the premises, equipment and furniture of the Bank. At the present time, the
Company does not intend to employ any persons other than officers who are also
officers of the Bank but will utilize the support staff of the Bank from time to
time. Additional employees will be hired as appropriate to the extent the
Company expands or changes its business in the future.
Management believes that the holding company structure will provide the
Company with additional flexibility to diversify its business activities, should
it decide to do so, through existing or newly formed subsidiaries, or through
acquisitions of or mergers with other financial institutions or financial
services related companies. Although there are no current arrangements,
understandings or agreements, written or oral, regarding any such opportunities
or transactions, the Company will be in a better position after the Conversion,
subject to regulatory limitations and the Company's financial position, to take
advantage of any such opportunities that may arise. The initial activities of
the Company are anticipated to be funded by the proceeds to be retained by the
Company and earnings thereon or, alternatively, through dividends from the Bank.
See "Dividend Policy."
The Company's executive office is located at the home office of the Bank
at 714 North Vermilion Street, Danville, Illinois 61832, and its telephone
number is (217) 442-0270.
AMERICAN SAVINGS BANK OF DANVILLE
The Bank is an Illinois-chartered, SAIF-insured mutual savings bank
conducting business from a single office located in Danville, Illinois. At
September 30, 1996, the Bank had total assets of $35.5 million, total deposits
of $30.7 million and equity of $2.4 million.
The Bank's principal business has been, and continues to be, attracting
deposits from its customers and investing such funds in residential real estate
loans and other loans. At September 30, 1996, the Bank's net loan portfolio
totalled $26.9 million, or 75.8% of the Bank's assets. In addition to its
lending activities, the Bank also has a securities portfolio consisting of
mortgage-backed securities and other investment securities. The Bank's
mortgage-backed securities portfolio totalled $3.5 million, or 9.9% of the
Bank's total assets at September 30, 1996, and its other investment securities
portfolio amounted to $3.1 million, or 8.7% of total assets at such date.
Traditionally, the Bank's principal source of funds has come from deposits. At
September 30, 1996, the Bank had total deposits of $30.7 million, of which $7.0
million or 22.8% consisted of core deposits which include savings and retirement
accounts, NOW accounts and money market investment accounts ("MMIA").
The Bank and its predecessor have been serving Danville, Illinois since
1888. In 1994, the Bank converted to an Illinois-chartered savings bank from an
Illinois-chartered savings and loan association. The Bank is a
community-oriented financial institution which offers a variety of financial
services to meet the needs of its community. The existing management of the Bank
believes that it is in the best interests of the Bank as well as the Company and
its stockholders for the Bank to remain an independent financial institution.
<PAGE>
-4-
The Bank is subject to examination and comprehensive regulation by the
Commissioner, which is the Bank's chartering authority and primary regulator.
The Bank is also subject to regulation by the FDIC, as the administrator of the
SAIF, and to certain reserve requirements established by the FRB. The Bank is a
member of the FHLB of Chicago, which is one of the 12 regional banks comprising
the FHLB System, and is subject to regulations applicable to members of the FHLB
of Chicago.
The Bank's executive office is located at 714 North Vermilion Street,
Danville, Illinois 61832 and its telephone number is (217) 442-0270.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial and other data of the Bank
does not purport to be complete and should be read in conjunction with, and is
qualified in its entirety by, the more detailed financial information, including
the Consolidated Financial Statements of the Bank and Notes thereto, contained
elsewhere herein.
<TABLE>
<CAPTION>
At September 30,
-----------------------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- -------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Selected Financial Condition Data:
Total assets........................................ $35,459 $33,977 $33,198 $33,591 $33,904
Cash and cash equivalents........................... 789 571 699 1,288 2,234
Interest-bearing time deposits...................... 99 99 694 1,181 2,168
Securities: (1)
Available for sale................................ 2,222 1,486
Held to maturity.................................. 861 2,556 4,354 7,183 8,911
Mortgage-backed securities held to maturity......... 3,476 4,260 4,851 5,899 3,668
Loans, net.......................................... 26,936 23,954 21,627 18,235 18,056
Premises and equipment.............................. 467 495 468 483 500
Federal Home Loan Bank of Chicago stock, at cost.... 269 255 236 236 230
Deposits............................................ 30,724 31,331 30,698 31,158 31,640
Federal Home Loan Bank advances..................... 2,000 -- -- -- --
Total equity capital................................ 2,355 2,442 2,341 2,185 2,012
Full Service offices................................ 1 1 1 1 1
Year Ended September 30,
-----------------------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- -------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Selected Operating Data:
Total interest income................................. $ 2,634 $ 2,375 $ 2,279 $ 2,390 $ 2,724
Total interest expense................................ 1,778 1,588 1,355 1,521 1,999
------ ------ ------ ------ ------
Net interest income................................. 856 787 924 869 725
Provision for losses on loans......................... 80 13 105 8 49
------ ------ ------ ------ ------
Net interest income after provision
for losses on loans................................. 776 774 819 861 676
Non-interest income................................... 45 51 49 82 99
Non-interest expenses................................. 889(2) 710 700 763 677
-------- ------ ------ ------ ------
Income (loss) before taxes............................ (68) 115 168 180 98
Provision for income taxes............................ 3 15 13 59 21
------ ------ ------ ------ ------
Net income (loss)..................................... $ (71) $ 100 $ 155 $ 121 $ 77
====== ====== ====== ====== ======
</TABLE>
(Footnotes on following page)
<PAGE>
-5-
- ----------
(1) The Bank adopted the provisions set forth in SFAS No. 115 on October
1, 1994, which requires entities to carry securities that are
available for sale at their market value while continuing to carry
securities that are held to maturity at their amortized cost. See
Note 1 to the Consolidated Financial Statements.
(2) Includes a special assessment of $206,000 to recapitalize the SAIF.
<TABLE>
<CAPTION>
At or For the Year Ended September 30,
----------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Other Data:
Profitability:
Return on average assets.......................... (0.20)%(5) 0.29% 0.46% 0.36% 0.23%
Return on average equity.......................... (2.89)(5) 4.18 6.86 5.78 3.95
Interest rate spread for period(1)................ 2.17 2.11 2.59 2.42 1.91
Net interest margin(2)............................ 2.48 2.39 2.83 2.64 2.16
Non-interest expenses to average assets........... 2.49 2.08 2.13 2.26 2.00
Average interest-earning assets to
average interest-bearing liabilities............ 106.05 104.04 104.78 104.81 104.12
Capital Ratios:
Average equity to average assets.................. 6.90 7.02 6.76 6.22 5.79
Total risk-based capital to risk-
weighted assets............................... 15.33 15.03 16.44 16.02 14.61
Tier 1 risk based capital to risk-weighted
assets....................................... 14.45 14.59 15.98 16.32 14.73
Asset Quality:
Non-performing assets to total
assets(4)....................................... 0.93 0.64 0.26 1.64 0.54
Net chargeoffs (recoveries) to average loans...... 0.04 0.03 0.76 (0.01) 0.07
Allowance for loan losses to total
loans........................................... 0.53 0.31 0.29 0.60 0.55
Allowance for loan losses to non-
performing loans................................ 43.60 34.26 73.26 19.78 54.40
</TABLE>
- ----------
(1) The interest rate spread represents the difference between the average
yield on interest-earning assets and the average rate paid on
interest-bearing liabilities.
(2) The net interest margin represents net interest income dividend by average
interest-earning assets.
(3) The efficiency ratio is non-interest expense dividend by the sum of net
interest income plus non-interest income.
(4) Non-performing assets include non-accrual loans, accruing loans delinquent
90 days or more and real estate owned.
(5) When calculated without the special SAIF assessment, the return on average
assets and the return on average equity would have been 0.24% and 3.01%,
respectively.
<PAGE>
-6-
RECENT DEVELOPMENTS
The following table sets forth certain summary historical financial
information concerning the financial position of the Bank for the periods and at
the dates indicated. The financial data is derived in part from, and should be
read in conjunction with, the Consolidated Financial Statements and Notes
thereto presented elsewhere in this Prospectus. The results of operations and
ratios and other data at or for the three months ended December 31, 1996 and
December 31, 1995 are derived from unaudited financial statements. and reflect,
in the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to present fairly the results for
such periods.
<TABLE>
<CAPTION>
At December 31,
----------------------------------------
1996(1) 1995(1)
----------------- -----------------
(In thousands)
(Unaudited)
<S> <C> <C>
Selected Financial Condition Data:
Total assets.......................................... 36,044 35,501
Cash and cash equivalents............................. 1,278 1,968
Interest-bearing time deposits........................ 99 99
Securities:
Available for sale................................ 2,117 2,649
Held to maturity.................................. 361 931
Mortgage-backed securities held to maturity........... 3,349 4,042
Loans, net............................................ 26,678 24,825
Premises and equipment 464 491
Federal Home Loan Bank of Chicago stock, at cost...... 269 255
Deposits.............................................. 31,494 30,882
Federal Home Loan Bank advances....................... 2,000 2,000
Total equity capital.................................. 2,391 2,450
Full Service offices.................................. 1 1
For the Three Months Ended
December 31,
------------------------------------------
1996 1995
------------------ -------------------
(In thousands)
(Unaudited)
<S> <C> <C>
Selected Operating Data:
Total interest income................................. 674 642
Total interest expense................................ 452 444
Net interest income............................... 222 198
Provision for losses on loans......................... -- --
Net interest income after provision for
losses on loans.................................... 222 198
Non-interest income................................... 6 10
Non-interest expenses................................. 185 194
Income (loss) before taxes............................ 43 14
Provision for income taxes............................ 6 2
Net income (loss)..................................... 37 12
</TABLE>
<PAGE>
-7-
At or For the Three
Months Ended
December 31,
-------------------
1996(1) 1995(1)
-------- --------
Other Data:(2)
Profitability:
Return on average assets........................... 0.43% 0.14%
Return on average equity........................... 6.40 1.98
Interest rate spread for period (3)................ 2.33 2.11
Net interest margin(4)............................. 2.57 2.36
Non-interest expenses to average assets............ 2.07 2.23
Average interest-earning assets to average
interest-bearing liabilities.................... 104.58 104.68
Capital Ratios:
Average equity to average assets................... 6.64 7.04
Total risk-based capital to risk-weighted assets... 14.07 15.05
Tier one capital to risk-weighted assets........... 13.31 14.60
Asset Quality:
Non-performing assets to total assets(5)........... 0.97 1.23
Net chargeoffs (recoveries) to average loans)...... 0.09 (0.02)
Allowances for loan losses to total loans.......... 0.49 0.30
Allowance for loan losses to non-performing loans.. 39.28 17.25
- ----------
(1) The data presented for the three months ended December 31, 1996 and 1995
were derived from unaudited consolidated financial statements and reflect,
in the opinion of management, all adjustments necessary to present fairly
the results for such interim periods. Interim results at and for the three
months ended December 31, 1996 are not necessarily indicative of the
results that may be expected for the year ending September 30, 1997.
(2) Asset Quality Ratios and Capital Ratios are end of period ratios. With the
exception of end of period ratios, all ratios are based on average monthly
balances during the indicated periods and are annualized where
appropriate.
(3) The interest rate spread represents the difference between the average
yield on interest-earning assets and the average rate paid on
interest-bearing liabilities.
(4) The net interest margin represents net interest income dividend by average
interest-earning assets.
(5) Non-performing assets include non-accrual loans, accruing loans delinquent
90 days or more and real estate owned.
<PAGE>
-8-
AMERICAN SAVINGS BANK OF DANVILLE AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
The following Consolidated Statement of Income of the Bank for each of the
years in the two-year period ended September 30, 1996 have been audited by Geo.
S. Olive & Co. LLC, independent certified public accountants, whose report
thereon appears in the Prospectus. This Consolidated Statement of Income should
be read in conjunction with the Consolidated Financial Statements and related
notes included elsewhere herein.
Year Ended September 30,
----------------------
1996 1995
------- ------
(In Thousands)
Interest income:
Loans receivable $ 2,118 $1,757
Investment securities 449 538
Deposits with financial institutions 67 80
------- ------
Total interest income 2,634 2,375
------- ------
Interest expense:
Deposits 1,671 1,588
FHLB advance 107 0
------- ------
Total interest expense 1,778 1,588
------- ------
Net interest income 856 787
Provision for losses on loans 80 13
------- ------
Net interest income after provisions for
for losses on loans 776 774
------- ------
Non-interest income:
Loan fees 12 11
Net realized gains on sales of securities
available for sale -- 1
Other income 33 39
------- ------
Total non-interest income 45 51
------- ------
Non-interest expenses:
Salaries and employee benefits 276 297
Net occupancy expenses 97 95
Data processing fees 40 39
Deposit insurance expense 277 71
Printing and office supplies 16 17
Legal and professional fees 36 43
Advertising and promotion 29 28
Director fees 41 41
Other expenses 77 79
------- ------
Total non-interest expenses 889 710
------- ------
Income (Loss) Before Income Tax (68) 115
Income tax expense 3 15
------- ------
Net income (loss) $ (71) $ 100
======= ======
<PAGE>
-9-
CAPITALIZATION
The following table presents the historical consolidated capitalization of
the Bank at September 30, 1996, and the pro forma consolidated capitalization of
the Company after giving effect to the Conversion, based upon the sale of the
number of shares shown below and the other assumptions set forth under "Pro
Forma Data."
<TABLE>
<CAPTION>
Company - Pro Forma
Based Upon Sale at $10.00 Per Share
----------------------------------------------------
396,750
255,000 300,000 345,000 Shares(1)
The Bank - Shares Shares Shares (15% above
Historical (Minimum of (Midpoint of (Maximum of Maximum of
Capitalization Range) Range) Range) Range)
-------------- ----------- ------------ ----------- -----------
(In Thousands)
<S> <C> <C> <C> <C> <C>
FHLB advances $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000
Deposits(2) 30,724 30,724 30,724 30,724 30,724
-------- -------- -------- -------- --------
Total deposits and
borrowings $ 32,724 $ 32,724 $ 32,724 $ 32,724 $ 32,724
======== ======== ======== ======== ========
Stockholders' equity:
Preferred Stock, $0.01
par value, 400,000
shares authorized; none
to be issued $ -- $ -- $ -- $ -- $ --
Common Stock, $0.01 par
value, 1,600,000 shares
authorized; shares to be
issued as reflected(3) -- 3 3 3 4
Additional paid-in
capital(3) -- 2,283 2,726 3,169 3,677
Retained earnings(4) 2,370 2,370 2,370 2,370 2,370
Net unrealized loss on
securities available for
sale (15) (15) (15) (15) (15)
Less:
Common Stock acquired
by the ESOP(5) -- (204) (240) (276) (317)
Common Stock acquired
by the Recognition
Plan(6) -- (102) (120) (138) (159)
-------- -------- -------- -------- --------
Total stockholders'
equity (equity at
September 30, 1996) $ 2,355 $ 4,335 $ 4,724 $ 5,113 $ 5,560
======== ======== ======== ======== ========
</TABLE>
(Footnotes on following page)
<PAGE>
-10-
- ----------
(1) As adjusted to give effect to an increase in the number of shares which
could occur due to an increase in the Estimated Price Range of up to 15%
to reflect changes in market and financial conditions following the
commencement of the Subscription and Community Offerings.
(2) Does not reflect withdrawals from deposit accounts for the purchase of
Common Stock in the Conversion. Such withdrawals would reduce pro forma
deposits by the amount of such withdrawals. Total deposits and borrowings
do not reflect the anticipated loan from the Company to the ESOP, which
loan will not be reflected as a liability on the Company's consolidated
statements of financial condition.
(3) The sum of par value and additional paid-in capital accounts equals the
net Conversion proceeds. No effect has been given to the issuance of
additional shares of Common Stock pursuant to the Stock Option Plan
expected to be adopted by the Company and presented for stockholder
approval at a special meeting of stockholders to be held not earlier than
six months following the Conversion. If the plan is approved by
stockholders, an amount equal to 10% of the shares of Common Stock issued
in the Conversion will be reserved for issuance upon the exercise of
options to be granted under the Stock Option Plan. See "Pro Forma Data"
and "Management - Benefits - Stock Option Plan." The issuance of common
stock pursuant to the exercise of options under the Stock Option Plan will
result in the dilution of existing stockholders' interests by
approximately 9.1%.
(4) The retained earnings of the Bank will be substantially restricted after
the Conversion. See "The Conversion - Liquidation Rights."
(5) Assumes that 8% of the shares offered for sale in the Conversion will be
purchased by the ESOP. The Common Stock acquired by the ESOP is reflected
as a reduction of stockholders' equity. Assumes the funds used to acquire
the ESOP shares will be borrowed from the Company. See "Management -
Benefits - Employee Stock Ownership Plan and Trust."
(6) Gives effect to the Recognition Plan which is expected to be adopted by
the Company and presented to stockholders for approval at a special
meeting of stockholders to be held not earlier than six months following
the Conversion. No shares will be purchased by the Recognition Plan in the
Conversion. If the Recognition Plan is approved by stockholders, the
Recognition Plan intends to acquire an amount of Common Stock equal to 4%
of the shares of Common Stock issued in the Conversion, or 10,200, 12,000,
13,800 and 15,870 shares at the minimum, midpoint, maximum and 15% above
the maximum of the Estimated Price Range, respectively. The table assumes
that stockholder approval has been obtained and that such shares are
purchased on the open market by the Company at the Purchase Price. The
Common Stock so acquired by the Recognition Plan is reflected as a
reduction in stockholders' equity. If the shares are purchased at prices
higher or lower than the Purchase Price, such purchases would have a
greater or lesser impact, respectively, on stockholders' equity. If the
Recognition Plan purchases authorized but unissued shares from the
Company, such issuance would dilute the voting interests of existing
stockholders by approximately 3.9%. See "Pro Forma Data" and "Management
-Benefits - Recognition and Retention Plan."
<PAGE>
-11-
REGULATORY CAPITAL REQUIREMENTS
Under FDIC regulations, depository institutions such as the Bank are
required to maintain a minimum ratio of qualifying total capital to total assets
and off-balance sheet instruments, as adjusted to reflect their relative credit
risks, of 8.0%. At least one-half of total capital is to be comprised of common
equity, retained earnings, non-cumulative perpetual preferred stock and a
limited amount of cumulative perpetual preferred stock, less goodwill and other
intangibles ("Tier 1 capital"). The remainder of total capital may consist of a
limited amount of subordinated debt, other preferred stock, certain other
instruments and a limited amount of general reserves for loan losses ("Tier 2
capital").
The FDIC also has established an additional capital adequacy guideline
referred to as the Tier 1 leverage capital ratio, which measures the ratio of
Tier 1 capital to total assets less goodwill. Although the most highly-rated
depository institutions will be required to maintain a minimum Tier 1 leverage
capital ratio of 3.0%, most depository institutions will be required to maintain
Tier 1 leverage capital ratios of 4.0% to 5.0% or more. The actual required
ratio will be based on the FDIC's assessment of the individual depository
institution's asset quality, earnings performance, interest-rate risk and
liquidity. Although the FDIC has not advised the Bank of a specific Tier 1
leverage capital ratio requirement, management of the Bank believes that for
purposes of complying with applicable federal regulations, the required Tier 1
leverage capital ratio for the Bank will be 4.0%, based upon published
regulatory criteria for establishing such minimum. There can be no assurance
that the Bank will not be required by the FDIC to maintain a higher Tier 1
leverage capital ratio.
The Federal Reserve Board has established guidelines regarding the capital
adequacy of bank holding companies, such as the Company. These requirements are
substantially similar to those adopted by the FDIC for depository institutions,
as set forth above. See generally "Regulation - The Company - Capital
Requirements" and "- The Bank - Capital Requirements."
Set forth below is a summary of the Bank's compliance with the applicable
capital standards as of September 30, 1996 on a historical basis and the
Company's and the Bank's compliance with applicable capital standards on a pro
forma basis assuming that the indicated number of shares were sold by the
Company as of such date and receipt by the Bank of 75% of net Conversion
proceeds. Proceeds have been assumed to be invested in interest-earning assets
which have a 50% risk-weighting.
<PAGE>
-12-
<TABLE>
<CAPTION>
Pro Forma at September 30, 1996 Based on
----------------------------------------------------------------
Historical at 255,000 Shares 300,000 Shares 345,000 Shares
September 30, 1996 (Minimum of Range) (Midpoint of Range) (Maximum of Range)
-------------------- -------------------- -------------------- --------------------
Percent Percent Percent Percent
Amount of Assets(1) Amount of Assets(1) Amount of Assets(1) Amount of Assets(1)
------ ------------ ------ ------------ ------ ------------ ------ ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Company:
Tier 1 risk-weighted level -- --% $4,351 25.01% $4,740 26.95% $5,129 28.84%
Requirement -- -- 696 4.00% 704 4.00% 711 4.00%
------ ----- ------ ----- ------ -----
Excess -- -- $3,655 21.01% $4,036 22.95% $4,418 24.84%
====== ===== ====== ===== ====== =====
Tier 1 adjusted total level -- -- $4,351 11.63% $4,740 12.53% $5,129 13.42%
Requirement -- -- 1,123 3.00% 1,134 3.00% 1,146 3.00%
------ ----- ------ ----- ------ -----
Excess -- -- $3,228 8.63% $3,606 9.53% $3,983 10.42%
====== ===== ====== ===== ====== =====
Total risk-based level -- -- $4,494 25.84% $4,883 27.76% $5,272 29.65%
Requirement -- -- 1,392 8.00% 1,407 8.00% 1,423 8.00%
------ ----- ------ ----- ------ -----
Excess -- -- $3,102 17.84% $3,476 19.76% $3,849 21.65%
====== ===== ====== ===== ====== =====
The Bank:
Tier 1 risk-weighted level $2,371 14.45% $3,780 21.96% $4,058 23.36% $4,336 24.74%
Requirement 656 4.00% 688 4.00% 695 4.00% 701 4.00%
------ ----- ------ ----- ------ ----- ------ -----
Excess $1,715 10.45% $3,092 17.96% $3,363 19.36% $3,635 20.74%
====== ===== ====== ===== ====== ===== ====== =====
Tier 1 adjusted total level $2,371 6.69% $3,780 10.20% $4,058 10.86% $4,336 11.50%
Requirement(2) 1,418 4.00% 1,482 4.00% 1,495 4.00% 1,508 4.00%
------ ----- ------ ----- ------ ----- ------ -----
Excess $ 953 2.69% $2,298 6.20% $2,563 6.86% $2,828 7.50%
====== ===== ====== ===== ====== ===== ====== =====
Total risk-based level $2,514 15.33% $3,923 22.79% $4,201 24.19% $4,479 25.56%
Requirement 1,312 8.00% 1,377 8.00% 1,389 8.00% 1,402 8.00%
------ ----- ------ ----- ------ ----- ------ -----
Excess $1,202 7.33% $2,546 14.79% $2,812 16.19% $3,077 17.56%
====== ===== ====== ===== ====== ===== ====== =====
</TABLE>
Pro Forma at September 30, 1996 Based on
----------------------------------------
396,750 Shares
(Maximum As Adjusted)
--------------------
Percent
Amount of Assets(1)
------ ------------
(Dollars in Thousands)
The Company:
Tier 1 risk-weighted level $5,576 30.98%
Requirement 720 4.00%
------ -----
Excess $4,856 26.98%
====== =====
Tier 1 adjusted total level $5,576 14.42%
Requirement 1,160 3.00%
------ -----
Excess $4,416 11.42%
====== =====
Total risk-based level $5,718 31.76%
Requirement 1,440 8.00%
------ -----
Excess $4,278 23.76%
====== =====
The Bank:
Tier 1 risk-weighted level $4,655 26.29%
Requirement 708 4.00%
------ -----
Excess $3,947 22.29%
====== =====
Tier 1 adjusted total level $4,655 12.24%
Requirement(2) 1,522 4.00%
------ -----
Excess $3,133 8.24%
====== =====
Total risk-based level $4,798 27.10%
Requirement 1,416 8.00%
------ -----
Excess $3,382 19.10%
====== =====
- ----------
(1) Average or risk-weighted assets, as appropriate.
(2) Reflects the minimum FDIC requirements. The FDIC could require the Bank to
hold a Tier 1 leverage ratio of up to 5.0%.
<PAGE>
-13-
Benefits of Conversion to Management
General. In connection with the Conversion, the Company's directors and
executive officers as a group (including purchases by any associates of or
groups acting in concert with such persons and purchases through by such
directors and executive officers the Bank's 401(k) profit sharing plan ("401(k)
Plan")) (5 persons) have indicated that they intend to purchase 65,000 shares of
Common Stock, or 18.6% of the Common Stock at the maximum of the Estimated Price
Range.
The ESOP. The ESOP intends to purchase an aggregate of 8.0% of the shares
of Common Stock offered in the Conversion ($204,000 and $276,000 of Common
Stock, respectively, based on the issuance of the minimum of 255,000 shares and
the maximum of 345,000 shares or $317,400 based on the issuance of 396,750
shares, at 15% above the maximum of the Estimated Price Range). For additional
information, see "Management Benefits - Employee Stock Ownership Plan and
Trust."
Employment Agreement. An employment agreement with the Bank's chief
executive officer provides for benefits and cash payments in the event of a
change in control of the Company or the Bank. These provisions may have the
effect of increasing the cost of acquiring the Company, thereby discouraging
future attempts to acquire the Company or the Bank. See "Management - Employment
Agreement."
Stock Option Plan. Following consummation of the Conversion, the Company
intends to submit for stockholder consideration a stock option plan for the
benefit of the directors, officers and key employees of the Company and the Bank
(the "Stock Option Plan"), pursuant to which the Company intends to reserve a
number of authorized but unissued shares of Common Stock equal to an aggregate
of 10% of the Common Stock issued in the Conversion (34,500 shares at the
maximum of the Estimated Price Range, 39,675 shares at 15% above the maximum of
the Estimated Price Range) for issuance pursuant to stock options and stock
appreciation rights. The Company currently intends to submit the
Stock Option Plan to stockholders at a meeting to be held not earlier than
six months after the Conversion. While no consideration has been given to the
number of shares granted to any employee or director under the Stock Option
Plan, any allocation will be consistent with applicable Federal regulations.
Under current Federal regulations, any plan approved by stockholders within one
year of the consummation of the Conversion is required to limit grants (i) to
any employee to 25% or less of the shares available under the Stock Option Plan
and (ii) to any non-employee director individually to 5% or less and to all such
non-employee directors to 30% in the aggregate of the shares available under the
Stock Option Plan. The value of any options granted under the Stock Option Plan
will be determined based on the increase, if any, in the market value of the
Common Stock compared over the exercise price of the options. The exercise price
of any options granted under the Stock Option Plan will be not less than fair
market value on the date of grant. See "Management - Benefits - Stock Option
Plan."
Recognition and Retention Plan. Following consummation of the Conversion,
the Company intends to submit for stockholder consideration a Recognition and
Retention Plan for the benefit of the directors and officers of the Company and
the Bank (the "Recognition Plan"). It is expected that the Recognition Plan will
be submitted to stockholders for approval at the same time as the Stock Option
Plan.
Upon the receipt of such approval, the Recognition Plan is expected to
purchase a number of shares of Common Stock either from the Company or in the
open market equal to an aggregate of 4% of the Common Stock issued in the
Conversion (13,800 shares at the maximum of the Estimated Price Range). While no
consideration has been given to the number of shares to be awarded to any
employee or director under the Recognition Plan, any allocation will be
consistent with applicable Federal regulations. Under current Federal
regulations, any such plan approved by stockholders within one year of the
consummation of the Conversion is required to limit grants (i) to any employee
to 25% or less of the shares available under the Recognition Plan
<PAGE>
-14-
and (ii) to any non-employee director individually to 5% or less and to all such
non-employee directors to 30% in the aggregate of the shares available under the
Recognition Plan.
Assuming that the Purchase Price is the value of shares awarded under the
Recognition Plan, the maximum value of awards to an employee would be $25,500,
$30,000, $34,500 and $39,675, respectively, assuming the issuance of shares at
the minimum, midpoint, maximum and 15% above the maximum of the Estimated Price
Range and the maximum value of awards to a non-employee director would be
$5,100, $6,000, $6,900 and $7,935, respectively, at the minimum, midpoint,
maximum and 15% above the maximum of the Estimated Price Range. The actual value
of any awards made under the Recognition Plan will depend upon, among other
factors, the market value of the Common Stock at the time of award and upon
payment. All awards under the Recognition Plan shall vest over a period of time,
but generally not in excess of 20% per year. See "Management - Benefits -
Recognition and Retention Plan."
Legal Proceedings
The Bank is involved in routine legal proceedings occurring in the
ordinary course of business which, in the aggregate except as noted below, are
believed by management to be immaterial to the financial condition of the Bank.
On December 30, 1992, Rosemary Frobose, a former officer of the Bank, filed a
lawsuit against the Bank in the United States District Court, Southern District
of Illinois, (subsequently transferred to the Central District of Illinois,
Peoria Division) alleging that she was the victim of a retaliatory discharge
based on common law rights and the federal "whistleblower statute," 12 USC ss.
1831j(a). The plaintiff seeks compensatory and punitive damages against the Bank
based upon her loss of income and employment for at least a ten-year period. She
has not sought a specific dollar amount in her complaint but at one point made a
demand of $900,000. Recently, the Court entered a summary judgment in favor of
the Bank on each count except one which was subsequently dismissed by the Court.
The Bank anticipates an appeal of the court's order against the plaintiff. The
Bank plans to continue to vigorously contest this lawsuit. In the judgment of
the Bank's litigation counsel, the likelihood that the plaintiff will prevail in
this case is remote. However, should the case be revised on appeal and a verdict
ultimately directed against the Bank by the trial court, the Bank's litigation
counsel believes that the range of potential loss is $250,000 to $1 million.
PRO FORMA DATA
The actual net proceeds from the sale of the Common Stock cannot be
determined until the Conversion is completed. However, net proceeds are
currently estimated to be between $2.3 million and $3.2 million (or $3.7 million
in the event the Estimated Price Range is increased by 15%) based upon the
following assumptions: (i) 100% of the shares of Common Stock will be sold in
the Subscription Offering and Community Offering; (ii) fixed Conversion expenses
will be approximately $234,000 and (iii) Trident will be paid a variable expense
based on the number of shares sold of $29,700, $37,000, $44,200 and $52,500 at
the minimum, midpoint, maximum and maximum, as adjusted, of the Estimated Price
Range, respectively. Actual Conversion expenses may vary from those estimated.
See "The Conversion - Marketing Arrangements."
Pro forma net income and stockholders' equity have been calculated for the
year ended September 30, 1996 as if the Common Stock to be issued in the
Offerings had been sold at the beginning of the year and the net proceeds had
been invested at 5.69%, which represents the yield on one-year U.S. Government
securities at September 30, 1996. The use of this interest rate is viewed to be
more relevant in the current rate environment than the use of an arithmetic
average of the weighted average yield earned by the Bank on its interest-earning
assets and the weighted average rate paid on its deposits during such periods
(as required by Federal regulations). The effect of withdrawals from deposit
accounts for the purchase of Common Stock has not been reflected. A combined
effective Federal and state income tax rate of 34% has been assumed for the
year, resulting in an after-tax yield of 3.76% during the year ended September
30, 1996. Historical and pro forma per share amounts have been calculated by
dividing historical and pro forma amounts by the indicated number of shares of
Common Stock, as adjusted to give effect to the shares committed to be released
during
<PAGE>
-15-
the period by the ESOP, with respect to the net income per share calculations.
See footnotes 4 and 6 to the Pro Forma Data tables. No effect has been given in
the pro forma stockholders' equity calculations for the assumed earnings on the
net proceeds. As discussed under "Use of Proceeds," the Company intends to
retain 25% of the net Conversion proceeds and will use a portion of such
retained proceeds to make a loan directly to the ESOP to enable the ESOP to
purchase up to 8.0% of the Common Stock in the Conversion.
The following pro forma information may not be representative of the
financial effects of the foregoing transactions at the dates on which such
transactions actually occur and should not be taken as indicative of future
results of operations. Pro forma stockholders' equity represents the difference
between the stated amount of assets and liabilities of the Company computed in
accordance with generally accepted accounting principles ("GAAP"). The pro forma
stockholders' equity is not intended to represent the fair market value of the
Common Stock and may be different than amounts that would be available for
distribution to stockholders in the event of liquidation. No effect has been
given in the tables to the possible issuance of additional shares equal to 10%
of the Common Stock to be reserved for future issuance pursuant to the Stock
Option Plan to be adopted by the Board of Directors of the Company, nor does
book value give any effect to the liquidation account to be established for the
benefit of Eligible Account Holders and Supplemental Eligible Account Holders or
to the bad debt reserve. See "Management - Benefits - Stock Option Plan" and
"The Conversion - Liquidation Rights" and "Federal and State Taxation - Federal
Taxation." The tables below give effect to the Recognition Plan, which is
expected to be presented (together with the Stock Option Plan) to stockholders
for approval at a meeting of stockholders which is expected to be held not
earlier than six months following completion of the Conversion. If the
Recognition Plan is approved by stockholders, the Recognition Plan intends to
acquire an amount of Common Stock equal to 4% of the shares of Common Stock
issued in the Conversion, either through open market purchases or from
authorized but unissued shares of Common Stock. The tables below assume that
stockholder approval has been obtained and that the shares acquired by the
Recognition Plan are purchased in the open market at $10.00 per share. There can
be no assurance that stockholder approval of the Recognition Plan will be
obtained, that the shares will be purchased in the open market, or that the
purchase price will be $10.00 per share.
The following tables summarize historical consolidated data of the Bank
and pro forma data of the Company at the year ended September 30, 1996 based on
assumptions set forth above and in the tables and should not be used as a basis
for projections of market value of the Common Stock following the Conversion.
<PAGE>
-16-
<TABLE>
<CAPTION>
At or For the Year Ended September 30, 1996
--------------------------------------------------------------------
255,000 300,000 345,000 396,750
Shares Sold Shares Sold Shares Sold Shares Sold
at $10.00 at $10.00 at $10.00 at $10.00
Per Share Per Share Per Share Per Share (15%
(Minimum (Midpoint (Maximum above Maximum
of Range) of Range) of Range) of Range)(9)
----------- ----------- ----------- --------------
(Dollars in Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Gross proceeds $ 2,550 $ 3,000 $ 3,450 $ 3,968
Less offering expenses 264 271 278 287
--------- --------- --------- ---------
Estimated net Conversion proceeds 2,286 2,729 3,172 3,681
Less: Common Stock acquired
by ESOP (204) (240) (276) (317)
Common Stock to be acquired
by the Recognition Plan (102) (120) (138) (159)
--------- --------- --------- ---------
Estimated adjusted net proceeds(1) 1,980 2,369 2,758 3,205
========= ========= ========= =========
Net income (loss):
Historical $ (71)(8) $ (71)(8) $ (71)(8) $ (71)(8)
Pro forma adjustments:
Income on adjusted net proceeds(1) 74 89 104 121
ESOP(2) (13) (16) (18) (21)
Recognition Plan(3) (13) (16) (18) (21)
--------- --------- --------- ---------
Pro forma net income (loss) $ (23) $ (14) $ (3) $ 8
========= ========= ========= =========
Net income (loss) per share(4):
Historical $ (0.30) $ (0.26) $ (0.22) $ (0.19)
Pro forma adjustments:
Income on adjusted net proceeds(1) $ 0.31 $ 0.32 $ 0.32 $ 0.33
ESOP(2) (0.05) (0.06) (0.06) (0.06)
Recognition Plan(3) (0.05) (0.06) (0.06) (0.06)
--------- --------- --------- ---------
Pro forma net income (loss) per share $ (0.09) $ (0.06) $ (0.02) $ 0.02
========= ========= ========= =========
Pro forma price/earnings ratio(9) NM NM NM NM
Number of shares used in net income per
share calculations(4) 236,640 278,400 320,160 368,184
Stockholders' equity:
Historical $ 2,355 $ 2,355 $ 2,355 $ 2,355
Estimated net Conversion proceeds 2,286 2,729 3,172 3,681
Less: Common Stock acquired
by ESOP(2) (204) (240) (276) (317)
Common Stock to be acquired
by the Recognition Plan(3) (102) (120) (138) (159)
--------- --------- --------- ---------
Pro forma stockholders' equity(6) $ 4,335 $ 4,724 $ 5,113 $ 5,560
========= ========= ========= =========
Stockholders' equity per share(7):
Historical $ 9.24 $ 7.85 $ 6.83 $ 5.94
Estimated net Conversion proceeds 8.96 9.10 9.19 9.28
Less: Common Stock acquired
by ESOP(2) (0.80) (0.80) (0.80) (0.80)
Common Stock to be acquired
by the Recognition Plan(3) (0.40) (0.40) (0.40) (0.40)
--------- --------- --------- ---------
Pro forma stockholders' equity
per share(3)(5)(6) $ 17.00 $ 15.75 $ 14.82 $ 14.02
========= ========= ========= =========
Pro forma price to book ratio(7) 58.82% 63.49% 67.48% 71.33%
========= ========= ========= =========
</TABLE>
(Footnotes on following page)
<PAGE>
-17-
- ----------
(1) Estimated adjusted net proceeds consist of the estimated net Conversion
proceeds, minus (i) the proceeds attributable to the purchase by the ESOP
and (ii) the value of the shares to be purchased by the Recognition Plan,
subject to stockholder approval, after the Conversion at an assumed price
of $10.00 per share.
(2) It is assumed that 8% of the shares of Common Stock issued in the
Conversion will be purchased by the ESOP. For purposes of this table, the
funds used to acquire such shares are assumed to have been borrowed by the
ESOP from the Company. The Company intends to make quarterly contributions
to the ESOP over a ten-year period in an amount at least equal to the
principal and interest requirement (which interest rate shall be ____%) of
the debt. The pro forma net income assumes (i) that the ESOP expense for
each respective period is equivalent to the principal payment for the
respective period and was made at the end of each respective period; (ii)
that 2,040, 2,400, 2,760 and 3,174 shares were committed to be released
with respect to the year ended September 30, 1996, at the minimum,
midpoint, maximum and 15% above the maximum of the Estimated Price Range,
respectively; and (iii) in accordance with SOP 93-6, only the ESOP shares
committed to be released during the respective period were considered
outstanding for purposes of the net income per share calculations. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations -Recent Accounting Pronouncements" and "Management -
Benefits -Employee Stock Ownership Plan and Trust."
(3) The adjustment is based upon the assumed purchases by the Recognition Plan
of 10,200, 12,000, 13,800 and 15,870 shares at the minimum, midpoint,
maximum and 15% above the maximum of the Estimated Price Range, assuming
that: (i) stockholder approval of the Recognition Plan has been received;
(ii) the shares were acquired by the Recognition Plan at the beginning of
the period in open market purchases at the Purchase Price; and (iii) the
amortized expense for the year ended September 30, 1996 was 20% of the
amount contributed. If the Recognition Plan purchases authorized but
unissued shares instead of making open market purchases, the voting
interests of existing stockholders would be diluted by approximately 3.9%
and pro forma net income (loss) per share for the year ended September 30,
1996 would be $(0.08), $(0.03), $0.01 and $0.03, and pro forma
stockholders' equity per share at September 30, 1996 would be $16.73,
$15.53, $14.63 and $13.86, at the minimum, midpoint, maximum and 15% above
the maximum of the Estimated Price Range, respectively. See "Management -
Benefits - Recognition and Retention Plan."
(4) Net income per share computations are determined by taking the number of
shares assumed to be sold in the Conversion and, in accordance with SOP
93-6, subtracting the ESOP shares which have not been committed for
release during the respective period. See Note 2 above.
(5) No effect has been given to the issuance of additional shares of Common
Stock pursuant to the Stock Option Plan. If the Stock Option Plan is
approved by stockholders, an amount equal to 10% of the Common Stock
issued in the Conversion, or 25,500, 30,000, 34,500 and 39,675 shares at
the minimum, midpoint, maximum and 15% above the maximum of the Estimated
Price Range, respectively, will be reserved for future issuance upon the
exercise of options to be granted under the Stock Option Plan. The
issuance of Common Stock pursuant to the exercise of options under such
plan will result in the dilution of existing stockholders' interests.
Assuming stockholder approval of the Stock Option Plan, that all the
options were exercised at the end of the period at an exercise price of
$10.00 per share, and that the Recognition Plan purchases shares in the
open market at the Purchase Price, pro forma net income (loss) per share
for the year ended September 30, 1996 would be $(0.09), $(0.05), $(0.01)
and $0.02 and pro forma stockholders' equity per share at September 30,
1996 would be $16.36, $15.22, $14.38 and $13.65, in each case, at the
minimum, midpoint, maximum and 15% above the maximum of the Estimated
Price Range, respectively.
(6) The retained earnings of the Bank will be substantially restricted after
the Conversion. See "Dividend Policy" and "The Conversion - Liquidation
Rights."
<PAGE>
-18-
(7) Based on the number of shares sold in the Conversion.
(8) Except for the special SAIF assessment, the Bank's net income for the year
ended September 30, 1996 would have been $84,000. If the Bank's net income
for the year ended had been $84,000, pro forma net income for the year
ended September 30, 1996 would have been $132,000, $141,000, $152,000 and
$162,000 and pro forma net income per share would have been $0.56, $0.51,
$0.47 and $0.44 at the minimum, midpoint, maximum and 15% above the
maximum of the Estimated Price Range, respectively. See "Management's
Discussion and Analysis of Financial Condition and Results of Operation -
Results of Operation."
(9) The ratio is not meaningful ("NM") when there is a pro forma less per
share.
THE CONVERSION
THE BOARD OF DIRECTORS OF THE BANK AND THE COMMISSIONER HAVE APPROVED THE
PLAN OF CONVERSION, SUBJECT TO APPROVAL BY THE MEMBERS OF THE BANK ENTITLED TO
VOTE ON THE MATTER AND THE SATISFACTION OF CERTAIN OTHER CONDITIONS. SUCH
APPROVAL BY THE COMMISSIONER, HOWEVER, DOES NOT CONSTITUTE A RECOMMENDATION OR
ENDORSEMENT OF THE PLAN BY SUCH AGENCY.
General
On November 6, 1996, the Bank's Board of Directors unanimously adopted the
Plan, pursuant to which the Bank will be converted from an Illinois-chartered
mutual savings bank to an Illinois-chartered stock savings bank. It is intended
that all of the common stock of the Bank to be issued in the Conversion will be
held by the Company, which is incorporated under Delaware law. The Plan has been
approved by the Commissioner, subject to, among other things, approval of the
Plan by the Bank's members. In addition, the FDIC has issued its conditional
non-objection to the Plan and the Conversion. A Special Meeting of the Bank's
members has been called for the purpose of approving the Plan, which meeting is
to be held on March __, 1997.
In adopting the Plan, the Board of Directors of the Bank determined that
conversion was advisable and in the best interests of its members and the Bank,
and further determined that the interests of certain holders of its deposit
accounts in the net worth of the Bank would be equitably provided for and that
the Conversion would not have any adverse impact on the reserves and net worth
of the Bank. In determining to convert to the stock form of organization the
Board of Directors of the Bank considered a number of factors. The stock form of
organization is used by commercial banks, most business entities and thrift
institutions. The Board of Directors considered that converting will increase
the Bank's capital base and enhance its ability to support future growth. The
stock form also will facilitate the Bank's ability to engage in acquisition or
merger transactions with other entities. While the Bank currently has no
understandings, arrangements or agreements, written or oral, with any other
entity, the Board of Directors considered the continuing consolidation occurring
throughout the banking industry and concluded that converting to the stock form
may enhance the Bank's ability to engage in acquisition opportunities which may
arise in the future. The Board of Directors also considered that upon conversion
to the stock form, the Bank's employees could participate in stock-benefit
compensation plans, such as stock option and/or stock grant plans. Upon
consideration of these and other factors, the Board of Directors of the Bank
determined that converting from the mutual to the stock form was in the best
interests of the Bank.
The Company has applied for the approval of the Federal Reserve Board to
become a bank holding company and to acquire all of the common stock of the Bank
to be issued in the Conversion. The Company plans to retain 25% of the net
proceeds from the sale of the Common Stock, with all the remaining proceeds used
to purchase all of the then to be issued and outstanding capital stock of the
Bank. Based on the issuance of 345,000 shares at the Purchase Price at the
maximum of the Estimated Price Range, approximately $276,000 of the net proceeds
retained by the Company are intended to be used to loan funds to the ESOP to
enable the ESOP to purchase up to 8.0% of
<PAGE>
-19-
the shares issued in the Conversion. The Conversion will be effected only upon
completion of the sale of all of the shares of Common Stock of the Company to be
issued pursuant to the Plan.
The Plan provides generally that (i) the Bank will convert from an
Illinois-chartered mutual savings bank to an Illinois-chartered stock savings
bank and (ii) the Company will offer shares of Common Stock for sale in the
Subscription Offering to Eligible Account Holders, the ESOP, Supplemental
Eligible Account Holders, Other Voting Members, and in a concurrent Community
Offering to certain members of the general public, subject to the prior rights
of holders of subscription rights. See "- Subscription Offering and Subscription
Rights" and "- Community Offering." It is anticipated that all shares not
subscribed for in the Subscription and Community Offerings will be offered for
sale by the Company to the general public in a Syndicated Community Offering.
See "- Syndicated Community Offering." The Bank has the right to accept or
reject, in whole or in part, any orders to purchase shares of the Common Stock
received in the Community Offering or in the Syndicated Community Offering.
The aggregate price of the shares of Common Stock to be issued in the
Conversion within the Estimated Price Range, currently estimated to be between
$2,550,000 and $3,450,000, will be determined based upon an independent
appraisal of the estimated pro forma market value of the Common Stock of the
Company. All shares of Common Stock to be issued and sold in the Conversion will
be sold at the same price. The independent appraisal will be affirmed or, if
necessary, updated at the completion of the Subscription and Community
Offerings, if all shares are subscribed for, or at the completion of the
Syndicated Community Offering. The appraisal has been performed by RP Financial,
a consulting firm experienced in the valuation and appraisal of savings
institutions. See "- Stock Pricing and Number of Shares to be Issued" for more
information as to the determination of the estimated pro forma market value of
the Common Stock.
The Plan may be amended at any time with the concurrence of the
Commissioner and the receipt of any necessary approval from the FDIC. Amendments
to the Plan will require additional approval of the Bank's members, whether such
amendment is made before or after the Special Meeting of the Bank's members
called to consider the Plan, only if required by the Commissioner and/or the
FDIC. The Plan shall terminate if the Offerings are not completed within [12]
months of the date of the Special Meeting of the Bank's members called to
consider the Plan, subject to further extension by the Commissioner. Prior to
the Special Meeting of the Bank's members to consider the Plan, the Bank's Board
of Directors may terminate the Plan without approval of the Commissioner and,
thereafter, only with the Commissioner's approval.
The following is a brief summary of the material aspects of the
Conversion. The summary is qualified in its entirety by reference to the
provisions of the Plan. A copy of the Plan is available for inspection at the
Bank and at the offices of the Office. The Plan is also filed as an Exhibit to
the Registration Statement of which this Prospectus is a part, copies of which
may be obtained from the SEC. See "Additional Information" and "Available
Information."
Purposes of Conversion
The Bank, as an Illinois-chartered mutual savings bank, does not have
shareholders and has no authority to issue capital stock. By converting to the
capital stock form of organization, the Bank will be structured in the form used
by commercial banks, most business entities and a growing number of savings
institutions. The Conversion will be important to the future growth and
performance of the institution by providing a larger capital base on which the
Bank may operate, enhanced future access to capital markets, enhanced ability to
support increased originations of commercial business loans and consumer loans
and to diversify into other financial services related activities, and enhanced
ability to render services to the public.
The holding company form of organization will provide additional
flexibility to diversify the Bank's business activities through existing or
newly formed subsidiaries, or through acquisition of other financial
institutions, as well as other companies. Although there are no current
arrangements, understandings or agreements regarding any such
<PAGE>
-20-
opportunities, the Company will be in a better position after the Conversion,
subject to regulatory limitations and the Company's financial position, to take
advantage of opportunities which may arise.
After completion of the Conversion, the unissued common and preferred
stock authorized by the Company's Certificate of Incorporation will permit the
Company, subject to market conditions and applicable regulatory approvals, to
raise additional equity capital through further sales of securities, and to
issue securities in connection with possible acquisitions. At the present time,
the Company has no plans with respect to additional offerings of securities,
other than the possible issuance of additional shares to the Recognition Plan or
upon exercise of stock options. Following Conversion, the Company will also be
able to use stock-related incentive programs to attract and retain executive and
other personnel for itself and its subsidiaries. See "Management -Management of
the Bank."
Effects of Conversion
General. Each depositor in a mutual savings bank has both a deposit
account in the institution and a pro rata ownership interest in the net worth of
the institution based upon the balance in his account, which interest may only
be realized in the event of a liquidation of the institution. However, this
ownership interest is tied to the depositor's account and has no tangible market
value separate from such deposit account. Any depositor who opens a deposit
account obtains a pro rata ownership interest in the net worth of the
institution without any additional payment beyond the amount of the deposit. A
depositor who reduces or closes his account receives a portion or all of the
balance in the account but nothing for his ownership interest in the net worth
of the institution, which is lost to the extent that the balance in the account
is reduced.
Consequently, mutual savings bank depositors normally have no way to
realize the value of their ownership interest, which has realizable value only
in the unlikely event that the mutual savings bank is liquidated. In such event,
the depositors of record at that time, as owners, would share pro rata in any
residual surplus and reserves after other claims, including claims of depositors
to the amounts of their deposits, are paid.
When a mutual savings bank converts to stock form, permanent
nonwithdrawable capital stock is created to represent the ownership of the
institution's net worth. The Bank's common stock and the Common Stock of the
Company is separate and apart from deposit accounts and cannot be and is not
insured by the FDIC or any other governmental agency. Certificates are issued to
evidence ownership of the permanent stock. The stock certificates are
transferable and, therefore, the stock may be sold or traded if a purchaser is
available with no effect on any account the seller may hold in the institution.
Continuity. While the Conversion is being accomplished, the normal
business of the Bank of accepting deposits and making loans will continue
without interruption. The Bank will continue to be subject to regulation by the
Commissioner and the FDIC. After Conversion, the Bank will continue to provide
services for depositors and borrowers under current policies by its present
management and staff.
The directors serving the Bank at the time of the Conversion will continue
to serve as directors of the Bank after the Conversion. The Directors of the
Company will consist of individuals currently serving on the Board of Directors
of the Bank. All officers of the Bank at the time of the Conversion will retain
their positions after the Conversion.
Effect on Deposit Accounts. Under the Plan, each depositor in the Bank at
the time of the Conversion will automatically continue as a depositor after the
Conversion to stock form, and each such deposit account will remain the same
with respect to deposit balance, interest rate and other terms. Each such
account will be insured by the FDIC to the same extent as before the Conversion.
Depositors will continue to hold their existing certificates, passbooks and
other evidences of their accounts.
<PAGE>
-21-
Effect on Loans. No loan outstanding from the Bank will be affected by the
Conversion, and the amount, interest rate, maturity and security for each loan
will remain as they were contractually fixed prior to the Conversion.
Effect on Voting Rights of Members. At present, all depositors of the Bank
are members of, and have voting rights in, the Bank as to all matters requiring
membership action. Upon Conversion, depositors will cease to be members and will
no longer be entitled to vote at meetings of the Bank. Upon Conversion, all
voting rights in the Bank will be vested in the Company as the sole stockholder
of the Bank. Exclusive voting rights with respect to the Company will be vested
in the holders of Common Stock. Depositors of the Bank will not have voting
rights after the Conversion except to the extent that they become stockholders
of the Company through the purchase of Common Stock.
Tax Effects. The Bank has received opinions with regard to Federal and
Illinois income taxation which indicates that the adoption and implementation of
the Plan of Conversion set forth herein will not be taxable for Federal or
Illinois tax purposes to the Bank or its Eligible Account Holders or
Supplemental Eligible Account Holders or the Company, except as discussed below.
See "- Tax Aspects."
Effect on Liquidation Rights. Were a mutual savings bank to liquidate, all
claims of creditors (including those of depositors, to the extent of deposit
balances) would be paid first. Thereafter, if there were any assets remaining,
depositors would receive such remaining assets, pro rata, based upon the deposit
balances in their deposit accounts immediately prior to liquidation. In the
unlikely event that the Bank were to liquidate after Conversion, all claims of
creditors (including those of depositors, to the extent of their deposit
balances) would also be paid first, followed by distribution of the "liquidation
account" to certain depositors (see "- Liquidation Rights"), with any assets
remaining thereafter distributed to the Company as the holder of the Bank's
capital stock. Pursuant to the rules and regulations of the Commissioner, a
post-Conversion merger, consolidation, sale of bulk assets or similar
combination or transaction with another insured savings institution would not be
considered a liquidation and, in such a transaction, the liquidation account
would be required to be assumed by the surviving institution.
Stock Pricing and Number of Shares to be Issued
The Plan of Conversion requires that the aggregate purchase price of the
Common Stock sold in the Offerings must be based on the appraised pro forma
market value of the Common Stock, as determined on the basis of an independent
valuation. The Bank and the Company have retained RP Financial to make such
valuation. For its services in making such appraisal and certain other services
(including assisting the Bank in the preparation of a business plan) rendered in
connection with the Conversion, RP Financial will receive a fee of $15,000, plus
reimbursement for reasonable expenses. The Bank and the Company have agreed to
indemnify RP Financial and its employees and affiliates against certain losses
(including any losses in connection with claims under the Federal securities
laws) arising out of its services as appraiser, except where RP Financial's
liability results from its negligence or willful misconduct.
An appraisal has been made by RP Financial in reliance upon the
information contained in this Prospectus, including the Consolidated Financial
Statement. RP Financial also considered the following factors, among others: the
present and projected operating results and financial condition of the Company
and the Bank and the economic and demographic conditions in the Bank's existing
marketing area; certain historical, financial and other information relating to
the Bank; a comparative evaluation of the operating and financial statistics of
the Bank with those of other similarly situated publicly-traded savings
institutions located in Illinois and other regions of the United States; the
aggregate size of the offering of the Common Stock; the impact of Conversion on
the Bank's net worth and earnings potential; and the trading market for
securities of comparable institutions and general conditions in the market for
such securities. In its review of the appraisal provided by RP Financial, the
Board of Directors reviewed the methodologies and the appropriateness of the
assumptions used by RP Financial in addition to the factors enumerated above.
<PAGE>
-22-
On the basis of the foregoing, RP Financial has advised the Company and
the Bank that, in its opinion, dated November 15, 1996 the Estimated Price Range
of the Common Stock ranged from a minimum of $2,550,000 to a maximum of
$3,450,000 with a midpoint of $3,000,000. Based upon the Estimated Price Range
and the Purchase Price of $10.00 per share for the Common Stock established by
the Board of Directors, the Company expects to issue between 255,000 and 345,000
shares of Common Stock. The Estimated Price Range may be amended with the
approval of the Commissioner and non-objection of the FDIC, if required, if
necessitated by subsequent developments in the financial condition of the
Company or the Bank or market conditions generally. In the event the appraisal
is updated to amend the value of the Bank below $2,550,000 or above $3,967,500
(the maximum of the Estimated Price Range, as adjusted by 15%), the range of the
number of shares that may be issued will decrease or increase to conform with
the updated appraisal. Such appraisal will be filed with the SEC by
post-effective amendment. The Conversion will not be consummated unless the
minimum of the Estimated Price Range is sold.
In the event the Company receives orders for Common Stock in excess of
$3,450,000 (the maximum of the Estimated Price Range) and up to $3,967,500 (the
maximum of the Estimated Price Range, as adjusted by 15%), the Company may
determine to accept all such orders. No assurances, however, can be made that
the Company will receive orders for Common Stock in excess of the maximum of the
Estimated Price Range or that, if such orders are received, that all such orders
will be accepted because the Company's final valuation and number of shares to
be issued are subject to the receipt of an updated appraisal from RP Financial
which reflects such an increase in the valuation and the approval of such
increase by the Commissioner and non-objection of the FDIC, if required. There
is no obligation or understanding on the part of management to take and/or pay
for any shares in order to complete the Conversion.
Such valuation, however, is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing such shares. RP
Financial did not independently verify the Consolidated Financial Statement and
other information provided by the Bank, nor did RP Financial value independently
the assets or liabilities of the Bank. The valuation considers the Bank as a
going concern and should not be considered as an indication of the liquidation
value of the Bank. Moreover, because such valuation is necessarily based upon
estimates and projections of a number of matters, all of which are subject to
change from time to time, no assurance can be given that persons purchasing such
shares in the Conversion will thereafter be able to sell such shares at prices
at or above the Purchase Price or in the range of the foregoing valuation of the
pro forma market value thereof.
Following commencement of the Subscription Offering, the maximum of the
Estimated Price Range may be increased up to 15% and the number of shares of
Common Stock to be issued in the Conversion may be increased to 396,750 shares
to reflect changes in the market and financial conditions, without the
resolicitation of subscribers. See "- Limitations on Common Stock Purchases" as
to the method of distribution and allocation of additional shares that may be
issued in the event of an increase in the Estimated Price Range to fill unfilled
orders in the Subscription Offering.
No sale of shares of Common Stock in the Conversion may be consummated
unless prior to such consummation RP Financial confirms that nothing of a
material nature has occurred which, taking into account all relevant factors,
would cause it to conclude that the aggregate price is materially incompatible
with the estimate of the pro forma valuation of the aggregate market value of
the Common Stock at the time of the sale of the Common Stock. If such is not the
case, a new Estimated Price Range may be set, a new Subscription and Community
Offering and/or Syndicated Community Offering may be held or such other action
may be taken as the Company and the Bank shall determine and the Commissioner
and FDIC may permit.
Depending upon market or financial conditions following the commencement
of the Subscription Offering, the total number of shares to be issued in the
Conversion may be increased or decreased without a resolicitation of
subscribers, provided that the product of the total number of shares times the
Purchase Price is not below the minimum or more than 15% above the maximum of
the Estimated Price Range. In the event market or financial conditions change so
as to cause the aggregate Purchase Price of the shares to be below the minimum
of the
<PAGE>
-23-
Estimated Price Range or more than 15% above the maximum of such range,
purchasers will be resolicited (i.e., permitted to continue their orders, in
which case they will need to affirmatively reconfirm their subscriptions prior
to the expiration of the resolicitation offering or their subscription funds
will be promptly refunded with interest at the Bank's passbook rate of interest,
or be permitted to modify or rescind their subscriptions). Any change in the
Estimated Price Range must be approved by the Commissioner and requires the
non-objection of the FDIC.
An increase in the number of shares to be issued in the Conversion, as a
result of an increase in the estimated pro forma market value, would decrease
both a subscriber's ownership interest and the Company's pro forma net income
and stockholders' equity on a per share basis while increasing pro forma net
income and stockholders' equity on an aggregate basis. A decrease in the number
of shares to be issued in the Conversion would increase both a subscriber's
ownership interest and the Company's pro forma net income and stockholders'
equity on a per share basis while decreasing pro forma net income and
stockholders' equity on an aggregate basis. See "Pro Forma Data."
Copies of the appraisal report of RP Financial, including any amendments
thereto, and the detailed memorandum of the appraiser setting forth the method
and assumptions for such appraisal are available for inspection at the Bank's
office and the other locations specified under "Additional Information."
Subscription Offering and Subscription Rights
In accordance with the Plan of Conversion, rights to subscribe for the
purchase of Common Stock have been granted under the Plan of Conversion to the
following persons in the following order of descending priority: (1) Eligible
Account Holders, (2) the ESOP, (3) Supplemental Eligible Account Holders, and
(4) Other Voting Members. All subscriptions received will be subject to the
availability of Common Stock after satisfaction of all subscriptions of all
persons having prior rights in the Subscription Offering and to the maximum and
minimum purchase limitations set forth in the Plan of Conversion and as
described below under "- Limitations on Common Stock Purchases."
Priority 1: Eligible Account Holders. Each Eligible Account Holder will
receive, without payment therefor, first priority, nontransferable subscription
rights to subscribe for in the Subscription Offering up to the greater of: (i)
$50,000 of Common Stock; (ii) one-tenth of one percent (0.10%) of the total
offering of shares of Common Stock; or (iii) fifteen times the product (rounded
down to the next whole number) obtained by multiplying the total number of
shares of Common Stock to be issued by a fraction, of which the numerator is the
amount of the Eligible Account Holder's qualifying deposit and the denominator
of which is the total amount of qualifying deposits of all Eligible Account
Holders, in each case on July 31, 1995 ("Eligibility Record Date"); in each case
subject to the overall purchase limitation. See "- Limitations on Common Stock
Purchases."
If there are not sufficient shares available to satisfy all subscriptions,
shares first will be allocated among subscribing Eligible Account Holders so as
to permit each such Eligible Account Holder, to the extent possible, to purchase
a number of shares which will make his total allocation equal to the lesser of
the number of shares subscribed for or 100 shares. Any available shares
remaining after each such subscribing Eligible Account Holder has been allocated
the lesser of the number of shares subscribed for or 100 shares shall be
allocated among the subscribing Eligible Account Holders in the proportion which
the amounts of the qualifying deposits of each such subscribing Eligible Account
Holder bears to the total amount of qualifying deposits of all such subscribing
Eligible Account Holders, provided that no fractional shares shall be issued.
The submission of multiple orders by an Eligible Account Holder or other
subscriber will result in a lower deposit credit per order in the event of an
allocation.
To ensure proper allocation of stock, each Eligible Account Holder must
list on his subscription order form all accounts in which he has an ownership
interest. Failure to list an account could result in less shares being allocated
than if all accounts had been disclosed. The subscription rights of Eligible
Account Holders who are also directors or officers of the Bank or their
associates will be subordinated to the subscription rights of other Eligible
Account Holders to the extent attributable to increased deposits in the year
preceding July 31, 1995.
<PAGE>
-24-
Priority 2: Employee Stock Ownership Plan. The ESOP will receive, without
payment therefor, second priority non-transferable subscription rights to
purchase, in the aggregate, up to 10.0% of the Common Stock issued in the
Conversion. The subscription rights granted to the ESOP are subject to the
availability of shares after taking into account the shares purchased by
Eligible Account Holders, including any shares of Common Stock to be issued in
the Conversion as a result of an increase of up to 15% in the maximum of the
Estimated Price Range. The ESOP intends to purchase up to 8.0% of the shares to
be issued in the Conversion, or 20,400 shares and 27,600 shares, based on the
issuance of 255,000 shares and 345,000 shares, respectively. Subscriptions by
the ESOP will not be aggregated with shares of Common Stock purchased directly
by or which are otherwise attributable to any other participants in the
Subscription and Community Offerings, including subscriptions of any of the
Bank's directors, officers, employees or associates thereof. In the event that
there are not sufficient shares available to satisfy the ESOP's purchase order,
it is anticipated that the ESOP will attempt to purchase additional shares of
Common Stock in the open market in order that the ESOP shall have purchased an
aggregate of 8.0% of the shares of Common Stock sold in the Offerings.
Priority 3: Supplemental Eligible Account Holders. Each Supplemental
Eligible Account Holder will receive, without payment therefor, third priority,
nontransferable subscription rights to subscribe for in the Subscription
Offering up to the greater of: (i) $50,000 of Common Stock; (ii) one-tenth of
one percent (0.10%) of the total offering of shares of Common Stock; or (iii)
fifteen times the product (rounded down to the next whole number) obtained by
multiplying the total number of shares of Common Stock to be issued by a
fraction, of which the numerator is the amount of the Supplemental Eligible
Account Holder's qualifying deposit and the denominator of which is the total
amount of qualifying deposits of all Supplemental Eligible Account Holders, in
each case on December 31, 1996; and, in all cases, subject to the overall
purchase limitation. See "- Limitations on Common Stock Purchases."
If there are not sufficient shares available to satisfy all Supplemental
Eligible Account Holders, shares first will be allocated among subscribing
Supplemental Eligible Account Holders so as to permit each such Supplemental
Eligible Account Holder, to the extent possible, to purchase a number of shares
sufficient to make his total allocation (including the number of shares, if any,
allocated to such person as an Eligible Account Holder) equal to the lesser of
the number of shares subscribed for or 100 shares. Any remaining available
shares shall be allocated among such subscribing Supplemental Eligible Account
Holders in the proportion that the amount of their respective amount of
qualifying deposits bears to the total amount of the amount of qualifying
deposits of all subscribing Supplemental Eligible Account Holders, provided that
no fractional shares shall be issued. The submission of multiple orders by a
Supplemental Eligible Account Holder or other subscriber will result in a lower
deposit credit per order in the event of an allocation.
Priority 4: Other Voting Members. To the extent that there are sufficient
shares remaining after satisfaction of subscriptions by Eligible Account
Holders, the ESOP, and Supplemental Eligible Account Holders, each Other Voting
Member will receive, without payment therefor, third priority, nontransferable
subscription rights to subscribe for Common Stock in the Subscription Offering
up to the greater of: (i) $50,000 of Common Stock or (ii) one-tenth of one
percent (0.10%) of the total offering of shares of Common Stock; in each case
subject to the overall purchase limitation. See "- Limitations on Common Stock
Purchases."
In the event the Other Voting Members subscribe for a number of shares of
Conversion Stock in excess of the total number of shares of Conversion Stock
remaining, available shares shall be allocated among subscribing Other Voting
Members on a pro rata basis in the same proportion as each Other Voting Members'
subscription bears to the total subscriptions of all subscribing Other Voting
Members.
Expiration Date for the Subscription Offering. The Subscription Offering
will expire on [March __,] 1997, unless extended for up to 45 days or such
additional periods by the Bank and the Company with the approval of the
Commissioner of the Commissioner and, if required, the non-objection of the
FDIC. Subscription rights which have not been exercised prior to the
Subscription Expiration Date will become void.
<PAGE>
-25-
The Bank and the Company will not execute orders before the Subscription
Expiration Date and until at least the minimum number of shares of Common Stock
(255,000 shares) have been subscribed for or otherwise sold. If the Subscription
Offering is not completed within 45 days after the Subscription Expiration Date,
unless such period is extended, all funds delivered to the Bank pursuant to the
Subscription Offering will be returned promptly to the subscribers with interest
and all withdrawal authorizations will be cancelled. If an extension beyond the
45 day period following the Subscription Expiration Date is granted, the Bank
will notify subscribers of the extension of time and of any rights of
subscribers to modify or rescind their subscriptions.
Community Offering
To the extent that shares remain available for purchase after satisfaction
of all subscriptions of Eligible Account Holders, the ESOP, Supplemental
Eligible Account Holders, and Other Voting Members, the Bank may offer shares
pursuant to the Plan to certain members of the general public, with preference
given to natural persons residing in the Bank's Local Community ("Preferred
Subscribers"). Such persons, together with associates of and persons acting in
concert with such persons, may purchase up to the greater of (i) $50,000 of the
Common Stock offered in the Conversion, or (ii) one-tenth of one percent (0.10%)
of the total offering of shares of Common Stock, in each case subject to the
maximum purchase limitation. See "- Limitations on Common Stock Purchases." This
amount may be increased or decreased at the sole discretion of the Company and
the Bank. The opportunity to subscribe for shares of Common Stock in the
Community Offering category is subject to the right of the Bank and the Company,
in its sole discretion, to accept or reject any such orders in whole or in part
either at the time of receipt of an order or as soon as practicable following
the Subscription Expiration Date. The Community Offering may be commenced at any
time during the Subscription Offering or subsequent thereto.
If there are not sufficient shares available to fill the orders of
Preferred Subscribers after completion of the Subscription and Community
Offerings, such stock will be allocated first to each Preferred Subscriber whose
order is accepted by the Bank, in an amount equal to the lesser of 100 shares or
the number of shares subscribed for by each such Preferred Subscriber, if
possible. Thereafter, unallocated shares will be allocated among the Preferred
Subscribers whose orders remain unsatisfied in the same proportion that the
unfilled subscription of each bears to the total unfilled subscriptions of all
Preferred Subscribers whose subscription remains unsatisfied. If there are any
shares remaining after all subscriptions by Preferred Subscribers, shares will
be allocated to other members of the general public who subscribe in the
Community Offering applying the same allocation described above for Preferred
Subscribers.
Persons in Nonqualified States or Foreign Countries. The Company and the
Bank will make reasonable efforts to comply with the securities laws of all
states in the United States in which persons entitled to subscribe for stock
pursuant to the Plan reside. However, the Bank and the Company are not required
to offer stock in the Subscription Offering to any person who resides in a
foreign country or resides in a state of the United States with respect to
which: (a) the number of persons otherwise eligible to subscribe for shares
under the Plan who reside in such jurisdiction is small; (b) the granting of
subscription rights or the offer or sale of shares of Common Stock to such
persons would require the Company, the Bank, or their officers, directors or
employees under the laws of such jurisdiction, to register as a broker, dealer,
salesman or selling agent or to register or otherwise qualify its securities for
sale in such jurisdiction or to qualify as a foreign corporation or file a
consent to service of process in such jurisdiction; and (c) such registration or
qualification in the Company's and the Bank's judgment would be impracticable or
unduly burdensome for reasons of cost or otherwise. Where the number of persons
eligible to subscribe for shares in one state is small, the Bank and the Company
will base their decision as to whether or not to offer the Common Stock in such
state on a number of factors, including the size of accounts held by account
holders in the state, the cost of registering or qualifying the shares or the
need to register the Company, its officers, directors or employees as brokers,
dealers or salesmen.
<PAGE>
-26-
Marketing Arrangements
The Company and the Bank have engaged Trident as a financial advisor and
marketing agent in connection with the offering of the Common Stock, and Trident
has agreed to use its best efforts to solicit subscriptions and purchase orders
for shares of Common Stock in the Offerings. Trident has not prepared or
delivered any opinion or recommendation with respect to the suitability of the
Common Stock or the appropriateness of the amount of Common Stock to be issued
in the Conversion. The engagement of Trident by the Company and the Bank and the
work performed thereunder should not be construed by purchasers of the Common
Stock as constituting an opinion or recommendation relating to such investment
and should not be construed as a verification of the accuracy or completeness of
the information contained in this Proxy Statement. Trident is a member of the
National Association of Securities Dealers, Inc. ("NASD") and an SEC-registered
broker-dealer. Trident is headquartered in Raleigh, North Carolina, and its
telephone number is (919) 781-8900. Trident will provide various services
including, but not limited to, (1) training and educating the Bank's directors,
officers and employees regarding the mechanics and regulatory requirements of
the stock sales process; (2) providing its employees to staff the Stock Sales
Center to assist the Bank's customers and internal stock purchasers and to keep
records of orders for shares of Common Stock; (3) targeting the Company's sales
efforts, including preparation of marketing materials; and (4) assisting in the
solicitation of proxies of members for use at the Special Meeting. In the event
that a selected dealers agreement is entered into in connection with a
Syndicated Community Offering, the Bank will pay a to-be negotiated fee to such
selected dealers for shares sold by any NASD member firm pursuant to a selected
dealers agreement. Fees to Trident and to any other broker-dealer may be deemed
to be underwriting fees, and Trident and such broker-dealers may be deemed to be
underwriters. Trident will also be reimbursed for its reasonable out-of-pocket
expenses in an amount not to exceed $10,000 and reasonable legal fees not to
exceed $22,500. To date, Trident has received $10,000 from the Bank as an
advance payment of its anticipated expenses.
The Company and the Bank have agreed to indemnify Trident for reasonable
costs and expenses in connection with certain claims or liabilities, including
certain claims or liabilities arising out of or based upon any untrue or alleged
untrue statement of a material fact or the omission or alleged omission of a
material fact required to be stated or necessary to make not misleading any
statements contained in the Company's Registration Statement or the Prospectus.
Directors and executive officers of the Company and the Bank may
participate in the solicitation of offers to purchase Common Stock. Other
employees of the Bank may participate in the Offering in ministerial capacities
or providing clerical work in effecting a sales transaction. Such other
employees have been instructed not to solicit offers to purchase Common Stock or
provide advice regarding the purchase of Common Stock. Questions of prospective
purchasers will be directed to executive officers or registered representatives.
The Company will rely on Rule 3a4-1 under the Exchange Act, and sales of Common
Stock will be conducted within the requirements of Rule 3a4-1, so as to permit
officers, directors and employees to participate in the sale of Common Stock. No
officer, director or employee of the Company or the Bank will be compensated in
connection with his participation by the payment of commissions or other
remuneration based either directly or indirectly on the transactions in the
Common Stock.
Procedure for Purchasing Shares in Subscription and Community Offerings
To ensure that each purchaser receives a Prospectus at least 48 hours
before the Subscription Expiration Date in accordance with Rule 15c2-8 of the
Exchange Act, no Prospectus will be mailed any later than five days prior to
such date or hand delivered any later than two days prior to such date.
Execution of the order form will confirm receipt or delivery in accordance with
Rule 15c2-8. Order forms will only be distributed with a Prospectus.
To purchase shares in the Subscription and Community Offerings, an
executed order form with the required payment for each share subscribed for, or
with appropriate authorization for withdrawal from the Bank's deposit account
(which may be given by completing the appropriate blanks in the order form),
must be received by the Bank at any of its offices by [12:00 noon, Central
Time,] on the Subscription Expiration Date. Order forms which are
<PAGE>
-27-
not received by such time or are altered or executed defectively or are received
without full payment (or appropriate withdrawal instructions) are not required
to be accepted. In addition, the Bank will neither accept orders submitted on
photocopied or facsimilied order forms nor order forms unaccompanied by an
executed certification form. The Company and the Bank have the right to waive or
permit the correction of incomplete or improperly executed forms, but do not
represent that they will do so. Once received, an executed order form may not be
modified, amended or rescinded without the consent of the Bank unless the
Conversion has not been completed within 45 days after the end of the
Subscription and Community Offerings, unless such period has been extended.
In order to ensure that depositors are properly identified as to their
stock purchase priority, depositors as of the Eligibility Record Date (July 31,
1995), the Supplemental Eligibility Record Date (December 31, 1996) and/or the
Voting Record Date (March __, 1997), must list all accounts on the stock order
form giving all names in each account and the account numbers.
Payment for subscriptions may be made (i) in cash if delivered in person
at the Bank, (ii) by check, bank draft or money order, or (iii) by authorization
of withdrawal from deposit accounts maintained with the Bank. Wire transfers
will not be accepted except at the discretion of the Company and the Bank.
Interest will be paid on payments made by check, bank draft or money order at
the Bank's passbook rate of interest from the date payment is received until
completion or termination of the Conversion. If payment is made by authorization
of withdrawal from deposit accounts, the funds authorized to be withdrawn from a
deposit account will continue to accrue interest at the contractual rates until
completion or termination of the Conversion, but a hold will be placed on such
funds, thereby making them unavailable to the depositor until completion or
termination of the Conversion.
If a subscriber authorizes the Bank to withdraw the amount of the purchase
price from his deposit account, the Bank will do so as of the effective date of
Conversion. The Bank will waive any applicable penalties for early withdrawal
from certificate accounts. If the remaining balance in a certificate account is
reduced below the applicable minimum balance requirement at the time that the
funds actually are transferred under the authorization, the certificate will be
cancelled at the time of the withdrawal, and the remaining balance will earn
interest at the passbook rate.
If the ESOP subscribes for shares during the Subscription Offering, such
plan will not be required to pay for the shares subscribed for at the time it
subscribes, but rather, may pay for such shares of Common Stock subscribed for
by such plan at the Purchase Price upon consummation of the Subscription and
Community Offering, if all shares are sold, or upon consummation of the
Syndicated Community Offering if shares remain to be sold in such offering,
provided that there is in force from the time of its subscription until such
time, a loan commitment from an unrelated financial institution or the Company
to lend to the ESOP, at such time, the aggregate Purchase Price of the shares
for which it subscribed.
Owners of self-directed IRAs may use the assets of such IRAs to purchase
shares of Common Stock in the Subscription and Community Offerings, provided
that the trustee of such IRA is not the Bank. Persons with self-directed IRAs
maintained at the Bank must have their accounts transferred to an unaffiliated
institution or broker to purchase shares of Common Stock in the Subscription and
Community Offerings. Subscriptions by IRAs will be credited only with the
balance of such IRA account in the event of an allocation. In order to ensure
that any necessary transfer is completed prior to the termination of the
Offering, any person desiring to transfer his or her account must notify the
Savings Bank on or before March __, 1997.
Certificates representing shares of Common Stock purchased will be mailed
to purchasers at such other address as may be specified in properly completed
order forms, as soon as practicable following consummation of the sale of all
shares of Common Stock. Any certificates returned as undeliverable will be
disposed of in accordance with applicable law.
<PAGE>
-28-
Restrictions on Transfer of Subscription Rights and Shares
Pursuant to the rules and regulations of the Office, no person with
subscription rights may transfer or enter into any agreement or understanding to
transfer the legal or beneficial ownership of the subscription rights issued
under the Plan or the shares of Common Stock to be issued upon their exercise.
Such rights may be exercised only by the person to whom they are granted and
only for his account. Each person exercising such subscription rights will be
required to certify that he is purchasing shares solely for his own account and
that he has no agreement or understanding regarding the sale or transfer of such
shares. No person may offer, or make an announcement of an offer or intent to
make an offer, to purchase such subscription rights or shares of Common Stock
prior to the completion of the Conversion.
The Bank and the Company will pursue any and all legal and equitable
remedies in the event they become aware of the transfer of subscription rights
and will not honor orders known by them to involve the transfer of such rights.
Syndicated Community Offering
As a final step in the Conversion, the Plan provides that, if feasible,
all shares of Common Stock not purchased in the Subscription and Community
Offerings may be offered for sale to the general public in a Syndicated
Community Offering through a syndicate of registered broker-dealers to be
formed. The Bank and the Company expect to market any shares which remain
unsubscribed after the Subscription and Community Offerings through a Syndicated
Community Offering. The Company and the Bank have the right to reject orders in
whole or part in their sole discretion in the Syndicated Community Offering.
Neither the Agent nor any registered broker-dealer shall have any obligation to
take or purchase any shares of the Common Stock in the Syndicated Community
Offering; however, the Agent has agreed to use its best efforts in the sale of
shares in the Syndicated Community Offering. In the event that a selected
dealers agreement is entered into in connection with a Syndicated Community
Offering, the Bank will pay a to-be negotiated fee to such selected dealers for
shares sold by any NASD member firm pursuant to a selected dealers agreement.
The price at which Common Stock is sold in the Syndicated Community
Offering will be determined as described above under "- Stock Pricing and Number
of Shares to be Issued." Subject to overall purchase limitations, no person,
together with any associate or group of persons acting in concert, will be
permitted to subscribe in the Syndicated Community Offering for more than
$50,000 of the Common Stock offered in the Conversion, without giving effect to
an increase in shares issued pursuant to an increase in the Estimated Price
Range by up to 15%.
Payments made in the form of a check, bank draft or money order will earn
interest at the Bank's passbook rate of interest from the date such payment is
actually received by the Bank until completion or termination of the Conversion.
In addition to the foregoing, if a syndicate of broker-dealers ("selected
dealers") is formed to assist in the Syndicated Community Offering, a purchaser
may pay for his shares with funds held by or deposited with a selected dealer.
If an order form is executed and forwarded to the selected dealer or if the
selected dealer is authorized to execute the order form on behalf of a
purchaser, the selected dealer is required to forward the order form and funds
to the Bank for deposit in a segregated account on or before 12:00 noon of the
business day following receipt of the order form or execution of the order form
by the selected dealer. Alternatively, selected dealers may solicit indications
of interest from their customers to place orders for shares. Such selected
dealers shall subsequently contact their customers who indicated an interest and
seek their confirmation as to their intent to purchase. Those indicating an
intent to purchase shall execute order forms and forward them to their selected
dealer or authorize the selected dealer to execute such forms. The selected
dealer will acknowledge receipt of the order to its customer in writing on the
following business day and will debit such customer's account on the third
business day after the customer has confirmed his intent to purchase (the "debit
date") and on or before 12:00 noon of the next business day following the debit
date will send order forms and funds to the Bank for deposit in a segregated
account. If such
<PAGE>
-29-
alternative procedure is employed, purchasers' funds are not required to be in
their accounts with selected dealers until the debit date.
Certificates representing shares of Common Stock purchased, together with
any refund due, will be mailed to purchasers at the address specified in the
order form, as soon as practicable following consummation of the sale of the
Common Stock. Any certificates returned as undeliverable will be disposed of in
accordance with applicable law.
The Syndicated Community Offering will terminate no more than 45 days
following the Subscription Expiration Date, unless extended by the Company and
the Bank with the approval of the Commissioner and, if required, the
non-objection of the FDIC. See "- Stock Pricing and Number of Shares to be
Issued" above for a discussion of rights of subscribers, if any, in the event an
extension is granted.
Limitations on Common Stock Purchases
The Plan includes the following limitations on the number of shares of
Common Stock which may be purchased during the Conversion:
(1) No less than 25 shares;
(2) Each Eligible Account Holder may subscribe for and purchase in
the Subscription Offering up to the greater of (i) $50,000 of Common
Stock, subject to the overall limitation in (8) below, (ii) one-tenth of
one percent (0.10%) of the total offering of shares of Common Stock or
(iii) fifteen times the product (rounded down to the next whole number)
obtained by multiplying the total number of shares of Common Stock to be
issued by a fraction, of which the numerator is the amount of the
qualifying deposit of the Eligible Account Holder and the denominator is
the total amount of qualifying deposits of all Eligible Account Holders,
in each case on the Eligibility Record Date, subject to the overall
limitation in (8) below;
(3) The ESOP may purchase in the aggregate up to 10% of the shares
of Common Stock issued in the Conversion, including any additional shares
issued in the event of an increase in the Estimated Price Range, after
taking into account the shares purchased by Eligible Account Holders;
(4) Each Supplemental Eligible Account Holder may subscribe for and
purchase in the Subscription Offering up to the greater of (i) $50,000 of
Common Stock, subject to the overall limitation in (8) below, (ii)
one-tenth of one percent (0.10%) of the total offering of shares of Common
Stock or (iii) fifteen times the product (rounded down to the next whole
number) obtained by multiplying the total number of shares of Common Stock
to be issued by a fraction, of which the numerator is the amount of the
qualifying deposit of the Supplemental Eligible Account Holder and the
denominator is the total amount of qualifying deposits of all Supplemental
Eligible Account Holders, in each case on the Supplemental Eligibility
Record Date, subject to the overall limitation in (8) below;
(5) Each Other Voting Member may subscribe for and purchase in the
Subscription Offering up to the greater of (i) $50,000 of Common Stock,
subject to the overall limitation in (8) below, or (ii) one-tenth of one
percent (0.10%) of the total offering of shares of Common Stock, subject
to the overall limitation in (8) below;
(6) Persons purchasing shares of Common Stock in the Community
Offering, together with associates of and groups of persons acting in
concert with such persons, may purchase in the Community Offering up to
the greater of (i) $50,000 of Common Stock, subject to the overall
limitation in (8) below or (ii) one-tenth of one percent (0.10%) of the
total offering of shares of Common Stock, subject to the overall
limitation in (8) below;
<PAGE>
-30-
(7) Persons purchasing shares of Common Stock in the Syndicated
Community Offering, together with associates of and persons acting in
concert with such persons, may purchase in the Syndicated Community
Offering up to $50,000 of Common Stock, subject to the overall limitation
in (8) below;
(8) Eligible Account Holders, Supplemental Eligible Account Holders
and Other Voting Members may purchase stock in the Community and
Syndicated Community Offerings subject to the purchase limitations
described in (6) and (7) above, provided that, except for the ESOP, the
maximum number of shares of Common Stock subscribed for or purchased in
all categories of the Conversion by any person together with associates of
and groups of persons acting in concert with such persons, shall not
exceed $150,000 of the aggregate value of the shares of Common Stock sold
in the Conversion; and
(9) No more than 35% of the total number of shares offered for sale
in the Conversion may be purchased by directors and officers of the Bank
and their associates in the aggregate, excluding purchases by the ESOP.
Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the members of
the Bank, both the individual amount permitted to be subscribed for and the
overall purchase limitation may be increased to up to a maximum of 5% at the
sole discretion of the Company and the Bank. If such amount is increased,
subscribers for the maximum amount will be, and certain other large subscribers
in the sole discretion of the Company and the Bank may be, given the opportunity
to increase their subscriptions up to the then applicable limit. In the event
that an individual purchase limitation is decreased after commencement of the
Subscription or Community Offerings, the orders of any persons who subscribed
for the maximum number of shares of Common Stock shall be decreased by the
minimum amount necessary so that such person shall be in compliance with the
maximum number of shares permitted to be subscribed for by participants. Unless
otherwise permitted by the FDIC, the Company and the Bank do not anticipate that
they would decrease the maximum purchase limitations below one-tenth of 1% of
the total shares of Common Stock permitted to be purchased in the Subscription
and Community Offerings.
The overall purchase limitation may not be reduced to less than 1.0% but
the individual amount permitted to be purchased may be reduced to less than
$50,000, subject to (2), (4) and (5) above. Each Eligible Account Holder,
Supplemental Eligible Account Holder or Other Voting Member may purchase in the
Subscription Offering $50,000 of the Common Stock offered, assuming that at
least $2.6 million of Common Stock is sold in the Offerings.
In the event of an increase in the total number of shares offered in the
Conversion due to an increase in the Estimated Price Range of up to 15% (the
"Adjusted Maximum"), the additional shares will be allocated in the following
order or priority in accordance with the Plan: (i) in the event that there is an
oversubscription by Eligible Account Holders, to fill unfulfilled subscriptions
of Eligible Account Holders; (ii) to fill the ESOP's subscription of 8.0% of the
Adjusted Maximum number of shares; (iii) in the event that there is an
oversubscription by Supplemental Eligible Account Holders, to fill unfulfilled
subscriptions of Supplemental Eligible Account Holders; (iv) in the event that
there is an oversubscription by Other Voting Members, to fill unfulfilled
subscriptions of Other Voting Members; and (v) to fill unfulfilled subscriptions
in the Community Offering to the extent possible.
The term "associate" of a person is defined to mean: (i) any corporation
or other organization (other than the Company, the Bank or a majority-owned
subsidiary of the Bank) of which such person is an officer or partner or is
directly or indirectly the beneficial owner of 10% or more of any class of
equity securities; (ii) any trust or other estate in which such person has a
substantial beneficial interest or as to which such person serves as a trustee
or in a similar fiduciary capacity, provided, however, such term shall not
include any employee stock benefit plan of the Company or the Bank in which such
person has a substantial beneficial interest or serves as a trustee or in a
similar fiduciary capacity; and (iii) any relative or spouse of such person, or
any relative of such spouse, who either has the same home as such person or who
is a director or officer of the Bank or the Company or any of their
subsidiaries.
<PAGE>
-31-
Liquidation Rights
In the unlikely event of a complete liquidation of the Bank in its present
mutual form, each depositor would receive his pro rata share of any assets of
the Bank remaining after payment of claims of all creditors (including the
claims of all depositors to the withdrawal value of their accounts). Each
depositor's pro rata share of such remaining assets would be in the same
proportion as the value of his deposit account was to the total value of all
deposit accounts in the Bank at the time of liquidation. After the Conversion,
each depositor, in the event of a complete liquidation, would have a claim as a
creditor of the same general priority as the claims of all other general
creditors of the Bank. However, except as described below, his claim would be
solely in the amount of the balance in his deposit account plus accrued
interest. He would not have an interest in the value or assets of the Bank above
that amount.
The Plan provides for the establishment, upon the completion of the
Conversion, of a special "liquidation account" for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders in an amount equal to
the net worth of the Bank as of the date of its latest statement of financial
condition contained in the final Prospectus used in connection with the
Conversion. Such liquidation account will not be reflected as an asset or
liability on the Company's or the Bank's financial statements subsequent to the
Conversion. Each Eligible Account Holder and Supplemental Eligible Account
Holder, if he were to continue to maintain his deposit account at the Bank,
would be entitled, on a complete liquidation of the Bank after Conversion, to an
interest in the liquidation account prior to any payment to the stockholders of
the Bank. Each Eligible Account Holder and Supplemental Eligible Account Holder
would have an initial interest in such liquidation account for each deposit
account, including passbook accounts, transaction accounts such as NOW accounts,
money market deposit accounts, and certificates of deposit, held in the Bank on
July 31, 1995 and December 31, 1996, respectively. Each Eligible Account Holder
and Supplemental Eligible Account Holder will have a pro rata interest in the
total liquidation account for each of his deposit accounts based on the
proportion that the balance of each such deposit account on the July 31, 1995
Eligibility Record Date or the December 31, 1996 Supplemental Eligibility Record
Date bore to the balance of qualifying deposits of all Eligible Account Holders
or Supplemental Eligible Account Holders on such dates. For deposit accounts in
existence at both the Eligibility Record Date and the Supplemental Eligibility
Record Date, separate initial subaccount balances will be determined for such
accounts on each of the Eligibility Record Date and the Supplemental Eligibility
Record Date.
If, however, on any July 31 or September 31, annual closing date of the
Bank, commencing after July 31, 1995 or December 31, 1996, the amount in any
deposit account is less than the amount in such deposit account on July 31, 1995
or December 31, 1996, or any other annual closing date, then the interest in the
liquidation account relating to such deposit account would be reduced from time
to time by the proportion of any such reduction, and such interest will cease to
exist if such deposit account is closed. In addition, no interest in the
liquidation account would ever be increased despite any subsequent increase in
the related deposit account. Any assets remaining after the above liquidation
rights of Eligible Account Holders and Supplemental Eligible Account Holders are
satisfied would be distributed to the Company as the sole stockholder of the
Bank.
Tax Aspects
The Bank has received an opinion of its counsel, Elias, Matz, Tiernan &
Herrick L.L.P., regarding the material effects of the Conversion for Federal
income tax purposes, which opinion states, among other matters: (i) the Bank's
change in form from mutual to stock ownership will constitute a reorganization
under section 368(a)(1)(F) of the Code and neither the Bank nor the Company will
recognize any gain or loss as a result of the Conversion; (ii) no gain or loss
will be recognized to the Bank or the Company upon the purchase of the Bank's
capital stock by the Company or to the Company upon the purchase of its Common
Stock in the Conversion; (iii) no gain or loss will be recognized by Eligible
Account Holders and Supplemental Eligible Account Holders upon the issuance to
them of deposit accounts in the Bank in its stock form plus their interests in
the liquidation account in exchange for their deposit accounts in the Bank; (iv)
the tax basis of the depositors' deposit accounts in the Bank immediately after
the Conversion will be the same as the basis of their deposit accounts
immediately prior to the Conversion; (v) the
<PAGE>
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tax basis of each Eligible Account Holder's and Supplemental Eligible Account
Holder's interest in the liquidation account will be zero; and (vi) the tax
basis to the stockholders of the Common Stock of the Company purchased in the
Conversion will be the amount paid therefor and the holding period for the
shares of Common Stock purchased by such persons will begin on the date on which
their subscription rights are exercised. Geo. S. Olive & Co. LLC, has rendered
an opinion to the effect that the foregoing tax effects of the Conversion under
Illinois law are substantially the same as they are under Federal law. Certain
portions of both the Federal and the state tax opinions are based upon the
opinion of RP Financial that subscription rights issued in connection with the
Conversion will have no value.
In the opinion of RP Financial, which opinion is not binding on the IRS,
the subscription rights do not have any value, based on the fact that such
rights are acquired by the recipients without cost, are nontransferable and of
short duration, and afford the recipients the right only to purchase the Common
Stock at a price equal to its estimated fair market value, which will be the
same price as the Purchase Price for the unsubscribed shares of Common Stock. If
the subscription rights granted to eligible subscribers are deemed to have an
ascertainable value, receipt of such rights would be taxable probably only to
those eligible subscribers who exercise the subscription rights (either as a
capital gain or ordinary income) in an amount equal to such value and the Bank
could recognize gain on such distribution. Eligible subscribers are encouraged
to consult with their own tax advisor as to the tax consequences in the event
that such subscription rights are deemed to have an ascertainable value.
Unlike private rulings, an opinion of counsel is not binding on the IRS
and the IRS could disagree with conclusions reached therein. In the event of
such disagreement, there can be no assurance that the IRS would not prevail in a
judicial or administrative proceeding. A copy of each of the above-referenced
opinions is included as an exhibit to the Company's registration statement on
Form S-1 as filed with the SEC and to the Bank's Application as filed with the
Commissioner. See "Additional Information" and "Available Information."
Delivery of Certificates
Certificates representing Common Stock issued in the Conversion will be
mailed by the Company's transfer agent to the persons entitled thereto at the
addresses of such persons appearing on the stock order form as soon as
practicable following consummation of the Conversion. Any certificates returned
as undeliverable will be held by the Company until claimed by persons legally
entitled thereto or otherwise disposed of in accordance with applicable law.
Until certificates for Common Stock are available and delivered to subscribers,
subscribers may not be able to sell the shares of Common Stock for which they
have subscribed, even though trading of the Common Stock may have commenced.
Certain Restrictions on Purchase or Transfer of Shares After Conversion
All shares of Common Stock purchased in connection with the Conversion by
a director or an officer of the Company and the Bank will be subject to a
restriction that the shares not be sold for a period of one year following the
Conversion, except in the event of the death of such director or officer or
pursuant to a merger or similar transaction approved by the Office. Each
certificate for restricted shares will bear a legend giving notice of this
restriction on transfer, and instructions will be issued to the effect that any
transfer within such time period of any certificate or record ownership of such
shares other than as provided above is a violation of the restriction. Any
shares of Common Stock issued at a later date within this one year period as a
stock dividend, stock split, or otherwise, with respect to such restricted stock
will be subject to the same restrictions. The directors and executive officers
of the Company and the Bank will also be subject to the insider trading rules
promulgated pursuant to the Exchange Act.
Purchases of outstanding shares of Common Stock of the Company by
directors, executive officers (or any person who was an executive officer or
director of the Company and the Bank after adoption of the Plan of Conversion)
during the three-year period following Conversion may be made only through a
broker or dealer registered with the SEC, except with the prior written approval
of the Office. This restriction does not apply,
<PAGE>
-33-
however, to negotiated transactions involving more than 1.0% of the Company's
outstanding Common Stock or to certain purchases of stock pursuant to an
employee stock benefit plan.
The Company has no present plans with respect to any repurchase of shares
of Common Stock and will not undertake any repurchase of shares of Common Stock
within the one year period subsequent to the Conversion. Any repurchases of
Common Stock by the Company in the future will be subject to the receipt of any
necessary approvals from the Commissioner and/or the FRB and will be subject to
any applicable regulations and policies of the Commissioner and FRB.
MANAGEMENT OF THE COMPANY
The Board of Directors is dividend into three classes, each of which
contains one-third of the Board. The directors shall be elected by the
stockholders of the Company for staggered three-year terms, or until their
successors are elected and qualified. One class of directors, consisting of
Messrs. Ewbank and Ingram has a term of office expiring at the first annual
meeting of stockholders, a second class, consisting of Messrs. Busby and Norton
has a term of office expiring at the second annual meeting of stockholders and a
third class, consisting of Mr. Meyer has a term of office expiring at the third
annual meeting of stockholders. Their names and biographical information are set
forth under "- Management of the Bank."
The following individuals are executive officers of the Company and hold
the offices set forth below opposite their names.
Executive Position Held with Company
- ------------------- -------------------------------------
Thomas B. Meyer Chairman of the Board
Merrill G. Norton President and Chief Executive Officer
William T. Ingram Secretary
The executive officers of the Company are elected annually and hold office
until their respective successors have been elected and qualified or until
death, resignation or removal by a majority vote of stockholders.
Since the formation of the Company, none of the executive officers,
directors or other personnel has received remuneration from the Company.
Information concerning the principal occupations, employment and compensation of
the directors and officers of the Company during the past five years is set
forth under "- Management of the Bank" and "- Executive Officers Who Are Not
Directors." Directors and executive officers of the Company initially will not
be compensated by the Company but will serve and be compensated by the Bank. It
is not anticipated that separate compensation will be paid to directors and
officers of the Company until such time as such persons devote significant time
to the separate management of the Company's affairs, which is not expected to
occur until the Company becomes actively engaged in additional businesses other
than holding the stock of the Bank. The Company may determine that such
compensation is appropriate in the future.
<PAGE>
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MANAGEMENT OF THE SAVINGS BANK
The following table sets forth certain information regarding the Board of
Directors of the Bank. Each member is elected annually.
Positions Held
With Director
Name Age(1) the Bank Since
- --------------------- ------ ----------------------------- ---------
Thomas B. Meyer 51 Chairman of the Board 1972
Merrill G. Norton 50 Director, President and Chief
Executive Officer 1992
Carl W. Busby 67 Director 1993
Robert L. Ewbank 64 Director 1983
William T. Ingram 56 Director/Secretary 1990
- ----------
(1) As of December 31, 1995.
Set forth below is information with respect to the principal occupations
during at least the last five years for the directors of the Bank.
Thomas B. Meyer Mr. Meyer is an attorney in private practice in Danville,
Illinois. He has served as Chairman of the Board since 1992.
Merrill G. Norton Mr. Norton has served as the Bank's president and chief
executive officer since 1992. He was the sole proprietor of Merrill G. Norton,
C.P.A. from 1973 to 1992.
Carl W. Busby Mr. Busby is an auctioneer, farm and real estate appraiser
and agriculture real estate salesman. He is the president and owner with his
wife of Busby Farms, Inc. and Busby Land and Auction Co., Inc.
Dr. Robert L. Ewbank Dr. Ewbank has been a medical consultant since 1995
when he retired from his oral and maxillofacial surgery practice in Danville,
Illinois.
William T. Ingram Mr. Ingram operates a number of businesses in the
Danville, Illinois area, including Automobile Diagnostics, Quick Air Freight,
Ingram's Quicklube and Ingram's Apartments.
<PAGE>
-35-
Committees and Meetings of the Board of the Bank
The Bank's Board of Directors holds regular meetings on the third
Wednesday of each month, as well as special meetings as necessary. The Board of
Directors held 15 meetings (including three special meetings) held in the fiscal
year ended September 30, 1996. The Board has established various committees to
which it has delegated certain responsibilities, including a nominating
committee, investment committee, audit committee, promotion and advertising
committee and interest rate risk/asset liability committee. No director attended
fewer than 75% of the total number of Board meetings and meetings of Board
committees on which he served during the fiscal year ended September 30, 1996.
All of the Board members serve on the Investment Committee and the
Interest Rate Risk/Asset Liability Committee and all of the Board members except
for Mr. Norton serve on the Nominating Committee. The Audit Committee's current
members are Messrs. Meyer, Eubank and Busby and the members of the Promotion and
Advertising Committee are Messrs Norton and Ingram. During fiscal 1996, the
Investment Committee met 12 times, the Interest Rate Risk/Asset Liability
Committee met quarterly, the Promotion and Advertising committee met three
times, the Audit Committee met twice and the Nominating Committee met once.
Directors' Compensation
Members of the Bank's Board of Directors receive $400 per month plus $300
per special meeting attended. Board fees are subject to adjustment by the Board
of Directors annually. Each of the Bank's directors also serves on GBW's board
of directors and receives a monthly fee of $50 for such service. In addition to
fees paid to directors for Board meetings, the Bank's directors are expected to
participate in the Stock Option Plan and Recognition Plan. See "- Benefits -
Stock Option Plan" and "- Recognition and Retention Plan."
Summary Compensation Table
The following table sets forth a summary of certain information concerning
the compensation paid by the Bank for services rendered in all capacities during
the year ended September 30, 1996 to the President and Chief Executive Officer
of the Bank. No other executive officers of the Bank had total annual
compensation in excess of $100,000 during fiscal 1996.
<TABLE>
<CAPTION>
========================================================================================================================
Annual Compensation Long Term Compensation
----------------------------------- --------------------------------------
Other
Annual Awards Payouts
Name and Year Salary Bonus Compensation(1) All Other
Principal Position Compensation
--------------------------------------
Restricted Securities LTIP
Stock Underlying Payouts
Options
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Merrill G. Norton
President and Chief
Executive Officer 1996 $74,613 $ -0- -- -- -- -- $6,700(2)
========================================================================================================================
</TABLE>
- ----------
(1) Does not include amounts attributable to miscellaneous benefits received
by the named executive officer. In the opinion of management of the Bank,
the costs to the Bank of providing such benefits to the named executive
officer during the year ended September 30, 1996 did not exceed the lesser
of $50,000 or 10% of the total of annual salary and bonus reported for the
individual.
(2) Consists of $6,700 allocated by the Bank on behalf of Mr. Norton pursuant
to the Bank's 401(k) plan.
<PAGE>
-36-
Employment Agreements
The Bank intends to enter into an employment agreement with Mr. Norton
upon consummation of the Conversion. The Bank intends to agree to employ Mr.
Norton for a term of three years in his current position at an initial base
salary of $76,000. The agreement is terminable with or without cause by the
Bank. The officer shall have no right to compensation or other benefits pursuant
to the employment agreement for any period after voluntary termination or
termination by the Bank for cause, provided, however, that (i) in the event that
the Bank fails to comply with any material provision of the employment agreement
he shall be entitled to severance payments equal to his annual salary multiplied
by three or (ii) if certain adverse actions are taken with respect to the
officer's employment following a Change in Control of the Company, as defined,
Mr. Norton will be entitled to cash severance payments equal to his average
annual compensation at the date of termination multiplied by two. A Change in
Control of the Company is generally defined in the employment agreement to mean
a change in control of a nature that would be required to be reported in
response to Item 6(c) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended. Mr. Norton's employment agreement
provides that in the event that any payments to be paid thereunder are deemed to
constitute "excess parachute payments" and, therefore, subject to an excise tax
under Section 4999 of the Code, the amount of severance shall be reduced to an
amount that will not result in any excess parachute payments. Mr. Norton's
agreement also provides that in the event of Mr. Norton's disability, retirement
or death during the term of the agreement, Mr. Norton or his estate will receive
payments equal to the amount of compensation for 12 months at his then current
base salary.
Based upon compensation levels at September 30, 1996, in the event of a
termination of employment following a Change in Control, Mr. Norton would
receive $149,200 in cash severance.
Although the above-described employment agreement could increase the cost
of any acquisition of control of the Company, management of the Company does not
believe that the terms thereof would have a significant anti-takeover effect.
Benefits
401(k) Profit Sharing Plan. The Bank maintains a 401(k) profit sharing
plan (the "401(k) Plan"). The 401(k) Plan is designed to promote the future
economic welfare of the employees of the Bank and to encourage employee savings.
Employee deferrals of salary and employer contributions made under the 401(k)
Plan, together with the income thereon, are accumulated in individual accounts
maintained in trust on behalf of the employee participants, and is made
available to the employee participants upon retirement and under certain other
circumstances as provided in the 401(k) Plan. Since employee deferrals of salary
and employer contributions made under the 401(k) Plan are made on a tax deferred
basis, employee participants are able to enjoy significant income tax savings by
participating in the 401(k) Plan. Employees are also permitted to direct the
investment of their accounts among five mutual funds.
An employee of the Bank becomes eligible to participate in the 401(k) Plan
after he or she completes a year of service (provided he or she is at least age
21). A year of service is a 12 consecutive month period in which the employee
works at least 1,000 hours for the Bank. An employee will become a participant
in the 401(k) Plan on the first day of the month coinciding with or next
following the date he or she satisfies the eligibility requirements.
Participants may elect to defer amounts of up to 15% of their annual
compensation to the 401(k) Plan, subject to certain limits imposed by law. Each
year the Bank may make a discretionary matching contribution equal to a
percentage of compensation deferred and may make additional discretionary
contributions. Upon consummation of the Conversion, the Bank expects to
terminate the matching provision of the 401(k) Plan. The Bank may also make
discretionary profit sharing contributions, allocated to eligible employees on
the basis of relative compensation.
<PAGE>
-37-
The 401(k) Plan was amended on January 15, 1996 to permit participants in
the plan to direct the administrator to invest their vested account balances
into an Employee Stock Fund which will be invested in shares of Common Stock of
the Company. However, no 401(k) Plan participant may purchase more than $50,000
in aggregate value of the Common Stock in the Conversion (subject to the overall
purchase limitations) through the 401(k) Plan's subscription rights. A
participant's ability to direct all or some of his vested account to purchase
Common Stock in the Subscription Offering will be dependent upon such individual
being an Eligible Account Holder, Supplemental Eligible Account Holder or Other
Member. A participant may directly vote shares of Common Stock held in his or
her 401(k) Plan account. During 1996, the Bank contributed $19,000 to the 401(k)
Plan, $6,700 of which was for the benefit of Mr. Norton.
Employee Stock Ownership Plan and Trust. The Company has established the
ESOP for employees of the Company and the Bank to become effective upon the
consummation of the Conversion. Full-time employees of the Company and the Bank
who have been credited with at least 1,000 hours of service during a 12-month
period and who have attained age 21 are eligible to participate in the ESOP.
As part of the Conversion, in order to fund the purchase of up to 8.0% of
the Common Stock to be issued in the Conversion, or 27,600 shares assuming
shares are sold at the maximum of the Estimated Price Range, it is anticipated
that the ESOP will borrow funds from the Company. It is anticipated that such
loan will equal 100% of the aggregate purchase price of the Common Stock
acquired by the ESOP. The loan to the ESOP will be repaid principally from the
Company's contributions to the ESOP over a period of ten years, and the
collateral for the loan will be the Common Stock purchased by the ESOP. The
interest rate for the ESOP loan is expected to be ___%. The Company may, in any
plan year, make additional discretionary contributions for the benefit of plan
participants in either cash or shares of Common Stock, which may be acquired
through the purchase of outstanding shares in the market or from individual
stockholders, upon the original issuance of additional shares by the Company or
upon the sale of treasury shares by the Company. Such purchases, if made, would
be funded through additional borrowing by the ESOP or additional contributions
from the Company. The timing, amount and manner of future contributions to the
ESOP will be affected by various factors, including prevailing regulatory
policies, the requirements of applicable laws and regulations and market
conditions.
Shares purchased by the ESOP with the proceeds of the loan will be held in
a suspense account and released on a pro rata basis as debt service payments are
made. Discretionary contributions to the ESOP and shares released from the
suspense account will be allocated among participants on the basis of
compensation. Forfeitures will be reallocated among remaining participating
employees and may reduce any amount the Company might otherwise have contributed
to the ESOP. Participants will vest in their right to receive their account
balances within the ESOP at the rate of 25% per year. In the case of a "change
in control," as defined, however, participants will become immediately fully
vested in their account balances. Benefits may be payable upon retirement, early
retirement, disability or separation from service. The Company's contributions
to the ESOP are not fixed, so benefits payable under the ESOP cannot be
estimated.
Messrs. Meyer, Ingram and Norton will serve as trustees of the ESOP. Under
the ESOP, the trustees must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees, and allocated
shares for which employees do not give instructions, and unallocated shares,
will be voted in the same ratio on any matter as to those shares for which
instructions are given.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Recent Accounting Pronouncements" of the Prospectus for
a discussion of SOP 93-6, which changes the measure of compensation expense
recorded by employers for leveraged ESOPs from the cost of ESOP shares to the
fair value of ESOP shares.
GAAP requires that any third party borrowing by the ESOP be reflected as a
liability on the Company's statement of financial condition. Since the ESOP is
borrowing from the Company, such obligation is not treated
<PAGE>
-38-
as a liability, but will be excluded from stockholders' equity. If the ESOP
purchases newly-issued shares from the Company, total stockholders' equity would
neither increase nor decrease, but per share stockholders' equity and per share
net earnings would decrease because of the increase in the number of outstanding
shares as those shares become committed to be released.
The ESOP will be subject to the requirements of Employee Retirement Income
Security Act of 1974, as amended, and the regulations of the IRS and Department
of Labor thereunder.
Stock Option Plan. Following the Conversion, the Board of Directors of the
Company intends to submit the Stock Option Plan for approval to stockholders at
a special meeting of stockholders, which is expected to be held not earlier than
six months following consummation of the Conversion. No options shall be awarded
under the Stock Option Plan unless stockholder approval is obtained.
The Stock Option Plan will be designed to attract and retain qualified
personnel in key positions, provide officers and key employees with a
proprietary interest in the Company as an incentive to contribute to the success
of the Company and reward key employees for outstanding performance and the
attainment of targeted goals. The Stock Option Plan will also be designed to
retain qualified directors for the Company. The Stock Option Plan will provide
for the grant of incentive stock options intended to comply with the
requirements of Section 422 of the Code ("incentive stock options"),
non-incentive or compensatory stock options and stock appreciation rights
(collectively "Awards"). Awards will be available for grant to directors and key
employees of the Company and any subsidiaries, except that directors will not be
eligible to receive incentive stock options. If stockholder approval is
obtained, it is expected that options to acquire shares of Common Stock will be
awarded to key employees of the Company and the Bank and directors of the
Company in accordance with applicable regulations. Regulations which apply to
the Stock Option Plan and the Recognition Plan provide that no individual
employee may receive more than 25% of the shares of any plan and non-employee
directors may not receive more than 5% of any plan individually or 30% in the
aggregate for all directors.
The Stock Option Plan will be administered and interpreted by a committee
of the Board of Directors ("Committee") which will be "disinterested" pursuant
to applicable regulations under the Federal securities laws. Unless sooner
terminated, the Stock Option Plan will be in effect for a period of ten years
from the earlier of adoption by the Board of Directors or approval by the
Company's stockholders.
Under the Stock Option Plan, the Committee will determine which officers
and key employees will be granted options, whether such options will be
incentive or compensatory options, the number of shares subject to each option,
whether such options may be exercised by delivering other shares of Common Stock
and when such options become exercisable. The per share exercise price of an
incentive and compensatory stock option shall be required to be at least equal
to the fair market value of a share of Common Stock on the date the option is
granted.
Stock options shall become vested and exercisable in the manner specified
by the Committee, which shall not be faster than 20% per year, beginning one
year from the date of grant. Each stock option or portion thereof shall be
exercisable at any time on or after it vests and is exercisable until ten years
after its date of grant or three months after the date on which the optionee's
employment terminates, unless extended by the Committee to a period not to
exceed one year from such termination. However, failure to exercise incentive
stock options within three months after the date on which the optionee's
employment terminates may result in adverse tax consequences to the optionee.
Stock options are non-transferable except by will or the laws of descent and
distribution.
Under the Stock Option Plan, the Committee will be authorized to grant
rights to optionees ("stock appreciation rights") under which an optionee may
surrender any exercisable incentive stock option or compensatory stock option or
part thereof in return for payment by the Company to the optionee of cash or
<PAGE>
-39-
Common Stock in an amount equal to the excess of the fair market value of the
shares of Common Stock subject to option at the time over the option price of
such shares, or a combination of cash and Common Stock. Stock appreciation
rights may be granted concurrently with the stock options to which they relate
or at any time thereafter which is prior to the exercise or expiration of such
options.
The number of options to be granted to non-employee directors will be
specifically set forth in the Stock Option Plan and will be granted upon
approval of the Stock Option Plan by stockholders. Such stock options to
directors will become vested and exercisable under the same terms as options
granted by the Committee to officers and employees. If an optionee dies or
terminates service due to disability, while serving as an employee or
non-employee director, all unvested options are accelerated. Under such
circumstances, the optionee or, as the case may be, the optionee's executors,
administrators, legatees or distributees, shall have the right to exercise all
unexercised options during the 12-month period following termination due to
disability or death, provided no option will be exercisable within six months
after the date of grant or more than ten years from the date it was granted.
The Company intends to reserve for future issuance pursuant to the Stock
Option Plan a number of authorized shares of Common Stock equal to 10% of the
Common Stock issued in the Conversion, or 34,500 shares, based on the issuance
of 345,000 shares at the maximum of the Estimated Price Range. In the event of a
stock split, reverse stock split or stock dividend, the number of shares of
Common Stock under the Stock Option Plan, the number of shares to which any
Award relates and the exercise price per share under any option or stock
appreciation right shall be adjusted to reflect such increase or decrease in the
total number of shares of the Common Stock outstanding.
Under current provisions of the Code, the Federal income tax treatment of
incentive stock options and compensatory stock options is different. As regards
incentive stock options, an optionee who meets certain holding period
requirements will not recognize income at the time the option is granted or at
the time the option is exercised, and a Federal income tax deduction generally
will not be available to the Company at any time as a result of such grant or
exercise. With respect to compensatory stock options, the difference between the
fair market value of the shares subject to the option on the date of exercise
and the option exercise price generally will be treated as compensation income
upon exercise, and the Company will be entitled to a deduction in the amount of
income so recognized by the optionee. Upon the exercise of a stock appreciation
right, the holder will realize income for Federal income tax purposes equal to
the amount received by him, whether in cash, shares of stock or both, and the
Company will be entitled to a deduction for Federal income tax purposes in the
same amount.
Although no specific award determinations have been made, assuming the
requisite receipt of stockholder approval, the Company intends to follow Federal
criteria with respect to awards of stock options under the Stock Option Plan.
Under such criteria, awards to individual non-employee directors may not exceed
5.0% of the options available under the plan and awards to all non-employee
directors may not exceed 30% of the plan in the aggregate. Awards to any
individual employee may not exceed 25% of the shares available under the plan.
Recognition and Retention Plan. Following the Conversion, the Board of
Directors of the Company intends to submit the Recognition Plan to stockholders
for approval at a special meeting of stockholders, which is expected to be held
not earlier than six months following completion of the Conversion. The
objective of the Recognition Plan will be to enable the Company to provide
directors, officers and employees with a proprietary interest in the Company as
an incentive to contribute to its success. The Recognition Plan will set forth
specific awards to be made to non-employee directors.
Assuming the receipt of stockholder approval, the Company expects to
acquire Common Stock on behalf of the Recognition Plan, in an amount equal to 4%
of the Common Stock issued in the Conversion, or 13,800 shares at the maximum of
the Estimated Price Range. These shares will be acquired through open market
<PAGE>
-40-
purchases or from authorized but unissued shares. Although no specific award
determinations have been made, the Company intends to follow Federal criteria
for making awards under the Recognition Plan. Under such criteria, the
individual and aggregate award limitations under the Recognition Plan will be
the same as under the Stock Option Plan. See "- Stock Option Plan."
The Board of Directors of the Company will administer the Recognition Plan
as it pertains to directors and a Board Committee will administer the
Recognition Plan with respect to all other persons. The Committee will have the
responsibility to invest all funds contributed by the Company to the Recognition
Plan. Shares of Common Stock granted pursuant to the Recognition Plan generally
will be in the form of restricted stock payable over a period specified by the
administrators, which shall not be faster than 20% per year, beginning one year
from the date of the award. For accounting purposes, compensation expense in the
amount of the fair market value of the Common Stock at the date of the grant to
the recipient will be recognized pro rata over the number of years during which
the shares are payable. While restricted, shares may not be sold, pledged or
otherwise disposed of and are required to be held in the Trust. But, while
restricted, a recipient will be entitled to voting and other stockholder rights.
If a recipient terminates employment for reasons other than death, disability or
retirement, the recipient will forfeit all rights to the allocated shares under
restriction. If the recipient's termination is caused by death or disability,
all restrictions will expire and all allocated shares will become unrestricted.
The Board of Directors of the Company will be authorized to terminate the
Recognition Plan at any time, and if it does so, any shares not allocated will
revert to the Company.
Transactions With Certain Related Persons
The Bank's policy provides that all loans made by the Bank to its
directors and officers are made in the ordinary course of business, are made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and do not
involve more than the normal risk of collectibility or present other unfavorable
features. As of September 30, 1996, none of the Bank's directors or executive
officers had aggregate loan balances in excess of $60,000. All loans made to the
Bank's directors and executive officers are made in the ordinary course of
business, without favorable terms and do not involve more than the normal risk
of collectibility.
<PAGE>
-41-
Subscriptions by Directors and Executive Officers
The following table sets forth the number of shares of Common Stock of the
Company proposed to be purchased by the Company's directors and by all directors
and executive officers as a group (including purchases by any associates of or
groups acting in concert with such persons), assuming shares of Common Stock are
issued at the maximum of the Estimated Price Range and that sufficient shares
will be available to satisfy their subscriptions.
At the Maximum
of the Estimated Price Range(1)
------------------------------------------
As a Percent
Number of Shares
Name Amount of Shares Offered
- ------------------------------ -------- ----------- ------------
Thomas B. Meyer $ 50,000 5,000 1.4%
Merrill G. Norton 150,000 15,000 4.3
Carl W. Busby 150,000 15,000 4.3
Robert L. Ewbank 150,000 15,000 4.3
William T. Ingram 150,000 15,000 4.3
All directors and executive
officers as a group
(5 persons) $650,000(2) 65,000 18.6%
- ----------
(1) Includes proposed subscriptions, if any, by associates. The ESOP intends
to acquire up to 8.0% of the Common Stock in the Conversion, or 27,600
shares at the maximum of the Estimated Price Range, which shares are not
reflected in the amounts to be purchased by the Company's directors and
officers in the table above. In addition, this does not include awards
pursuant to the Stock Option Plan or the Recognition Plan, which will be
submitted for approval to stockholders at a meeting of stockholders
expected to be held not earlier than six months following the completion
of the Conversion. See "- Benefits - Employee Stock Ownership Plan and
Trust."
(2) Includes purchases to be made by executive officers through the 401(k)
Plan.
<PAGE>
-42-
USE OF PROCEEDS
Although the actual net proceeds from the sale of the Common Stock cannot
be determined until the Conversion is completed, it is presently anticipated
that the net proceeds from the sale of the Common Stock will be between $2.3
million and $3.2 million ($3.7 million in the event of an increase in the
Estimated Price Range by 15%). See "Pro Forma Data" and "The Conversion - Stock
Pricing and Number of Shares to be Issued" as to the assumptions used to arrive
at such amounts. None of the assets of the Company or the Bank will be
distributed in order to effect the Conversion other than to pay expenses
incident thereto.
The Company will purchase all of the capital stock of the Bank to be
issued upon Conversion in exchange for 75% of the net proceeds. Based upon the
Estimated Price Range, between $1.7 million and $2.4 million ($2.8 million in
the event of an increase in the Estimated Price Range by 15%) will be received
by the Bank from the net proceeds of the Conversion in exchange for capital
stock of the Bank. The Company intends to use a portion of the net proceeds it
retains to make a loan directly to the ESOP to enable the ESOP to purchase up to
8.0% of the Common Stock in the Conversion. Based upon the issuance of 255,000
shares and 345,000 shares at the minimum and maximum of the Estimated Price
Range, respectively, the loan to the ESOP would be $204,000 and $276,000,
respectively, and $317,400 in the event of an increase in the Estimated Price
Range by 15%. See "Management - Benefits - Employee Stock Ownership Plan and
Trust." The balance of the net proceeds retained by the Company will be
initially invested primarily in short-term deposits and investment grade,
short-term marketable securities. Giving effect to the anticipated purchase of
capital stock of the Bank and the loan to the ESOP, the balance of the net
proceeds retained by the Company would be between $367,500 and $517,000
($602,850 in the event of an increase in the Estimated Price Range by 15%). Net
proceeds retained by the Company may facilitate the Company's ability to pay
dividends in the future. See "Dividend Policy."
Funds received by the Bank from the Company's purchase of its capital
stock will be used for general business purposes, including the funding of
loans. Neither the Company nor the Bank has any pending agreements or
understandings, written or oral, regarding acquisitions of any specific
financial services institutions or companies nor have criteria been established
to identify potential candidates for acquisition.
DIVIDEND POLICY AND RETURN OF EXCESS CAPITAL
Upon Conversion, the Board of Directors of the Company will have the
authority to declare dividends on the Common Stock, subject to statutory and
regulatory requirements. Declarations of dividends by the Board of Directors, if
any, will depend upon a number of factors, including investment opportunities
available to the Company or the Bank, capital requirements, regulatory
limitations, the Company's and the Bank's financial condition and results of
operations, tax considerations and general economic conditions. Subject to
regulatory and other considerations, the Company intends to establish an annual
cash dividend policy. Although the Board of Directors of the Company has not
made any decision as to the amount of cash dividends it will pay, it anticipates
that the first dividend will be paid during the first quarter of fiscal 1998.
However, no assurances can be given that any dividends will be paid or, once
commenced, will continue to be paid at the same rate.
The Company is subject to the requirements of Delaware law, which
generally permits the payment of dividends out of surplus, except when (1) the
corporation is insolvent or would thereby be made insolvent, or (2) the
declaration or payment thereof would be contrary to any restrictions contained
in the articles of incorporation. Upon consummation of the Conversion, the
Company's surplus is expected to be between $367,500 and $517,000, depending on
the number of shares issued in the Offerings. See "Capitalization." If there is
no surplus available for dividends, a Delaware corporation may pay dividends out
of its net profits for the then current or the preceding fiscal year or both,
except that no dividend may be paid if the corporation's assets are exceeded by
its liabilities or if its net assets are less than the amount which would be
needed, under certain circumstances, to satisfy any preferential rights of
stockholders.
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Dividends from the Company may depend in part upon receipt of dividends
from the Bank because the Company initially will have no source of income other
than dividends from the Bank, earnings from the investment of proceeds from the
sale of Common Stock retained by the Company and interest payments with respect
to the Company's loan to the ESOP. The Bank will not be permitted to pay
dividends to the Company if its capital would be reduced below the amount
required for the liquidation account of the Bank. See "The Conversion -
Liquidation Rights." Under Illinois law, a savings bank is required to maintain
at all times total capital of not less than 3% of total assets. Prior approval
of the Commissioner is required before any dividends on capital stock that
exceed 50% of a savings bank's net profits that year may be declared in that
calendar year. Moreover, as a condition to the Commissioner's approval, the
Company is subject to a net worth maintenance agreement which requires it to
infuse equity capital into the Bank as needed to maintain the core capital of
the Bank at a level of no less than 6% of total assets. See "Regulations - The
Bank - Capital Requirements." Section 38 of the Federal Deposit Insurance Act
("FDIA") also would prohibit the Bank from making a dividend if it were
"undercapitalized" or if such dividend would result in the institution becoming
"undercapitalized."
In addition, as required by the FDIC as a condition to its nonobjection to
the Conversion, the Company has agreed not to return any excess capital to its
stockholders (which does not include dividends) for a period of one year from
the consummation of the Conversion.
MARKET FOR THE COMMON STOCK
The Company and the Bank have never issued capital stock, and,
consequently, there is no established market for the Common Stock at this time.
The Company intends to apply to have the Common Stock listed on the National
Daily Quotation Service "pink sheets" published by the National Quotations
Bureau, Inc. The development of a liquid public market depends on the existence
of willing buyers and sellers, the presence of which is not within the control
of the Company or the Bank. While the Company will use its best efforts to
encourage and assist a professional market maker in establishing and maintaining
a market for the Common Stock, the number of active buyers and sellers of the
Common Stock at any particular time may be limited, especially in view of the
limited size of the Offerings and the anticipated concentrated ownership of the
Common Stock. Under such circumstances, investors in the Common Stock could have
difficulty disposing of their shares and should not view the Common Stock as a
short-term investment. Investors should consider that it is unlikely that an
active and liquid trading market for the Common Stock will develop or that, if
developed, it will continue, and there can be no assurance that persons
purchasing shares of Common Stock will be able to sell them at or above the
Purchase Price.
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
General
The Company is authorized to issue 1,600,000 shares of Common Stock having
a par value of $0.01 per share and 400,000 shares of preferred stock having a
par value of $0.01 per share (the "Preferred Stock"). The Company currently
expects to issue up to a maximum of 345,000 shares of Common Stock and no shares
of Preferred Stock in the Conversion. Each share of the Company's Common Stock
will have the same relative rights as, and will be identical in all respects
with, each other share of Common Stock. Upon payment of the Purchase Price for
the Common Stock in accordance with the Plan of Conversion, all such stock will
be duly authorized, fully paid and nonassessable. Presented below is a
description of all aspects of the Company's capital stock which are deemed
material to an investment decision with respect to the Conversion.
The Common Stock of the Company will represent nonwithdrawable capital,
will not be an account of an insurable type, and will not be insured by the
FDIC.
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Common Stock
Distributions. The Company can pay dividends if, as and when declared by
its Board of Directors, subject to compliance with limitations which are imposed
by law. See "Dividend Policy." The holders of Common Stock of the Company will
be entitled to receive and share equally in such dividends as may be declared by
the Board of Directors of the Company out of funds legally available therefor.
If the Company issues Preferred Stock, the holders thereof may have a priority
over the holders of the Common Stock with respect to dividends. During at least
the one-year period subsequent to the Conversion, the Company will take no
action to implement any distribution of a return of excess capital to
stockholders.
Voting Rights. Upon Conversion, the holders of Common Stock of the Company
will possess exclusive voting rights in the Company. They will elect the
Company's Board of Directors and act on such other matters as are required to be
presented to them under Delaware law or the Company's Certificate of
Incorporation or as are otherwise presented to them by the Board of Directors.
Each holder of Common Stock will be entitled to one vote per share and will not
have any right to cumulate votes in the election of directors. Cumulative voting
means that holders of stock of a corporation are entitled, in the election of
directors, to cast a number of votes equal to the number of shares which they
own multiplied by the number of directors to be elected Because a stockholder
entitled to cumulative voting may cast all of his votes for one nominee or
disperse his votes among nominees as he chooses, cumulative voting is generally
considered to increase the ability of minority stockholders to elect nominees to
a corporation's board of directors. Under certain circumstances, shares in
excess of 10.0% of the issued and outstanding shares of Common Stock may be
considered "Excess Shares" and, accordingly, not be entitled to vote. See
"Restrictions on Acquisitions of the Company and the Bank." If the Company
issues Preferred Stock, holders of the Preferred Stock may also possess voting
rights.
As an Illinois-chartered mutual savings bank, corporate powers and control
of the Bank are vested in its Board of Directors who elect the officers of the
Bank and will fill any vacancies on the Board of Directors as it exists upon
Conversion. Subsequent to Conversion, voting rights will be vested exclusively
in the owners of the shares of capital stock of the Bank, which will be the
Company, and voted at the direction of the Company's Board of Directors.
Consequently, the holders of the Common Stock will not have direct control of
the Bank.
Liquidation. In the event of any liquidation, dissolution or winding up of
the Bank, the Company, as holder of the Bank's capital stock, would be entitled
to receive, after payment or provision for payment of all debts and liabilities
of the Bank (including all deposit accounts and accrued interest thereon) and
after distribution of the balance in the special liquidation account to Eligible
Account Holders and Supplemental Eligible Account Holders (see "The Conversion -
Liquidation Rights"), all assets of the Bank available for distribution. In the
event of liquidation, dissolution or winding up of the Company, the holders of
its Common Stock would be entitled to receive, after payment or provision for
payment of all its debts and liabilities, all of the assets of the Company
available for distribution. If Preferred Stock is issued, the holders thereof
may have a priority over the holders of the Common Stock in the event of
liquidation or dissolution.
Preemptive Rights. Holders of the Common Stock of the Company will not be
entitled to preemptive rights with respect to any shares which may be issued.
The Common Stock is not subject to redemption.
Preferred Stock
None of the shares of the Company's authorized Preferred Stock will be
issued in the Conversion. Such stock may be issued with such preferences and
designations as the Board of Directors may from time to time determine. The
Board of Directors can, without stockholder approval, issue preferred stock with
voting, dividend, liquidation and conversion rights which could dilute the
voting strength of the holders of the Common Stock and may assist management in
impeding an unfriendly takeover or attempted change in control. The Company has
no present plans to issue Preferred Stock.
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DESCRIPTION OF CAPITAL STOCK OF THE BANK
General
The Amended and Restated Articles of Incorporation of the Bank, to be
effective upon the Conversion, authorizes the issuance of capital stock
consisting of 1,000,000 shares of common stock, par value $1.00 per share. Each
share of common stock of the Bank will have the same relative rights as, and
will be identical in all respects with, each other share of common stock. After
the Conversion, the Board of Directors will be authorized to approve the
issuance of common stock up to the amount authorized by the Amended and Restated
Articles of Incorporation without the approval of the Bank's stockholders. Upon
Conversion, all of the issued and outstanding common stock of the Bank will be
held by the Company as the Bank's sole stockholder. The capital stock of the
Bank will represent nonwithdrawable capital, will not be an account of an
insurable type, and will not be insured by the FDIC. Presented below is a
description of all aspects of the Bank's capital stock which are deemed material
to an investment decision with respect to the Conversion.
Dividends
The holders of the Bank's common stock will be entitled to receive and to
share equally in such dividends as may be declared by the Board of Directors of
the Bank out of funds legally available therefore. See "Dividend Policy" for
certain restrictions on the payment of dividends.
Voting Rights
Immediately after the Conversion, the holders of the Bank's common stock,
which consist solely of the Company, will possess exclusive voting rights in the
Bank. Each holder of shares of common stock will be entitled to one vote for
each share held and there shall be no right to cumulate votes.
Liquidation
In the event of any liquidation, dissolution, or winding up of the Bank,
the holders of common stock will be entitled to receive, after payment of all
debts and liabilities of the Bank (including all deposit accounts and accrued
interest thereon) and after distribution of the balance in the special
liquidation account to Eligible Account Holders and Supplemental Eligible
Account Holders, all assets of the Bank available for distribution in cash or in
kind. If additional preferred stock is issued subsequent to the Conversion, the
holders thereof may also have priority over the holders of common stock in the
event of liquidation or dissolution.
Preemptive Rights; Redemption
Holders of the common stock of the Bank will not be entitled to preemptive
rights with respect to any shares of the Bank which may be issued. The common
stock will not be subject to redemption. Upon receipt by the Bank of the full
specified purchase price therefor, the common stock will be fully paid and
nonassessable.
RESTRICTIONS ON ACQUISITION OF THE COMPANY
General
The Bank's Plan of Conversion provides for the Conversion of the Bank from
the mutual to the stock form of organization and for the concurrent formation of
a holding company. As described below, certain provisions in the Company's
Certificate of Incorporation and Bylaws, together with provisions of Delaware
law, may have anti-takeover effects. In addition, regulatory restrictions may
make it difficult for persons or companies to acquire control of either the
Company or the Bank.
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Restrictions in the Company's Certificate of Incorporation and Bylaws
General. A number of provisions of the Company's Certificate of
Incorporation and Bylaws deal with matters of corporate governance and certain
rights of stockholders. The following discussion is a general summary of certain
provisions of the Company's Certificate of Incorporation and Bylaws which might
be deemed to have a potential "anti-takeover" effect. These provisions may have
the effect of discouraging a future takeover attempt which is not approved by
the Board of Directors but which individual Company stockholders may deem to be
in their best interests or in which stockholders may receive a substantial
premium for their shares over then current market prices. As a result,
stockholders who might desire to participate in such a transaction may not have
an opportunity to do so. Such provisions will also render the removal of the
current Board of Directors or management of the Company more difficult. The
following description of certain of the provisions of the Certificate of
Incorporation and Bylaws of the Company is necessarily general and reference
should be made in each case to such Certificate of Incorporation and Bylaws,
which are incorporated herein by reference. See "Additional Information" as to
how to obtain a copy of these documents.
Limitation on Acquisition of Voting Stock and Voting Rights. Article X of
the Company's Certificate of Incorporation provides that for a period of five
years from the date of Conversion of the Bank from the mutual to the stock form,
no person shall directly or indirectly offer to acquire or acquire the
beneficial ownership of (i) more than 10% of the issued and outstanding shares
of any class of an equity security of the Company, or (ii) any securities
convertible into, or exercisable for, any equity securities of the Company if,
assuming conversion or exercise by such person of all securities of which such
person is the beneficial owner which are convertible into, or exercisable for,
such equity securities (but of no securities convertible into, or exercisable
for, such equity securities of which such person is not the beneficial owner),
such person would be the beneficial owner of more than 10% of any class of an
equity security of the Company. The term "person" is broadly defined to prevent
circumvention of this restriction.
The foregoing restrictions do not apply to (i) any offer with a view
toward public resale made exclusively to the Company by underwriters or a
selling group acting on its behalf, (ii) any tax-qualified employee benefit plan
or arrangement established by the Company or the Bank and any trustee of such a
plan or arrangement, and (iii) any other offer or acquisition approved in
advance by the affirmative vote of two-thirds of the Company's entire Board of
Directors. In the event that shares are acquired in violation of Article X, all
shares beneficially owned by any person in excess of 10% shall be considered
"Excess Shares" and shall not be counted as shares entitled to vote and shall
not be voted by any person or counted as voting shares in connection with any
matters submitted to stockholders for a vote, and the Board of Directors may
cause such Excess Shares to be transferred to an independent trustee for sale on
the open market or otherwise, with the expenses of such trustee to be paid out
of the proceeds of the sale.
Board of Directors. Article VII of the Certificate of Incorporation of the
Company contains provisions relating to the Board of Directors and provides,
among other things, that the Board of Directors shall be divided into three
classes as nearly equal in number as possible with the term of office of one
class expiring each year. See "Management of the Company." The classified Board
is intended to provide for continuity of the Board of Directors and to make it
more difficult and time consuming for a stockholder group to fully use its
voting power to gain control of the Board of Directors without the consent of
the incumbent Board of Directors of the Company. Cumulative voting in the
election of directors is prohibited by the Certificate of Incorporation.
Elimination of cumulative voting will help to ensure continuity and stability of
the Company's Board of Directors and the policies adopted by it by making it
more difficult for the holders of a relatively small amount of the common stock
to elect their nominees to the Board of Directors and possibly by delaying,
deterring, or discouraging proxy contests.
Directors may be removed only with cause at a duly constituted meeting of
stockholders called expressly for that purpose upon the vote of the holders of
not less than a majority of the total votes eligible to be cast by stockholders.
Any vacancy occurring in the Board of Directors for any reason (including an
increase in the
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number of authorized directors) may be filled by the affirmative vote of a
majority of the Directors then in office, though less than a quorum of the
Board, or by the sole remaining director, and a director appointed to fill a
vacancy shall serve for the remainder of the term to which the director has been
elected, and until his successor has been elected and qualified.
Section 4.15 of the Bylaws governs nominations for election to the Board,
and provides that nominations for election to the Board of Directors may be made
by the Board of Directors or a committee thereof or by a stockholder eligible to
vote at an annual meeting of stockholders who has complied with the notice
provisions in that section. Written notice of a stockholder nomination must be
delivered to, or mailed to and received at, the principal executive offices of
the Company not less than ninety days prior to the anniversary date of the
mailing of proxy materials by the Company in connection with the immediately
preceding annual meeting, provided, however, that, with respect to the first
scheduled annual meeting following completion of the Conversion, which is
expected to be held on the third Wednesday of January 1998, nominations by the
stockholder must be so delivered or received no later than the close of business
on the third Wednesday of October 1997, notwithstanding a determination by the
Company to schedule such annual meeting at a date later than the third Wednesday
of January 1998. With respect to an election to be held at a special meeting of
stockholders for the election of directors, the notice must be delivered or
received no later than the close of business on the tenth day following the date
on which notice of such meeting is first given to stockholders. Each such notice
shall set forth: (a) the name and address of the stockholder who intends to make
the nomination and of the person or persons to be nominated; (b) a
representation that the stockholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the notice;
(c) a description of all arrangements or understandings between the stockholder
and each nominee and any arrangements or understandings between the stockholder
and each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by such
stockholders; (d) such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the SEC; and (e) the consent of each nominee to
serve as a director of the Company if so elected.
The provisions regarding director elections and other provisions in the
Certificate of Incorporation and Bylaws discussed herein are generally designed
to protect the ability of the Board of Directors to negotiate with the proponent
of an unfriendly or unsolicited proposal to take over or restructure the Company
by making it more difficult and time-consuming to change majority control of the
Board, whether by proxy contest or otherwise. The general effect of these
provisions will be to require generally two annual stockholders meetings,
instead of one, to effect a change in control of the Board of Directors of the
Company even if holders of a majority of the Company's capital stock believe
that a change in the composition of the Board of Directors is desirable. Because
a majority of the directors at any given time will have prior experience as
directors, these requirements will help to ensure continuity and stability of
the Company's management and policies and facilitate long-range planning for the
Company's business. The provisions relating to removal of directors and filling
of vacancies are consistent with and supportive of a classified board of
directors.
The procedures regarding stockholder nominations will provide the Board of
Directors with sufficient time and information to evaluate a stockholder nominee
to the Board and other relevant information, such as existing stockholder
support for the nominee. The proposed procedures, however, will provide
incumbent directors advance notice of a dissident slate of nominees for
directors, and will make it easier for the Board to solicit proxies resisting
such nominees. This may make it easier for the incumbent directors to retain
their status as directors, even when certain stockholders view the dissident
nominations as in the best interests of the Company or its stockholders.
Limitation of Liability. Article IX of the Company's Certificate of
Incorporation provides that the personal liability of the directors and officers
of the Company for monetary damages shall be eliminated to the fullest extent
permitted by the General Corporation Law of the State of Delaware as it exists
on the effective date of
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the Certificate of Incorporation or as such law may be thereafter in effect.
Section 102(b)(7) of the Delaware General Corporation Law currently provides
that directors (but not officers) of corporations that have adopted such a
provision will not be so liable, except (i) for any breach of the director's
duty of loyalty to the corporation or its shareholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law, (iii) for the payment of certain unlawful dividends and the
making of certain stock purchases or redemptions, or (iv) for any transaction
from which the director derived an improper personal benefit. This provision
would absolve directors of personal liability for negligence in the performance
of their duties, including gross negligence. It would not permit a director to
be exculpated, however, for liability for actions involving conflicts of
interest or breaches of the traditional "duty of loyalty" to the Company and its
shareholders, and it would not affect the availability of injunctive or other
equitable relief as a remedy.
If Delaware law was amended in the future to provide for greater
limitations on the personal liability of directors or to permit corporations to
limit the personal liability of officers, the provision in the Company's
Certificate of Incorporation limiting the personal liability of directors and
officers would automatically incorporate such authorities without further action
by shareholders. Similarly, if Delaware law was amended in the future to
restrict the ability of a corporation to limit the personal lability of
directors, the Company's Certificate of Incorporation would automatically
incorporate such restrictions without further action by shareholders.
Currently, the scope of the provision in the Company's Certificate of
Incorporation limiting the personal liability of directors is uncertain because
of the absence of judicial precedent interpreting similar provisions. In
addition, the SEC takes the position that similar provisions added to other
corporations' certificates of incorporation would not protect those
corporations' directors from liability for violations of the federal securities
laws. Federal banking regulators also may take the same position with respect to
violations of federal banking laws and regulations.
The provision limiting the personal liability of the Company's directors
does not eliminate or alter the duty of the Company's directors; it merely
limits personal lability for monetary damages to the maximum extent now or
hereafter permitted by the Delaware General Corporation Law. Moreover, it
currently applies only to claims against a director arising out of his role as a
director; it currently does not apply to claims arising out of his role as an
officer (if he is also an officer) or arising out of any other capacity in which
he serves because Section 102(b)(7) does not authorize such a limitation of
liability.
The provision in the Company's Certificate of Incorporation which limits
the personal liability of directors is designed to ensure that the ability of
the Company's directors to exercise their best business judgment in managing the
Company's affairs is not unreasonably impeded by exposure to the potentially
high personal costs or other uncertainties of litigation. The nature of the
tasks and responsibilities undertaken by directors of publicly-held corporations
often require such persons to make difficult judgments of great importance which
can expose such persons to personal liability, but from which they will acquire
no personal benefit. In recent years, litigation against publicly-held
corporations and their directors and officers challenging good faith business
judgments and involving no allegations of personal wrongdoing has become common.
Such litigation regularly involves damage claims in huge amounts which bear no
relationship to the amount of compensation received by the directors or
officers, particularly in the case of directors who are not employees of the
corporation. The expense of such litigation, whether it is well-founded or not,
can be enormous. The provisions of the Certificate of Incorporation relating to
director liability is intended to reduce, in appropriate cases, the risk
incident to serving as a director and to enable the Company to elect and retain
persons most qualified to serve as directors.
Indemnification of Directors, Officers, Employees and Agents. Article VI
of the Company's Bylaws provide that the Company shall indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that such person is or was a director,
officer, employee or agent of the Company or any predecessor of the Company, or
is or was serving at the request of the Company or any
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predecessor of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding to the fullest extent authorized by Section 145
of the General Corporation Law of the State of Delaware, provided that the
Company shall not be liable for any amounts which may be due in connection with
a settlement of any action, suit or proceeding effected without its prior
written consent or any action, suit or proceeding initiated by any person
seeking indemnification thereunder without its prior written consent.
Under Section 145 of the Delaware General Corporation Law as currently in
effect, other than in actions brought by or in the right of the Company, such
indemnification would apply if it was determined in the specific case that the
proposed indemnitee acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Company and, with
respect to any criminal proceeding, if he or she had no reasonable cause to
believe that his or her conduct was unlawful. In actions brought by or in the
right of the Company, such indemnification would probably be limited to
reasonable expenses (including attorneys' fees), and would apply if it were
determined in the specific case that the proposed indemnitee acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the Company, except that no indemnification may be made with
respect to any claim, issue or matter as to which such person is adjudged liable
to the Company unless, and only to the extent that, the Delaware Court of
Chancery or the court in which that action was brought determines upon
application that, in view of all the circumstances of the case, the proposed
indemnitee is fairly and reasonably entitled to indemnity for such expenses as
the court deems proper. To the extent that any director, officer, employee or
agent of the Company has been successful on the merits or otherwise in defense
of any proceeding, he or she must be indemnified against reasonable expenses
incurred by him or her in connection therewith.
The Company's Bylaws also provide that reasonable expenses (including
attorneys' fees) incurred by a director, officer, employee or agent of the
Company in defending any civil, criminal, administrative or investigative
action, suit or proceeding described above shall be paid by the Company in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors upon receipt of an undertaking by or on
behalf of such person to repay such amount if it shall ultimately be determined
that the person is not entitled to be indemnified by the Company.
Authorized Shares and Issuance of Capital Stock. Article IV of the
Certificate of Incorporation authorizes the issuance of 1,600,000 shares of
Common Stock with a par value of $.01 per share and 400,000 shares of preferred
stock with a par value of $0.01 per share (the "Preferred Stock"). The shares of
Common Stock and Preferred Stock were authorized in an amount greater than that
to be issued in the Conversion to provide the Company's Board of Directors with
flexibility to effect, among other transactions, financings, acquisitions, stock
dividends, stock splits and employee stock options. However, these additional
authorized shares may also be used by the Board of Directors consistent with its
fiduciary duty to deter future attempts to gain control of the Company. The
Board of Directors also has sole authority to determine the terms of any one or
more series of Preferred Stock, including voting rights, conversion rates, and
liquidation preferences. As a result of the ability to fix voting rights for a
series of Preferred Stock, the Board has the power, to the extent consistent
with its fiduciary duty, to issue a series of Preferred Stock to persons
friendly to management in order to attempt to block a post-tender offer merger
or other transaction by which a third party seeks control, and thereby assist
management to retain its position. The Company's Board currently has no plans
for the issuance of additional shares, other than the issuance of additional
shares pursuant to stock benefit plans.
Neither the Certificate of Incorporation nor the Bylaws of the Company
contain a restriction on the issuance of shares of capital stock to directors,
officers or controlling persons of the Company. Thus, stock-related compensation
plans such as the Stock Option Plan and the Recognition Plan could be adopted by
the Company without shareholder approval and shares of Company capital stock
could be issued directly to directors, officers or controlling persons without
shareholder approval. The Bylaws of the National Association of Securities
Dealers, Inc., however, generally require corporations with securities which are
quoted on the Nasdaq Stock
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Market to obtain shareholder approval of most stock compensation plans for
directors, officers and key employees of the corporation. Moreover, although
generally not required, shareholder approval of stock-related compensation plans
may be sought in certain instances in order to qualify such plans for favorable
federal income tax and securities law treatment under current laws and
regulations.
Special Meetings of Stockholders and Stockholder Proposals. Section 2.4 of
the Company's Bylaws provides that special meetings of the Company's
stockholders, for any purpose or purposes, may only be called by the affirmative
vote of a majority of the Board of Directors then in office.
Section 2.14 of the Company's Bylaws provides that only such business as
shall have been properly brought before an annual meeting of stockholders shall
be conducted at the annual meeting. In order to be properly brought before an
annual meeting following completion of the Conversion, business must be (a)
brought before the meeting by or at the direction of the Board of Directors or
(b) otherwise properly brought before the meeting by a stockholder who has given
timely notice thereof in writing to the Company. For stockholder proposals to be
included in the Company's proxy materials, the stockholder must comply with all
the timing and informational requirements of Rule 14a-8 of the Exchange Act.
With respect to stockholder proposals to be considered at the annual meeting of
stockholders but not included in the Company's proxy materials, the
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Company not less than 90 days prior to the
anniversary date of the mailing of proxy materials by the Company in connection
with the immediately preceding annual meeting; provided, however, that with
respect to the first scheduled annual meeting following completion of the
Conversion, which is expected to be held on the third Wednesday of January 1998,
such written notice must be received by the Company not later than the close of
business on the third Wednesday of October 1997. In connection with such first
annual meeting, stockholder nominations will be required to be received by the
Company by the aforementioned date notwithstanding a determination by the
Company to schedule such annual meeting at a date later than the third Wednesday
of January 1998. A stockholder's notice shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting, (b) the name
and address, as they appear on the Company's books, of the stockholder proposing
such business, (c) the class and number of shares of the Company which are
beneficially owned by the stockholder, and (d) any financial interest of the
stockholder in such business. The presiding officer of an annual meeting shall
determine and declare to the meeting whether the business was properly brought
before the meeting in accordance with the provisions of Section 2.14 and any
such business not properly brought before the meeting shall not be transacted.
The procedures regarding stockholder proposals are designed to provide the
Board with sufficient time and information to evaluate a stockholder proposal
and other relevant information, such as existing stockholder support for the
proposal. The proposed procedures, however, will give incumbent directors
advance notice of a business proposal. This may make it easier for the incumbent
directors to defeat a stockholder proposal, even when certain stockholders view
such proposal as in the best interests of the Company or its stockholders.
Amendment of Certificate of Incorporation and Bylaws. Article 11 of the
Company's Certificate of Incorporation generally provides that any amendment of
the Certificate of Incorporation must be first approved by a majority of the
Board of Directors and, to the extent required by law, then by the holders of a
majority of the shares of the Company entitled to vote in an election of
directors, except that the approval of 75% of the shares of the Company entitled
to vote in an election of directors is required for any amendment to Articles
VII (directors), VIII (meetings of stockholders and bylaws), IX (limitation on
liability of directors and officers), X (restrictions on acquisitions) and 11
(amendment), unless any such proposed amendment is approved by a vote of 75% of
the Board of Directors then in office.
The Bylaws of the Company may be amended by a majority of the Board of
Directors or by the affirmative vote of a majority of the total shares entitled
to vote in an election of directors, except that the affirmative vote of at
least 75% of the total shares entitled to vote in an election of directors shall
be required to amend, adopt,
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alter, change or repeal any provision inconsistent with certain specified
provisions of the Bylaws, unless any such proposed amendment is approved by a
vote of 75% of the Board of Directors then in office.
Delaware General Corporation Law. In addition to the provisions contained
in the Company's Certificate of Incorporation, the Delaware General Corporation
Law includes certain provisions applicable to Delaware corporations, such as the
Company, which may be deemed to have an anti-takeover effect. Section 203 of the
Delaware General Corporation Law ("Section 203") imposes certain restrictions on
business combinations between the Company and large shareholders. Specifically,
Section 203 prohibits a "business combination" (as defined in Section 203,
generally including mergers, sales and leases of assets, issuances of securities
and similar transactions) between the Company or a subsidiary and an "interested
shareholder" (as defined in Section 203, generally the beneficial owner of 15%
or more of the Company's Common Stock) within three years after the person or
entity becomes an interested shareholder, unless (i) prior to the person or
entity becoming an interested shareholder, the business combination or the
transaction pursuant to which such person or entity became an interested
shareholder shall have been approved by the Company's Board of Directors, (ii)
upon consummation of the transaction in which the interested shareholder became
such, the interested shareholder holds at least 85% of the Company's Common
Stock (excluding shares held by persons who are both officers and directors and
shares held by certain employee benefit plans), or (iii) the business
combination is approved by the Company's Board of Directors and by the holders
of at least two-thirds of the outstanding Company Common Stock, excluding shares
owned by the interested shareholders.
One of the effects of Section 203 may be to prevent highly leveraged
takeovers, which depend upon getting access to the acquired corporation's assets
to support or repay acquisition indebtedness and certain coercive acquisition
tactics. By requiring approval of the holders of two-thirds of the shares held
by disinterested shareholders for business combinations involving an interested
shareholder, Section 203 may prevent any interested shareholder from taking
advantage of its position as a substantial, if not controlling, shareholder and
engaging in transactions with the Company that may not be fair to the Company's
other shareholders or that may otherwise not be in the best interests of the
Company, its shareholders and other constituencies.
For similar reasons, however, these provisions may make more difficult or
discourage an acquisition of the Company, or the acquisition of control of the
Company by a principal shareholder, and thus the removal of incumbent
management, because a business combination within the specified three-year
period that is not approved by a majority of the Board of Directors prior to the
transaction in which a person becomes an interested shareholder will require the
approval of the Board of Directors and the holders of two-thirds of the shares
held by disinterested shareholders. In addition, to the extent that Section 203
discourages takeovers that would result in the change of the Company's
management, such a change may be less likely to occur.
Anti-Takeover Effects of the Certificate of Incorporation and Bylaws and
Management Remuneration Adopted in the Conversion
The foregoing provisions of the Certificate of Incorporation and Bylaws of
the Company could have the effect of discouraging an acquisition of the Company
or stock purchases in furtherance of an acquisition, and could accordingly,
under certain circumstances, discourage transactions which might otherwise have
a favorable effect on the price of the Company's Common Stock.
In addition, certain provisions of the proposed employment agreement with
the Company's and the Bank's President provide him with severance payments upon
his termination in connection with a change in control of the Company or the
Bank. See "Management of the Company - Employment Agreement." The foregoing
provisions may make it more difficult for companies or persons to acquire
control of the Company. Additionally, the provisions could deter offers to the
shareholders which might be viewed by such shareholders to be in their best
interests.
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The Board of Directors believes that the provisions described above are
prudent and will reduce vulnerability to takeover attempts and certain other
transactions that are not negotiated with and approved by the Board of Directors
of the Company. The Board of Directors believes that these provisions are in the
best interests of the Company and its future stockholders. In the Board of
Directors' judgment, the Board of Directors is in the best position to determine
the true value of the Company and to negotiate more effectively for what may be
in the best interests of its stockholders. Accordingly, the Board of Directors
believes that it is in the best interests of the Company and its future
stockholders to encourage potential acquirors to negotiate directly with the
Board of Directors and that these provisions will encourage such negotiations
and discourage hostile takeover attempts. It is also the Board of Directors'
view that these provisions should not discourage persons from proposing a merger
or other transaction at prices reflective of the true value of the Company and
where the transaction is in the best interests of all stockholders.
Despite the Board of Directors' belief as to the benefits to the Company's
stockholders of the foregoing provisions, these provisions also may have the
effect of discouraging a future takeover attempt in which stockholders might
receive a substantial premium for their shares over then current market prices
and may tend to perpetuate existing management. As a result, stockholders who
might desire to participate in such a transaction may not have an opportunity to
do so. The Board of Directors, however, has concluded that the potential
benefits of these provisions outweigh their possible disadvantages.
The Board of Directors of the Company and the Bank are not aware of any
effort that might be made to acquire control of the Bank or the Company.
Regulatory Restrictions
The Change in Bank Control Act provides that no person, acting directly or
indirectly or through or in concert with one or more other persons, may acquire
control of a bank unless the FDIC has been given 60 days' prior written notice.
The Bank Company Act provides that no company may acquire "control" of a bank
without the prior approval of the Federal Reserve Board. Any company that
acquires such control becomes a bank holding company subject to registration,
examination and regulation by the Federal Reserve Board. Pursuant to federal
regulations, control of a bank is conclusively deemed to have been acquired by,
among other things, the acquisition of more than 25% of any class of voting
stock of the bank or the ability to control the election of a majority of the
directors of a bank. The Federal Reserve Board may prohibit an acquisition if
(i) it would result in a monopoly or substantially lessen competition, (ii) the
financial condition of the acquiring person might jeopardize the financial
stability of the institution, or (iii) the competence, experience or integrity
of the acquiring person indicates that it would not be in the interest of the
depositors or of the public to permit the acquisition of control by such person.
Approval of a change in control of an Illinois-chartered savings bank is also
required from the Office pursuant to the Savings Bank Act.
REGISTRATION REQUIREMENTS
The Company will register the Common Stock under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), in connection with the Conversion
and has agreed not to deregister such shares for a period of three years
following the Conversion. Upon such registration, the proxy rules, tender offer
rules, insider reporting requirements and trading restrictions, annual and
periodic reporting and other requirements of the Exchange Act will be
applicable. In addition, upon registration, the Company will furnish its
stockholders with annual reports containing audited financial statements as
promptly as practicable after the end of each fiscal year and quarterly reports
containing unaudited financial information as promptly as practicable after the
end of each of the first three quarterly periods in each fiscal year.
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EXPERTS
The consolidated financial statements of the Bank as of September 30, 1996
and 1995, and for each of the years in the two-year period ended September 30,
1996, included in the Prospectus have been audited by Geo. S. Olive & Co. LLC,
independent auditors, as stated in their report appearing elsewhere herein, and
have been so included in reliance upon the report of such firm, given upon their
authority as experts in accounting and auditing.
RP Financial has consented to the publication herein of the summary of its
report to the Bank and Company setting forth its opinion as to the estimated pro
forma market value of the Common Stock upon Conversion and its opinion with
respect to subscription rights.
LEGAL AND TAX OPINIONS
The legality of the Common Stock and the Federal income tax consequences
of the Conversion will be passed upon for the Bank and the Company by Elias,
Matz, Tiernan & Herrick L.L.P., Washington, D.C., special counsel to the Bank
and the Company. The Illinois income tax consequences of the Conversion will be
passed upon for the Bank and the Company by Geo. Olive & Co. LLC. Certain legal
matters will be passed upon for Trident by Luse Lehman Gorman Pomerenk & Schick,
PC, Washington, D.C.
HOW TO OBTAIN ADDITIONAL INFORMATION
If you would like to receive the Plan of Conversion, you must mark, sign
and return the enclosed postage-paid Request Card so that it is received by the
Savings Bank at the address shown on the envelope by 12:00 p.m., Central Time,
on February ___, 1997. Returning the Request Card does not obligate you to
purchase shares. If you return the Request Card so that the Savings Bank
receives it at the address shown on the envelope by 12:00 p.m., Central Time, on
February __, 1997, you will be entitled to have the Plan of Conversion mailed to
you on such date. Request Cards received after such date and before the Special
Meeting will be honored after receipt; however, there can be no assurance that
you will have sufficient time to review the additional information prior to the
Special Meeting and conclusion of the Subscription and Community Offering if the
Request Card is not received by the Savings Bank by the aforementioned time and
date. If you would like a copy of the Company's Certificate of Incorporation and
Bylaws, please contact William T. Ingram, Secretary, American Savings Bank of
Danville, 714 North Vermilion Street, Danville, Illinois 61832. For additional
information, you may call (___) ____-_______.
AVAILABLE INFORMATION
The Savings Bank has filed an Application for Conversion with the
Commissioner with respect to the Conversion. This Proxy Statement and the
Subscription and Community Offering Prospectus omit certain information
contained in such Application for Conversion. The Application for Conversion may
be examined at the principal offices of the Office of Banks and Real Estate, 310
S. Michigan Avenue, 21st Floor, Chicago, Illinois 60604-4278 and 500 E. Monroe,
Springfield, Illinois 62701-1532.
The Company has filed with the SEC a Registration Statement on Form S-1
(File No. 333-17227) under the Securities Act with respect to the Common Stock
offered in the Conversion. This Proxy Statement and the Subscription and
Community Offering Prospectus do not contain all the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the Rules and Regulations of the SEC. Such information may be examined at
the public reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and copies may be obtained at prescribed
rates from the Public Reference Section of the SEC at the same address. The
Commission maintains a World Wide Web site on the Internet that contains
reports, proxy and information statements and other information regarding
registrants such as the Company that file electronically with the Commission.
The address of such site is: http://www.sec.gov.
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Copies of the appraisal report of RP Financial, including any amendments
thereto, are available at the Bank's office and the appraisal report is also
part of the Application for Conversion and the Registration Statement.
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PLEASE REMEMBER TO MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN
THE ENCLOSED POSTAGE-PAID ENVELOPE SO THAT YOUR IMPORTANT VOTE WILL BE COUNTED
AT THE SPECIAL MEETING.
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THIS PROXY STATEMENT IS NEITHER AN OFFER TO SELL NOR THE SOLICITATION OF
ANY OFFER TO BUY STOCK. THE OFFER IS MADE ONLY BY THE SUBSCRIPTION AND COMMUNITY
OFFERING PROSPECTUS.
