<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
----------------
FIRST OF MICHIGAN CAPITAL CORPORATION
(NAME OF ISSUER AND PERSON FILING STATEMENT)
COMMON STOCK, $.10 PAR VALUE
(TITLE OF CLASS OF SECURITIES)
----------------
CUSIP NO. 320862105
(CUSIP NUMBER OF CLASS OF SECURITIES)
STEVE GASPER, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
FIRST OF MICHIGAN CAPITAL CORPORATION
100 RENAISSANCE CENTER
DETROIT, MICHIGAN 48243-1182
(313) 259-2600
WITH COPY TO:
JOHN F. MARVIN, ESQ.
LEONARD W. JURDEN, ESQ.
PAUL P. HOLEWINSKI, ESQ.
WATSON & MARSHALL L.C.
1010 GRAND AVENUE, 5TH FLOOR
KANSAS CITY, MISSOURI 64106-2271
(816) 842-3132
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON FILING STATEMENT)
AUGUST 3, 1995
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
This Statement is filed in connection with:
[_] a.The filing of solicitation materials or an information statement subject
to Regulation 14A, Regulation 14C or Rule 13d-3(c) under the Securities
Exchange Act of 1934.
[_] b.The filing of a registration statement under the Securities Act of 1933.
[X] c.A tender offer.
[_] d.None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [_]
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
- --------------------------------------------------------------------------------
<S> <C>
$7,109,375.................................... $1,421.88
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
*For purposes of calculating fee only. Based upon $11 3/8 cash per share for
625,000 shares. The amount of the filing fee, calculated in accordance with
Regulation 240.0-11 of the Securities Exchange Act of 1934, as amended, equals
1/50th of one percentum of the value of Shares purchased.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or schedule
and the date of its filing.
Amount previously paid: $1,421.88
Filing party: First of Michigan Capital Corporation
Form or registration no.: Schedule 13E-4 Date filed: August 3, 1995
Issuer Tender Offer Statement
<PAGE>
INTRODUCTION
This Rule 13e-3 Transaction Statement on Schedule 13E-3 ("Schedule 13E-3")
relates to the offer by First of Michigan Capital Corporation, a Delaware
Corporation (the "Company"), to purchase 625,000 shares of its common stock,
par value $0.10 per share (the "Shares"), at $11 3/8 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated August 3, 1995 (the "Offer
to Purchase") and in the related Letter of Transmittal (which together
constitute the "Offer"). The Offer to Purchase is attached as Exhibit (a)(1) to
the related Schedule 13E-4 Issuer Tender Offer Statement ("Schedule 13E-4")
filed by the Company with the Securities and Exchange Commission on the date
hereof.
The information set forth in the Schedule 13E-4, including the Offer to
Purchase and other Exhibits, is incorporated in its entirety herein by
reference. The following is a summary cross-reference sheet pursuant to General
Instruction F of Schedule 13E-3, showing the location in the Schedule 13E-4 and
the Offer to Purchase of information required by Schedule 13E-3. To the extent
the requirements of Schedule 13E-3 are met by the Offer to Purchase, no attempt
is made in the following cross-reference sheet to distinguish more limited
requirements of the corresponding Schedule 13E-4 items which are also
referenced.
<TABLE>
<CAPTION>
SCHEDULE SCHEDULE CAPTION IN OFFER
13E-3 ITEM 13E-4 ITEM TO PURCHASE
---------- ----------- ----------------
ITEM 1 ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION
<C> <C> <S>
(a) Item 1(a-b) "Cover Page" and "Introduction"
(b) Item 1(b) "Introduction"
(c) Item 1(c) "Introduction", "Special Factors--Certain Effects
of the Offer on the Market for Shares;
Registration Under the Exchange Act" and "The
Tender Offer--Price Range of Common Stock;
Dividends"
(d) -- "The Tender Offer--Price Range of Common Stock;
Dividends"
(e) -- Not applicable
(f) -- Not applicable
ITEM 2 IDENTITY AND BACKGROUND
The Company is the issuer of the class of securities which is the subject of
the Rule 13E-3 transaction, and the Company is filing this Schedule 13E-3.
(a-d, g) -- Schedule I--Information Concerning Directors and
Executive Officers of the Company
(e-f): During the last five years neither the Company nor, to the best of its
knowledge, any of the persons listed in Schedule I to the Offer to Purchase, has
been (i) convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors), or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree, or final order enjoining future
violation of, or prohibiting activities subject to, federal or state securities
laws or finding any violations of such laws.
ITEM 3 PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS
(a) -- Not applicable
(b) -- "Special Factors--Prior Evaluations of the
Company; Prior Transactions"
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE SCHEDULE CAPTION IN OFFER
13E-3 ITEM 13E-4 ITEM TO PURCHASE
---------- ---------- ----------------
ITEM 4 TERMS OF THE TRANSACTION
<C> <C> <S>
(a-b) Item 3 "Introduction", "Special Factors" and "The Tender
Offer"
ITEM 5 PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE
(a-e) Item 3 "Special Factors--Plans for the Company" and "The
Tender Offer--Price Range of Shares; Dividends"
(f-g) Item 3 "Cover Page", "Introduction" and "Special Factors--
Purpose of the Offer; Considerations of the
Directors, --Plans for the Company,
--Certain Effects of the Offer on the Market for
the Shares; Registration Under the Exchange Act"
ITEM 6 SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) Item 2 "Special Factors--Source and Amount of Funds"
(b) Item 6 "The Tender Offer--Fees and Expenses"
(c-d) Item 2 Not applicable
ITEM 7 PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS
(a) Item 3 "Cover Page", "Introduction" and "Special Factors--
Purpose of the Offer; Considerations of the
Directors"
(b) -- "Special Factors--Background of the Offer"
(c) -- "Special Factors--Purpose of the Offer;
Considerations of the Directors"
(d) -- "Cover Page", "Introduction" and "Special Factors--
Purpose of the Offer; Considerations of the
Directors, --Certain Effects of the Offer on the
Market for the Shares; Registration Under the
Exchange Act, --Certain Tax Consequences to
Stockholders"
ITEM 8 FAIRNESS OF THE TRANSACTION
(a-e) -- "Cover Page", "Introduction", "Special Factors--
Vote of the Board of Directors; Position of
Dissenting Directors, --Purpose of the Offer;
Considerations of the Directors, --Opinion of the
Financial Advisor; Fairness of the Transaction,
--Prior Evaluation of the Company; Prior
Transactions, --Plans for the Company" and Appendix
A--Opinion of Duff & Phelps Capital Markets Co.
(f) -- Not Applicable
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE SCHEDULE CAPTION IN OFFER
13E-3 ITEM 13E-4 ITEM TO PURCHASE
---------- ---------- ----------------
ITEM 9 REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS
<C> <C> <S>
(a-c) -- "Cover Page", "Introduction", "Special Factors--
Background of the Offer, --Purpose of the Offer;
Considerations of the Directors, --Opinion of the
Financial Advisor; Fairness of the Transaction" and
Appendix A--Opinion of Duff & Phelps Capital
Markets Co.
ITEM 10 INTEREST IN SECURITIES OF THE ISSUER
(a) -- "Special Factors--Continuing Stockholders,
--Interests of Certain Persons in the Transaction"
(b) Item 4 "Special Factors--Interests of Certain Persons in
the Transactions" and Schedule II--Transactions in
Shares During the 60 Days Prior to the Offer
ITEM 11 CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES
Item 5 None
ITEM 12 PRESENT INTENTION AND RECOMMENDATIONS OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION
(a-b) Item 3 "Special Factors--Background of the Offer", Vote of
the Board of Directors; Position of Dissenting
Director, --Interests of Certain Persons in the
Transaction"
ITEM 13 OTHER PROVISIONS OF THE TRANSACTION
(a) -- None
(b) -- None
(c) -- Not applicable
ITEM 14 FINANCIAL INFORMATION
(a) Item 7(a) "The Tender Offer--Certain Information About the
Company" and Appendix B--First of Michigan Capital
Corporation Audited Financial Statements
(b) Item 7(b) "The Tender Offer--Certain Information About the
Company" and Appendix B--First of Michigan Capital
Corporation Audited Financial Statements
ITEM 15 PERSON OR ASSETS EMPLOYED, RETAINED OR UTILIZED
(a) -- "Special Factors--Background of the Offer,
--Source and Amount of Funds"
(b) Item 6 "Cover Page", "Introduction", "Special Factors--
Background of the Offer, --Opinion of the Financial
Advisor; Fairness of the Transaction" and --"The
Tender Offer--Fees and Expenses"
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE
13E- SCHEDULE CAPTION IN OFFER
3 ITEM 13E-4 ITEM TO PURCHASE
-------- ---------- ----------------
ITEM 16 ADDITIONAL INFORMATION
<C> <C> <S>
Item 8 Offer to Purchase in its entirety
ITEM 17 MATERIAL TO BE FILED AS EXHIBITS
Item 9
</TABLE>
<TABLE>
<C> <S>
(a) None.
(b)(1) Opinion of Duff & Phelps Capital Markets Co., dated July 31,
1995, set forth as "Appendix A" to the Offer to Purchase.
(Incorporated by reference from Schedule 13E-4 filed on the same
date).
(b)(2) Presentation Materials to the Board of Directors of the Company,
dated July 20, 1995, in connection with the Opinion of Duff &
Phelps Capital Markets Co.
(c) None
(d)(1) Offer to Purchase (incorporated by reference from Schedule 13E-4
filed on the same date).
(d)(2) Letter of Transmittal (incorporated by reference from Schedule
13E-4 filed on the same date).
(d)(3) Notice of Guaranteed Delivery (incorporated by reference from
Schedule 13E-4 filed on the same date).
(d)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees (incorporated by reference from Schedule 13E-
4 filed on the same date).
(d)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees (incorporated by reference
from Schedule 13E-4 filed on the same date).
(d)(6) Press Release published on July 26, 1995 (incorporated by
reference from Schedule 13E-4 filed on the same date).
(d)(7) Press Release dated August 3, 1995 (incorporated by reference
from Schedule 13E-4 filed on the same date).
(e) None.
(f) None.
</TABLE>
5
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
First of Michigan Capital
Corporation
/s/ Steve Gasper, Jr.
By: _________________________________
Name: Steve Gasper, Jr.
Title: President
Dated: August 3, 1995
6
<PAGE>
[LOGO OF DUFF & PHELPS CAPITAL MARKETS CO.]
DUFF & PHELPS CAPITAL MARKETS CO.
<PAGE>
[LOGO]
Duff & Phelps Capital Markets Co.
55 East Monroe Street . Suite 3600 . Chicago, Illinois 60603 . (312) 263-2610
. Fax (312) 263-5359
================================================================================
CONFIDENTIAL
============
FIRST OF MICHIGAN
CAPITAL CORPORATION
COMMON STOCK TENDER OFFER PRICING ANALYSIS
PREPARED FOR THE BOARD OF DIRECTORS
OF FIRST OF MICHIGAN CAPITAL CORPORATION
JULY 20, 1995
================================================================================
The information contained herein is of a confidential nature and is intended for
the exclusive use of the persons or firm to whom it is furnished by us.
Reproduction, publication or dissemination of portions hereof may not be made
without prior approval of Duff & Phelps Capital Markets Co.
<PAGE>
First of Michigan Capital Corporation
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
I. Executive Summary
II. Determination of Freely Traded (Fully Liquid) Value
. Marketability / Liquidity Analysis
. Comparable Company Analysis
III. Determination of Tender Offer Value Range
. Discounted Cash Flow Analysis
. Control Transaction Analysis
. Comparable Company Valuation Multiples vs. Tender Offer Value Range
Multiples
Appendix A: Comparable Company Descriptions and Supporting Data
Appendix B: Detailed Projections for Discounted Cash Flow Analysis
Appendix C: Detailed Summary of Recent Control Transactions
Stock Price Graphs of Target Companies in Control Transactions
Appendix D: Duff & Phelps Capital Market Co. Description and Qualifications
- -------------------------------------------------------------------------------
Duff & Phelps Capital Markets Co.
<PAGE>
First of Michigan Capital Corporation
- --------------------------------------------------------------------------------
EXECUTIVE SUMMARY
SCOPE OF ENGAGEMENT
- -------------------
. Discussions with senior management including majority of business unit heads.
. Review of historical financial statements and projections prepared at the
direction of the Board and senior management.
. Incorporation of publicly available information on securities brokerage
industry, recent transactions and comparable, publicly traded companies.
TYPES OF ANALYSIS
- -----------------
. Assessment of the marketability / liquidity of First of Michigan common
stock.
. Discounted cash flow analysis based on management projections and modified by
DPCM.
. Comparative valuations of publicly traded companies considered comparable to
First of Michigan.
. Review of recent control transactions in the securities brokerage industry.
- --------------------------------------------------------------------------------
Duff & Phelps Capital Markets Co. I-1
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
ANALYSIS SUMMARY
- ----------------
. Current market quotations and transactions (if any) do not reflect the value
of the common stock if it had a following of equity analysts, an active
trading market, and greater institutional ownership.
. Based on comparable company analysis, freely traded (fully liquid) value of
common stock is approximately $11.00 per share.
. Discounted cash flow analysis concludes a control value of about $14.20 per
share.
. Control transaction analysis concludes a reasonable control premium of 20%
to 30%. Subtracting this premium from the control value yields a value
range of approximately $11.00 to $11.75 per share.
OVERALL CONCLUSION
- ------------------
. Current, fair tender offer range for common stock is $11.00 to $11.75 per
share. This range is supported by all levels of analysis.
. Valuation basis is marketable minority interest. Shareholders are under no
compulsion to tender their shares. Furthermore, due to the lack of an
active market for the common stock, those shareholders who do not tender
will be no worse off after the transaction.
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. I-2
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORP. VS. COMPARABLE COMPANY INDEX
The graphic and image material contained in the paper version of this
exhibit is omitted in this electronic version pursuant to Rule 304 of Regulation
S-T.
The image depicted is one of a line graph comparing the value of a
composite group of companies to the value of the First of Michigan. The
vertical axis represents the value component and rangers from 60 at the
intersection with the horizontal axis to 130 in increments of 5. The horizontal
index represents time, starting at June 24,1994 at the intersection with the
vertical axis to July 7, 1995. The comparable company index is represented by a
solid line and the First of Michigan graph is represented by a broken lines.
Both lines start at 100 on the vertical axis and go across the page with
irregular vertical movement (both up and down), with the comparable company
index and the First of Michigan lines ending at points equal to approximately
the 125 and the 77 points, respectively, on the vertical axis on the right side
of the graph.
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. II-1
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORP.
The image depicted is one of a bar graph showing the volume of shares of
First of Michigan that were traded during relevant periods. The vertical axis
represents the number of shares traded and rangers from 0 at the intersection
with the horizontal axis to 27,500 in increments of 2,500. The horizontal index
represents time, starting at June 24,1994 at the intersection with the vertical
axis to July 7, 1995. The time interval for the points on the horizontal line
is two weeks. The vertical rise of the bar graphs varies from none to in excess
of 25,000.
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. II-2
<PAGE>
First of Michigan Capital Corporation
- ------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Comparable Company Analyst Coverage/Institutional Ownership
<TABLE>
<CAPTION>
- --------------------- ------------------ ------------------------
Company Number of Number of
Name Equity Analysts Institutional Holders
- --------------------- ------------------ ------------------------
<S> <C> <C>
First of Michigan 0 1
First Albany 0 1
Inter-Regional 3 11
Interstate/Johnson 1 3
Legg Mason 4 18
McDonald & Co. Investment 3 6
Morgan Keegan 1 8
Piper Jaffray 2 13
Raymond James Financial 5 24
Rodman & Renshaw 0 6
Scott & Stringfellow 1 2
Stifel Financial 0 4
</TABLE>
Source: Bloomberg Financial Markets
- -------------------------------------------------------------------------------
Duff & Phelps Capital Markets Co. II-3
<PAGE>
First of Michigan Capital Corporation
- -------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Comparable Company Revenue Contributions
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
Percentage of Total Revenues
--------------------------------------------------------------------------
Investment Principal Asset Total Market
Commissions Banking Transactions Management Interest Other Total Revenues Capitalization
(%) (%) (%) (%) (%) (%) (%) ($000,000) ($000,000)
----------- ---------- ------------ ---------- -------- ----- ----- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First of Michigan (FMG)(a) 61 15 6 (b)NA 13 5 100 61 27
Scott & Stringfellow (SCOT) 51 20 16 0 8 5 100 52 26
Rodman & Renshaw (RR) 38 (c)NA 35 10 12 5 100 77 18
Stifel Financial (SF) 27 13 24 0 12 24 100 94 25
First Albany (FACT) 27 18 34 5 15 1 100 108 33
Interstate/Johnson (IS) 75 5 4 4 6 6 100 167 63
McDonald & Co. (MDD) 26 31 26 10 7 0 100 205 141
Morgan Keegan (MOR) 20 24 39 0 11 6 100 232 247
Legg Mason (LM) 39 14 18 15 9 5 100 398 332
Piper Jaffray (PJC) 37 15 26 13 6 3 100 398 270
Inter-Regional (IFG) 27 19 28 4 15 7 100 496 233
Raymond James (RJF) 60 12 1 10 12 5 100 507 364
</TABLE>
(a) Other income comes from insurance.
(b) Started two money market funds at the beginning of 1995.
(c) Has investment banking operations but no breakout of revenue contributions.
Source: S&P Stock Reports and 10-K's
- -------------------------------------------------------------------------------
Duff & Phelps Capital Markets Co. II-4
<PAGE>
First of Michigan Capital Corporation
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Comparable Company Performance Analysis Summary
in % except rankings
All rankings are out of twelve companies except 5-year EPS growth (see note).
<TABLE>
<CAPTION>
----------------------------------- -----------------------------
Comparable Companies First of Michigan Corporation
----------------------------------- -----------------------------
FIVE-YEAR COMPOUND GROWTH High Low Mean Median Performance Rank
- ------------------------- ---- --- ---- ------ ----------- ----
<S> <C> <C> <C> <C> <C> <C>
Five-Year Compounded Annual Revenue Growth 26.7 1.6 12.3 12.5 10.2 7
Five-Year Compounded Annual EPS Growth 69.5 13.3 35.6 33.9 10.9 10+
NET INCOME MARGIN++
- -------------------
Five-Year Average Net Income Margin 9.8 -1.3 5.1 5.8 6.1 6
Three-Year Average Net Income Margin 14.2 -2.2 6.9 7.3 7.4 6
Latest Twelve Months' Net Income Margin 11.4 -31.3 1.3 4.2 1.8 10
RETURN ON EQUITY++
- ------------------
Five-Year Average ROE 24.2 -2.9 13.9 14.8 12.6 8
Three-Year Average ROE 33.8 -5.0 18.7 19.4 15.8 9
Latest Twelve Months' ROE 39.7 -74.3 4.1 10.8 3.5 10
</TABLE>
+ This ranking is only among ten companies instead of all twelve because two
comparables did not have meaningful 5-year compounded EPS.
++ All net income and return on equity numbers are adjusted for non-recurring
items.
Source: Compustat PC Plus
- --------------------------------------------------------------------------------
Duff & Phelps Capital Markets Co. II-5
<PAGE>
First of Michigan Capital Corporation
- -------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Comparable Company Analysis Summary
Freely Traded (Fully Liquid) Value Range
<TABLE>
<CAPTION>
------------------------------------- ------------------------------
Multiples Implied by Equity Value of: Comparison to Comparable Group
------------------------------------- ------------------------------
First of Michigan Comparable Co. Comparable Co.
PERFORMANCE MEASURES Performance $10.75 $11.00 $11.25 Group Median Group Range
- --------------------- ----------------- ------ ------ ------ -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Latest 12 months' EPS (Adj.) $0.34 32.1x 32.8x 33.6x 12.7x 10.2x - 22.2x
Projected 1996 EPS $0.93 11.6x 11.9x 12.1x 9.7x 9.0x - 15.3x
3-year average EPS (Adj.) $1.55 6.9x 7.1x 7.3x 8.8x 7.1x - 12.7x
Book Value/Share $10.73 1.0x 1.0x 1.0x 1.3x 0.8x - 1.9x
Tangible Book Value/Share $10.73 1.0x 1.0x 1.0x 1.3x 0.9x - 1.9x
</TABLE>
Note: Earnings adjusted to exclude merger termination expenses.
Value per share based on 2,811,000 shares outstanding.
- -------------------------------------------------------------------------------
Duff & Phelps Capital Markets Co. II-6
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Discounted Cash Flow Analysis
Management vs. DPCM Base Case Scenario Comparison
($ in 000s)
<TABLE>
<CAPTION>
Discount Long-term Price/ Price/ Price/
Stock Price Rate P/E Ratio LTM EPS Proj. EPS Book Value
----------- ---------- --------- ------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Management $14.20 21.0% 6.1x 42.4x 15.3x 1.3x
DPCM Base Case $14.20 19.5% 6.6x 42.4x 15.3x 1.3x
</TABLE>
<TABLE>
<CAPTION>
Actual Actual Actual Estimated Projected Projected Projected Projected Projected
1992 1993 1994 1995 1996 1997 1998 1999 2000
-------- -------- -------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUE
- -------
Management $59,879 $63,030 $61,196 $57,700 $64,280 $78,610 $97,550 ------ ------
DPCM Base Case $59,879 $63,030 $61,196 $57,700 $64,280 $73,636 $83,373 $90,331 $95,136
REVENUE GROWTH
- --------------
Management 5.3% -2.9% -5.7% 11.4% 22.3% 24.1% ------ ------
DPCM Base Case 5.3% -2.9% -5.7% 11.4% 14.6% 13.2% 8.3% 5.3%
NET INCOME
- ----------
Management $4,705 $3,400 $1,042 $605 $1,836 $4,379 $6,422 ------ ------
DPCM Base Case $4,705 $3,400 $1,042 $605 $1,836 $3,514 $4,741 $5,933 $6,547
NET INCOME MARGIN
- -----------------
Management 7.9% 5.4% 1.7% 1.0% 2.9% 5.6% 6.6% ------ ------
DPCM Base Case 7.9% 5.4% 1.7% 1.0% 2.9% 4.8% 5.7% 6.6% 6.9%
</TABLE>
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. III-1
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Control Transaction Premiums
<TABLE>
<CAPTION>
Target Company Name Date of Transaction Premium Over Unaffected Price (%)
- ------------------- ------------------- ---------------------------------
<S> <C> <C>
Carolina Financial Corp. 10/23/92 96.8
Discount Corp. of New York 8/11/93 26.5
Rodman & Renshaw 12/21/93 15.4
Dreyfus Corp. 8/24/94 24.7
Concord Holding Corp. 3/29/95 94.1
Kemper Corp.* pending 19.6
CF Bancorp** pending 8.8
</TABLE>
Source: CompuServe, Inc. and Securities Data Corp
*Premium based on $49.50 cash per common share.
**Premium based on 1.4545 shares of the common stock of First Midwest Bancorp.
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. III-2
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Comparable Company Analysis Summary
Tender Offer Value Range
<TABLE>
<CAPTION>
Multiples Implied by Equity Value of: Comparison to Comparable Group
------------------------------------- ------------------------------
First of Michigan Comparable Co. Comparable Co.
PERFORMANCE MEASURES Performance $11.00 $11.38 $11.75 Group Median Group Range
- -------------------- ----------------- ---------- ---------- ----------- ----------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Latest 12 months' EPS (Adj.) $0.34 32.8x 34.0x 35.1x 12.7x 10.2x - 22.2x
Projected 1996 EPS $0.93 11.9x 12.3x 12.7x 9.7x 9.0x - 15.3x
3-year average EPS (Adj.) $1.55 7.1x 7.3x 7.6x 8.8x 7.1x - 12.7x
Book Value/Share $10.73 1.0x 1.1x 1.1x 1.3x 0.8x - 1.9x
Tangible Book Value/Share $10.73 1.0x 1.1x 1.1x 1.3x 0.9x - 1.9x
</TABLE>
Note: Earnings adjusted to exclude merger termination expenses.
Value per share based on 2,811,000 shares outstanding.
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. III-3
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORP.
MONTHLY STOCK PRICE
The image depicted is one of a line graph showing the variations in the
price of First of Michigan Capital Corporation stock. The vertical axis
represents the price of the stock and ranges from 1 at the intersection with the
horizontal axis to 15 in increments of 1. The horizontal index represents time,
starting at July 31,1990 at the intersection with the vertical axis to July 17,
1995. The line starts at approximately 8 1/2 on the vertical axis and goes
across the page with irregular vertical movement (both up and down), and ends at
points equal to approximately 10 1/2.
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. III-4
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
COMPARABLE COMPANY DESCRIPTIONS
FIRST ALBANY (FACT) is a securities broker for institutional and individual
customers. The company is also involved in market making; trading of corporate,
government and municipal securities; underwriting tax-exempt and corporate
issues; providing clearing services for brokerages; advisory services; and money
management. First Albany operates out of 25 offices in 8 states. Money
management services are provided to individuals and institutions and the company
acts as subadvisor to the Victory Fund for Income.
INTERSTATE/JOHNSON LANE (IS) is a financial services holding company involved in
institutional and retail brokerage services, market making and underwriting,
investment management and advisory services, and the sale of mutual funds and
other financial products. Retail brokerage is conducted through 57 offices
primarily located in the southeastern U.S. Interstate is a market maker for
over 300 equity securities and underwrites corporate and tax-exempt securities.
The Company, through its Sovereign Capital Management subsidiary, has $68
million in assets under management.
INTER-REGIONAL FINANCIAL GROUP (IFG) offers investment banking and securities
services throughout the western U.S. The company provides investment banking
and broker-dealer services through its Dain Bosworth and Rauscher Pierce Refsnes
subsidiaries, which operate out of 83 offices with over 1,000 sales
representatives. Dain and Rauscher also provide research services in addition
to being dealers for corporate, tax-exempt, and government bonds and corporate
equities. The company also has an investment advisory firm that sponsors and
serves Great Hall Investment Funds, Inc.
LEGG MASON (LM) is a multiregional broker-dealer and investment bank that serves
both individual and institutional clients through 90 offices in 22 states. The
company has subsidiaries engaged in trading, investment management, the sale of
insurance products, commercial mortgage banking and other financial services.
Legg Mason sponsors 14 mutual funds with an aggregate $3.7 billion in assets.
MCDONALD & CO. INVESTMENTS, INC. (MDD) is a regional investment bank and
brokerage that serves institutional clients in Canada, the U.S. and Europe and
serves individual clients mainly in Ohio and the surrounding area. The company
provides underwriting, trading, brokerage and investment research services
through 36 offices in 10 states. MDD also acts as the investment advisors for 9
investment funds with total assets of $1.7 billion that invest in taxable and
tax-exempt money market instruments and government securities.
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. A-1
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
Continued
MORGAN KEEGAN (MOR) is a regional broker-dealer that serves institutional
clients in the U.S. and abroad and serves individual clients mainly in the
southeastern U.S. Morgan has 492 account executives that operate out of 29
offices in 12 states. The company is also involved in private placements, M&A,
venture capital financing, and the sale of investment products such as
insurance, limited partnerships, tax advantaged investments, and mutual funds.
PIPER JAFFRAY (PJC) offers investment banking and investment management services
through 76 offices in 17 states. The company is involved in corporate and
public finance, institutional sales, trading and research and retail brokerage.
The company's Piper Capital Management, Inc. subsidiary is the investment
advisor to 38 mutual funds with about $11.6 billion in assets. The Piper Trust
Co. subsidiary provides trust services to individuals and institutions.
RAYMOND JAMES FINANCIAL (RJF) is a regional broker-dealer and investment banking
firm that operates through 47 offices mostly in Florida. The company is
involved in trading, sales of mutual funds, institutional sales and research,
corporate finance, sale of limited partnerships and the underwriting of
municipal securities. Through various subsidiaries, the company is also
involved in financial planning and other financial services through over 800
offices in all 50 states and Puerto Rico. RJF also has a total of approximately
$7.6 billion under management through 6 mutual funds and individual investor
accounts.
RODMAN & RENSHAW (RR) is a regional broker-dealer and investment banking firm.
The company is involved in trading, commodities brokerage, sale and management
of real estate limited partnerships, insurance, and investment advisory. During
the latest fiscal year the company sold its London futures and options
operations and its Chicago Stock Exchange specialist operation. In December
1993, Abaco Casa de Bolsa of Mexico acquired 51% of R&R. In May of 1995, R&R
acquired the institutional equity and investment banking units of Mabon
Securities.
SCOTT & STRINGFELLOW FINANCIAL (SCOT) is a regional broker-dealer and investment
banking firm that operates through 25 offices in Virgina, North Carolina and
West Virginia. The company serves both institutional and individual clients and
is involved in investment research, market making, underwriting and distributing
of municipal and corporate securities and money market accounts, and the sale of
insurance partnership investments, mutual funds and other financial products.
Scott & Stringfellow also has $132 million in assets under management.
STIFEL FINANCIAL (SF) is a regional retail brokerage and investment banking firm
that operates primarily in the central U.S. through approximately 70 offices in
12 states. Investment banking activities include underwriting corporate and
municipal securities, M&A, private placements and valuation and advisory work.
Through subsidiaries, the company also provides specialist services for about 40
common stock issues that trade on the Chicago Stock Exchange.
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. A-2
<PAGE>
First of Michigan Capital Corporation
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Analysis of Publicly Traded Comparable Companies
Market Data
($ in millions except per share data)
July 11, 1995
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
Common Stock Data Dividend Data Market Capitalization
---------------------------------------------------------------------------------------
Common 52-Week Range
Stock -------------- Primary Indicated Current Percent Shares Out- Equity
Price High Low Market Dividend Yield Payout standing Value
------ ---- --- ------- --------- ------- ------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
First Albany Cos. 8.250 8.571 5.896 NSDQ $0.20 2.4% 31% 4.284 $ 35
Inter-Regional Financial 30.875 31.500 20.000 NYSE 0.64 2.1 26 8.105 250
Interstate/Johnson Lane 10.375 10.375 7.250 NYSE 0.12 1.2 16 6.307 65
Legg Mason 27.500 28.375 18.500 NYSE 0.44 1.6 35 12.210 336
McDonald & Co. 16.125 16.500 11.000 NYSE 0.32 2.0 22 8.940 144
Morgan Keegan 12.375 13.125 7.833 NYSE 0.24 1.9 20 20.599 255
Piper Jaffray Cos. 15.125 16.000 9.375 NYSE 0.30 2.0 29 17.408 263
Raymond James Financial 20.000 20.250 13.125 NYSE 0.36 1.8 22 19.264 385
Rodman & Renshaw Capital 4.000 6.000 3.375 NYSE 0.00 0.0 0 6.646 27
Scott & Stringfellow 12.250 13.750 11.000 NSDQ 0.40 3.3 42 2.112 26
Stifel Financial 6.875 7.619 5.238 NYSE 0.12 1.7 -13 4.211 29
- ---------------------------------------------------------------------------------------------------------------
First of Michigan Capital 10.000 14.375 9.125 OTC 0.00 0.0 0 2.811 28
- ---------------------------------------------------------------------------------------------------------------
S & P 500 554.780
Dow Jones
Industrial Avg 4680.600
</TABLE>
*Equity value plus debt, preferred stock, and minority interest, less cash and
equivalents.
Sources: Standard & Poor's Compustat Services, Inc., Value Line, Inc., and
I/B/E/S.
- --------------------------------------------------------------------------------
Duff & Phelps Capital Markets Co. A-3
<PAGE>
First of Michigan Capital Corporation
- -------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Analysis of Publicly Traded Comparable Companies
Operating Performance
($ in millions except per share data)
July 11, 1995
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
Earnings Per Share(a)
------------------------------ Book Tangible Latest Projected
Latest Projected 3-Year Value Book Value 12 Months' LTM EPS for
12 Months Fiscal Year Average Per Share Per Share(c) Revenues Ended Year Ending
--------- ----------- ------- ------------ ------------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First Albany Cos. $0.65 NA $1.16 $ 8.04 $ 8.04 $107 Mar95 NA
Inter-Regional Financial 2.50 $3.40 4.07 24.68 24.68 499 Mar95 Dec96
Interstate/Johnson Lane 0.76 1.00 1.19 11.09 8.87 164 Mar95 Sep95 (b)
Legg Mason 1.24 1.80 2.17 18.28 16.47 372 Mar95 Mar96
McDonald & Co. 1.47 1.50 1.80 12.12 12.12 178 Mar95 Mar96
Morgan Keegan 1.21 1.37 1.38 6.50 6.50 219 Apr95 Jul96
Piper Jaffray Cos. 1.04 NA 1.96 7.96 7.96 379 Mar95 NA
Raymond James Financial 1.65 2.20 2.04 12.48 12.48 484 Mar95 Sep95 (b)
Rodman & Renshaw Capital -4.68 NA -0.34 3.64 3.64 69 Mar95 NA
Scott & Stringfellow 0.96 NA 1.53 11.81 11.81 52 Mar95 NA
Stifel Financial -0.96 NA 0.57 8.29 7.28 90 Jan95 NA
- --------------------------------------------------------------------------------------------------------------------------
First of Michigan Capital 0.34 NA 1.55 10.73 10.73 58 Mar95 NA
- --------------------------------------------------------------------------------------------------------------------------
S & P 500 32.60 36.00
Dow Jones Industrial Avg 287.60 322.50
</TABLE>
(a) Adjusted for special items.
(b) The September 1996 EPS estimate is not available for Interstate/
Johnson and Raymond James Financial.
(c) Tangible book value is shareholders' equity less intangible assets.
Sources: Standard & Poor's Compustat Services, Inc., Value Line, Inc., and
I/B/E/S.
- -------------------------------------------------------------------------------
Duff & Phelps Capital Markets Co. A-4
<PAGE>
First of Michigan Capital Corporation
- ------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Analysis of Publicly Traded Comparable Companies
Valuation Multiples
July 11, 1995
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Price as a Multiple of:
-------------------------------------------------------------------------
Earnings Per Share (a)
--------------------------------------------------
LTM Tangible
Latest Projected 3-Year Relative to Book Book
12 Months Fiscal Year Average S&P 500(%) Value Value
--------- ---------- ------- ----------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
First Albany Cos. 12.7x NA 7.1x 74.6 1.0x 1.0x
Inter-Regional Financial 12.4 9.1x 7.6 72.6 1.3 1.3
Interstate/Johnson Lane 13.7 10.4 8.7 80.2 0.9 1.2
Legg Mason 22.2 15.3 12.7 130.3 1.5 1.7
McDonald & Co. 11.0 10.8 9.0 64.5 1.3 1.3
Morgan Keegan 10.2 9.0 8.9 59.9 1.9 1.9
Piper Jaffray Cos. 14.6 NA 7.7 85.8 1.9 1.9
Raymond James Financial 12.1 9.1 9.8 71.2 1.6 1.6
Rodman & Renshaw Capital NM NA NM NM 1.1 1.1
Scott & Stringfellow 12.7 NA 8.0 74.9 1.0 1.0
Stifel Financial NM NA 12.1 NM 0.8 0.9
Range - High 22.2 15.3 12.7 130.3 1.9 1.9
Low 10.2 9.0 7.1 59.9 0.8 0.9
Mean 13.5 10.6 9.2 79.3 1.3 1.4
Median 12.7 9.7 8.8 74.6 1.3 1.3
- ------------------------------------------------------------------------------------------------------------
First of Michigan Capital 29.9 NA 6.5 175.4 0.9 0.9
- ------------------------------------------------------------------------------------------------------------
S & P 500 17.0 15.4
Dow Jones Industrial Avg 16.3 14.5
</TABLE>
(a) Adjusted for special items.
Sources: Standard & Poor's Compustat Services, Inc., Value Line, Inc., and
I/B/E/S.
- -------------------------------------------------------------------------------
Duff & Phelps Capital Markets Co. A-5
<PAGE>
First of Michigan Capital Corporation
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Projected Financial Results
Fiscal Years Ending September 30, 1995 - 1998
(In $000s Except Per Share)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
VALUATION ASSUMPTIONS 1992 1993 1994 1995 1996 1997 1998
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING
- ----------------------------------------------------------------------------------------------------
Branch System -8.3% 14.0% 26.3% 27.5%
Fully Disclosed Brokers -24.5% 0.0% 15.0% 15.0%
Investment Banking -7.9% 26.8% 17.8% 24.5%
Interest 21.5% -0.2% 6.0% 7.4%
Insurance Comm. & Other -8.5% 0.0% 9.0% 13.8%
Cranbrook Capital NM 22.2% 43.9% 26.3%
-------- -------- -------- -------- -------- -------- --------
Total revenue growth 5.3% -2.9% -5.7% 11.4% 22.3% 24.1%
RR Costs/Branch system revenues 39.6% 36.8% 37.4% 38.5% 43.7%
Other comp. & benefits growth 12.6% 9.7% 8.6% 7.6%
-------- -------- -------- -------- -------- -------- --------
Compensation & Benefits/Revenues 53.0% 51.8% 49.1% 50.8% 51.4% 50.1% 51.6%
growth rate 2.9% -7.9% -2.6% 12.7% 19.4% 27.7%
Other expenses/revenues 34.9% 34.3% 42.9% 43.5% 40.3% 36.7% 33.1%
growth rate 3.4% 21.7% -4.5% 3.2% 11.4% 11.9%
-------- -------- -------- -------- -------- -------- --------
Total operating exp./revenues 87.9% 86.1% 92.1% 94.3% 91.7% 86.9% 84.7%
Implied Operating Margin 12.1% 13.9% 7.9% 5.7% 8.3% 13.1% 15.3%
Tax rate 35.1% 34.9% 29.0% 40.0% 40.0% 40.0% 40.0%
Implied Net Income Margin 7.9% 5.4% 1.7% 1.0% 2.9% 5.6% 6.6%
Adjusted Net Income Margin 0.0% 0.0% 0.0% 3.2% 4.1% 6.0% 7.0%
FIXED CAPITAL INVESTMENT
- ----------------------------------------------------------------------------------------------------
Capital Expenditures 449 258 514 540 567 596 625
-- growth rate 5.0% 5.0% 5.0% 5.0%
Depreciation 351 331 315 486 510 536 563
-- Depr./CapX 78.1% 128.3% 61.2% 90.0% 90.0% 90.0% 90.0%
</TABLE>
- --------------------------------------------------------------------------------
Duff & Phelps Capital Markets Co. Management Case B-1
<PAGE>
First of Michigan Capital Corporation
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Projected Financial Results
Fiscal Years Ending September 30, 1995 - 1998
(In $000s Except Per Share)
<TABLE>
<CAPTION>
INCOME STATEMENT 1992 1993 1994 1995 1996 1997 1998
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues
Branch System 42,052 38,570 43,970 55,540 70,810
Fully Disclosed Brokers 5,300 4,000 4,000 4,600 5,290
Investment Banking 3,856 3,550 4,500 5,300 6,600
Interest 4,525 5,500 5,490 5,820 6,250
Insurance Comm. & Other 5,463 5,000 5,000 5,450 6,200
Cranbrook Capital 0 1,080 1,320 1,900 2,400
------ ------ ------ ------ ------ ------ ------
Total Revenue 59,879 63,030 61,196 57,700 64,280 78,610 97,550
Operating Expenses
RR Costs 16,650 14,180 16,430 21,410 30,960
Other compensation & benefits 13,422 15,110 16,580 18,010 19,370
------ ------ ------ ------ ------ ------ ------
Total Compensation & Benefits 31,746 32,668 30,072 29,290 33,010 39,420 50,330
Other Expenses 20,878 21,596 26,272 25,100 25,910 28,860 32,300
------ ------ ------ ------ ------ ------ ------
Total operating expenses 52,624 54,263 56,343 54,390 58,920 68,280 82,630
------ ------ ------ ------ ------ ------ ------
Operating income 7,255 8,766 4,853 3,310 5,360 10,330 14,920
Other Expense (Income)
Merger/Legal 0 3,546 3,386 2,050 1,280 600 650
Bonuses 252 1,020 2,433 3,568
------ ------ ------ ------ ------ ------ ------
Pretax income 7,255 5,220 1,467 1,008 3,060 7,298 10,703
Income tax provision 2,550 1,820 425 403 1,224 2,919 4,281
------ ------ ------ ------ ------ ------ ------
Net Income 4,705 3,400 1,042 605 1,836 4,379 6,422
====== ====== ====== ====== ====== ====== ======
Earnings per share based on
2,811,000 shares outstanding $0.22 $0.65 $1.56 $2.28
===== ===== ===== =====
</TABLE>
- --------------------------------------------------------------------------------
Duff & Phelps Capital Markets Co. Management Case B-2
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Projected Financial Results
Fiscal Years Ending September 30, 1995 - 1998
(In $000s Except Per Share)
<TABLE>
<CAPTION>
CASH FLOW 1992 1993 1994 1995 1996 1997 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sources:
EBIT 7,255 5,220 1,467 1,008 3,060 7,298 10,703
Less: Cash Taxes 2,550 1,820 425 403 1,224 2,919 4,281
------ ------ ------ ------ ------ ------ ------
Net Operating Profit After Tax 4,705 3,400 1,042 605 1,836 4,379 6,422
Depreciation 351 331 315 486 510 536 563
Amortization of employee retention agreements 1,309 747 0 0
------ ------ ------ ------ ------ ------ ------
Total Sources of Cash 5,056 3,731 1,357 2,400 3,094 4,914 6,984
Uses:
Incremental Working Capital 0 0 0 0 0 0 0
Fixed Capital Investment 449 258 514 540 567 596 625
------ ------ ------ ------ ------ ------ ------
Total Uses 449 258 514 540 567 596 625
------ ------ ------ ------ ------ ------ ------
Free Cash Flow 4,607 3,473 843 1,860 2,526 4,319 6,359
====== ====== ====== ====== ====== ====== ======
</TABLE>
Discounted Cash Flow Analysis
- -------------------------------------------------------
Long-term Weighted Average Cost of Capital 21.0%
- -------------------------------------------------------
Continuing Value in 1998 38,902
Present Value of Continuing Value 23,031
Present Value of FYE 1995 - 1998 Cash Flows 9,978
- -------------------------------------------------------
Total Enterprise Value 33,009
- -------------------------------------------------------
Less: Market Value of Debt 0
Add: Cash surrender value of Life Insurance 6,921
- -------------------------------------------------------
Total Equity Value 39,930
- -------------------------------------------------------
- -------------------------------------------------------
Value per share based on 2,811,000 shares $14.20
- -------------------------------------------------------
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. Management Case B-3
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Projected Financial Results
Fiscal Years Ending September 30, 1995 - 2000
(In $000s Except Per Share)
<TABLE>
<CAPTION>
VALUATION ASSUMPTIONS 1992 1993 1994 1995 1996 1997 1998 1999 2000
- -----------------------------------------------------------------------------------------------------------------------
OPERATING
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Branch System -8.3% 14.0% 15.0% 12.0% 8.0% 5.0%
Fully Disclosed Brokers -24.5% 0.0% 15.0% 15.0% 8.0% 5.0%
Investment Banking -7.9% 26.8% 17.8% 24.5% 8.0% 5.0%
Interest 21.5% -0.2% 6.0% 7.4% 8.0% 5.0%
Insurance Comm. & Other -8.5% 0.0% 9.0% 13.8% 8.0% 5.0%
Cranbrook Capital NM 22.2% 43.9% 26.3% 20.0% 15.0%
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Total revenue growth 5.3% -2.9% -5.7% 11.4% 14.6% 13.2% 8.3% 5.3%
RR Costs / Branch system revenues 36.8% 37.4% 38.5% 43.7% 43.7% 43.7%
Other comp. & benefits growth 12.6% 9.7% 8.6% 3.0% 3.0% 2.0%
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Compensation & Benefits / Revenues 53.0% 51.8% 49.1% 50.8% 51.4% 50.9% 51.9% 50.8% 50.0%
growth rate 2.9% -7.9% -2.6% 12.7% 13.6% 15.5% 5.9% 3.7%
Other expenses / revenues 34.9% 34.3% 42.9% 43.5% 40.3% 37.6% 35.4% 34.6% 34.7%
growth rate 3.4% 21.7% -4.5% 3.2% 7.0% 6.5% 6.0% 5.5%
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Total operating exp. / revenues 87.9% 86.1% 92.1% 94.3% 91.7% 88.6% 87.4% 85.4% 84.7%
Implied Operating Margin 12.1% 13.9% 7.9% 5.7% 8.3% 11.4% 12.6% 14.6% 15.3%
Tax rate 35.1% 34.9% 29.0% 40.0% 40.0% 40.0% 40.0% 40.0% 40.0%
Implied Net Income Margin 7.9% 5.4% 1.7% 1.0% 2.9% 4.8% 5.7% 6.6% 6.9%
Adjusted Net Income Margin 0.0% 0.0% 0.0% 3.2% 4.1% 5.3% 5.7% 6.6% 6.9%
FIXED CAPITAL INVESTMENT
- -----------------------------------------------------------------------------------------------------------------------
Capital Expenditures 449 258 514 540 567 596 625 657 689
-- growth rate 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%
Depreciation 351 331 315 486 510 536 563 591 620
-- Depr. / CapX 78.1% 128.3% 61.2% 90.0% 90.0% 90.0% 90.0% 90.0% 90.0%
</TABLE>
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. DPCM Base Case B-4
<PAGE>
First of Michigan Capital Corporation
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Projected Financial Results
Fiscal Years Ending September 30, 1995 - 2000
(In $000s Except Per Share)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
INCOME STATEMENT 1992 1993 1994 1995 1996 1997 1998 1999 2000
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Branch System 42,052 38,570 43,970 50,566 56,633 61,164 64,222
Fully Disclosed Brokers 5,300 4,000 4,000 4,600 5,290 5,713 5,999
Investment Banking 3,856 3,550 4,500 5,300 6,600 7,128 7,484
Interest 4,525 5,500 5,490 5,820 6,250 6,750 7,088
Insurance Comm. & Other 5,463 5,000 5,000 5,450 6,200 6,696 7,031
Cranbrook Capital 0 1,080 1,320 1,900 2,400 2,880 3,312
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Revenue 59,879 63,030 61,196 57,700 64,280 73,636 83,373 90,331 95,136
Operating Expenses
RR Costs 16,650 14,180 16,430 19,492 24,762 26,743 28,080
Other compensation & benefits 13,422 15,110 16,580 18,010 18,550 19,107 19,489
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Compensation & Benefits 31,746 32,668 30,072 29,290 33,010 37,502 43,312 45,849 47,569
Other Expenses 20,878 21,596 26,272 25,100 25,910 27,724 29,526 31,297 33,019
------ ------ ------ ------ ------ ------ ------ ------ ------
Total operating expenses 52,624 54,263 56,343 54,390 58,920 65,226 72,838 77,147 80,587
------ ------ ------ ------ ------ ------ ------ ------ ------
Operating income 7,255 8,766 4,853 3,310 5,360 8,409 10,536 13,185 14,549
Other Expense (Income)
Merger / Legal 0 3,546 3,386 2,050 1,280 600 0 0 0
Bonuses 252 1,020 1,952 2,634 3,296 3,637
------ ------ ------ ------ ------ ------ ------ ------ ------
Pretax income 7,255 5,220 1,467 1,008 3,060 5,857 7,902 9,888 10,911
Income tax provision 2,550 1,820 425 403 1,224 2,343 3,161 3,955 4,365
------ ------ ------ ------ ------ ------ ------ ------ ------
Net Income 4,705 3,400 1,042 605 1,836 3,514 4,741 5,933 6,547
====== ====== ====== ====== ====== ====== ====== ====== ======
Earnings per share based on 2,811,000 shares outstanding $0.22 $0.65 $1.25 $1.69 $2.11 $2.33
====== ====== ====== ====== ====== ======
</TABLE>
- --------------------------------------------------------------------------------
Duff & Phelps Capital Markets DPCM Base Case B-5
<PAGE>
First of Michigan Capital Corporation
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Projected Financial Results
Fiscal Years Ending September 30, 1995 - 2000
(In $000s Except Per Share)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
CASH FLOW 1992 1993 1994 1995 1996 1997 1998 1999 2000
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sources:
EBIT 7,255 5,220 1,467 1,008 3,060 5,857 7,902 9,888 10,911
Less: Cash Taxes 2,550 1,820 425 403 1,224 2,343 3,161 3,955 4,365
----- ----- ----- ----- ----- ----- ----- ----- ------
Net Operating Profit After Tax 4,705 3,400 1,042 605 1,836 3,514 4,741 5,933 6,547
Depreciation 351 331 315 486 510 536 563 591 620
Amortization of employee retention agreements 1,309 747 0 0 0 0
----- ----- ----- ----- ----- ----- ----- ----- ------
Total Sources of Cash 5,056 3,731 1,357 2,400 3,094 4,050 5,304 6,524 7,167
Uses:
Incremental Working Capital 0 0 0 0 0 0 0 0 0
Fixed Capital Investment 449 258 514 540 567 596 625 657 689
----- ----- ----- ----- ----- ----- ----- ----- ------
Total Uses 449 258 514 540 567 596 625 657 689
----- ----- ----- ----- ----- ----- ----- ----- ------
Free Cash Flow 4,607 3,473 843 1,860 2,526 3,455 4,679 5,867 6,478
===== ===== ===== ===== ===== ===== ===== ===== ======
</TABLE>
Discounted Cash Flow Analysis
- -------------------------------------------------------
Long-term Weighted Average Cost of Capital 19.5%
- -------------------------------------------------------
Continuing Value in 2000 43,465
Present Value of Continuing Value 18,648
Present Value of FYE 1995 - 2000 Cash Flows 14,324
- -------------------------------------------------------
Total Enterprise Value 32,972
- -------------------------------------------------------
Less: Market Value of Debt 0
Add: Cash surrender value of Life Insurance 6,921
- -------------------------------------------------------
Total Equity Value 39,893
- -------------------------------------------------------
- -------------------------------------------------------
Value per share based on 2,811,000 shares $14.20
- -------------------------------------------------------
- --------------------------------------------------------------------------------
Duff & Phelps Capital Markets Co. DPCM Base Case B-6
<PAGE>
First of Michigan Capital Corporation
- -------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Control Transactions for Broker/Dealers
From 1/1/93 to 6/1/95
S.I.C. Code 6211
<TABLE>
<CAPTION>
Date Date
Announced Effective Target Name Target Business Description Acquiror Name Acquiror Business Description
--------- --------- ----------- ----------------------------- ------------- -----------------------------
<S> <C> <C> <C> <C> <C>
1 1/28/92 10/23/92 Carolina Financial Securities brokerage firm SouthTrust Corp Bank holding company
Corp
2 5/21/93 8/11/93 Discount Corp Securities brokerage firm; Zions First National Commercial bank
of New York holding company Bank, Salt Lake City,
Utah (Zions Bancorp)
3 11/1/93 12/21/93 Rodman & Renshaw Security brokerage firm; Abaco Casa de Bolsa SA Securities brokerage firm
Capital Group Inc holding company de CV (Abaco Grupo
Financiero)
4 12/6/93 8/24/94 Dreyfus Corp Security brokers and dealers; Mellon Bank Corp, Bank holding company; provide
provide investment advisory Pittsburgh, PA persona and business credit,
and mutual fund management mortgage banking, and
services; life insurance investment management services
company; state bank
5 12/12/94 3/29/95 Concord Holding Securities brokerage firm BISYS Group Inc Provide data processing
Corp services for the banking
industry
6 4/10/95 Kemper Corp Securities brokerage firm; Investor Group Investor group
provide investment advisory,
mutual fund management, life
insurance and reinsurance,
automobile insurance, workers
compensation insurance and
fire, marine, casualty and
property insurance services;
holding company
7 6/1/95 CF Bancorp Inc Investment bankers First Midwest Bank holding company
Bancorp Inc
</TABLE>
<TABLE>
<CAPTION>
------------------------ ---------------------------------------------------------
Value Offering Enterprise
of Enterprise Price Value/ Price/ Price/
Deal(a) Value(b) Earnings Target LTM Book
($mil) ($mil) Ratio Cash Flow Revenues Value
------ ------ ----- --------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
$ 21 $ 32 13.5x 6.3x 1.3x 1.4x
65 NM NM NM 2.8x 0.9x
27 24 175.0x 14.9x 0.3x 0.8x
1,848 1,218 19.1x 7.5x 4.9x 2.2x
122 95 3.9x 19.3x 3.8x 3.2x
1,667 2,549 13.9x 8.0x 1.0x 1.2x
32 130 14.2x 29.0x 1.8x 1.4x
------------------------ ---------------------------------------------------------
---------------------------------------------------------
MEAN 39.9x 14.2x 2.3x 1.6x
MEDIAN 14.1x 11.5x 1.8x 1.4x
---------------------------------------------------------
</TABLE>
(a) Value of the deal is defined as all consideration paid before fees.
(b) Enterprise value is the market value of the common stock plus book
value of total debt, preferred stock, deferred taxes and minority
interest less cash.
Source: Securities Data Corporation and 10Q's.
- -------------------------------------------------------------------------------
Duff & Phelps Capital Markets Co. C-1
<PAGE>
First of Michigan Capital Corporation
- --------------------------------------------------------------------------------
FIRST OF MICHIGAN CAPITAL CORPORATION
Control Transactions for Broker/Dealers
From 1/1/93 to 6/1/95
S.I.C. Code 6211
<TABLE>
<CAPTION>
---------------------------------------------------------------
Adj.
Tangible Price to
Book Book Primary Excess Primary Price to
Date Date Value Value Capital (a) Capital (b) Capital Tangible
Announced Effective Target Name ($mil) ($mil) ($mil) ($mil) (c) Book
- --------- --------- ----------- ------ -------- -------- ----------- -------- --------
<C> <C> <S> <C> <C> <C> <C> <C> <C>
1 1/28/92 10/23/92 Carolina Financial Corp 15.3 15.3 NM NM NM 1.4x
2 5/21/93 8/11/93 Discount Corp of New York 70.4 70.4 NM NM NM 0.9x
3 11/1/93 12/21/93 Rodman & Renshaw Capital
Group, Inc. 33.8 33.8 4.8 12.7 4.7x 0.8x
4 12/6/93 8/24/94 Dreyfus Corp 849.3 849.3 NM NM NM 2.2x
5 12/12/94 3/29/95 Concord Holding Corp 37.7 36.1 0.4 5.5 302.8x 3.4x
6 4/10/95 Kemper Corp 1423.4 1423.4 NA NA NM 1.2x
7 6/1/95 CF Bancorp Inc 22.8 22.8 NM NM NM 1.4x
-----------------------------------------------------------------
-----------------------------------------------------------------
MEAN 350.4 350.1 2.6 9.1 153.7x 1.6x
MEDIAN 37.7 36.1 2.6 9.1 153.7x 1.4x
-----------------------------------------------------------------
</TABLE>
(a) Primary capital is the minimum net capital requirement defined as 2% of
aggregate debit balances arising from customer transactions.
(b) Excess capital is net capital over the primary capital requirement.
(c) Adjusted price is the value of the deal less the excess net capital over the
primary capital requirement.
Source: Securities Data Corporation and 10Q's.
- --------------------------------------------------------------------------------
Duff & Phelps Capital Markets Co. C-2
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
CAROLINA FINANCIAL CORP.
The image depicted is one of a line graph showing the variations in the
price of Carolina Financial Corp stock. The vertical axis represents the price
of the stock and ranges from 4 at the intersection with the horizontal axis to
24 in increments of 2. The horizontal index represents time, starting at
November 1, 1991 at the intersection with the vertical axis to October 16, 1992.
The line starts at approximately 10 on the vertical axis and goes across the
page with irregular vertical movement (both up and down), and ends at points
equal to approximately 22 1/2.
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. C-3
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
DISCOUNT CORP. OF NY
The image depicted is one of a line graph showing the variations in the
price of Discount Corp of New York stock. The vertical axis represents the
price of the stock and ranges from 0 at the intersection with the horizontal
axis to 11 in increments of 1. The horizontal index represents time, starting
at November 20,1992 at the intersection with the vertical axis to August 13,
1993. The line starts at approximately 9 1/3 on the vertical axis and goes
across the page with irregular vertical movement (both up and down), and ends at
points equal to approximately 7 3/4.
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. C-4
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
RODMAN & RENSHAW
The image depicted is one of a line graph showing the variations in the
price of Rodman and Renshaw stock. The vertical axis represents the price of
the stock and ranges from 0 at the intersection with the horizontal axis to 10
in increments of 1. The horizontal index represents time, starting at October
30,1992 at the intersection with the vertical axis to December 24, 1993. The
line starts at approximately 4 3/4 on the vertical axis and goes across the page
with irregular vertical movement (both up and down), and ends at points equal to
approximately 7 2/3.
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. C-5
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
DREYFUS CORP.
The image depicted is one of a line graph showing the variations in the
price of Dreyfus Corp. stock. The vertical axis represents the price of the
stock and ranges from 30 at the intersection with the horizontal axis to 56 in
increments of 2. The horizontal index represents time, starting at June 4,1993
at the intersection with the vertical axis to August 19, 1994. The line starts
at approximately 39 on the vertical axis and goes across the page with irregular
vertical movement (both up and down), and ends at points equal to approximately
51.
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. C-6
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
CONCORD HOLDINGS
The image depicted is one of a line graph showing the variations in the
price of Concord Holdings stock. The vertical axis represents the price of the
stock and ranges from 0 at the intersection with the horizontal axis to 17 in
increments of 1. The horizontal index represents time, starting at April 1,
1994 at the intersection with the vertical axis to March 31, 1995. The line
starts at approximately 13 on the vertical axis and goes across the page with
irregular vertical movement (both up and down), and ends at points equal to
approximately 16 1/2.
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. C-7
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
KEMPER
The image depicted is one of a line graph showing the variations in the
price of Kemper Financial stock. The vertical axis represents the price of the
stock and ranges from 30 at the intersection with the horizontal axis to 58 in
increments of 2. The horizontal index represents time, starting at October
14,1994 at the intersection with the vertical axis to June 9, 1995. The line
starts at approximately 58 on the vertical axis and goes across the page with
irregular vertical movement (both up and down), and ends at points equal to
approximately 47.
- --------------------------------------------------------------------------------
DUFF & PHELPS CAPITAL MARKETS CO. C-8
<PAGE>
FIRST OF MICHIGAN CAPITAL CORPORATION
- --------------------------------------------------------------------------------
DUFF & PHELPS CORPORATION
DUFF & PHELPS CORPORATION is a NYSE traded company with two principal operating
subsidiaries: Duff & Phelps Investment Management, which manages over $17
billion in discretionary assets, and Duff & Phelps Capital Markets Co., which
provides investment research and investment banking services.
DUFF & PHELPS CAPITAL MARKETS (DPCM) is an investment banking firm focused on
serving the investment needs of institutional investors and the capital raising
and financial advisory needs of midsized companies.
DPCM consists of five principal operating units:
. DUFF & PHELPS CORPORATE ADVISORS provides capital raising and financial
advisory services to public and private companies, including private
placements of debt and equity securities, merger and acquisition advisory
services, valuation opinions, fairness opinions, solvency opinions and
other strategic financial consulting services.
. DUFF & PHELPS EQUITY RESEARCH, with a staff of 35 industry specialists,
provides investment recommendations and research on over 400 publicly
traded equity securities.
. DUFF & PHELPS FIXED INCOME RESEARCH, with a staff of 24 analysts, provides
investment recommendations and research on 300 high-yield and midgrade
fixed income securities.
. DUFF & PHELPS SECURITIES provides institutional brokerage, trading and
underwriting services based on our research ideas.
. DUFF & PHELPS CORPORATE FINANCE provides public debt and equity
underwriting services for middle-market companies.
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DUFF & PHELPS CAPITAL MARKETS CO. D-1
