As filed with the Securities and Exchange Commission on November 10, 1997
Registration No. ________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BANKUNITED FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
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FLORIDA 6035 65-0377773
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(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
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255 Alhambra Circle
Coral Gables, Florida 33134
(305) 569-2000
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(Address, including ZIP Code, and telephone number,
including area code, of registrant's principal executive offices)
Alfred R. Camner
Chairman of the Board
BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
(305) 569-2000
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(Name, address, including ZIP Code, and telephone number,
including area code, of agent for service)
Copies to:
Marsha D. Bilzin, Esq. Alan Schick, Esq.
Stuzin and Camner, Luse Lehman Gorman Pomerenk & Schick, P.C.
Professional Association 5335 Wisconsin Avenue, N.W.
550 Biltmore Way, Suite 700 Washington, D.C. 20015
Coral Gables, Florida 33134 (202) 274-2000
(305) 442-4994
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of the Registration Statement
and all other conditions precedent to the merger of Consumers Bancorp, Inc.
("Consumers") into the Registrant have been satisfied or waived as described in
the enclosed Prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering [ ].
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering [ ].
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [ ].
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
OF SECURITIES TO BE REGISTERED REGISTERED (1) PER UNIT OFFERING PRICE FEE
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Class A Common Stock, $.01 par value ....... 1,110,782 $ (2) $ (3) $2,321.10
shares
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(1) This Registration Statement covers the maximum number of the Registrant's
securities that would be issued in the transaction described herein.
(2) Not applicable.
(3) Computed pursuant to Rule 457(f)(2), based upon the book value ($14.35) of
the securities to be cancelled in the merger (533,773 shares of common
stock, par value $.01 per share, of Consumers) as of September 30, 1997.
</FN>
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this 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.
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<PAGE>
PROSPECTUS
BANKUNITED FINANCIAL CORPORATION
CLASS A COMMON STOCK
BankUnited Financial Corporation ("BankUnited") is hereby offering (the
"Offering") in a merger (the "Merger") with Consumers Bancorp, Inc.
("Consumers"), up to 2.081 shares of BankUnited's Class A Common Stock, subject
to adjustment, for each share of Consumers Common Stock. BankUnited is the
holding company for BankUnited, FSB, Coral Gables, Florida (the "Bank").
This Prospectus relates to up to 1,110,782 shares of BankUnited's Class
A Common Stock which may be issued in connection with the Merger. Upon
consummation of the Merger, each share of the Consumers Common Stock will be
converted into the right to receive, at the holder's option, either $21.33 in
cash, 2.081 shares of BankUnited's Class A Common Stock or a combination
thereof, although no more than 55% of the total merger consideration may be paid
in cash. The merger consideration is subject to adjustment under certain
circumstances. For example, the agreed value of 2.081 shares is subject to
change based upon the fair market value of the BankUnited Common Stock prior to
the effective time of the Merger, and may be reduced should that fair market
value exceed $12.00 per share, which has been the case for ____ of the last ___
trading days. See "The Merger--Conversion of Consumers Capital Stock."
The reported last sale price of BankUnited's Class A Common Stock, as
quoted on Nasdaq, on September 18, 1997 (the last trading day prior to the
public announcement of the Merger) was $12.75, and on October 31, 1997 the
closing bid and asked prices of the Class A Common Stock, were $13.00 and
$13.125, respectively, and the reported last sale price was $13.125. If the fair
market value of the BankUnited Common Stock was $13.125 at the time of
consummation of the Merger, each share of Consumers Common Stock would be
converted into the right to receive 1.9 shares of BankUnited Common Stock,
rather than 2.081 shares.
Each share of BankUnited's Common Stock is entitled to one-tenth vote on
all matters upon which shareholders have the right to vote, in contrast to the
one vote per share to which BankUnited's Class B Common Stock is entitled and
the two and one-half votes per share to which BankUnited's Series B Preferred
Stock is entitled. At October 31, 1997 holders of BankUnited's Class A Common
Stock (assuming exercise of all outstanding options and warrants to acquire
Class A Common Stock) were entitled to cast 1,445,581 votes of a total of
3,467,614 votes entitled to vote at any meeting of shareholders of BankUnited.
See "Description of Capital Stock--Class A Common Stock." In addition, the
holders of BankUnited's Class A Common Stock are entitled to dividends as
declared by BankUnited's Board, which may be declared solely on BankUnited's
Class A Common Stock or for not less than 110% of the amount per share of any
dividend declared on BankUnited's Class B Common Stock. BankUnited has not paid
dividends on its common stock since 1994. BankUnited does not currently expect
to pay any dividends on its common stock for the foreseeable future. Information
as to dividends paid on BankUnited's Class A Common Stock and BankUnited's Class
B Common Stock is set forth in "Summary--Comparative Stock Prices and
Dividends."
BankUnited has filed a Registration Statement (the "Registration
Statement") on Form S-4 under the Securities Act of 1933, as amended (the
"Securities Act"), with the Securities and Exchange Commission (the
"Commission") covering a maximum of 1,110,782 shares of BankUnited's Class A
Common Stock which may be issued in connection with the Merger. This Prospectus
does not cover any resales of BankUnited's Class A Common Stock to be received
by shareholders of Consumers upon consummation of the Merger, and no person is
authorized to make use of this Prospectus in connection with any such resale.
THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THIS PROSPECTUS. THE
PROPOSED MERGER IS A COMPLEX TRANSACTION. SHAREHOLDERS ARE STRONGLY URGED
TO READ AND CONSIDER CAREFULLY THIS PROSPECTUS IN ITS ENTIRETY.
THE SHARES OF BANKUNITED CLASS A COMMON STOCK OFFERED HEREBY ARE NOT
DEPOSITS OR SAVINGS ACCOUNTS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER
FEDERAL OR STATE GOVERNMENTAL AGENCY.
SEE "RISK FACTORS," BEGINNING ON PAGE 19 OF THIS PROSPECTUS, FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY EACH PROSPECTIVE
INVESTOR.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
All information contained in this Prospectus with respect to BankUnited
has been supplied by BankUnited and all information with respect to Consumers
has been supplied by Consumers.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE HEREIN
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY BANKUNITED OR CONSUMERS. THIS DOCUMENT DOES
NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE 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. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY DISTRIBUTION OF SHARES OF BANKUNITED'S CLASS A COMMON STOCK
HEREUNDER WILL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS NOT
BEEN ANY CHANGE IN THE AFFAIRS OF BANKUNITED OR CONSUMERS SINCE THE DATE HEREOF.
The date of this Prospectus is November __, 1997.
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AVAILABLE INFORMATION
BankUnited is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048 and Suite
1400, Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material can also be obtained at prescribed rates by
writing to the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Such material may also be accessed electronically
by means of the Commission's home page on the Internet at http://www.sec.gov. In
addition, equity securities of BankUnited are traded on Nasdaq and reports,
proxy statements and other information concerning BankUnited are available for
inspection and copying at the offices of the Nasdaq Stock Market Inc., 1735 K
Street, N.W., Washington, D.C. 20006. Reports, proxy statements and other
information filed by Suncoast Savings and Loan Association, FSA ("Suncoast")
pursuant to the informational requirements of the Exchange Act, prior to the
acquisition of Suncoast by BankUnited, can be inspected and copied at the public
reference facilities maintained by the OTS at 1700 G Street, N.W., Washington,
D.C. 20552 or at the OTS Southeast Regional Office, 1475 Peachtree Street, N.E.,
Atlanta, Georgia 30309.
BankUnited has filed with the Commission a Registration Statement on
Form S-4 (together with all amendments thereto, the "Registration Statement"),
of which this Prospectus is a part, under the Securities Act of 1933, as amended
(the "Securities Act") This Prospectus does not contain all of the information
set forth in the Registration Statement, certain portions of which have been
omitted as permitted by the rules and regulations of the Commission. In
addition, certain documents filed by BankUnited with the Commission have been
incorporated in this Prospectus by reference. See "Incorporation of Certain
Documents by Reference." For further information with respect to BankUnited,
reference is made to the Registration Statement, including the exhibits thereto
and the documents incorporated herein by reference. Any statements contained
herein concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission or incorporated by
reference herein are not necessarily complete, and, in each instance, reference
is made to the copy of such document so filed for a more complete description of
the matter involved. Each such statement is qualified in its entirety by such
reference; provided that such statements, even though summaries, contain all
material information with respect to such documents. The Registration Statement
may be inspected without charge at the principal office of the Commission in
Washington, D.C, and copies of all or part of it may be obtained from the
Commission upon payment of the prescribed fees.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following BankUnited documents are incorporated by reference herein
(Commission File No. 5-43936):
(1) BankUnited's Annual Report on Form 10-K/A for the year ended
September 30, 1996 filed with the Commission on December 23, 1996.
(2) BankUnited's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1996, March 31, 1997 and June 30, 1997 filed with the Commission on
February 14, 1997, May 15, 1997 and August 12, 1997, respectively.
(3) BankUnited's Current Reports on Form 8-K dated November 15, 1996,
December 30, 1996, February 25, 1997, March 24, 1997, April 2, 1997, September
12, 1997, September 23, 1997 and October 10, 1997 filed with the Commission on
December 2, 1996, January 9, 1997, February 25, 1997, March 26, 1997, April 4,
1997, September 15, 1997, September 25, 1997 and October 29, 1997, respectively.
(4) The description of the Class A Common Stock contained in
BankUnited's Current Report on Form 8-K dated March 5, 1993, filed with the
Commission to register BankUnited's Class A Common stock under Section 12(g) of
the Securities Exchange Act of 1934, as amended.
The following documents of Suncoast Savings and Loan Association, FSA
("Suncoast"), which BankUnited acquired on November 15, 1996, are incorporated
by reference herein (OTS File No. 8147):
Suncoast's Annual Report on Form 10-K for the year ended June 30, 1996
filed with the OTS on September 27, 1996, is also incorporated by reference
herein.
Suncoast's Quarterly Report on Form 10-Q for the quarter ended September
30, 1996 filed with the OTS on November 13, 1996, is also incorporated by
reference herein.
Any statement contained in this Prospectus or in a document incorporated
or deemed to be incorporated by reference herein will be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
All documents subsequently filed by the Registrant pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the
Offering, shall be deemed to be incorporated by reference into this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS, OTHER THAN
EXHIBITS THERETO, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS DELIVERED UPON WRITTEN OR ORAL
REQUEST TO BANKUNITED FINANCIAL CORPORATION, 255 ALHAMBRA CIRCLE, CORAL GABLES,
FLORIDA 33134, ATTENTION: DEBORAH KOCH, (305) 569-2000.
IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD
BE MADE BY (DATE FIVE BUSINESS DAYS PRIOR TO THE DATE ON WHICH THE FINAL
INVESTMENT DECISION MUST BE MADE.)
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SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN OR
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
BANKUNITED FINANCIAL CORPORATION
GENERAL
BankUnited is a Florida corporation organized for the purpose of
becoming the savings and loan holding company for BankUnited, FSB (the "Bank").
This holding company reorganization, together with the Bank's conversion from a
Florida-chartered stock savings bank (which had begun operations in 1984) to a
federally chartered stock savings bank, became effective on March 5, 1993. At
June 30, 1997, BankUnited had $1.1 billion in deposits and $101 million in
shareholders' equity. With over $1.8 billion in assets, BankUnited is the third
largest publicly held depository institution headquartered in South Florida.
After completion of the recently announced sales of the two largest financial
institutions in South Florida, BankUnited will become the second largest
depository institution headquartered in that area.
BankUnited currently has sixteen branch offices in Dade, Broward and
Palm Beach Counties, Florida ("South Florida") and anticipates opening five or
more additional branches by June 30, 1998. BankUnited's business has
traditionally consisted of attracting deposits from the general public and using
those deposits, together with borrowings and other funds, to purchase nationwide
and to originate in its market area single-family residential mortgage loans,
and to a lesser extent, to purchase and originate commercial real estate,
commercial business and consumer loans. BankUnited's revenues are derived
principally from interest earned on loans, mortgage-backed securities and
investments. BankUnited's primary expenses arise from interest paid on savings
deposits and borrowings and non-interest overhead expenses incurred in
operations.
On November 15, 1996, BankUnited acquired Suncoast, a federally
chartered savings association with assets of $409.4 million at September 30,
1996, and merged Suncoast into the Bank. The merger increased BankUnited's
deposit market share, particularly in Broward County, Florida while permitting
BankUnited to achieve economies associated with an in-market merger, and should
enable BankUnited to compete more effectively with larger super-regional
financial institutions operating in Florida. On September 19, 1997, in
connection with the Merger, BankUnited signed a definitive agreement to acquire
Consumers, the parent company of Consumers Savings Bank, a Florida chartered
savings and loan association with assets of $102 million at June 30, 1997. See
"Business Strategy--Acquisitions and Branching Activity" for a further
discussion of these acquisitions.
The Bank is a member of the Federal Home Loan Bank system and is subject
to comprehensive regulation, examination and supervision by the Office of Thrift
Supervision (the "OTS") and the Federal Deposit Insurance Corporation (the
"FDIC"). Deposits at the Bank are insured by the Savings Association Insurance
Fund of the FDIC (the "SAIF") to the maximum extent permitted by law.
BankUnited's executive offices are located at 255 Alhambra Circle, Coral
Gables, Florida 33134, and its telephone number is (305) 569-2000.
BUSINESS STRATEGY
CAPITALIZING ON THE CONSOLIDATING SOUTH FLORIDA MARKET. During the past
three years BankUnited has redefined its strategy to increase its emphasis on
strategic product niches which management believes are being
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underserved as South Florida's banking market consolidates. The products include
commercial business and commercial real estate lending and deposit services for
small to mid-sized businesses. BankUnited has also focused on attracting
depositors by stressing convenience, competitive rates and personalized service.
During the fourth quarter of fiscal 1997, BankUnited has also proceeded with
plans to package and sell residential mortgage loans on a quarterly basis and
engage in sales of annuity products. In order to accomplish this strategy,
BankUnited has retained management with expertise in developing and managing
these product lines. The banking consolidation in South Florida has resulted in
numerous personnel opportunities for BankUnited.
OPERATING PLAN. BankUnited's operating plan emphasizes (i) rapidly
expanding BankUnited's deposit base by providing convenience, competitive rates
and personalized service in its market area and continuing expansion of
BankUnited's branch network through de novo branching or the acquisition of
branches of, and mergers with, existing financial institutions; (ii)
concentrating lending activities on purchasing single-family residential
mortgage loans and originating such loans as favorable market opportunities
arise; (iii) expanding BankUnited's commercial and multi-family real estate,
commercial business, and real estate construction lending; and (iv) managing
exposure to interest rate risk, while optimizing operating results through
effective asset/liability management and investment policies.
DEPOSIT OPPORTUNITIES. As the super regional banking companies acquire
and close branches, BankUnited has identified certain locations for potential
expansion. Additionally, in November 1996, BankUnited hired a retail banking
director from one of its key competitors with eighteen years of experience in
retail banking in the region. BankUnited emphasizes personalized service by a
local financial institution to differentiate itself from the super regionals
that do business in the South Florida market. For the nine months ended June 30,
1997 deposits at BankUnited's South Florida branches increased by $595 million,
or 117.5% from September 30, 1996. Of this growth, $323.7 million was acquired
with Suncoast.
RESIDENTIAL MORTGAGE LOAN PURCHASES. Since inception in 1984,
BankUnited's primary source of earning assets has been the purchase of single
family residential mortgages in the secondary market. Management believes
BankUnited has developed an expertise in making such purchases including
re-underwriting each loan purchased. The anticipated future growth in
BankUnited's assets will be primarily through the purchase of single family
residential mortgages.
COMMERCIAL LOAN PRODUCT AVAILABILITY. BankUnited believes the rapid
consolidation of the South Florida banking market has created and will continue
to create opportunities to originate commercial real estate loans to the small
to medium sized companies. BankUnited has hired seasoned loan officers to take
advantage of these opportunities.
ACQUISITIONS AND BRANCHING ACTIVITY. BankUnited has acquired, is
acquiring and will continue to acquire financial institutions and branches in
South Florida.
On November 15, 1996, BankUnited acquired Suncoast, a federally
chartered savings association with assets of $409 million at September 30, 1996,
and merged Suncoast into the Bank. The merger has increased BankUnited's market
share, particularly in Broward County, has allowed BankUnited to achieve
economies associated with an in-market merger, and should enable BankUnited to
compete more effectively with larger financial institutions in South Florida. Of
Suncoast's six branch offices in South Florida, five continue to operate and one
has been consolidated with an existing Bank branch office. Additionally, as part
of the Suncoast acquisition, BankUnited acquired approximately $95.8 million in
commercial real estate loans and $14.1 million in real estate construction
loans. Through internal growth and as a result of the acquisition, BankUnited's
total assets increased from $824 million at September 30, 1996 to $1.8 billion
at June 30, 1997.
On March 29, 1996, BankUnited acquired the Bank of Florida with total
assets of $28.1 million which was merged into BankUnited's South Miami branch.
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On September 19, 1997, in connection with the Merger BankUnited signed a
definitive agreement (the "Merger Agreement") to acquire Consumers, the parent
company of Consumers Savings Bank, a Florida chartered savings and loan
association with assets of $102 million at June 30, 1997.
BankUnited also opened branches in Delray Beach, Florida in June 1996,
West Palm Beach, Florida in September 1996, and Boca Hamptons, Florida in August
1997. BankUnited currently has two additional branches under construction in the
Coconut Creek, northeast Dade County and West Miami areas of South Florida,
which are scheduled to open before the end of 1997.
PREFERRED STOCK RESTRUCTURING; CONVERSION TO COMMON STOCK. In August
1997, BankUnited purchased 448,583 shares of its 9% Noncumulative Perpetual
Preferred Stock (the "9% Preferred Stock") at $10.25 per share. The purchase was
made pursuant to a tender offer which expired on August 15, 1997. After the
purchase, 701,417 shares of 9% Preferred Stock were still outstanding. Pursuant
to its terms, that stock may be redeemed by BankUnited after September 30, 1998.
On October 10, 1997, BankUnited redeemed the outstanding shares of its
8% Noncumulative Convertible Preferred Stock, Series 1996 (the "Series 1996
Preferred Stock") at $15.00 per share. Holders of the shares of Series 1996
Preferred Stock had the right to convert them to shares of Class A Common Stock,
at a conversion rate of approximately 1.67 shares of Class A Common Stock for
each share of Series 1996 Preferred Stock. Holders of 927,204 shares of Series
1996 Preferred Stock exercised their conversion right, which resulted in the
issuance of 1,548,410 additional shares of BankUnited Class A Common Stock, and
4,496 shares of Series 1996 Preferred Stock were redeemed.
RESULTS. BankUnited had net income before preferred stock dividends of
$5.4 million and $2.7 million for the nine months ended June 30, 1997 and June
30, 1996, respectively. The annualized return on average assets was .54% and
.54% for the nine months ended June 30, 1997 and 1996, respectively. Net income
before preferred stock dividends was $2.6 million in fiscal 1996 compared to
$6.2 million in fiscal 1995. The decrease in net income was primarily
attributable to the pretax gain recorded in the fourth quarter of fiscal 1995 of
$9.3 million ($5.8 million after tax) from the sale of BankUnited's three
branches on the west coast of Florida and the expense of a one-time special
assessment by the SAIF of $2.6 million ($1.6 million after tax) in the fourth
quarter of fiscal 1996.
BankUnited seeks to maintain asset quality and control credit risk.
While the loan portfolio has grown substantially in recent years, BankUnited's
ratio of non-performing assets to total assets has decreased from 1.10% at
September 30, 1995 to .95% at September 30, 1996 and .66% at June 30, 1997. The
ratio of the loan loss allowance to total loans was .21% at June 30, 1997.
The implementation of BankUnited's business strategy has produced for
the Bank tangible capital, core capital and risk-based capital ratios of 8.1%,
8.1% and 14.0%, respectively, at June 30, 1997. The Bank currently exceeds all
applicable minimum regulatory capital requirements. BankUnited's total
shareholders' equity was $101 million at June 30, 1997 and its equity to assets
ratio at that date was 5.6%.
6
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THE MERGER
THE PARTIES
BANKUNITED. BankUnited is a Florida corporation organized for the
purpose of becoming the savings and loan holding company for the Bank. The
holding company reorganization, together with the Bank's conversion from a
Florida-chartered stock savings bank (which was founded in 1984) to a federally
chartered stock savings bank, became effective on March 5, 1993. At June 30,
1997, BankUnited had $1.1 billion in deposits, $101.4 million in shareholders'
equity, and over $1.8 billion in assets. Based on the latest available
information BankUnited is the third largest publicly held financial institution
headquartered in Florida, based on asset size. After completion of the recently
announced sales of two of the largest financial institutions in South Florida,
BankUnited will become the second largest depository institution headquartered
in that area.
BankUnited's executive offices are located at 255 Alhambra Circle, Coral
Gables, Florida 33134, and its telephone number of (305) 569-2000.
CONSUMERS. Consumers is a Florida-chartered company headquartered in
Miami, Florida. Consumers was incorporated in November 1993 solely for the
purpose of becoming a savings and loan holding company for Consumers Savings
Bank ("CSB"). CSB completed its reorganization into the holding company form of
ownership in April 1994. Consumers' principle business is to hold all of the
issued and outstanding shares of Class A Common Stock of CSB. At June 30, 1997,
Consumers had consolidated total assets of $102.2 million, deposit liabilities
of $81.5 million and shareholders' equity of $6.8 million.
Consumers' executive offices are located at 9400 Dadeland Boulevard,
Suite 620, Miami, Florida 33156 and its telephone number of (305) 670-1050.
DATE, TIME, PLACE AND PURPOSE OF SPECIAL MEETING
A special meeting of the shareholders of Consumers (the "Consumers
Special Meeting") will be held at Consumers' main office at 9400 Dadeland
Boulevard, Suite 620, Miami, Florida on November __, 1997 at _____p.m., local
time, for the purpose of considering and voting upon a proposal to approve the
Merger Agreement and the consummation of the transactions contemplated thereby,
including the Merger.
SHARES ENTITLED TO VOTE; QUORUM
Only shareholders of Consumers at the close of business on October __,
1997 shall be entitled to notice of and to vote at the Consumers Special
Meeting. The presence, in person or by proxy, of shares representing at least a
majority of the shares entitled to be case by the holders of the Consumers
Common Stock outstanding is necessary to constitute a quorum at the Consumers
Special Meeting. As of October __, 1997 there were 485,509 shares of Consumers
Common Stock outstanding, each of which is entitled to one vote.
VOTE REQUIRED TO APPROVE
Under Florida law it is not necessary for shareholders of BankUnited to
approve the Merger Agreement in order to consummate the Merger, and therefore
they will not be asked to do so. Proxies will not be solicited from shareholders
of BankUnited.
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The affirmative vote of a majority of the votes of the Consumers Common
Stock, at least 242,755, is necessary to approve the Merger. An abstention by a
holder of shares of Consumers Common Stock will have the same effect as a vote
against the Merger Agreement. Approval of the Merger Agreement by the requisite
vote of the holders of the Consumers Common Stock is a condition to, and
required for, consummation of the Merger.
TERMS OF THE MERGER
The Merger Agreement was executed on September 19, 1997. The Merger
Agreement provides that the affiliation of Consumers and BankUnited is to be
effected by the merger of Consumers into BankUnited. Upon consummation of the
Merger, BankUnited will continue its existing business, Consumers will be merged
with and into BankUnited and Consumers will cease to exist. Promptly thereafter,
CSB, a wholly-owned subsidiary of Consumers, will be merged with and into the
Bank, a wholly-owned subsidiary of BankUnited, with the Bank being the survivor
of that merger (the "Subsidiaries Merger"). The Merger Agreement is hereby
incorporated herein by reference.
Upon consummation of the Merger, each issued and outstanding share of
Consumers common stock ("Consumers Common Stock") will be converted into the
right to receive, at the holders option, either $21.33 in cash, 2.081 shares of
BankUnited Series I Class A common stock ("BankUnited Common Stock") or a
combination thereof, although no more than 55% of the total merger consideration
may be paid in cash. The agreed value of 2.081 shares is subject to change based
upon the fair market value of the BankUnited Common Stock prior to the effective
time of the Merger and may be reduced should that fair market value exceed
$12.00 per share, which as been the case for ___ of the last ___ trading days.
For example, if the fair market value of BankUnited Common Stock was $13.125 per
share (the reported last sales price on October 31, 1997) at the time of
consummation of the Merger, each share of Consumers Common Stock would be
converted into the right to receive 1.9 shares of BankUnited Common Stock,
rather than 2.081 shares. Should that fair market value be less than $9.80 per
share, each share of Consumers Common Stock will be converted into the right to
receive $20.95 in cash. The merger consideration may be reduced should the net
worth of consumers fall below $6,500,000. See "The Merger--Conversion of
Consumers Capital Stock.
Each stock option granted pursuant to Consumers option plans which is
outstanding and unexercised immediately prior to the Merger, whether or not then
exercisable, shall be cancelled, and each holder of any such option shall be
paid for each such option an amount in cash determined by multiplying (i) the
excess of $21.33 over the applicable exercise price of such option by (ii) the
number of shares covered by such option. The amount of this payment is subject
to adjustment should the net worth of Consumers fall below $6,500,000. See "The
Merger--Treatment of Consumers Stock Options."
The Merger Agreement contains representations and warranties of
BankUnited and Consumers as to, among other things, (i) the corporate
organization and existence of each party and its subsidiaries; (ii) the
capitalization of each party and its subsidiaries; (iii) the corporate power and
authority of each party and the compliance of the Merger Agreement with (a) the
articles of incorporation or charter and bylaws of each party, (b) applicable
law, and (c) certain material agreements; (iv) governmental and third-party
approvals; (v) the timely filing of required regulatory reports; (vi) each
party's financial statements and filings with the Commission or the OTS, as
applicable; (vii) except as disclosed, the absence of the need for either party
to pay brokers' fees; (viii) the absence of certain changes in each party's
business since March 31, 1997; (ix) except as disclosed, the absence of material
legal proceedings; (x) the filing and accuracy of each party's tax returns; (xi)
each party's employee benefit plans and related matters; (xii) material accuracy
and completeness of the filings made by each party with the Commission or the
OTS, as applicable; (xiii) each party's compliance with applicable law; (xiv)
the absence of material defaults under certain contracts; (xv) agreements
between each party and regulatory agencies; (xvi) activities of the subsidiaries
of each party; and (xvii) the absence of undisclosed liabilities; and (xviii)
specified matters as to Consumers' business and property.
Pursuant to the Merger Agreement, prior to the Merger Consumers has
agreed to (i) conduct its business in the usual, regular and ordinary course
consistent with past practice, (ii) use its best efforts to maintain and
preserve intact its business organization, employees and advantageous business
relationships and retain the services of its officers and key employees, and
(iii) take no action which would adversely affect or delay the ability of
Consumers to obtain any regulatory approvals or to perform its covenants and
agreements under the Merger Agreement.
8
<PAGE>
BankUnited and Consumers have also agreed to use their best reasonable
efforts to promptly prepare and file all necessary documentation to effect all
applications, notices, petitions and filings, and to obtain and to cooperate in
obtaining permits, consents, approvals and authorizations of all third parties
and governmental entities necessary or advisable to consummate the transactions
contemplated by the Merger Agreement and to comply with the terms and conditions
of all such permits, consents, approvals and authorizations. BankUnited and
Consumers have each agreed upon request to furnish to the other party all
information concerning themselves and their subsidiaries, directors, officers
and shareholders and such other matters as may be necessary or advisable in
connection with the Merger. BankUnited and Consumers have also agreed, subject
to the terms and conditions of the Merger Agreement, to use their best efforts
to take, or cause to be taken, all actions necessary, proper or advisable to
comply promptly with all legal requirements which may be imposed on such party
or its subsidiaries to consummate the Merger.
BankUnited has agreed that all Consumers employees who are employed by
BankUnited upon consummation of the Merger will be eligible to participate in
the employee benefit plans and other fringe benefits of BankUnited on the same
terms and conditions as those provided from time to time by BankUnited to its
similarly situated officers and employees, giving effect, for eligibility and
vesting of benefits, to years of service with Consumers as if such service were
with BankUnited. BankUnited and Consumers also reached certain agreements with
respect to directors' and officers' indemnification and insurance.
The Merger Agreement provides that BankUnited may at any time change the
structure of its acquisition of Consumers if and to the extent that it deems
such a change desirable. In no case, however, may any such change alter the
amount or kind of consideration to be received by Consumers shareholders under
the Merger Agreement, adversely affect the tax treatment to Consumers
shareholders as the result of the receipt of such consideration or delay or
jeopardize the receipt of any regulatory approval.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
The Merger Agreement provides, as a condition to the parties'
obligations to consummate the Merger, that the parties shall have received an
opinion from counsel agreed upon by Consumers and BankUnited that the Merger
will qualify as a tax-free reorganization under the Internal Revenue Code of
1986, as amended (the "Code"), and that the conversion of Consumers Common Stock
solely into BankUnited Common Stock will be a tax-free exchange. See "The
Merger--Certain Federal Income Tax Consequences."
The Merger Agreement also provides that consummation of the Merger is
subject to certain other conditions, including the approval of the Merger
Agreement by the shareholders of Consumers, the effectiveness of the
Registration Statement on Form S-4; approval of the Merger by certain Federal
regulatory authorities; holders of no more than ten percent of the Consumers
Common Stock having exercised dissenters' rights under Florida law; the absence
of any event, occurrence, or circumstance that would constitute a Material
Adverse Effect (as defined in the Merger Agreement) as to BankUnited or
Consumers; Consumers maintaining a Net Worth of not less than $6,500,000; the
shares of the BankUnited Common Stock issuable pursuant to the Merger having
been authorized for trading on the Nasdaq upon official notice of issuance; the
absence of any injunction or legal restraint prohibiting consummation of the
Merger and certain other customary closing conditions.
CONSUMERS SPECIAL MEETING OF SHAREHOLDERS
At a special meeting Consumers shareholders will vote on approval of the
Merger Agreement. Under Florida law the affirmative vote of a majority of the
votes present or represented at the special meeting and voting is necessary to
approve the Merger Agreement.
Holders of record of Consumers Common Stock on October __, 1997 are
entitled to one vote for each share then held. As of October __, 1997 Consumers
had 485,509 shares of Consumers Common Stock issued and outstanding. The
presence in person or by proxy of a majority of the outstanding shares of
Consumers Common Stock entitled to vote is necessary to constitute a quorum at
the Meeting. All of the directors of Consumers have agreed to vote their shares
in favor of the Merger Agreement.
9
<PAGE>
OPINION OF FINANCIAL ADVISOR
On September 19, 1997, RP Financial, LC ("RP Financial"), Consumers'
financial advisor, rendered an oral opinion to the Consumers' Board, which was
confirmed by its written opinion dated as of the date of the proxy statement
sent to Consumers shareholders (the "Proxy Statement") to the effect that, as of
the date of the opinion, the merger consideration to be received by holders of
Consumers Common Stock was fair to Consumers shareholders from a financial point
of view. Attached to this Prospectus as Appendix C is a copy of RP Financial's
opinion dated _______________, 1997, setting forth the procedures followed,
assumptions made, matters considered and the qualifications and limitations of
the review undertaken by RP Financial in connection with rendering its opinion.
Holders of Consumers Common Stock are urged to read RP Financial's opinion in
its entirety. See "The Merger--Opinion of Financial Advisor."
CONSUMERS SECURITY OWNERSHIP
The following table sets forth information with respect to the
beneficial ownership in Consumers Common Stock by persons known by Consumers to
own more than 5% of Common Stock, each director individually and all officers
and directors as a group. Other than as set forth below, to the best knowledge
of Consumers, no person beneficially owns more than 5% of the outstanding
Consumers Common Stock. Ownership is direct unless otherwise specified.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF SHARES OF CONSUMERS
OF BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP (2) COMMON STOCK OUTSTANDING
- ----------------------- ------------------------ ------------------------------
<S> <C> <C>
Bernard Janis (3) 95,197 19.61%
Victor Falk 7,597 1.56
Marc J. Fine 1,200 *
Robert E. Gallaher 737(4) *
Warren Jones 100 *
Gary Simon 1,200 *
Jack Langer 3,617 *
All Officers and Directors 110,248 22.7
as a Group (13 persons)
- -----------------------------
<FN>
* Less than 1%.
(1) The address of each of the named persons is: 9400 South Dadeland
Boulevard, Suite 620, Miami, Florida 33156
(2) Fractional shares have been rounded to nearest share.
(3) Does not include shares beneficially owned by Mr. Janis' daughter over
which shares Mr. Janis disclaims beneficial ownership.
(4) Includes 637 shares owned by the Hedg-Peth & Gallaher Profit Sharing
Trust of which Mr. Gallaher is a trustee and over which he has shared
voting and investment power.
</FN>
</TABLE>
10
<PAGE>
BOARD OF DIRECTORS AND MANAGEMENT FOLLOWING THE MERGER
The Board of Directors of BankUnited consists of 15 persons and will not
change as a result of the consummation of the Merger. The executive officers of
BankUnited after the Merger will be comprised of members of BankUnited's current
senior management. It has not yet been determined which members of Consumers'
management will become officers of BankUnited following the Merger.
NASDAQ LISTING
The Merger Agreement provides for BankUnited to use its best efforts,
prior to the consummation of the Merger, to list on the Nasdaq, upon official
notice of issuance, the shares of BankUnited Common Stock to be issued to
holders of Consumers Common Stock in the Merger. It is a condition to the
consummation of the Merger that such shares of BankUnited Common Stock be
authorized for listing on the Nasdaq effective upon official notice of issuance.
TERMINATION
The Merger Agreement provides that it may be terminated and the Merger
abandoned at any time prior to the consummation under certain circumstances,
including (i) by mutual consent of BankUnited and Consumers; (ii) by BankUnited
or Consumers if the OTS has denied approval of the Merger under specified
circumstances or if the Merger has not occurred by March 15, 1998; (iii) by
BankUnited or Consumers if the shareholders of Consumers fail to approve the
Merger Agreement at the Consumers Special Meeting, or (iv) by Consumers if,
prior to the consummation of the Merger, it receives another acquisition
proposal that the Consumers Board determines in its good faith judgment and in
the exercise of its fiduciary duties, based as to legal matters on the
reasonable advice of legal counsel and as to financial matters on the reasonable
advice of an investment banking firm familiar with savings institutions, is more
favorable to the Consumers shareholders than the Merger and that the failure to
terminate the Merger Agreement and accept such alternative acquisition proposal
would be inconsistent with the proper exercise of such fiduciary duties. If the
Agreement is terminated under certain circumstances, the Merger Agreement
provides for payment by BankUnited or Consumers of termination fees.
EFFECTIVE TIME
The time of the consummation of the Merger (the "Effective Time") shall
be determined by BankUnited and Consumers, but will occur no later than ten
business days following the last to occur of (i) the date that is 30 days after
the date of the order of the OTS approving the Merger, (ii) the effective date
of the last order, approval, or exemption of any other federal or state
regulatory agency approving or exempting the Merger if such action is required,
(iii) the expiration of all required waiting periods after the filing of all
notices to all federal or state regulatory agencies required for consummation of
the Merger, and (iv) the date on which the shareholders of Consumers approve the
Merger Agreement. BankUnited and Consumers each anticipate that the Merger will
be consummated by the end of 1997. If the Merger is not effected on or before
March 15, 1998, the Merger Agreement may be terminated by either BankUnited or
Consumers.
ACCOUNTING TREATMENT
The acquisition of Consumers pursuant to the Merger will be accounted
for under the purchase method of accounting. Under the purchase method of
accounting, the assets and liabilities of Consumers will be recorded on the
consolidated books of BankUnited at their fair values upon consummation of the
Merger. Any excess of the value of the consideration paid by BankUnited over the
fair value of Consumers' identifiable net assets acquired will
11
<PAGE>
be treated as goodwill and will be amortized over a period of 25 years.
CERTAIN DIFFERENCES IN THE RIGHTS OF SHAREHOLDERS
The rights of shareholders and other corporate matters related to the
BankUnited Common Stock are controlled by BankUnited's Articles of Incorporation
and Bylaws and by the Florida Business Corporation Act (the "FBCA"). The rights
of shareholders and other corporate matters relating to the Consumers Common
Stock are controlled by the Consumers Articles of Incorporation and Bylaws and
by the FBCA. Upon consummation of the Merger, shareholders of Consumers will
receive cash, shares of BankUnited Common Stock or a combination thereof.
Shareholders of Consumers who become shareholders of BankUnited will have rights
governed by BankUnited's Articles of Incorporation and Bylaws and by the FBCA.
See "Comparison of Shareholders' Rights."
APPRAISAL RIGHTS
Pursuant to Section 607.1320 of the FBCA, Consumers shareholders will be
entitled to dissenters' rights of appraisal with respect to the Merger. The
provisions of Section 607.1320 of the FBCA are technical in nature and complex.
Shareholders desiring to exercise their appraisal rights should be aware that
the failure to comply strictly with the provisions of Section 607.1320 of the
FBCA may result in the waiver or forfeiture of their appraisal rights. A
shareholder who votes in favor of the Merger Agreement or the return of a signed
proxy card which does not specify a vote against approval and adoption of the
Merger Agreement will constitute a waiver of such shareholder's rights of
appraisal and will nullify any previously filed written demand for appraisal.
See "The Merger--Rights of Dissenting Shareholders" and Appendix B to this
Prospectus.
REGULATORY APPROVAL
The Merger is subject to approval by the OTS. BankUnited has filed prior
to the date hereof certain applications with the OTS with respect to the Merger.
The Merger will not proceed until the Requisite Regulatory Approvals (as defined
herein) have been obtained and such approvals are in full force and effect.
There can be no assurance that the Merger will be approved by the OTS. If such
approval is received, there can be no assurance as to the date of such approval
or the absence of any litigation challenging such approval. See "The
Merger--Regulatory Approval Required for the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to qualify as a tax-free reorganization under
Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code").
Kronish, Lieb, Weiner & Hellman LLP, special tax counsel to BankUnited, has
delivered an opinion to BankUnited and Consumers to the effect that no gain or
loss will be recognized by Consumers or BankUnited as a result of the Merger.
For a more complete description of the federal income tax consequences, see "The
Merger--Certain Federal Income Tax Consequences."
COMPARATIVE STOCK PRICES AND DIVIDENDS
The shares of the BankUnited Class A Common Stock are listed for trading
on the Nasdaq under the symbol "BKUNA." As of October 31, 1997, there were
approximately 425 record holders of Class A Common Stock and 13,860,960 shares
issued and outstanding. BankUnited's Class B Common Stock is not currently
traded on any established public market. As of October 31, 1997 there were
approximately 19 holders of record of Class B
12
<PAGE>
Common Stock and 278,685 shares of Class B Common Stock issued and outstanding.
The table below sets forth, for the periods indicated, the cash dividends
declared by BankUnited and the range of high and low bid prices for the
BankUnited Class A Common Stock quoted on the Nasdaq. Stock price data on Nasdaq
reflects inter-dealer prices, without retail mark-up, mark-down or commission
and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK (1) CLASS B COMMON STOCK (1)
-------------------------------------- --------------------
PRICE
FISCAL YEAR ENDED -------------------- CASH DIVIDENDS CASH DIVIDENDS
SEPTEMBER 30, 1994: HIGH LOW PAID PER SHARE PAID PER SHARE
------------------- -------------------------------------- -------------------
<S> <C> <C> <C> <C>
1st Quarter $ 8.250 $ 7.500 $.025 $ .010
2nd Quarter $ 7.500 $ 6.750 $.025 $ .010
3rd Quarter $ 7.500 $ 6.750 $.025 $ .010
4th Quarter $ 7.250 $ 6.000 $ -- $ --
FISCAL YEAR ENDED
SEPTEMBER 30, 1995:
-------------------
1st Quarter $ 7.000 $ 4.500 $ -- $ --
2nd Quarter $ 6.250 $ 4.750 $ -- $ --
3rd Quarter $ 7.000 $ 5.000 $ -- $ --
4th Quarter $ 8.750 $ 7.130 $ -- $ --
FISCAL YEAR ENDED
SEPTEMBER 30, 1996:
-------------------
1st Quarter $ 8.750 $ 6.000 $ -- $ --
2nd Quarter $ 8.500 $ 6.500 $ -- $ --
3rd Quarter $ 8.500 $ 7.250 $ -- $ --
4th Quarter $ 8.250 $ 7.250 $ -- $ --
FISCAL YEAR ENDED
SEPTEMBER 30, 1997:
-------------------
1st Quarter $10.000 $ 7.875 $ -- $ --
2nd Quarter $11.250 $ 9.250 $ -- $ --
3rd Quarter $10.750 $ 8.500 $ -- $ --
4th Quarter $31.3125 $ 9.625 $ -- $ --
- -----------------------------
<FN>
(1) Adjusted to reflect a 15% stock dividend paid in April of 1993 on the
Class A Common Stock and Class B Common Stock.
</FN>
</TABLE>
The following table sets forth the closing sale price of the BankUnited
Common Stock on September 18, 1997 (the last trading day prior to the public
announcement of the proposed Merger) and October 31, 1997 (the latest
practicable trading day before the printing of this Prospectus).
BANKUNITED CLASS A
COMMON STOCK
------------------
September 18, 1997 $12.75
October 31, 1997 $13.125
Since the number of shares of BankUnited Common Stock which Consumers
shareholders may receive in the Merger is dependent on the fair market value of
BankUnited Common Stock, Consumers shareholders are advised to obtain current
market quotations for the BankUnited Common Stock. If the average fair market
value of BankUnited Common Stock, as determined by using the average closing
price of one share of the security computed for the 15-day trading period on the
NASDAQ system (as reported by THE WALL STREET JOURNAL or, if not reported
thereby, any other authoritative source), ending three days prior to the
effective time of the Merger (the "Fair Market Value" or "FMV"), is greater than
$12.00 per share, the number of shares of BankUnited Common Stock into which
each share of Consumers Common Stock would be converted will be determined under
the following formula:
2.081 X 12
----------
FMV
For example, if the Fair Market Value of BankUnited Common Stock was $13.125 per
share (the reported last sales price on October 31, 1997) at the time of
consummation of the Merger, each share of Consumers Common Stock would be
converted into the right to receive 1.9 shares of BankUnited Common Stock,
rather than 2.081 shares.
Consumers Common Stock is not traded or quoted on an exchange or other
stock market. Consumers Common Stock has historically been an illiquid
investment. As of September 30, 1997, there were 485,509 shares of Consumers
Common Stock issued and outstanding which are held by approximately 60
shareholders of record. Consumers has not declared any dividends on the
Consumers Common Stock during fiscal 1996 and 1997. The last trade of Consumers
Common Stock was in May 1997 at a price of $13.82 per share.
13
<PAGE>
BANKUNITED SUMMARY CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA
The information for, and as of the end of, the nine months ended June
30, 1997 and 1996 is unaudited, but in the opinion of BankUnited's management
reflects all adjustments (consisting only of normal recurring accruals)
necessary for a fair presentation of the results for such periods. The results
for the nine months ended June 30, 1997 are not necessarily indicative of the
results that may be expected for the entire year. The summary consolidated
financial information should be read in conjunction with BankUnited's
Consolidated Financial Statements and Notes thereto incorporated by reference
into this Prospectus.
<TABLE>
<CAPTION>
AT OR FOR THE NINE
MONTHS ENDED
JUNE 30, AT OR FOR THE FISCAL YEARS ENDED SEPTEMBER 30,
------------------------ -----------------------------------------------------------------
1997(1) 1996 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS DATA:
Interest income ...................... $ 73,932 $ 36,953 $ 52,132 $ 39,419 $ 30,421 $ 25,722 $ 24,243
Interest expense ..................... 50,013 24,934 34,622 26,305 16,295 12,210 14,022
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income before provision
(credit) for loan losses ........... 23,919 12,019 17,510 13,114 14,126 13,512 10,221
Provision (credit) for loan losses ... 695 (225) (120) 1,221 1,187 1,052 70
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income after provision
(credit) for loan losses ........... 23,224 12,244 17,630 11,893 12,939 12,460 10,151
----------- ----------- ----------- ----------- ----------- ----------- -----------
Non-interest income:
Service fees ......................... 2,298 432 597 423 358 221 142
Gain on sales of loans and mortgage-
backed securities, net ............. 11 8 5 239 150 1,496 94
(Loss) gain on sales of other
assets, net(2) ..................... 1 (6) (6) 9,569 -- -- 2
Other ................................ 207 51 53 6 46 2 25
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total non-interest income .......... 2,517 485 649 10,237 554 1,719 263
----------- ----------- ----------- ----------- ----------- ----------- -----------
Non-interest expense:
Employee compensation and benefits ... 6,745 3,161 4,275 3,997 3,372 2,721 1,986
Occupancy and equipment .............. 2,594 1,232 1,801 1,727 1,258 978 940
Insurance (3) ........................ 701 748 3,610 1,027 844 835 697
Professional fees .................... 1,063 687 929 1,269 833 543 542
Other ................................ 5,611 2,470 3,421 4,129 3,579 2,746 2,002
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total non-interest expense ......... 16,714 8,298 14,036 12,149 9,886 7,823 6,167
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before income taxes and
Preferred Stock dividends .......... 9,027 4,431 4,243 9,981 3,607 6,356 4,247
Provision for income taxes (4) ....... 3,594 1,693 1,657 3,741 1,328 2,318 1,538
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income before Preferred
Stock dividends .................... 5,433 2,738 2,586 6,240 2,279 4,038 2,709
Preferred Stock dividends ............ 2,167 1,609 2,145 2,210 2,069 1,513 875
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income after Preferred
Stock dividends .................... $ 3,266 $ 1,129 $ 441 $ 4,030 $ 210 $ 2,525 $ 1,834
=========== =========== =========== =========== =========== =========== ===========
FINANCIAL CONDITION DATA:
Total assets ......................... $ 1,807,192 $ 801,531 $ 824,360 $ 608,415 $ 551,075 $ 435,378 $ 345,931
Loans receivable, net, and mortgage-
backed securities(5) ............... 1,587,124 702,529 716,550 506,132 470,154 313,899 250,606
Investments, overnight deposits, tax
certificates, repurchase agreements,
certificates of deposits and other
interest earning assets ............ 115,262 79,991 87,662 88,768 64,783 100,118 83,445
Total liabilities .................... 1,705,777 731,871 755,249 562,670 509,807 397,859 322,907
Deposits ............................. 1,100,923 470,236 506,106 310,074 347,795 295,108 275,026
Borrowings ........................... 447,259 244,775 237,775 241,775 158,175 97,775 42,241
Trust Preferred Securities ........... 116,000 -- -- -- -- -- --
Total shareholders' equity ........... 101,415 69,660 69,111 45,745 41,268 30,273 16,797
Common shareholders' equity .......... 67,311 45,346 44,807 21,096 16,667 17,162 11,134
PER COMMON SHARE DATA:
Primary earnings per common share and
common equivalent share ............ $ .39 $ .28 $ .10 $ 1.77 $ .10 $ 1.42 $ 1.27
=========== =========== =========== =========== =========== =========== ===========
Earnings per common share assuming
full dilution ...................... $ .38 $ .28 $ .10 $ 1.26 $ .10 $ 1.00 $ .92
=========== =========== =========== =========== =========== =========== ===========
Weighted average number of common
shares and common equivalent shares
assumed outstanding during the
period:
Primary ............................ 8,376,849 3,997,331 4,558,521 2,296,021 2,175,210 1,773,264 1,448,449
Fully diluted ...................... 9,304,102 3,997,331 4,558,521 4,158,564 2,173,210 3,248,618 2,376,848
Equity per common share .............. 7.59 $ 7.95 $ 7.85 $ 10.20 $ 8.33 $ 8.86 $ 8.51
Fully converted tangible equity per
common share ....................... 6.74 $ 7.20 $ 7.13 $ 8.15 $ 7.39 $ 7.57 $ 6.86
</TABLE>
(Continued on next page)
14
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE NINE
MONTHS ENDED
JUNE 30, AT OR FOR THE FISCAL YEARS ENDED SEPTEMBER 30,
------------------- -----------------------------------------------
1997(1) 1996 1996 1995 1994 1993 1992
----------- ------ ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS:
(Annualized where appropriate)
PERFORMANCE RATIOS:
Return on average assets(6).............. .54% .54% .36% 1.10% .46% 1.12% .92%
Return on average common equity.......... 8.85 4.78 1.30 22.60 1.21 18.55 17.68
Return on average total equity(6)........ 7.84 6.43 4.30 14.70 5.84 14.07 14.72
Interest rate spread..................... 2.24 2.01 2.10 2.12 2.78 3.59 3.34
Net interest margin...................... 2.48 2.43 2.51 2.39 3.01 3.87 3.63
Dividend payout ratio(7)................. 39.89 58.77 82.95 35.42 96.79 40.66 34.97
Ratio of earnings to combined fixed
charges and preferred stock
dividends(8):
Excluding interest on deposits........ 1.29 1.14 1.05 1.52 1.07 1.87 1.83
Including interest on deposits........ 1.11 1.07 1.02 1.21 1.03 1.27 1.18
Total loans, net, and mortgage-backed
securities to total deposits.......... 147.14 149.40 141.58 163.13 134.40 109.65 91.12
Non-interest expenses to average assets.. 1.67 1.63 1.97 2.14 2.04 2.18 2.09
Efficiency ratio(9)...................... 59.35 65.00 76.45 14.58 66.06 45.17 57.76
ASSET QUALITY RATIOS:
Ratio of non-performing loans to
total loans ........................... .65% .84% .99% 1.02% 1.07% 1.54% .45%
Ratio of non-performing assets to
total loans, real estate
owned and tax certificates............. .77 1.06 1.14 1.35 1.41 1.78 .66
Ratio of non-performing assets to
total assets .......................... .66 .92 .95 1.10 1.17 1.46 .50
Ratio of charge-offs to total loans...... .04 .05 .08 .13 .39 .07 --
Ratio of loan loss allowance to
total loans ........................... .21 .34 .34 .32 .20 .38 .11
Ratio of loan loss allowance to
non-performing loans................... 32.20 40.20 33.74 31.54 18.89 24.70 25.41
CAPITAL RATIOS:
Ratio of average common equity to
average total assets................... 3.68% 4.64% 4.78% 3.14% 3.58% 3.79% 3.51%
Ratio of average total equity to
average total assets .................. 6.90 8.36 8.44 7.47 8.05 7.99 6.24
Tangible capital-to-assets ratio(10)..... 8.08 6.92 7.01 7.09 6.65 7.56 6.66
Core capital-to-assets ratio(10)......... 8.08 6.92 7.01 7.09 6.65 7.56 6.66
Risk-based capital-to-assets ratio(10)... 14.04 13.90 14.19 15.79 14.13 15.85 14.42
- -----------------------------
<FN>
(1) Includes operations of Suncoast from date of acquisition on November 15,
1996.
(2) In 1995, BankUnited recorded a $9.3 million gain ($5.8 million after
tax) from the sale of its branches on the west coast of Florida.
(3) In 1996, BankUnited recorded a one time SAIF special assessment of $2.6
million ($1.6 million after tax).
(4) Amount reflects expense from change in accounting principle of $195,000
for fiscal 1994. See Note 15 of Notes to Consolidated Financial
Statements incorporated by reference into this Prospectus.
(5) Does not include mortgage loans held for sale (which at June 30, 1997
totaled $32.8 million).
(6) Return on average assets and average total equity are calculated before
payment of preferred stock dividends.
(7) The ratio of total dividends declared during the period (including
dividends on the Bank's and BankUnited's preferred stock and
BankUnited's Class A and Class B Common Stock) to total earnings for the
period before dividends.
(8) The ratio of earnings to combined fixed charges and preferred stock
dividends excluding interest on deposits is calculated by dividing
income before taxes and extraordinary items by interest on borrowings
plus 33% of rental expense plus preferred stock dividends on a pretax
basis. The ratio of earnings to combined fixed charges and preferred
stock dividends including interest on deposits is calculated by dividing
income before taxes and extraordinary items by interest on deposits plus
interest on borrowings plus 33% of rental expense plus preferred stock
dividends on a pretax basis.
(9) Efficiency ratio is calculated by dividing non-interest expenses less
non-interest income by net interest income.
(10) Regulatory capital ratio of the Bank.
</FN>
</TABLE>
15
<PAGE>
CONSUMERS SELECTED FINANCIAL DATA
The information for, and as of the end of, the three months ended June
30, 1997 and 1996 is unaudited, but in the opinion of Consumers' Management,
reflects all adjustments (consisting only of normal recurring accruals necessary
for a fair presentation of results for such periods. The results for the three
months ended June 30, 1997 are not necessarily indicative of the results that
may be expected for the entire year. This information is derived in part from
and should be read in conjunction with the consolidated financial statements of
Consumers and the notes thereto contained in Appendix A to this Prospectus.
<TABLE>
<CAPTION>
AT JUNE 30, AT MARCH 31,
--------------------- ------------------
1997 1996 1997 1996
--------- -------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets........................... $ 102,167 $ 88,714 $ 94,022 $88,648
Loans held for sale.................... 4,567 5,541 5,107 5,661
Loans receivable, net.................. 61,260 49,876 56,305 49,749
Mortgage-backed securities held
to maturity .......................... 4,076 5,248 4,709 5,622
Mortgage-backed securities available
for sale ............................ 15,067 11,805 9,951 12,085
Investment securities.................. 9,993 5,948 6,955 4,958
Cash and cash equivalents.............. 2,571 3,867 6,320 4,370
Deposits............................... 81,545 73,600 79,079 72,617
Borrowed funds......................... 9,000 3,500 3,500 5,333
Shareholders' equity................... 6,819 6,646 6,712 6,598
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS YEARS
ENDED JUNE 30, ENDED MARCH 31,
--------------------- -------------------
1997 1996 1997 1996
--------- -------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Interest income........................ $ 1,771 $ 1,629 $ 6,736 $ 6,545
Interest expense....................... 1,092 1,013 4,089 4,143
Net interest income before provision
for loan losses...................... 679 616 2,647 2,402
Provision for loan losses.............. -- -- -- --
Net interest income after provision
for loan losses...................... 679 616 2,647 2,402
Other income:
Gain (loss) on sale of loans and
mortgage-backed securities........... (44) 41 (32) (59)
Gain on sale of loan servicing
rights ............................ 83 35 337 386
Brokered loan fees................... -- 45 186 295
Other income......................... 66 34 137 174
Total other income............. 105 155 628 796
Other expense:
Salaries and employee benefits....... 374 331 1,353 1,392
Occupancy and equipment expense...... 113 109 436 467
FDIC and other insurance premiums.... 13 43 592 201
Data processing...................... 30 30 124 112
Legal, professional and consulting
fees............................... 24 24 89 104
Stationery and supplies.............. 10 13 61 64
Other expense........................ 114 109 419 515
Total other expense............ 678 659 3,074 2,856
Income before income taxes............. 106 112 201 343
Income tax expense..................... 41 45 77 137
--------- -------- -------- -------
Net income..................... $ 65 $ 67 $ 124 $ 206
========= ======== ======== =======
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
AT JUNE 30, AT MARCH 31,
------------------- -----------------
1997 1996 1997 1996
------- -------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
OTHER DATA:
Equity to assets at period end......... 6.67% 7.49% 7.14% 7.44%
Net interest spread.................... 2.69% 2.47% 2.65% 2.47%
Net interest margin.................... 3.01% 2.88% 3.06% 2.91%
Return on average assets............... 0.28% 0.31% 0.14% 0.25%
Return on average equity............... 3.84% 4.06% 1.87% 3.14%
Non-interest income to average
asset ratio ......................... 0.46% 0.69% 0.71% 0.95%
Non-interest expense to average
asset ratio.......................... 2.94% 2.98% 3.48% 3.40%
Non-performing loans to total loans.... 0.69% 0.35% 0.30% 0.32%
Non-performing assets to total assets.. 0.67% 0.36% 0.34% 0.18%
Average interest-earning assets
to average interest-bearing
liability............................ 106.55% 108.64% 108.78% 108.71%
Allowance for loan losses to
non-performing assets................ 48.53% 103.75% 102.16% 233.46%
Net interest income to non-interest
expense.............................. 100.17% 94.29% 86.13% 84.11%
Net interest income after provision
for loan losses to non-interest
expense.............................. 100.17% 94.29% 86.13% 84.11%
</TABLE>
17
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, TOGETHER WITH THE OTHER
INFORMATION CONTAINED AND INCORPORATED BY REFERENCE IN THIS PROSPECTUS, THE
FOLLOWING FACTORS IN EVALUATING BANKUNITED AND ITS BUSINESS BEFORE ELECTING TO
RECEIVE THE BANKUNITED COMMON STOCK OFFERED HEREBY IN CONNECTION WITH THE
MERGER. PROSPECTIVE INVESTORS SHOULD NOTE, IN PARTICULAR, THAT THIS PROSPECTUS
CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND SECTION 21E OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), THAT
INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES. WHEN USED IN THIS PROSPECTUS, OR IN
THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN, THE WORDS "ANTICIPATE,"
"BELIEVE," "ESTIMATE," "MAY," "INTEND" AND "EXPECT" AND SIMILAR EXPRESSIONS
IDENTIFY CERTAIN OF SUCH FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS, PERFORMANCE
OR ACHIEVEMENTS COULD DIFFER MATERIALLY FROM THOSE CONTEMPLATED, EXPRESSED OR
IMPLIED BY THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN. THE CONSIDERATIONS
LISTED BELOW REPRESENT CERTAIN IMPORTANT FACTORS BANKUNITED BELIEVES COULD CAUSE
SUCH RESULTS TO DIFFER. THESE CONSIDERATIONS ARE NOT INTENDED TO REPRESENT A
COMPLETE LIST OF THE GENERAL OR SPECIFIC RISKS THAT MAY AFFECT BANKUNITED. IT
SHOULD BE RECOGNIZED THAT OTHER RISKS, INCLUDING GENERAL ECONOMIC FACTORS AND
EXPANSION STRATEGIES, MAY BE SIGNIFICANT, PRESENTLY OR IN THE FUTURE, AND THE
RISKS SET FORTH BELOW MAY AFFECT BANKUNITED TO A GREATER EXTENT THAN INDICATED.
POTENTIAL IMPACT OF CHANGES IN INTEREST RATES
The Bank's profitability is dependent to a large extent on its net
interest income, which is the difference between its income on interest-earning
assets and its expense on interest-bearing liabilities. The Bank, like most
financial institutions, is affected by changes in general interest rate levels
and by other economic factors beyond its control. Interest rate risk arises from
mismatches (i.e., the interest sensitivity gap) between the dollar amount of
repricing or maturing assets and liabilities, and is measured in terms of the
ratio of the interest rate sensitivity gap to total assets. More assets than
liabilities repricing or maturing over a given time frame is considered
asset-sensitive and is reflected as a positive gap, and more liabilities than
assets repricing or maturing over a given time frame is considered
liability-sensitive and is reflected as a negative gap. An asset-sensitive
position (i.e., a positive gap) will generally enhance earnings in a rising
interest rate environment and will reduce earnings in a falling interest rate
environment, while a liability-sensitive position (i.e., a negative gap) will
generally enhance earnings in a falling interest rate environment and reduce
earnings in a rising interest rate environment. Fluctuations in interest rates
are not predictable or controllable. At June 30, 1997, the Bank had a one year
cumulative negative gap of 13.05%. This negative one year gap position may, as
noted above, have a negative impact on earnings in a rising interest rate
environment.
There can be no assurances of BankUnited's ability to continue to
achieve positive net interest income.
RISKS ASSOCIATED WITH BANKUNITED'S ADJUSTABLE RATE MORTGAGE LOANS
BankUnited has purchased and intends to continue to purchase a
significant amount of residential mortgage loans. During the nine months ended
June 30, 1997 and the year ended September 30, 1996, BankUnited purchased $545.4
million and $210.1 million, respectively, of one-to-four family residential
loans, of which $289.3 million and $161.5 million, respectively, were adjustable
rate mortgage loans ("ARMs"). At June 30, 1997 BankUnited's residential loan
portfolio included $1.0 billion of ARMs (69% of BankUnited's gross loan
portfolio). The ARMs purchased by BankUnited generally have annual interest rate
caps that limit rate increases to 2% per year. Further, the ARMs purchased by
BankUnited provide for initial rates of interest below the rates which would
prevail were the index and margin used for repricing applied initially (the
"teaser rate period"). Although BankUnited attempts to mitigate the risk of
default on these loans by requiring that borrowers qualify for the loan based
upon the fully indexed rate, nonetheless these loans are subject to increased
risk of delinquency or default as the higher, fully indexed rate of interest
subsequently comes into effect upon repricing. As a result, management believes
that
18
<PAGE>
BankUnited's net interest margin could be negatively impacted in a rapidly
rising interest rate environment by increased delinquencies and defaults.
Also, if market interest rates rise rapidly, the annual and lifetime
interest rate caps on the ARMs may limit the increase in the interest rates on
the ARMs relative to the increase in market interest rates, and yields on ARMs
with teaser rates may be limited to repricing at interest rates below the
contractual index plus the margin. At June 30, 1997, $200.6 million of
BankUnited's ARM loans (13.5% of BankUnited's gross loan portfolio) were in the
teaser rate period with an average teaser rate of 5.97% and an average fully
indexed rate of 8.22%. Rapid increases in market interest rates may not be fully
reflected in loans which are in the teaser rate period and may, accordingly have
a negative impact on BankUnited's net interest margin.
COMPOSITION OF RESIDENTIAL AND COMMERCIAL LOAN PORTFOLIO
GEOGRAPHIC CONCENTRATION. Most of the loans in BankUnited's portfolio
are secured by real estate. At June 30, 1997, 39.7% of BankUnited's gross loans
receivable were secured by properties located in Florida, 14.0% by properties
located in California and the balance throughout the country. Therefore,
conditions in the real estate markets in which the collateral for BankUnited's
mortgage loans are located strongly influence the level of BankUnited's
non-performing loans and its results of operations. Real estate values are
affected by, among other things, changes in general or local economic
conditions, changes in governmental rules or policies, the availability of loans
to potential purchasers, and natural disasters. Declines in real estate markets
could negatively impact the value of the collateral securing BankUnited's loans
and its results of operations. In this regard, as a result of the downturn in
the California real estate market in 1993, BankUnited believes that certain of
its loans secured by real estate in California have current loan to value ratios
that are higher than those when the loans were originated. In addition, both
Florida and California are states that are subject to natural disasters such as
hurricanes, earthquakes and flooding. In the event a property securing the loan
incurs damage as a result of a natural disaster that is not covered by
homeowner's insurance, BankUnited's results of operations may be negatively
impacted. Damage from windstorm and flooding is generally covered by homeowner's
insurance, but earthquake damage is frequently not insured.
DIVERSIFIED LENDING RISKS. BankUnited's recent operating strategy has
included an increased emphasis on originating and/or purchasing commercial real
estate (including multi-family residential) loans, and originating real estate
construction and commercial business loans. These lending categories are
generally considered to involve a higher degree of credit risk than that for
traditional single-family residential lending, because, among other factors,
such loans involve larger loan balances to a single borrower or groups of
related borrowers. At June 30, 1997, BankUnited had a balance of $126.4 million
in commercial real estate loans, $8.5 million in construction loans and $9.1
million in commercial business loans. As part of the Suncoast acquisition,
BankUnited acquired approximately $95.8 million in commercial real estate loans
and $14.1 million in real estate construction loans. The payment experience on
multi-family residential and commercial real estate loans typically is dependent
on the successful operation of the project (as opposed to a desire by the
borrower to continue to occupy the residence), and thus such loans may be
adversely affected to a greater extent by adverse conditions in the real estate
markets or in the economy generally. In addition to the foregoing, multi-family
residential and commercial real estate loans which are not fully amortizing over
their maturity and which have a balloon payment due at their stated maturity, as
would generally be the case with BankUnited's multi-family residential and
commercial real estate loans, involve a greater degree of risk than fully
amortizing loans. The ability of a borrower to make a balloon payment typically
will depend on its ability to either refinance the loan or timely sell the
underlying property.
If commercial properties are foreclosed upon, BankUnited may encounter
environmental problems with the properties. There is a risk that hazardous
substances or wastes, contaminants, pollutants or other environmentally
restricted substances could be discovered on the real estate owned (primarily in
the case of properties securing multi-family residential and commercial real
estate loans). In such event, BankUnited might be required to remove such
19
<PAGE>
substances from the affected properties or to engage in abatement procedures at
its cost and expense. There can be no assurance that the cost of such removal or
abatement would not substantially exceed the value of the affected properties or
the loans secured by such properties; that BankUnited would have adequate
remedies against the prior owners or other responsible parties; or that
BankUnited would be able to resell the affected properties either prior to or
following completion of any such removal or abatement procedures. If such
environmental problems are discovered prior to foreclosure, BankUnited generally
would not foreclose on the related loan; however, the value of such property as
collateral will generally be substantially reduced and BankUnited may suffer a
loss upon collection of the loan as a result.
Risk of loss on a construction loan is dependent largely upon the
concurrence of the initial estimate of the property's value at completion of
construction and the estimated cost (including interest) of construction, as
well as the availability of permanent take-out financing. During the
construction phase, a number of factors could result in delays and cost
overruns. If the estimate of value proves to be inaccurate, BankUnited may be
confronted, at or prior to the maturity of the loan, with a project which, when
completed, has a value which is insufficient to ensure full repayment.
Unlike residential mortgage loans, which generally are made on the basis
of the borrower's ability to repay the loan from the borrower's employment and
other income and which are secured by real property the value of which tends to
be more easily ascertainable, commercial business loans are of higher risk and
typically are made on the basis of the borrower's ability to make repayment from
the cash flow of the borrower's business. As a result, the availability of funds
for the repayment of commercial business loans may be substantially dependent on
the success of the business itself. Further, the collateral securing the loans
may depreciate over time, may be difficult to appraise, and may fluctuate in
value based on the success of the business.
Accordingly, there can be no assurance that BankUnited's commercial real
estate, multi-family residential, real estate construction, and commercial
business loans will not be adversely affected by these and the other risks
related to such loans.
RISKS ASSOCIATED WITH LOANS AVAILABLE FOR SALE. BankUnited recently
initiated a program to sell packages of adjustable rate residential loans,
servicing retained, currently originated through its correspondent loan program.
In September 1997, BankUnited sold its first package, totaling $30.1 million of
residential loans which were either originated by BankUnited or acquired with
Suncoast. A substantial portion of the loans sold were loans secured by
properties located in South Florida and made to non-resident aliens or secured
by condominiums (both of which are viewed by BankUnited as potentially having a
greater degree of risk than other types of single family residential loans). It
is currently BankUnited's intention that future packages will consist of newly
originated loans secured by properties located in Florida and made to
non-resident aliens and/or secured by condominiums, or otherwise identified by
BankUnited as available for sale at the time of origination. These loans, when
originated, will be classified as available for sale and be subject to a lower
of cost or market adjustment, on a quarterly basis, depending on market
conditions.
In addition, BankUnited is in the process of refining its policy with
regard to loans currently in its portfolio which will be classified as available
for sale. Final implementation of this policy could result in up to 15% of
BankUnited's portfolio being reclassified. Any such reclassification is not
currently expected to result in any material lower of cost or market adjustment
or to impact net income. Since BankUnited does not currently intend to hedge its
available for sale loan portfolio, this portfolio will be subject to
adjustments, based on market conditions, which may adversely affect BankUnited's
results of operations.
20
<PAGE>
ALLOWANCE FOR LOAN LOSSES
Industry experience indicates that a portion of BankUnited's loans will
become delinquent and a portion of the loans will require partial or entire
charge-off. Regardless of the underwriting criteria utilized by BankUnited,
losses may be experienced as a result of various factors beyond BankUnited's
control, including, among other things, changes in market conditions affecting
the value of properties and problems affecting the credit of the borrower.
BankUnited's determination of the adequacy of its allowance for loan losses is
based on various considerations, including an analysis of the risk
characteristics of various classifications of loans, previous loan loss
experience, specific loans which would have loan loss potential, delinquency
trends, estimated fair value of the underlying collateral, current economic
conditions, the views of BankUnited's regulators, and geographic and industry
loan concentrations. Further, a significant amount of BankUnited's loan
portfolio was originated, purchased or acquired over the last three years and,
therefore, may be considered to be subject to a greater likelihood of
delinquency. If delinquency levels were to increase, whether as a result of
adverse general economic conditions, especially in Florida and California where
BankUnited's exposure is greatest, or otherwise, the allowance for loan losses
as determined by BankUnited may not be adequate. As of June 30, 1997
BankUnited's allowance for loan losses was $3.1 million or .21% of total loans.
There can be no assurance that the allowance will be adequate to cover loan
losses or that BankUnited will not experience significant losses in its loan
portfolios which may require significant increases to the provision for loan
losses in the future.
DISPARATE VOTING RIGHTS; CONTINUING INSIDER CONTROL OF BANKUNITED
The shares of Class A Common Stock are entitled to one-tenth vote per
share. BankUnited also has outstanding shares of Class B Common Stock entitled
to one vote per share and Series B Preferred Stock entitled to 2-1/2 votes per
share. As of October 31, 1997, directors, executive officers and holders of 5%
or more of BankUnited's equity securities held approximately 44% of the total
voting power of all outstanding voting stock of BankUnited.
The voting power of the directors, executive officers and holders of 5%
or more of BankUnited's equity securities and certain provisions of BankUnited's
Articles of Incorporation may discourage any proposed takeover of BankUnited
unless the terms thereof are approved by management. In addition, BankUnited's
Articles of Incorporation permit additional shares of Class A Common Stock to be
issued at any time which may have disproportionate voting rights or preferences
as to dividends or other rights, subject to shareholder approval in certain
circumstances. BankUnited, however, does not intend to issue additional shares
of such stock if the issuance would result in termination of trading of the
BankUnited Class A Common Stock on Nasdaq. See "Description of Capital Stock."
CERTAIN POTENTIAL ANTI-TAKEOVER PROVISIONS
Certain provisions of BankUnited's Articles of Incorporation and Bylaws
could delay or frustrate the removal of incumbent directors and could make more
difficult a merger, tender offer or proxy contest involving BankUnited, even if
such events could be perceived as beneficial to the interests of the
shareholders. In addition, certain provisions of state and federal law may also
have the effect of discouraging or prohibiting a future takeover attempt in
which shareholders of BankUnited might otherwise receive a substantial premium
for their shares over then-current market prices. See "Description of Capital
Stock--Certain Anti-Takeover Provisions."
21
<PAGE>
COMPETITION
BankUnited faces substantial competition in purchasing and originating
real estate loans and in attracting deposits. BankUnited's competition in
originating real estate loans is principally from banks, other thrifts, mortgage
banking companies, real estate financing conduits, and small insurance
companies. In purchasing real estate loans BankUnited competes with other
participants in the secondary mortgage market. Many entities competing with
BankUnited enjoy competitive advantages over BankUnited relative to a potential
borrower or seller in terms of a prior business relationship, wide geographic
presence or more accessible branch office locations, the ability to offer
additional services or more favorable pricing alternatives, a lower origination
and operating cost structure, and other relevant items. BankUnited does not have
a significant market share of the real estate lending activities in the areas in
which it conducts operations, and increased competition in those areas from
traditional competitors or new sources could result in a decrease in the
origination or purchase of mortgage loans and could adversely affect
BankUnited's results of operations. In its deposit gathering activities,
BankUnited competes with insured depository institutions such as thrifts, credit
unions, and banks, as well as uninsured investment alternatives including money
market funds. These competitors may offer higher rates than BankUnited, which
could result in BankUnited either attracting fewer deposits or in requiring
BankUnited to increase the rates it pays to attract deposits. Increased deposit
competition could adversely affect BankUnited's ability to generate the funds
necessary for its lending operations and could adversely affect BankUnited's
results of operations.
REGULATORY OVERSIGHT
The Bank is subject to extensive regulation, supervision and examination
by the OTS as its chartering authority and primary federal regulator, and by the
FDIC, which insures its deposits up to applicable limits. The Bank is a member
of the FHLB of Atlanta and is subject to certain limited regulation by the
Federal Reserve Board. As the holding company of the Bank, BankUnited is also
subject to regulation and oversight by the OTS. Such regulation and supervision
governs the activities in which an institution may engage and is intended
primarily for the protection of the FDIC insurance funds and depositors.
Regulatory authorities have been granted extensive discretion in connection with
their supervisory and enforcement activities and regulations have been
implemented which have increased capital requirements, increased insurance
premiums and have resulted in increased administrative, professional and
compensation expenses. Any change in the regulatory structure or the applicable
statutes or regulations could have a material impact on BankUnited and the Bank
and their operations. Additional legislation and regulations may be enacted or
adopted in the future which could significantly affect the powers, authority and
operations of the Bank and the Bank's competitors which in turn could have a
material adverse effect on the Bank and its operations.
22
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of
BankUnited as of June 30, 1997, as adjusted to give effect to the consummation
of (i) the tender offer by BankUnited, which expired on August 15, 1997, for any
and all shares of its outstanding 9% Noncumulative Perpetual Preferred Stock and
which resulted in the purchase of 448,583 shares of preferred stock, (ii) the
conversion to 1,533,333 shares of Class A Common Stock of all 920,000 shares of
BankUnited's then outstanding 8% Noncumulative Convertible Preferred Stock,
Series 1996, (iii) the redemption of all outstanding subordinated notes, (iv)
the issuance and sale of 3,680,000 shares of Class A Common Stock in a public
offering which was completed on October 21, 1997, and (v) the acquisition and
merger of Consumers and the assumed issuance of 1,110,782 shares of Class A
Common Stock (based upon the maximum that could be issued) and an assumed price
per share of $10.25 (the negotiated cash equivalent price) in connection
therewith. The following data should be read in conjunction with the
Consolidated Financial Statements and Notes thereto of BankUnited incorporated
by reference into this Prospectus.
<TABLE>
<CAPTION>
AS
ACTUAL ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Deposits.......................................................... $1,100,923 $1,182,468
FHLB advances..................................................... 446,484 455,484
Company Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trusts Holding Solely Junior Subordinated
Deferrable Interest
Debentures of BankUnited....................................... 116,000 116,000
Subordinated notes................................................ 775 --
---------- ----------
Total deposits and borrowed funds............................ 1,664,182 1,753,952
---------- ----------
Shareholders' equity:
Preferred Stock, Series B, 8% Convertible and 9% Perpetual,
$.01 par value; authorized--10,000,000 shares; issued and
outstanding--2,998,688 shares as of June 30, 1997 and
1,630,105 shares as adjusted(1) 30 16
Class A Common Stock, $.01 par value; authorized--30,000,000
shares; issued and outstanding--8,593,356 shares as of
June 30, 1997 and 14,917,471 shares as adjusted................ 86 149
Class B Common Stock, $.01 par value; authorized--3,000,000
shares, issued and outstanding--275,685 shares as of
June 30, 1997 and as adjusted.................................. 3 3
Additional paid-in capital....................................... 90,780 141,607
Retained earnings................................................ 10,546 10,546
Net unrealized losses on securities available for sale,
net of tax..................................................... (30) (30)
---------- ----------
Total shareholders' equity.................................... 101,415 152,291
---------- ----------
Total deposits, borrowed funds and shareholders' equity....... $1,765,597 $1,906,243
========== ==========
- -----------------------------
<FN>
(1) Such shares had an aggregate liquidation preference of $34.1 million at
June 30, 1997 and $15.8 million as adjusted. For a more detailed
description of preferred stock, common stock and equivalents, see
"Description of Capital Stock."
(2) Does not include activity in BankUnited's capital accounts since June
30, 1997.
</FN>
</TABLE>
23
<PAGE>
THE MERGER
GENERAL
The Agreement and Plan of Merger between BankUnited and Consumers was
executed on September 19, 1997 (the "Merger Agreement"). The Merger Agreement
provides that the affiliation of Consumers and BankUnited is to be effected by
the merger of Consumers into BankUnited. Upon consummation of the Merger,
BankUnited will continue its existing business. Consumers will be merged with
and into BankUnited and Consumers will cease to exist. Promptly thereafter,
CSB, a wholly-owned subsidiary of Consumers, will be merged with and into the
Bank, a wholly-owned subsidiary of BankUnited, with the Bank being the survivor
of that merger. The Merger Agreement is hereby incorporated herein by reference.
BACKGROUND OF THE MERGER
The Board of Directors of Consumers has been concerned with maximizing
shareholder value and increasing the liquidity of the Consumers Common Stock.
Toward that end, the Board of Directors of Consumers had periodically
entertained discussions regarding the purchase or merger of Consumers during the
last several years, as well as considered the private placement of securities.
More recently Consumers held preliminary discussions with another financial
institution for a merger of equals but was unable to negotiate a mutually
satisfactory definitive agreement.
In June 1997, Consumers' Chairman of the Board was contacted by the
Chairman of the Board and Chief Executive Officer of BankUnited who indicated
that BankUnited was interested in pursuing a business combination with
Consumers. Subsequently, Consumers' Board of Directors discussed the nature of
BankUnited's expression of interest and concluded that it was in Consumers' best
interest to pursue further discussion. Shortly thereafter, Consumers received a
non-binding written offer from BankUnited outlining the terms of a proposed
merger between BankUnited and Consumers. Upon receiving this written offer,
Consumers engaged Gibson & Co., Inc. to assist in evaluating the offer and to
assist and advise Consumers in negotiating certain aspects of a definitive
Merger Agreement. At this time, Consumers was contacted by another financial
institution that was interested in acquiring Consumers. This other indication
was for significantly less than BankUnited's offer. The Board of Directors met
in August 1997 to consider both offers. At that time the Board directed the
Chairman of the Board and Gibson & Co., Inc. to contact both parties to find out
if they had presented their best offer. Following the Board of Director's review
of both proposals the Board concluded that BankUnited's offer provided the best
consideration to shareholders and that Consumers would complement BankUnited's
existing banking franchise. After carefully evaluating the two proposed
transaction Consumers' Board of Directors decided to continue discussions with
BankUnited and to permit BankUnited's personnel to conduct a detailed "due
diligence" investigation of Consumers.
BankUnited then commenced a detailed review of the books and records of
Consumers. Following negotiations between the parties, the Boards of Consumers
and BankUnited determined to enter into a definitive agreement providing for the
Merger Consideration.
BANKUNITED'S REASONS FOR THE MERGER
In considering the Merger, the BankUnited Board concluded that the
combination of Consumers and BankUnited represented a combination of two
institutions with complementary businesses and business strategies and would
result in a merged institution with greater size, flexibility, efficiency,
capital strength, and profitability.
In addition, in reaching its determination to approve the Merger the
BankUnited Board considered the following factors:
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(a) BankUnited and Consumers currently have very similar businesses.
Both institutions are spread oriented, community banks seeking, in part, to
service niche markets which have become available due to the consolidation of
the banking business in South Florida; both institutions provide traditional
savings and loan services to their depositors.
(b) The short and long term goals of BankUnited and Consumers are
similar. Specifically, the short term goal of becoming a community bank with a
significant franchise in South Florida is similar for both institutions. The
long term strategy of building a valuable franchise in South Florida which will
be recognized by the market place as a valuable asset is also similar.
(c) The redundancies of the institutions are at the administrative level
and officer level; therefore, the BankUnited Board concluded that the savings to
be realized as a result of greater efficiencies would be accomplished without a
noticeable impact to the customer. This would enhance the probability that a
significant portion of CSB's core deposits will remain as deposits of the Bank.
The BankUnited Board did not assign any specific or relative weight to
the foregoing factors in the course of its consideration.
CONSUMERS' REASONS FOR THE MERGER
In considering the Merger, the Consumers' Board concluded that the
Merger is fair to, and in the best interests of, Consumers and its shareholders,
and has unanimously recommended that its shareholders vote in favor of the
approval and adoption of the Merger Agreement at the special meeting of
shareholders of Consumers called for that purpose.
In reaching its conclusion that the Merger is fair to, and in the best
interests of, Consumers and its shareholders, the Consumers Board considered a
number of factors, including, without limitation, the following:
(i) the Consumers Board familiarity with and review of Consumers
business, operations, financial condition, earnings and
prospects, including the ability to implement its business plan;
(ii) The current and prospective economic environment and competitive
and regulatory constraints facing financial institutions and
particularly CSB;
(iii) the Consumers Board's opinion that the merger consideration was
fair to the holders of Consumers Common Stock, and that the
Consumers Common Stock is an illiquid investment;
(iv) the Consumers Board's review of the alternative of continuing to
remain independent and the possibility of shareholders obtaining
returns equal to the merger consideration if Consumers continued
as an independent entity given possible levels of future
earnings. In this connection, the Consumers Board was aware of
certain risks of remaining independent, including, among other
things, the limited potential to engage in acquisitions which
could further enhance shareholder value;
(v) the financial resources and prospects of BankUnited and the Bank
and the likelihood of receiving the requisite regulatory
approvals in a timely manner;
(vi) the compatibility of the respective businesses, branches and
options of CSB and the Bank;
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(vii) the merger consideration represented approximately 150.21% of
Consumers book value if paid in cash and 175.8% of Consumers'
book value if paid in BankUnited Common Stock, and 28.07x
Consumers' earnings (excluding the impact of the special SAIF
assessment) if paid in BankUnited Common Stock at and for the
twelve months ended August 31, 1997.
(viii) a comparison of Consumers' and BankUnited's business franchise,
including the fact that the holders of Consumers Common Stock
will receive a more liquid security in a substantially more
diversified financial institution; and
(ix) the tax deferred nature of the transaction to the holders of
Consumers Common Stock who elect to take only BankUnited Common
Stock as merger consideration.
On September __, 1997, the Board of Directors of Consumers retained RP
Financial as an independent financial advisor in connection with the Merger. As
discussed below, RP Financial has rendered an opinion to the effect that the
Merger Consideration is fair from a financial point of view to Consumers'
shareholders.
OPINION OF FINANCIAL ADVISOR
Consumers Board of Directors retained RP Financial in September 1997 to
provide certain financial advisory and investment banking services to Consumers
in conjunction with the Merger, including the rendering of an opinion with
respect to the fairness of the Merger Consideration from a financial point of
view to holders of Consumers Common Stock. In requesting RP Financial's advice
and opinion, the Board of Directors of Consumers did not give any special
instructions to RP Financial, nor did it impose any limitations upon the scope
of the investigation which RP Financial might wish to conduct to enable it to
give its opinion. RP Financial delivered its opinion orally to Consumers on
September 18, 1997, and its written updated opinion as of ______________, 1997,
to the effect that, based upon and subject to the matters set forth therein, as
of the date thereof, the Merger Consideration is fair to the shareholders of
Consumers Common Stock from a financial point of view. The opinion of RP
Financial is directed toward the consideration to be received by Consumer's
shareholders and does not constitute a recommendation to any Consumers
shareholder to vote in favor of approval of the Merger Agreement. A copy of the
RP Financial opinion is set forth as Appendix C to this Prospectus and should be
read in its entirety by shareholders of Consumers.
THE OPINION OF RP FINANCIAL IS DIRECTED TO CONSUMERS'S BOARD IN ITS
CONSIDERATION OF THE PURCHASE PRICE AS DESCRIBED IN THE MERGER AGREEMENT, AND
DOES NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER OF CONSUMERS AS TO ANY
ACTION THAT SUCH SHAREHOLDER SHOULD TAKE IN CONNECTION WITH THE AGREEMENT OR
OTHERWISE. IT IS FURTHER UNDERSTOOD THAT THE OPINION OF RP FINANCIAL IS BASED ON
MARKET CONDITIONS AND OTHER CIRCUMSTANCES EXISTING ON THE DATE HEREOF.
RP Financial was selected by Consumers to act as its financial advisor
because of RP Financial's expertise in the valuation of businesses and their
securities for a variety of purposes, including its expertise in connection with
mergers and acquisitions of savings and loan associations, savings banks,
savings and loan holding companies, commercial banks and bank holding companies.
RP Financial had also previously been engaged by Consumers over the past several
years to assist management with the preparation of the business plan in
connection with the formation of the holding company as well as to provide
valuation expertise in connection with a proposed merger of equals which was
never consummated. Pursuant to a letter agreement dated and executed September
15, 1997 (the "Engagement Letter"), RP Financial estimates that it will receive
from Consumers total professional fees of $20,000, of which $______ has been
paid to date, plus reimbursements of certain out-of-pocket expenses, for its
services in connection with the Merger. In addition, Consumers has agreed to
indemnify and hold harmless RP Financial, any affiliates of RP Financial and the
respective members, managers, officers, agents and employees of RP Financial or
their successors and assigns who act for or on behalf of RP Financial in
connection with the services called for under the Engagement Letter from and
against any and all losses, claims, damages and liabilities (including, but not
limited
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to, all losses and expenses in connection with claims under the federal
securities laws) attributable to (i) any untrue statement or called untrue
statement of a material fact contained in the financial statements or other
information furnished or otherwise provided by Consumers to RP Financial either
orally or in writing, or (ii) the omission or alleged omission of a material
fact from the financial statements or other information furnished or otherwise
made available by Consumers to RP Financial. Consumers will be under no
obligation to indemnify RP Financial hereunder if a court determines that RP
Financial was negligent or acted in bad faith with respect to any actions or
omissions of RP Financial related to a matter for which indemnification is
sought hereunder. In addition, if RP Financial is entitled to indemnification
from Consumers under the Engagement Letter and in connection therewith incurs
legal expenses in defending any legal action challenging the opinion of RP
Financial where RP Financial is not negligent or otherwise at fault or is found
by a court of law to be not negligent or otherwise at fault, Consumers will
indemnify RP Financial for all reasonable expenses.
In rendering its fairness opinion, RP Financial reviewed the following
material: (1) the Merger Agreement including exhibits; (2) financial and other
information for Consumers, all with regard to balance and off-balance sheet
composition, profitability, interest rates, volumes, maturities, trends, credit
risk, interest rate risk, liquidity risk and operations: (a) financial
statements of Consumers for the fiscal years ended March 31, 1993 through 1997,
(b) shareholder, regulatory and internal financial and other reports through
August 31, 1997, (c) the most recent proxy statement for Consumers, (d) internal
budgets and financial projections prepared by management and (e) Consumers's
management and Board of Directors comments regarding past and current business,
operations, financial condition, and future prospects; and (3) financial and
other information for BankUnited including: (a) audited financial statements of
BankUnited for the fiscal years ended September 30, 1995 and 1996, incorporated
in annual reports to shareholders; (b) BankUnited's Annual Report on Form 10-K/A
as of September 30, 1996; (c) regulatory and internal financial and other
reports of BankUnited through June 30, 1997; (d) internal budgets and financial
projections prepared by management of BankUnited; (e) BankUnited's registration
statement on Form S-3 as filed with the Securities and Exchange Commission on
September 17, 1997 in conjunction with a secondary offering of common stock; and
(f) BankUnited's management comments regarding past and current business,
operations, financial condition, and future prospects.
In addition, RP Financial stated that it reviewed financial,
operational, market area and stock price and trading characteristics for
BankUnited and the stock price and relatively limited trading information
available for Consumers relative to publicly-traded savings institutions with
comparable resources, financial condition, earnings, operations and markets. RP
Financial also considered the economic and demographic characteristics in the
local market area, and the potential impact of the regulatory, legislative and
economic environments on operations for Consumers and BankUnited and the public
perception of the thrift industry. In rendering its opinion, RP Financial
relied, without independent verification, on the accuracy and completeness of
the information concerning Consumers as furnished by Consumers to RP Financial
for review for purposes of its opinion, as well as publicly available
information regarding other financial institutions and economic data. Neither
Consumers nor BankUnited restricted RP Financial as to the material it was
permitted to review. RP Financial did not perform or obtain any independent
appraisals or evaluations of the assets and liabilities and potential and/or
contingent liabilities of Consumers.
RP Financial expresses no opinion on matters of a legal, regulatory, tax
or accounting nature or the ability of the Merger to be consummated as set forth
in the Merger Agreement. In rendering its opinion, RP Financial assumed that in
the course of obtaining the necessary regulatory and governmental approvals for
the proposed Merger, no restriction will be imposed on BankUnited that would
have a material adverse effect on the ability of the Merger to be consummated as
set forth in the Merger Agreement.
RP Financial's opinion was based solely upon the information available
to it and the economic, market and other circumstances as they existed as of
September 18, 1997 and ______________________ , 1997; events occurring after the
most recent date could materially affect the assumptions used in preparing the
opinion.
In connection with rendering its opinion dated September 18, 1997, and
updated as of ___________________ , 1997, RP Financial performed a variety of
financial analyses which are summarized below. Although the evaluation of
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the fairness, from a financial point of view, of the Merger Consideration was to
some extent subjective based on the experience and judgment of RP Financial and
not merely the result of mathematical analyses of financial data, RP Financial
relied, in part, on the financial analyses summarized below in its
determinations. The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial analyses or summary description. RP
Financial believes its analyses must be considered as a whole and that selecting
portions of such analyses and factors considered by RP Financial without
considering all such analyses and factors could create an incomplete view of the
process underlying RP Financial's opinion. In its analyses, RP Financial took
into account its assessment of general business, market, monetary, financial and
economic conditions, industry performance and other matters, many of which are
beyond the control of Consumers and BankUnited, as well as RP Financial's
experience in securities valuation, its knowledge of financial institutions and
its experience in similar transactions. With respect to the comparable
transactions analysis described below, no public company utilized as a
comparison is identical to Consumers and such analyses necessarily involve
complex considerations and judgments concerning the differences in financial and
operating characteristics of the companies and other factors that could affect
the acquisition values of the companies concerned. The analyses were prepared
solely for purposes of RP Financial providing its opinion as to the fairness of
the Merger Consideration and do not purport to be appraisals or necessarily
reflect the prices at which businesses or securities actually may be sold. Any
estimates contained in RP Financial's analysis are not necessarily indicative of
future results of values, which may be significantly more or less favorable than
such estimates. None of the analyses performed by RP Financial was assigned a
greater significance by RP Financial than any other.
The following is a summary of the financial analyses performed by RP
Financial in connection with providing its opinion of September 18, 1997.
(a) COMPARABLE TRANSACTIONS ANALYSIS. In this analysis, RP Financial
conducted an evaluation of the financial terms, financial and operating
condition and market area of recent business combinations among comparable
thrift institutions, both pending and completed. In conjunction with its
analysis, RP Financial considered the multiples of tangible book value,
earnings, assets and core deposit premiums implied by the terms in such
completed and pending transactions involving selling companies whose financial
characteristics and markets were comparable to those of Consumers including two
comparable groups: (1) companies operating in the Florida market with total
assets less than $150 million and completed in 1996 or 1997 ("Comparable Group
#I"); and (2) companies operating in the Southeast United States with total
assets less than $150 million and completed or announced during 1997
("Comparable Group #2").
The Florida institutions with similar resources and scope of operations
(Comparable Group #I) completing acquisitions since the beginning of 1996
included a total of seven institutions. The acquisition pricing ratios of this
group were: (i) price/earnings ratios ranging from 9.07x to 34.09x, with a
median of 17.89x; (ii) price/tangible book ratios ranging from 140% to 175%,
with a median of 153% percent; and (iii) price/assets ratios ranging from 5.60%
to 15.05%, with a median of 10.38%.
The Southeast institutions with similar resources and scope of
operations (Comparable Group #2) completing or announcing acquisitions since the
beginning of 1997 included a total of nineteen institutions. The acquisition
pricing ratios of this group were: (i) price/earnings ratios ranging from 9.17x
to 52.33x, with a median of 17.70x; (ii) price/tangible book ratios ranging from
102% to 216%, with a median of 157%; and (iii) price/assets ratios ranging from
6.48% to 19.99%, with a median of 13.70%.
In comparison to the comparable transactions median, Consumers
maintained a larger asset size and generated a lower return on assets and return
on equity. Consumers' equity-to-assets ratio exceeds the median for Comparable
Group #1 and was below the median for Comparable Group #2. Further, Consumers'
acquisition pricing ratios for price/earnings, price/tangible book,
price/assets, and core deposits premium exceeds the median ratios of these four
groups based on the Merger Consideration as of September 18, 1997, and
________________ , 1997. Specifically, the Merger Consideration of $ , based on
the exchange ratio and the Fair Market Value as of and assuming that 55% of the
Merger Consideration is in the form of cash indicated the following pricing
ratios for shares of
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ConsumersCommon Stock, based on financial statements as of or for the 12 months
ended _____________, 1997: x earnings,_ % of reported tangible book value,
____________ % of assets and ______% premium on core deposits. Assuming that
100% of the Merger Consideration is in the form of BankUnited Common Stock, the
following pricing ratios for shares of Consumers Common Stock are indicated,
based on financial statements as of or for the 12 months ended
_________________, 1997: ___________ x earnings, ______________% of reported
tangible book value, ___% of assets and ______% premium on core deposits.
No company or transaction used in this composite is identical to
Consumers or the Merger. Accordingly, an analysis of the results of the
foregoing is not mathematical; rather, it involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies involved and other factors that could affect the public trading
values of the securities of the company or companies to which they are being
compared.
(b) DISCOUNTED CASH FLOW ANALYSIS. RP Financial prepared discounted cash
flow ("DCF") analyses assuming Consumers operates on a stand-alone basis for the
next five years. The projections of future cash flows to shareholders assumed
that Consumers would continue to forego the payment of cash dividends during
interim years, consistent with Consumers' recent practice. The terminal value at
the end of the fifth year was based on a sale of control reflecting a range of
multiples to tangible book value based on the multiples reflected in the
comparable transactions analysis reviewed above. The DCF analyses incorporated
several specific factors reflecting the operating environment of Consumers on a
stand-alone basis, including growth prospects in the local market, the level of
competition from other financial institutions, and future earnings estimates for
Consumers under a stand-alone business plan without the benefits of the Merger.
Two alternative scenarios were also evaluated which incorporated (1) projected
earnings equal to 90 % of the "base case" level and (2) projected earnings equal
to 110% of the "base case" level. The Year 5 sale-of-control values were then
discounted to present values based on discount rates selected after examining
the earnings capitalization rate of publicly-traded thrifts, the Treasury yield
curve (I.E., the risk-free rate), and perceived investment risks in the
Consumers Common Stock. RP Financial concluded that, since the Merger
Consideration exceeded the present value of future cash flows accruing to
holders of Consumers Common Stock under all scenarios, the DCF analyses
supported its fairness conclusions.
(c) PRO FORMA IMPACT ANALYSIS. RP Financial's analysis considered the
financial condition and operations of BankUnited on a stand-alone basis at June
30, 1997, adjusted for the effect of the proposed secondary offering of common
stock, versus the pro forma impact of the Merger. RP Financial considered that
the Merger is estimated to be accretive to BankUnited's pro forma tangible book
value per share and initially dilutive to reported earnings per share before
incorporating anticipated merger synergies. RP Financial also considered
BankUnited's pro forma cash earnings per share. RP Financial considered the
impact of the Merger an BankUnited's key financial characteristics, per share
data and resulting pricing ratios, as well as BankUnited's longer run strategic
objectives. RP Financial also considered the pro forma impact to Consumers'
shareholders including the accretive nature of the transaction to Consumers'
tangible book value and earnings per share for shareholders selecting the stock
election.
On the basis of these analyses and other considerations, RP Financial
concluded that the Merger Consideration, as described in the Merger Agreement,
is fair to the shareholders of Consumers from a financial point of view. As
described above, RP Financial's opinion was one of many factors taken into
consideration by Consumers Board of Directors in making its determination to
proceed with the Merger. Although the foregoing summary describes the material
components of the analyses presented by RP Financial, it does not purport to be
a complete description of all the analyses performed by RP Financial and is
qualified by reference to the written opinion of RP Financial set forth as
Appendix C hereto, which Consumers shareholders are urged to read in its
entirety.
STRUCTURE OF THE MERGER
Subject to the terms and conditions of the Merger Agreement and in
accordance with applicable law, at the Effective Time, Consumers will merge with
and into BankUnited with BankUnited being the surviving entity in the
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Merger. At the Effective Time, the separate corporate existence of Consumers
will terminate. Promptly thereafter, Consumers Savings Bank, a wholly-owned
subsidiary of Consumers, will be merged with and into BankUnited, FSB, with
BankUnited, FSB being the surviving bank.
CONVERSION OF CONSUMERS CAPITAL STOCK
At the Effective Time, each share of the Consumers Common Stock issued
and outstanding, immediately prior to the Effective Time, will be converted into
the right to receive a payment (the "Merger Consideration") of $21.33 in cash or
2.081 shares of the BankUnited Common Stock, subject to adjustment. Each
shareholder may elect to receive its total Merger Consideration in cash,
BankUnited Common Stock or a combination thereof, provided, however, that (1) in
the aggregate, the cash portion shall not exceed 55% of the total amount of
Merger Consideration, including any cash paid in respect of fractional shares
pursuant to the Merger Agreement, and (2) the Merger Consideration shall not be
paid on shares as to which dissenters rights have been asserted and duly
perfected pursuant to ss.607.1320 of the Florida Business Corporation Act. The
agreed value of 2.081 shares is subject to change based upon the fair market
value of the BankUnited Common Stock prior to the effective time of the Merger
and may be reduced should that fair market value exceed $12.00 per share. If the
average fair market value of BankUnited Common Stock, as determined by using the
average closing price of one share of the security computed for the 15-day
trading period on the NASDAQ system (as reported by THE WALL STREET JOURNAL or,
if not reported, thereby, any other authoritative source), ending three days
prior to the Effective Time (the "Fair Market Value" or "FMV"), is greater than
$12.00 per share, the agreed value shall be determined under the following
formula:
2.081 X 12 = agreed value
----------
FMV
For example, if the Fair Market Value of BankUnited Common Stock was $13.125 per
share (the reported last sales price on October 31, 1997) at the time of
consummation of the Merger, each share of Consumers Common Stock would be
converted into the right to receive 1.9 shares of BankUnited Common Stock,
rather than 2.081 shares.
Should the Fair Market Value of BankUnited Common Stock be less than
$9.80 per share, each share of Consumers Common Stock will be converted into the
right to receive $20.95 in cash, and BankUnited shall pay a total purchase
price, including all amounts paid for Consumers stock options, of $10,800,000.
If the Consumers net worth is less than $6,500,000, then at BankUnited's
option, it may either terminate the Merger Agreement, or proceed to consummate
the Merger by reducing the aggregate Merger Consideration to be paid to holders
of Consumers stock and the amounts to be paid to holders of Consumers stock
options by $1.25 for each dollar that the Consumers net worth is less than
$6,500,000.
Each holder of shares of Consumers capital stock exchanged pursuant to
the Merger, who would otherwise have been entitled to receive a fraction of a
share of BankUnited Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of BankUnited
Common Stock multiplied by the Fair Market Value. No such holder will be
entitled to dividends, voting rights or any other rights as a shareholder in
respect of any fractional share.
Former shareholders of record of Consumers shall be entitled to vote
after the Effective Time at any meeting of BankUnited shareholders the number of
whole shares of BankUnited Common Stock into which their respective shares of
Consumers capital stock are converted. Until surrendered for exchange in
accordance with the provisions of the Merger Agreement, each certificate
therefor representing shares of Consumers capital stock shall from and after the
Effective Time represent for all purposes only the right to receive shares of
BankUnited Common Stock and cash. No dividend or other distribution payable to
the holders of the record of BankUnited Common Stock at or as of any time after
the Effective Time, shall be paid to the holder of any certificate representing
shares of
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Consumers capital stock issued and outstanding at the Effective Time until such
holder surrenders such certificate for exchange, promptly after which time all
such dividends or distributions which have been declared and paid following the
Effective Time shall be paid (without interest). See -- Exchange of
Certificates.
The holders of the BankUnited Class A Common Stock are entitled to
dividends when, as, and if declared by the BankUnited Board out of funds legally
available therefor. The BankUnited Board may declare dividends solely on the
BankUnited Class A Common Stock or may declare dividends on both the BankUnited
Class A Common Stock and the BankUnited Class B Common Stock provided that the
dividend declared for a share of the BankUnited Class A Common Stock is not less
than 110% (subject to adjustment upon the occurrence of certain events) of the
amount per share of any dividend declared on the BankUnited Class B Common
Stock. See "Description of BankUnited Capital Stock."
TREATMENT OF CONSUMERS STOCK OPTIONS
At the Effective Time, all rights with respect to any shares of the
Consumers Common Stock pursuant to stock options granted by Consumers
("Consumers Options"), which are outstanding at the Effective Time, whether or
not then exercisable, shall be cancelled and each holder of any such option
shall be paid for each such option an amount in cash without interest,
determined by multiplying (i) the excess, if any, of $21.33 over the applicable
exercise price of such option by (ii) the number of shares of Consumers Common
Stock such holder could have purchased had such holder exercised such option in
full, assuming full vesting of such options, immediately prior to the Effective
Time.
BankUnited shall be entitled to deduct and withhold from any Option
Payments payable pursuant to the Merger Agreement to any holder of Consumers
Options such amounts as BankUnited is required to deduct and withhold with
respect to making such payment under the Code, or any provision of state, local
or foreign tax law. To the extent that amounts are so deducted and withheld and
paid over to the appropriate taxing authority by BankUnited, such amounts shall
be treated for all purposes of the Merger Agreement as having been paid to the
holder of the Consumers Options in respect of which such deduction and
withholding was made by BankUnited.
Except as provided in the Merger Agreement or as otherwise agreed in
writing by BankUnited and Consumers, (i) the provisions of the Consumers Stock
Plans and any other plan, program or arrangement pursuant to which Consumers
may, or may be required to, issue stock or stock-based compensation, shall be
terminated by the Effective Time, and (ii) Consumers shall ensure that following
the Effective Time no holder of Consumers Options or any participant in any
Consumers Stock Plan shall have any right thereunder to acquire any equity
securities of Consumers or any of its subsidiaries. Nothing shall restrict the
ability of holders of Consumers Options to exercise such options prior to the
Effective Time and upon such exercise to be treated like any other holder of
Consumers Common Stock.
Shares of BankUnited capital stock issued and outstanding immediately
prior to the Effective Time will remain issued and outstanding immediately after
the Merger.
EXCHANGE OF CERTIFICATES
Promptly after the Effective Time (but in no event more than three
business days following the Effective Time), BankUnited and Consumers shall
cause the exchange agent to mail appropriate transmittal materials (which shall
specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of Consumers Common Stock shall
pass, only upon proper delivery of such certificates to the exchange agent) to
the former shareholders of Consumers. After the Effective Time, each holder of
shares of Consumers Common Stock issued and outstanding at the Effective Time
(other than shares as to which dissenters' rights have been asserted) shall
surrender the certificate or certificates theretofore representing such shares,
together with such transmittal materials properly executed, to the exchange
agent and promptly upon surrender (but in no event more
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than three business days following receipt by the exchange agent) shall receive
in exchange therefor the Merger Consideration as provided in the Merger
Agreement. The certificate or certificates for Consumers Common Stock so
surrendered shall be duly endorsed as the exchange agent may require. Each
holder of shares of Consumers Common Stock issued and outstanding at the
Effective Time also shall receive, upon surrender of the certificate or
certificates representing such shares, cash in lieu of any fractional shares of
BankUnited Common Stock to which such holder would otherwise be entitled.
BankUnited shall not be obligated to deliver the consideration to which any
former holder of Consumers Common Stock is entitled as a result of the Merger
until such holder surrenders his certificate or certificates representing shares
of Consumers capital stock for exchange or the exchange agent receives documents
sufficient, in the discretion of the exchange agent and BankUnited, to evidence
the holder's ownership interest in Consumers Common Stock. In addition,
certificates surrendered for exchange by any person constituting an "affiliate"
of Consumers for purposes of Rule 145(c) under the Securities Act shall not be
exchanged for certificates representing whole shares of BankUnited Common Stock
until BankUnited has received a written agreement from such person that any
disposition of such shares shall be made in compliance with applicable
provisions of the Securities Act.
Shares of BankUnited capital stock issued and outstanding immediately
prior to the Effective Time will remain issued and outstanding and be unaffected
by the Merger.
EFFECTIVE TIME
The Effective Time of the consummation of the Merger shall occur on or
promptly after the first business day following the last to occur of (i) the
date that is 30 days after the date of the order of the OTS approving the Merger
and the Subsidiaries Merger, (ii) the effective date of the last order,
approval, or exemption of any other federal or state regulatory agency approving
or exempting the Merger and the Subsidiaries Merger, if such action is required,
(iii) the expiration of all required waiting periods after the filing of all
notices to all federal or state regulatory agencies required for consummation of
the Merger and the Subsidiaries Merger, and (iv) the date on which the
shareholders of Consumers approve the Merger Agreement, in each case as
contemplated by the Merger Agreement. The Effective Time may occur at such other
date and time as BankUnited and Consumers shall agree in writing.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains representations and warranties of
BankUnited and Consumers as to, among other things, (i) the corporate
organization and existence of each party and its subsidiaries; (ii) the
capitalization of each party and its subsidiaries; (iii) the corporate power and
authority of each party and the compliance of the Merger Agreement with (a) the
articles of incorporation and bylaws of each party, (b) applicable law, and (c)
certain material agreements; (iv) governmental and third-party approvals; (v)
the timely filing of required regulatory reports; (vi) each party's financial
statements and filings with the Commission or the OTS, as applicable; (vii)
other than as disclosed in disclosure schedules the absence of the need for
either party to pay brokers' fees; (viii) the absence of certain changes in each
party's business since March 31, 1996; (ix) the absence of material legal
proceedings; (x) the filing and accuracy of each party's tax returns; (xi) each
party's employee benefit plans and related matters; (xii) material accuracy and
completeness of the filings made by each party with the Commission or the OTS,
as applicable; (xiii) each party's compliance with applicable law; (xiv) the
absence of material defaults under certain contracts; (xv) agreements between
each party and regulatory agencies; (xvi) activities of the subsidiaries of each
party; and (xvii) the absence of undisclosed liabilities; and (xviii) specified
matters as to Consumers' business and property.
CONDUCT OF BUSINESS PENDING THE MERGER AND OTHER AGREEMENTS
Pursuant to the Merger Agreement, prior to the Effective Time, Consumers
has agreed (i) to conduct its business in the usual, regular and ordinary course
consistent with past practice, and (ii) use its best efforts to maintain
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and preserve intact its business organization, employees and advantageous
business relationships and retain the services of its officers and key
employees.
In addition, except as required by law, or as contemplated by the Merger
Agreement, Consumers has agreed that without the prior written consent of
BankUnited, Consumers will not, among other things:
(a) other than in the ordinary course of business consistent with
past practice since December 31, 1996 ("In the Ordinary Course"), incur
any indebtedness for borrowed money, including Federal Home Loan Bank
advances (other than (i) Federal Home Loan Bank advances having
maturities of six months or less and (ii) short-term indebtedness
incurred to refinance short-term indebtedness and indebtedness of
Consumers or any of its subsidiaries to Consumers or any of its
subsidiaries) (it being understood and agreed that incurrence of
indebtedness In the Ordinary Course shall include, without limitation,
the creation of deposit liabilities, purchases of federal funds, sales
of certificates of deposit and entering into repurchase agreements),
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or
other entity, or make any loan or advance other than In the Ordinary
Course;
(b) adjust, split, combine or reclassify any capital stock; make,
declare or pay any dividend or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares
of its capital stock or any securities or obligations convertible into
or exchangeable for any shares of its capital stock, or grant any stock
appreciation rights or grant any individual, corporation or other entity
any right to acquire any shares of its capital stock; or issue any
additional shares of capital stock, or any securities or obligations
convertible into or exchangeable for any shares of its capital stock;
(c) sell, transfer, mortgage, encumber or otherwise dispose of
any of its properties or assets to any individual, corporation or other
entity, or cancel, release or assign any indebtedness to any such person
or any claims held by any such person, except in the ordinary course of
business consistent with past practice or pursuant to contracts or
agreements in force at the date of the Merger Agreement;
(d) except for transactions identified by Consumers to BankUnited
or pursuant to contracts in force on the date of the Merger Agreement,
make any material investment either by purchase of stock or securities,
contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other entity;
(e) enter into or terminate any contract or agreement involving
annual payments in excess of $20,000 and which cannot be terminated
without penalty upon 30 days notice, or make any change in, or extension
of, any of its leases or contracts involving annual payments in excess
of $20,000 and which cannot be terminated without penalty upon 30 days
notice;
(f) except as identified by Consumers to BankUnited, increase or
modify in any manner the compensation or fringe benefits of any of its
current or former employees or pay any pension or retirement allowance
not required by any existing plan or agreement to any such current or
former employees, or become a party to, amend or commit itself to any
pension, retirement, profit-sharing or welfare benefit plan or agreement
or employment agreement with or for the benefit of any current or former
employee other than routine adjustments in compensation and fringe
benefits In the Ordinary Course or accelerate the vesting of any stock
options or other stock-based compensation;
(g) settle any claim, action or proceeding involving the payment
of money damages in excess of $20,000, except In the Ordinary Course;
(h) amend its articles of incorporation or its bylaws;
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(i) fail to maintain any regulatory agreements, material licenses
and permits or to file in a timely fashion all federal, state, local and
foreign tax returns;
(j) make any capital expenditures of more than $5,000
individually or $20,000 in the aggregate;
(k) issue any additional shares of Consumers capital stock,
except pursuant to the exercise of Consumers Options by the holders
thereof; or
(l) agree to, or make any commitment to, take any of the actions
listed above;
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Each party's obligations to effect the Merger is subject to the
fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) The Merger Agreement and the transactions contemplated
thereby shall have been adopted and approved by the requisite
affirmative votes of the holders of Consumers Common Stock entitled to
vote thereon;
(b) The Merger Agreement, the Merger, the Subsidiaries Merger and
the other transactions contemplated hereby shall have been approved by
the OTS and any other regulatory authorities whose approval is required
for consummation of the transactions contemplated hereby, which
approvals are subject to no conditions that in the judgment of
BankUnited would restrict it or its subsidiaries or affiliates in their
respective spheres of operations and business activities after the
Effective Time;
(c) The Registration Statement shall have been declared effective
and shall not be subject to a stop order or any threatened stop order;
(d) Neither BankUnited nor Consumers shall be subject to any
order, decree, or injunction of any court or agency of competent
jurisdiction, directing that the consummation of the transactions
contemplated by the Merger Agreement be prohibited or enjoined;
(e) The shares of BankUnited Common Stock issuable pursuant to
the Merger shall have been authorized for trading on the NASDAQ upon
official notice of issuance;
(f) Holders of no more than ten percent of the outstanding
capital stock of Consumers shall have exercised dissenters' rights under
Florida law;
(g) The representations and warranties of the other party to the
Merger Agreement shall be true and correct in all material respects as
of the date of the Merger Agreement and (except to the extent such
representations and warranties speak as of as of an earlier date) as of
the Closing Date as though made on the Closing Date; and
(h) Each party shall have performed in all material respects all
obligations required to be performed by it under the Merger Agreement at
or prior to the Closing Date.
The obligations of Consumers to effect the Merger shall be subject to
the fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
(a) As of the Effective Time Consumers' net worth shall be not
less than $6,100,000;
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(b) No event, occurrence, or circumstance shall have occurred
that would constitute a Material Adverse Effect (as defined in the
Merger Agreement) as to BankUnited;
(c) Consumers will have received an opinion of Kronish, Lieb,
Weiner & Hellman LLP addressed to Consumers and/or BankUnited in form
reasonably satisfactory to them that for federal income tax purposes the
Merger will qualify as a reorganization under the provisions of Section
368 of the Code, and that the conversion of Consumers Common Stock
solely into BankUnited Common Stock will be treated as a tax-free
exchange; and
(d) The fair market value of BankUnited Common Stock shall not be
less than $8.50, as determined by using the average of the mean of the
closing prices of such stock as quoted on the NASDAQ system on each of
the ten (10) trading days immediately preceding the Effective Time.
The obligations of BankUnited to effect the Merger shall be subject to
the fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
(a) As of the Effective Time Consumers' net worth shall be not
less than $6,500,000; and
(b) No event, occurrence, or circumstance shall have occurred
that would constitute a Material Adverse Effect as to Consumers.
REGULATORY APPROVAL REQUIRED FOR THE MERGER
BankUnited and Consumers have agreed to use their reasonable best
efforts to obtain the requisite regulatory approvals, which include approval
from the OTS, and have filed applications to obtain such requisite regulatory
approvals. The Merger is subject to the approval of the OTS. Under federal law,
a period of 15 days must expire following approval by the OTS within which
period the United States Department of Justice may file objections to the Merger
under the federal antitrust laws. The Merger cannot proceed in the absence of
the requisite regulatory approvals. There can be no assurance that such
requisite regulatory approvals will be obtained, and, if obtained, there can be
no assurance as to the date of any such approvals or the absence of any
litigation challenging such approvals. There can likewise be no assurance that
the United States Department of Justice will not attempt to challenge the Merger
on antitrust grounds or, if such a challenge is made, as to the result thereof.
BankUnited and Consumers are not aware of any other material
governmental approvals or actions that are required prior to the consummation of
the Merger other than those described above. It is presently contemplated that,
if any such additional governmental approvals or actions are required, such
approvals or actions will be sought. There can be no assurance, however, that
any such additional approvals or actions will be obtained.
PAYMENT OF FEES TO BANKUNITED
Consumers has agreed to pay BankUnited a fee equal to $325,000 (the
"Termination Fee") plus reasonable out of pocket expenses, not in excess of
$25,000 incurred by BankUnited or any of its affiliates in the event any of the
following events occurs: (i) Consumers' Board of Directors recommends a proposal
other than the acquisition of Consumers by BankUnited; (ii) Consumers' net worth
is less than $6.1 million, permitting Consumers to terminate the Merger
Agreement, and within nine months after such termination Consumers enters into
an agreement to be acquired by another company; or (iii) BankUnited terminates
the Merger Agreement as a result of a material breach by Consumers, and within
nine months after such termination Consumers enters into an agreement to be
acquired by another company. The Termination Fee is payable in the event that
the proposal for Consumers to be acquired by a party other than BankUnited has
an aggregate value of $11 million or more. If Consumers enters into an
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agreement with another party and the aggregate value is between $11 million and
$11,325,000, the Termination Fee shall be limited to the excess over $11
million.
DISSENTERS' RIGHTS
Any holder of Consumers Common Stock who objects to the Merger may
demand payment of the fair value of his or her shares in cash pursuant to the
procedures set forth in Section 607.1320 of the Florida Business Corporation
Act. Any holder of Consumers Common Stock contemplating the exercise of his or
her dissenter's rights should carefully review the provisions of Sections
607.1301, 607.1302 and 607.1320 of the Florida Business Corporation Act, which
are described below and set forth in their entirety as Appendix B to this
Prospectus. The following discussion is not complete and is qualified in its
entirety by reference to Sections 607.1301, 607.1302 and 607.1320.
Holders of record of Consumers Common Stock who desire to exercise their
dissenter's rights must satisfy all of the following conditions. A writing
identifying the shareholder and giving notice of his or her intent to demand
cash payment for his or her shares, if the Merger is consummated, must be
delivered to Consumers before the shareholder vote on approval of the Merger
Agreement. A Consumers shareholder wishing to exercise his or her dissenter's
rights must not vote in favor of the Merger Agreement. A holder of Consumers
Common Stock who votes his or her shares of Consumers Common Stock against the
Merger Agreement, by proxy, or otherwise, but who does not exercise his or her
dissenter's rights pursuant to Section 607.1320, will not fulfill the demand for
dissenter's rights required under Section 607.1320.
A shareholder who elects to exercise dissenters' rights must mail or
deliver his or her notice to:
Bernard Janis
Chairman of the Board and Chief Executive Officer
Consumers Bancorp, Inc.
9400 South Dadeland Boulevard
Suite 620
Miami, Florida 33156
Within ten days of the date on which the shareholder vote authorizing
the proposed action was taken, Consumers shall give written notice of the
adoption of the Merger Agreement to each shareholder who filed the notice of
intent to demand payment for his or her shares pursuant to Section 607.1320.
Within 20 days after the giving of notice to the dissenting shareholder,
the dissenting shareholder shall file with Consumers a notice of his or her
election to dissent, stating his or her name and address, the number of shares
as to which he or she dissents, and a demand for payment of the fair value of
his or her shares. Any shareholder failing to file such election to dissent
within the period set forth shall be bound by the terms of the Merger Agreement.
The dissenting shareholder shall deposit his or her certificates with Consumers
simultaneously with the filing of the election to dissent.
Upon the filing of the notice of election to dissent, the dissenting
shareholder shall be entitled only to such payment as provided in Section
607.1320 and shall not be entitled to vote or to exercise any other rights of a
shareholder. A notice of election may be withdrawn in writing by the dissenting
shareholder at any time before an offer is made by Consumers to pay for his or
her shares. After such offer, no such notice of election may be withdrawn unless
Consumers consents thereto. The right of the dissenting shareholder to be paid
the fair value of his shares shall cease, and he or she shall be reinstated to
have all the rights of a shareholder if (1) his or her demand is withdrawn; (2)
the Merger Agreement is abandoned or rescinded or shareholders revoke the
authority to effect such action; (3) no demand or petition for the determination
of fair value by a court has been made or filed within the
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time provided in Section 607.1320; or (4) a court of competent jurisdiction
determines that the dissenting shareholder is not entitled to relief provided by
Section 607.1320.
Within ten days after the expiration of the period in which a dissenting
shareholder may file his or her notice of election to dissent, or within ten
days after the Merger is effected, whichever is later (but in no case later than
90 days from the date of the shareholders vote) Consumers shall make a written
offer to each dissenting shareholder who has made demand as provided above to
pay an amount Consumers estimates to be the fair value of the Consumers Common
Stock. Such offer shall be accompanied by (1) a balance sheet of Consumers, as
of the latest available date and not more than 12 months prior to the making of
such offer and (2) a profit and loss statement of Consumers for the 12-month
period ended on the date of such balance sheet. If the Merger has not been
effected, the offer may be made conditional upon the consummation of such
action. Under Section 607.1320 of the Florida Business Corporation Act, fair
value with respect to dissenters' shares means the value of the shares as of the
close of business on the day prior to the date on which the shareholders vote
authorizing the corporate action to which the shareholder is dissenting,
excluding any appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable.
If within 30 days after the making of such offer any shareholder accepts
the same, payment for his or her shares shall be made within 90 days after the
making of such offer or the consummation of the Merger, whichever is later. Upon
payment of the agreed value, the dissenting shareholder shall cease to have any
interest in such shares.
If Consumers fails to make such offer within the period specified above
or if it makes the offer and any dissenting shareholder or shareholders fail to
accept the same within the period of 30 days thereafter, then Consumers, within
30 days after receipt of written demand from any dissenting shareholder given
within 60 days after the date of which the Merger was effected, shall, or at its
election at any time within such period of 60 days may, file an action in the
Circuit Court of Dade County, Florida requesting that the fair value of said
shares be determined. If Consumers fails to institute the proceeding as herein
provided, any dissenting shareholder may do so in the name of Consumers. All
dissenting shareholders, other than shareholders who have agreed with Consumers
as to the value of their shares shall be made party to the proceeding as an
action against their shares. Consumers shall serve a copy of the initial
pleading in such proceeding upon each dissenting shareholder who is a resident
of Florida in the manner provided by law for the service of a Summons and
Complaint and upon each non-resident dissenting shareholder either by registered
or certified mail and publication or in such manner as permitted by law. All
dissenting shareholders who are proper parties to the proceeding shall be
entitled to judgement against Consumers for the amount of the fair value of
their shares. The court may, if it so elects, appoint one or more persons as
appraisers to receive evidence and recommend a decision on the question of fair
value. Consumers shall pay each dissenting shareholder the amount found to be
due him or her within ten days after final determination of the proceedings. At
the discretion of the court, the judgement may include a fair rate of interest
to be determined by the court. Upon payment of the judgement, the dissenting
shareholders shall cease to have any interest in such shares.
The costs and expenses of any court proceedings shall be determined by
the court and shall be assessed against Consumers, but all or any part of such
costs and expenses may be apportioned and assessed as the court deems equitable
against any or all of the dissenting shareholders who are parties to the
proceeding, to whom Consumers has made an offer to pay for the shares, if the
courts find that the action of such shareholders in failing to accept such offer
was arbitrary, vexatious, or not in good faith. Such expenses shall include
reasonable compensation for, and reasonable expenses of, the appraisers, but
shall exclude the fees and expenses of counsel for, and experts employed by, any
party. If the fair value of the shares, as determined, materially exceeds the
amounts which Consumers offered to pay thereto, or if no offer was made, the
court in its discretion may award to any shareholder who is a party to the
proceeding such sum as the court determines to be reasonable compensation to any
attorney or expert employed by the shareholder in the proceeding.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING DISCUSSION OF MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER UNDER PRESENT LAW DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OF ALL
TAX CONSEQUENCES THAT MAY BE RELEVANT TO ANY PARTICULAR SHAREHOLDERS. CERTAIN
SHAREHOLDERS (INCLUDING, BUT NOT LIMITED TO, INSURANCE COMPANIES, TAX-EXEMPT
ORGANIZATIONS, FINANCIAL INSTITUTIONS, BROKER-DEALERS, EMPLOYEE SHAREHOLDERS,
FOREIGN CORPORATIONS AND PERSONS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED
STATES) MAY BE SUBJECT TO SPECIAL RULES NOT DISCUSSED BELOW. SHAREHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO SPECIFIC TAX CONSEQUENCES TO THEM
OF THE MERGER INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL,
AND OTHER TAX MATTERS.
Consumers and BankUnited have received an opinion of Kronish, Lieb,
Weiner & Hellman LLP, special tax counsel to BankUnited, to the effect that for
federal income tax purposes (i) the Merger and the Subsidiaries Merger will each
be a reorganization under Section 368(a) of the Code, (ii) none of Consumers,
BankUnited, Consumers Savings Bank or BankUnited, FSB will recognize any taxable
gain or loss upon consummation of the Merger or consummation of the Subsidiaries
Merger, and (iii) the Merger will result in the tax consequences summarized
below for Consumers shareholders who receive BankUnited Common Stock, BankUnited
Common Stock and cash, or cash only, in exchange for Consumers Common Stock in
the Merger. Receipt of substantially the same opinion of Kronish, Lieb, Weiner &
Hellman LLP as of the Effective Time is a condition to consummation of the
Merger. The opinion of Kronish, Lieb, Weiner & Hellman LLP is based on, and the
opinion to be given as of the Effective Time will be based on, certain customary
assumptions and representations regarding, among other things, the lack of
previous dealings between Consumers and BankUnited, the existing and future
ownership of Consumers and BankUnited, and the future plans for Consumers'
business.
As described below, the federal income tax consequences to a shareholder
of Consumers will depend on whether the shareholder exchanges shares of
Consumers Common Stock for BankUnited Common Stock, cash, or a combination of
BankUnited Common Stock and cash. The following summary does not discuss all
potentially relevant federal income tax matters, consequences to any
shareholders subject to special tax treatment (for example, tax-exempt
organizations and foreign persons), or consequences to shareholders who acquired
their Consumers Common Stock through the exercise of employee stock options or
otherwise as compensation.
EXCHANGE OF CONSUMERS COMMON STOCK FOR BANKUNITED COMMON STOCK. A holder
of shares of Consumers Common Stock who receives solely BankUnited Common Stock
in exchange for all his shares of Consumers Common Stock will not recognize any
gain or loss on the exchange. If a shareholder receives BankUnited Common Stock
and cash in lieu of a fractional share of BankUnited Common Stock, the
shareholder will recognize taxable gain or loss solely with respect to such
fractional share as if the fractional share had been received and then redeemed
for the cash. A shareholder who exchanges all his shares of Consumers Common
Stock for BankUnited Common Stock will have an aggregate tax basis in the shares
of BankUnited Common Stock (including any fractional share interest) equal to
his tax basis in the shares of Consumers Common Stock exchanged therefor. A
shareholder's holding period for shares of BankUnited Common Stock (including
any fractional share interest) received in the Merger will include his holding
period for the shares of Consumers Common Stock exchanged therefor if they are
held as a capital asset at the time of the Merger.
EXCHANGE OF CONSUMERS COMMON STOCK FOR CASH AND BANKUNITED COMMON STOCK.
A holder of shares of Consumers Common Stock who receives both cash and shares
of BankUnited Common Stock (including any fractional share interest) in the
Merger will recognize any gain realized up to the amount of cash received
(excluding cash paid in lieu of a fractional share of BankUnited Common Stock)
but will not recognize any loss. If the shareholder holds his Consumers Common
Stock as a capital asset at the time of the Merger, the amount of gain
recognized generally will be treated as capital gain.
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However, it is possible that such gain will be treated as dividend
income, depending on a shareholder's individual circumstances. Dividend
treatment would arise if, had a shareholder received shares of BankUnited Common
Stock instead of the cash actually received and had BankUnited then redeemed
those shares for cash, such a redemption would have been taxable as a dividend
(rather than a sale) under Section 302 of the Code. A shareholder should consult
his own tax advisor to determine whether gain recognized on the exchange of
Consumers Common Stock for shares of BankUnited Common Stock and cash is to be
treated as capital gain, as typically will be the case, or a dividend.
A shareholder's tax basis in the shares of BankUnited Common Stock
(including any fractional share interest) received will equal his tax basis in
his shares of Consumers Common Stock exchanged therefor, reduced by the amount
of cash received (excluding cash paid in lieu of a fractional share of
BankUnited Common Stock) and increased by the amount of gain recognized
(including any gain treated as a dividend). A shareholder's holding period for
shares of BankUnited Common Stock (including any fractional share interest)
received in the Merger will include his holding period for the shares of
Consumers Common Stock exchanged therefor if they are held as capital assets at
the time of the Merger. If a shareholder receives cash in lieu of a fractional
share of BankUnited Common Stock, the shareholder will recognize gain or loss as
if the fractional share had been received and then redeemed for the cash.
EXCHANGE OF CONSUMERS COMMON STOCK FOR CASH. Any shareholder who makes
an election to receive cash for all his shares should be aware that he may, in
fact, receive some BankUnited Common Stock under the proration provisions of the
Merger Agreement. Such a shareholder should therefore be familiar with the
rules, described above, that apply to a holder who receives cash and some
BankUnited Common Stock.
Generally, a shareholder receiving solely cash in the Merger, or
pursuant to the exercise of dissenters' rights, will recognize gain or loss
equal to the difference between the amount of cash received and his tax basis in
his shares of Consumers Common Stock surrendered. Such gain or loss generally
will be capital gain or loss if the shares of Consumers Common Stock are held as
a capital asset at the time of the Merger. However, it is possible that a
shareholder's receipt of cash in exchange for Consumers Common Stock could be
treated as dividend income if the shareholder actually owns or constructively
owns (under the rules of Section 318 of the Code) shares of BankUnited Common
Stock or constructively owns shares of Consumers Common Stock actually owned by
another person. The cash received by such a shareholder could be treated as a
dividend if the shareholder would have had a dividend (rather than a sale) under
Section 302 of the Code in either of two situations: (1) before the Merger,
Consumers redeemed the shareholder's shares of Consumers Common Stock for cash,
or (2) the shareholder received shares of BankUnited Common Stock in exchange
for his Consumers Common Stock (instead of the cash actually received) and
BankUnited then redeemed those shares of BankUnited Common Stock for cash. A
shareholder should consult his own tax advisor to determine whether the exchange
of Consumers Common Stock for cash in the Merger, or pursuant to the exercise of
dissenters' rights, is to be treated as a sale, as typically will be the case,
or as a dividend.
ACCOUNTING TREATMENT
The acquisition of Consumers pursuant to the Merger will be accounted
for under the purchase method of accounting. Under the purchase method of
accounting, the assets and liabilities of Consumers will be recorded on the
consolidated books of BankUnited at their fair values at the Effective Time. Any
excess of the value of the consideration paid by BankUnited over the fair value
of Consumers' identifiable net assets acquired will be treated as goodwill and
will be amortized over a period of 25 years.
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TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement provides that the Merger may be terminated at any
time prior to the Effective Time, whether before or after approval by Consumers'
shareholders:
(a) by mutual consent of the Board of Directors of BankUnited and
the Board of Directors of Consumers; or
(b) by the Board of Directors of BankUnited or the Board of
Directors of Consumers if (i) the OTS has denied approval of the Merger
and such denial has become final and nonappealable or has approved the
Merger subject to conditions that in the judgment of BankUnited would
restrict it or its subsidiaries or affiliates in their respective
spheres of operations and business activities after the Effective Time
or (ii) the Effective Time does not occur by March 15, 1998, unless
mutually extended by the parties; or
(c) by BankUnited or Consumers (if not in material breach of any
of its obligations hereunder) pursuant to notice in the event of a
breach or failure by the other that is material in the context of the
transactions contemplated by the Merger Agreement of any representation,
warranty, covenant or agreement by Consumers contained in the Merger
Agreement which has not been, or cannot be, cured within 30 days after
written notice of such breach is given to Consumers; or
(d) by either party if the shareholders of Consumers fail to
approve the Merger; or
(e) by Consumers if (i) there shall not have been a material
breach of any covenant or agreement on the part of Consumers under the
Merger Agreement and (ii) prior to the Effective Time, a corporation,
partnership, person or other entity or group shall have made a bona fide
Acquisition Proposal (as defined in the Merger Agreement) that the
Consumers Board determines in its good faith judgment and in the
exercise of its fiduciary duties, based as to legal matters on the
reasonable advice of legal counsel and as to financial matters on the
reasonable advice of an investment banking firm of national reputation,
is more favorable to the Consumers shareholders than the Merger and that
the failure to terminate the Merger Agreement and accept such
alternative Acquisition Proposal would be inconsistent with the proper
exercise of such fiduciary duties; or
(f) If the Consumers net worth is less than $6,500,000, then at
BankUnited's option, it may either terminate the Merger Agreement, or
proceed to consummate the Merger by reducing the aggregate Merger
Consideration to be paid to holders of Consumers stock and the amounts
to be paid to holders of Consumers stock options by $1.25 for each
dollar that the Consumers net worth is less than $6,500,000.
MODIFICATION AND WAIVER OF THE MERGER AGREEMENT
To the extent permitted by law, the Merger Agreement may be amended by a
subsequent writing signed by each of BankUnited and Consumers; provided,
however, that the provisions hereof relating to the manner or basis in which
shares of Consumers capital stock will be exchanged for the Merger Consideration
shall not be amended after the Consumers shareholders meeting without any
requisite approval of the holders of the issued and outstanding shares of
Consumers capital stock entitled to vote thereon.
Prior to or at the Effective Time, each of BankUnited and Consumers
shall have the right to waive any default in the performance of any term of the
Merger Agreement by the other, to waive or extend the time for the compliance or
fulfillment by the other of any and all of the other's obligations under the
Merger Agreement and to waive any or all of the conditions precedent to its
obligations under the Merger Agreement, except any condition which, if not
satisfied, would result in the violation of any law or applicable governmental
regulation.
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BOARD OF DIRECTORS, MANAGEMENT AND OPERATIONS FOLLOWING THE MERGER
The Board of Directors of BankUnited consists of 15 persons and will not
change as a result of the consummation of the Merger. The executive officers of
BankUnited after the Merger will be comprised of members of BankUnited's current
senior management. It has not yet been determined which members of Consumers'
management will become officers of BankUnited following the Merger.
EXPENSES
The Merger Agreement provides that BankUnited and Consumers will each
pay its own expenses in connection with the Merger and the transactions
contemplated thereby.
RESALES OF BANKUNITED COMMON STOCK RECEIVED/ISSUED IN THE MERGER
The BankUnited Common Stock issued pursuant to the Merger will be
registered under the Securities Act and will be freely transferable under the
Securities Act, except for shares issued to any Consumers shareholder who may be
deemed to be an affiliate of BankUnited for purposes of Rule 144 promulgated
under the Securities Act ("Rule 144") or an affiliate of Consumers for purposes
of Rule 145 promulgated under the Securities Act ("Rule 145") (each an
"Affiliate"). Affiliates will include persons (generally executive officers,
directors and 10% shareholders) who control, are controlled by, or are under
common control with (i) Consumers at the time of the Consumers Special Meeting
or (ii) BankUnited at or after the Effective Time.
Rules 144 and 145 will restrict the sale of the BankUnited Common Stock
received in the Merger by Affiliates and certain of their family members and
related interests. Generally speaking, during the one year period following the
Effective Time, those persons who are Affiliates of Consumers at the time of the
Consumers Special Meeting, provided they are not Affiliates of BankUnited at or
following the Effective Time, may publicly resell any shares of the BankUnited
Common Stock received by them in the Merger, subject to certain limitations as
to, among other things, the amount of the BankUnited Common Stock sold by them
in any three-month period and as to the manner of sale. After the one-year
period, such Affiliates may resell their shares without such restrictions so
long as there is adequate current public information with respect to BankUnited
as required by Rule 144. Persons who become Affiliates of BankUnited prior to or
after the Effective Time, may publicly resell the BankUnited Common Stock
received by them in the Merger subject to the volume, manner of sale and current
public information limitations and certain filing requirements specified in Rule
144.
The ability of Affiliates to resell shares of the BankUnited Common
Stock received in the Merger under Rule 144 or Rule 145 as summarized herein
generally will be subject to BankUnited having satisfied its Exchange Act
reporting requirements for specified periods prior to the time of sale.
Affiliates also would be permitted to resell the BankUnited Common Stock
received in the Merger pursuant to an effective registration statement under the
Securities Act or another available exemption from the Securities Act
registration requirements.
This Prospectus does not cover any resales of the BankUnited Common
Stock received by persons who may be deemed to be Affiliates of BankUnited or
Consumers in the Merger.
Consumers has agreed in the Merger Agreement to use its best efforts to
cause each person who is an Affiliate (for purposes of Rule 145) of Consumers to
deliver to BankUnited a written agreement intended to ensure compliance with the
Securities Act.
41
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Set forth below is a summary of certain terms and provisions of
BankUnited's capital stock, which is qualified in its entirety by reference to
BankUnited's Articles of Incorporation and to the Statements of Designation
setting forth the resolutions establishing the rights and preferences of
BankUnited's stock. Copies of the Articles of Incorporation and Statements of
Designation have been incorporated by reference into the Registration Statement
of which this Prospectus forms a part.
Under the Articles of Incorporation, the authorized but unissued and
unreserved shares of BankUnited's capital stock will be available for issuance
for general corporate purposes, including, but not limited to, possible stock
dividends, future mergers or acquisitions, or private or public offerings.
Except as may otherwise be required, shareholder approval will not be required
for the issuance of those shares.
The following table sets forth all classes of stock outstanding, and
stock options and warrants held, as of October 31, 1997, as well as the amount
of Class A Common Stock which would be outstanding upon exercise or conversion
of all outstanding options, warrants and convertible securities:
<TABLE>
<CAPTION>
SHARES, OPTIONS SHARES OF CLASS A
AND WARRANTS COMMON STOCK
OUTSTANDING CONVERTIBLE INTO
--------------- -----------------
<S> <C> <C>
Class A Common Stock..................................... 13,860,960 13,860,960
Class B Common Stock..................................... 278,685 278,685
Series 1993 Preferred Stock.............................. 744,870 744,870
Series B Preferred Stock................................. 183,818 274,973
9% Preferred Stock....................................... 697,117 0
Stock Options............................................ 1,586,624 1,586,624
Warrants................................................. 55,200 93,034
---------- -----------
Total............................................. 17,407,274 16,839,146
========== ==========
</TABLE>
CLASS A COMMON STOCK
BankUnited's Articles of Incorporation authorizes the issuance, in
series, of up to 30,000,000 shares of Class A Common Stock and permits
BankUnited's Board of Directors to establish the rights and preferences of each
series of Class A Common Stock. The Board of Directors has allocated 20,000,000
shares to the Series I Class A Common Stock, the only series of Class A Common
Stock outstanding. As of October 31, 1997, 13,860,960 shares of Class A Common
Stock were issued and outstanding and __________ shares were reserved for
issuance under BankUnited's stock option and stock bonus plans and upon the
conversion of other classes of stock, as described below.
DIVIDENDS. The holders of the Class A Common Stock are entitled to
dividends when, as, and if declared by BankUnited's Board of Directors out of
funds legally available therefor, which may be declared solely on the Class A
Common Stock or for not less than 110% of the amount per share of any dividend
declared on the Class B Common Stock. The payment of dividends by BankUnited
will depend on BankUnited's net income, financial condition, regulatory
requirements and other factors deemed relevant by the Board of Directors. See
"Risk Factors" for a discussion of certain factors relating to the ability of
BankUnited to pay dividends.
VOTING RIGHTS. Each share of Class A Common Stock entitles the holder
thereof to one-tenth vote on all matters upon which shareholders have the right
to vote. The Class A Common Stock does not have cumulative voting rights in the
election of directors.
42
<PAGE>
LIQUIDATION. In the event of any liquidation, dissolution or winding up
of BankUnited, the holders of shares of Class A Common Stock are entitled to
share equally with the holders of shares of Class B Common Stock, after payment
of all debts and liabilities of BankUnited and subject to the prior rights of
holders of shares of BankUnited's Preferred Stock, in the remaining assets of
BankUnited.
NO PREEMPTIVE RIGHTS; REDEMPTION; ASSESSABILITY. Holders of shares of
Class A Common Stock are not entitled to preemptive rights with respect to any
shares of any stock of BankUnited that may subsequently be issued. The Class A
Common Stock is not subject to call or redemption and, as to shares of Class A
Common Stock currently outstanding, are fully paid and non-assessable. When the
shares of Class A Common Stock offered hereby are issued upon payment of the
purchase price therefor, such shares will be fully paid and non-assessable.
CLASS B COMMON STOCK
BankUnited's Articles of Incorporation authorizes the issuance of up to
3,000,000 shares of Class B Common Stock, all of which have the rights and
preferences described below. The Class B Common Stock is held by directors,
executive officers and other certain shareholders of BankUnited. As of October
31, 1997, 278,685 shares of Class B Common Stock were issued and outstanding and
_________ shares were reserved for issuance under BankUnited's stock option and
stock bonus plans and upon the conversion of Series B Preferred Stock, as
described below.
DIVIDENDS. The holders of Class B Common Stock are entitled to dividends
when, as, and if declared by BankUnited's Board of Directors out of funds
legally available therefor. The payment of dividends on the Class B Common Stock
is subject to the right of the holders of the Class A Common Stock to receive a
dividend per share of 110% of the amount per share of any dividend declared on
the Class B Common Stock.
VOTING RIGHTS. Each share of Class B Common Stock entitles the holder
thereof to one vote on all matters upon which shareholders have the right to
vote. The Class B Common Stock does not have cumulative voting rights in the
election of directors.
CONVERTIBILITY. Each share of Class B Common Stock is convertible into
one share of Class A Common Stock, subject to adjustment upon the occurrence of
certain events.
LIQUIDATION. In the event of any liquidation, dissolution or winding up
of BankUnited, the holders of shares of Class B Common Stock are entitled to
share equally with the holders of shares of Class A Common Stock, after payment
of all debts and liabilities of BankUnited and subject to the prior rights of
holders of shares of BankUnited's Preferred Stock, in the remaining assets of
BankUnited.
NO PREEMPTIVE RIGHTS; REDEMPTION; ASSESSABILITY. Holders of shares of
Class B Common Stock are not entitled to preemptive rights with respect to any
shares of any stock of BankUnited that may be issued. The Class B Common Stock
is not subject to call or redemption and is fully paid and non-assessable.
PREFERRED STOCK
BankUnited's Articles of Incorporation authorizes the issuance, in
series, of up to 10,000,000 shares of Preferred Stock and permits BankUnited's
Board of Directors to establish the rights and preference of each of such series
and to increase the number of shares in any of the series. As of October 31,
1997, 744,870 shares of 8% Noncumulative Convertible Preferred Stock, Series
1993 (the "Series 1993 Preferred Stock"), 203,818 shares of Series B Preferred
Stock, and 697,117 shares of 9% Noncumulative Perpetual Preferred Stock (the "9%
Preferred Stock"), were issued and outstanding.
43
<PAGE>
The shares of Series B Preferred Stock are held by directors, executive
officers and other shareholders of BankUnited. The shares of Series 1993
Preferred Stock and the 9% Preferred Stock are publicly held.
DIVIDENDS. The total annual dividend requirement for all series of
BankUnited's Preferred Stock outstanding as of October 31, 1997 is $___ million.
In August 1997 the Board of Directors decreased the dividend rate on the Series
B Preferred Stock to 7.5% per annum. See Note 13 to BankUnited's Consolidated
Financial Statements incorporated by reference into this Prospectus.
VOTING RIGHTS. Each share of Series B Preferred Stock is entitled to two
and one-half votes per share on all matters submitted to the vote of
shareholders. The Series B Preferred Stock does not have cumulative voting
rights in the election of directors. The Series 1993 Preferred Stock and the 9%
Preferred Stock are non-voting.
The Series B Preferred Stock, Series 1993 Preferred Stock and the 9%
Preferred Stock are each permitted to elect two directors for their respective
classes to the Board, if BankUnited fails to declare and pay dividends for six
dividend periods, whether or not those periods are consecutive. The right to
elect directors would be revoked once BankUnited paid dividends in four
consecutive periods.
CONVERSION RIGHTS. Each share of Series B Preferred Stock is convertible
into 1.4959 shares of Class B Common Stock, subject to adjustment on the
occurrence of certain events. Each share of Series 1993 Preferred Stock is
convertible into one share of Class A Common Stock, subject to adjustment upon
the occurrence of certain events.
LIQUIDATION. In the event of any liquidation, dissolution or winding up
of BankUnited, voluntary or involuntary, the 9% Preferred Stock and the Series
1993 Preferred Stock shall be entitled to a distribution of $10.00 and $10.00
per share, respectively, out of the assets of BankUnited available for
distribution to shareholders prior to any distribution being made on any other
class of stock of BankUnited. In the event of liquidation, dissolution, or
winding up of BankUnited, after payment of any debts and other liabilities of
BankUnited, after the per share distributions to the Series 1993 Preferred Stock
and the 9% Preferred Stock, and prior to any distribution of assets to the
holders of Class A Common Stock or Class B Common Stock, the holders of the
Series B Preferred Stock will be entitled to a preference on liquidation of
$7.375 per share, if the liquidation is involuntary. Such holders shall be
entitled to receive the redemption price per share applicable to such stock at
the time of liquidation if the liquidation is involuntary.
REDEMPTION. Pursuant to its original terms, the Series B Preferred Stock
was redeemable at BankUnited's option at $7.5225 per share to January 31, 1996,
declining thereafter at $.07375 per share during each year through January 31,
1998, and thereafter at $7.375 per share. In connection with the recent decrease
in the dividend rate, the Board agreed that the Series B Preferred Stock would
not be redeemed for a ten year period (until August 2008) without the consent of
at least 51% of the voting stock of such series.
The 9% Preferred Stock is redeemable after September 30, 1998 at the
option of BankUnited at a redemption price of $10.00 per share.
RANK. The 9% Preferred Stock and the Series 1993 Preferred Stock rank
senior to all other classes of stock of BankUnited with respect to dividend
rights and rights upon liquidation, dissolution or winding up of BankUnited. The
Series B Preferred Stock ranks senior to the Class A Common Stock and Class B
Common Stock, as to dividend rights, rights upon liquidation, dissolution or
winding up of BankUnited, and redemption rights.
NO PREEMPTIVE RIGHTS; ASSESSABILITY. Holders of BankUnited's Preferred
Stock are not entitled to preemptive rights with respect to any shares of any
stock of BankUnited that may be issued. The outstanding Preferred Stock is fully
paid and non-assessable.
44
<PAGE>
NO OTHER RIGHTS
The shares of Class A Common Stock shall not have any preferences,
voting powers or relative, participating, option or other special rights, except
as set forth above and in BankUnited's Articles of Incorporation or as otherwise
required by law.
TRANSFER AGENT
BankUnited's transfer agent is American Stock Transfer & Trust Company,
New York, New York.
CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of BankUnited's Articles of Incorporation and Bylaws,
as well as certain provisions of Florida law, could have the effect of deterring
takeovers. The Board of Directors believes that the provisions of BankUnited's
Articles of Incorporation and Bylaws described below are prudent and in the best
interests of BankUnited and its shareholders. Although these provisions may
discourage a future takeover attempt in which shareholders might receive a
premium for their shares over the then current market price and may make removal
of incumbent management more difficult, the Board of Directors believes that the
benefits of these provisions outweigh their possible disadvantages. Management
is not aware of any current effort to effect a change in control of BankUnited.
In addition, BankUnited has opted not to be governed by the affiliated
transactions and control-share acquisitions sections of the Florida Business
Corporation Act.
DIRECTORS. The Board of Directors is divided into three classes of
directors serving staggered three-year terms. Vacancies on the Board may be
filled for the remainder of the unexpired term by a majority vote of the
directors then in office. The maximum number of members of BankUnited's Board of
Directors is 20.
Shareholders entitled to vote may nominate persons for election as
directors only if written notice is given not later than (i) with respect to an
annual meeting, 60 days in advance of the meeting, and (ii) with respect to a
special meeting, the close of business on the seventh day following the date on
which notice of the meeting is first given.
CUMULATIVE VOTING. Shareholders may not cumulate their votes in the
election of directors.
CAPITAL STRUCTURE. The Board of Directors may authorize for issuance
various series of Class A Common Stock and Preferred Stock with different voting
rights. The Board of Directors is authorized to establish the rights and
preferences of such stock and issue such shares, subject to shareholder approval
in certain circumstances.
45
<PAGE>
COMPARISON OF SHAREHOLDERS' RIGHTS
GENERAL
The rights of Consumers' shareholders are currently governed by
Consumers' Articles of Incorporation, Consumers' bylaws (the "Consumers'
Bylaws") and the Florida Business Corporation Act (the "FBCA"). The rights of
BankUnited's shareholders are governed by the BankUnited Articles of
Incorporation, the Bylaws of BankUnited (the "BankUnited Bylaws") and the FBCA.
After the Effective Date, the rights of Consumers shareholders who become
shareholders of BankUnited will be governed by the BankUnited Articles of
Incorporation, the BankUnited Bylaws and the FBCA. In most respects, the rights
of holders of the Consumers Common Stock are similar to those of holders of the
BankUnited Common Stock. The following is a summary of the material differences
between the rights of holders of the Consumers Common Stock and the rights of
holders of the BankUnited Common Stock. This summary does not purport to be a
complete discussion of, and is qualified in its entirety by reference to the
Consumers' Articles of Incorporation and Bylaws, the BankUnited Articles of
Incorporation and Bylaws and the FBCA.
REQUIRED SHAREHOLDER VOTES
Under Florida law, the Consumers' Bylaws and the BankUnited's Bylaws,
the affirmative vote of a majority of the holders of BankUnited capital stock
entitled to vote would be required to approve a merger, consolidation, or other
business combination to which Consumers or BankUnited is a party and which
requires the consent of holders of Consumers or BankUnited capital stock under
Florida law. Furthermore, the Statement of Designation of the BankUnited Series
I Class A Common Stock and the BankUnited Class B Common Stock provides that in
the event of any consolidation of BankUnited with or merger of BankUnited into
another corporation, or in the event of any sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of BankUnited to another
corporation, then, in any such consolidation, merger, sale, conveyance, exchange
or transfer, if the consideration per share to be received for the shares of the
BankUnited Class A Common Stock differs in any substantial kind or amount from
the per share consideration to be received for the BankUnited Class B Common
Stock, then the majority of the holders of the outstanding BankUnited Class A
Common Stock, by a separate vote of the holders of the BankUnited Class A Common
Stock, must approve such consolidation, merger, sale, conveyance, exchange or
transfer.
AMENDMENT TO ARTICLES OF INCORPORATION AND BYLAWS
The Consumers Articles of Incorporation provide that certain amendments
to the Consumers' Articles of Incorporation and Bylaws must be approved by the
holders of at least 80% of the voting power of all of the votes eligible to be
cast at a legal meeting of the holders of Consumers capital stock. This
supermajority is necessary to amend certain provisions of the Consumers'
Articles of Incorporation dealing with voting, dividend and liquidation rights,
prohibiting shareholder action by written consent, requirements for calling
special meetings of shareholders, indemnification of directors and officers, and
election and removal of directors. The BankUnited Articles of Incorporation
provide that the BankUnited Articles of Incorporation may be amended in the
manner authorized by law at the time of amendment. The BankUnited Bylaws may be
amended at any time by either a majority vote of the BankUnited Board or a
majority vote of the holders of BankUnited capital stock. However, the
BankUnited Board may not amend or repeal any bylaw adopted by the holders of
BankUnited capital stock if the bylaw specifically provides that the bylaw is
not subject to amendment or repeal by the directors.
46
<PAGE>
PROVISIONS RELATING TO DIRECTORS
NUMBER OF DIRECTORS. The BankUnited Articles of Incorporation provide
that the number of directors shall be equal to or greater than one and may be
fixed by the bylaws of BankUnited. The BankUnited Bylaws provide that the number
of directors shall be no less than five and no more than 20, as shall be fixed
from time to time by resolution of the BankUnited board of directors. The
BankUnited board of directors currently has 15 members. The Consumers Bylaws
provide that the number of directors shall be no less than five and no greater
than 15, as shall be fixed from time to time by resolution of the Consumers
board of directors. The Consumers board of directors has currently set the
number of directors at 8.
REMOVAL. The Consumers Articles of Incorporation provide that at a
meeting of the holders of Consumers capital stock called expressly for the
purpose of removal of a director, any director may be removed for cause by a
vote of the holders of at least 80% of the voting power of all of the
outstanding shares of the Consumers capital stock then entitled to vote at an
election of directors. Neither the BankUnited Articles of Incorporation or
Bylaws expressly provide for the removal of directors. Under Florida law, the
holders of BankUnited capital stock may remove one or more directors with or
without cause at a meeting of the holders of BankUnited capital stock, provided
that the notice of the meeting states that one of the purposes of the meeting is
to remove the director.
CERTAIN ANTI-TAKEOVER PROVISIONS
BANKUNITED. Certain provisions of the BankUnited Articles of
Incorporation currently in effect could have the effect of deterring takeovers.
The BankUnited Articles of Incorporation (i) provide for a Board of Directors
that is divided into three classes of directors serving staggered three-year
terms; (ii) does not permit shareholder action by written consent; and (iii)
does not provide for cumulative voting. Management has no present intention to
propose in any future proxy solicitations any other amendments to the BankUnited
Articles of Incorporation that would have an anti-takeover effect.
CONSUMERS. The Consumers Articles of Incorporation provide similar
anti-takeover protections to those applicable to BankUnited. In addition,
federal laws and regulations contain a number of provisions that affect the
acquisition of institutions such as Consumers. Subject to certain limited
exceptions, control of a savings and loan holding company, such as Consumers,
may only be obtained with the approval (or in the case of an acquisition by an
individual, the non-objection) of the OTS, after a public comment and
application review process.
COMMON STOCK
The principal difference between the BankUnited Class A Common Stock
that the holders of the Consumers Common Stock will receive upon consummation of
the Merger and the Consumers Common Stock is that each share of the BankUnited
Class A Common Stock entitles the holder thereof to one-tenth of a vote on each
matter upon which shareholders have the right to vote. In contrast, holders of
the Consumers Common Stock are entitled to one vote per share under identical
circumstances. In other respects, the Consumers Common Stock has essentially the
same rights and preferences as the BankUnited Class A Common Stock. Dividends
may be paid to the holders of each of the Consumers Common Stock and the
BankUnited Class A Common Stock if declared by the board of directors out of
assets of the respective entity which are by law available for the payment of
dividends to holders of common stock. BankUnited has not paid dividends on its
common stock since 1994. BankUnited does not currently expect to pay any
dividends on its common stock for the foreseeable future. In addition, neither
of these classes of common stock have preemptive rights or preferences upon
liquidation.
BankUnited, unlike Consumers, however, has two classes of common stock.
Each share of the BankUnited Class B Common Stock has ten times the voting power
of the BankUnited Class A Common Stock and is entitled to a lower dividend
amount than any dividend declared with respect to a share of the BankUnited
Class A Common Stock. Each share of the BankUnited Class B Common Stock is also
convertible into one share of BankUnited
47
<PAGE>
Class A Common Stock, subject to adjustment for certain events. Neither the
Consumers Common Stock nor the BankUnited Class A Common Stock is convertible.
In all other respects, the BankUnited Class B Common Stock is the same as the
BankUnited Class A Common Stock.
EXPERTS
The consolidated financial statements of BankUnited and subsidiaries
incorporated in this Prospectus by reference to the Annual Report on Form 10-K/A
for the year ended September 30, 1996 have been so incorporated in reliance on
the report of Price Waterhouse LLP, independent certified public accountants,
given on the authoriy of such firm as experts in auditing and accounting.
The consolidated financial statements of Suncoast and subsidiaries
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended June 30, 1996 have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent certified public accountants, given
on the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Consumers Bancorp, Inc. and
subsidiaries as of March 31, 1997 and 1996 and for each of the three years in
the period ended March 31, 1997 included in this Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report appearing
herein and are included in reliance upon the report of such firm given upon
their authority as experts in auditing and accounting.
48
<PAGE>
APPENDIX A
FINANCIAL STATEMENTS OF CONSUMERS BANCORP, INC.
AND MANAGEMENT'S DISCUSSION AND ANALYSIS
49
<PAGE>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
----
INDEPENDENT AUDITORS' REPORT F-2
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Statements of Financial Condition
as of March 31, 1997 and 1996 F-3
Consolidated Statements of Operations
for the years ended March 31, 1997, 1996 and 1995 F-4
Consolidated Statements of Stockholders' Equity
for the years ended March 31, 1997, 1996 and 1995 F-5
Consolidated Statements of Cash Flows
for the years ended March 31, 1997, 1996 and 1995 F-6
Notes to Consolidated Financial Statements F-7
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Consumers Bancorp, Inc.:
We have audited the accompanying consolidated statements of financial condition
of Consumers Bancorp, Inc. (the "Company") and subsidiaries as of March 31, 1997
and 1996, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the three years in the period ended March 31,
1997. These consolidated financial statements are the responsibility of the
Company'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 referred to above present
fairly, in all material respects, the financial position of the Company and
subsidiaries as of March 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
1997, in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Miami, Florida
May 9, 1997
F-2
<PAGE>
<TABLE>
<CAPTION>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
MARCH 31, 1997 AND 1996
- -------------------------------------------------------------------------------
ASSETS 1997 1996
------------ ------------
<S> <C> <C>
CASH AND OVERNIGHT FUNDS $ 6,320,354 $ 4,370,069
LOANS HELD FOR SALE 5,107,367 5,661,465
SECURITIES AVAILABLE FOR SALE 4,956,213 2,959,500
SECURITIES HELD TO MATURITY (Market value:
1997 - $1,980,000; 1996 - $1,969,500) 1,999,077 1,998,465
INVESTMENT IN MUTUAL FUND AVAILABLE FOR SALE 2,399,036 4,394,615
MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE 9,950,713 12,084,800
MORTGAGE-BACKED SECURITIES HELD TO MATURITY
(Market value: 1997 - $4,752,019; 1996 - $5,694,882) 4,708,941 5,622,439
LOANS - Net 56,304,643 49,749,357
REAL ESTATE OWNED 157,817
FEDERAL HOME LOAN BANK STOCK - At cost 673,100 624,700
ACCRUED INTEREST RECEIVABLE 563,271 525,718
OFFICE PROPERTIES AND EQUIPMENT - Net 351,951 348,027
OTHER ASSETS 529,573 308,967
------------ ------------
TOTAL $ 94,022,056 $ 88,648,122
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 79,079,330 $ 72,616,509
Federal Home Loan Bank advances 3,500,000 3,500,000
Reverse repurchase agreements 1,833,000
Advance payments by borrowers for taxes and insurance 714,082 707,985
Official checks 3,820,486 3,196,097
Other liabilities 195,726 196,141
------------ ------------
Total liabilities 87,309,624 82,049,732
------------ ------------
COMMITMENTS
STOCKHOLDERS' EQUITY:
Class A common stock - $.01 par value; 15,000,000
shares authorized; 485,509 shares issued and outstanding 4,855 4,855
Additional paid-in capital 4,147,895 4,147,895
Retained earnings 2,598,472 2,474,142
Net unrealized losses on securities available for sale,
net of tax of $23,000 in 1997 and $17,000 in 1996 (38,790) (28,502)
------------ ------------
Total stockholders' equity 6,712,432 6,598,390
------------ ------------
TOTAL $ 94,022,056 $ 88,648,122
============ ============
</TABLE>
See notes to consolidated financial statement.
F-3
<PAGE>
<TABLE>
<CAPTION>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 1997, 1996 AND 1995
- -------------------------------------------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
INTEREST INCOME:
Interest on loans $ 4,775,838 $ 4,483,800 $ 3,103,313
Interest on mortgage-backed securities 1,150,759 1,248,234 760,239
Other 809,561 813,231 1,007,531
----------- ----------- -----------
Total 6,736,158 6,545,265 4,871,083
----------- ----------- -----------
INTEREST EXPENSE:
Interest on savings deposits 3,721,738 3,563,681 1,773,231
Interest on demand deposits 115,895 149,396 312,764
Interest on FHLB advances 227,858 240,342 224,709
Interest on other borrowings 23,250 189,451 161,078
----------- ----------- -----------
Total 4,088,741 4,142,870 2,471,782
----------- ----------- -----------
NET INTEREST INCOME 2,647,417 2,402,395 2,399,301
----------- ----------- -----------
PROVISION FOR LOAN LOSSES 15,000
----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,647,417 2,402,395 2,384,301
----------- ----------- -----------
OTHER INCOME:
Gains (losses) on sales of loans and mortgage-backed
securities - net (31,620) (59,268) (94,469)
Gains on sales of loan servicing rights 336,583 386,213 618,564
Brokered loan fees 186,337 294,999 60,368
Other 137,037 174,490 126,090
----------- ----------- -----------
Total 628,337 796,434 710,553
----------- ----------- -----------
OTHER EXPENSE:
Salaries and employee benefits 1,353,143 1,391,824 1,045,681
Occupancy and equipment expense 435,954 467,414 411,619
FDIC and other insurance premiums 197,773 200,945 184,273
FDIC special assessment (Note 1) 393,865
Data processing 123,510 112,072 119,532
Legal, professional, and consulting fees 89,252 104,164 120,246
Stationery and supplies 61,388 64,437 58,585
Costs of proposed merger 33,278 68,410
Lease termination 64,158
Other general and administrative expenses 385,771 382,869 347,803
----------- ----------- -----------
Total 3,073,934 2,856,293 2,287,739
----------- ----------- -----------
INCOME BEFORE INCOME TAX PROVISION 201,820 342,536 807,115
INCOME TAX PROVISION 77,490 136,850 307,000
----------- ----------- -----------
NET INCOME $ 124,330 $ 205,686 $ 500,115
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED MARCH 31, 1997, 1996 AND 1995
- -------------------------------------------------------------------------------
NET UNREALIZED
COMMON ADDITIONAL GAINS (LOSSES) TOTAL
STOCK PAID-IN RETAINED ON SECURITIES STOCKHOLDERS'
CLASS A CAPITAL EARNINGS AVAILABLE FOR SALE EQUITY
----------- ----------- ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1994 $ 5,138 $ 4,607,780 $ 1,816,892 $ (58,068) $ 6,371,742
Net income 500,115 500,115
Repurchase and retirement
of common stock (283) (459,885) (460,168)
Cash dividends ($.10 per share) (48,551) (48,551)
Net unrealized gains (losses) on
securities available for sale (3,112) (3,112)
----------- ----------- ----------- ----------- -----------
BALANCE, MARCH 31, 1995 4,855 4,147,895 2,268,456 (61,180) 6,360,026
Net income 205,686 205,686
Net unrealized gains (losses) on
securities available for sale 32,678 32,678
----------- ----------- ----------- ----------- -----------
BALANCE, MARCH 31, 1996 4,855 4,147,895 2,474,142 (28,502) 6,598,390
Net income 124,330 124,330
Net unrealized gains (losses) on
securities available for sale (10,288) (10,288)
----------- ----------- ----------- ----------- -----------
BALANCE, MARCH 31, 1997 $ 4,855 $ 4,147,895 $ 2,598,472 $ (38,790) $ 6,712,432
=========== =========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1997, 1996 AND 1995
- ------------------------------------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 124,330 $ 205,686 $ 500,115
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Loans originated for sale (40,225,493) (46,641,750) (50,652,017)
Loans sold 40,779,592 44,673,545 55,387,695
Provision for loan losses 15,000
Depreciation 150,882 117,362 102,950
(Gain) loss on sale of property (10,358) 2,117
Premium amortization and discount accretion - net (49,030) (114,625) (44,747)
Gain on sale of mortgage-backed security (49,513)
Loss on sale of mutual fund 11,457
Increase (decrease) in official checks 624,389 1,594,983 (832,529)
(Decrease) increase in deferred income taxes (54,000) 51,000 (97,000)
Increase (decrease) in other liabilities 53,585 (158,394) (208,750)
Increase in accrued interest receivable (37,553) (102,663) (111,226)
Increase (decrease) in advance payments by
borrowers for taxes and insurance 6,097 40,506 (172,119)
Increase in other assets (220,607) (94,148) (41,369)
------------ ------------ ------------
Net cash provided by (used in) operating activities 1,103,778 (428,498) 3,848,120
------------ ------------ ------------
INVESTING ACTIVITIES:
Purchases of securities available for sale (2,997,899) (3,999,688)
Maturity of securities available for sale 1,000,000 3,000,000
Maturity of securities held to maturity 1,000,000 1,000,000
Purchases of property (158,947) (274,508) (47,842)
Proceeds from sale of property 14,500
Sales (purchases) of mutual fund 2,003,009 1,000,000 (92,979)
Disposal of real estate owned 125,200 107,000
Increase in loans - net (6,790,628) (10,364,729) (10,206,657)
Purchases of mortgage-backed securities available for sale (1,007,127) (1,198,945)
Sales of mortgage-backed securities available for sale 2,046,969
Principal reductions of mortgage-backed securities available for sale 1,116,243 940,697
Purchases of mortgage-backed securities held to maturity (182,123) (8,258,468)
Principal reductions of mortgage-backed securities held to maturity 1,095,889 1,397,733 1,846,047
Sales (purchases) of FHLB stock (48,400) (132,300) 339,300
------------ ------------ ------------
Net cash used in investing activities (3,783,314) (8,631,740) (15,313,599)
------------ ------------ ------------
FINANCING ACTIVITIES:
Increase in deposits 6,462,821 13,832,749 6,985,426
Federal Home Loan Bank advances (repayment), net (1,000,000) 1,500,000
(Decrease) increase in reverse repurchase agreements (1,833,000) (1,729,000) 3,562,000
Repurchase of common stock (460,168)
Cash dividends paid (48,551)
------------ ------------ ------------
Net cash provided by financing activities 4,629,821 11,103,749 11,538,707
------------ ------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS 1,950,285 2,043,511 73,228
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,370,069 2,326,558 2,253,330
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 6,320,354 $ 4,370,069 $ 2,326,558
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest $ 4,087,279 $ 4,163,481 $ 1,820,077
============ ============ ============
Cash paid during the year for income taxes $ 125,000 $ 264,500 $ 323,100
============ ============ ============
Transfers of loans to real estate owned $ 314,678 $ 107,000
============ ============
Reclassification of securities held to maturity to securities
available for sale $ 11,794,990 $ 1,993,987
============ ============
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1997, 1996 AND 1995
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consumers Bancorp, Inc. (the "Company"), a Florida chartered unitary
holding company, was formed on November 10, 1995 for the purposes of a
reorganization whereby the Company became the holding company of Consumers
Savings Bank (the "Savings Bank"). On April 14, 1994, regulatory approval
was obtained at which time the reorganization became effective and the
outstanding stock of the Savings Bank was converted on a share-for-share
basis to shares of the Company. The reorganization has been accounted for
in a manner similar to a pooling of interests and, accordingly,
stockholders' equity accounts have been retroactively restated to reflect
the capital structure of the Company. The Savings Bank offers general
banking services and residential mortgage, commercial real estate and
consumer lending through its two branches in South Florida.
The accounting and reporting policies of the Company and the Savings Bank
conform, in all material respects, to generally accepted accounting
principles and to general practices within the savings and loan industry.
The following summarizes the more significant of these policies and
practices.
IMPACT OF NEW LEGISLATIVE ISSUES - In August 1996, Congress passed
legislation which repeals the Savings Bank's present method of accounting
for bad debts for federal income tax purposes. The Savings Bank currently
uses the percentage of taxable income tax method to determine its bad debt
deduction, in the computation of its taxable income. Under the new
legislation, the Savings Bank will be required to use the specific
charge-off method, which may result in a different deduction for bad debts
in determining taxable income than are presently computed under the current
method. Additionally, the Savings Bank will be required to recapture its
post-1987 additions to its bad debt reserves. As the Savings Bank had
provided deferred taxes for the income tax bad debt reserves established
after 1987, management does not anticipate any additional income tax
liability related to the recapture. The new legislation is effective for
taxable years beginning after December 31, 1995.
On September 30, 1996, Congress passed, and the President signed, the
Deposit Insurance Fund Act of 1996 which mandated that all institutions
which have SAIF-insured deposits are required to pay a one-time special
assessment of 65.7 basis points (subject to certain adjustments) on
SAIF-insured deposits that were held at March 31, 1995 payable by November
27, 1996 to recapitalize the SAIF which is administered by the Federal
Deposit Insurance Corporation ("FDIC"). The assessment will bring the
SAIF's reserve ratio to a comparable level of the Bank Insurance Fund at
1.25 percent of total insured deposits. The FDIC in connection with the
recapitalization also lowered SAIF premiums beginning in January 1997. The
Savings Bank's shares of this special assessment totaled $393,865, and is
included in the accompanying financial statements for the year ended March
31, 1997.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of the Company and its subsidiary, the Savings Bank, and the
Savings Bank's wholly-owned subsidiary, Consumers Savings Mortgage Corp.
Intercompany balances and transactions have been eliminated.
F-7
<PAGE>
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect 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 the revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
SECURITIES AND MORTGAGE-BACKED SECURITIES HELD TO MATURITY - Investment and
mortgage-backed securities held to maturity are carried at cost, adjusted
for discount accretion and premium amortization. The Savings Bank has the
intent and ability to hold these securities to maturity. At March 31, 1997,
neither a disposal nor conditions that could lead to a decision not to hold
these securities to maturity were reasonably foreseen.
SECURITIES, MORTGAGE-BACKED SECURITIES AND INVESTMENT IN MUTUAL FUND
AVAILABLE FOR SALE Investment and mortgage-backed securities available for
sale consist of securities not classified as trading securities nor as
securities held to maturity. Securities available for sale and investments
in mutual funds are carried at fair value. Unrealized holding gains and
losses, net of tax, are reported as a net amount in a separate component of
stockholders' equity until realized. Gains and losses on the sale of
securities are determined using the specific identification method.
Premiums and discounts are recognized in interest income using the interest
method over the period to maturity.
The Savings Bank's mutual fund investment has a portfolio that consists
primarily of adjustable rate mortgage-backed securities.
LOANS HELD FOR SALE - Sales of loans are recorded at the date funds are
received from the purchaser. Generally, at the time these loans are
originated, the Savings Bank obtains a firm commitment (generally for 30
days) to sell the loan to a third party. Such loans are carried at the
lower of cost or market value.
ALLOWANCE FOR LOAN LOSSES - The allowance for loan losses is established by
charges to income through the provision for loan losses. Loans or portions
thereof which are considered by management to be uncollectible are charged
to the allowance and recoveries of amounts previously charged off are
credited to the allowance. The allowance represents the amount which, in
management's judgment, is adequate to absorb charge-offs of existing loans
which may become uncollectible. The adequacy of the allowance is determined
by management's continuing evaluation of the loan portfolio, current
economic conditions, past loan loss experience and other pertinent factors.
Many of these factors involve a significant degree of estimation and are
subject to rapid change which may be unforeseen by management. Changes in
these factors could result in material adjustments to the allowance in the
near term.
On April 1, 1995, the Savings Bank adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, ACCOUNTING BY CREDITORS FOR
IMPAIRMENTS OF A LOAN, and SFAS No. 118, ACCOUNTING FOR IMPAIRMENT OF A
LOAN - RECOGNITION AND DISCLOSURES, an amendment of SFAS No. 114. These
standards address the accounting for impairment of certain loans when it is
probable that all amounts due pursuant to the contractual terms of the loan
will not be collected. Adoption of these standards entailed the
identification of commercial and commercial real estate loans which are
considered impaired under the provisions of SFAS No. 114. Groups of
smaller-balance homogeneous loans (generally residential mortgage and
installment loans) are collectively evaluated for impairment. Adoption of
these statements did not have a material impact on the Savings Bank's
financial position or results of operations.
Under the provisions of these standards, a loan is impaired when, based on
current information and events, it is probable that the Savings Bank will
be unable to collect all amounts due according to the contractual terms of
the loan agreement. Individually identified impaired loans are measured
based on the present value of payments expected to be received, using the
historical effective loan rate as the discount rate. Alternatively,
measurement may also be based on observable market prices or for loans that
are
F-8
<PAGE>
solely dependent on the collateral for repayment, measurement may be based
on the fair value of the collateral. Loans that are to be foreclosed are
measured based on the fair value of the collateral. If the recorded
investment in the impaired loan exceeds that measure of fair value, a
valuation allowance is required as a component of the allowance for loan
losses. Changes to the valuation allowance are recorded as a component of
the provision for loan losses.
Commercial loans where reasonable doubt exists as to timely collection,
including loans that are individually identified as being impaired under
SFAS No. 114, are generally classified as nonperforming loans unless, based
on the evaluation of management, the loan is well secured and in the
process of collection.
Interest collections on nonperforming loans, including impaired loans, for
which the ultimate collectibility of principal and interest is uncertain,
are applied as reduction in book value. Otherwise, such collections are
credited to income when received.
UNCOLLECTED INTEREST - Interest on loans is accrued as earned. The Savings
Bank generally will provide an allowance for the loss of uncollected
interest on loans which become more than 90 days past due and cease
accruing interest thereafter. At March 31, 1997 and 1996, approximately
$8,600 and $10,000, respectively, was reserved for uncollected interest.
LOAN ORIGINATION AND COMMITMENT FEES - Loan origination fees and certain
loan commitment fees, net of related direct loan origination costs, are
deferred and amortized over the life of the related loan as an adjustment
of yield.
REAL ESTATE OWNED - Property acquired by foreclosure or deed in lieu of
foreclosure is initially recorded at fair value less estimated costs to
sell. These properties are subsequently evaluated and carried at the lower
of cost or fair market value less estimated costs to sell. Expenses
incurred from ownership of such properties and gains and losses on
dispositions are included in other expenses.
The amounts the Savings Bank could ultimately recover from property
acquired by foreclosure or deed in lieu of foreclosure could differ
materially from the amounts used in arriving at the net carrying value of
the assets because of future market factors beyond the Savings Bank's
control or changes in the Savings Bank's strategy for recovering its
investment.
OFFICE PROPERTIES AND EQUIPMENT - Office properties and equipment are
carried at cost less accumulated depreciation. Depreciation is computed on
the straight-line method over the estimated useful lives of the assets
which range from 3 to 10 years.
INCOME TAXES - The Company provides for income taxes in accordance with
SFAS No. 109, ACCOUNTING FOR INCOME TAXES. Deferred income tax assets and
liabilities are computed annually for differences between the financial
statements and tax bases of assets and liabilities that will result in
taxable or deductible amounts in the future based on enacted tax laws and
rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established when necessary
to reduce deferred tax assets to the amounts expected to be realized.
Income tax expense is the tax payable or refundable for the period plus or
minus the change during the period in deferred tax assets and liabilities.
INTEREST RATE RISK - The Savings Bank is engaged principally in providing
first mortgage loans (both adjustable rate and fixed rate mortgage loans)
to individuals (see Note 6 for the composition of the mortgage loan
portfolio at March 31, 1997 and 1996). Mortgage loans and securities held
to maturity are funded primarily with short-term liabilities that have
interest rates that vary with market rates over time.
F-9
<PAGE>
At March 31, 1997, the Savings Bank had interest-earning assets of
approximately $92.0 million having a weighted-average effective interest
rate of 7.94% and a remaining term of 8.3 years, and interest-bearing
liabilities of approximately $81.3 million having a weighted-average
effective interest rate of 5.27% and a remaining term of .65 years based
upon the contractual repricing or stated maturity of the underlying
instrument and commitments to sell mortgage loans. The shorter remaining
term of the interest-bearing liabilities indicates that the Savings Bank is
exposed to interest rate risk because, in a rising rate environment,
liabilities will be repricing faster at higher interest rates, thereby
reducing the market value of long-term assets and net interest income. Net
interest income and the market value of net interest-earning assets will
fluctuate based on changes in interest rates and changes in the levels of
interest-sensitive assets and liabilities. The actual remaining term of
interest-earning assets and interest-bearing liabilities may differ
significantly from the stated remaining term as a result of prepayment,
early withdrawals and similar factors.
STATEMENT OF CASH FLOWS - For purposes of the statement of cash flows, cash
and overnight funds are considered to be cash equivalents.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS - In May 1995, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards No. 122, ACCOUNTING FOR MORTGAGE SERVICING RIGHTS
("SFAS 122"). This Statement, which amends SFAS No. 65, ACCOUNTING FOR
CERTAIN MORTGAGE BANKING ACTIVITIES, requires mortgage banking enterprises
that acquire mortgage servicing rights through either the purchase of or
origination of mortgage loans and sell or securitize those loans with
servicing rights retained to allocate the total cost of the mortgage loans
to the mortgage servicing rights and the loans based on their relative fair
values. Mortgage banking enterprises include commercial banks and thrift
institutions that conduct operations substantially similar to the primary
operations of a mortgage banking enterprise. SFAS No. 122 applies
prospectively in fiscal years beginning after December 15, 1995 to sales of
mortgage loans with servicing rights retained and to impairment evaluations
of all amounts capitalized as mortgage servicing rights, including those
purchased before the adoption of this Statement. Adoption of this statement
did not have a material impact on the Savings Bank's financial position or
results of operations.
In October 1995, the FASB issued SFAS No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, which encourages, but does not require, companies to record
compensation cost for stock-based employee compensation plans at fair
value. However, even though compensation costs may not be recorded, the
Company must make certain pro forma disclosures as if such compensation
costs were recorded. The Company has chosen to account for stock-based
compensation to employees using the intrinsic value method prescribed by
Accounting Principles Board Opinion ("APB") No. 25, ACCOUNTING FOR STOCK
ISSUED TO EMPLOYEES, and related interpretations. Accordingly, compensation
cost for stock options issued to employees are measured as the excess, if
any, of the fair value of the Company's stock at the date of grant over the
amount an employee must pay for the stock. Compensation costs in 1996 would
have been immaterial to the consolidated financial statements had the fair
market value of stock options been recognized as compensation expense as
prescribed by SFAS No. 123.
In June 1996, the FASB issued SFAS No. 125, ACCOUNTING FOR TRANSFERS AND
SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES. SFAS No.
125 provides accounting and reporting standards for transfers and servicing
of financial assets and extinguishments of liabilities. Those standards are
based on consistent application of a FINANCIAL-COMPONENTS APPROACH that
focuses on control. Under that approach, after a transfer of financial
assets, an entity recognizes the financial and servicing assets it controls
and the liabilities it has incurred, derecognizes financial assets when
control has been surrendered, and derecognizes liabilities when
extinguished. SFAS No. 125 also provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. SFAS No. 125 is effective for transfers and
servicing of financial assets and extinguishments
F-10
<PAGE>
of liabilities occurring after December 31, 1996, and is to be applied
prospectively. The Savings Bank is in the process of evaluating the impact
of SFAS No. 125.
2. SECURITIES AVAILABLE FOR SALE
Securities available for sale at March 31, 1997 and 1996 are summarized as
follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
MARCH 31, 1997:
U.S. Agency Securities $4,995,215 $ -- $ 39,002 $4,956,213
========== ========= ========== ==========
Weighted average interest rate 6.11 %
==========
MARCH 31, 1996:
U.S. Agency Securities $2,999,688 $ -- $ 40,188 $2,959,500
========== ========= ========== ==========
Weighted average interest rate 5.94 %
==========
</TABLE>
The securities held at March 31, 1997 will mature between the years ending
March 31, 1998 and March 31, 2002.
3. SECURITIES HELD TO MATURITY
Securities held to maturity are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
MARCH 31, 1997:
U.S. Agency Securities $ 1,999,077 $ -- $ 19,077 $1,980,000
=========== ======== =========== ==========
Weighted average interest rate 5.39 % -- -- --
=========== ======== =========== ==========
MARCH 31, 1996:
U.S. Agency Securities $ 1,998,465 $ -- $ 28,965 $1,969,500
=========== ======== =========== ==========
Weighted average interest rate 4.92 % -- -- --
=========== ======== =========== ==========
</TABLE>
The following table sets forth the maturity/repricing of the Savings Bank's
investment securities held to maturity at March 31, 1997 and 1996:
<TABLE>
<CAPTION>
MARCH 31, 1997 MARCH 31, 1996
------------------------- ------------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Matures/reprices in one year
or less $1,000,000 $1,000,000 $1,000,000 $ 996,000
Matures/reprices after one
year through three years 999,077 980,000 998,465 973,500
---------- ---------- ---------- ----------
Total $1,999,077 $1,980,000 $1,998,465 $1,969,500
========== ========== ========== ==========
</TABLE>
F-11
<PAGE>
4. MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE
Mortgage-backed securities available for sale are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
MARCH 31, 1997: COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CMO's $3,237,716 $ 25,494 $ 60,370 $3,202,840
FNMA, GNMA, FHLMC 5,726,740 32,547 11,414 5,747,873
Other mortgage-backed securities 996,058 3,942 1,000,000
---------- ---------- ---------- ----------
Total $9,960,514 $ 61,983 $ 71,784 $9,950,713
========== ========== ========== ==========
Weighted average interest rate 6.93 %
==========
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
MARCH 31, 1997: COST GAINS LOSSES VALUE
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
CMO's $ 3,291,999 $ 19,222 $ 51,871 $ 3,259,350
FNMA, GNMA, FHLMC 7,770,220 53,814 3,384 7,820,650
Other mortgage-backed securities 995,500 9,300 -- 1,004,800
----------- ----------- ----------- -----------
Total $12,057,719 $ 82,336 $ 55,255 $12,084,800
=========== =========== =========== ===========
Weighted average interest rate 6.73%
===========
</TABLE>
The following table sets forth the maturity/repricing of the Savings Bank's
mortgage-backed securities available for sale at March 31, 1997 and 1996:
<TABLE>
<CAPTION>
MARCH 31, 1997 MARCH 31, 1996
-------------------------- --------------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Matures/reprices in
one year $ 5,733,547 $ 5,726,062 $ 7,334,862 $ 7,318,223
Matures/reprices after
one year through
five years 2,650,778 2,649,535 2,788,822 2,816,789
Matures/reprices after
ten years through
twenty years 1,576,189 1,575,116 1,934,035 1,949,788
----------- ----------- ----------- -----------
$ 9,960,514 $ 9,950,713 $12,057,719 $12,084,800
=========== =========== =========== ===========
</TABLE>
On December 20, 1995, the Company transferred $13.1 million of
mortgage-backed securities held to maturity with aggregate unrealized gains
of $188,000 to mortgage-backed securities available for sale. This transfer
was a result of the Company adopting the provisions of FASB's Special
Report, A GUIDE TO IMPLEMENTATION OF STATEMENT 115 ON ACCOUNTING FOR
CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES - QUESTIONS AND ANSWERS,
issued in November 1995.
F-12
<PAGE>
5. MORTGAGE-BACKED SECURITIES HELD TO MATURITY
Mortgage-backed securities held to maturity are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
MARCH 31, 1997:
CMO'S $ 727,565 $ 7,661 -- $ 735,226
FNMA, GNMA, FHLMC 2,164,182 44,574 $ 2,448 2,206,308
Other mortgage-backed securities 1,817,194 -- 6,709 1,810,485
---------- ---------- ---------- ----------
Total $4,708,941 $ 52,235 $ 9,157 $4,752,019
========== ========== ========== ==========
Weighted average interest rate 7.05 %
==========
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
MARCH 31, 1996:
CMO's $ 911,146 $ 6,489 $ 92 $ 917,543
FNMA, GNMA, FHLMC 2,456,065 55,275 -- 2,511,340
Other mortgage-backed securities 2,255,228 10,909 138 2,265,999
---------- ---------- ---------- ----------
Total $5,622,439 $ 72,673 $ 230 $5,694,882
========== ========== ========== ==========
Weighted average interest rate 6.53 %
==========
</TABLE>
The Savings Bank purchases both adjustable and fixed rate mortgage-backed
securities. The securities held at March 31, 1997 will mature/reprice
during the year ended March 31, 1998.
At March 31, 1997, all mortgage-backed securities held to maturity were
adjustable rate securities with interest rate adjustment limitations and
are generally indexed to the one-year U.S. Treasury Note rate, the Eleventh
District Cost of Funds Index, prime or LIBOR.
F-13
<PAGE>
6. LOANS
Loans are summarized as follows:
MARCH 31, MARCH 31,
1997 1996
------------ ------------
Residential real estate $ 50,913,742 $ 46,758,896
Residential construction 260,000 994,127
Commercial real estate 4,752,301 2,251,251
Commercial business 116,100 171,454
Consumer 696,024 205,789
Home equity 376,951
------------ ------------
Total 57,115,117 50,381,517
Loans in process (312,103) (87,390)
Net deferred interest (16,028) (35,922)
Net deferred loan fees (151,356) (142,321)
Allowance for loan losses (330,987) (366,527)
------------ ------------
Loans - net $ 56,304,643 $ 49,749,357
============ ============
Activity in the allowance for loan losses is summarized as follows for the
years ended March 31:
1997 1996 1995
--------- --------- ---------
Balance at beginning of year $ 366,527 $ 366,527 $ 378,500
Provision charged to income 15,000
Charge-offs and recoveries, net (35,540) (26,973)
--------- --------- ---------
Balance at end of year $ 330,987 $ 366,527 $ 366,527
========= ========= =========
At March 31, 1997, the Savings Bank had outstanding commitments of
approximately $5,126,000 to originate loans and approximately $5,107,000 to
sell loans. All such commitments expire within the following fiscal year.
The Savings Bank originates both adjustable and fixed interest rate loans.
At March 31, 1997, the composition of these loans was as follows:
<TABLE>
<CAPTION>
FIXED ADJUSTABLE
RATE RATE TOTAL
----------- ----------- -----------
<S> <C> <C> <C>
Matures/reprices in one year or less $ 1,003,007 $22,704,901 $23,707,908
Matures/reprices after one year
through five years 4,059,599 8,506,908 12,566,507
Matures/reprices after five years
through ten years 805,343 1,608,624 2,413,967
Matures/reprices after ten years
through twenty years 4,680,328 4,680,328
Matures/reprices after twenty years
through thirty years 13,434,304 13,434,304
----------- ----------- -----------
Total $23,982,581 $32,820,433 $56,803,014
=========== =========== ===========
</TABLE>
F-14
<PAGE>
At March 31, 1997 and 1996, loans serviced for the benefit of others
totaled approximately $15,950,000 and $18,941,000, respectively. In
connection with these loans serviced for others, borrower's escrow balances
of $191,000 and $198,000 were held at March 31, 1997 and 1996,
respectively.
The Savings Bank's real estate and commercial lending activities are
primarily with customers located in Dade and Broward counties, Florida.
Collateral required for these types of loans is based upon management's
evaluation of the respective credit risk in accordance with the Savings
Bank's credit policies. However, these types of loans are dependent on,
among other things, economic conditions in these counties. Management
monitors its loan concentrations by industry and type of collateral as well
as by individual borrowers.
7. OFFICE PROPERTIES AND EQUIPMENT
Office properties and equipment consist of the following at March 31:
1997 1996
---------- ----------
Furniture, fixtures, and equipment $ 988,954 $ 885,733
Leasehold improvements 388,879 366,354
---------- ----------
Total 1,377,833 1,252,087
Less accumulated depreciation 1,025,882 904,060
---------- ----------
Office properties and equipment - net $ 351,951 $ 348,027
========== ==========
The Savings Bank is a lessee under operating leases for real estate
extending into the 2001 fiscal year. The leases contain clauses which grant
options to renew for periods up to an additional 12 years and require
additional payments for a proportionate share of real estate taxes and
common area maintenance expenses.
The future minimum annual rentals at March 31, 1997 are as follows:
YEAR ENDING
MARCH 31 AMOUNT
----------- --------
1998 $154,138
1999 106,748
2000 78,932
2001 60,576
--------
Total future minimum lease payments $400,394
========
Total rental expense for the years ended March 31, 1997, 1996 and 1995 was
approximately $232,000, $278,000, and $252,000, respectively. In addition,
in February 1996, the Savings Bank made a one-time payment of $64,158 in
order to cancel the remaining 40 months on one of its office leases. The
future minimum rental payments remaining at the time of cancellation were
approximately $284,000.
F-15
<PAGE>
8. DEPOSITS
Deposit accounts, including the nominal rates at which the Savings Bank
paid interest on such accounts, are as follows at March 31:
<TABLE>
<CAPTION>
RATE 1997 1996
----------- -----------
<S> <C> <C>
Passbook, statement and NOW accounts:
Non-interest bearing checking accounts $ 1,326,643 $ 1,029,496
Passbook - 2.00% - 4.25% at March 31, 1997 and 1996 10,925,958 8,634,303
NOW - 2.0% at March 31, 1997 and 1996 2,045,351 1,982,310
Super NOW - 2.25% at March 31, 1997 and 1996 243,080 308,986
Money market accounts - 2.0% - 3.15% at
March 31, 1997 and 1996 2,210,392 2,525,088
----------- -----------
Total 16,751,424 14,480,183
----------- ----------
Certificate accounts:
3.01% - 4.00% 143,276
4.01% - 5.00% 6,879,927 8,023,887
5.01% - 6.00% 43,278,730 39,542,563
6.01% - 7.00% 11,925,973 10,182,402
7.01% - 8.00% 100,000 387,474
----------- -----------
Total 62,327,906 58,136,326
----------- ----------
Total deposits $79,079,330 $72,616,509
=========== ==========
</TABLE>
The weighted average nominal interest rate payable on all deposits at March
31, 1997 and 1996 was 5.16%.
At March 31, 1997, certificate accounts are scheduled to mature as follows:
YEAR ENDING
MARCH 31 AMOUNT
----------- -----------
1997 $39,288,826
1998 18,827,578
1999 2,101,142
2000 912,909
2001 54,828
2002 1,142,623
---- -----------
Total $62,327,906
===========
9. FEDERAL HOME LOAN BANK ADVANCES
The Savings Bank's Federal Home Loan Bank advances at March 31, 1997 and
1996 consist of a $1,500,000 advance with a fixed rate of 6.56% which
matures in June 1997, a $1,000,000 advance with a fixed rate of 6.33% which
matures in June 1998 and a $1,000,000 advance with a fixed rate of 6.52%
which matures in June 2000. The advances are secured by a blanket floating
lien on first mortgage loans with balances totaling approximately 150% of
such advances.
F-16
<PAGE>
10. SECURITIES SOLD UNDER AGREEMENT TO REPURCHASE
The Savings Bank has sold investment securities under agreements to
repurchase the identical securities. The amounts received under the
agreements represent short-term borrowings and are reflected as reverse
repurchase agreements in the statement of financial condition. There were
no such borrowings outstanding at March 31, 1997. At March 31, 1996, the
borrowings bear interest at a rate of 5.78% and matured on June 16, 1996.
At March 31, 1996, the borrowings under such agreements were transacted
with one primary dealer and involve mortgage-backed securities with a book
value and market value of $1,949,000. The dealer may have sold, loaned, or
otherwise disposed of such securities to other parties in the normal course
of their operations, and had agreed to resell identical securities to the
Savings Bank at the maturities of the agreements.
11. INCOME TAXES
The components of the provision for income taxes consist of the following
for the year ended March 31:
1997 1996 1995
--------- --------- ---------
Current - Federal $ 104,500 $ 90,350 $ 313,000
Current - State 18,990 15,500 54,000
--------- --------- ---------
Total current 123,490 105,850 367,000
Deferred - Federal and State (46,000) 31,000 (60,000)
--------- --------- ---------
Total $ 77,490 $ 136,850 $ 307,000
========= ========= =========
The Savings Bank's provision for income taxes differs from the amounts
determined by applying the Federal income tax rate to income before income
taxes for the following reasons:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Tax provision at
federal rate $ 68,700 34.0 % $116,462 34.0 % $274,419 34.0 %
State income taxes 7,300 3.6 12,331 3.6 29,056 3.6
Other 1,490 0.8 8,057 2.4 3,525 0.4
-------- ------ -------- ------ -------- ----
Total provision for
income taxes $ 77,490 38.4 % $136,850 40.0 % $307,000 38.0 %
======== ====== ======== ====== ======== ====
</TABLE>
F-17
<PAGE>
The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities are as follows:
MARCH 31, MARCH 31,
1997 1996
---------- ---------
Deferred tax liabilities:
Loan fee income $ 73,000 $ 85,000
FHLB stock dividends 64,000 64,000
Deferred payments to loan brokers -- 18,000
-------- --------
137,000 167,000
Deferred tax assets:
Excess of book bad debt reserve
over tax bad debt reserve 11,000
Depreciation and amortization 23,000 17,000
Unrealized depreciation in securities 23,000 17,000
Other 3,000 2,000
-------- --------
Net deferred tax liability $ 77,000 $131,000
======== ========
12. STOCKHOLDERS' EQUITY
The Company has reserved 50,400 shares of common stock for stock options
granted to certain key officers. The officers' right to exercise such
options is restricted by the passage of time and the continuation of their
employment through specified dates. The exercise price per share of the
options is $8.33 and the options expire on March 31, 2002. At March 31,
1997, options for 38,400 shares were outstanding, all of which are
exercisable. If the employment of an officer terminates for any reason, all
unexercised options which have been earned will expire one year from the
day of such termination of employment.
On May 18, 1989, the Board of Directors approved an incentive stock option
plan (the "Plan") in which a total of 14,400 shares of common stock were
reserved for the benefit of the Company's directors. The exercise price of
the options under the Plan is $6.46 and such options expire on March 31,
2002. At March 31, 1997, options for 9,864 shares were outstanding, all of
which are exercisable.
During the year ended March 31, 1995, the Company paid cash dividends of
$.10 per share.
In connection with the reorganization in 1994, certain of the Savings
Bank's stockholders, representing 28,322 outstanding shares, exercised
their rights of dissent as provided for in the Florida 1989 Business
Corporation Act. During the year ended March 31, 1995, the dissenting
stockholders received $460,168 for the repurchase of these shares.
The Company has authorized 5,000,000 shares of Preferred Stock, $.01 par
value of which no shares have been issued.
REGULATORY CAPITAL - The Company and the Savings Bank are subject to
various regulatory capital requirements administered by the Office of
Thrift Supervision ("OTS"). Failure to meet minimum capital requirements
can initiate certain mandatory and possibly additional discretionary
actions by regulators that, if undertaken, could have direct material
effect on the Company's and the Savings Bank's financial statements. Under
capital adequacy guidelines, the Company and the Savings Bank must meet
specific capital guidelines that involve quantitative measures of the
Company's and the Savings Bank's assets, liabilities, and certain
off-balance sheet items as calculated under regulatory accounting
practices. The Company's and the Savings Bank's capital amounts and the
Savings Bank's classification under the
F-18
<PAGE>
regulatory framework for prompt corrective action are also subject to
qualitative judgments by the regulators about components, risk weightings,
and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Savings Bank to maintain minimum amounts and
ratios (set forth in the table below) of tangible capital to adjusted total
assets, total capital to risk-weighted total assets and tier I (core)
capital equal to adjusted total assets, as defined in the regulations.
Management believes, as of March 31, 1997, that the Company and the Savings
Bank meet all capital adequacy requirements to which they are subject.
As of March 31, 1997, the most recent notification from the OTS categorized
the Savings Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the
Savings Bank must maintain risk-based and core capital ratios as set forth
in the table. There are no conditions or events since that notification
that management believes have changed the institution's category.
The Savings Bank's actual capital amounts and ratios are also presented in
the table.
<TABLE>
<CAPTION>
TO BE CONSIDERED
WELL CAPITALIZED
MINIMUM FOR CAPITAL FOR PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PURPOSES
------------------------- ---------------------- ------------------------
RATIO AMOUNT RATIO AMOUNT RATIO AMOUNT
--------- ------------ ------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
AS OF MARCH 31, 1997
Stockholders' equity, and
ratio to total assets 7.10 % $ 6,690,000
=====
Unrealized loss on securities
available for sale 39,000
------------
Tangible capital, and ratio to
adjusted total assets 7.14 % $ 6,729,000 1.50 % $ 1,414,000 N/A
===== ============ ===== =========== =====================
Tier 1 (core) capital, and ratio
to adjusted total assets 7.14 % $ 6,729,000 3.00 % $ 2,829,000 5.00 % $ 4,715,000
===== ----------- ----- ----------- ----- -----------
Tier 1 (core) capital, and ratio
to risk weighted total assets 16.06 % $ 6,729,000 N/A 6.00 % $ 2,514,000
===== ====================== ===== ===========
Allowance for loan losses 331,000
------------
Total risk-based capital, and
ratio to risk-based total assets 16.85 % $ 7,060,000 8.00 % $ 3,352,000 10.0 % $ 4,190,000
===== ============ ===== =========== ===== ===========
Total assets $ 94,257,000
============
Adjusted total assets $ 94,296,000
============
Risk-weighted total assets $ 41,902,000
============
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
TO BE CONSIDERED
WELL CAPITALIZED
MINIMUM FOR CAPITAL FOR PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PURPOSES
------------------------- ------------------------ ----------------------
RATIO AMOUNT RATIO AMOUNT RATIO AMOUNT
---------- ------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
AS OF MARCH 31, 1996
Stockholders' equity, and ratio to
total assets 7.38 % 6,548,000
====
Unrealized loss on securities
available for sale 28,000
-------------
Tangible capital and ratio to
adjusted total assets 7.41 % $ 6,576,000 1.50 % $ 1,332,000 N/A
==== ============= ==== =========== ====================
Tier 1 (core) capital, and ratio
to adjusted total assets 7.41 % $ 6,576,000 3.00 % $ 2,663,000 5.00 % $ 4,438,000
==== ============= ==== =========== ==== ===========
Tier 1 (core) capital, and ratio
to risk weighted total assets 17.75 % $ 6,576,000 N/A 6.00 % $ 2,223,000
===== ==================== ==== ===========
Allowance for loan losses 367,000
-------------
Total risk-based capital, and
ratio to risk-based total assets 18.74 % $ 6,943,000 8.00 % $ 2,964,000 10.0 % $ 3,705,000
===== ============= ==== =========== ==== ===========
Total assets $ 88,732,000
=============
Adjusted total assets $ 88,760,000
=============
Risk-weighted total assets $ 37,051,000
=============
</TABLE>
The Company's actual capital amounts and ratios were substantially the same
as the Savings Bank's at March 31, 1997 and 1996, respectively.
Banking regulations may limit the amount of dividends that may be paid
without prior regulatory approval.
13. RELATED PARTIES
At March 31, 1997 and 1996, the Savings Bank had loans of approximately
$231,000 and $237,000, respectively, outstanding to officers and directors.
* * * * * *
F-20
<PAGE>
<TABLE>
<CAPTION>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
JUNE 30, 1997 (unaudited) and MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
JUNE 30 MARCH 31
ASSETS
CASH AND OVERNIGHT FUNDS $ 2,571,088 $ 6,320,354
LOANS HELD FOR SALE 4,567,491 5,107,367
SECURITIES AVAILABLE FOR SALE 7,993,596 4,956,213
SECURITIES HELD TO MATURITY 1,999,233 1,999,077
INVESTMENT IN MUTUAL FUND AVAILABLE FOR SALE 2,406,269 2,399,036
MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE 15,067,382 9,950,713
MORTGAGE-BACKED SECURITIES HELD TO MATURITY 4,075,390 4,708,041
LOANS - Net 61,259,065 56,304,643
REAL ESTATE OWNED 229,144 157,817
FEDERAL HOME LOAN BANK STOCK - At cost 673,100 673,100
ACCRUED INTEREST RECEIVABLE 582,653 563,271
OFFICE PROPERTIES AND EQUIPMENT - Net 334,467 351,951
OTHER ASSETS 408,119 529,573
------------ ------------
TOTAL $102,166,997 $ 94,022,056
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 81,545,442 $ 79,079,330
Federal home Loan Bank Advances 9,000,000 3,500,000
Advance payments by borrowers for taxes and insurance 1,200,647 714,082
Official Checks 3,200,443 3,820,486
Other liabilities 401,202 195,726
============ ============
Total liabilities 95,347,734 87,309,624
------------ ------------
COMMITMENTS
STOCKHOLDERS' EQUITY:
Class A Common Stock - $.01 par value; 15,000,000
share authorized; 485,509
shares issued and outstanding 4,855 4,855
Additional paid-in capital 4,147,895 4,147,895
Retained earnings 2,663,453 2,598,472
Net unrealized gains on securities - net of tax 3,060 (38,790)
------------ ------------
Total stockholders' equity 6,819,263 6,712,432
============ ============
TOTAL $102,166,997 $ 94,022,056
============ ============
</TABLE>
See condensed notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
- -------------------------------------------------------------------------------
1997 1996
---- ----
<S> <C> <C>
INTEREST INCOME:
Interest on loans $1,282,410 $1,121,560
Interest on mortgage-backed securities 265,344 293,084
Other 223,590 213,847
--------- ---------
Total 1,771,344 1,628,491
--------- ---------
INTEREST EXPENSE:
Interest on savings deposits 1,001,703 903,067
Interest on demand deposits 26,136 29,872
Interest on FHLB advances 64,920 56,415
Interest on other borrowings 23,250
--------- ---------
Total 1,092,759 1,012,604
NET INTEREST INCOME 678,585 615,887
PROVISION FOR LOAN LOSSES
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 678,585 615,887
OTHER INCOME:
Gains (losses) on sales of loans and mortgage-backed (44,159) 41,223
securities - net
Gains on sales of loan servicing 82,552 34,723
Brokered loan fees 44,523
Other 66,696 35,297
--------- ---------
Total 105,089 155,766
--------- ---------
OTHER EXPENSE:
Salaries and employee benefits 373,860 330,896
Occupancy and equipment expense 112,676 109,406
FDIC and other insurance premiums 12,880 43,012
Data processing 30,241 30,321
Legal, professional, and consulting fees 24,242 23,969
Stationery and supplies 10,120 13,227
Other expense 113,624 109,046
--------- ---------
Total 677,643 659,877
--------- ---------
INCOME BEFORE INCOME TAX PROVISION 106,031 111,776
INCOME TAX PROVISION 41,050 45,020
--------- ---------
NET INCOME $ 64,981 $ 66,756
========= =========
</TABLE>
See condensed notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
- -------------------------------------------------------------------------------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 64,981 $ 66,756
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Loans originated for sale (11,143,450)(11,347,075)
Loans sold 11,683,326 11,467,991
Depreciation 33,536 30,867
Premium amortization and discount accretion - net (13,109) (120)
Increase (decrease) in official checks (620,043) 391,386
(Decrease) increase in deferred income taxes (71,790) (60,800)
Increase (decrease) in other liabilities 277,266 168,668
Increase (decrease) in accrued interest receivable (19,382) 16,896
Increase (decrease) in advance payments by borrowers
for taxes and insurance 486,565 367,947
(Decrease) increase in other assets 121,455 (105,617)
---------- -----------
Net cash provided by (used in) operating activities 799,355 996,899
---------- -----------
INVESTING ACTIVITIES:
Purchases of securities available for sale (3,004,321) (1,000,000)
Purchases of property (16,053) (42,699)
Increases in loans - net (5,015,389) (262,523)
Purchases of mortgage-backed securities available for sale (5,361,226)
Principal reductions of mortgage-backed securities available for
sale 248,661 280,897
Principal reductions of mortgage-backed securities held to
maturity 633,595 374,072
---------- -----------
Net cash used in investing activities (12,514,733) (650,253)
---------- -----------
FINANCING ACTIVITIES:
Increase in deposits 2,466,112 983,378
Federal Home Loan Bank advances (repayment), net 5,500,000
(Decrease) increase in reverse repurchase agreements (1,833,000)
---------- -----------
Net cash provided by financing activities 7,966,112 (849,622)
---------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS (3,749,266) (502,976)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,320,354 4,370,069
---------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,571,088 $ 3,867,093
========== ===========
SUPPLEMENTAL DISCLOSURES:
Transfers of loans to real estate owned $ 71,327 $ 125,200
========== ===========
</TABLE>
See condensed notes to consolidated financial statements
<PAGE>
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The consolidated financial statements of Consumers Bancorp, Inc. ("Consumers")
and Subsidiaries, included herein, do not include all footnote disclosures
normally included in annual financial statements and, therefore, should be read
in conjunction with Consumers consolidated financial statements and notes
thereto for each of the three years in the period ended March 31, 1997 included
in Appendix A.
The interim consolidated financial statements for the three months ended June
30, 1997 are unaudited and, in the opinion of management, reflect all
adjustments (consisting of normal recurring accruals) necessary for fair
presentation of the balance sheet, statements of operations and cash flows of
Consumers and its Subsidiaries. The statements of operations for the three
months ended June 30, 1997 are not necessarily indicative of the results to be
expected for the year ending March 31, 1998.
2. SUBSEQUENT EVENT
On September 19, 1997, Consumers Board of Directors approved a definitive merger
agreement with BankUnited Financial Corporation. Under the terms of the
agreement, which is subject to approval from the Office of Thrift Supervision as
well as Consumers' stockholders, Consumers' stockholders would receive, in
exchange for their Consumers' common stock, either $21.33 in cash, 2.081 shares
of BankUnited Financial Series I Class A Common, or a combination thereof.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Total assets increased $8.2 million, or 8.7% to $102.2 million at June
30, 1997 from $94.0 million at March 31, 1997.
LOANS AND LOANS HELD FOR SALE. Loans and loans held for sale increased
$4.4 million, or 7.2% to $65.8 million at June 30, 1997 from $61.4 million at
March 31, 1997. This increase is primarily the result of loans originated of
$18.8 million that were partially offset by principal reductions of $3.8 million
and loan sales of $10.7 million.
CREDIT QUALITY. At June 30, 1997 non-performing assets totaled $682,000,
as compared to $324,000 at March 31, 1997. Expressed as a percentage of total
assets, non-performing assets increased to .67% of total assets at June 30, 1997
from .34% of total assets at March 31, 1997.
MORTGAGE-BACKED SECURITIES. Consumers' mortgage-backed securities
portfolio at June 30, 1997 was divided into $15.1 million classified as
available for sale and $4.1 million classified as held to maturity. Consumers'
mortgage-backed securities portfolio increased by $4.2 million, or 28.9% to
$18.9 million at June 30, 1997 from $14.7 million at March 31, 1997. The
increase is the result of purchases of mortgage-backed securities of $5.3
million which were partially offset by principal repayments totaling $900,000.
DEPOSITS. Deposits increased $2.4 million, or 3.1% to $81.5 million at
June 30, 1997 from $79.1 million at March 31, 1997.
BORROWINGS. Borrowings increased $5.5 million, or 157% to $9.0 million
at June 30, 1997 from $3.5 million at March 31, 1997. The increase is primarily
attributable to $5.0 million borrowed to finance the purchase of mortgage-backed
securities.
STOCKHOLDERS' EQUITY. Stockholders' equity increased $107,000 or 1.6% to
$6.8 million at June 30, 1997 from $6.7 million at March 31, 1997.
RESULTS OF OPERATIONS FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
NET INCOME. Net Income for fiscal 1997 was $124,000 compared to $206,000
in 1996. The decrease was primarily attributable to the FDIC special assessment
of $394,000 that was partially offset by increases in net interest income.
NET INTEREST INCOME. Net interest income for fiscal 1997 was $2.6
million compared to $2.4 million during fiscal 1996, an increase of 10.2%. The
$245,000 increase in net interest income resulted from an increase in the net
interest spread to 2.65% for fiscal 1997 from 2.47% for fiscal 1996 combined
with a $3.9 million increase in average interest earning assets. The
<PAGE>
average yield on interest earning assets decreased to 7.80% in fiscal 1997 from
7.93% in fiscal 1996. The average cost of interest bearing liabilities decreased
to 5.15% in fiscal 1997 from 5.46% in fiscal 1996.
Interest income increased $192,000, or 2.9% to $6.7 million for fiscal
1997 from $6.5 million for fiscal 1996. Interest on loans increased $292,000, or
6.5%, to $4.78 million for fiscal 1997 while interest on mortgage-backed
securities and other investments decreased by $100,000, or 4.9%, to $1.96
million for fiscal 1997. The yield on loans decreased to 8.58% in fiscal 1997
from 8.83% in fiscal 1996 and the average balance of loans increased $4.9
million, or 9.6%, to $55.7 million in fiscal 1997 from $50.8 million in fiscal
1996. The yield on mortgage backed securities decreased to 6.86% in fiscal 1997
from 6.97% in fiscal 1996, and the average balance of mortgage-backed securities
decreased $1.1 million, or 6.2%, to $16.8 million in fiscal 1997 from $17.9
million in fiscal 1996. In order to maximize the overall yield on interest
earning assets and to enhance profitability, Consumers implemented programs to
increase the volume of residential loans retained in portfolio and to increase
the balance of higher yielding commercial real estate loans.
The decrease in interest expense of $54,000, or 1.3%, to $4.09 million
in fiscal 1997 from $4.13 million in fiscal 1996 reflects an increase in
interest on deposits of $125,000, or 3.4%, to $3.84 million in fiscal 1997 and a
decrease in interest on borrowings of $179,000, or 4.2%, to $251,000 in fiscal
1997. The average cost of deposits decreased from 5.38% to 5.08% and the average
balance of deposits increased $6.5 million, or 9.5%, to $75.5 million during
fiscal 1997. The average cost of borrowings increased from 6.22% to 6.41% and
the average balance of borrowings decreased $3.0 million, or 43.4%, to $3.9
million during fiscal 1997.
PROVISIONS FOR LOAN LOSSES. There was no provision for loan losses
during either fiscal 1997 or fiscal 1996. Net charge-offs were $35,500, and $-0-
for fiscal 1997 and 1996, respectively.
OTHER INCOME. Other income for fiscal 1997 was $628,000 compared to
$796,000 for fiscal 1996. The decrease is primarily attributable to a decrease
in gains on sales of loan servicing rights of $50,000, or 13.0%, to $337,000 in
fiscal 1997 and a decrease in brokered loans fees of $109,000, or 36.9%, to
$186,000 in fiscal 1997.
OTHER EXPENSES. Operating expenses increased $218,000, or 7.6%, to $3.07
million in fiscal 1997 from $2.86 million in fiscal 1996.
Salaries and employee benefits decreased $39,000, or 2.8%, to $1.35
million in fiscal 1997 from $1.39 million in fiscal 1996.
Occupancy and equipment expense decreased $31,000, or 6.6%, to $436,000
in fiscal 1997 from $467,000 in fiscal 1996. The decrease is attributable to
Consumers canceling the remaining term on the lease of its administrative office
space and relocating to less expensive
2
<PAGE>
premises. During fiscal 1996 there was a $64,000 expense recognized in order to
cancel the remaining term of the lease.
FDIC and other insurance premiums increased $391,000, or 194.4%, to
$592,000 in fiscal 1997 from $201,000 in fiscal 1996. This increase reflects the
one-time $394,000 FDIC Special Assessment charged in September 1996 to
recapitalize the SAIF. Consumers' expects its insurance expense to decrease
substantially in future periods due to the decrease in deposit insurance
premiums, which has resulted from the SAIF recapitalization.
Professional fees decreased $50,000, or 28.9%, to $123,000 in fiscal
1997 from $173,000 in fiscal 1996. This decrease is primarily attributable to a
reduction in the costs associated with a proposed merger during fiscal 1996,
which decreased $35,000, or 51.4%, to $33,000 in fiscal 1997. The Company does
not anticipate any additional costs associated with that proposed transaction.
Other operating expenses increased $12,000, or 2.0%, to $571,000 in
fiscal 1997 from $559,000 in fiscal 1996.
INCOME TAX PROVISION. The income tax provision was $77,000 for fiscal
1997 compared to $137,000 for fiscal 1996. The decrease reflects the reduction
in income before income taxes. The effective tax rate was 38.4% for fiscal 1997
compared to 40.0% for fiscal 1996.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
NET INCOME. Net Income for the three months ended June 30, 1997 and 1996
was $65,000 and $67,000, respectively.
NET INTEREST INCOME. Net interest income for the three months ended June
30, 1997 was $679,000 compared to $616,000 for the three months ended June 30,
1996, an increase of 10.2%. The $63,000 increase in net interest income resulted
from an increase in the net interest spread to 2.69% for the three months ended
June 30, 1997 from 2.47% for the three months ended June 30, 1996 combined with
a $4.5 million increase in average interest earning assets. The average yield on
interest earning assets increased to 7.86% for the three months ended June 30,
1997 from 7.61% for the three months ended June 30, 1996. The average cost of
interest bearing liabilities increased to 5.17% for the three months ended June
30, 1997 from 5.13% for the three months ended June 30, 1996.
Interest income increased $142,000, or 8.7% to $1.77 million for the
three months ended June 30, 1997 from $1.63 million for the three months ended
June 30, 1996. Interest on loans increased $160,000, or 14.3%, to $1.28 million
for the three months ended June 30, 1997 while interest on mortgage-backed
securities and other investments decreased by $18,000, or 3.6%, to $489,000 for
the three months ended June 30, 1997. The yield on loans increased to 8.64% for
3
<PAGE>
the three months ended June 30, 1997 from 8.42% for the three months ended June
30, 1996. The average balance of loans increased $6.1 million, or 11.35%, to
$59.4 million for the three months ended June 30, 1997 from $53.3 million for
the three months ended June 30, 1996. The yield on mortgage-backed securities
increased to 6.88% for the three months ended June 30, 1997 from 6.74% for the
three months ended June 30, 1996. The average balance of mortgage-backed
securities decreased $2.0 million, or 11.49%, to $15.4 million for the three
months ended June 30, 1997 from $17.4 million for the three months ended June
30, 1996.
Interest expense increased $81,000, or 8.0%, to $1.09 million for the
three months ended June 30, 1997 from $1.01 million for the three months ended
June 30,1996. The average cost of deposits increased to 5.11% for the three
months ended June 30, 1997 from 5.05% for the three months ended June 30,1996.
The average balance of deposits increased $6.6 million, or 9.0%, to $80.4
million for the three months ended June 30, 1997 from $73.8 million for the
three months ended June 30,1996. The average cost of borrowings decreased to
6.24% for the three months ended June 30, 1997 from 6.31% for the three months
ended June 30,1996. The average balance of borrowings decreased $900,000, or
17.8%, to $4.2 million for the three months ended June 30, 1997 from $5.1
million for the three months ended June 30,1996.
PROVISIONS FOR LOAN LOSSES. There was no provision for loan losses
during either of the three-month periods ended June 30, 1997 and 1996. Net
charge-offs were -0- and $35,500 for the three months ended June 30, 1997 and
1996 respectively.
OTHER INCOME. Other income for the three months ended June 30, 1997 and
1996 was $105,000 and $155,000, respectively. This decrease is primarily
attributable to lesser income from Consumers' mortgage banking operations.
OTHER EXPENSES. Operating expenses increased $19,000, or 2.9%, to
$678,000 for the three months ended June 30, 1997 from $659,000 for the three
months ended June 30, 1996.
Salaries and employee benefits increased $43,000, or 13.0%, to $374,000
for the three months ended June 30, 1997 from $331,000 for the three months
ended June 30,1996. This increase is the result of an expansion of Consumers'
commercial real estate and consumer lending operations along with additional
personnel for a new branch facility scheduled to open in the fall of 1997.
Occupancy and equipment expense increased $4,000, or 3.7%, to $113,000
for the three months ended June 30, 1997 from $109,000 for the three months
ended June 30,1996.
FDIC and other insurance premiums decreased $30,000, or 69.8%, to
$13,000 for the three months ended June 30, 1997 from $43,000 for the three
months ended June 30,1996. This decrease is the result of the SAIF
recapitalization that occurred in the September 1996 quarter. Subsequent to the
SAIF recapitalization, Consumers FDIC insurance premiums were reduced
significantly.
4
<PAGE>
All other operating expenses increased $3,000, or 1.7%, to $179,000 for
the three months ended June 30, 1997 from $176,000 for the three months ended
June 30,1996.
INCOME TAX PROVISION. The income tax provision was $41,000 for the three
months ended June 30, 1997 compared to $45,000 for the three months ended June
30,1996. The decrease is attributable to the decrease in income before income
taxes. The effective tax rate was 40.6% for the three months ended June 30, 1997
compared to 40.2% for the three months ended June 30, 1996.
<PAGE>
APPENDIX B
SECTIONS 607.1301, 607.1302 AND 607.1320 OF THE
FLORIDA BUSINESS CORPORATION ACT
<PAGE>
607.1301 DISSENTER'S RIGHTS; DEFINITIONS.--The following definitions apply to
ss. 607.1302 and 607.132:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the value of
the shares as of the close of business on the day prior to the shareholders'
authorization date, excluding any appreciation or depreciation in anticipation
of the corporate action unless exclusion would be inequitable.
(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on which
the corporation received written consents without a meeting from the requisite
number of shareholders in order to authorize the action, or, in the case of a
merger pursuant to s. 607.1104, the day prior to the date on which a copy of the
plan of merger was mailed to each shareholder of record of the subsidiary
corporation.
607.1302 RIGHT OF SHAREHOLDERS TO DISSENT.--(1) Any shareholder has the right
to dissent from, and obtain payment of the fair value of his shares in the event
of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its parent under
s. 607.1104, and the shareholders would have been entitled to vote on action
taken, except for the applicability of s.
607.1104;
(b) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation, other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange
pursuant to s. 607.1202, including a sale in dissolution but not including a
sale pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to the
shareholders within 1 year after the date of sale;
(c) As provided in s. 607.0902(11), the approval of a control-share
acquisition;
(d) Consummation of a plan of share exchange to which the corporation is a
party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;
(e)Any amendment of the articles of incorporation if the shareholder is
entitled to vote on the amendment and if such amendment would adversely affect
such shareholder by:
1. Altering or abolishing any preemptive rights attached to any of his
shares;
2. Altering or abolishing the voting rights pertaining to any of his shares,
except as such rights may be affected by the voting rights of new shares then
being authorized of any existing of new class or series of shares;
3. Effecting an exchange, cancellation, or reclassification of any of his
shares, when such exchange, cancellation, or reclassification would alter or
abolish his voting rights or alter his percentage of equity in the corporation,
or effecting a reduction or cancellation of accrued dividends or other
arrearages in respect to such shares;
4. Reducing the stated redemption price of any of his redeemable shares,
altering or abolishing any provision relating to any sinking fund for the
redemption or purchase of any of his shares, or making any of his shares subject
to redemption when they are not otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of any of his
preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of his preferred shares; or
7. Reducing any stated preferential amount payable on any of his preferred
shares upon voluntary or involuntary liquidation; or
(f) Any corporation action taken, to the extent the articles of incorporation
provide that a voting of nonvoting shareholder is entitled to dissent and obtain
payment for his shares.
(2) A shareholder dissenting from any amendment specified in paragraph (1)(e)
has the right to dissent only as to those of his shares which are adversely
affected by the amendment.
<PAGE>
(3) A shareholder may dissent as to less than all the shares registered in
his name. In that event, his rights shall be determined as if the shares as to
which he has dissented and his other shares were registered in the names of
different shareholders.
(4) Unless the articles of incorporation otherwise provide, this section does
not apply with respect to a plan of merger or share exchange or a proposed sale
or exchange of property, to the holders of shares of any class or series which,
on the record date fixed to determine the shareholders entitled to vote at the
meeting of shareholders at which such action is to be acted upon or to consent
to any such action without a meeting, were either registered on a national
securities exchange OR DESIGNATED AS A NATIONAL MARKET SYSTEM SECURITY ON AN
INTERDEALER QUOTATION SYSTEM BY THE NATIONAL ASSOCIATION OF SECURITIES DEALERS,
INC., or held of record by not fewer than 2,000 shareholders.
(5) A shareholder entitled to dissent and obtain payment for his shares under
this section may not challenge the corporate action creating his entitlement
unless the action is unlawful or fraudulent with respect to the shareholder or
the corporation. (Last amended by Ch. 94-327, L. '94, eff. 6-2- 94.)
607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.--(1)(a) If a proposed
corporate action creating dissenters' rights under s. 607.1320 is submitted to a
vote at a shareholders' meeting, the meeting notice shall state that
shareholders are or may be entitled to asset dissenters' rights and be
accompanied by a copy of ss. 607.1301, 607.1302, and 607.1320. A shareholder who
wishes to assert dissenters' rights shall:
1. Deliver to the corporation before the vote is taken written notice of his
intent to demand payment for his shares if the proposed action is effectuated,
and
2. Not vote his shares in favor of the proposed action. A proxy or vote
against the proposed action does not constitute such a notice of intent to
demand payment.
(b) If proposed corporate action creating dissenters' rights under s.
607.1302 is effectuated by written consent without a meeting, the corporation
shall deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to each shareholder
simultaneously with any request for his written consent, or, of such a request
is not made, within 10 days after the date the corporation received written
consents without a meeting from the requisite number of shareholders necessary
to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his shares pursuant to paragraph
(1)(a) or, in the case of action authorized by written consent, to each
shareholder, excepting any who voted for, or consented in writing to, the
proposed action.
(3) Within 20 days after the giving of notice to him, any shareholder who
elects to dissent shall file with the corporation a notice of such election,
stating his name and address, the number, classes, and series of shares as to
which he dissents, and a demand for payment of the fair value of his shares. Any
shareholder failing to file such election to dissent within the period set forth
shall be bound by the terms of the proposed corporate action. Any shareholder
filing an election to dissent shall deposit his certificates for certificated
shares with the corporation simultaneously with the filing of the election to
dissent. The corporation may restrict the transfer of uncertificated shares from
the date the shareholder's election to dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall not
be entitled to vote or to exercise any other rights of a shareholder. A notice
of election may be withdrawn in writing by the shareholder at any time before an
offer is made by the corporation, as provided in subsection (5), to pay for his
shares. After such offer, no such notice of election may be withdrawn unless the
corporation consents thereto. However, the right of such shareholder to be paid
the fair value of his shares shall cease, and he shall be reinstated to have all
his rights as a shareholder as of the filing of his notice of election,
including any intervening preemptive rights and the right to payment of any
intervening dividend or other distribution or, if any such rights have expired
or any such dividend or distribution other than in cash has been completed, in
lieu thereof, at the election of the corporation, the fair value thereof in cash
as determined by the board as of the time of such expiration or completion,
<PAGE>
but without prejudice otherwise to any corporate proceedings that may have been
taken in the interim, if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a court has
been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such shareholder is not
entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided in
this section to pay an amount the corporation estimates to be the fair value for
such shares. If the corporate action has not been consummated before the
expiration of the 90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such action. Such notice
and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the dissenting
shareholder holds, as of the latest available date and not more than 12 months
prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the 12-month period
ended on the date of such balance sheet or, if the corporation was not in
existence throughout such 12-month period, for the portion thereof during which
it was in existence.
(6) If within 30 days after the making of such offer any shareholder accepts
the same, payment for his shares shall be made within 90 days after the making
of such offer or the consummation of the proposed action, whichever is later.
Upon payment of the agreed value, the dissenting shareholder shall cease to have
any interest in such shares.
(7) If the corporation fails to make such offer within the period specified
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30 days
thereafter, then the corporation, within 30 days after receipt of written demand
from any dissenting shareholder given within 60 days after the date on which
such corporate action was effected, shall, or at its election at any time within
such period of 60 days may, file an action in any court of competent
jurisdiction in the county in this state where the registered office of the
corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting shareholder,
as to whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation fails to
institute the proceeding as herein provided, any dissenting shareholder may do
so in the name of the corporation. All dissenting shareholders (whether or not
residents of this state), other than shareholders who have agreed with the
corporation as to the value of their shares, shall be made parties to the
proceeding as an action against their shares. The corporation shall serve a copy
of the initial pleading in such proceeding upon each dissenting shareholder who
is a resident of this state in the manner provided by law for the service of a
summons and complaint and upon each nonresident dissenting shareholder either by
registered or certified mail and publication or in such other manner as is
permitted by law. The jurisdiction of the court is plenary and exclusive. All
shareholders who are proper parties to the proceeding are entitled to judgment
against the corporation for the amount of the fair value of their shares. The
court may, if it so elects, appoint one or more persons as appraisers to receive
evidence and recommend a decision on the question of fair value. The appraisers
shall have such power and authority as is specified in the order of their
appointment or an amendment thereof. The corporation shall pay each dissenting
shareholder the amount found to be due him within 10 days after final
determination of the proceedings. Upon payment of the judgment, the dissenting
shareholder shall cease to have any interest in such shares.
(8) The judgment may, at the discretion of the court, include a fair rate of
interest, to be determined by the court.
<PAGE>
(9) The costs and expenses of any such proceeding shall be determined by the
court and shall be assessed against the corporation, but all or any part of such
costs and expenses may be apportioned and assessed as the court deems equitable
against any or all of the dissenting shareholders who are parties to the
proceeding, to whom the corporation has made an offer to pay for the shares, if
the court finds that the action of such shareholders in failing to accept such
offer was arbitrary, vexatious, or not in good faith. Such expenses shall
include reasonable compensation for, and reasonable expenses of, the appraisers,
but shall exclude the fees and expenses of counsel for, and experts employed by,
any party. If the fair value of the shares, as determined, materially exceeds
the amount which the corporation offered to pay therefor or if no offer was
made, the court in its discretion may award to any shareholder who is a party to
the proceeding such sum as the court determines to be reasonable compensation to
any attorney or expert employed by the shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the agreed value
thereof or pursuant to payment of the judgment entered therefor, as provided in
this section, may be held and disposed of by such corporation as AUTHORIZED BUT
UNISSUED SHARES OF THE CORPORATION, except that, in the case of a merger, they
may be held and disposed of as the plan of merger otherwise provides. The shares
of the surviving corporation into which the shares of such dissenting
shareholders would have been converted had they assented to the merger shall
have the status of authorized but unissued shares of the surviving corporation.
(Last amended by Ch. 93-281, L. '93, eff. 5-15-93.)
<PAGE>
APPENDIX C
FAIRNESS OPINION OF RP FINANCIAL, LC
<PAGE>
_____________, 1997
[RP FINANCIAL LETTERHEAD]
Board of Directors
Consumers Bancorp, Inc.
9400 South Dadeland Boulevard
Suite 620
Miami, Florida 33156
Members of the Board:
You have requested RP Financial, L.C. ("RP Financial") to provide you with
its opinion as to the fairness from a financial point of view to the
shareholders of Consumers Bancorp, Inc., Miami, Florida, a Florida Corporation
("Consumers"), of the Agreement and Plan of Merger (the "Agreement"), by and
between BankUnited Financial Corporation, Coral Gables, Florida, a Florida
Corporation ("BankUnited"), Consumers and Consumers Savings Bank (the "Bank"), a
wholly-owned subsidiary of Consumers. The Agreement is incorporated herein by
reference. Unless otherwise defined, all capitalized terms incorporated herein
have the meanings ascribed to them in the Agreement.
SUMMARY DESCRIPTION OF CONSIDERATION
At the Effective Time, each share of common stock of Consumers, $0.01 par
value per share, issued and outstanding immediately prior to the Effective Time
shall cease to be outstanding and shall be converted into and become the right
to receive a payment (the "Merger Consideration") of $21.33 in cash or 2.081
shares of BankUnited Common Stock (the "Agreed Value"). Each shareholder may
elect to receive his, her, or its total of the Merger Consideration in cash,
BankUnited Common Stock or a combination thereof, provided, however, that (1)
in the aggregate, the cash portion of the consideration shall not exceed 55
percent of the total amount of the Merger Consideration, including any cash
paid in lieu of fractional shares, (2) the Merger Consideration shall not be
paid on shares as to which dissenters rights have been asserted pursuant to
Florida law, and (3) if the average fair market value of BankUnited Common
Stock, as determined by using the average closing price of one share of the
security computed for the 20-day trading period on the NASDAQ system (as
reported by the WALL STREET JOURNAL or, if not reported thereby, any other
authorative source), ending three days prior to the Effective Time (the "Fair
Market Value" or "FMV"), is greater than $12.00 per share, the number of
BankUnited shares received by Consumers shareholders shall be equal to 2.081
times a fraction, the numerator of which is $12.00 and the denominator of which
is the Fair Market Value. If the Fair Market Value falls below $9.80 per share,
then BankUnited shall pay Consumers, in cash, a total purchase price, including
all amounts paid for Consumers Options, of $10,800,000. If the fair market value
of BankUnited Common Stock is less than $8.50 per share, as determined by using
the average of the mean closing prices of such stock as quoted on the NASDAQ
system on each of the ten trading days immediately preceding the Effective
Time, then Consumers may terminate the transaction at the discretion of the
Board of Directors. Additionally, each Consumers stock option outstanding
("Consumers Options") granted by Consumers under the Consumers Benefit Plans,
which are outstanding at the Effective Time, whether or not then exercisable,
shall be cancelled, and each holder shall be paid for each such option an
amount of cash without interest earned determined by multiplying (i) the excess,
if any, of $21.33 over the applicable exercise price of such option by (ii)
the number of shares of Consumers Common Stock subject to option. As of the
date hereof, Consumers had 485,509 shares of common stock issued and outstanding
and 48,264 stock options outstanding. Cash will be paid in lieu of fractional
shares.
<PAGE>
RP FINANCIAL, LC.
BOARD OF DIRECTORS
_____________________, 1997
PAGE 2
Notwithstanding the foregoing, if the Closing Net Worth of Consumers is
less than $6,500,000, then at BankUnited's option, it may either terminate the
Agreement, or proceed to consummate the Merger by reducing the aggregate Merger
Consideration to be paid the holders of Consumers Common Stock and the amounts
to be paid to holders of Consumers stock options by $1.25 for each dollar that
the Closing Net Worth is less than $6,500,000. If the Closing Net Worth of
Consumers is less than $6,100,000, then Consumers may terminate the transaction
at the discretion of the Board of Directors.
RP FINANCIAL BACKGROUND AND EXPERIENCE
RP Financial, as part of its financial institution valuation and consulting
practics, is regularly engaged in the valuation of financial institutional
securities in connection with mergers and acquisitions of commercial banks and
thrift institutions, initial and secondary offerings, mutual-to-stock
conversions of thrift institutions, and business valuations for other corporate
purposes for financial institutions. As specialists in the valuation of
securities of financial institutions, RP Financial has experience in, and
knowledge of, the Florida and Southeast markets for thrift and bank securities
and financial institutions operating in Florida.
MATERIALS REVIEWED
In rendering this fairness option, RP Financial reviewed the following
material: (1) the Agreement including exhibits; (2) financial and other
information for Consumers, all with regard to balance and off-balance sheet
composition, profitability, interest rates, volumes, maturities, trends, credit
risk, interest rate risk, liquidity risk and operations: (a) audited financial
statements for the fiscal years ended March 31, 1993 through 1997, (b)
shareholder, regulatory and internal financial and other reports through
August 31, 1997, (c) the most recent proxy statement for Consumers, (d)
internal budgets and financial projections prepared by management and (e)
Consumers' management and Board comments regarding past and current business,
operations, financial condition, and future prospects; and (3) financial and
other information for BankUnited including: (a) audited financial statements
for the fiscal years ended December 31, 1995 and 1996, incorporated in Annual
Reports to shareholders, (b) Form 10K as of December 31, 1996, (c) regulatory
and internal financial and other reports through June 30, 1997, (d) internal
budgets and financial projections prepared by management of BankUnited, (e)
registration statement on Form S-3 as filed with the Securities and Exchange
Commission on September 17, 1997 in conjunction with a secondary offering of
common stock, and (f) BankUnited's management comments regardingpast and
current business, operations, financial condition, and future prospects.
In addition, RP Financial reviewed financial, operational, market area
and stock price and trading characteristics for BankUnited and the stock price
and relatively limited trading information available for Consumers relative to
publicly-traded savings institutions, repsectively, with comparable resources,
financial condition, earnings, operations and markets. RP Financial also
considered the economic and demographic characteristics in the local market
area, and the potential impact of the regulatory, legislative and economic
environments on operations for Consumers and BankUnited and the public
preception of savings institutions. RP Financial also considered: (a) a
transaction summary of the financial terms of the Merger, including the
aggregate Merger Consideration relative to tangible book value, annualized
earnings for the first five months of fiscal 1998, fiscal 1998 budgeted
earnings, assets, and deposit liabilities of Consumers; (b) the financial terms,
financial condition, operating performance, and market area of other recently
completed and pending mergers and acquisitions of comparable financial
institution entities, including Florida transactions specifically and Southeast
U.S. transactions both generally and specifically; (c) discounted cash flow
analyses for Consumers on a stand-alone basis, incorporating estimated
earnings and equity levels implied by Consumers' current business plan and
future prospects; and (d) the pro forma impact on Bank United of the planned
secondary offering of common stock as well the acquisition of Consumers, which
is expected to be accounted for as a purchase.
<PAGE>
RP FINANCIAL, LC.
BOARD OF DIRECTORS
_____________________, 1997
PAGE 3
Furthermore, RP Financial also considered the pro forma impact of the Merger to
the holders of Consumers Common Stock (incorporating the Agreed Value,
transaction adjustments and potential earnings improvements), including the
pro forma impact to the market value per share, tangible book value per share,
and earnings per share of the Consumers Common Stock. RP Financial also
considered the improved liquidity characteristics of the BankUnited Common
Stock relative to the Consumers Common Stock, the enhanced competitive position
of BankUnited resulting from the Merger, and the opportunities for BankUnited
to increase earnings in the future. The results of these analyses and the other
factors considered were evaluated as a whole, with the aggregate results
indicating a range of financial parameters utilized to access the Agreed Value
as described in the Agreement.
In rendering its opinion, RP Financial relied, without independent
verification, on the accuracy and completeness of the information concerning
Consumers and BankUnited furnished by the respective institutions to RP
Financial for review, as well as publicly-available information regarding
other financial institutions and economic and demographic data. Consumers and
BankUnited did not restrict RP Financial as to the material it was permitted to
review. RP financial did not perform or obtain any independent appraisals or
evaluations of the assets and liabilities and potential and/or contingent
liabilities of Consumers or BankUnited.
RP Financial expresses no opinion on matters of a legal, regulatory, tax or
accounting nature or the ability of the merger as set forth in the Agreement to
be consummated. In rendering its opinion, RP Financial assumed that, in the
course of obtaining the necessary regulatory and governmental approvals for the
Merger, no restriction will be imposed on BankUnited that would have a material
adverse effect on the ability of the Merger to be consummated as set forth in
the Agreement.
OPINION
It is understood that this letter is directed to the Board of Directos of
Consumers in its consideration of the Agreement, and does not constitute a
recommendation to any shareholder of Consumers as to any action that such
shareholder should take in connection with the Agreement, or otherwise.
It is understood that this opinion is based on market conditions and
other circumstances existing on the date hereof.
It is understood that this opinion may be included in its entirety in any
communication by Consumers or its Board of Directors to the stockholders of
Consumers. It is also understood that this opinion may be included in its
entirety in any regulatory filing by Consumers or BankUnited, and that RP
Financial consents to the summary of the opinion in the proxy materials of
Consumers, and any amendments thereto. Except as described above, this opinion
may not be summarized, excerpted from or otherwise publicly referred to
without RP Financial's prior written consent.
Based upon and subject to the the foregoing, and other such matters
considered relevant, it is RP Financial's opinion that, as of the date hereof,
the Merger Consideration to be received by Consumers' shareholders, as described
in the Agreement, is fair to such shareholders from a financial point of view.
Respectfully submitted,
RP FINANCIAL, LC.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION AND REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY BANKUNITED, OR CONSUMERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.
TABLE OF CONTENTS
PAGE
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AVAILABLE INFORMATION..................................................
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................
SUMMARY ...............................................................
RISK FACTORS...........................................................
CAPITALIZATION.........................................................
THE MERGER.............................................................
DESCRIPTION OF CAPITAL STOCK...........................................
COMPARISON OF SHAREHOLDERS' RIGHTS.....................................
EXPERTS................................................................
APPENDIX A - FINANCIAL STATEMENTS OF
CONSUMERS BANCORP, INC.
AND MANAGEMENT'S DISCUSSION
AND ANALYSIS..............................................
APPENDIX B - SECTIONS 607.1301, 607,1302 AND 607.1320 OF THE FLORIDA
BUSINESS CORPORATION ACT..................................
APPENDIX C - FAIRNESS OPINION OF RP FINANCIAL, LC
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF BANKUNITED SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
BANKUNITED FINANCIAL
CORPORATION
1,110,782 Shares of
Class A Common Stock
--------------------
PROSPECTUS
--------------------
October __, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Articles IX of the Articles of Incorporation of BankUnited
provides that BankUnited shall indemnify its officers and directors to the
fullest extent permitted by law.
The Bylaws of BankUnited provide that BankUnited will indemnify
any person against whom an action is brought or threatened because that person
is or was a director, officer or employee of BankUnited for any amount for which
that person becomes liable under a judgment in such action and reasonable costs
and expenses, including attorneys' fees. Such indemnification may only be made,
however, if (i) final judgment on the merits is in his or her favor or (ii) in
case of settlement, final judgment against him or her or final judgment in his
or her favor, other than on the merits, if a majority of the Board of Directors
of BankUnited determines that he or she was acting in good faith within the
scope of his or her duties and for a purpose he or she could have reasonably
believed under the circumstances was in the best interests of BankUnited.
Section 607.0831 of the Florida Business Corporation Act
provides, among other things, that a director is not personally liable for
monetary damages to a company or any other person for any statement, vote,
decision, or failure to act, by the director, regarding corporate management or
policy, unless the director breached or failed to perform his or her duties as a
director and such breach or failure constitutes (a) a violation of criminal law,
unless the director had reasonable cause to believe his or her conduct was
lawful or had no reasonable cause to believe his or her conduct was unlawful;
(b) a transaction from which the director derived an improper personal benefit;
(c) a circumstance under which the liability provisions of Section 607.0834 of
the Florida Business Corporation Act (relating to the liability of the directors
for improper distributions) are applicable; (d) willful misconduct or a
conscious disregard for the best interest of BankUnited in the case of a
proceeding by or in the right of BankUnited to procure a judgment in its favor
or by or in the right of a shareholder; or (e) recklessness or an act or
omission in bad faith or with malicious purpose or with wanton and willful
disregard of human rights, safety or property, in a proceeding by or in the
right of someone other than such company or a shareholder.
Section 607.0850 of the Florida Business Corporation Act
authorizes, among other things, BankUnited to indemnify any person who was or is
a party to any proceeding (other than an action by or in the right of
BankUnited) by reason of the fact that he is or was a director, officer,
employee or agent of BankUnited (or is or was serving at the request of
BankUnited in such a position for any entity) against liability incurred in
connection with such proceeding, if he or she acted in good faith and in a
manner reasonably believed to be in the best interests of BankUnited and, with
respect to criminal proceedings, had no reasonable cause to believe his or her
conduct was unlawful.
Florida law requires that a director, officer or employee be
indemnified for expenses (including attorneys' fees) to the extent that he or
she has been successful on the merits or otherwise in the defense of any
proceeding. Florida law also allows expenses of defending a proceeding to be
advanced by a company before the final disposition of the proceedings, provided
that the officer, director or employee undertakes to repay such advance if it is
ultimately determined that indemnification is not permitted.
Florida law states that the indemnification and advancement of
expenses provided pursuant to Section 607.0850 is not exclusive and that
indemnification may be provided by a company pursuant to other means, including
agreements or bylaw provisions. Florida law prohibits indemnification or
advancement of expenses, however, if a judgment or other final adjudication
establishes that the actions of a director, officer or employee constitute (i) a
violation of criminal law, unless he or she had reasonable cause to believe his
or her conduct was lawful or had no reasonable cause to believe his or her
conduct was unlawful; (ii) a transaction from which such person derived an
improper personal benefit; (iii) willful misconduct or conscious disregard for
the best interests of
II-1
<PAGE>
BankUnited in the case of a derivative action or a proceeding by or in the right
of a shareholder, or (iv) in the case of a director, a circumstance under which
the liability provisions of Section 607.0834 of the Florida Business Corporation
Act (relating to the liability of directors for improper distributions) are
applicable.
BankUnited has purchased director and officer liability insurance
that insures directors and officers against liabilities in connection with the
performance of their duties.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.* The following is a list of Exhibits to this
Registration Statement;
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
2.1 Agreement and Plan of Merger, dated July 15, 1996, between
BankUnited and Suncoast Savings and Loan Association, FSA.
(Exhibit 2.1 to BankUnited's Form S-4 Registration Statement,
File No. 333-13211, as filed with the Securities and Exchange
Commission on October 1, 1996).
2.2 Agreement and Plan of Merger between BankUnited and Consumers
Bancorp, Inc. dated September 19, 1997.
3.1 Articles of Incorporation of BankUnited (Exhibit 4.1 to
BankUnited's Form S-2 Registration Statement, File No. 333-27597,
as filed with the Securities and Exchange Commission on May 22,
1997).
3.2 Statement of Designation of Series I Class A Common Stock and
Class B Common Stock of BankUnited (included as an appendix to
Exhibit 3.1).
3.3 Statement of Designation of Noncumulative Convertible Preferred
Stock, Series A, of BankUnited (included as an appendix to
Exhibit 3.1).
3.4 Statement of Designation of Noncumulative Convertible Preferred
Stock, Series B of BankUnited (included as appendix to Exhibit
3.1).
3.5 Statement of Designation of 8% Noncumulative Convertible
Preferred Stock, Series 1993 of BankUnited (included as an
appendix to Exhibit 3.1).
3.6 Statement of Designation of 9% Noncumulative Perpetual Preferred
Stock of BankUnited (included as an appendix to Exhibit 3.1).
3.7 Bylaws of BankUnited (Exhibit 4.5 to BankUnited's Form S-8
Registration Statement, File No. 333-43211, as filed with the
Securities and Exchange Commission on November 14, 1996).
4.1 Agreement for Advances and Security Agreement with Blanket
Floating Lien dated as of September 25, 1992, between BankUnited,
FSB (the "Bank") and the Federal Home Loan Bank of Atlanta
(Exhibit 4.1 to the Bank's Form 10-K for the year ended September
30, 1992, filed with the Securities and Exchange Commission as an
exhibit to BankUnited's Form 8-K dated March 25, 1993).
II-2
<PAGE>
4.2 Forms of Series 15A-F, Series 18E and Series 20A-F of
Subordinated Notes of the Bank (Exhibit 4.3 to BankUnited's Form
S-4 Registration Statement, File No. 33-55232, as filed with the
Securities and Exchange Commission on December 2, 1992).
5.1 Opinion of Stuzin and Camner, P.A. as to the validity of the
issuance of the Class A Common Stock.**
8.1 Opinion of Kronish, Lieb, Weiner & Hellman LLP regarding federal
income tax matters.**
10.1 Non-Statutory Stock Option Plan, as amended, (Exhibit 4.9 to
BankUnited's Form S-8 Registration Statement, File No. 33-76882,
as filed with the Securities and Exchange Commission on March 24,
1994). ***
10.2 1992 Stock Bonus Plan, as amended (Exhibit 10.2 to BankUnited's
Form 10-K Report for the year ended September 30, 1994 [the "1994
10-K"]).***
10.3 1994 Incentive Stock Option Plan. (Exhibit 10.3 to the 1994
10-K).***
10.4 The Bank's Profit Sharing Plan. (Exhibit 10.4 to BankUnited's
Form S-2 Registration Statement, File No. 33-80791, as filed with
the Securities and Exchange Commission on December 22, 1995).***
10.5 1996 Incentive Compensation and Stock Award Plan (Exhibit 10.5 to
BankUnited's Form 10-K Report for the year ended September 30,
1996).***
10.6 Purchase and Assumption Agreement dated March 20, 1995 by and
among BankUnited, the Bank, SouthTrust Corporation, SouthTrust of
Florida, Inc. and SouthTrust Bank of the Suncoast (Exhibit 10.1
to BankUnited's Form 10-Q Report for the quarter ended March 31,
1995 [the "March 31, 1995 10-Q"]).
10.7 Purchase and Assumption Agreement dated March 20, 1995 by and
among BankUnited, the Bank, SouthTrust Corporation, SouthTrust of
Florida, Inc., and SouthTrust Bank of Southwest Florida, N.A.
(Exhibit 10.2 to the March 31, 1995 10-Q).
10.8 First Amendment to Purchase and Assumption Agreement dated July
27, 1995 by and among BankUnited, the Bank, SouthTrust
Corporation, SouthTrust of Florida, Inc., and SouthTrust Bank of
the Suncoast (Exhibit 10.1 to BankUnited's Form 10-Q Report for
the quarter ended June 30, 1995 [the "June 30, 1995 10-Q"]).
10.9 First Amendment to Purchase and Assumption Agreement dated July
27, 1995 by and among BankUnited, the Bank, SouthTrust
Corporation, SouthTrust of Florida, Inc., and SouthTrust of
Southwest Florida, N.A. (Exhibit 10.2 to the June 30, 1995 10-Q).
10.10 Form of Employment Agreement between BankUnited and Alfred R.
Camner (Exhibit 10.10 to BankUnited's 10-K Report for the year
ended September 30, 1996).
10.11 Form of Employment Agreement between BankUnited and Earline G.
Ford (Exhibit 10.11 to BankUnited's 10-K Report for the year
ended September 30, 1996).
10.12 Form of Employment Agreement between BankUnited and certain of
its senior officers (Exhibit 10.12 to BankUnited's 10-K Report
for the year ended September 30, 1996).
II-3
<PAGE>
11.1 Statement regarding calculation of earnings per common share.
12.1 Statement regarding calculation of earnings to combined fixed
charges and preferred stock dividends.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Deloitte & Touche, LLP
23.3 Consent of Stuzin and Camner, P.A. (set forth in Exhibit 5.1 to
this Registration Statement).**
23.4 Consent of Kronish, Lieb, Weiner & Hellman LLP (set forth in
Exhibit 8.1 to this Registration Statement).**
23.5 Consent of RP Financial, LC.
24.1 Power of attorney (set forth on the signature page in Part II of
this Registration Statement).
99.1 Proxy materials of Consumers Bancorp, Inc.
- -----------------------------
* Exhibits containing a parenthetical reference in their description are
incorporated herein by reference from the documents described in the
parenthetical reference.
** To be filed by amendment
*** Exhibits 10.1-10.5 are compensatory plans or arrangements.
ITEM 22. 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 posit-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 securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) (ss.230.424(b) of
this chapter) if, in the aggregate the changes in volume and price represent no
more than a 20% 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.
II-4
<PAGE>
(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 that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11, or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a transaction, and
BankUnited being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this Registration Statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed
pursuant to the immediately preceding paragraph, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the Registration Statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offering therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
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 Item 20 of this Registration Statement, 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 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.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Coral Gables, State of
Florida on November 7, 1997.
BANKUNITED FINANCIAL CORPORATION
By: /s/ ALFRED R. CAMNER
------------------------------------
Alfred R. Camner
Chairman of the Board, President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Alfred R. Camner, Earline G. Ford and Marc
Jacobson and each of them, his true and lawful attorney-in-fact and agent with
full power of substitution, for him and in his name, place and stead, in any and
all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement, or any Registration Statement
relating to this offering to be effective upon filing pursuant to Rule 462(b)
under the Securities Act of 1933, and to file the same, with all exhibits
thereto and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto each said attorney-in-fact and agent, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on November 7, 1997 by the following
persons in the capacities indicated.
/s/ ALFRED R. CAMNER
- ---------------------------------- Chairman of the Board, Chief Executive
Alfred R. Camner Officer, President and Director
(Principal Executive Officer)
/s/ LAWRENCE H. BLUM
- ---------------------------------- Vice Chairman of the Board and Director
Lawrence H. Blum
/s/ JAMES A. DOUGHERTY
- ---------------------------------- Chief Operating Officer, Executive Vice
James A. Dougherty President and Director
/s/ EARLINE G. FORD
- ---------------------------------- Executive Vice President, Treasurer and
Earline G. Ford Director
/s/ SAMUEL A. MILNE
- ---------------------------------- Executive Vice President and Chief Financial
Samuel A. Milne Officer (Principal Financial Officer and
Principal Accounting Officer)
/s/ MARC LIPSITZ
- ---------------------------------- Corporate Secretary and Director
Marc Lipsitz
II-6
<PAGE>
/s/ ALLEN M. BERNKRANT
- ---------------------------------- Director
Allen M. Bernkrant
/s/ IRVING P. COHEN
- ---------------------------------- Director
Irving P. Cohen
/s/ CHRISTINA CUERVO
- ---------------------------------- Director
Christina Cuervo
/s/ BRUCE FRIESNER
- ---------------------------------- Director
Bruce Friesner
- ---------------------------------- Director
Patricia Frost
/s/ E. J. GIUSTI
- ---------------------------------- Director
E. J. Giusti
/s/ MARC D. JACOBSON
- ---------------------------------- Director
Marc D. Jacobson
/s/ NORMAN MAINS
- ---------------------------------- Director
Norman Mains
/s/ NEIL MESSINGER
- ---------------------------------- Director
Neil Messinger
/s/ ANNE W. SOLLOWAY
- ---------------------------------- Director
Anne W. Solloway
II-7
<PAGE>
<TABLE>
<CAPTION>
BANKUNITED FINANCIAL CORPORATION
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER PAGE
- ------- ------------
<S> <C> <C>
2.2 Agreement and Plan of Merger between BankUnited and Consumers
Bancorp, Inc. dated September 19, 1997.
11.1 Statement regarding calculation of earnings per common share.
12.1 Statement regarding calculation of ratios.
21.1 Subsidiaries of the Registrant
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Deloitt & Touche LLP.
23.5 Consent of RP Financial, LC.
99.1 Proxy materials of Consumers Bancorp, Inc.
</TABLE>
EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
BETWEEN
BANKUNITED FINANCIAL CORPORATION
AND
CONSUMERS BANCORP, INC.
September 19, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions....................................................1
ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
2.01 Merger.................................................................6
2.02 Time and Place of Closing..............................................7
2.03 Effective Time.........................................................7
2.04 Further Actions........................................................7
ARTICLE III
MANNER OF CONVERTING SHARES
3.01 Conversion.............................................................8
ARTICLE IV
EXCHANGE OF SHARES
4.01 Exchange Procedures....................................................9
4.02 Voting and Dividends..................................................10
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CONSUMERS
5.01 Organization, Standing, and Authority.................................11
5.02 Consumers Capital Stock...............................................11
5.03 Subsidiaries..........................................................12
5.04 Authorization of Merger and Related Transactions......................12
5.05 Consumers Financial Statements........................................13
5.06 Absence of Undisclosed Liabilities....................................13
5.07 Tax Matters...........................................................14
5.08 Allowance for Loan Losses.............................................14
5.09 Other Tax and Regulatory Matters......................................15
5.10 Properties............................................................15
5.11 Compliance with Laws..................................................15
5.12 Employee Benefit Plans................................................16
5.13 Commitments and Contracts.............................................17
5.14 Material Contract Defaults............................................18
5.15 Legal Proceedings.....................................................18
5.16 Absence of Certain Changes or Events..................................19
5.17 Reports...............................................................19
5.18 Statements True and Correct...........................................19
5.19 Insurance.............................................................19
5.20 Labor.................................................................20
i
<PAGE>
Page
5.21 Material Interests of Certain Persons.................................20
5.22 Registration Obligations..............................................20
5.23 Brokers and Finders...................................................20
5.24 Takeover Laws.........................................................20
5.25 Environmental Matters.................................................20
5.26 Support of Stockholders...............................................21
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BANKUNITED
6.01 Organization..........................................................21
6.02 BankUnited Capital Stock..............................................22
6.03 Subsidiaries..........................................................22
6.04 Authorization of Merger and Related Transactions......................22
6.05 Financial Statements..................................................23
6.06 Securities Reporting Documents........................................23
6.07 Absence of Undisclosed Liabilities....................................24
6.08 Absence of Certain Changes or Events..................................24
6.09 Compliance with Laws..................................................24
6.10 Allowance for Loan Losses.............................................25
6.11 Statements True and Correct...........................................25
6.12 Capital Stock.........................................................25
6.13 Properties............................................................25
6.14 Tax and Regulatory Matters............................................26
6.15 Litigation............................................................26
6.16 Brokers and Finders...................................................26
6.17 Material Contract Defaults............................................26
6.18 Insurance.............................................................26
ARTICLE VII
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
7.01 Conduct of Business Prior to the Effective Time.......................27
7.02 Forbearances of Consumers.............................................27
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 Access and Information................................................29
8.02 Registration Statement; Regulatory Matters............................30
8.03 Stockholders' Approval................................................30
8.04 Press Releases........................................................31
8.05 Notice of Defaults....................................................31
8.06 Miscellaneous Agreements and Consents; Affiliates Agreements..........31
8.07 Indemnification of Consumers..........................................31
8.08 Falls Branch Sublease.................................................32
8.09 Stock Options.........................................................32
ii
<PAGE>
Page
8.10 Certain Change of Control Matters.....................................33
8.11 Stock Exchange Listing................................................33
8.12 Employee Benefits.....................................................33
8.13 Certain Actions.......................................................34
8.14 Acquisition Proposals.................................................34
8.15 Termination Fee.......................................................35
ARTICLE IX
CONDITIONS
9.01 Conditions to Each Party's Obligation to Effect the Merger............36
9.02 Conditions to Obligations of Consumers to Effect the Merger...........37
9.03 Conditions to Obligations of BankUnited to Effect the Merger..........38
ARTICLE X
TERMINATION
10.01 Termination...........................................................38
10.02 [Intentionally Omitted]...............................................40
10.03 Effect of Termination.................................................40
10.04 Survival of Representations, Warranties and Covenants
Following the Effective Time .....................................40
ARTICLE XI
GENERAL PROVISIONS
11.01 Expenses..............................................................40
11.02 Entire Agreement......................................................40
11.03 Amendments............................................................40
11.04 Waivers...............................................................40
11.05 No Assignment.........................................................41
11.06 Notices...............................................................41
11.07 Specific Performance..................................................41
11.08 Governing Law.........................................................42
11.09 Counterparts..........................................................42
11.10 Captions..............................................................42
11.11 Severability..........................................................42
LIST OF EXHIBITS
Exhibit A Board of Directors of Resulting Institution
Exhibit B Offices of Resulting Institution
Exhibit C Rule 145 Affiliate Agreement Pursuant to Section 8.06
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
September 19, 1997, between BANKUNITED FINANCIAL CORPORATION ("BankUnited"), a
Florida corporation and CONSUMERS BANCORP, INC., a Florida corporation
("Consumers").
WITNESSETH:
WHEREAS, pursuant to the terms and subject to the conditions of this
Agreement, BankUnited will acquire Consumers through the merger of Consumers
with and into BankUnited or by such other means as provided for herein (the
"Merger"); and
WHEREAS, promptly following the Merger, Consumers Savings Bank, a
subsidiary of Consumers, will be merged with and into BankUnited, FSB, a
subsidiary of BankUnited; and
WHEREAS, the respective Boards of Directors of BankUnited and Consumers
have resolved that the transactions described herein are in the best interests
of the parties and their respective stockholders and have approved the
transactions described herein, and
WHEREAS, BankUnited and Consumers desire to provide for certain
undertakings, conditions, representations, warranties and covenants in
connection with the transactions contemplated by this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below. Capitalized terms not otherwise defined
herein shall have the meanings ascribed in this Article I.
(a) "Acquisition Proposal" shall have the meaning set forth in
Section 8.14.
(b) "Acquisition Transaction" shall have the meaning set forth in
Section 8.14.
(c) "Affiliate" shall mean, with respect to any Person, any Person
that, directly or indirectly, controls or is controlled by or is under
common control with such Person.
(d) "Agreed Value" shall have the meaning set forth in Section
3.01(a)(ii).
(e) "Agreement" shall have the meaning set forth in the
introduction to this Agreement.
<PAGE>
(f) "Allowance" shall have the meaning set forth in Section 5.08.
(g) "Approvals" shall mean any and all permits, consents,
authorizations and approvals of any governmental or regulatory authority
or of any other third person necessary to give effect to the arrangement
contemplated by this Agreement or necessary to consummate the Merger.
(h) "Authorizations" shall have the meaning set forth in Section
5.01.
(i) "BankUnited" shall have the meaning set forth in the
introduction to this Agreement.
(j) "BankUnited Common Stock" shall mean the Series I Class A
Common Stock of BankUnited.
(k) "BankUnited Financial Statements" shall have the meaning set
forth in Section 6.05.
(l) "BankUnited SEC Documents" shall have the meaning set forth in
Section 6.05.
(m) "Closing" shall have the meaning set forth in Section 2.02.
(n) "Closing Net Worth" shall mean Consumers Net Worth, but not
including the filing fees paid to the regulatory authorities or to the
SEC in connection with the approvals for the transaction, payments made
by Consumers at the request of BankUnited to the holders of Consumers
stock options pursuant to Section 8.09 just prior to closing, changes in
the market value of Consumers investment portfolio, or expenses related
to the Falls branch that are requested by BankUnited.
(o) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder.
(p) "Condition" shall have the meaning set forth in Section 5.01.
(q) "Consumers" shall have the meaning set forth in the
introduction to this Agreement.
(r) "Consumers Benefit Plan" shall have the meaning set forth in
Section 5.12(a).
(s) "Consumers Board" shall mean the Board of Directors of
Consumers.
(t) "Consumers Common Stock" shall mean the common stock, par value
$.01 per share, of Consumers.
2
<PAGE>
(u) "Consumers Disclosure Schedule" shall mean that document
containing the written detailed information prepared by Consumers and
delivered by Consumers to BankUnited which appropriately
cross-references each Section of the Agreement to which that Section of
the Consumers Disclosure Schedule applies.
(v) "Consumers ERISA Plan" shall have the meaning set forth in
Section 5.12(a).
(w) "Consumers Financial Statements" shall have the meaning set
forth in Section 5.05.
(x) "Consumers Net Worth" shall mean the net worth of Consumers as
determined in accordance with GAAP as at the month end prior to the
Effective Time and as adjusted for events occurring between such month
end and the Effective Time which either individually or in the aggregate
have had or immediately will have a Material Adverse Effect on
Consumers.
(y) "Consumers Options" shall have the meaning set forth in Section
8.09(a).
(z) "Consumers Stock Plan" shall have the meaning set forth in
Section 5.12(a).
(aa) "Current Employee" shall have the meaning set forth in Section
8.12(a).
(ab) "Effective Time" shall have the meaning set forth in Section
2.03.
(ac) "Employee" shall mean any current or former employee, officer
or director, independent contractor or retiree of Consumers or its
Subsidiaries and any dependent or spouse thereof.
(ad) "Environmental Law" shall have the meaning set forth in Section
5.25.
(ae) "ERISA" shall have the meaning set forth in Section 5.12(a).
(af) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(ag) "Exchange Agent" shall have the meaning set forth in Section
3.01(c).
(ah) "Expenses" shall have the meaning set forth in Section 8.15(a).
(ai) "Fair Market Value" shall have the meaning set forth in Section
3.01(a)(ii).
(aj) "FDIA" shall mean the Federal Deposit Insurance Act.
(ak) "FDIC" shall mean the Federal Deposit Insurance Corporation.
(al) "GAAP" shall mean generally accepted accounting principles in
the United States.
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(am) "Hired Employees" shall have the meaning set forth in Section
8.12(b)(iii).
(an) "HOLA" shall mean the Home Owners' Loan Act of 1933, as
amended.
(ao) "Indemnified Party" shall have the meaning set forth in Section
8.07.
(ap) "In the Ordinary Course" shall have the meaning set forth in
Section 7.02(a).
(aq) "Liens" shall have the meaning set forth in Section 5.03.
(ar) "Material Adverse Effect" shall have the meaning set forth in
Section 5.01.
(as) "Material Adverse Effect on BankUnited" shall have the meaning
set forth in Section 6.01.
(at) "Merger" shall have the meaning set forth in the recitals to
this Agreement.
(au) "Merger Consideration" shall mean the combination of (i)
BankUnited Common Stock and (ii) cash to be issued by BankUnited in the
Merger, subject to adjustment as provided in Section 10.01(g).
(av) "NASD" shall mean the National Association of Securities
Dealers, Inc.
(aw) "NASDAQ" shall mean The Nasdaq Stock Market, Inc.
(ax) "OTS" shall mean the Office of Thrift Supervision.
(ay) "Person" or "person" shall mean any individual, corporation,
association, partnership, group (as defined in Section 13(d)(3) of the
Exchange Act), joint venture, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
(az) "Proxy Statement" shall have the meaning set forth in Section
5.18.
(ba) "Registration Statement" shall have the meaning set forth in
Section 5.18
(bb) "Regulatory Agreements" shall have the meaning set forth in
Section 5.11 (b).
(bc) "Regulatory Authorities" shall have the meaning set forth in
Section 5.11 (b).
(bd) "Reports" shall have the meaning set forth in Section 5.17.
(be) "Resulting Institution" shall have the meaning set forth in
Section 2.01(e).
(bf) "SEC" shall mean the Securities and Exchange Commission.
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(bg) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(bh) "Securities Laws" shall have the meaning set forth in Section
5.04(c).
(bi) "Securities Reporting Documents" shall have the meaning set
forth in Section 6.06.
(bj) "Stockholders' Meeting" shall have the meaning set forth in
Section 5.18.
(bk) "Subsidiaries Merger" shall have the meaning set forth in
Section 2.01(e).
(bl) "Subsidiary" shall mean, in the case of either BankUnited or
Consumers, any corporation, association or other entity in which it owns
or controls, directly or indirectly, 25% or more of the outstanding
voting securities or 25% or more of the total equity interest; provided,
however, that the term shall not include any such entity in which such
voting securities or equity interest is owned or controlled in a
fiduciary capacity, without sole voting power, or was acquired in
securing or collecting a debt previously contracted in good faith.
(bm) "Surviving Corporation" shall have the meaning set forth in
Section 2.01(a).
(bn) "Tax" or "Taxes" shall mean all federal, state, local and
foreign taxes, charges, fees, levies, imposts, duties or other
assessments, including, without limitation, income, gross receipts,
excise, employment, sales, use, transfer, license, payroll, franchise,
severance, stamp, occupation, windfall profits, environmental, federal
highway use, commercial rent, customs duties, capital stock, paid up
capital, profits, withholding, Social Security, single business and
unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever,
imposed or required to be withheld by the United States or any state,
local, foreign government or subdivision or agency thereof, including,
without limitation, any interest, penalties or additions thereto.
(bo) "Tax Return" shall mean any report, return, information return
or other information required to be supplied to a taxing authority in
connection with Taxes, including, without limitation, any return of an
affiliated or combined or unitary group that includes Consumers or its
Subsidiaries.
(bp) "Termination Fee" shall have the meaning set forth in Section
8.15(a).
(bq) "Voting Power" shall mean the right to vote generally in the
election of Directors of Consumers through the beneficial ownership of
Consumers Common Stock.
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ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
2.01 MERGER.
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time of the Merger (as defined in Section 2.03 of this
Agreement), Consumers shall be merged with and into BankUnited in
accordance with the provisions of Florida law and with the effect
provided therein. The separate corporate existence of Consumers shall
thereupon cease, and BankUnited shall be the surviving corporation in
the Merger (the "Surviving Corporation").
(b) As of the Effective Time of the Merger, the articles of
incorporation and bylaws of BankUnited shall be the articles of
incorporation and bylaws of the Surviving Corporation.
(c) The directors and officers of BankUnited immediately prior to
the Effective Time shall be the directors and officers of the Surviving
Corporation, in each case, until their respective directors are duly
elected and qualified.
(d) All assets of Consumers as they exist at the Effective Time of
the Merger shall pass to and vest in the Surviving Corporation without
any conveyance or other transfer. The Surviving Corporation shall be
responsible and liable for all of the liabilities of every kind and
description of Consumers as of the Effective Time of the Merger.
(e) Promptly following the Effective Time of the Merger, Consumers
Savings Bank shall be merged with and into BankUnited, FSB (the
"Subsidiaries Merger") in accordance with applicable law and with the
effect provided therein. The separate corporate existence of Consumers
Savings Bank shall thereupon cease, and BankUnited, FSB shall be the
surviving bank in the Subsidiaries Merger (the "Resulting Institution").
(f) Upon the consummation of the Subsidiaries Merger the charter
and bylaws of BankUnited, FSB shall be the charter and bylaws of the
Resulting Institution.
(g) The directors and officers of BankUnited, FSB immediately prior
to the consummation of the Subsidiaries Merger shall be the directors
and officers of the Resulting Institution, in each case, until their
respective successors are duly elected and qualified. The Resulting
Institution shall have directors whose terms shall be for three years.
The directors of the Resulting Institution and their home addresses are
set forth in Exhibit A hereto.
(h) All assets of Consumers Savings Bank as they exist at the time
of consummation of the Subsidiaries Merger shall pass to and vest in the
Resulting Institution without any conveyance or other transfer. The
Resulting Institution shall be responsible and liable for all of the
liabilities of every kind and description of Consumers Savings Bank at
the time of consummation of the Subsidiaries Merger.
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(i) The name of the Resulting Institution shall be BankUnited, FSB.
The location of the home office of the Resulting Institution shall be
255 Alhambra Circle, Coral Gables, Florida 33134. The locations of
offices of the Resulting Institution are set forth in Exhibit B hereto.
(j) Upon the consummation of the Subsidiaries Merger, the savings
account holders of Consumers Savings Bank shall be issued savings
accounts of the Resulting Institution containing substantially the same
terms and conditions as those issued by Consumers Savings Bank.
(k) Notwithstanding any provision to the contrary, BankUnited may
elect to modify the structure of the transactions contemplated hereby so
long as (1) there is no material adverse federal or state income tax
consequences to Consumers and its stockholders or to holders of Options
to purchase Consumers Common Stock, (2) the Merger Consideration is not
reduced in kind or amount and (3) the notification will not delay or
jeopardize the receipt of any regulatory approval.
2.02 TIME AND PLACE OF CLOSING. The closing of the transactions
contemplated hereby (the "Closing") will take place at the offices of Stuzin and
Camner, P. A. in Miami, Florida at 10:00 A.M. on the date that the Effective
Time occurs, or at such other time, and at such other place, as may be mutually
agreed upon by BankUnited and Consumers.
2.03 EFFECTIVE TIME. The effective time of the consummation of the
Merger (the "Effective Time") shall occur on or promptly after the first
business day following the last to occur of (i) the date that is 30 days after
the date of the order of the OTS approving the Merger and the Subsidiaries
Merger, (ii) the effective date of the last order, approval, or exemption of any
other federal or state regulatory agency approving or exempting the Merger and
the Subsidiaries Merger, if such action is required, (iii) the expiration of all
required waiting periods after the filing of all notices to all federal or state
regulatory agencies required for consummation of the Merger and the Subsidiaries
Merger, and (iv) the date on which the stockholders of Consumers approve this
Agreement, in each case as contemplated hereby. The Effective Time may occur at
such other date and time as the parties hereto shall agree to in writing.
2.04 FURTHER ACTIONS. To facilitate the Merger and the acquisition of
Consumers by BankUnited, each of the parties will execute or will cause to be
executed, such additional agreements and documents and take such other actions
as BankUnited determines to be reasonably necessary or appropriate.
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ARTICLE III
MANNER OF CONVERTING SHARES
3.01 CONVERSION.
(a) Subject to the provisions of this Article III and of Article I,
at the Effective Time, by virtue of the Merger and without any action on
the part of the holders thereof, the shares of the constituent
corporations shall be converted as follows:
(i) Each share of capital stock of BankUnited issued and
outstanding immediately prior to the Effective Time shall remain
outstanding as one share of capital stock of the Surviving
Corporation;
(ii) Subject to adjustment as described in subsection (b)
hereof, and Section 10.01(g), each share of Consumers Common Stock
issued and outstanding immediately prior to the Effective Time
shall be converted into and become the right to receive a payment
(the "Merger Consideration") of $21.33 in cash or 2.081 shares of
BankUnited Common Stock (the "Agreed Value"). Each shareholder may
elect to receive his, her or its total Merger Consideration in
cash, BankUnited Common Stock or a combination thereof, provided,
however, that (1) in the aggregate, the cash portion shall not
exceed 55% of the total amount of Merger Consideration, including
any cash paid in respect of fractional shares pursuant to
subsection (b) hereof, (2) the Merger Consideration shall not be
paid on shares as to which dissenters rights have been asserted
pursuant to ss.607.24 of the Florida General Corporation Act, and
(3) if the average fair market value of BankUnited Common Stock, as
determined by using the average closing price of one share of the
security computed for the 15-day trading period on the NASDAQ
system (as reported by THE WALL STREET JOURNAL or, if not reported
thereby, any other authoritative source), ending three days prior
to the Effective Time (the "Fair Market Value" or "FMV"), is
greater than $12.00 per share, the Agreed Value shall be determined
under the following formula:
2.081 X 12 = Agreed Value
----------
FMV
(iii) Each Consumers Option outstanding as of the Effective
Time shall be treated in accordance with the provisions of Section
8.09; and
(iv) At or before the Effective Time, BankUnited shall cause to
be deposited with the Exchange Agent an amount sufficient to pay
the cash portion of the Merger Consideration;
(b) Notwithstanding, any other provision of this Agreement, each
holder of shares of Consumers capital stock exchanged pursuant to the
Merger, who would otherwise have been entitled to receive a fraction of
a share of BankUnited Common Stock (after taking into
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account all certificates delivered by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to such
fractional part of a share of BankUnited Common Stock multiplied by the
Fair Market Value. No such holder will be entitled to dividends, voting
rights or any other rights as a stockholder in respect of any fractional
share.
(c) Notwithstanding the provisions of subsections (a) and (b)
hereof, and subject to adjustment as described in Section 10.01(g), if
the Fair Market Value of BankUnited Common Stock is less than $9.80 per
share, then BankUnited shall pay Consumers, in cash, a total purchase
price, including all amounts paid for Consumers Options pursuant to
Section 8.09, of $10,800,000.
(d) At the Effective Time, the stock transfer books of Consumers
shall be closed as to holders of Consumers capital stock immediately
prior to the Effective Time and no transfer of Consumers capital stock
by any such holder shall thereafter be made or recognized. If, after the
Effective Time, certificates are properly presented in accordance with
Article IV of this Agreement to the exchange agent, which shall be
selected by BankUnited and is deemed reasonably acceptable to Consumers
(the "Exchange Agent"), such certificates shall be canceled and
exchanged for certificates representing the appropriate number of shares
of BankUnited Common Stock and a check representing the amount of cash
selected as part of the Merger Consideration by such holder, or the
amount of cash in lieu of fractional shares, if any, into which the
Consumers capital stock represented thereby was converted in the Merger.
Any other provision of this Agreement notwithstanding, neither
BankUnited nor the Exchange Agent shall be liable to a holder of
Consumers capital stock for any amount paid or property delivered in
good faith to a public official pursuant to any applicable abandoned
property, escheat, or similar law. In the event any certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such certificate to be lost, stolen or
destroyed and, if required by the Exchange Agent, the posting by such
person of a bond in such amount as the Exchange Agent may direct as
indemnity against any claim that may be made against it with respect to
such certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed certificate the Merger Consideration
deliverable in respect thereof pursuant to this Agreement.
ARTICLE IV
EXCHANGE OF SHARES
4.01 EXCHANGE PROCEDURES. Promptly after the Effective Time (but in no
event more than three business days following the Effective Time), BankUnited
and Consumers shall cause the Exchange Agent to mail appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of loss
and title to the certificates theretofore representing shares of Consumers
Common Stock shall pass, only upon proper delivery of such certificates to the
Exchange Agent) to the former stockholders of Consumers. After the Effective
Time, each holder of shares of Consumers Common Stock issued and outstanding at
the Effective Time (other than shares as to which dissenters' rights have been
asserted) shall surrender the certificate or certificates theretofore
representing such shares, together with such transmittal materials properly
executed, to the Exchange Agent and
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promptly upon surrender (but in no event more than three business days following
receipt by the Exchange Agent) shall receive in exchange therefor the
consideration provided in Section 3.01 of this Agreement. The certificate or
certificates for Consumers Common Stock so surrendered shall be duly endorsed as
the Exchange Agent may require. To the extent provided by Section 3.01 (c), each
holder of shares of Consumers Common Stock issued and outstanding at the
Effective Time also shall receive, upon surrender of the certificate or
certificates representing such shares, cash in lieu of any fractional shares of
BankUnited Common Stock to which such holder would otherwise be entitled.
BankUnited shall not be obligated to deliver the consideration to which any
former holder of Consumers Common Stock is entitled as a result of the Merger
until such holder surrenders his certificate or certificates representing shares
of Consumers capital stock for exchange as provided in this Article IV or the
Exchange Agent receives documents sufficient, in the discretion of the Exchange
Agent and BankUnited, to evidence the holders ownership interest in Consumers
Common Stock. In addition, certificates surrendered for exchange by any person
constituting an "affiliate" of Consumers for purposes of Rule 145(c) under the
Securities Act shall not be exchanged for certificates representing whole shares
of BankUnited Common Stock until BankUnited has received a written agreement
from such person as provided in Section 8.06. Certificates representing
BankUnited Common Stock issued in the Merger to any person constituting an
"affiliate" of Consumers for purposes of Rule 145(c) under the Securities Act
shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, APPLIES. NO TRANSFER OF SUCH SHARES
SHALL BE VALID OR EFFECTIVE UNTIL THE CONDITIONS OF SUCH RULE
HAVE BEEN FULFILLED."
If any certificate for shares of BankUnited Common Stock, or any check
representing cash, is to be issued in a name other than that in which a
certificate surrendered for exchange is issued, the certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and the
person requesting such exchange shall affix any requisite stock transfer tax
stamps to the certificate surrendered or provide funds for their purchase or
establish to the satisfaction of the Exchange Agent that such taxes are not
payable.
4.02 VOTING AND DIVIDENDS. Former stockholders of record of Consumers
shall be entitled to vote after the Effective Time at any meeting of BankUnited
stockholders the number of whole shares of BankUnited Common Stock into which
their respective shares of Consumers capital stock are converted, regardless of
whether such holders have exchanged their certificates representing Consumers
capital stock for certificates representing BankUnited Common Stock in
accordance with the provisions of this Agreement. Until surrendered for exchange
in accordance with the provisions of Section 4.01, each certificate theretofore
representing shares of Consumers capital stock shall from and after the
Effective Time represent for all purposes only the right to receive shares of
BankUnited Common Stock and cash, as set forth in this Agreement. No dividend or
other distribution payable to the holders of record of BankUnited Common Stock,
at or as of any time after the Effective Time, shall be paid to the holder of
any certificate representing shares of Consumers capital stock issued and
outstanding at the Effective Time until such holder physically surrenders such
certificate for exchange as provided in Section 4.01, promptly after which time
all such dividends or distributions which have been declared and paid following
the Effective Time shall be paid (without interest).
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CONSUMERS
Consumers represents and warrants to BankUnited, subject to such
exceptions and limitations as are set forth below or in the Consumers Disclosure
Schedule, as follows:
5.01 ORGANIZATION, STANDING, AND AUTHORITY. Consumers is a corporation
duly organized validly existing and in good standing under the laws of the State
of Florida. Consumers is duly qualified to do business and in good standing in
all jurisdictions (whether federal, state, local or foreign) where its ownership
or leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be duly qualified would have a material
adverse effect on the financial condition, results of operations or business
(the "Condition") of Consumers and its Subsidiaries on a consolidated basis or
on the ability of Consumers to consummate the transactions contemplated hereby
(a "Material Adverse Effect"). Consumers has all requisite corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its assets, properties and business, except where the failure to have
such power and authority would not have a Material Adverse Effect, and to
execute and deliver this Agreement and perform the terms of this Agreement.
Consumers has in effect all federal, state, local and foreign governmental,
regulatory and other authorizations, permits and licenses (collectively,
"Authorizations") necessary for it to own or lease its properties and assets and
to carry on its business as now conducted, the absence of which, either
individually or in the aggregate, would have a Material Adverse Effect.
5.02 CONSUMERS CAPITAL STOCK.
(a) The authorized capital stock of Consumers consists of
15,000,000 shares of Consumers Common Stock. At March 31, 1997, there
were outstanding 485,509 shares of Consumers Common Stock. All of the
issued and outstanding shares of Consumers capital stock are duly and
validly issued and outstanding and are fully paid and nonassessable.
None of the outstanding shares of the Consumers capital stock has been
issued in the violation of any preemptive rights or any provision of
Consumers' Articles of Incorporation. As of March 31, 1997 Consumers had
reserved 48,264 shares of Consumers Common Stock for issuance under the
Consumers Options, and no other shares of capital stock have been
reserved for any purpose. None of the Consumers Options are incentive
stock options within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended from time to time.
(b) Except as set forth in Section 5.02 of the Consumers Disclosure
Schedule, there are no shares of capital stock, or other equity
securities of Consumers outstanding and no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible
into or exchangeable for, shares of the capital stock of Consumers or
contracts, commitments, understandings or arrangements by which
Consumers is or may be bound to issue any equity security of Consumers
including any additional shares of its capital stock or options,
warrants or rights to purchase or acquire any additional shares of its
capital stock. There are no contracts, commitments, understandings or
arrangements by which Consumers or any of its Subsidiaries
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is or may be bound to transfer any shares of the capital stock of any
Subsidiary of Consumers, except for a transfer to Consumers or any of
its wholly owned Subsidiaries and except as set forth in Section 5.02 of
the Consumers Disclosure Schedule, and there are no agreements,
understandings or commitments relating to the right of Consumers to vote
or to dispose of such shares, other than such as are held in a fiduciary
capacity.
(c) Except as set forth in Section 5.02 of the Consumers Disclosure
Schedule, there are no securities required to be issued by Consumers
under any Consumers Stock Plan, dividend reinvestment plan or similar
plan.
5.03 SUBSIDIARIES. Section 5.03 of the Consumers Disclosure Schedule
contains a complete list of Consumers' Subsidiaries. All of the issued and
outstanding shares of each Subsidiary are owned by Consumers and no equity
securities are or may become required to be issued by reason of any options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of any Subsidiary, and there are no contracts, commitments,
understandings or arrangements by which any Subsidiary is bound to issue
additional shares of its capital stock or options, warrants or rights to
purchase or acquire any additional shares of its capital stock. All of the
shares of capital stock of each Subsidiary are fully paid and nonassessable and
are owned free and clear of any claim, lien, pledge or encumbrance of whatsoever
kind ("Liens"). Each Subsidiary (i) is duly organized, validly existing, and in
good standing under the laws of the jurisdiction in which it is incorporated or
organized, (ii) is duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be so qualified would have a Material
Adverse Effect, (iii) has all requisite corporate power and authority to own or
lease its properties and assets and to carry on its business as now conducted
and (iv) has in effect all Authorizations necessary for it to own or lease its
properties and assets and to carry on its business as now conducted, the absence
of which Authorizations, individually or in the aggregate, would have a Material
Adverse Effect.
5.04 AUTHORIZATION OF MERGER AND RELATED TRANSACTIONS.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof
on the part of Consumers, including approval of the Merger by its Board
of Directors, subject to the approval of the stockholders of Consumers
with respect to the Merger to the extent required by the applicable law.
This Agreement, subject to any requisite regulatory and stockholder
approval hereof with respect to the Merger, represents a valid and
legally binding obligation of Consumers, enforceable against Consumers
in accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium, and similar laws
of general applicability affecting creditors rights generally and by
general principles of equity (whether applied in a proceeding at law or
in equity).
(b) Except as set forth in Section 5.04 of the Consumers Disclosure
Schedule, neither the execution and delivery of this Agreement by
Consumers, nor the consummation by Consumers of the transactions
contemplated hereby or thereby nor compliance by
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Consumers with any of the provisions hereof or thereof will (i) conflict
with or result in a breach of any provision of Consumers' Articles of
Incorporation or bylaws or (ii) constitute or result in a breach of any
term, condition or provision of, or constitute a default (or an event
which with notice or lapse of time or both would become a default)
under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any Lien
upon, any property or assets of any of Consumers or its Subsidiaries
pursuant to any note, bond, mortgage, indenture, license, agreement,
lease or other instrument or obligation to which any of them is a party
or by which any of them or any of their properties or assets may be
subject and that would individually or in the aggregate have a Material
Adverse Effect, or (iii) subject to receipt of the requisite approvals
referred to in Section 9.01 of this Agreement, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Consumers
or its Subsidiaries or any of their properties or assets.
(c) Other than (i) in connection with complying with the provisions
of applicable state corporate, banking and securities laws, the
Securities Act, the Exchange Act, and the rules and regulations of the
SEC or the OTS promulgated thereunder (the "Securities Laws"), and (ii)
consents, authorizations, approvals or exemptions required from the OTS,
no notice to, filing with, authorization of, exemption by, or consent or
approval of any public body or authority is necessary for the
consummation by Consumers of the Merger and the other transactions
contemplated in this Agreement.
5.05 CONSUMERS FINANCIAL STATEMENTS. Consumers (i) has delivered to
BankUnited copies of the consolidated statements of financial condition of
Consumers and its Subsidiaries as of March 31, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended March 31, 1997, (ii) until the
Closing will deliver to BankUnited promptly upon the filing thereof with the OTS
copies of the consolidated statements of financial condition and related
consolidated statements of operations, stockholders' equity and cash flows
included in any filing with the OTS, and (iii) until the Closing will deliver to
BankUnited within 10 business days of the end of each month copies of monthly
consolidated statements of financial condition and related consolidated
statements of operations (collectively, the "Consumers Financial Statements").
The Consumers Financial Statements (as of the dates thereof and for the periods
covered thereby) (A) are or will be in accordance with the books and records of
Consumers and its Subsidiaries, which are or will be complete and accurate in
all material respects and which have been or will have been maintained in
accordance with good business practices, and (B) present or will present fairly
the consolidated financial position and the consolidated results of operations,
changes in stockholders' equity and cash flows of Consumers and its Subsidiaries
as of the dates and for the periods indicated, in accordance with GAAP
consistently applied except as disclosed, subject in the case of interim
financial statements to normal recurring year-end adjustments and except for the
absence of certain footnote information in the unaudited statements. Consumers
has delivered to BankUnited (i) copies of all management letters prepared by
Deloitte & Touche LLP (and any predecessor thereto) delivered to Consumers since
January 1, 1993 and (ii) copies of audited balance sheets and related statements
of income, changes in stockholders' equity and cash flows for any Subsidiary of
Consumers since January 1, 1993 for which a separate audit has been performed.
5.06 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
Consumers Disclosure Schedule, neither Consumers nor any of its Subsidiaries has
any obligations or liabilities (contingent
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or otherwise) in the aggregate amount of $35,000 or more, except obligations and
liabilities (i) which are fully accrued or reserved against in the consolidated
balance sheet of Consumers and its Subsid iaries as of March 31, 1997 included
in the Consumers Financial Statements or reflected in the notes thereto, or (ii)
which were incurred after March 31, 1997 in the ordinary course of business
consistent with past practice. Except as set forth in Section 5.06 of the
Consumers Disclosure Schedule, since March 31, 1997 neither Consumers nor any of
its Subsidiaries has incurred or paid any obligation or liability which would
have a Material Adverse Effect.
5.07 TAX MATTERS. Except as set forth in Section 5.07 of the Consumers
Disclosure Schedule:
(a) All Tax Returns required to be filed by or on behalf of
Consumers or any of its Subsidiaries have been timely filed, or requests
for extensions have been timely filed, granted and have not expired, for
periods ending on or before March 31, 1997, and all such returns filed
are complete and accurate in all material respects.
(b) There are no audits, examinations, deficiencies or refund
litigation or matters in controversy with respect to any Taxes that
might reasonably be expected individually or in the aggregate to result
in a determination the effect of which would have a Material Adverse
Effect. All Taxes due with respect to completed and settled examinations
or concluded litigation have been paid or adequately reserved for.
(c) Consumers has not executed an extension or waiver of any
statute of limitations on the assessment or collection of any Tax due
that is currently in effect.
(d) Adequate provision for any Taxes due or to become due for
Consumers and any of its Subsidiaries for any period or periods through
and including March 31, 1997, has been made and is reflected on the
March 31, 1997 financial statements included in the Consumers Financial
Statements. Deferred Taxes of Consumers and its Subsidiaries have been
provided for in the Consumers Financial Statements in accordance with
GAAP, applied on a consistent basis.
(e) Consumers and its Subsidiaries have collected and withheld all
Taxes which they have been required to collect or withhold and have
timely submitted all such collected and withheld amounts to the
appropriate authorities. Consumers and its Subsidiaries are in
compliance with the back-up withholding and information reporting
requirements under (1) the Code, and (2) any state, local or foreign
laws, and the rules and regulations, thereunder.
(f) Neither Consumers nor any of its Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any
contract, agreement or other arrangement that could obligate it to make
any payments that would not be deductible under Section 28OG of the
Code.
5.08 ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses (the
"Allowance") shown on the consolidated statement of condition of Consumers and
its Subsidiaries as of March 31, 1997 included in the Consumers Financial
Statements and the Allowance shown on the consolidated
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statement of condition of Consumers and its Subsidiaries, as of dates subsequent
to the execution of this Agreement included in the Consumers Financial
Statements will be, in each case as of the dates thereof, sufficient, in
accordance with generally accepted accounting principles, to provide for losses
relating to or inherent in the loan and lease portfolios (including accrued
interest receivables) of Consumers and its Subsidiaries; other extensions of
credit (including letters of credit and commitments to make loans or extend
credit) by Consumers and its Subsidiaries; and the off balance sheet exposures,
if any, of Consumers and its Subsidiaries.
5.09 OTHER TAX AND REGULATORY MATTERS. Neither Consumers nor any of its
Subsidiaries has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would (i) prevent the transactions contemplated
hereby, including the Merger, from qualifying as a reorganization within the
meaning of Section 368 of the Code, or (ii) materially impede or delay receipt
of any approval referred to in Section 9.01(b).
5.10 PROPERTIES. Except as disclosed in any Reporting Document filed
since March 31, 1997 and prior to the date hereof and except for Liens arising,
in the ordinary course of business after the date hereof, Consumers and its
Subsidiaries have good and marketable title, free and clear of all Liens that
are material to the Condition of Consumers and its Subsidiaries on a
consolidated basis, to all their material properties and assets whether tangible
or intangible, real, personal or mixed, reflected in the Consumers Financial
Statements as being owned by Consumers and its Subsidiaries as of the date
hereof. All buildings, and all fixtures, equipment and other property and assets
which are material to its business on a consolidated basis, held under leases or
subleases by any of Consumers or its Subsidiaries are held under valid
instruments enforceable in accordance with their respective terms, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability affecting creditors rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity). Substantially all of Consumers' and Consumers'
Subsidiaries' equipment in regular use has been well maintained and is in good
serviceable condition, reasonable wear and tear excepted.
5.11 COMPLIANCE WITH LAWS.
(a) Except as set forth in Section 5.11(a) of the Consumers
Disclosure Schedule, each of Consumers and its Subsidiaries is in
compliance with all laws, rules, regulations, policies, guidelines,
reporting and licensing requirements and orders applicable to its
business or to its employees conducting its business, and with its
internal policies and procedures except for failures to comply which
will in the aggregate not result in a Material Adverse Effect.
(b) Except as set forth in Section 5.11(b) of the Consumers
Disclosure Schedule, neither Consumers nor any of its Subsidiaries has
received any notification or communication from any agency or department
of any federal, state or local government, including, the OTS, the FDIC,
and the staffs thereof (collectively, the "Regulatory Authorities") (i)
asserting that any of Consumers or its Subsidiaries is not in
substantial compliance with any of the statutes, regulations, or
ordinances which such agency, department or Regulatory Authority
enforces, or the internal policies and procedures of such company, (ii)
threatening to revoke any license, franchise, permit or governmental
authorization which is material to the Condition of
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Consumers and its Subsidiaries on a consolidated basis, (iii) requiring
or threatening to require Consumers or any of its Subsidiaries, or
indicating that Consumers or any of its Subsidiaries may be required to
enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement restricting or limiting or
purporting to restrict or limit in any manner the operations of
Consumers or any of its Subsidiaries, including, without limitation, any
restriction on the payment of dividends, or (iv) directing, restricting
or limiting, or purporting to direct, restrict or limit in any manner
the operations of Consumers or any of its Subsidiaries, including,
without limitation, any restriction on the payment of dividends (any
such notice, communication, memorandum, agreement or order described in
this sentence herein referred to as a "Regulatory Agreement").
(c) Neither Consumers nor any of its Subsidiaries has consented to
or entered into any Regulatory Agreement or memorandum of understanding.
(d) Neither Consumers nor any of its Subsidiaries is required by
Section 32 of FDIA to give prior notice to a federal banking agency of
the proposed addition of an individual to its board of directors or the
employment of an individual as a senior executive officer.
5.12 EMPLOYEE BENEFIT PLANS.
(a) Consumers has delivered or made available to BankUnited prior
to the execution of this Agreement true and complete copies (or, in the
case of bonus or other incentive plans, summaries thereof and financial
data with respect thereto) of all material pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus or other material incentive
plans, all other material employee programs, arrangements or agreements,
whether arrived at through collective bargaining or otherwise, all
material medical, vision, dental or other health plans, all life
insurance plans and all other material employee benefit plans or fringe
benefit plans, including, without limitation, all "employee benefit
plans" as that term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), currently
adopted by, maintained by, sponsored in whole or in part by, or
contributed to by Consumers or any of its Subsidiaries or any affiliate
thereof for the benefit of any Employee or under which any Employee is
eligible to participate and under which Consumers or any of its
Subsidiaries could have any liability contingent or otherwise
(collectively, the "Consumers Benefit Plans"). Any of the Consumers
Benefit Plans which is an "employee pension benefit plan," as that term
is defined in Section 3(2) of ERISA, is referred to herein as a
"Consumers ERISA Plan." Any of the Consumers Benefit Plans pursuant to
which Consumers is or may become obligated to, or obligated to cause any
of its Subsidiaries or any other Person to, issue, deliver or sell
shares of capital stock of Consumers or any of its Subsidiaries, or
grant, extend or enter into any option, warrant, call, right, commitment
or agreement to issue, deliver or sell shares, or any other interest in
respect of capital stock of Consumers or any of its Subsidiaries, is
referred to herein as a "Consumers Stock Plan." No Consumers Benefit
Plan is or has been a multiemployer plan within the meaning of Section
3(37) of ERISA. Consumers has set forth in Section 5.12 of the Consumers
Disclosure Schedule (i) a list of all of the Consumers Benefit Plans,
(ii) a list of
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Consumers Benefit Plans that are Consumers ERISA Plans, (iii) a list of
Consumers Benefit Plans that are Consumers Stock Plans and (iv) a list
of the number of shares covered by, exercise prices for, and holders of,
all stock options granted and available for grant under the Consumers
Stock Plans.
(b) All Consumers Benefit Plans are in compliance with the
applicable terms of ERISA and the Code and any other applicable laws,
rules and regulations the breach or violation of which could reasonably
be expected to result in a Material Adverse Effect.
(c) All liabilities under any Consumers Benefit Plan are fully
accrued or reserved against in the Consumers Financial Statements in
accordance with GAAP. No Consumers ERISA Plan which is a defined benefit
pension plan has any "unfunded current liability," as that term is
defined in Section 302(d)(8)(A) of ERISA, and the present fair market
value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA,
when determined under actuarial factors that would apply if the plan
terminated in accordance with all applicable legal requirements.
(d) Neither Consumers nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Consumers
Benefit Plan or otherwise, except as set forth in the Consumers
Disclosure Schedule. There are no restrictions on the rights of
Consumers or its Subsidiaries to amend or terminate any such Consumers
Benefit Plan without incurring any material liability thereunder, except
for such restrictions as would not have a Material Adverse Effect.
(e) Except as set forth in the Consumers Disclosure Schedule.
neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby or thereby will (i)
result in any payment (including, without limitation, severance, golden
parachute or otherwise) becoming due to any Employees under any
Consumers Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any Consumers Benefit Plan or (iii) result in
any acceleration of the time of payment or vesting of any such benefits.
5.13 COMMITMENTS AND CONTRACTS. Except as set forth in the Consumers
Disclosure Schedule, neither Consumers nor any of its Subsidiaries is a party or
subject to, or has amended or waived any rights under, any of the following
(whether written or oral, express or implied):
(a) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination
pay liabilities or fringe benefits) with any Employees, including in any
such person's capacity as a consultant (other than those which are
terminable at will by Consumers or such Subsidiary without cost to
Consumers or any Subsidiary;
(b) any labor contract or agreement with any labor union;
(c) any contract not made in the usual, regular and ordinary course
of business containing non-competition covenants which limit the ability
of Consumers or any of its
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Subsidiaries to compete in any line of business or which involve any
restriction of the geographical area in which Consumers or its
Subsidiaries may carry on its business (other than as may be required by
law or applicable Regulatory Authorities);
(d) any real or personal property lease with annual rental payments
aggregating $5,000 or more;
(e) any employment or other contract requiring the payment of
additional amounts as "change in control" payments as a result of
transactions contemplated by this Agreement;
(f) any agreement with respect to (i) the acquisition of the assets
or stock of another financial institution or (ii) the sale of one or
more bank branches which would require additional payments by Consumers
after the date of this Agreement; or
(g) any outstanding, interest rate exchange or other derivative
contracts.
(h) any commitment or contract to acquire real property; or
(i) any other agreement to which Consumers or any of its
Subsidiaries is a party requiring payment by Consumers or any of its
Subsidiaries in excess of $10,000 during the remainder of the term of
such agreement, except as set forth in Section 5.13 of the Consumers
Disclosure Schedule.
5.14 MATERIAL CONTRACT DEFAULTS. Neither Consumers nor any of its
Subsidiaries is, or has received any notice or has any knowledge that any party
is, in default in any respect under any contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which Consumers or
any of its Subsidiaries is a party or by which Consumers or any of its
Subsidiaries or the assets, business or operations thereof may be bound or
affected or under which it or its respective assets, business or operations
receives benefits, except for those defaults which would not have, individually
or in the aggregate, a Material Adverse Effect; and there has not occurred any
event that with the lapse of time or the giving of notice of both would
constitute such a default. No consent of any party to any contract to which
Consumers or any of its Subsidiaries is a party is required in connection with
the consummation of the transactions contemplated by this Agreement.
5.15 LEGAL PROCEEDINGS. Except as set forth in Section 5.15 of the
Consumers Disclosure Schedule, there are no actions, suits, proceedings or
investigations by Regulatory Authorities or any other Person instituted or
pending or, to the best knowledge of Consumers' management, threatened against
Consumers or any of its Subsidiaries, or against any property, asset, interest
or right of any of them, that might reasonably be expected to result in a
judgment in excess of $25,000 or that might reasonably be expected to threaten
or impede the consummation of the transactions contemplated by this Agreement.
Neither Consumers nor any of its Subsidiaries is a party to any agreement or
instrument or is subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree, rule, regulation, code or ordinance
that, individually or in the aggregate, might reasonably be expected to have a
Material Adverse Effect or, might reasonably be expected to threaten or impede
the consummation of the transactions contemplated by this Agreement.
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5.16 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1997, except
as set forth in Section 5.16 of the Consumers Disclosure Schedule, neither
Consumers nor any of its Subsidiaries has (A) incurred or paid any liability or
obligation (contingent or otherwise) which individually or in the aggregate had
or is reasonably likely to have a Material Adverse Effect, (B) suffered any
change in its Condition which individually or in the aggregate is reasonably
likely to have a Material Adverse Effect, (C) failed to operate its business
consistent in all material respects with past practice, or (D) changed any
accounting practices.
5.17 REPORTS. Since July 1, 1992, Consumers and each of its Subsidiaries
have filed on a timely basis all reports and statements, together with all
amendments required to be made with respect thereto (collectively "Reports"),
that they were required to file with (i) the OTS, (ii) the FDIC, and (iii) any
other applicable state securities or banking authorities (except, in the case of
state securities authorities, filings which are not material). No Reports with
respect to periods beginning on or after July 1, 1992, and until the Closing
contained or will contain any information that was false or misleading, with
respect to any material fact or omitted or will omit to state any material fact
necessary in order to make the statements therein not misleading and each such
Report contained or will contain all information required to be stated therein.
5.18 STATEMENTS TRUE AND CORRECT. None of the information supplied or to
be supplied by Consumers for inclusion in the registration statement on Form
S-4, or other appropriate form, to be filed with the SEC by BankUnited under the
Securities Act in connection with the transactions contemplated by this
Agreement (the "Registration Statement"), or the proxy statement to be used by
Consumers in connection with obtaining all required approvals of its
stockholders as contemplated by this Agreement (the "Proxy Statement") will, in
the case of the Proxy Statement, when it is first mailed to the stockholders of
Consumers, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which such statements are made, not misleading, or,
in the case of the Registration Statement, when it becomes effective, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not misleading, or in the
case of the Proxy Statement or any amendment thereof or supplement thereto, at
the time of the meeting of the stockholders of Consumers to be held pursuant to
Section 8.03 of this Agreement, including any adjournments thereof (the
"Stockholders' Meeting"), be false or misleading with respect to any material
fact or omit to state any material fact necessary to correct any statement or
remedy any omission in any earlier communication with respect to the
solicitation of any proxy for the Stockholders' Meeting. All documents that
Consumers is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable law. No representation or warranty of
Consumers contained in this Agreement, and no statement or disclosure contained
in the Consumer Disclosure Schedule contains any untrue statement of a material
fact or omits to state a material fact necessary to make such representations,
warranties, statements or disclosures not misleading.
5.19 INSURANCE. Consumers and each of its Subsidiaries are presently
insured, and during each of the past five calendar years has been insured, for
reasonable amounts against such risks as companies engaged in a similar business
would, in accordance with good business practice, customarily be insured. The
policies of fire, theft, banker's blanket bond, liability (including directors
and officers liability insurance) and other insurance maintained with respect to
the assets or businesses
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of Consumers and its Subsidiaries provide adequate coverage against all pending
or threatened claims, and the fidelity bonds in effect as to which any of
Consumers or any of its Subsidiaries is a named insured are sufficient for their
purpose, except where the failure to have such coverage would not have a
Material Adverse Effect. Such policies are listed and briefly described in
Section 5.19 of the Consumers Disclosure Schedule.
5.20 LABOR. No material work stoppage involving Consumers or its
Subsidiaries is pending or, to the best knowledge of Consumers' management,
threatened. Neither Consumers nor any of its Subsidiaries is involved in, or, to
the best knowledge of Consumers' management threatened with or affected by, any
labor or other employment-related dispute, arbitration, lawsuit or
administrative proceeding which might reasonably be expected to have a Material
Adverse Effect. Employees of Consumers and its Subsidiaries are not represented
by any labor union, and, to the best knowledge of Consumers' management, no
labor union is attempting to organize employees of Consumers or any of its
Subsidiaries.
5.21 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as set forth in the
Consumers Disclosure Schedule, no executive officer or director of Consumers, or
any "associate" (as such term is defined in Rule 14a-1 under the Exchange Act)
of any such executive officer or director, has any material interest in any
material contract or property real or personal, tangible or intangible, used in
or pertaining to the business of Consumers or any of its Subsidiaries.
5.22 REGISTRATION OBLIGATIONS. Neither Consumers nor any of its
Subsidiaries is under any obligation, contingent or otherwise, presently in
effect or which will survive the Merger to register any of its securities under
the Securities Act.
5.23 BROKERS AND FINDERS. Neither Consumers nor any of its Subsidiaries
nor any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees in connection with this Agreement
or the transactions contemplated hereby, except that Consumers has engaged, and
will pay a fee or commission to Gibson & Co, in accordance with the terms of a
letter agreement between that entity and Consumers, a copy of which is set forth
in Section 5.23 of the Consumers Disclosure Schedule.
5.24 TAKEOVER LAWS. Consumers has taken all steps necessary to
irrevocably exempt the transactions contemplated by this Agreement from any
applicable state or federal takeover law and from any applicable charter or
contractual provision containing change of control or anti-takeover provisions.
5.25 ENVIRONMENTAL MATTERS. Except as set forth in Section 5.25 of the
Consumers Disclosure Schedule, neither Consumers, any of its Subsidiaries, nor
any properties owned or operated by Consumers or any of its Subsidiaries or held
as collateral by any of its Subsidiaries has been or is in violation of or
liable under any Environmental Law (as hereinafter defined) and no properties
owned or leased by Consumers or any of its Subsidiaries or held as collateral by
Consumers or any of its Subsidiaries, while owned or leased by Consumers or any
of the Subsidiary or while held as collateral by Consumers or any of its
Subsidiaries, have been or are in violation of any Environmental Law, except for
such violations or liabilities that, individually or in the aggregate, are not
reasonably
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likely to have a Material Adverse Effect. There are no actions, suits or
proceedings, or demands, claims, notices or investigations (including without
limitation notices, demand letters or requests for information from any
environmental agency) instituted or pending, or to the best knowledge of
Consumers' management, threatened relating to the liability of any properties
owned, leased or operated by Consumers or any of its Subsidiaries under any
Environmental Law, except for liabilities or violations that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
"Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
Regulatory Authority relating to (i) the protection. preservation or restoration
of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of any substance presently listed,
defined, designated or classified as hazardous, toxic radioactive or dangerous,
or otherwise regulated, whether by type or by quantity, including any material
containing any such substance as a component.
5.26 SUPPORT OF STOCKHOLDERS. All members of the Consumers Board of
Directors and any Consumers officers who are stockholders have agreed to
actively support the Merger by, among other things, voting in favor of the
Merger at the Stockholders Meeting and not disposing of any Consumers Common
Stock.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BANKUNITED
BankUnited represents and warrants to Consumers as follows:
6.01 ORGANIZATION, STANDING AND AUTHORITY. BankUnited is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida. BankUnited is duly qualified to do business and in good
standing in all jurisdictions (whether federal, state, local or foreign) where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified and in which the failure to be duly qualified would have a
material adverse effect on the financial condition, results of operations or
business (the "Condition") of BankUnited and its Subsidiaries on a consolidated
basis or on the ability of BankUnited to consummate the transactions
contemplated hereby ("Material Adverse Effect on BankUnited"). BankUnited has
all requisite corporate power and authority to carry on its business as now
conducted and to own, lease and operate its assets, properties and business, and
to execute and deliver this Agreement and perform the terms of this Agreement.
BankUnited is duly registered as a savings and loan holding company under the
HOLA, BankUnited has in effect all Authorizations necessary for it to own or
lease its properties and assets and to carry on its business as now conducted,
the absence of which, either individually or in the aggregate, would have a
Material Adverse Effect on BankUnited.
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6.02 BANKUNITED CAPITAL STOCK. The authorized capital stock of
BankUnited consists of 33,000,000 shares of BankUnited common stock and
10,000,000 shares of BankUnited Preferred Stock. At June 30, 1997, there were
issued and outstanding 8,869,041 shares of BankUnited common stock and 2,998,688
shares of BankUnited Preferred Stock and no other shares of capital stock of any
class. All of the issued and outstanding shares of BankUnited common stock and
BankUnited Preferred Stock are duly and validly issued and outstanding and are
fully paid and nonassessable.
6.03 SUBSIDIARIES. Section 6.03 of the BankUnited Disclosure Schedule
contains a complete list of BankUnited's Subsidiaries. All of the issued and
outstanding shares of each Subsidiary are owned by BankUnited and no equity
securities are or may become required to be issued by reason of any options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of any Subsidiary, and there are no contracts, commitments,
understandings or arrangements by which any Subsidiary is bound to issue
additional shares of its capital stock or options, warrants or rights to
purchase or acquire any additional shares of its capital stock. All of the
shares of capital stock of each Subsidiary are fully paid and nonassessable and
are owned free and clear of any Liens. Each Subsidiary (i) is duly organized,
validly existing, and in good standing under the laws of the jurisdiction in
which it is incorporated or organized, (ii) is duly qualified to do business and
in good standing in all jurisdictions (whether federal, state, local or foreign)
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and in which the failure to be so qualified would
have a Material Adverse Effect on BankUnited, (iii) has all requisite corporate
power and authority to own or lease its properties and assets and to carry on
its business as now conducted and (iv) has in effect all Authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as now conducted, the absence of which Authorizations, individually or
in the aggregate, would have a Material Adverse Effect on BankUnited.
6.04 AUTHORIZATION OF MERGER AND RELATED TRANSACTIONS.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof
on the part of BankUnited, including approval of the Merger by its Board
of Directors. Stockholder approval is not required. This Agreement,
subject to any requisite regulatory approval hereof with respect to the
Merger and the Subsidiaries Merger, represents a valid and legally
binding obligation of BankUnited, enforceable against BankUnited in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, and similar laws of
general applicability affecting creditors rights generally and by
general principles of equity (whether applied in a proceeding at law or
in equity).
(b) Neither the execution and delivery of this Agreement by
BankUnited, nor the consummation by BankUnited of the transactions
contemplated hereby or thereby nor compliance by BankUnited with any of
the provisions hereof or thereof will (i) conflict with or result in a
breach of any provision of BankUnited's articles of incorporation or
bylaws or (ii) constitute or result in a breach of any term, condition
or provision of, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give rise to
any right of termination, cancellation. or acceleration with respect to,
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or result in the creation of any Lien upon any property or assets of any
of BankUnited or its Subsidiaries pursuant to any note, bond, mortgage,
indenture, license, agreement, lease or other instrument or obligation
to which any of them is a party or by which any of them or any of their
properties or assets may be subject, and that would, in any such event,
have a Material Adverse Effect on BankUnited or the transactions
contemplated hereby or thereby or (iii) subject to receipt of the
requisite approvals referred to in Section 9.01 of this Agreement,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to BankUnited or any of its Subsidiaries or any of their
properties or assets.
(c) Other than (i) in connection with complying with the provisions
of applicable state corporate and securities laws, the Securities Act,
the Exchange Act, and the rules and regulations of the SEC or the OTS
promulgated thereunder (the "Securities Laws"), and (ii) consents,
authorizations, approvals or exemptions required from the OTS, no notice
to, filing with, authorization of, exemption by, or consent or approval
of any public body or authority is necessary for the consummation by
Consumers of the Merger and the other transactions contemplated in this
Agreement.
6.05 FINANCIAL STATEMENTS. BankUnited (i) has delivered to Consumers
copies of the consolidated balance sheets and the related consolidated
statements of income, consolidated statements of changes in shareholders' equity
and consolidated statements of cash flows (including related notes and
schedules) of BankUnited and its consolidated Subsidiaries as of and for the
period ended June 30, 1997 included in the quarterly report filed on Form 10-Q,
and for the period ended September 30, 1996 included on an annual report filed
on Form 10-K, as the case may be, filed by BankUnited pursuant to the Securities
Laws (a "BankUnited SEC Document"), and (ii) until the Closing will deliver to
Consumers promptly upon the filing thereof with the SEC copies of the
consolidated balance sheets and related consolidated statements of income,
consolidated statements of changes in shareholders' equity and consolidated
statements of cash flows (including related notes and schedules) included in any
BankUnited SEC Documents filed subsequent to the execution of this Agreement
(clauses (i) and (ii) collectively, the "BankUnited Financial Statements"). The
BankUnited Financial Statements (as of the dates thereof and for the periods
covered thereby) (A) are or will be in accordance with the books and records of
BankUnited and its Consolidated Subsidiaries, which are or will be complete and
accurate in all material respects and which have been or will have been
maintained in accordance with good business practices, and (B) present or will
present fairly the consolidated financial position and the consolidated results
of operations, changes in shareholders' equity and cash flows of BankUnited and
its Subsidiaries as of the dates and for the periods indicated, in accordance
with GAAP, subject in the case of interim financial statements to normal
recurring year-end adjustments and except for the absence of certain footnote
information in the unaudited statements.
6.06 SECURITIES REPORTING DOCUMENTS. Since October 1, 1992, BankUnited
and each of its Subsidiaries has filed on a timely basis all material reports,
schedules, registration statements and definitive proxy statements ("Securities
Reporting Documents"), together with all amendments required to be made with
respect thereto, that they were required to file with (i) the SEC, including
without limitation, all quarterly reports on Form 10-Q, annual reports on Form
10-K, and current reports of Form 8-K, (ii) the OTS, (iii) the FDIC, (iv) any
other applicable state securities or banking authorities (except in the case of
state securities authorities, filings that were not material), and (v)
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the NASD. No Securities Reporting Document of BankUnited with respect to periods
beginning on or after October 1, 1992 and until the Closing contained or will
contain any information that was false or misleading with respect to any
material fact or omitted or will omit to state any material fact necessary in
order to make the statements therein not misleading and each Securities
Reporting Document of BankUnited contained or will contain all information
required to be stated therein.
6.07 ABSENCE OF UNDISCLOSED LIABILITIES. Neither BankUnited nor any of
its Subsidiaries has any obligations or liabilities (contingent or otherwise) in
the aggregate amount of $630,000 or more, except obligations and liabilities (i)
which are fully accrued or reserved against in the consolidated balance sheet of
BankUnited and its Subsidiaries as of June 30, 1997 included in the BankUnited
Financial Statements or reflected in the notes thereto, or (ii) which were
incurred after June 30, 1997 in the ordinary course of business consistent with
past practice. Since June 30, 1997 neither BankUnited nor any of its
Subsidiaries has incurred or paid any obligation or liability which would have a
Material Adverse Effect on BankUnited.
6.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1997, except
as set forth in Section 6.08 of the BankUnited Disclosure Schedule, neither
BankUnited nor any of its Subsidiaries has (A) incurred or paid any liability or
obligation (contingent or otherwise) which individually or in the aggregate had
or is reasonably likely to have a Material Adverse Effect on BankUnited, (B)
suffered any change in its Condition which individually or in the aggregate is
reasonably likely to have a Material Adverse Effect on BankUnited, (C) failed to
operate its business consistent in all material respects with past practice, or
(D) changed any accounting practices.
6.09 COMPLIANCE WITH LAWS.
(a) Each of BankUnited and its Subsidiaries is in compliance with
all laws, rules, regulations, policies, guidelines, reporting and
licensing requirements and orders applicable to its business or to its
employees conducting its business, and with its internal policies and
procedures except for failures to comply which will in the aggregate not
result in a Material Adverse Effect on BankUnited.
(b) Neither BankUnited nor any of its Subsidiaries has received any
notification or communication from any agency or department of any
federal, state or local government, including, the OTS, the FDIC, and
the staffs thereof (collectively, the "Regulatory Authorities") (i)
asserting that any of BankUnited or its Subsidiaries is not in
substantial compliance with any of the statutes, regulations, or
ordinances which such agency, department or Regulatory Authority
enforces, or the internal policies and procedures of such company, (ii)
threatening to revoke any license, franchise, permit or governmental
authorization which is material to the Condition of BankUnited and its
Subsidiaries on a consolidated basis, (iii) requiring or threatening to
require BankUnited or any of its Subsidiaries, or indicating that
BankUnited or any of its Subsidiaries may be required to enter into a
cease and desist order, agreement or memorandum of understanding or any
other agreement restricting or limiting or purporting to restrict or
limit in any manner the operations of BankUnited or any of its
Subsidiaries, including, without limitation, any restriction on the
payment of dividends, or (iv) directing, restricting or limiting, or
purporting to direct, restrict or limit in any manner the operations of
BankUnited or any of its Subsidiaries, including, without limitation,
any
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restriction on the payment of dividends (any such notice, communication,
memorandum, agreement or order described in this sentence herein
referred to as a "Regulatory Agreement").
(c) Neither BankUnited nor any of its Subsidiaries has consented to
or entered into any Regulatory Agreement or memorandum of understanding.
(d) Neither BankUnited nor any of its Subsidiaries is required by
Section 32 of FDIA to give prior notice to a federal banking agency of
the proposed addition of an individual to its board of directors or the
employment of an individual as a senior executive officer.
6.10 ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses (the
"Allowance") shown on the consolidated statement of condition of BankUnited and
its Subsidiaries as of June 30, 1997 included in the BankUnited Financial
Statements and the Allowance shown on the consolidated statement of condition of
BankUnited and its Subsidiaries, as of dates subsequent to the execution of this
Agreement included in the BankUnited Financial Statements will be, in each case
as of the dates thereof, adequate to provide for losses relating to or inherent
in the loan and lease portfolios (including accrued interest receivables) of
BankUnited and its Subsidiaries; other extensions of credit (including letters
of credit and commitments to make loans or extend credit) by BankUnited and its
Subsidiaries; and the off balance sheet exposures, if any, of BankUnited and its
Subsidiaries.
6.11 STATEMENTS TRUE AND CORRECT. None of the information supplied or to
be supplied by BankUnited for inclusion in the Registration Statement or the
Proxy Statement will, in the case of the Proxy Statement, when it is first
mailed to the stockholders of Consumers contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which such
statements are made, not misleading or, in the case of the Registration
Statement, when it becomes effective, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements therein not misleading, or in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the Stockholders'
Meeting, be false or misleading with respect to any material fact or omit to
state any material fact necessary to correct any statement or remedy any
omission in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meeting. All documents that BankUnited is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable law, including applicable provisions of the
Securities Laws.
6.12 CAPITAL STOCK. At the Effective Time, and upon issuance pursuant to
this Agreement the BankUnited Common Stock issued pursuant to the Merger will be
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights.
6.13 PROPERTIES. Except as disclosed in any Reporting Document filed
since June 30, 1997 and prior to the date hereof and except for Liens arising,
in the ordinary course of business after the date hereof, BankUnited and its
Subsidiaries have good and marketable title, free and clear of all Liens that
are material to the Condition of BankUnited and its Subsidiaries on a
consolidated basis, to all their material properties and assets whether tangible
or intangible, real, personal or mixed,
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reflected in the BankUnited Financial Statements as being owned by BankUnited
and its Subsidiaries as of the date hereof. All buildings, and all fixtures,
equipment and other property and assets which are material to its business on a
consolidated basis, held under leases or subleases by any of BankUnited or its
Subsidiaries are held under valid instruments enforceable in accordance with
their respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws of general applicability
affecting creditors rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity). Substantially all of
BankUnited's and BankUnited's Subsidiaries' equipment in regular use has been
well maintained and is in good serviceable condition, reasonable wear and tear
excepted.
6.14 TAX AND REGULATORY MATTERS. Neither BankUnited nor any of its
Subsidiaries has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would prevent the transactions contemplated hereby,
including the Merger, from qualifying as a reorganization within the meaning of
Section 368 of the Code; or materially impede or delay receipt of any approval
referred to in Section 9.01.
6.15 LITIGATION. There are no judicial proceedings of any kind or nature
pending or, to the knowledge of BankUnited, threatened against BankUnited before
any court or arbitral tribunal or before or by any governmental department,
agency or instrumentality involving the validity of the BankUnited Common Stock,
the transactions contemplated by this Agreement or which would result in a
Material Adverse Effect on BankUnited.
6.16 BROKERS AND FINDERS. Neither BankUnited nor any of its Subsidiaries
nor any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker or finder has acted
directly or indirectly for BankUnited or any of its Subsidiaries in connection
with this Agreement or the transactions contemplated hereby.
6.17 MATERIAL CONTRACT DEFAULTS. Neither BankUnited nor any of its
Subsidiaries is, or has received any notice or has any knowledge that any party
is, in default in any respect under any contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which BankUnited or
any of its Subsidiaries is a party or by which BankUnited or any of its
Subsidiaries or the assets, business or operations thereof may be bound or
affected or under which it or its respective assets, business or operations
receives benefits, except for those defaults which would not have, individually
or in the aggregate, a Material Adverse Effect on BankUnited; and there has not
occurred any event that with the lapse of time or the giving of notice of both
would constitute such a default. No consent of any party to any contract to
which BankUnited or any of its Subsidiaries is a party is required in connection
with the consummation of the transactions contemplated by this Agreement.
6.18 INSURANCE. BankUnited and each of its Subsidiaries are presently
insured, and during each of the past five calendar years has been insured, for
reasonable amounts against such risks as companies engaged in a similar business
would, in accordance with good business practice, customarily be insured. The
policies of fire, theft, banker's blanket bond, liability (including directors
and officers liability insurance) and other insurance maintained with respect to
the assets or businesses of BankUnited and its Subsidiaries provide adequate
coverage against all pending or threatened
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claims, and the fidelity bonds in effet as to which any of BankUnited or any of
its Subsidiaries is a named insured are sufficient for their purpose, except
where the failure to have such coverage would not have a Material Adverse Effect
on BankUnited.
ARTICLE VII
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
7.01 CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME. During the period
from the date of this Agreement to the Effective Time, Consumers shall, and
shall cause each of its Subsidiaries to, (i) conduct its business in the usual,
regular and ordinary course consistent with past practice (other than
transactions made pursuant to contracts in existence on the date hereof and
described in Sections 7.01 or 7.02 of the Consumers Disclosure Schedule) and
(ii) use its best efforts to maintain and preserve intact its business
organization, employees and advantageous business relationships and retain the
services of its officers and key Employees.
7.02 FORBEARANCES OF CONSUMERS. Except as required by law, regulation or
Regulatory Authorities or as disclosed in the Consumers Disclosure Schedule as
delivered to BankUnited prior to the signing of this Agreement, during the
period from the date of this Agreement to the Effective Time, Consumers shall
not, and shall not permit any of its Subsidiaries to, without the prior written
consent of BankUnited (and Consumers shall provide BankUnited with prompt notice
of any events referred to in this Section 7.02 occurring after the date hereof):
(a) other than in the ordinary course of business consistent with
past practice since December 31, 1996 ("In the Ordinary Course"), incur
any indebtedness for borrowed money, including Federal Home Loan Bank
advances (other than (i) Federal Home Loan Bank advances having
maturities of six months or less and (ii) short-term indebtedness
incurred to refinance short-term indebtedness and indebtedness of
Consumers or any of its Subsidiaries to Consumers or any of its
Subsidiaries) (it being understood and agreed that incurrence of
indebtedness In the Ordinary Course shall include, without limitation,
the creation of deposit liabilities, purchases of federal funds, sales
of certificates of deposit and entering into repurchase agreements),
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or
other entity, or make any loan or advance other than In the Ordinary
Course.
(b) adjust, split, combine or reclassify any capital stock; make,
declare or pay any dividend or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares
of its capital stock or any securities or obligations convertible into
or exchangeable for any shares of its capital stock, or grant any stock
appreciation rights or grant any individual, corporation or other entity
any right to acquire any shares of its capital stock; or issue any
additional shares of capital stock, or any securities or obligations
convertible into or exchangeable for any shares of its capital stock.
(c) sell, transfer, mortgage, encumber or otherwise dispose of any
of its properties or assets to any individual, corporation or other
entity, or cancel, release or assign any
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indebtedness to any such person or any claims held by any such person,
except in the ordinary course of business consistent with past practice
or pursuant to contracts or agreements in force at the date of this
Agreement;
(d) make any material investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of
any property or assets of any other individual, corporation or other
entity other than in connection with contracts in existence on the date
hereof and described in Section 7.02 of the Consumers Disclosure
Schedule;
(e) enter into or terminate any contract or agreement involving
annual payments in excess of $20,000 and which cannot be terminated
without penalty upon 30 days notice, or make any change in, or extension
of, any of its leases or contracts involving, annual payments in excess
of $20,000 and which cannot be terminated without penalty upon 30 days
notice;
(f) except as set forth in the Consumers Disclosure Schedule for
severance pay up to $200,000, increase or modify in any manner the
compensation or fringe benefits of any of its Employees or pay any
pension or retirement allowance not required by any existing plan or
agreement to any such Employees, or become a party to, amend or commit
itself to any pension, retirement, profit-sharing or welfare benefit
plan or agreement or employment agreement with or for the benefit of any
Employee other than routine adjustments in compensation and fringe
benefits In the Ordinary Course or accelerate the vesting of any stock
options or other stock-based compensation;
(g) take any action that would prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368 of the
Code.
(h) settle any claim, action or proceeding involving the payment of
money damages in excess of $20,000, except In the Ordinary Course;
(i) amend its articles of incorporation or its bylaws;
(j) fail to maintain any Regulatory Agreements, material licenses
and permits or to file in a timely fashion all federal, state, local and
foreign tax returns;
(k) make any capital expenditures of more than $5,000 individually
or $20,000 in the aggregate;
(1) fail to maintain each Consumers Benefit Plan or timely make all
contributions or accruals required thereunder in accordance with GAAP
applied on a consistent basis;
(m) issue any additional shares of Consumers capital stock, except
pursuant to the exercise of Consumers Options by the holders thereof;
(n) agree to, or make any commitment to, take any of the actions
prohibited by this Section 7.02;
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(o) take any action or enter into any contract or agreement
regarding the Falls branch located at 8941 S.W. 136 Street, Miami,
Florida; or
(p) take any action to collect, nor file any collection or
foreclosure proceedings with respect to, any loans with a principal
balance in excess of five hundred thousand dollars ($500,000).
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 ACCESS AND INFORMATION.
(a) During the period from the date of this Agreement through the
Effective Time:
(i) Each of Consumers and BankUnited shall, and shall cause its
Subsidiaries to, afford the other, and their respective
accountants, counsel and other representatives, reasonable access
during normal business hours to their respective properties, books,
contracts, tax returns, commitments and records at any time, and
from time to time, for the purpose of conducting any review or
investigation reasonably related to the Merger and the Subsidiaries
Merger, and each of the parties will cooperate fully with all such
reviews and investigations.
(ii) BankUnited shall provide copies of its Securities
Reporting Documents to Consumers and its advisors for purposes of
any review or report to its Board of Directors in evaluating the
Merger.
(b) During the period from the date of this Agreement through the
Effective Time, Consumers shall furnish to BankUnited (i) all Reports
referred to in Section 5.17 promptly upon the filing thereof, (ii) a
copy of each Tax Return filed by it and (iii) monthly and other interim
financial statements in the form prepared by Consumers for its internal
use. During this period, Consumers also shall notify BankUnited promptly
of any material change in the Condition of Consumers or any of its
Subsidiaries.
(c) During the period from the date of this Agreement through the
Effective Time BankUnited shall promptly furnish to Consumers (i) all
BankUnited Financial Statements referred to in Section 6.05(ii), (ii) a
copy of each Tax Return filed by it and (iii) monthly and other interim
financial statements in the form prepared by BankUnited for its internal
use. During this period BankUnited also shall notify Consumers promptly
of any material change in the Condition of BankUnited or any of its
Subsidiaries.
(d) Notwithstanding the foregoing provisions of this Section 8.01,
no investigation by the parties hereto made heretofore or hereafter
shall affect the representations and warranties of the parties which are
contained herein and each such representation and warranty shall survive
such investigation.
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(e) BankUnited agrees that it will keep confidential for a period
of one year any information furnished to it in connection with the
transactions contemplated by this Agreement which is reasonably
designated as confidential at the time of delivery, except to the extent
that such information (i) was already known to BankUnited and was
received from a source other than Consumers or any of its Subsidiaries,
directors, officers, employees or agents, (ii) thereafter was lawfully
obtained from another source, or (iii) is required to be disclosed by
BankUnited or its agents or representatives to the SEC, the NASD, the
OTS, the FDIC or any other governmental agency or authority, or is
otherwise required to be disclosed by BankUnited or its agents or
representatives by law. BankUnited agrees not to use such information,
and to implement safeguards and procedures that are reasonably designed
to prevent such information from being used, for any purpose other than
in connection with the transactions contemplated by this Agreement.
(f) Consumers shall cooperate, and shall cause its Subsidiaries,
accountants, counsel and other representatives to cooperate, with
BankUnited and its accountants, counsel and other representatives, in
connection with the preparation by BankUnited of any applications and
documents required to obtain the Approvals which cooperation shall
include providing all information, documents and appropriate
representations as may be necessary in connection therewith.
(g) From and after the date of this Agreement, each of BankUnited
and Consumers shall use its reasonable best efforts to satisfy or cause
to be satisfied all conditions to their respective obligations under
this Agreement. While this Agreement is in effect, neither BankUnited
nor Consumers shall take any actions, or omit to take any actions, which
would cause this Agreement to become unenforceable in accordance with
its terms.
8.02 REGISTRATION STATEMENT; REGULATORY MATTERS.
(a) BankUnited shall (i) prepare and file the Registration
Statement with the SEC as soon as is reasonably practicable, (ii) use
its best efforts to cause the Registration Statement to become
effective, and (iii) take any action required to be taken under any
applicable state blue sky or securities laws in connection therewith.
Consumers and its Subsidiaries shall furnish BankUnited with all
information concerning Consumers, its Subsidiaries and the holders of
Consumers Common Stock as BankUnited may reasonably request in
connection with the foregoing.
(b) BankUnited and Consumers shall cooperate and use their
respective best efforts (i) to prepare all documentation, to effect all
filings and to obtain all permits, consents, approvals and
authorizations of all third parties, Regulatory Authorities and other
governmental authorities necessary to consummate the transactions
contemplated by this Agreement, including, without limitation, any such
approvals or authorizations required by the OTS and (ii) to cause the
Merger to be consummated as expeditiously as reasonably practicable.
8.03 STOCKHOLDERS' APPROVAL. Consumers shall use its best efforts to
call a meeting of its stockholders to be held no later than sixty (60) days
after the date this Agreement is executed, for
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the purpose of voting upon the Merger and related matters. The Board of
Directors of Consumers shall submit for approval of its stockholders the matters
to be voted upon at the Stockholders' Meeting, and shall recommend approval of
such matters and use its best efforts (including, without limitation, soliciting
proxies for such approvals) to obtain such stockholder approval. The covenants
under this Section 8.03 are subject to the exercise by the Board of Directors of
Consumers of its fiduciary obligations.
8.04 PRESS RELEASES. Prior to the public dissemination of any press
release or other public disclosure of information about this Agreement, the
Merger or any other transaction contemplated hereby, the parties to this
Agreement shall mutually agree as to the form and substance of such release or
disclosure.
8.05 NOTICE OF DEFAULTS. Consumers and BankUnited shall each promptly
notify the other of (i) any material change in its business, operations or
prospects, (ii) any complaints, investigations or hearings (or communications
indicating that the same may be contemplated) of any Regulatory Authority, (iii)
the institution or the threat of material litigation involving such party, or
(iv) any event or condition that might be reasonably expected to cause any of
its representations, warranties or covenants set forth herein not to be true and
correct in all material respects as of the Effective Time.
8.06 MISCELLANEOUS AGREEMENTS AND CONSENTS; AFFILIATES AGREEMENTS.
Subject to the terms and conditions of this Agreement, each of the parties
hereto agrees to use its respective best efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement as expeditiously as reasonably
practicable, including, without limitation, using their respective best efforts
to lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby. BankUnited and Consumers shall, and shall cause each of their respective
Subsidiaries to, use their best efforts to obtain consents of all third parties
and Regulatory Authorities necessary or, in the reasonable opinion of BankUnited
or Consumers, desirable for the consummation of the transactions contemplated by
this Agreement. In case at any time after the Effective Time any further action
is necessary or desirable to carry out the purposes of this Agreement, the
proper officers and directors of BankUnited shall be deemed to have been granted
authority in the name of Consumers to take all such necessary or desirable
action.
Without limiting the foregoing, Consumers will, at the request of
BankUnited, take such actions, or forbear from taking such actions, as may be
reasonably necessary to identify each of its "affiliates" for purposes of Rule
145 under the Securities Act and to cause each person so identified to deliver
to BankUnited within 10 days after the execution of this Agreement a written
agreement in the form attached hereto as Exhibit C providing that such person
shall not sell, pledge, transfer or otherwise dispose of any capital stock to be
received by such person as part of the Merger Consideration except in compliance
with the applicable provisions of the Securities Act.
8.07 INDEMNIFICATION OF CONSUMERS. For three years after the Effective
Time, BankUnited shall indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of Consumers and its
Subsidiaries (each, an "Indemnified Party") after the
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Effective Time against all losses, expenses, claims, judgments, fines, damages
or liabilities arising out of any claim, action, suit, proceedings or
investigations arising out of any actions or omissions occurring on or prior to
the Effective Time to the full extent then permitted under Florida law.
At or prior to the Effective Time, BankUnited shall purchase $1 million
of directors and officers liability insurance coverage for the Indemnified
Parties with respect to Costs that may be incurred by the Indemnified Parties,
which coverage shall be for a term of three years commencing at the Effective
Time and shall have a deductible of $50,000; provided, however, that in no event
shall BankUnited expend in order to obtain such insurance, an amount in excess
of a total of $15,000 in premiums (the "Maximum Amount") for coverage for such
three year period. If the amount of the total premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount, BankUnited shall use
its reasonable best efforts to maintain the most advantageous policies (in terms
of coverage) of directors and officers insurance for a total three year premium
equal to the Maximum Amount.
If BankUnited or any of its successors or assigns (i) shall consolidate
with or merge into any other corporation or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) shall transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then and in each such case, proper
provision shall be made so that the successors and assigns of the BankUnited
shall assume the obligations set forth in this Section 8.07.
8.08 FALLS BRANCH SUBLEASE. Consumers will use its best efforts to
obtain the consent of NationsBank to the assignment to BankUnited of the
Sublease for the premises.
8.09 STOCK OPTIONS.
(a) Immediately prior to the Effective Time, all rights with
respect to Consumers Common Stock pursuant to stock options ("Consumers
Options") granted by Consumers under the Consumers Benefit Plans, which
are outstanding at the Effective Time, whether or not then exercisable,
shall be cancelled, and each holder of any such option shall be paid for
each such option an amount in cash without interest determined by
multiplying (i) the excess, if any, of $21.33 (subject to adjustment as
provided in Section 10.01(g)) over the applicable exercise price of such
option by (ii) the number of shares of Consumers Common Stock such
holder could have purchased had such holder exercised such option in
full, assuming full vesting of such options, immediately prior to the
Effective Time.
(b) Prior to the Effective Time, Consumers shall (i) obtain any
consents which are necessary from holders of Consumers Options and (ii)
make any amendments to the terms of such option or compensation plans
for arrangements that are necessary to give effect to the transactions
contemplated by Section 8.09(a). Notwithstanding any other provision of
this Section 8.09, payment may be withheld in respect of any Consumers
Option until necessary consents, if any, are obtained.
(c) BankUnited shall be entitled to deduct and withhold from any
Option Payments payable pursuant to this Agreement to any holder of
Consumers Options such
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amounts as BankUnited is required to deduct and withhold with respect to
making such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so deducted and withheld
and paid over to the appropriate taxing authority by BankUnited, such
amounts shall be treated for all purposes of this Agreement as having
been paid to the hold of the Consumers Options in respect of which such
deduction and withholding was made by the Surviving Corporation.
(d) Except as provided herein or as otherwise agreed in writing by
the parties, (i) the provisions of the Consumers Stock Plans and any
other plan, program or arrangement pursuant to which Consumers may, or
may be required to, issue stock or stock-based compensation, shall be
terminated by the Effective Time, and (ii) Consumers shall ensure that
following the Effective Time no holder of Consumers Options or any
participant in any Consumers Stock Plan shall have any right thereunder
to acquire any equity securities of Consumers or any of its
Subsidiaries.
(e) Notwithstanding any other provision of this Section 8.09,
nothing shall restrict the ability of holders of Consumers Options to
exercise such options prior to the Effective Time and upon such exercise
to be treated like any other holder of Consumers Common Stock.
8.10 CERTAIN CHANGE OF CONTROL MATTERS. From and after the date hereof,
Consumers shall take all action necessary so that the execution and delivery of
this Agreement will not increase any benefits otherwise payable under any
Consumers Benefit Plan.
8.11 STOCK EXCHANGE LISTING. BankUnited shall use its best efforts to
list, prior to the Effective Time, on the NASDAQ, upon official notice of
issuance, the shares of BankUnited Common Stock to be issued to holders of
Consumers capital stock in the Merger.
8.12 EMPLOYEE BENEFITS.
(a) Consumers shall provide BankUnited in Section 8.12 of the
Consumers Disclosure Schedule the names of all Consumers Employees
(including full and part-time employees) as of the date of the Consumers
Disclosure Schedule (the "Current Employees"), and, as to each Current
Employee, such Current Employee's date of hire, current compensation,
and current severance benefits.
(b) BankUnited and Consumers agree as follows:
(i) BankUnited shall offer, where possible, employment to the
employees of Consumers and its subsidiary following the Effective Time.
As soon as reasonably practicable after the date of this Agreement
BankUnited and Consumers shall consult with each other in order for
BankUnited in its sole discretion to determine which employees of
Consumers will become employees of BankUnited after the Effective Time.
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(ii) All employees of Consumers and their dependents, who are
enrolled in a group health plan made available by Consumers, who would
lose coverage in the event such employee's employment is terminated by
Consumers or BankUnited in connection with the Merger, shall be eligible
for group health coverage, consistent with the requirements of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA") requirements of
the Internal Revenue Code and ERISA, as in effect on the date of such
termination, for the applicable period set forth in the Internal Revenue
Code. BankUnited agrees that any pre-existing condition, limitation or
exclusion in its health plan shall not apply to Continuing Employees or
their covered dependents who are covered under a group health plan
maintained by Consumers and who then change that coverage to the group
health plan coverage offered by BankUnited at the time that such
Continuing Employees are first given the option to enroll in
BankUnited's group health plan.
(iii) All employees who accept employment with BankUnited as of
the Effective Time ("Hired Employees") shall be eligible to participate
in the employee benefit plans and other fringe benefits of BankUnited,
including sickness benefit days and vacation days, on the same terms and
conditions as those provided from time to time by BankUnited to its
similarly situated officers and employees, giving effect, for
eligibility and vesting of benefits, to years of service with Consumers
as if such service were with BankUnited.
(iv) All employees who are not offered employment by BankUnited
shall be entitled to receive payment in lieu of accrued vacation and
sick days, consistent with Consumers past practice and policy.
8.13 CERTAIN ACTIONS. No party shall take any action which would
adversely affect or delay the ability of either BankUnited or Consumers to
obtain any necessary approvals of any Regulatory Authority or other governmental
authority required for the transactions contemplated hereby or to perform its
covenants and agreements under this Agreement. No party shall take any action
that would prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code.
8.14 ACQUISITION PROPOSALS. Consumers shall not, and shall use its best
efforts to cause its officers, directors and employees and any investment
banker, attorney, accountant, or other agent retained by it or its Subsidiaries
not to (i) initiate, encourage or solicit, directly or indirectly, the making of
any proposal or offer (an "Acquisition Proposal") to acquire all or any
significant part of the business and properties or capital stock of Consumers or
its Subsidiaries, whether by merger, purchase of securities or assets, tender
offer or otherwise (an "Acquisition Transaction"), or initiate, directly or
indirectly, any contact with any person in an effort to or with a view towards
soliciting any Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, an Acquisition Proposal. Notwithstanding the foregoing, Consumers
may (i) furnish or cause to be furnished information subject to a
confidentiality agreement similar to that contained in Section 8.01(e) hereof,
(ii) in response to an Acquisition Proposal, issue a communication to its
security holders of the type contemplated by Rule 14d-9(e) under the Exchange
Act, and (iii) participate in discussions and negotiations directly and through
its representatives with persons who have sought the same if, in each instance
the Consumers Board determines, based as to legal matters on the reasonable
advice of outside legal counsel, that the failure
34
<PAGE>
to furnish such information or to negotiate with such entity or group or to take
and disclose such position would be inconsistent with the proper exercise of the
fiduciary duties of the Consumers Board. In the event Consumers receives an
Acquisition Proposal or such discussions are sought to be initiated or continued
with Consumers, it shall promptly inform BankUnited as to the material terms
thereof.
8.15 TERMINATION FEE. To compensate BankUnited for entering into this
Agreement, taking action to consummate the transactions hereunder and incurring
the costs and expenses related thereto and other losses and expenses, including
the foregoing by BankUnited of other opportunities, Consumers and BankUnited
agree as follows:
(a) (i) Provided that BankUnited shall not be in material breach of
its obligations under this Agreement (which breach has not been cured
promptly following receipt of written notice thereof by Consumers
specifying in reasonable detail the basis of such alleged breach),
Consumers shall pay to BankUnited the sum of $325,000 (the "Termination
Fee") plus reasonable out-of-pocket expenses, not in excess of $25,000
(including, without limitation, amounts paid or payable to banks and
investment bankers, fees and expenses of counsel, filing fees and
printing expenses) (such expenses are hereinafter referred to as the
"Expenses") incurred by BankUnited or any of its affiliates in
connection with or arising out of transactions contemplated by this
Agreement, regardless of when those expenses are incurred, if this
Agreement is terminated (x) by Consumers: under the provisions of
Section 10.01(f) or as a result of Section 9.02(c), or (y) by BankUnited
under the provisions of 10.01(c), if an Acquisition Event shall occur
after the date hereof and prior to the date that is 9 months after the
date of such termination and as a result of such Acquisition Event
Consumers stockholders shall receive payment in the aggregate that is
valued at more than $11 million (the "Acquisition Price"); provided,
however, that if the Acquisition Price is between $11 million and
$11,325,000, the Termination Fee shall be limited to the excess over $11
million. "Acquisition Event" shall mean any of the following: (i) any
person or group (as defined in Section 13(d)(3) of the Exchange Act),
other than BankUnited, shall have acquired, pursuant to a tender offer,
exchange offer or otherwise, beneficial ownership (including pursuant to
the acquisition of options) of 25% or more of any class of equity
securities of Consumers; (ii) any such person or group shall have
received approval from the OTS to acquire ownership of 25% or more of
any class of equity securities of Consumers; or (iii) Consumers shall
have authorized, recommended, proposed or publicly announced an
intention to authorize, recommend or propose, or shall have entered
into, an agreement with any person (other than BankUnited) to (w) effect
a merger, consolidation, business combination, sale of substantially all
assets, or similar transaction involving Consumers, (x) sell, lease or
otherwise dispose of assets of Consumers representing 25% or more of the
consolidated assets of Consumers, (y) issue, sell or otherwise dispose
of other than by means of a widely disbursed public offering (including
by way of merger, consolidation, share exchange, or any similar
transaction) securities representing 25% or more of any class of equity
securities of Consumers in the aggregate, or (z) have such person effect
a tender offer or exchange offer that if consummated would result in any
person beneficially owning 25% or more of any class of equity securities
of Consumers in the aggregate.
35
<PAGE>
(ii) If BankUnited terminates this Agreement under the
provisions of Section 10.01(c), and paragraph (a)(i) hereof does not
apply, and BankUnited is not in breach of any representation, warranty
or covenant or other obligation, Consumers shall pay BankUnited, upon
demand, liquidated damages in the amount of $100,000 plus BankUnited's
reasonable out-of-pocket costs incurred in connection with this
transaction, including legal and accounting fees.
(b) Any payment required by paragraph (a) of this Section shall
become payable within five business days after demand therefor by
BankUnited.
(c) Consumers acknowledges that the agreements contained in this
Section 8.15 are an integral part of the transactions contemplated in
this Agreement, and that. without these agreements, BankUnited would not
enter into this Agreement; accordingly, if Consumers fails to promptly
pay the Termination Fee or Expenses or the amounts specified in Section
8.15(a)(ii) when due, Consumers shall in addition thereto pay to
BankUnited all reasonable costs and expenses (including fees and
disbursements of counsel) incurred in collecting such amounts together
with interest on said amounts (or any unpaid portion thereof) from the
date such payment was required to be made until the date such payment is
received by BankUnited at the prime rate of BankUnited, FSB as in effect
from time to time during such period.
8.16 EXPENSES OF CONSUMERS. If Consumers terminates this Agreement
pursuant to Section 10.01(b) or (d) and Consumers is not in breach of any
representation, warranty or covenant or other obligation, BankUnited shall pay
Consumers, upon demand, liquidated damages of $100,000 plus Consumers'
reasonable out-of-pocket costs incurred in connection with this transaction,
including legal and accounting fees (including fees and disbursements incurred
in collecting such amounts).
ARTICLE IX
CONDITIONS
9.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each of BankUnited and Consumers to effect the Merger
and the other transactions contemplated hereby shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) The stockholders of Consumers shall have approved all matters
relating to the Merger required under applicable law at the
Stockholders' Meeting.
(b) This Agreement, the Merger, the Subsidiaries Merger and the
other transactions contemplated hereby shall have been approved by the
OTS and any other Regulatory Authorities whose approval is required for
consummation of the transactions contemplated hereby, which approvals
are subject to no conditions that in the judgment of BankUnited would
restrict it or its Subsidiaries or affiliates in their respective
spheres of operations and business activities after the Effective Time.
36
<PAGE>
(c) The Registration Statement shall have been declared effective
and shall not be subject to a stop order or any threatened stop order.
(d) Neither BankUnited nor Consumers shall be subject to any order,
decree, or injunction of any court or agency of competent jurisdiction,
directing that the consummation of the transactions contemplated by this
Agreement be prohibited or enjoined.
(e) The shares of BankUnited Common Stock issuable pursuant to the
Merger shall have been authorized for trading on the NASDAQ upon
official notice of issuance.
(f) Holders of no more than ten percent of the outstanding capital
stock of Consumers shall have exercised dissenters' rights under Florida
law.
9.02 CONDITIONS TO OBLIGATIONS OF CONSUMERS TO EFFECT THE MERGER. The
obligations of Consumers to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
(a) The representations and warranties of BankUnited set forth in
Article VI hereof shall be true and correct in all material respects as
of the date of this Agreement and as of the Effective Time (as though
made on and as of the Effective Time except to the extent such
representations and warranties are by their express provisions made as
of a specified date) and Consumers shall have received a certificate
signed by the chairman and chief executive officer, executive vice
president or other duly authorized officer of BankUnited to that effect.
(b) BankUnited shall have performed in all material respects all
obligations required to be performed by it under this Agreement prior to
the Effective Time, and Consumers shall have received a certificate
signed by the chairman and chief executive officer, executive vice
president or other duly authorized officer of BankUnited to that effect.
(c) As of the Effective Time the Closing Net Worth shall be not
less than $6,100,000.
(d) No event, occurrence, or circumstance shall have occurred that
would constitute a Material Adverse Effect as to BankUnited.
(e) Consumers will have received an opinion of counsel mutually
agreed upon by Consumers and BankUnited addressed to Consumers and/or
BankUnited in form reasonably satisfactory to them that for federal
income tax purposes the Merger will qualify as a reorganization under
the provisions of Section 368 of the Code, and that the conversion of
Consumers Common Stock solely into BankUnited Common Stock will be
treated as a tax free exchange.
(f) The fair market value of BankUnited Common Stock shall not be
less than $8.50, as determined by using the average of the mean of the
closing prices of such stock as
37
<PAGE>
quoted on the NASDAQ system on each of the ten (10) trading days
immediately preceding the Effective Time.
9.03 CONDITIONS TO OBLIGATIONS OF BANKUNITED TO EFFECT THE MERGER. The
obligations of BankUnited to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
(a) The representations and warranties of Consumers set forth in
Article V hereof shall be true and correct in all material respects as
of the date of this Agreement as of the Effective Time (as though made
on and as of the Effective Time except to the extent such
representations and warranties are by their express provisions made as
of a specified date) and BankUnited shall have received a certificate
signed by the chairman or the chief executive officer or other duly
authorized officer of Consumers to that effect.
(b) Consumers shall have performed in all material respects all
obligations required to be performed by it under this Agreement prior to
the Effective Time, and BankUnited shall have received a certificate
signed by the chairman or the chief executive officer or other duly
authorized officer of Consumers to that effect.
(c) As of the Effective Time the Closing Net Worth shall be not
less than $6,500,000.
(d) BankUnited will receive an opinion of counsel for Consumers
addressed to BankUnited and in form satisfactory to it as to the
validity of the approvals of the Merger by the directors and
stockholders of Consumers.
(e) No event, occurrence, or circumstance shall have occurred that
would constitute a Material Adverse Effect as to Consumers.
(f) BankUnited will receive an opinion of counsel mutually agreed
upon by BankUnited and Consumers addressed to BankUnited and/or
Consumers in form reasonably satisfactory to them that for federal
income tax purposes the Merger will qualify as a reorganization under
the provisions of Section 368 of the Code, that the conversion of
Consumers Common Stock solely into BankUnited Common Stock will be a tax
free exchange, that the BankUnited Common Stock to be issued in the
Merger has been registered with the SEC, and that to their best
knowledge such registration is in full force and effect and not subject
to a stop order.
ARTICLE X
TERMINATION
10.01 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement, the Merger and
the other transactions contemplated
38
<PAGE>
hereby by the stockholders of BankUnited and Consumers or both, this Agreement
may be terminated and the Merger abandoned at any time prior to the Effective
Time:
(a) by mutual consent of the Board of Directors of BankUnited and
the Board of Directors of Consumers; or
(b) by the Board of Directors of BankUnited or the Board of
Directors of Consumers if (i) the OTS has denied approval of the Merger
and such denial has become final and nonappealable or has approved the
Merger subject to conditions that in the judgment of BankUnited would
restrict it or its Subsidiaries or affiliates in their respective
spheres of operations and business activities after the Effective Time
or (ii) the Effective Time does not occur by March 15, 1998, unless
mutually extended by the parties; or
(c) by BankUnited (if it is not in material breach of any of its
obligations hereunder) pursuant to notice in the event of a breach or
failure by Consumers that is material in the context of the transactions
contemplated hereby of any representation, warranty, covenant or
agreement by Consumers contained herein which has not been, or cannot
be, cured within 30 days after written notice of such breach is given to
Consumers; or
(d) by Consumers (if it is not in material breach of any of its
obligations hereunder) pursuant to notice in the event of a breach or
failure by BankUnited that is material in the context of the
transactions contemplated hereby of any representation, warranty,
covenant or agreement by BankUnited contained herein which has not been,
or cannot be, cured within 30 days after written notice of such breach
is given to BankUnited; or
(e) by either party if the stockholders of Consumers fail to
approve the Merger at the Stockholder's Meeting; or
(f) by Consumers if (i) there shall not have been a material breach
of any covenant or agreement on the part of Consumers under this
Agreement and (ii) prior to the Effective Time, a corporation,
partnership, person or other entity or group shall have made a bona fide
Acquisition Proposal that the Consumers Board determines in its good
faith judgment and in the exercise of its fiduciary duties, based as to
legal matters on the reasonable advice of legal counsel and as to
financial matters on the reasonable advice of an investment banking firm
of national reputation, is more favorable to the Consumers stockholders
than the Merger and that the failure to terminate this Agreement and
accept such alternative Acquisition Proposal would be inconsistent with
the proper exercise of such fiduciary duties; provided, however, that
termination under this clause (ii) shall not be deemed effective until
payment of the Termination Fee required by Section 8.15.
(g) If the Closing Net Worth is less than $6,500,000, then
at BankUnited's option, it may either terminate this Agreement, or
proceed to consummate the Merger by reducing the aggregate Merger
Consideration to be paid to holders of Consumers stock and the amounts
to be paid to holders of Consumers stock options by $1.25 for each
dollar that the Closing Net Worth is less than $6,500,000.
39
<PAGE>
10.02 [INTENTIONALLY OMITTED.]
10.03 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Sections 10.01 or 10.02, this
Agreement shall become void and have no effect, except that (i) the provisions
of Section 8.01(e), 8.15, 10.03 and Section 11.01 shall survive any such
termination and abandonment, and (ii) no party shall be relieved or released
from any liability arising out of an intentional breach of any provision of this
Agreement.
10.04 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS FOLLOWING
THE EFFECTIVE TIME. The parties hereto agree that none of the respective
representations, warranties, obligations, covenants and agreements of the
parties contained in this Agreement except for Sections 8.01(e), 8.15 and 8.16,
or in any certificate, document or instrument delivered in connection herewith,
shall survive the Effective Time, regardless of any investigation made by the
parties hereto.
ARTICLE XI
GENERAL PROVISIONS
11.01 EXPENSES. Unless otherwise agreed by the parties in writing, each
party hereto shall bear its own expenses incident to preparing, entering into
and carrying out this Agreement and to consummating the Merger, except that
BankUnited and Consumers shall divide equally all printing expenses and filing
fees incurred in connection with this Agreement, the Registration Statement and
the Proxy Statement.
11.02 ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
this Agreement contains the entire agreement between the parties hereto with
respect to the transactions contemplated hereunder and thereunder, and such
agreements supersede all prior arrangements or understandings with respect
thereto, written or oral. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors. Other than as expressly set forth in this Agreement, nothing in this
Agreement, expressed or implied, is intended to confer upon any individual,
corporation or other entity, other than BankUnited, Consumers and the Resulting
Institution, or their respective successors, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
11.03 AMENDMENTS. To the extent permitted by law, this Agreement may be
amended by a subsequent writing signed by each of BankUnited and Consumers;
provided, however, that the provisions hereof relating to the manner or basis in
which shares of Consumers capital stock will be exchanged for the Merger
Consideration shall not be amended after the Stockholders' Meeting without any
requisite approval of the holders of the issued and outstanding shares of
Consumers capital stock entitled to vote thereon.
11.04 WAIVERS. Prior to or at the Effective Time, each of BankUnited and
Consumers shall have the right to waive any default in the performance of any
term of this Agreement by the other, to waive or extend the time for the
compliance or fulfillment by the other of any and all of the
40
<PAGE>
other's obligations under this Agreement and to waive any or all of the
conditions precedent to its obligations under this Agreement, except any
condition which, if not satisfied, would result in the violation of any law or
applicable governmental regulation.
11.05 NO ASSIGNMENT. None of the parties hereto may assign any of its
rights or delegate any of its obligations under this Agreement to any other
person or entity. Any such purported assignment or delegation that is made
without the prior written consent of the other parties to this Agreement shall
be void and of no effect.
11.06 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand
(including overnight delivery service), or by registered or certified mail,
postage prepaid to the persons at the addresses set forth below (or at such
other address as may be provided hereunder), and shall be deemed to have been
delivered as of the date so delivered:
Consumers: Consumers Bancorp, Inc.
9400 South Dadeland Boulevard - Suite 620
Miami, Florida 33156
Attention: Bernard Janis, Chairman of the Board
and Chief Executive Officer
Copy to Counsel: Luse Lehman Gorman Pomerenk & Schick
5335 Wisconsin Avenue, N.W. - Suite 400
Washington, DC 20015
Attention: Alan Schick, Esq.
BankUnited: BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
Attention: Alfred R. Camner, Chairman of the Board
and President
Samuel A. Milne, Chief Financial
Officer
Copy to Counsel: Stuzin and Camner, P.A.
550 Biltmore Way, Suite 700
Coral Gables, Florida 33134
Attention: Marsha D. Bilzin, Esq.
11.07 SPECIFIC PERFORMANCE. The parties hereby acknowledge and agree
that the failure of either party to fulfill any of its covenants and agreements
hereunder, including the failure to take all such actions as are necessary on
its part to cause the consummation of the Merger, will cause irreparable injury
for which damages, even if available, will not be an adequate remedy.
Accordingly,
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<PAGE>
each party hereby consents to the issuance of injunctive relief by any court of
competent jurisdiction to compel performance of the other party's obligations or
any arbitration award hereunder and to the granting by any such court of the
remedy of the specific performance hereunder.
11.08 GOVERNING LAW. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of Florida.
11.09 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
11.10 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.11 SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement, or in any other instrument referred to herein,
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
42
<PAGE>
IN WITNESS WHEREOF, BankUnited and Consumers have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
BANKUNITED FINANCIAL CORPORATION
By:
-----------------------------
Alfred R. Camner
Chairman of the Board and President
CONSUMERS BANCORP, INC.
By:
-----------------------------
Bernard Janis
Chairman of the Board and
Chief Executive Officer
43
<PAGE>
EXHIBIT C
Rule 145 Affiliate Agreement
Pursuant to Section 8.06
of the Agreement and Plan of Merger
<PAGE>
Name (please print) __________________
August ___, 1997
BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
Dear Madam or Sir:
This letter is delivered to you in compliance with Section 8.06 of the
Agreement and Plan of Merger, dated August __, 1997 (the "Agreement"), between
BankUnited Financial Corporation ("BankUnited") and Consumers Bancorp, Inc.
("Consumers"), providing for the merger (the "Merger") of Consumers with and
into BankUnited.
1. The undersigned represents and warrants to you that the shares of
Class A Common Stock of BankUnited (the "BankUnited Stock"), which the
undersigned shall receive in exchange for shares of common stock of Consumers,
are not being acquired by the undersigned with a view to their distribution
except to the extent and in the manner provided for in paragraph (d) of Rule 145
under the Securities Act of 1933, as amended (the "Act"). The undersigned agrees
that the undersigned will not sell, transfer or otherwise dispose of any shares
of BankUnited Stock to be received by the undersigned in connection with the
Merger unless (i) such sale, transfer, or other disposition has been registered
under this Act, (ii) such sale, transfer, or other disposition is made in
conformity with the volume and other applicable limitations of Rule 145 under
the Act, or (iii) the undersigned at the undersigned's expense delivers to
BankUnited an opinion of counsel in form and substance reasonably satisfactory
to BankUnited to the effect that the proposed transfer of BankUnited Stock does
not violate the federal securities laws.
2. The undersigned acknowledges that to the extent the undersigned
believed necessary, the undersigned discussed this letter and any applicable
limitations upon the resale of BankUnited Stock with either counsel for
undersigned or counsel for Consumers. The undersigned agrees that BankUnited may
place the legend set forth below on the certificate or certificates for any or
all BankUnited Stock to be received by the undersigned in connection with the
Merger and may file stop-transfer instructions with respect to such shares with
the transfer agent for such shares. The undersigned understands that the legend
set forth on the certificate or certificates for BankUnited Stock to be received
by the undersigned shall be removed as well as the related stop-transfer
instructions when such restrictions are no longer applicable to such shares.
<PAGE>
3. Pursuant to the provisions of the preceding paragraph, the
certificate or certificates evidencing BankUnited Stock received by the
undersigned may bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, APPLIES. NO TRANSFER OF SUCH SHARES
SHALL BE VALID OR EFFECTIVE UNTIL THE CONDITIONS
OF SUCH RULE HAVE BEEN FULFILLED."
Very truly yours,
-----------------------------
Signature
EXHIBIT 11.1
CALCULATION OF EARNINGS PER SHARE
(In thousands, except per share data)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED JUNE 30,
---------------------------------
CALCULATION OF PRIMARY EARNINGS PER COMMON SHARE 1997 1996
------------ ------------
<S> <C> <C>
Net income before preferred stock dividends $1,992 $1,134
Preferred stock dividends (718) (537)
------ ------
Net income available to common shares $1,274 $ 597
====== ======
Weighted average number of common shares outstanding
during the period 8,856 5,698
Assumed exercise of stock options (Modified Treasury
Stock Method) 459 249
------ ------
Weighted average number of common share equivalents
assumed outstanding during the period 9,315 5,947
====== ======
Primary earnings per share $ 0.14 $ 0.10
====== ======
FOR THE THREE MONTHS
ENDED JUNE 30,
---------------------------------
CALCULATION OF FULLY DILUTED EARNINGS PER COMMON SHARE 1997 1996
------------ ------------
<S> <C> <C>
Net income before preferred stock dividends $1,992 $1,134
Preferred stock dividends (718) (537)
------ ------
Net income available to common shares $1,274 $ 597
====== ======
Weighted average number of common shares outstanding
during the period 8,856 5,698
Assumed exercise of stock options (Modified Treasury
Stock Method) 489 249
------ ------
Weighted average number of fully diluted common shares
assumed outstanding during the period 9,345 5,947
====== ======
Fully diluted earnings per share $ 0.14 $ 0.10
====== ======
</TABLE>
<PAGE>
CALCULATION OF EARNINGS PER SHARE
(In thousands, except per share data)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED JUNE 30,
---------------------------------
CALCULATION OF PRIMARY EARNINGS PER COMMON SHARE 1997 1996
------------ ------------
<S> <C> <C>
Net income before preferred stock dividends $ 5,433 $ 2,738
Preferred stock dividends (2,167) (1,609)
Reduction of interest expense due to assumed
exercise of stock options, net of taxes -- --
------ ------
Net income available to common shares $ 3,266 $ 1,132
======= =======
Weighted average number of common shares outstanding
during the period 7,945 3,739
Assumed exercise of stock options (Modified Treasury
Stock Method) 432 258
------- -------
Weighted average number of common share equivalents
assumed outstanding during the period 8,377 3,997
======= =======
Primary earnings per share $ 0.39 $ 0.28
======= =======
FOR THE NINE MONTHS
ENDED JUNE 30,
---------------------------------
CALCULATION OF FULLY DILUTED EARNINGS PER COMMON SHARE 1997 1996
------------ ------------
<S> <C> <C>
Net income before preferred stock dividends $ 5,433 $ 2,738
Preferred stock dividends (1,910) (1,609)
------- -------
Net income available to common shares $ 3,523 $ 1,129
======= =======
Weighted average number of common shares outstanding
during the period 7,945 3,739
Assumed exercise of stock options (Modified Treasury
Stock Method) 481 258
Conversion of Preferred Stock 878 --
------- -------
Weighted average number of fully diluted common shares
assumed outstanding during the period 9,304 3,997
======= =======
Fully diluted earnings per share $ 0.38 $ 0.28
======= =======
</TABLE>
EXHIBIT 12.1
BANKUNITED FINANCIAL CORPORATION
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
JUNE 30, FOR THE YEARS ENDED SEPTEMBER 30,
----------------- -----------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed charges (excluding interest on deposits):
Interest on Borrowings $15,190 $10,379 $13,832 $ 8,455 $ 4,951 $ 1,949 $ 1,888
Rent (33%) 394 214 302 320 256 202 205
----------------- -----------------------------------------------
Total fixed charges 15,584 10,593 14,134 8,775 5,207 2,151 2,093
Income fixed charges
extraordinary items 9,027 4,431 4,243 9,981 3,607 6,356 4,248
----------------- -----------------------------------------------
$24,611 $15,024 $18,377 $18,756 $ 8,814 $ 8,507 $ 6,341
================= ===============================================
Total fixed charges $15,584 $10,593 $14,134 $ 8,775 $ 5,207 $ 2,151 $ 2,093
Preferred stock dividends on a pretax basis 3,495 2,595 3,460 3,536 3,016 2,386 1,373
----------------- -----------------------------------------------
Combined fixed charges and
preferred stock dividends $19,079 $13,188 $17,594 $12,311 $ 8,223 $ 4,537 $ 3,466
================= ===============================================
Ratio of earnings to combined fixed charges
and preferred stock dividends 1.29:1 1.14:1 1.05:1 1.52:1 1.07:1 1.87:1 1.83:1
================= ===============================================
Fixed charges (including interest on deposits):
Interest on Deposits $34,823 $14,555 $20,791 $17,849 $11,344 $10,261 $12,134
Interest on Borrowings 15,190 10,379 13,832 8,456 4,951 1,949 1,888
Rent (33%) 394 214 302 320 256 202 205
----------------- -----------------------------------------------
Total fixed charges 50,407 25,148 34,925 26,625 16,551 12,412 14,227
Income before income taxes and
extraordinary items 9,027 4,431 4,243 9,981 3,607 6,356 4,248
Earnings $59,434 $29,579 $39,168 $36,606 $20,158 $18,768 $18,475
================= ===============================================
Total fixed charges $50,407 $25,148 $34,925 $26,625 $16,551 $12,412 $14,227
Preferred stock dividends on a pretax basis 3,495 2,595 3,460 3,536 3,016 2,386 1,373
----------------- -----------------------------------------------
Combined fixed charges and
preferred stock dividends $53,902 $27,743 $38,385 $30,161 $19,567 $14,798 $15,600
----------------- -----------------------------------------------
Ratio of earnings to combined fixed charges
and preferred stock dividends 1.11:1 1.07:1 1.02:1 1.21:1 1.03:1 1.27:1 1.18:1
----------------- -----------------------------------------------
</TABLE>
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
JURISDICTION OF
INCORPORATION OR
ORGANIZATION
----------------
BankUnited Financial Corporation owns 100% of:
- -----BankUnited, FSB which owns 100% of: U.S.A.
-----T&D Properties of South Florida, Inc. Florida
-----Bay Holdings, Inc. Florida
-----SCG Holdings, Inc. Florida
-----SCS Ventures, Inc. Florida
-----SCG Mortgage Corporation Delaware
-----SCS Management Corporation Delaware
- -----BU Ventures, Inc. Florida
- -----BankUnited Mortgage Corporation Florida
- -----BUFC Financial Services, Incorporated Florida
- -----BankUnited Financial Services, Inc. Florida
- -----BankUnited Capital Delaware
- -----BankUnited Capital II Delaware
- -----BankUnited Capital III Delaware
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of our report dated
November 4, 1996, except as to Note 18, which is as of November 15, 1996,
appearing on page 54 of BankUnited Financial Corporation's Annual Report on Form
10-K/A for the year ended September 30, 1996, and our report dated August 12,
1996 appearing on page 56 of Suncoast Savings and Loan Association, FSA's Annual
Report on Form 10-K for the year ended June 30, 1996. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE, LLP
Miami, Florida
November 4, 1997
EXHIBIT 23.2
INDEPENDENT AUDITOR'S CONSENT
We consent to the use in this Registration Statement of BankUnited Financial
Corporation on Form S-4 of our report relating to Consumers Bancorp, Inc. as of
March 31, 1997 and 1996 and for each of the three years in the period ended
March 31, 1997 dated May 9, 1997 appearing in the Propsectus, which is part of
this Registration Statement. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
DELOITTE & TOUCHE LLP
Miami, Florida
November 7, 1997
EXHIBIT 23.5
[LETTERHEAD]
November 10, 1997
Board of Directors
Consumers Bancorp, Inc.
9400 South Dadeland Boulevard
Suite 620
Miami, Florida 33156
Members of the Board:
We hereby consent to the use of our firm's name in the Form S-4
Registration Statement of BankUnited Financial Corporation, Coral Gables,
Florida, and any amendments thereto, and the inclusion of, summary of and
references to our fairness opinion in such filings including the Proxy Statement
of Consumers Bancorp, Inc.
Very truly yours,
RP FINANCIAL, LC.
James P. Hennessey
Senior Vice President
EXHIBIT 99.1
October __, 1997
Dear Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders
of Consumers Bancorp, Inc. (the "Company") to be held on November __, 1997 at
____ p.m. (local time) at the Company's main office, 9400 South Dadeland
Boulevard, Suite 620, Miami, Florida.
At the Special Meeting, you will be asked to approve and adopt the
Agreement and Plan of Merger, dated as of September 19, 1997 (the "Merger
Agreement"), by and between BankUnited Financial Corporation ("BankUnited
Financial"), BankUnited, FSB, and the Company, pursuant to which the Company
will merge with and into BankUnited Financial with BankUnited Financial being
the surviving company (the "Merger"), to be followed by the merger of Consumers
Savings Bank with and into BankUnited, FSB with BankUnited, FSB as the surviving
bank (the "Subsidiaries Merger"). In connection therewith, and subject to the
rights of dissenting stockholders which have been asserted and duly perfected in
accordance with the provisions of Section 607.1320 of the Florida 1989 Business
Corporation Act, each share of common stock of the Company outstanding
immediately prior to the Effective Time of the Merger shall be canceled and
automatically converted into the right to receive at the stockholder's option
either $21.33 in cash, 2.081 shares of BankUnited Financial Series I Class A
Common ("BankUnited Common Stock"), or a combination thereof (the "Merger
Consideration"). The Merger Consideration is subject to adjustment under certain
circumstances. Pursuant to the terms of the Merger Agreement, no more than 55%
of the total Merger Consideration may be paid in cash.
In addition to the approval of the stockholders at the Special Meeting,
the Merger and Subsidiaries Merger are subject to the approval of the Office of
Thrift Supervision.
Details of the proposed Merger and other important information are
described in the accompanying Notice of Special Meeting and Proxy Statement. You
are urged to give these important documents your prompt attention. In addition,
a Prospectus containing information regarding BankUnited Financial is included
with the Proxy Statement. YOU ARE URGED TO READ THE PROSPECTUS BEFORE MAKING AN
ELECTION WITH RESPECT TO THE MERGER CONSIDERATION.
YOUR VOTE, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, IS EXTREMELY
IMPORTANT. IN ORDER FOR THE MERGER TO BE CONSUMMATED, THE MERGER AGREEMENT MUST
BE APPROVED BY THE HOLDERS OF AT LEAST A MAJORITY OF THE OUTSTANDING SHARES OF
COMMON STOCK ENTITLED TO VOTE. CONSEQUENTLY, A FAILURE TO VOTE OR AN ABSTENTION
WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS IN THE BEST
INTERESTS OF STOCKHOLDERS AND HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT. THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.
It is important that your shares be represented at the Special Meeting,
whether or not you plan to attend personally. Please complete, sign and date the
enclosed proxy card and return it as soon as possible in the postage-paid
envelope provided so that your shares will be represented at the Special
Meeting. You may revoke your proxy at any time prior to its exercise, and you
may attend the Special Meeting and vote in person, even if you have previously
returned your proxy card. However, if you are a stockholder whose shares are not
registered in your own name, you will need additional documentation from your
record holder to vote personally at the special meeting. PLEASE DO NOT SEND IN
ANY STOCK CERTIFICATES AT THIS TIME.
We thank you for your prompt attention to this matter and appreciate
your support.
Sincerely,
Bernard Janis
Chairman of the Board and Chief Executive Officer
<PAGE>
CONSUMERS BANCORP, INC.
9400 DADELAND BOULEVARD, SUITE 620
MIAMI, FLORIDA 33156
(305) 670-1050
NOTICE OF
SPECIAL MEETING OF STOCKHOLDERS
November __, 1997
TO THE STOCKHOLDERS OF CONSUMERS BANCORP, INC.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the
"Special Meeting") of Consumers Bancorp, Inc. (the "Company") will be held at
the Company's main office, 9400 Dadeland Boulevard, Suite 620, Miami, Florida,
on November __, 1997 at ____ p.m., local time, for the purpose of considering
and acting on the following matters:
(1) The approval of an Agreement and Plan of Merger (the "Merger
Agreement") by and among BankUnited Financial Corporation
("BankUnited Financial") and the Company, pursuant to which the
Company shall be merged into BankUnited Financial, with
BankUnited Financial being the surviving institution, to be
followed by the merger of Consumers Savings Bank with and into
BankUnited, FSB with BankUnited, FSB as the surviving bank. In
connection therewith, each share of common stock, par value $.01
per share, of the Company (the "Common Stock") shall be canceled
and automatically converted into the right to receive either
$21.33 in cash, 2.081 shares of BankUnited Common Stock, or a
combination thereof (the "Merger Consideration"). The Merger
Consideration is subject to adjustment under certain
circumstances.
(2) If necessary, a proposal to adjourn the Special Meeting to
solicit additional proxies.
(3) The transaction of such other business as may properly come
before the Special Meeting, or any adjournments thereof. The
Board of Directors is not currently aware of any other business
to come before the Special Meeting.
Pursuant to the Bylaws of the Company, the Board of Directors has fixed
October __, 1997 as the record date for the determination of stockholders
entitled to notice of and to vote at the Special Meeting and any adjournments or
postponements thereof. Only holders of Common Stock of record at the close of
business on such date will be entitled to notice of and to vote at the Special
Meeting or any adjournments or postponements thereof.
Stockholders of the Company who comply with the requirements of Section
607.1320 of the Florida 1989 Business Corporation Act will be entitled, if the
Merger is consummated, to seek an appraisal of their shares of Common Stock. See
"THE MERGER--Rights of Dissenting Stockholders" in, and Annex B to, the attached
Proxy Statement.
APPROVAL OF THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY
ENTITLED TO VOTE. A FAILURE TO VOTE OR AN ABSTENTION WILL HAVE THE SAME EFFECT
AS A VOTE AGAINST THE MERGER AGREEMENT. PLEASE COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE. IT IS IMPORTANT
THAT PROXIES BE RETURNED REGARDLESS OF THE NUMBER OF SHARES OWNED.
ANY PROXY GIVEN BY A STOCKHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS
EXERCISED. A PROXY MAY BE REVOKED BY FILING WITH THE SECRETARY OF THE COMPANY A
LATER DATED PROXY OR A WRITTEN REVOCATION. ANY STOCKHOLDER PRESENT AT THE
i
<PAGE>
SPECIAL MEETING MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER
BROUGHT BEFORE THE SPECIAL MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE
SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL
DOCUMENTATION FROM YOUR RECORD HOLDER TO VOTE PERSONALLY AT THE SPECIAL MEETING.
By Order of the Board of Directors,
Gary Simon
SECRETARY
Miami, Florida
October __, 1997
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE FOR THE
PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT.
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE SPECIAL MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
ii
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
INTRODUCTION.................................................................................1
SUMMARY .....................................................................................2
THE COMPANIES........................................................................2
Consumers Bancorp, Inc........................................................2
BankUnited Financial Corporation..............................................2
THE SPECIAL MEETING..................................................................3
Date, Time, Place and Purpose of Special Meeting..............................3
THE MERGER...........................................................................4
Form of the Merger; Merger Consideration......................................4
Background of and Reasons for the Merger; Recommendation of
the Company's Board of Directors..............................................4
Opinion of Financial Advisor..................................................4
Interests of Certain Persons in the Merger....................................4
Accounting Treatment..........................................................4
Conditions to the Merger......................................................4
Regulatory Approvals..........................................................5
Procedures for Exchange of Certificates.......................................5
Federal Income Tax Consequences...............................................5
No Solicitation of Alternative Transactions...................................5
Termination of the Merger Agreement; Payment of Fees to BankUnited Financial..5
Rights of Dissenting Stockholders.............................................6
Market for Common Stock.......................................................6
Financial Information Regarding Company.......................................6
THE SPECIAL MEETING..........................................................................8
General.......................................................................8
Matters to Be Considered at the Meeting.......................................8
Voting at the Meeting; Record Date............................................8
Proxies.......................................................................8
PROPOSAL I -- THE MERGER.....................................................................9
Form of the Merger; Purchase Price............................................9
Effect on Stock Options......................................................10
Effective Time of the Merger.................................................10
Conversion of Shares; Procedures for Exchange of Certificates................11
Background of and Reasons for the Merger.....................................11
Opinion of Financial Advisor.................................................13
Representations and Warranties...............................................16
Conditions to the Merger.....................................................17
Regulatory Approvals.........................................................19
Business Pending the Merger..................................................19
Additional Agreements........................................................21
Termination..................................................................21
Payment of Fees to BankUnited Financial......................................23
Dissenters' Rights...........................................................23
Certain Federal Income Tax Consequences......................................25
Accounting Treatment.........................................................26
iii
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............................................27
PROPOSAL II -- ADJOURNMENT OF SPECIAL MEETING...............................................27
OTHER MATTERS...............................................................................29
APPENDICES
A. AGREEMENT AND PLAN OF MERGER BETWEEN BANKUNITED FINANCIAL CORPORATION AND
CONSUMERS BANCORP, INC.................................................................A-1
B. SECTIONS 607.1301, 607.1302 and 607.1320 OF THE FLORIDA BUSINESS CORPORATION ACT
RELATING TO DISSENTERS' RIGHTS.........................................................B-1
C. AUDITED FINANCIAL STATEMENTS OF CONSUMERS BANCORP, INC.................................C-1
D. OPINION OF RP FINANCIAL, LC............................................................D-1
</TABLE>
iv
<PAGE>
PROXY STATEMENT
CONSUMERS BANCORP, INC.
9400 DADELAND BOULEVARD, SUITE 620
MIAMI, FLORIDA 33156
(305) 670-1050
- --------------------------------------------------------------------------------
SPECIAL MEETING OF STOCKHOLDERS
NOVEMBER __, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INTRODUCTION
- --------------------------------------------------------------------------------
This Proxy Statement is being furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Consumers Bancorp, Inc. (the
"Company") for use at a special meeting (the "Special Meeting") of stockholders
of the Company to be held for the purposes described herein, and at any
adjournment or adjournments thereof. Only stockholders of record at the close of
business on _________, 1997 (the "Record Date") will be entitled to vote at the
Special Meeting or at any adjournments thereof, either in person or by proxy. At
the close of business on the Record Date, there were 485,509 shares of Company
common stock, $.01 par value per share ("Consumers Common Stock") outstanding,
each of which is entitled to one vote on each matter properly coming before the
Special Meeting.
At the Special Meeting stockholders will be asked to consider and vote on
the adoption of the Agreement and Plan of Merger dated as of September 19, 1997
(the "Merger Agreement") by and between BankUnited Financial Corporation
("BankUnited Financial") and the Company, pursuant to which the Company will be
acquired by BankUnited Financial through the merger of the Company with and into
BankUnited Financial with BankUnited Financial being the surviving institution
(the "Merger"), to be followed by the merger of Consumers Savings Bank with and
into BankUnited, FSB, with BankUnited, FSB being the resulting institution (the
"Subsidiaries Merger"). Upon consummation of the Merger, each share of Consumers
Common Stock outstanding on the effective date of the Merger will by virtue of
the Merger be canceled and automatically converted into the right to receive
either $21.33 in cash, 2.081 in BankUnited Common Stock, or a combination
thereof (the "Merger Consideration"). The Merger Consideration is subject to
adjustment under certain circumstances. See "The Merger--Form of the Merger;
Purchase Price."
Consummation of the Merger is conditioned upon, among other things, approval
and adoption of the Merger Agreement by the requisite vote of the Company's
stockholders, which is a majority of the shares outstanding and entitled to
vote, and the receipt of all necessary governmental approvals and consents. In
order for the Merger Agreement to be approved, stockholders must cast at least
242,755 votes in favor of Proposal No. 1. There can be no assurance that the
conditions to the Merger will be satisfied or, where permissible, waived, or
that the Merger will be consummated. See "THE MERGER--Conditions to the Merger."
NO PERSONS HAVE BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT IN CONNECTION
WITH THE SOLICITATION OF PROXIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY OTHER PERSON. THIS PROXY STATEMENT DOES NOT CONSTITUTE A
SOLICITATION OF A PROXY IN ANY JURISDICTION FROM ANY PERSON TO WHOM IT IS NOT
LAWFUL TO MAKE ANY SUCH SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS
PROXY STATEMENT SHALL NOT, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THIS
PROXY STATEMENT OR THAT THE INFORMATION IS CORRECT AS OF ANY TIME SUBSEQUENT TO
SUCH DATE. ALL INFORMATION CONTAINED IN THIS PROXY STATEMENT RELATING TO THE
COMPANY AND ITS SUBSIDIARY HAS BEEN SUPPLIED BY THE COMPANY AND ALL INFORMATION
CONTAINED IN THIS PROXY STATEMENT RELATING TO BANKUNITED FINANCIAL AND
BANKUNITED, FSB HAS BEEN SUPPLIED BY BANKUNITED FINANCIAL AND BANKUNITED, FSB.
THE DESCRIPTION OF THE MERGER AGREEMENT AND OTHER DOCUMENTS IN THE PROXY
STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE TEXT OF THOSE
DOCUMENTS, WHICH ARE INCLUDED AS APPENDICES HERETO.
<PAGE>
The Board of Directors knows of no additional matters that will be presented
for consideration at the Special Meeting. Execution of a proxy, however, confers
on the designated proxyholders discretionary authority to vote the shares of
Consumers Common Stock covered thereby in accordance with the direction of a
majority of the Board of Directors on such other business, if any, that may
properly come before the Special Meeting or any adjournments or postponements
thereof.
This Proxy Statement and the accompanying form of proxy are first being
mailed to stockholders on or about October __, 1997.
- --------------------------------------------------------------------------------
SUMMARY
- --------------------------------------------------------------------------------
This summary of information contained elsewhere in this Proxy Statement has
been prepared to assist Stockholders in their review of this Proxy Statement and
is not intended to be a complete statement of all material facts. This summary
is qualified in its entirety by the more detailed information contained in this
Proxy Statement, the Appendices hereto and the documents incorporated herein by
reference, all of which Stockholders are urged to read carefully.
THE COMPANIES
CONSUMERS BANCORP, INC.
The Company is a Florida-chartered company headquartered in Miami, Florida.
The Company was incorporated in November 1993 solely for the purpose of becoming
a savings and loan holding company for Consumers Savings Bank (the "Bank"). The
Bank completed its reorganization into the holding company form of ownership in
April 1994. The Company's principal business is to hold all of the issued and
outstanding shares of Class A Common Stock of the Bank. At June 30, 1997, the
Company had consolidated total assets of $102.2 million, deposit liabilities of
$81.5 million and stockholders' equity of $6.8 million.
The Bank is a community oriented savings institution that is primarily
engaged in the business of attracting deposits from the general public in the
Bank's market area, and investing such deposits in one- to four-family
residential real estate loans and mortgage-backed securities. The Bank operates
as a mortgage banking company in originating and selling mortgage loans and
mortgage servicing rights to agency and private investors in the secondary
market. Currently, the Bank is in the process of establishing commercial real
estate lending and consumer lending operations. At June 30, 1997 The Bank's loan
portfolio consisted of $58.7 million, or 86.9%, of one- to four-family
residential loans, $1.8 million, or 2.7%, in multi-family loans, $5.4 million,
or 8.0%, in commercial real estate loans, and $1.6 million in other loans. At
that date, the Bank also had invested $2.4 million in a mutual fund that was
primarily invested in adjustable-rate mortgage-backed securities.
At June 30, 1997, the Bank had total nonperforming assets of $682,000
(comprised of $453,000 in loans and $229,000 Real Estate Owned). At that date,
the Bank's ratio of nonperforming loans to total loans was .69% and its ratio of
nonperforming assets to total assets was .67%.
The Company and Bank are subject to the regulations of the Federal Deposit
Insurance Corporation, Office of Thrift Supervision and Florida Department of
Banking and Finance.
BANKUNITED FINANCIAL CORPORATION
BankUnited Financial is a Florida corporation organized for the purpose of
becoming the savings and loan holding company for BankUnited, FSB. This holding
company reorganization, together with BankUnited, FSB's conversion from a
Florida-chartered stock savings bank (which was founded in 1984) to a federally
chartered stock savings bank, became effective on March 5, 1993. At June 30,
1997, BankUnited Financial had $1.1 billion in deposits, $101
2
<PAGE>
million in stockholder's equity, and over $1.8 billion in assets. Based on the
latest available information, BankUnited, FSB is the fourth largest publicly
held financial institution headquartered in Florida, based on asset size. After
completion of the recently announced sale of two of the largest financial
institutions in Florida, BankUnited, FSB expects to become the second largest
publicly held financial institution headquartered in the state.
BankUnited Financial currently has fifteen branch offices in Dade, Broward,
and Palm Beach Counties, Florida ("South Florida") and anticipates opening six
or more additional branches by June 30, 1998, either by acquisition or de novo
branching. BankUnited Financial's business has traditionally consisted of
attracting deposits from the general public and using those deposits, together
with borrowings and other funds, to purchase nationwide and to originate in
Florida single-family residential mortgage loans, and to a lesser extent, to
purchase and originate commercial real estate, commercial business and consumer
loans. BankUnited Financial also invests in tax certificates and other permitted
investments. BankUnited Financial's revenues are derived principally from
interest earned on loans, mortgage-backed securities and investments. BankUnited
Financial's primary expenses arise from interest paid on savings deposits and
borrowings and non-interest overhead expenses incurred in operations.
On November 15, 1996, BankUnited, FSB acquired Suncoast Savings and Loan
Association, FSA ("Suncoast"), a federally chartered savings association with
assets of $409 million at September 30, 1996, and merged Suncoast into
BankUnited FSB. The merger increased the Company's market share, particularly in
Broward County, while permitting BankUnited Financial to achieve economies
associated with an in-market merger, and should enable BankUnited Financial to
compete more effectively with large super-regional financial institutions
operating in Florida.
BankUnited, FSB is a member of the Federal Home Loan Bank system (the
"FHLB") and is subject to comprehensive regulation, examination and supervision
by the Office of Thrift Supervision (the "OTS") and the Federal Deposit
Insurance Corporation (the "FDIC"). Deposits at the Bank are insured by the
Savings Association Insurance Fund of the FDIC (the "SAIF") to the maximum
extent permitted by law.
BankUnited Financial's executive offices are located at 255 Alhambra Circle,
Coral Gables, Florida 33134, and its telephone number is (305) 569-2000.
THE SPECIAL MEETING
DATE, TIME, PLACE AND PURPOSE OF SPECIAL MEETING
The Special Meeting will be held on ____________, 1997 at ____ p.m., local
time, at the Company's main office. At the Special Meeting, stockholders will be
asked to consider and act on: (i) approval of the Merger Agreement; (ii) if
necessary, the adjournment of the Special Meeting in order to solicit additional
proxies; and (iii) such other matters as may properly come before the Special
Meeting. The Board of Directors is not currently aware of any other business to
come before the Special Meeting. Holders of record of Consumers Common Stock at
the close of business on _________, 1997 (the "Record Date") are entitled to
notice of and to vote at the Special Meeting and any adjournments or
postponements thereof. On that date there were 485,509 shares of Consumers
Common Stock outstanding, each of which will be entitled to one vote on each
matter to be acted upon or which may properly come before the Special Meeting
and any adjournments or postponements thereof. Stockholders must cast at least
242,755 votes in favor of adopting the Merger Agreement in order for it to be
approved. ____ Approval of the Merger Agreement by the requisite vote of the
Company's stockholders is a condition to the consummation of the Merger. See
"THE SPECIAL MEETING--Voting at the Meeting; Record Date."
As of the Record Date, directors and executive officers of the Company may
be deemed to be the beneficial owners of approximately 22.7% of the outstanding
shares of Consumers Common Stock. Such persons have indicated to the Company
that they intend to vote such shares in favor of the approval and adoption of
the Merger Agreement. As of the Record Date, neither BankUnited Financial nor
BankUnited, FSB owned any shares of Consumers Common Stock. See "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
3
<PAGE>
THE MERGER
FORM OF THE MERGER; MERGER CONSIDERATION
Under the terms of the Merger Agreement, at the Effective Time the Company
shall be merged with and into BankUnited Financial, with BankUnited Financial
being the surviving company, to be followed by the merger of Consumers Savings
Bank with and into BankUnited, FSB with BankUnited, FSB being the surviving
bank. In connection therewith, and subject to the rights of dissenting
stockholders which have been asserted and duly perfected in accordance with
Section 607.1320 of the Florida 1989 Business Corporation Act, each share of
Consumers Common Stock outstanding shall be canceled and automatically converted
into the right to receive either $21.33 in cash, 2.081 shares of BankUnited
Common Stock, or a combination of both. The Merger Consideration is subject to
adjustment under certain circumstances. No more than 55% of the total Merger
Consideration may be paid in cash.
BACKGROUND OF AND REASONS FOR THE MERGER; RECOMMENDATION OF THE COMPANY'S BOARD
OF DIRECTORS
The Board of Directors of the Company believes that the Merger is in the
best interests of the stockholders of the Company and has unanimously approved
the Merger Agreement. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS OF
THE COMPANY VOTE FOR APPROVAL OF THE MERGER AGREEMENT. In making this
determination, the Board of Directors considered a number of factors. See "THE
MERGER--Background of and Reasons for the Merger; Recommendations of the Company
Board of Directors."
OPINION OF FINANCIAL ADVISOR
On September 19, 1997, RP Financial, LC ("RP Financial"), the Company's
financial advisor, rendered an oral opinion to the Consumers' Board, which was
confirmed by its written opinion dated as of the date of the Proxy Statement, to
the effect that, as of the date of the opinion, the Merger Consideration to be
received by holders of Consumers Common Stock was fair to the Company's
stockholders from a financial point of view. Attached to the Proxy Statement as
Appendix D is a copy of RP Financial's opinion dated __________, 1997, setting
forth the procedures followed, assumptions made, matters considered and the
qualifications and limitations of the review undertaken by RP Financial in
connection with rendering its opinion. Holders of Consumers Common Stock are
urged to read RP Financial's opinion in its entirety. See "The Merger--Opinion
of Financial Advisor."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Company's executive officers and directors have interests in the Merger
by virtue of their interests as stockholders and as optionholders.
ACCOUNTING TREATMENT
It is intended that the Merger will be accounted for as a purchase under the
purchase method of accounting.
CONDITIONS TO THE MERGER
The Merger Agreement sets forth a number of conditions which must be
satisfied before the Merger may be consummated, including the approval of the
Merger Agreement by the requisite vote of the stockholders of the Company and
the receipt of all necessary consents, waivers, clearances, approvals and
authorizations from regulatory or governmental bodies, including the OTS. See
"THE MERGER--Conditions to the Merger."
4
<PAGE>
REGULATORY APPROVALS
The Merger is subject to federal regulatory approvals. There can be no
assurances that such approvals will be obtained, or if obtained, as to the date
of such approvals. There can also be no assurance that any such approvals will
not contain a condition or requirement which causes such approvals to fail to
satisfy the conditions to the consummation of the Merger. See "THE
MERGER--Conditions to the Merger" and "--Regulatory Approvals."
PROCEDURES FOR EXCHANGE OF CERTIFICATES
If the Merger is consummated, the Company's stockholders will be notified
promptly of the consummation of the Merger and will be advised of the procedure
for surrender of their stock certificates in exchange for the Merger
Consideration, which will be paid promptly after such surrender. STOCKHOLDERS
SHOULD NOT SEND IN STOCK CERTIFICATES AT THIS TIME. See "THE MERGER--Conversion
of Shares; Procedures for Exchange of Certificates."
FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash by a Company stockholder in exchange for his or her
shares of Consumers Common Stock pursuant to the Merger, or pursuant to the
exercise of dissenters' rights, will be a taxable transaction to such
stockholder for federal income tax purposes and may also be a taxable
transaction under applicable state, local, foreign and other tax laws. In
general, a stockholder will recognize gain or loss equal to the difference, if
any, between the amount of cash received in exchange for his or her shares of
Consumers Common Stock and the stockholder's tax basis in such shares.
Kronish, Lieb, Weiner & Hellman LLP, BankUnited Financial's special tax
counsel, has delivered its opinion to the effect that, assuming the Merger
occurs in accordance with the Merger Agreement, the Merger will constitute a
"reorganization" for federal income tax purposes and that, accordingly, no gain
or loss will be recognized by the Company's stockholders who exchange their
shares solely for shares of BankUnited Common Stock. The Company's stockholders
who receive cash, as well as BankUnited Common Stock in exchange for their
Consumers Common Stock may recognize taxable income but not in excess of the
amount of cash received.
ALL STOCKHOLDERS SHOULD READ CAREFULLY THE DISCUSSION IN "THE
MERGER--FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER" SECTION OF THIS PROXY
STATEMENT. THEY ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC
CONSEQUENCES TO THEM OF THE MERGER UNDER FEDERAL, STATE, LOCAL, FOREIGN AND ANY
OTHER APPLICABLE TAX LAWS.
NO SOLICITATION OF ALTERNATIVE TRANSACTIONS
The Merger Agreement provides that the Company will not initiate, solicit or
encourage any inquiries or the making of any proposals or offers with respect to
a merger, consolidation or certain similar transactions involving the Bank. See
"THE MERGER--No Solicitation of Alternative Transactions;" "--Termination of the
Merger Agreement; Payment of Fees to BankUnited Financial."
TERMINATION OF THE MERGER AGREEMENT; PAYMENT OF FEES TO BANKUNITED FINANCIAL
The Merger Agreement may be terminated either by BankUnited Financial or the
Company, acting alone under specified circumstances, or by mutual consent. The
Company has agreed to pay BankUnited Financial a termination fee of $325,000 in
the event the Merger is not consummated under certain specified circumstances,
including certain situations relating to efforts by a third party to acquire the
Company. In addition, in the event the Merger Agreement is terminated as a
result of a breach by the Company, the Company shall pay BankUnited Financial
liquidated damages of $100,000. Conversely, in the event that the Merger
Agreement is terminated as a result of a breach by
5
<PAGE>
BankUnited Financial, BankUnited Financial shall pay the Company liquidated
damages of $100,000. See "THE MERGER--Termination of the Merger Agreement;
Payment of Fees to BankUnited Financial."
RIGHTS OF DISSENTING STOCKHOLDERS
Pursuant to Section 607.1320 of the Florida Business Corporation Act, the
Company's stockholders will be entitled to dissenters' rights of appraisal with
respect to the Merger. The provisions of Section 607.1320 of the Florida 1989
Business Corporation Act are technical in nature and complex. Stockholders
desiring to exercise their appraisal rights should be aware that the failure to
comply strictly with the provisions of Section 607.1320 of the Florida 1989
Business Corporation Act may result in the waiver or forfeiture of their
appraisal rights. A stockholder who votes in favor of the Merger Agreement or
the return of a signed proxy card which does not specify a vote against approval
and adoption of the Merger Agreement will constitute a waiver of such
stockholder's rights of appraisal and will nullify any previously filed written
demand for appraisal. See "THE MERGER - Rights of Dissenting Stockholders" and
Appendix B to this proxy statement.
MARKET FOR COMMON STOCK
Consumers Common Stock is not traded or quoted on an exchange or other stock
market. Consumers Common Stock has historically been an illiquid investment.
There are 485,509 shares of Consumers Common Stock issued and outstanding which
are held by approximately 60 stockholders of record. The Company has not
declared any dividends on the Consumers Common Stock during fiscal 1996 and
1997. The last trade of Consumers Common Stock was in May 1997 at a price of
$13.82 per share.
FINANCIAL INFORMATION REGARDING COMPANY
Set forth below are selected consolidated financial and other data of the
Company. This information is derived in part from and should be read in
conjunction with the consolidated financial statements of the Company and the
notes thereto presented as Appendix C to this Proxy Statement.
<TABLE>
<CAPTION>
AT AT
JUNE 30, MARCH 31,
------------------- ------------------
1997 1996 1997 1996
-------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets.................................... $102,167 $ 88,703 $ 94,022 $ 88,648
Loans held for sale............................. 4,567 5,541 5,107 5,661
Loans receivable, net........................... 61,260 49,876 56,305 49,749
Mortgage-backed securities held to maturity..... 4,076 5,248 4,709 5,622
Mortgage-backed securities available for sale... 15,067 11,805 9,951 12,085
Investment securities........................... 9,993 5,948 6,955 4,958
Cash and cash equivalents....................... 2,571 3,867 6,320 4,370
Deposits........................................ 81,545 73,600 79,079 72,617
Borrowed funds.................................. 9,000 3,500 3,500 5,333
Stockholders' equity............................ 6,819 6,639 6,712 6,598
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS YEARS
ENDED JUNE 30, ENDED MARCH 31,
------------------ -----------------
1997 1996 1997 1996
------- ------- -------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Interest income................................ $ 1,771 $ 1,629 $ 6,736 $ 6,545
Interest Expense............................... 1,092 1,013 4,089 4,143
------- ------- -------- -------
Net interest income before provision
for loan losses.............................. 679 616 2,647 2,402
Provision for loan losses...................... - - - -
------- ------- -------- -------
Net interest income after provision for
loan losses.................................. 679 616 2,647 2,402
Other Income:
Gain (loss) on sale of loans and mortgage
- backed securities....................... (44) 41 (932) (59)
Gains on sales of loan servicing rights...... 83 35 337 386
Brokered loan fees........................... - 45 186 295
Other income................................. 66 34 137 174
------- ------- -------- -------
Total other income......................... 105 155 628 796
Other expense:
Salaries & employee benefits................. 374 331 1,353 1,392
Occupancy & equipment expense................ 113 109 436 467
FDIC and other insurance premiums............ 13 43 592 201
Data Processing.............................. 30 30 124 112
Legal, professional and consulting fees...... 24 24 89 104
Stationery and supplies...................... 10 13 61 64
Other expense................................ 114 109 419 515
------- ------- -------- -------
Total other expense........................ 678 659 3,074 2,856
------- ------- -------- -------
Income before income taxes..................... 106 112 201 343
Income tax expense............................. 41 45 77 137
------- ------- -------- -------
Net income................................. $ 65 $ 67 $ 124 $ 206
======= ======= ======== =======
</TABLE>
<TABLE>
<CAPTION>
AT AT
JUNE 30, MARCH 31,
----------------- ------------------
1997 1996 1997 1996
------ ------- ------- -------
<S> <C> <C> <C> <C>
OTHER DATA:
Equity to assets at period end................. 6.58% 7.49% 7.14% 7.44%
Net interest spread............................ 2.69% 2.47% 2.65% 2.47%
Net interest margin............................ 3.01% 2.88% 3.06% 2.91%
Return on average assets....................... 0.28% 0.31% 0.14% 0.25%
Return on average equity....................... 3.87% 4.16% 1.88% 3.14%
Noninterest income to average asset ratio...... 0.46% 0.69% 0.71% 0.95%
Noninterest expense to average asset ratio..... 2.87% 2.98% 3.48% 3.40%
Nonperforming loans to total loans............. 0.69% 0.46% 0.50% 0.32%
Nonperforming assets to total assets........... 0.67% 0.43% 0.47% 0.18%
Average interest-earning assets to average
interest-bearing liabilities................. 106.55% 108.64% 108.78% 108.71%
Allowance for loan losses to nonperforming
assets....................................... 48.53% 86.65% 75.09% 233.46%
Net interest income to noninterest expense..... 100.17% 94.29% 86.13% 84.11%
Net interest income after provision for loan
losses to noninterest expense................ 100.17% 94.29% 86.13% 84.11%
Number of full service offices................. 2 2 2 2
</TABLE>
7
<PAGE>
- --------------------------------------------------------------------------------
THE SPECIAL MEETING
- --------------------------------------------------------------------------------
GENERAL
This Proxy Statement is being furnished to holders of Consumers Common
Stock in connection with the solicitation of proxies by the Board of Directors
for use at the Special Meeting of Stockholders to be held at ____ p.m., local
time, on November __, 1997 at the Company, 9400 Dadeland Boulevard, Suite 620,
Miami, Florida, and at any adjournments or postponements thereof.
This Proxy Statement and the accompanying form of proxy are first being
mailed to the stockholders of the Company on or about October __, 1997.
MATTERS TO BE CONSIDERED AT THE MEETING
At the Special Meeting, the stockholders of the Company will be asked:
(1) to consider and vote upon a proposal to approve and adopt the Merger
Agreement and the transactions contemplated thereby; (2) if necessary, to
adjourn the Special Meeting in order to provide for the solicitation of
additional proxies; and (3) to transact such other business as may properly come
before the Special Meeting and any adjournments or postponements thereof. See
"THE MERGER."
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY VOTE FOR THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT.
VOTING AT THE MEETING; RECORD DATE
The Board of Directors has fixed the close of business on October __,
1997 as the record date (the "Record Date") for the determination of
stockholders of the Company entitled to notice of and to vote at the Special
Meeting and any adjournments or postponements thereof. Only holders of record on
such date will be entitled to notice of and to vote at the Special Meeting. On
the Record Date, there were 485,509 shares of Common Stock outstanding and
entitled to vote. Stockholders must cast at least 242,755 votes in favor of the
Merger Agreement in order for it to be adopted. An abstention will have the same
effect as a vote against the Merger Agreement. Obtaining stockholder approval of
the Merger is a condition to consummation of the Merger. Each holder of record
of Consumers Common Stock on the Record Date is entitled to cast one vote per
share, exercisable in person or by properly executed proxy, on the approval and
adoption of the Merger Agreement and on any other matter properly submitted for
the vote of the stockholders of the Company at the Special Meeting and any
adjournments or postponements thereof. The presence, in person or by properly
executed proxy, of the holders of a majority of the shares of Consumers Common
Stock outstanding and entitled to vote at the Special Meeting is necessary to
constitute a quorum at the Special Meeting.
As of _________, 1997, directors and executive officers of the Company
and their affiliates may be deemed to be the direct or indirect beneficial
owners of 110,248 shares of Consumers Common Stock representing approximately
22.7% of the outstanding shares of Consumers Common Stock. Such persons have
informed the Company that they intend to vote all such shares in favor of the
approval and adoption of the Merger Agreement.
PROXIES
This Proxy Statement is being furnished to stockholders of the Company
in connection with the solicitation of proxies by the Board of Directors for use
at the Special Meeting. All shares of Consumers Common Stock which are entitled
to vote and are represented at the Special Meeting by properly executed proxies
received prior to or at the Special Meeting, and not duly revoked, will be voted
at the Special Meeting in accordance with the instructions
8
<PAGE>
indicated on such proxies. If no instructions are indicated on a properly
executed proxy, such proxy will be voted FOR the approval and adoption of the
Merger Agreement.
If any other matters are properly presented for consideration at the
Special Meeting, including, among other things, consideration of a motion to
adjourn or postpone the Special Meeting to another time and/or place (including,
without limitation, for the purpose of soliciting additional proxies), the
persons named in the enclosed form of proxy and acting thereunder will have
discretion to vote on such matters in accordance with their best judgment. The
Company has no knowledge of any matters to be presented at the Special Meeting
other than those matters described herein.
STOCKHOLDERS SHOULD NOT FORWARD ANY STOCK
CERTIFICATES WITH THEIR PROXY CARDS.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (i)
filing with the Secretary of the Company, at or before the taking of the vote at
the Special Meeting, a written notice of revocation bearing a later date than
the proxy, (ii) duly executing a later dated proxy relating to the same shares
and delivering it to the Secretary of the Company at or before the taking of the
vote at the Special Meeting or (iii) attending the Special Meeting and voting in
person. Attendance at the Special Meeting will not in and of itself constitute a
revocation of a proxy. In addition, stockholders whose shares of Consumers
Common Stock are not registered in their own name will need additional
documentation from the record holder of such shares to vote personally at the
Special Meeting. Any written notice of revocation or subsequent proxy should be
sent so as to be delivered to Consumers Bancorp, Inc., 9400 Dadeland Boulevard,
Suite 620, Miami, Florida 33156, Attention: Bernard Janis, Chairman of the
Board, or hand-delivered to the Secretary of the Company, at or before the
taking of the vote at the Special Meeting.
All expenses of this solicitation, including the cost of preparing this
Proxy Statement, will be borne by the Company. In addition to solicitation by
use of the mails, proxies may be solicited by directors, officers and employees
of the Company or its subsidiaries in person or by telephone, telegram or other
means of communication. Such directors, officers and employees will not be
additionally compensated, but may be reimbursed for reasonable out-of-pocket
expenses in connection with such solicitation. Arrangements will also be made
with custodians, nominees and fiduciaries for forwarding of proxy solicitation
materials to beneficial owners of shares held of record by such custodians,
nominees and fiduciaries, and the Company will reimburse such custodians,
nominees and fiduciaries for reasonable expenses incurred in connection
therewith.
- --------------------------------------------------------------------------------
PROPOSAL I -- THE MERGER
- --------------------------------------------------------------------------------
This section of the Proxy Statement describes aspects of the proposed
Merger. The following description is qualified in its entirety by reference to
the Merger Agreement which is attached as Appendix A to this Proxy Statement and
is incorporated herein by reference. All stockholders are urged to read the
Merger Agreement in its entirety.
FORM OF THE MERGER; PURCHASE PRICE
Under the terms of the Merger Agreement, the Company will be merged with
and into BankUnited Financial, with BankUnited Financial being the surviving
company, to be followed by the merger of Consumers Savings Bank with and into
BankUnited, FSB, with BankUnited, FSB as the surviving bank. On the effective
date of the Merger, each share of Consumers Common Stock then outstanding,
except for each holder ("Dissenting Stockholder") of shares ("Dissenting
Shares") which have not been voted in favor of the Merger Agreement and who has
properly perfected his dissenters' rights of appraisal by satisfying all of the
applicable requirements of Section 607.1320 of the Florida Business Corporation
Act (see "THE MERGER--Rights of Dissenting Stockholders") shall be canceled and
automatically converted into the right to receive either $21.33 in cash, 2.081
shares of BankUnited Common Stock,
9
<PAGE>
or a combination of cash and BankUnited Common Stock of the Merger
Consideration. The Merger Consideration is subject to adjustment under certain
circumstances.
The stock portion of Merger Consideration may be adjusted downward in
the event that the BankUnited Common Stock price is greater than $12.00 per
share during the 15 day trading period ending three days prior to the Effective
Time. However, in the event of such adjustment, the dollar value of the
BankUnited Common Stock to be exchanged for Consumers Common Stock shall not be
less than $24.97 per share. In the event that BankUnited Common Stock is less
than $9.80 per share then BankUnited Financial shall pay the shareholders a
total of $10.8 million in cash, or approximately $20.39 per share, which would
include all amounts paid for Consumers options. In the event that the Company's
net worth is less than $6.5 million at the time of closing, BankUnited Financial
will have the right to reduce the Merger Consideration by $1.25 for each $1.00
below $6.5 million in net worth. In the event that the Company's net worth is
less than $6.1 million at the Effective Time the Company will have the right to
terminate the Merger Agreement rather than accept a reduced Merger
Consideration. The total cash amount of Merger Consideration may not exceed 55%
of the total Merger Consideration.
The Agreement is subject to certain conditions and contains other
material terms more fully set forth in the Proxy Statement and in the Merger
Agreement, a copy of which is attached hereto as Appendix A.
Based upon the number of shares of Consumers Common Stock outstanding at
the Record Date, the amount of funds necessary to cancel the issued and
outstanding Consumers Common Stock would be approximately $___ million. At March
31, 1997, the Company's book value per share was $____. For the twelve months
ended March 31, 1997, the Company's earnings per share were $____. Consequently,
the Merger Consideration represents a price equal to approximately ___% of the
Company's book value per share at September 30, 1997 and ____x the Company's
earnings per share for the twelve months then ended.
EFFECT ON STOCK OPTIONS
Immediately prior to the Effective Time all outstanding options to
purchase Consumers Common Stock shall be canceled and each option holder shall
be paid an amount in cash equal to (i) the difference between the exercise price
of the option and the cash merger consideration, multiplied by (ii) the number
of shares of Consumers Common Stock that the holder of the option could purchase
if the holder exercised his or her option in full.
EFFECTIVE TIME OF THE MERGER
The Merger will become effective (the "Effective Time") on or promptly
after the first business day following the last to occur of (i) the date that is
30 days after the date of the order of the OTS approving the Merger and the
Subsidiaries Merger, (ii) the effective date of the last order, approval, or
exemption of any other federal or state regulatory agency approving or exempting
the Merger and the Subsidiaries Merger, if such action is required, (iii) the
expiration of all required waiting periods after the filing of all notices to
all federal or state regulatory agencies required for consummation of the Merger
and the Subsidiaries Merger, and (iv) the date on which the stockholders of the
Company approve this Agreement, in each case as contemplated hereby, unless
another date is agreed to in writing by the Company and BankUnited Financial.
See "THE MERGER--Conditions to the Merger" below. It is expected that a period
of time will elapse between the Special Meeting and the Effective Time while the
parties seek to obtain the regulatory approvals required in order to consummate
the Merger. See "--Regulatory Approvals" below. The Merger Agreement may be
terminated by either party if, among other reasons, the Merger has not been
consummated on or before March 15, 1998. See "THE MERGER--Termination of the
Merger Agreement" below.
10
<PAGE>
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES
Following the Effective Time, BankUnited Financial shall pay to each
holder of Consumers Common Stock who delivers his or her stock certificate the
Merger Consideration. BankUnited Financial will send to each holder of record of
a certificate or certificates (other than holders of Dissenting Shares) which,
immediately prior to the Effective Time represented outstanding shares of
Consumers Common Stock ("Certificates"), a letter of transmittal (which will
specify the means for the holders of Consumers Common Stock to elect to receive
cash, BankUnited Common Stock or a combination thereof as well as specify that
delivery will be effected, and risk of loss and title to certificates for shares
of Consumers Common Stock will pass, only upon proper delivery of such
certificates to BankUnited Financial) and instructions for use in surrendering
certificates representing shares of Consumers Common Stock in exchange for the
cash into which such shares have been converted.
STOCKHOLDERS SHOULD NOT FORWARD COMPANY COMMON STOCK CERTIFICATES
TO BANKUNITED FINANCIAL UNTIL THEY HAVE RECEIVED TRANSMITTAL FORMS.
STOCKHOLDERS SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
Until the Certificates are surrendered for exchange after the
consummation of the Merger, holders of such certificates will not be paid the
cash amount into which such shares of Consumers Common Stock have been
converted. The Merger Agreement requires that when such Certificates are
surrendered, the Merger Consideration will be paid promptly without interest.
For Consumers stockholders who elect to receive BankUnited Common Stock,
following the Effective Time they will have the right to vote their shares of
BankUnited Common Stock regardless of whether they exchanged their Certificates
for shares of BankUnited Common Stock. However, no dividend or distribution
payable to the holders of BankUnited Common Stock after the Effective Time will
be paid to the holder of a former stockholder of the Company until the
stockholder surrenders their Certificate for exchange. Following such exchange,
the stockholder shall be paid all dividends or distributions which have been
declared and paid after the Effective Time (without interest).
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER. The Board of Directors of the Company has been
concerned with maximizing shareholder value and increasing the liquidity of the
Consumers Common Stock. Toward that end, the Board of Directors has periodically
entertained discussions regarding the purchase or merger of the Company during
the last several years, as well as considered the private placement of
securities. More recently the Company held preliminary discussions with another
financial institution for a merger of equals but was unable to negotiate a
mutually satisfactory definitive agreement.
In June 1997, the Company's Chairman of the Board was contacted by the
Chairman of the Board and Chief Executive Officer of BankUnited Financial who
indicated that BankUnited Financial was interested in pursuing a business
combination with the Company. Subsequently the Company's Board of Directors
discussed the nature of BankUnited Financial's expression of interest and
concluded that it was in the Company's best interest to pursue further
discussions. Shortly thereafter, the Company received a non-binding written
offer from BankUnited Financial outlining the terms of a proposed merger between
BankUnited Financial and the Company. Upon receiving this written offer, the
Company engaged Gibson & Co., Inc. to assist in evaluating the offer and to
assist and advise the Company in negotiating certain aspects of a definitive
Merger Agreement. At this time, the Company was contacted by another financial
institution that was interested in acquiring the Company. This other indication
was for significantly less than BankUnited Financial's offer. The Board of
Directors met in August 1997 to consider both offers. At that time the Board
directed the Chairman of the Board and Gibson & Co., Inc. to contact both
parties to find out if they had presented their best offer. Following the Board
of Director's review of both proposals the Board concluded that BankUnited
Financial's offer provided the best consideration to stockholders and that the
Company would complement BankUnited Financial's existing banking franchise.
After carefully evaluating the two proposed transactions, the Company's Board of
Directors decided to continue discussions with BankUnited Financial and to
permit BankUnited Financial personnel to conduct a detailed "due diligence"
investigation of the Company.
11
<PAGE>
BankUnited, Financial then commenced a detailed review of the books and
records of the Company. Following negotiations between the parties, the Boards
of the Company and BankUnited Financial determined to enter into a definitive
agreement providing for the Merger Consideration. For the reasons set forth
below, the Board of the Company believes that the offer was fair and reasonable
and entered into the present Merger Agreement, subject to stockholder approval.
REASONS FOR THE MERGER. The Board of Directors of Company believes that
the Merger is fair to, and in the best interests of, the Company and its
stockholders. Accordingly, the Board has approved and adopted the Merger
Agreement. The Board of Directors of Company therefore unanimously recommends
that stockholders vote FOR the approval and adoption of the Merger Agreement.
In reaching its conclusion that the Merger is fair to, and in the best
interests of, the Company and its stockholders, the Board considered a number of
factors, including, without limitation, the following:
(i) the Board's familiarity with and review of the Company's
business, operations, financial condition, earnings and
prospects, including the ability to implement its business plan;
(ii) the current and prospective economic environment and competitive
and regulatory constraints facing financial institutions and
particularly Consumers Savings Bank;
(iii) the Board's opinion that the Merger Consideration was fair to the
holders of Consumers Common Stock, and that the Consumers Common
Stock is an illiquid investment;
(iv) the Board's review of the alternative of continuing to remain
independent and the possibility of stockholders obtaining returns
equal to the Merger Consideration if the Company continued as an
independent entity given possible levels of future earnings. In
this connection, the Board was aware of certain risks of
remaining independent, including, among other things, the limited
potential to engage in acquisitions which could further enhance
stockholder value;
(v) the financial resources and prospects of BankUnited Financial and
BankUnited, FSB and the likelihood of receiving the requisite
regulatory approvals in a timely manner;
(vi) the compatibility of the respective businesses, branches and
operations of the Company and BankUnited, FSB;
(vii) the Merger Consideration represented approximately 150.21% of the
Company's book value if paid in cash and 175.8% of the Company's
book value if paid in BankUnited Common Stock, and 28.07x the
Company's earnings (excluding the impact of the special SAIF
assessment) if paid in cash and 32.86x the Company's earnings
(excluding the impact of the special SAIF assessment) if paid in
BankUnited Common Stock at and for the twelve months ended August
31, 1997.
(viii) a comparison of the Company's and BankUnited Financial's business
franchise, including the fact that the holders of Consumers
Common Stock will receive a more liquid security in a
substantially more diversified financial institution; and
(ix) the tax deferred nature of the transaction to the holders of
Consumers Common Stock who elect to take BankUnited Common Stock.
12
<PAGE>
On September ___, 1997, the Board of Directors of the Company retained
RP Financial as an independent financial advisor in connection with the merger
transaction. As discussed below, RP Financial has rendered an opinion to the
effect that the Merger Consideration is fair from a financial point of view to
Company stockholders.
THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES THAT THE MERGER IS IN THE
BEST INTERESTS OF THE STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR ADOPTION OF THE MERGER AGREEMENT.
For information regarding interests of directors and executive officers
of the Company in the Merger, see "THE MERGER--Interests of Certain Persons in
the Merger" and "SECURITY OWNERSHIP OF CERTAIN BENE FICIAL OWNERS AND
MANAGEMENT."
OPINION OF FINANCIAL ADVISOR
The Company's Board of Directors retained RP Financial in September 1997
to provide certain financial advisory and investment banking services to the
Company in conjunction with the Merger, including the rendering of an opinion
with respect to the fairness of the Merger Consideration from a financial point
of view to holders of Consumers Common Stock. In requesting RP Financial's
advice and opinion, the Board of Directors of the Company did not give any
special instructions to RP Financial, nor did it impose any limitations upon the
scope of the investigation which RP Financial might wish to conduct to enable it
to give its opinion. RP Financial delivered its opinion orally to the Company on
September 18, 1997, and its written updated opinion as of __________, 1997, to
the effect that, based upon and subject to the matters set forth therein, as of
the date thereof, the Merger Consideration is fair to the shareholders of
Consumers Common Stock from a financial point of view. The opinion of RP
Financial is directed toward the consideration to be received by the Company's
stockholders and does not constitute a recommendation to any Company stockholder
to vote in favor of approval of the Merger Agreement. A copy of the RP Financial
opinion is set forth as Appendix D to this Proxy Statement and should be read in
its entirety by stockholders of the Company. RP Financial has consented to the
inclusion and description of its written opinion in this Proxy Statement.
THE OPINION OF RP FINANCIAL IS DIRECTED TO THE COMPANY'S BOARD IN ITS
CONSIDERATION OF THE PURCHASE PRICE AS DESCRIBED IN THE AGREEMENT, AND DOES NOT
CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER OF THE COMPANY AS TO ANY ACTION
THAT SUCH SHAREHOLDER SHOULD TAKE IN CONNECTION WITH THE AGREEMENT, OR
OTHERWISE. IT IS FURTHER UNDERSTOOD THAT THE OPINION OF RP FINANCIAL IS BASED ON
MARKET CONDITIONS AND OTHER CIRCUMSTANCES EXISTING ON THE DATE HEREOF.
RP Financial was selected by the Company to act as its financial advisor
because of RP Financial's expertise in the valuation of businesses and their
securities for a variety of purposes, including its expertise in connection with
mergers and acquisitions of savings and loan associations, savings banks,
savings and loan holding companies, commercial banks and bank holding companies.
RP Financial had also previously been engaged by the Company over the past
several years to assist management with the preparation of the business plan in
connection with the formation of the holding company as well as to provide
valuation expertise in connection with a proposed merger of equals which was
never consummated. Pursuant to a letter agreement dated and executed September
15, 1997 (the "Engagement Letter"), RP Financial estimates that it will receive
from the Company total professional fees of $20,000, of which $________ has been
paid to date, plus reimbursement of certain out-of-pocket expenses, for its
services in connection with the Merger. In addition, the Company has agreed to
indemnify and hold harmless RP Financial, any affiliates of RP Financial and the
respective members, managers, officers, agents and employees of RP Financial or
their successors and assigns who act for or on behalf of RP Financial in
connection with the services called for under this agreement from and against
any and all losses, claims, damages and liabilities (including, but not limited
to, all losses and expenses in connection with claims under the federal
securities laws) attributable to (i) any untrue statement or alleged untrue
statement of a material fact contained in the financial statements or other
information furnished or otherwise provided by the Company to RP Financial
either orally or in writing, or (ii) the omission or alleged omission of a
material fact from the financial statements or other information furnished or
otherwise made available
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by the Company to RP Financial. The Company will be under no obligation to
indemnify RP Financial hereunder if a court determines that RP Financial was
negligent or acted in bad faith with respect to any actions or omissions of RP
Financial related to a matter for which indemnification is sought hereunder. In
addition, if RP Financial is entitled to indemnification from the Company under
the agreement and in connection therewith incurs legal expenses in defending any
legal action challenging the opinion of RP Financial where RP Financial is not
negligent or otherwise at fault or is found by a court of law to be not
negligent or otherwise at fault, the Company will indemnify RP Financial for all
reasonable expenses.
In rendering its fairness opinion, RP Financial reviewed the following
material: (1) the Merger Agreement including exhibits; (2) financial and other
information for the Company, all with regard to balance and off-balance sheet
composition, profitability, interest rates, volumes, maturities, trends, credit
risk, interest rate risk, liquidity risk and operations: (a) audited financial
statements for the fiscal years ended March 31, 1993 through 1997, (b)
shareholder, regulatory and internal financial and other reports through August
31, 1997, (c) the most recent proxy statement for the Company, (d) internal
budgets and financial projections prepared by management and (e) the Company's
management and Board comments regarding past and current business, operations,
financial condition, and future prospects; and (3) financial and other
information for BankUnited Financial including: (a) audited financial statements
for the fiscal years ended September 30, 1995 and 1996, incorporated in Annual
Reports to shareholders; (b) Form 10-K as of September 30, 1996; (c) regulatory
and internal financial and other reports through June 30, 1997; (d) internal
budgets and financial projections prepared by management of BankUnited
Financial; (e) registration statement on Form S-3 as filed with the Securities
and Exchange Commission on September 17, 1997 in conjunction with a secondary
offering of common stock; and (f) BankUnited Financial's management comments
regarding past and current business, operations, financial condition, and future
prospects.
In addition, RP Financial stated that it reviewed financial,
operational, market area and stock price and trading characteristics for
BankUnited Financial and the stock price and relatively limited trading
information available for the Company relative to publicly-traded savings
institutions, with comparable resources, financial condition, earnings,
operations and markets. RP Financial also considered the economic and
demographic characteristics in the local market area, and the potential impact
of the regulatory, legislative and economic environments on operations for the
Company and BankUnited Financial and the public perception of the thrift
industry. In rendering its opinion, RP Financial relied, without independent
verification, on the accuracy and completeness of the information concerning the
Company as furnished by the Company to RP Financial for review for purposes of
its opinion, as well as publicly-available information regarding other financial
institutions and economic data. Neither the Company nor BankUnited Financial
restricted RP Financial as to the material it was permitted to review. RP
Financial did not perform or obtain any independent appraisals or evaluations of
the assets and liabilities and potential and/or contingent liabilities of the
Company.
RP Financial expresses no opinion on matters of a legal, regulatory, tax
or accounting nature or the ability of the Merger to be consummated as set forth
in the Agreement. In rendering its opinion, RP Financial assumed that in the
course of obtaining the necessary regulatory and governmental approvals for the
proposed Merger, no restriction will be imposed on BankUnited Financial that
would have a material adverse effect on the ability of the Merger to be
consummated as set forth in the Agreement.
RP Financial's opinion was based solely upon the information available
to it and the economic, market and other circumstances as they existed as of
September 18, 1997 and _________________, 1997; events occurring after the most
recent date could materially affect the assumptions used in preparing the
opinion.
In connection with rendering its opinion dated September 18, 1997, and
updated as of ____________, 1997, RP Financial performed a variety of financial
analyses which are summarized below. Although the evaluation of the fairness,
from a financial point of view, of the Merger Consideration was to some extent
subjective based on the experience and judgment of RP Financial and not merely
the result of mathematical analyses of financial data, RP Financial relied, in
part, on the financial analyses summarized below in its determinations. The
preparation of a fairness opinion is a complex process and is not necessarily
susceptible to partial analyses or summary description.
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RP Financial believes its analyses must be considered as a whole and that
selecting portions of such analyses and factors considered by RP Financial
without considering all such analyses and factors could create an incomplete
view of the process underlying RP Financial's opinion. In its analyses, RP
Financial took into account its assessment of general business, market,
monetary, financial and economic conditions, industry performance and other
matters, many of which are beyond the control of the Company and BankUnited
Financial, as well as RP Financial's experience in securities valuation, its
knowledge of financial institutions and its experience in similar transactions.
With respect to the comparable transactions analysis described below, no public
company utilized as a comparison is identical to the Company and such analyses
necessarily involve complex considerations and judgments concerning the
differences in financial and operating characteristics of the companies and
other factors that could affect the acquisition values of the companies
concerned. The analyses were prepared solely for purposes of RP Financial
providing its opinion as to the fairness of the Merger Consideration and do not
purport to be appraisals or necessarily reflect the prices at which businesses
or securities actually may be sold. Any estimates contained in RP Financial's
analysis are not necessarily indicative of future results of values, which may
be significantly more or less favorable than such estimates. None of the
analyses performed by RP Financial was assigned a greater significance by RP
Financial than any other.
The following is a summary of the financial analyses performed by RP
Financial in connection with providing its opinion of September 18, 1997.
(a) COMPARABLE TRANSACTIONS ANALYSIS. In this analysis, RP Financial
conducted an evaluation of the financial terms, financial and operating
condition and market area of recent business combinations among comparable
thrift institutions, both pending and completed. In conjunction with its
analysis, RP Financial considered the multiples of tangible book value,
earnings, assets and core deposit premiums implied by the terms in such
completed and pending transactions involving selling companies whose financial
characteristics and markets were comparable to those of the Company including
two comparable groups: (1) companies operating in the Florida market with total
assets less than $150 million and completed in 1996 or 1997 ("Comparable Group
#1"); and (2) companies operating in the Southeast United States with total
assets less than $150 million and completed or announced during 1997
("Comparable Group #2).
The Florida institutions with similar resources and scope of operations
(Comparable Group #1) completing acquisitions since the beginning of 1996
included a total of seven institutions. The acquisition pricing ratios of this
group were: (i) price/earnings ratios ranging from 9.07x to 34.09x, with a
median of 17.89x; (ii) price/tangible book ratios ranging from 140% to 175%,
with a median of 153% percent; and (iii) price/assets ratios ranging from 5.60%
to 15.05%, with a median of 10.38%.
The Southeast institutions with similar resources and scope of
operations (Comparable Group #2) completing or announcing acquisitions since the
beginning of 1997 included a total of nineteen institutions. The acquisition
pricing ratios of this group were: (i) price/earnings ratios ranging from 9.17x
to 52.33x, with a median of 17.70x; (ii) price/tangible book ratios ranging from
102% to 216%, with a median of 157%; and (iii) price/assets ratios ranging from
6.48% to 19.99%, with a median of 13.70%.
In comparison to the comparable transactions median, the Company
maintained a larger asset size and generated a lower return on assets and return
on equity. The Company's equity-to-assets ratio exceed the median for Comparable
Group #1 and was below the median for Comparable Group #2. Further, the
Company's acquisition pricing ratios for price/earnings, price/tangible book,
price/assets, and core deposits premium exceeds the median ratios of these four
groups based on the Merger Consideration as of September 18, 1997, and
____________, 1997. Specifically, the Merger Consideration of $________, based
on the exchange ratio and the Fair Market Value as of ________ and assuming that
55% of the Merger Consideration is in the form of cash indicated the following
pricing ratios for shares of Consumers Common Stock, based on financial
statements as of or for the 12 months ended __________________, 1997: _______ x
earnings,______ % of reported tangible book value, ______ % of assets and ______
% premium on core deposits. Assuming that 100% of the Merger Consideration is in
the form of Common Stock, the following pricing ratios for shares of Consumers
Common Stock are indicated, based on financial
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statements as of or for the 12 months ended __________________, 1997: _______ x
earnings,______ % of reported tangible book value, ______ % of assets and ______
% premium on core deposits.
No company or transaction used in this composite is identical to the
Company or the Merger. Accordingly, an analysis of the results of the foregoing
is not mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies involved and other factors that could affect the public trading values
of the securities of the company or companies to which they are being compared.
(b) DISCOUNTED CASH FLOW ANALYSIS. RP Financial prepared discounted cash
flow ("DCF") analyses assuming the Company operates on a stand-alone basis for
the next five years. The projections of future cash flows to shareholders
assumed that the Company would continue to forego the payment of cash dividends
during interim years, consistent with the Company's recent practice. The
terminal value at the end of the fifth year was based on a sale of control
reflecting a range of multiples to tangible book value based on the multiples
reflected in the comparable transactions analysis reviewed above. The DCF
analyses incorporated several specific factors reflecting the operating
environment of the Company on a stand-alone basis, including growth prospects in
the local market, the level of competition from other financial institutions,
and future earnings estimates for the Company under a stand-alone business plan
without the benefits of the Merger. Two alternative scenarios were also
evaluated which incorporated (1) projected earnings equal to 90% of the "base
case" level and (2) projected earnings equal to 110% of the "base case" level.
The Year 5 sale-of-control values were then discounted to present values based
on discount rates selected after examining the earnings capitalization rate of
publicly-traded thrifts, the Treasury yield curve (i.e., the risk-free rate),
and perceived investment risks in the Consumers Common Stock. RP Financial
concluded that, since the Merger Consideration exceeded the present value of
future cash flows accruing to holders of Consumers Common Stock under all
scenarios, the DCF analyses supported its fairness conclusions.
(c) PRO FORMA IMPACT ANALYSIS. RP Financial's analysis considered the
financial condition and operations of BankUnited Financial on a stand-alone
basis at June 30, 1997, adjusted for the effect of the proposed secondary
offering of common stock, versus the pro forma impact of the Merger. RP
Financial considered that the Merger is estimated to be accretive to BankUnited
Financial's pro forma tangible book value per share and initially dilutive to
reported earnings per share before incorporating anticipated merger synergies.
RP Financial also considered BankUnited Financial's pro forma cash earnings per
share. RP Financial considered the impact of the Merger on BankUnited
Financial's key financial characteristics, per share data and resulting pricing
ratios, as well as BankUnited Financial's longer run strategic objectives. RP
Financial also considered the pro forma impact to the Company's shareholders
including the accretive nature of the transaction to the Company's tangible book
value and earnings per share for shareholders selecting the stock election.
On the basis of these analyses and other considerations, RP Financial
concluded that the Merger Consideration, as described in the Agreement, is fair
to the shareholders of the Company from a financial point of view. As described
above, RP Financial's opinion was one of many factors taken into consideration
by the Company Board in making its determination to proceed with the Merger.
Although the foregoing summary describes the material components of the analyses
presented by RP Financial, it does not purport to be a complete description of
all the analyses performed by RP Financial and is qualified by reference to the
written opinion of RP Financial set forth as Appendix D hereto, which the
Company shareholders are urged to read in its entirety.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains representations and warranties by the
Company regarding, among other things, its organization, authority to enter into
the Merger Agreement, capitalization, the conduct of its business, subsidiaries,
properties, financial statements, the absence of undisclosed liabilities,
compliance with laws and orders, pending and threatened litigation,
environmental matters, certain employee benefits plan matters and employee
matters, contractual obligations, governmental regulation, tax matters,
allowances for losses, regulatory matters, properties, compliance with laws,
leases, insurance matters, material interests of certain persons, registration
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obligations, brokers and finders and accuracy of representations and warranties
and disclosures to BankUnited Financial. The Merger Agreement also contains
representations and warranties by BankUnited Financial regarding, among other
things, its organization, authority to enter into the Merger Agreement,
capitalization, consents and approvals of regulatory authorities, the
availability of funds to consummate the Merger in a timely manner, pending and
threatened litigation involving BankUnited Financial, and the accuracy of the
representations and warranties and disclosures to the Company.
CONDITIONS TO THE MERGER
CONDITION TO EACH PARTY'S OBLIGATIONS. The obligations of BankUnited
Financial, and the Company to effect the Merger are subject, among other things,
to the following conditions:
(i) the Merger Agreement shall be approved by the requisite
vote of the stockholders of the Company;
(ii) all necessary regulatory or governmental approvals
required to consummate the Merger shall be obtained and
shall be in full force and effect, and such approvals are
not subject to any conditions that in the judgement of
BankUnited Financial would restrict BankUnited Financial,
BankUnited, FSB or affiliates in their operations and
business activities after the Effective Time. (see
"PROPOSAL I--THE MERGER--Regulatory Approvals");
(iii) the registration statement to register BankUnited Common
Stock shall have been declared effective and shall not be
subject to stop order or any threatened stop order;
(iv) no party to the Merger Agreement shall be subject to any
order, decree or injunction of a court or agency of
competent jurisdiction which enjoins or prohibits the
consummation of the Merger;
(v) the BankUnited Common Stock issuable pursuant to the
Merger shall have been authorized for trading on the
Nasdaq;
(vi) holders of no more than ten percent of the outstanding
Consumers Common Stock shall have sought to exercise their
dissenters' rights.
CONDITIONS TO THE OBLIGATIONS OF BANKUNITED FINANCIAL. The obligations
of BankUnited Financial to effect the Merger are subject, among other things, to
the following additional conditions:
(i) The representations and warranties of the Company shall be
true and correct in all material respects as of the date
of the Merger Agreement and as of the Effective Time (as
though made on and as of the Effective Time except to the
extent such representations and warranties are by their
express provisions made as of a specified date) and
BankUnited Financial shall have received a certificate
signed by the Chairman of the Board, Chief Executive
Officer or other duly authorized officer of the Company to
that effect;
(ii) The Company shall have performed in all material respects
all obligations required to be performed by it under this
Agreement prior to the Effective Time, and BankUnited
Financial shall have received a certificate signed by the
Chairman of the Board, Chief Executive Officer or other
duly authorized officer of Consumers to that effect;
(iii) As of the Effective Time the Closing Net Worth as defined
shall be not less than $6.5 million;
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(iv) BankUnited Financial will receive an opinion of counsel
for the Company addressed to BankUnited Financial and in
form satisfactory to it as to the validity of the
approvals of the Merger by the directors and stockholders
of the Company;
(v) No event, occurrence, or circumstance shall have occurred
that would constitute a Material Adverse Effect as to the
Company; and
(vi) BankUnited Financial will receive an opinion of counsel
mutually agreed upon by BankUnited Financial and the
Company addressed to BankUnited Financial and/or the
Company in form reasonably satisfactory to them that for
federal income tax purposes the Merger will qualify as a
reorganization under the provisions of Section 368 of the
Code, that the conversion of Consumers Common Stock solely
into BankUnited Common Stock will be a tax free exchange,
that the BankUnited Common Stock to be issued in the
Merger has been registered with the Securities and
Exchange Commission, and that to their best knowledge such
registration is in full force and effect and not subject
to a stop order.
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company to effect the Merger are subject, among other things, to the following
additional conditions:
(i) the representations and warranties of BankUnited Financial
shall be true and correct in all material respects, such
representations and warranties are by their express
provisions made as of a specified date and the Company
shall have received a certificate signed by the chairman
and chief executive officer, executive vice president or
other duly authorized officer of BankUnited Financial to
that effect;
(ii) BankUnited Financial shall have performed in all material
respects all obligations required to be performed by it
under this Agreement prior to the Effective Time, and the
Company shall have received a certificate signed by the
chairman and chief executive officer, executive vice
president or other duly authorized officer of BankUnited
Financial to that effect;
(iii) As of the Effective Time the Closing Net Worth of the
Company shall be not less than $6.1 million;
(iv) No event, occurrence, or circumstance shall have occurred
that would constitute a Material Adverse Effect as to
BankUnited Financial;
(v) The Company will have received an opinion of counsel
mutually agreed upon by the Company and BankUnited
Financial addressed to the Company and/or BankUnited
Financial in form reasonably satisfactory to them that for
federal income tax purposes the Merger will qualify as a
reorganization under the provisions of Section 368 of the
Code, and that the conversion of Consumers Common Stock
solely into BankUnited Financial Common Stock will be
treated as a tax free exchange; and
(vi) The fair market value of BankUnited Financial Common Stock
shall not be less than $8.50, as determined by using the
average of the mean of the closing prices of such stock as
quoted on the Nasdaq system on each of the ten (10)
trading days immediately preceding the Effective Time.
Except with respect to stockholders' approval and all regulatory
approvals, substantially all of the conditions to consummation of the Merger may
be waived at any time by the party for whose benefit they were created, and the
Merger Agreement may be amended or modified at any time by written agreement of
the parties, except that any
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waiver, amendment or modification executed after approval of the Merger
Agreement by the Company's stockholders may only occur if the Board of Directors
of the Company concludes that such waiver, amendment or modification will not
have a Material Adverse Effect on the benefits intended under the Merger
Agreement and will not require a resolicitation of proxies from stockholders.
REGULATORY APPROVALS
The acquisition of the Company by BankUnited Financial is subject to the
approval of the OTS. BankUnited Financial anticipates filing an application for
approval of the acquisition with the OTS in mid-October 1997. BankUnited
Financial anticipates obtaining the approval of the OTS during the fourth
quarter of 1997. There can be no assurance as to the timing of such approval or
that the OTS will approve the acquisition of the Merger of the Company with and
into BankUnited Financial.
In addition, under federal law, a period of 30 days must expire
following approval by the OTS within which period the Department of Justice may
file objections to the Merger under the federal antitrust laws. The postapproval
waiting period may be reduced by the OTS to 15 days, with the concurrence of the
Department of Justice. The Department of Justice could take such action under
the antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the Merger unless divestiture of an acceptable
number of branches to a competitively suitable purchaser could be made. While
BankUnited Financial believes that the likelihood of such action by the
Department of Justice is remote in this case, there can be no assurance that the
Department of Justice will not initiate such a proceeding.
BankUnited Financial and the Company are not aware of any governmental
approvals or actions that are required for consummation of the Merger except as
described above. Should any such approval or action be required, it is presently
contemplated that such approval or action would be sought. There can be no
assurance that any such approval or action, if needed, could be obtained, or
that it would not delay consummation of the Merger or be conditioned in a manner
that would cause BankUnited Financial to abandon the Merger.
BUSINESS PENDING THE MERGER
Under the terms of the Merger Agreement, the Company and its
subsidiaries generally are required to carry on their business in the ordinary
course consistent with past practice except as expressly contemplated by the
Merger Agreement. Furthermore, the Company shall use its best efforts to
preserve its business organization and assets, maintain its rights and
franchises, retain the services of its officers and key employees in accordance
with established procedures and maintain its relationships with customers. The
Company shall maintain its corporate existence in good standing and file all
required reports, use its best efforts to maintain and keep its properties in
good repair and condition, except for ordinary wear and tear, use its best
efforts to keep in full force and effect insurance and bonds comparable in
amount and scope of coverage to that which it now maintains and, in the event
that Company is unable to keep such insurance and bonds in full force and
effect, to provide prompt notice of such failure to BankUnited Financial. In
addition, the Company must perform all obligations required to be performed by
it under all material contracts, leases, and documents relating to or affecting
its assets, properties, and business; use its best efforts to comply with and
perform in all material respects all obligations and duties imposed upon it by
all applicable laws and regulations; and as soon as reasonably practicable,
furnish BankUnited Financial copies of all of the Company's financial and
regulatory reports subsequent to the date the Merger Agreement was entered into.
Except as otherwise approved by BankUnited Financial in writing, which
approval shall not be unreasonably withheld, or as permitted, required or
contemplated by the Merger Agreement or required by law or regulation, the
Company will not:
(a) other than in the ordinary course of business consistent
with past practice since December 31, 1996 ("In the Ordinary Course"), incur any
indebtedness for borrowed money, including Federal Home Loan Bank advances
(other than (i) Federal Home Loan Bank advances having maturities of six months
or less and (ii)
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short-term indebtedness incurred to refinance short-term indebtedness and
indebtedness of the Company or any of its Subsidiaries to the Company or any of
its Subsidiaries) (it being understood and agreed that incurrence of
indebtedness In the Ordinary Course shall include, without limitation, the
creation of deposit liabilities, purchases of federal funds, sales of
certificates of deposit and entering into repurchase agreements), assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity, or make any
loan or advance other than In the Ordinary Course;
(b) adjust, split, combine or reclassify any capital stock; make,
declare or pay any dividend or make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of its capital
stock or any securities or obligations convertible into or exchangeable for any
shares of its capital stock, or grant any stock appreciation rights or grant any
individual, corporation or other entity any right to acquire any shares of its
capital stock or issue any additional shares of capital stock, or any securities
or obligations convertible into or exchangeable for any shares of its capital
stock;
(c) sell, transfer, mortgage, encumber or otherwise dispose of
any of its properties or assets to any individual, corporation or other entity,
or cancel, release or assign any indebtedness to any such person or any claims
held by any such person, except in the ordinary course of business consistent
with past practice or pursuant to contracts or agreement in force at the date of
the Agreement;
(d) make any material investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other entity other
than in connection with contracts in existence on the date the Merger Agreement
was entered into and described in the Consumers Disclosure Schedule;
(e) enter into or terminate any contract or agreement involving
annual payments in excess of $20,000 and which cannot be terminated without
penalty upon 30 days notice, or make any change in, or extension of, any of its
leases or contracts involving, annual payments in excess of $20,000 and which
cannot be terminated without penalty upon 30 days notice;
(f) except as set forth in the Consumers Disclosure Schedule for
severance pay up to $200,000, increase or modify in any manner the compensation
or fringe benefits of any of its employees or pay any pension or retirement
allowance not required by any existing plan or agreement to any such employees,
or become a party to, amend or commit itself to any pension, retirement,
profit-sharing or welfare benefit plan or agreement or employment agreement with
or for the benefit of any employee other than routine adjustments in
compensation and fringe benefits In the Ordinary Course or accelerate the
vesting of any stock options or other stock-based compensation;
(g) take any action that would prevent or impede the Merger from
qualifying as a reorganization with the meaning of Section 368 of the Code;
(h) settle any claim, action or proceeding involving the payment
of money damages in excess of $20,000, except In the Ordinary Course;
(i) amend its articles of incorporation or its bylaws;
(j) fail to maintain any regulatory agreements, material licenses
and permits or to file in a timely fashion all federal, state, local and foreign
tax returns;
(k) make any capital expenditures of more than $5,000
individually or $20,000 in the aggregate;
(l) fail to maintain each of its benefit plan or timely make all
contributions or accruals required thereunder in accordance with generally
accepted accounting principles applied on a consistent basis;
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(m) issue any additional shares of the Consumers Common Stock,
except pursuant to the exercise of options by the holders thereof;
(n) agree to, or make any commitment to, take any of the actions
prohibited by the Merger Agreement;
(o) take any action or enter into any contract or agreement
regarding the Consumers Savings Bank's Falls branch located at 8941 S.W. 136
Street, Miami, Florida; or
(p) take any action to collect, nor file any collection or
foreclosure proceedings with respect to, any loans with a principal balance in
excess of $500,000.
ADDITIONAL AGREEMENTS
The Company and BankUnited Financial have each made various additional
agreements customary to transactions of this type, including, among others, that
each party will use its best efforts to take or cause to be taken all actions
necessary, proper or advisable to consummate the Merger on a prompt basis,
including the preparation of a proxy statement by the Company in order to obtain
stockholder approval of the Merger Agreement and holding a stockholder's meeting
for the purpose of approving the Merger Agreement, that the Company will provide
BankUnited Financial with reasonable access to certain books and records of, and
other information regarding, the Company and that each party will promptly
provide the other with copies of all reports filed with the regulatory
authorities. BankUnited Financial will prepare and file a registration statement
with the Securities and Exchange Commission.
NO SOLICITATION OF ALTERNATIVE TRANSACTIONS. In addition, the Company
has agreed not to directly or indirectly initiate, solicit or knowingly
encourage or facilitate any inquiries or the making of a proposal that may
ultimately result in a third party proposal for the Company.
EFFECT ON EMPLOYEES AND BENEFIT PLANS; INTERESTS OF CERTAIN PERSONS IN
THE MERGER. The Merger Agreement provides that, subject to the continuing
discretion and judgment of BankUnited Financial and BankUnited, FSB, BankUnited
Financial and BankUnited, FSB will consider making offers of continuing
employment to those persons employed by the Company at the Effective Time.
However, nothing in the Merger Agreement requires BankUnited Financial or
BankUnited, FSB to employ any such employee on and after the Effective Time.
Each employee of the Company who becomes an employee of BankUnited, FSB and who
participates in any BankUnited, FSB employee benefit plans shall participate in
such plans as a new employee of BankUnited, FSB, except as otherwise provided by
law. It is the intention of BankUnited Financial and BankUnited, FSB that the
various employee benefit plans or other arrangements of the Company will be
terminated.
TERMINATION
The Merger Agreement may be terminated by either party, whether before
or after its approval by the Stockholders, by the mutual written consent of the
parties, or if the Merger has not been consummated on or before March 15, 1998.
The Merger Agreement may also be terminated if:
(i) by mutual consent of the Board of Directors of
BankUnited Financial and the Board of Directors of the Company; or
(ii) by the Board of Directors of BankUnited Financial or
the Board of Directors of the Company if (i) the OTS has denied approval of the
Merger and such denial has become final and nonappealable or has approved the
Merger subject to conditions that in the judgment of BankUnited Financial would
restrict it or its
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subsidiaries or affiliates in their respective spheres of operations and
business activities after the Effective Time or (ii) the Effective Time does not
occur by March 15, 1998, unless mutually extended by the parties;
(iii) by BankUnited Financial (if it is not in material
breach of any of its obligations hereunder) pursuant to notice in the event of a
breach or failure by the Company that is material in the context of the
transactions contemplated hereby of any representation, warranty, covenant or
agreement by the Company which has not been, or cannot be, cured within 30 days
after written notice of such breach is give to the Company;
(iv) by the Company (if it is not in material breach of
any of its obligations hereunder) pursuant to notice in the event of a breach or
failure by BankUnited Financial that is material in the context of the
transactions contemplated hereby of any representation, warranty, covenant or
agreement by BankUnited Financial contained herein which has not been, or cannot
be, cured within 30 days after written notice of such breach is given to
BankUnited Financial;
(v) by either party if the stockholders of the Company
fail to approve the Merger at the Stockholders' Meeting;
(vi) by the Company if (i) there shall not have been a
material breach of any covenant or agreement on the part of the Company under
the Merger Agreement and (ii) prior to the Effective Time, a corporation,
partnership, person or other entity or group shall have made a bona fide
acquisition proposal that the Company's Board determines in its good faith
judgment and in the exercise of its fiduciary duties, based as to legal matters
on the reasonable advice of legal counsel and as to financial matters on the
reasonable advice of an investment banking firm of national reputation, is more
favorable to the Company's stockholders than the Merger and that the failure to
terminate the Agreement and accept such alternative acquisition proposal would
be inconsistent with the proper exercise of such fiduciary duties; provided,
however, that termination under this clause (iii) shall not be deemed effective
until payment of the termination fee required under the Merger Agreement; or
(vii) If the Closing Net Worth of the Company is less than
$6.5 million, then at BankUnited Financial's option, it may either terminate the
Agreement, or proceed to consummate the Merger by reducing the aggregate Merger
Consideration to be paid to holders of Consumers Common Stock and the amounts to
be paid to holders of Consumers Common Stock options to purchase Consumers
Common Stock by $1.25 for each dollar that the Closing Net Worth is less than
$6.5 million.
In the event of termination, the Merger Agreement will become null and
void, except that certain provisions thereof relating to the payment of expenses
and confidentiality of information exchanged by the parties will survive any
such termination, and any termination resulting from a breach of a covenant,
undertaking, representation or warranty contained in the Merger Agreement will
not relieve any breaching party from liability for any willful breach of any
such covenant, undertaking, representation or warranty giving rise to such
termination.
INDEMNIFICATION
BankUnited Financial has agreed that for three years following the
Effective Time it will indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of the Company and its
subsidiaries ("Indemnified Parties") against all losses, expenses, claims,
judgements, fines, damages or liabilities arising out of any claim, action,
suit, proceeding, or investigation arising out of any action or omission
occurring on or after the Effective Time to the fullest extent permitted under
Florida law.
In addition BankUnited Financial has agreed to provide directors' and
officers' liability insurance coverage for the Indemnified Parties for a three
year period. Such insurance coverage for the Indemnified Parties will be for $1
million and have a $50,000 deductible. If BankUnited Financial consolidates or
merges with another corporation or entity or transfers all or substantially all
of its properties and assets to another person, then provisions will be made
22
<PAGE>
to ensure that the successor to BankUnited Financial assumes the obligations to
indemnify and insure the Company's Indemnified Parties.
PAYMENT OF FEES TO BANKUNITED FINANCIAL
The Company agrees to pay BankUnited Financial a fee equal to $325,000
(the "Termination Fee") plus reasonable out of pocket expenses, not in excess of
$25,000 incurred by BankUnited Financial or any of its affiliates in the event
any of the following events occurs: (i) the Company's Board of Directors
recommends a proposal other than the acquisition of the Company by BankUnited
Financial; (ii) the Company's net worth is less than $6.1 million, permitting
the Company to terminate the Merger Agreement, and within nine months after such
termination the Company enters into an agreement to be acquired by another
company; or (iii) BankUnited Financial terminates the Merger Agreement as a
result of a material breach by the Company, and within nine months after such
termination the Company enters into an agreement to be acquired by another
company. The Termination Fee is payable in the event that the proposal for the
Company to be acquired by a party other than BankUnited Financial has an
aggregate value of $11 million or more. If the Company enters into an agreement
with another party and the aggregate value is between $11 million and
$11,325,000, the Termination Fee shall be limited to the excess over $11
million.
DISSENTERS' RIGHTS
Any holder of Consumers Common Stock who objects to the Merger may
demand payment of the fair value of his or her shares in cash pursuant to the
procedures set forth in Section 607.1320 of the Florida 1989 Business
Corporation Act ("Section 607.1320"). Any holder of Consumers Common Stock
contemplating the exercise of his or her dissenter's rights should carefully
review the provisions of Sections 607.1301, 607.1302 and 607.1320 of the Florida
1989 Business Corporation Act, which are described below and set forth in their
entirety as Appendix D to this Proxy Statement. The following discussion is not
complete and is qualified in its entirety by reference to Sections 607.1301,
607.1302 and 607.1320.
Holders of record of Consumers Common Stock who desire to exercise their
dissenter's rights must satisfy all of the following conditions. A writing
identifying the stockholder and giving notice of his or her intent to demand
cash payment for his or her shares, if the Merger is consummated, must be
delivered to the Company before the stockholder vote on approval of the Merger
Agreement. A Company stockholder wishing to exercise his or her dissenter's
rights must not vote in favor of the Merger Agreement. A holder of Consumers
Common Stock who votes his or her shares of Consumers Common Stock against the
Merger Agreement, by proxy, or otherwise, but who does not exercise his or her
dissenter's rights pursuant to Section 607.1320, will not fulfill the demand for
dissenter's rights required under Section 607.1320.
A stockholder who elects to exercise dissenter's rights must mail or
deliver his or her notice to:
Bernard Janis
Chairman of the Board and Chief Executive Officer
Consumers Bancorp, Inc.
9400 South Dadeland Boulevard
Suite 620
Miami, Florida 33156
Within ten days of the date on which the stockholder vote authorizing
the proposed action was taken, the Company shall give written notice of the
adoption of the Merger Agreement to each stockholder who filed the notice of
intent to demand payment for his or her shares pursuant to Section 607.1320.
Within 20 days after the giving of notice to the dissenting stockholder,
the dissenting stockholder shall file with the Company a notice of his or her
election to dissent, stating his or her name and address, the number of shares
as to which he or she dissents, and a demand for payment of the fair value of
his or her shares. Any stockholder failing to file such election to dissent
within the period set forth shall be bound by the terms of the Merger Agreement.
23
<PAGE>
The dissenting stockholder shall deposit his or her certificates with the
Company simultaneously with the filing of the election to dissent.
Upon the filing of the notice of election to dissent, the dissenting
stockholder shall be entitled only to such payment as provided in Section
607.1320 and shall not be entitled to vote or to exercise any other rights of a
stockholder. A notice of election may be withdrawn in writing by the dissenting
stockholder at any time before an offer is made by the Company to pay for his or
her shares. After such offer, no such notice of election may be withdrawn unless
the Company consents thereto. The right of the dissenting stockholder to be paid
the fair value of his shares shall cease, and he or she shall be reinstated to
have all the rights of a stockholder if (1) his or her demand is withdrawn; (2)
the Merger Agreement is abandoned or rescinded or stockholders revoke the
authority to effect such action; (3) no demand or petition for the determination
of fair value by a court has been made or filed within the time provided in
Section 607.1320; or (4) a court of competent jurisdiction determines that the
dissenting stockholder is not entitled to relief provided by Section 607.1320.
Within ten days after the expiration of the period in which a dissenting
stockholder may file his or her notice of election to dissent, or within ten
days after the Merger is effected, whichever is later (but in no case later than
90 days from the date of the stockholders vote) the Company shall make a written
offer to each dissenting stockholder who has made demand as provided above to
pay an amount the Company estimates to be the fair value of the Company Common
Stock. Such offer shall be accompanied by (1) a balance sheet of the Company, as
of the latest available date and not more than 12 months prior to the making of
such offer and (2) a profit and loss statement of the Company for the 12-month
period ended on the date of such balance sheet. If the Merger has not been
effected, the offer may be made conditional upon the consummation of such
action. Under Section 607.1320 of the Florida Business Corporation Act, fair
value with respect to dissenters' shares means the value of the shares as of the
close of business on the day prior to the date on which the stockholders vote
authorizing the corporate action to which the stockholder is dissenting,
excluding any appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable.
If within 30 days after the making of such offer any stockholder accepts
the same, payment for his or her shares shall be made within 90 days after the
making of such offer or the consummation of the Merger, whichever is later. Upon
payment of the agreed value, the dissenting stockholder shall cease to have any
interest in such shares.
If the Company fails to make such offer within the period specified
above or if it makes the offer and any dissenting stockholder or stockholders
fail to accept the same within the period of 30 days thereafter, then the
Company, within 30 days after receipt of written demand from any dissenting
stockholder given within 60 days after the date on which the Merger was
effected, shall, or at its election at any time within such period of 60 days
may, file an action in the Circuit Court of Dade County, Florida requesting that
the fair value of said shares be determined. If the Company fails to institute
the proceeding as herein provided, any dissenting stockholder may do so in the
name of the Company. All dissenting stockholders, other than stockholders who
have agreed with the Company as to the value of their shares shall be made party
to the proceeding as an action against their shares. The Company shall serve a
copy of the initial pleading in such proceeding upon each dissenting stockholder
who is a resident of Florida in the manner provided by law for the service of a
Summons and Complaint and upon each non-resident dissenting stockholder either
by registered or certified mail and publication or in such manner as permitted
by law. All dissenting stockholders who are proper parties to the proceeding
shall be entitled to judgement against the Company for the amount of the fair
value of their shares. The court may, if it so elects, appoint one or more
persons as appraisers to receive evidence and recommend a decision on the
question of fair value. The Company shall pay each dissenting stockholder the
amount found to be due him or her within ten days after final determination of
the proceedings. At the discretion of the court, the judgement may include a
fair rate of interest to be determined by the court. Upon payment of the
judgement, the dissenting stockholders shall cease to have any interest in such
shares.
The costs and expenses of any court proceedings shall be determined by
the court and shall be assessed against the Company, but all or any part of such
costs and expenses may be apportioned and assessed as the court deems equitable
against any or all of the dissenting stockholders who are parties to the
proceeding, to whom the Company has made an offer to pay for the shares, if the
courts find that the action of said stockholders in failing to
24
<PAGE>
accept such offer was arbitrary, vexatious, or not in good faith. Such expenses
shall include reasonable compensation for, and reasonable expenses of, the
appraisers, but shall exclude the fees and expenses of counsel for, and experts
employed by, any party. If the fair value of the shares, as determined,
materially exceeds the amount which the Company offered to pay thereto, or if no
offer was made, the court in its discretion may award to any stockholder who is
a party to the proceeding such sum as the court determines to be reasonable
compensation to any attorney or expert employed by the stockholder in the
proceeding.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING DISCUSSION OF MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER UNDER PRESENT LAW DOES NOT PURPORT TO BE A COMPLETE ANALYSIS OF ALL
TAX CONSEQUENCES THAT MAY BE RELEVANT TO ANY PARTICULAR STOCKHOLDER. CERTAIN
HOLDERS (INCLUDING, BUT NOT LIMITED TO, INSURANCE COMPANIES, TAX-EXEMPT
ORGANIZATIONS, FINANCIAL INSTITUTIONS, BROKER-DEALERS, EMPLOYEE STOCKHOLDERS,
FOREIGN CORPORATIONS AND PERSONS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED
STATES) MAY BE SUBJECT TO SPECIAL RULES NOT DISCUSSED BELOW. STOCKHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO SPECIFIC TAX CONSEQUENCES TO THEM
OF THE MERGER INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL,
AND OTHER TAX MATTERS.
The Company and BankUnited Financial have received an opinion of
Kronish, Lieb, Weiner & Hellman LLP, special tax counsel to BankUnited
Financial, to the effect that for federal income tax purposes (i) the Merger and
the Subsidiaries Merger will each be a reorganization under Section 368(a) of
the Code, (ii) none of the Company, BankUnited Financial, Consumers Savings Bank
or BankUnited FSB will recognize any taxable gain or loss upon consummation of
the Merger or consummation of the Subsidiaries Merger, and (iii) the Merger will
result in the tax consequences summarized below for Company shareholders who
receive BankUnited Common Stock or BankUnited Common Stock and cash in exchange
for Consumers Common Stock in the Merger. Receipt of substantially the same
opinion of Kronish, Lieb, Weiner & Hellman LLP as of the Effective Time is a
condition to consummation of the Merger. The opinion of Kronish, Lieb, Weiner &
Hellman LLP is based on, and the opinion to be given as of the Effective Time
will be based on, certain customary assumptions and representations regarding,
among other things, the lack of previous dealings between the Company and
BankUnited Financial, the existing and future ownership of the Company and
BankUnited Financial, and the future plans for the Company's business.
As described below, the federal income tax consequences to a shareholder
of the Company will depend on whether the shareholder exchanges shares of
Consumers Common Stock for BankUnited Common Stock, cash, or a combination of
BankUnited Common Stock and cash. The following summary does not discuss all
potentially relevant federal income tax matters, consequences to any
shareholders subject to special tax treatment (for example, tax-exempt
organizations and foreign persons), or consequences to shareholders who acquired
their Consumers Common Stock through the exercise of employee stock options or
otherwise as compensation.
EXCHANGE OF CONSUMERS COMMON STOCK FOR BANKUNITED COMMON STOCK. A holder
of shares of Consumers Common Stock who receives solely BankUnited Common Stock
in exchange for all his shares of Consumers Common Stock will not recognize any
gain or loss on the exchange. If a shareholder receives BankUnited Common Stock
and cash in lieu of a fractional share of BankUnited Common Stock, the
shareholder will recognize taxable gain or loss solely with respect to such
fractional share as if the fractional share had been received and then redeemed
for the cash. A shareholder who exchanges all his shares of Consumers Common
Stock for BankUnited Common Stock will have an aggregate tax basis in the shares
of BankUnited Common Stock (including any fractional share interest) equal to
his tax basis in the shares of Consumers Common Stock exchanged therefor. A
shareholder's holding period for shares of BankUnited Common Stock (including
any fractional share interest) received in the Merger will include his holding
period for the shares of Consumers Common Stock exchanged therefor if they are
held as a capital asset at the Effective Time of the Merger.
25
<PAGE>
EXCHANGE OF CONSUMERS COMMON STOCK FOR CASH AND BANKUNITED COMMON STOCK.
A holder of shares of Consumers Common Stock who receives both cash and shares
of BankUnited Common Stock (including any fractional share interest) in the
Merger will recognize any gain realized up to the amount of cash received
(excluding cash paid in lieu of a fractional share of BankUnited Common Stock)
but will not recognize any loss. If the shareholder holds his Consumers Common
Stock as a capital asset at the time of the Merger, the amount of gain
recognized generally will be treated as capital gain.
However, it is possible that such gain will be treated as dividend
income, depending on a shareholder's individual circumstances. Dividend
treatment would arise if, had a shareholder received shares of BankUnited Common
Stock instead of the cash actually received and had BankUnited Financial then
redeemed those shares for cash, such a redemption would have been taxable as a
dividend (rather than a sale) under Section 302 of the Code. A shareholder
should consult his own tax advisor to determine whether gain recognized on the
exchange of Consumers Common Stock for shares of BankUnited Common Stock and
cash is to be treated as capital gain, as typically will be the case, or a
dividend.
A shareholder's tax basis in the shares of BankUnited Common Stock
(including any fractional share interest) received will equal his tax basis in
his shares of Consumers Common Stock exchanged therefor, reduced by the amount
of cash received (excluding cash paid in lieu of a fractional share of
BankUnited Common Stock) and increased by the amount of gain recognized
(including any gain treated as a dividend). A shareholder's holding period for
shares of BankUnited Common Stock (including any fractional share interest)
received in the Merger will include his holding period for the shares of
Consumers Common Stock exchanged therefor if they are held as capital assets at
the time of the Merger. If a shareholder receives cash in lieu of a fractional
share of BankUnited Common Stock, the shareholder will recognize gain or loss as
if the fractional share had been received and then redeemed for the cash.
EXCHANGE OF CONSUMERS COMMON STOCK FOR CASH. Any shareholder who makes
an election to receive cash for all his shares should be aware that he may, in
fact, receive some BankUnited Common Stock under the proration provisions of the
Agreement. Such a holder should therefore be familiar with the rules, described
above, that apply to a holder who receives cash and some BankUnited Common
Stock.
Generally, a shareholder receiving solely cash in the Merger, or
pursuant to the exercise of dissenters' rights, will recognize gain or loss
equal to the difference between the amount of cash received and his tax basis in
his shares of Consumers Common Stock surrendered. Such gain or loss generally
will be capital gain or loss if the shares of Consumers Common Stock are held as
a capital asset at the time of the Merger. However, it is possible that a
shareholder's receipt of cash in exchange for Consumers Common Stock could be
treated as dividend income if the shareholder actually owns or constructively
owns (under the rules of Section 318 of the Code) shares of BankUnited Common
Stock or constructively owns shares of Consumers Common Stock actually owned by
another person. The cash received by such a shareholder could be treated as a
dividend if the shareholder would have had a dividend (rather than a sale) under
Section 302 of the Code in either of two situations: (1) before the Merger, the
Company redeemed the shareholder's shares of Consumers Common Stock for cash, or
(2) the shareholder received shares of BankUnited Common Stock in exchange for
his Consumers Common Stock (instead of the cash actually received) and
BankUnited Financial then redeemed those shares of BankUnited Common Stock for
cash. A shareholder should consult his own tax advisor to determine whether the
exchange of BankUnited Common Stock for cash in the Merger, or pursuant to the
exercise of dissenters' rights, is to be treated as a sale, as typically will be
the case, or as a dividend.
ACCOUNTING TREATMENT
The Merger will be accounted for as a "purchase" transaction. Under the
purchase method of accounting, the assets and liabilities of the Company will be
recorded on the consolidated financial statements of BankUnited Financial at
their respective fair values at the Effective Date. Any excess of the value of
the consideration paid by BankUnited Financial over the fair value of the
Company's identifiable net assets acquired, less liabilities assumed, will be
recorded as an intangible asset.
26
<PAGE>
- --------------------------------------------------------------------------------
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- --------------------------------------------------------------------------------
Holders of record of the Company's common stock as of the close of
business on __________, 1997 are entitled to one vote for each share then held.
As of __________, 1997 (the "Record Date"), the Company had __________ shares of
Consumers Common Stock issued and outstanding. The presence in person or by
proxy of the outstanding shares of Consumers Common Stock entitled to vote is
necessary to constitute a quorum at the Meeting.
The following table sets forth information with respect to the
beneficial ownership in Consumers Common Stock by persons known by the Company
to own more than 5% of Common Stock, each director individually and all officers
and directors as a group. Other than as set forth below, to the best knowledge
of the Company, no person beneficially owns more than 5% of the outstanding
Consumers Common Stock. Ownership is direct unless otherwise specified.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF SHARES OF
OF BENEFICIAL OWNER (4) BENEFICIAL OWNERSHIP (2) COMMON STOCK OUTSTANDING
- -------------------------- ------------------------ -------------------------
<S> <C> <C>
Bernard Janis (1) 95,197 19.61%
9400 South Dadeland Boulevard
Miami, Florida 33156
Victor Falk 7,597 1.56
Marc J. Fine 1,200 .2
Robert E. Gallaher 737(3) .1
Warren Jones 100 *
Gary Simon 1,200 .2
Jack Langer 3,617 .74
All Officers and Directors 110,248 22.7
as a Group (13 persons)
- -----------------------------
<FN>
(1) Does not include shares beneficially owned by Mr. Janis' daughter over
which shares Mr. Janis disclaims beneficial ownership.
(2) Fractional shares have been rounded to nearest share.
(3) Includes 637 shares owned by the Hedg-Peth & Gallaher Profit Sharing
Trust of which Mr. Gallaher is a trustee and over which he has shared
voting and investment power.
(4) The address of each of the named persons is: 9400 South Dadeland
Boulevard, Suite 620, Miami, Florida 33156.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
PROPOSAL II -- ADJOURNMENT OF SPECIAL MEETING
- --------------------------------------------------------------------------------
The proxy solicited hereby requests approval of the Adjournment
Proposal. The Company may seek an adjournment of the Special Meeting for not
more than 29 days in order to solicit additional votes in favor of the
27
<PAGE>
proposal to approve and adopt the Merger Agreement in the event that such
proposal has not received the requisite affirmative vote of stockholders at the
Special Meeting. If the Company desires to adjourn the Special Meeting, it will
request a motion that the meeting be adjourned for up to 29 days, and no vote
will be taken on the proposal to approve and adopt the Merger Agreement at the
originally scheduled Special Meeting. An adjournment for 29 days or less would
not require either the setting of a new record date or notice of the new meeting
date, so long as the time and place of the new meeting is announced at the
Special Meeting. The proxy solicited hereby, if properly signed and returned to
the Company on or before November __, 1997 and not revoked prior to its use,
will be voted on any motion for adjournment in accordance with the instructions
contained therein. If no contrary instructions are given, each proxy received
will be voted for any motion sought by the Company to adjourn the Special
Meeting. Unless revoked prior to its use, any proxy solicited for the Special
Meeting will continue to be valid for any adjourned meeting, and will be voted
in accordance with the instructions contained therein and, if no contrary
instructions are given, for the proposal to approve and adopt the Merger
Agreement.
Any adjournment will permit the Company to solicit additional proxies
and will permit a greater expression of the views of the Company stockholders
with respect to the Merger. Such an adjournment would be disadvantageous to
stockholders who are against the proposal to approve and adopt the Merger
Agreement because an adjournment will give the Company additional time to
solicit favorable votes and increase the chances of approving such proposal. The
Company has no reason to believe that an adjournment of the Special Meeting will
be necessary at this time.
If a quorum is not present at the Special Meeting, no proposal will be
acted upon and the Board of Directors of the Company will adjourn the Special
Meeting to a later date in order to solicit additional proxies on each of the
proposals being submitted to stockholders.
BECAUSE THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS VOTE FOR THE PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT,
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ADJOURNMENT
PROPOSAL. THE HOLDERS OF A MAJORITY OF THE SHARES VOTING IN PERSON OR BY PROXY
AT THE SPECIAL MEETING WILL BE REQUIRED TO APPROVE THE ADJOURNMENT PROPOSAL.
Any statement contained in a document incorporated by reference shall be
deemed to be modified or superseded for purposes hereof to the extent that a
statement contained herein (or in any other subsequently filed document which
also is incorporated by reference herein) modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed to constitute a part
hereof except as so modified or superseded.
28
<PAGE>
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Special Meeting other than those matters described in this Proxy Statement.
However, if any other matters should properly come before the Special Meeting,
it is intended that the proxies solicited hereby will be voted with respect to
those other matters in accordance with the judgment of the persons voting the
proxies.
By Order of the Board of Directors,
Gary Simon
SECRETARY
Miami, Florida
October __, 1997
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR THE PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT.
29
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER BETWEEN
BANK UNITED FINANCIAL CORPORATION AND CONSUMERS BANCORP, INC.
<PAGE>
AGREEMENT AND PLAN OF MERGER
BETWEEN
BANKUNITED FINANCIAL CORPORATION
AND
CONSUMERS BANCORP, INC.
September 19, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
1.01 Certain Definitions....................................................1
ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
2.01 Merger.................................................................6
2.02 Time and Place of Closing..............................................7
2.03 Effective Time.........................................................7
2.04 Further Actions........................................................7
ARTICLE III
MANNER OF CONVERTING SHARES
3.01 Conversion.............................................................8
ARTICLE IV
EXCHANGE OF SHARES
4.01 Exchange Procedures....................................................9
4.02 Voting and Dividends..................................................10
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CONSUMERS
5.01 Organization, Standing, and Authority.................................11
5.02 Consumers Capital Stock...............................................11
5.03 Subsidiaries..........................................................12
5.04 Authorization of Merger and Related Transactions......................12
5.05 Consumers Financial Statements........................................13
5.06 Absence of Undisclosed Liabilities....................................13
5.07 Tax Matters...........................................................14
5.08 Allowance for Loan Losses.............................................14
5.09 Other Tax and Regulatory Matters......................................15
5.10 Properties............................................................15
5.11 Compliance with Laws..................................................15
5.12 Employee Benefit Plans................................................16
5.13 Commitments and Contracts.............................................17
5.14 Material Contract Defaults............................................18
5.15 Legal Proceedings.....................................................18
5.16 Absence of Certain Changes or Events..................................19
5.17 Reports...............................................................19
5.18 Statements True and Correct...........................................19
5.19 Insurance.............................................................19
5.20 Labor.................................................................20
i
<PAGE>
Page
5.21 Material Interests of Certain Persons.................................20
5.22 Registration Obligations..............................................20
5.23 Brokers and Finders...................................................20
5.24 Takeover Laws.........................................................20
5.25 Environmental Matters.................................................20
5.26 Support of Stockholders...............................................21
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BANKUNITED
6.01 Organization..........................................................21
6.02 BankUnited Capital Stock..............................................22
6.03 Subsidiaries..........................................................22
6.04 Authorization of Merger and Related Transactions......................22
6.05 Financial Statements..................................................23
6.06 Securities Reporting Documents........................................23
6.07 Absence of Undisclosed Liabilities....................................24
6.08 Absence of Certain Changes or Events..................................24
6.09 Compliance with Laws..................................................24
6.10 Allowance for Loan Losses.............................................25
6.11 Statements True and Correct...........................................25
6.12 Capital Stock.........................................................25
6.13 Properties............................................................25
6.14 Tax and Regulatory Matters............................................26
6.15 Litigation............................................................26
6.16 Brokers and Finders...................................................26
6.17 Material Contract Defaults............................................26
6.18 Insurance.............................................................26
ARTICLE VII
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
7.01 Conduct of Business Prior to the Effective Time.......................27
7.02 Forbearances of Consumers.............................................27
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 Access and Information................................................29
8.02 Registration Statement; Regulatory Matters............................30
8.03 Stockholders' Approval................................................30
8.04 Press Releases........................................................31
8.05 Notice of Defaults....................................................31
8.06 Miscellaneous Agreements and Consents; Affiliates Agreements..........31
8.07 Indemnification of Consumers..........................................31
8.08 Falls Branch Sublease.................................................32
8.09 Stock Options.........................................................32
ii
<PAGE>
Page
8.10 Certain Change of Control Matters.....................................33
8.11 Stock Exchange Listing................................................33
8.12 Employee Benefits.....................................................33
8.13 Certain Actions.......................................................34
8.14 Acquisition Proposals.................................................34
8.15 Termination Fee.......................................................35
ARTICLE IX
CONDITIONS
9.01 Conditions to Each Party's Obligation to Effect the Merger............36
9.02 Conditions to Obligations of Consumers to Effect the Merger...........37
9.03 Conditions to Obligations of BankUnited to Effect the Merger..........38
ARTICLE X
TERMINATION
10.01 Termination...........................................................38
10.02 [Intentionally Omitted]...............................................40
10.03 Effect of Termination.................................................40
10.04 Survival of Representations, Warranties and Covenants
Following the Effective Time .....................................40
ARTICLE XI
GENERAL PROVISIONS
11.01 Expenses..............................................................40
11.02 Entire Agreement......................................................40
11.03 Amendments............................................................40
11.04 Waivers...............................................................40
11.05 No Assignment.........................................................41
11.06 Notices...............................................................41
11.07 Specific Performance..................................................41
11.08 Governing Law.........................................................42
11.09 Counterparts..........................................................42
11.10 Captions..............................................................42
11.11 Severability..........................................................42
LIST OF EXHIBITS
Exhibit A Board of Directors of Resulting Institution
Exhibit B Offices of Resulting Institution
Exhibit C Rule 145 Affiliate Agreement Pursuant to Section 8.06
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
September 19, 1997, between BANKUNITED FINANCIAL CORPORATION ("BankUnited"), a
Florida corporation and CONSUMERS BANCORP, INC., a Florida corporation
("Consumers").
WITNESSETH:
WHEREAS, pursuant to the terms and subject to the conditions of this
Agreement, BankUnited will acquire Consumers through the merger of Consumers
with and into BankUnited or by such other means as provided for herein (the
"Merger"); and
WHEREAS, promptly following the Merger, Consumers Savings Bank, a
subsidiary of Consumers, will be merged with and into BankUnited, FSB, a
subsidiary of BankUnited; and
WHEREAS, the respective Boards of Directors of BankUnited and Consumers
have resolved that the transactions described herein are in the best interests
of the parties and their respective stockholders and have approved the
transactions described herein, and
WHEREAS, BankUnited and Consumers desire to provide for certain
undertakings, conditions, representations, warranties and covenants in
connection with the transactions contemplated by this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
representations, warranties and agreements contained herein, the parties hereto
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth below. Capitalized terms not otherwise defined
herein shall have the meanings ascribed in this Article I.
(a) "Acquisition Proposal" shall have the meaning set forth in
Section 8.14.
(b) "Acquisition Transaction" shall have the meaning set forth in
Section 8.14.
(c) "Affiliate" shall mean, with respect to any Person, any Person
that, directly or indirectly, controls or is controlled by or is under
common control with such Person.
(d) "Agreed Value" shall have the meaning set forth in Section
3.01(a)(ii).
(e) "Agreement" shall have the meaning set forth in the
introduction to this Agreement.
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(f) "Allowance" shall have the meaning set forth in Section 5.08.
(g) "Approvals" shall mean any and all permits, consents,
authorizations and approvals of any governmental or regulatory authority
or of any other third person necessary to give effect to the arrangement
contemplated by this Agreement or necessary to consummate the Merger.
(h) "Authorizations" shall have the meaning set forth in Section
5.01.
(i) "BankUnited" shall have the meaning set forth in the
introduction to this Agreement.
(j) "BankUnited Common Stock" shall mean the Series I Class A
Common Stock of BankUnited.
(k) "BankUnited Financial Statements" shall have the meaning set
forth in Section 6.05.
(l) "BankUnited SEC Documents" shall have the meaning set forth in
Section 6.05.
(m) "Closing" shall have the meaning set forth in Section 2.02.
(n) "Closing Net Worth" shall mean Consumers Net Worth, but not
including the filing fees paid to the regulatory authorities or to the
SEC in connection with the approvals for the transaction, payments made
by Consumers at the request of BankUnited to the holders of Consumers
stock options pursuant to Section 8.09 just prior to closing, changes in
the market value of Consumers investment portfolio, or expenses related
to the Falls branch that are requested by BankUnited.
(o) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder.
(p) "Condition" shall have the meaning set forth in Section 5.01.
(q) "Consumers" shall have the meaning set forth in the
introduction to this Agreement.
(r) "Consumers Benefit Plan" shall have the meaning set forth in
Section 5.12(a).
(s) "Consumers Board" shall mean the Board of Directors of
Consumers.
(t) "Consumers Common Stock" shall mean the common stock, par value
$.01 per share, of Consumers.
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(u) "Consumers Disclosure Schedule" shall mean that document
containing the written detailed information prepared by Consumers and
delivered by Consumers to BankUnited which appropriately
cross-references each Section of the Agreement to which that Section of
the Consumers Disclosure Schedule applies.
(v) "Consumers ERISA Plan" shall have the meaning set forth in
Section 5.12(a).
(w) "Consumers Financial Statements" shall have the meaning set
forth in Section 5.05.
(x) "Consumers Net Worth" shall mean the net worth of Consumers as
determined in accordance with GAAP as at the month end prior to the
Effective Time and as adjusted for events occurring between such month
end and the Effective Time which either individually or in the aggregate
have had or immediately will have a Material Adverse Effect on
Consumers.
(y) "Consumers Options" shall have the meaning set forth in Section
8.09(a).
(z) "Consumers Stock Plan" shall have the meaning set forth in
Section 5.12(a).
(aa) "Current Employee" shall have the meaning set forth in Section
8.12(a).
(ab) "Effective Time" shall have the meaning set forth in Section
2.03.
(ac) "Employee" shall mean any current or former employee, officer
or director, independent contractor or retiree of Consumers or its
Subsidiaries and any dependent or spouse thereof.
(ad) "Environmental Law" shall have the meaning set forth in Section
5.25.
(ae) "ERISA" shall have the meaning set forth in Section 5.12(a).
(af) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(ag) "Exchange Agent" shall have the meaning set forth in Section
3.01(c).
(ah) "Expenses" shall have the meaning set forth in Section 8.15(a).
(ai) "Fair Market Value" shall have the meaning set forth in Section
3.01(a)(ii).
(aj) "FDIA" shall mean the Federal Deposit Insurance Act.
(ak) "FDIC" shall mean the Federal Deposit Insurance Corporation.
(al) "GAAP" shall mean generally accepted accounting principles in
the United States.
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(am) "Hired Employees" shall have the meaning set forth in Section
8.12(b)(iii).
(an) "HOLA" shall mean the Home Owners' Loan Act of 1933, as
amended.
(ao) "Indemnified Party" shall have the meaning set forth in Section
8.07.
(ap) "In the Ordinary Course" shall have the meaning set forth in
Section 7.02(a).
(aq) "Liens" shall have the meaning set forth in Section 5.03.
(ar) "Material Adverse Effect" shall have the meaning set forth in
Section 5.01.
(as) "Material Adverse Effect on BankUnited" shall have the meaning
set forth in Section 6.01.
(at) "Merger" shall have the meaning set forth in the recitals to
this Agreement.
(au) "Merger Consideration" shall mean the combination of (i)
BankUnited Common Stock and (ii) cash to be issued by BankUnited in the
Merger, subject to adjustment as provided in Section 10.01(g).
(av) "NASD" shall mean the National Association of Securities
Dealers, Inc.
(aw) "NASDAQ" shall mean The Nasdaq Stock Market, Inc.
(ax) "OTS" shall mean the Office of Thrift Supervision.
(ay) "Person" or "person" shall mean any individual, corporation,
association, partnership, group (as defined in Section 13(d)(3) of the
Exchange Act), joint venture, trust or unincorporated organization, or a
government or any agency or political subdivision thereof.
(az) "Proxy Statement" shall have the meaning set forth in Section
5.18.
(ba) "Registration Statement" shall have the meaning set forth in
Section 5.18
(bb) "Regulatory Agreements" shall have the meaning set forth in
Section 5.11 (b).
(bc) "Regulatory Authorities" shall have the meaning set forth in
Section 5.11 (b).
(bd) "Reports" shall have the meaning set forth in Section 5.17.
(be) "Resulting Institution" shall have the meaning set forth in
Section 2.01(e).
(bf) "SEC" shall mean the Securities and Exchange Commission.
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(bg) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(bh) "Securities Laws" shall have the meaning set forth in Section
5.04(c).
(bi) "Securities Reporting Documents" shall have the meaning set
forth in Section 6.06.
(bj) "Stockholders' Meeting" shall have the meaning set forth in
Section 5.18.
(bk) "Subsidiaries Merger" shall have the meaning set forth in
Section 2.01(e).
(bl) "Subsidiary" shall mean, in the case of either BankUnited or
Consumers, any corporation, association or other entity in which it owns
or controls, directly or indirectly, 25% or more of the outstanding
voting securities or 25% or more of the total equity interest; provided,
however, that the term shall not include any such entity in which such
voting securities or equity interest is owned or controlled in a
fiduciary capacity, without sole voting power, or was acquired in
securing or collecting a debt previously contracted in good faith.
(bm) "Surviving Corporation" shall have the meaning set forth in
Section 2.01(a).
(bn) "Tax" or "Taxes" shall mean all federal, state, local and
foreign taxes, charges, fees, levies, imposts, duties or other
assessments, including, without limitation, income, gross receipts,
excise, employment, sales, use, transfer, license, payroll, franchise,
severance, stamp, occupation, windfall profits, environmental, federal
highway use, commercial rent, customs duties, capital stock, paid up
capital, profits, withholding, Social Security, single business and
unemployment, disability, real property, personal property,
registration, ad valorem, value added, alternative or add-on minimum,
estimated, or other tax or governmental fee of any kind whatsoever,
imposed or required to be withheld by the United States or any state,
local, foreign government or subdivision or agency thereof, including,
without limitation, any interest, penalties or additions thereto.
(bo) "Tax Return" shall mean any report, return, information return
or other information required to be supplied to a taxing authority in
connection with Taxes, including, without limitation, any return of an
affiliated or combined or unitary group that includes Consumers or its
Subsidiaries.
(bp) "Termination Fee" shall have the meaning set forth in Section
8.15(a).
(bq) "Voting Power" shall mean the right to vote generally in the
election of Directors of Consumers through the beneficial ownership of
Consumers Common Stock.
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ARTICLE II
THE MERGER AND RELATED TRANSACTIONS
2.01 MERGER.
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time of the Merger (as defined in Section 2.03 of this
Agreement), Consumers shall be merged with and into BankUnited in
accordance with the provisions of Florida law and with the effect
provided therein. The separate corporate existence of Consumers shall
thereupon cease, and BankUnited shall be the surviving corporation in
the Merger (the "Surviving Corporation").
(b) As of the Effective Time of the Merger, the articles of
incorporation and bylaws of BankUnited shall be the articles of
incorporation and bylaws of the Surviving Corporation.
(c) The directors and officers of BankUnited immediately prior to
the Effective Time shall be the directors and officers of the Surviving
Corporation, in each case, until their respective directors are duly
elected and qualified.
(d) All assets of Consumers as they exist at the Effective Time of
the Merger shall pass to and vest in the Surviving Corporation without
any conveyance or other transfer. The Surviving Corporation shall be
responsible and liable for all of the liabilities of every kind and
description of Consumers as of the Effective Time of the Merger.
(e) Promptly following the Effective Time of the Merger, Consumers
Savings Bank shall be merged with and into BankUnited, FSB (the
"Subsidiaries Merger") in accordance with applicable law and with the
effect provided therein. The separate corporate existence of Consumers
Savings Bank shall thereupon cease, and BankUnited, FSB shall be the
surviving bank in the Subsidiaries Merger (the "Resulting Institution").
(f) Upon the consummation of the Subsidiaries Merger the charter
and bylaws of BankUnited, FSB shall be the charter and bylaws of the
Resulting Institution.
(g) The directors and officers of BankUnited, FSB immediately prior
to the consummation of the Subsidiaries Merger shall be the directors
and officers of the Resulting Institution, in each case, until their
respective successors are duly elected and qualified. The Resulting
Institution shall have directors whose terms shall be for three years.
The directors of the Resulting Institution and their home addresses are
set forth in Exhibit A hereto.
(h) All assets of Consumers Savings Bank as they exist at the time
of consummation of the Subsidiaries Merger shall pass to and vest in the
Resulting Institution without any conveyance or other transfer. The
Resulting Institution shall be responsible and liable for all of the
liabilities of every kind and description of Consumers Savings Bank at
the time of consummation of the Subsidiaries Merger.
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(i) The name of the Resulting Institution shall be BankUnited, FSB.
The location of the home office of the Resulting Institution shall be
255 Alhambra Circle, Coral Gables, Florida 33134. The locations of
offices of the Resulting Institution are set forth in Exhibit B hereto.
(j) Upon the consummation of the Subsidiaries Merger, the savings
account holders of Consumers Savings Bank shall be issued savings
accounts of the Resulting Institution containing substantially the same
terms and conditions as those issued by Consumers Savings Bank.
(k) Notwithstanding any provision to the contrary, BankUnited may
elect to modify the structure of the transactions contemplated hereby so
long as (1) there is no material adverse federal or state income tax
consequences to Consumers and its stockholders or to holders of Options
to purchase Consumers Common Stock, (2) the Merger Consideration is not
reduced in kind or amount and (3) the notification will not delay or
jeopardize the receipt of any regulatory approval.
2.02 TIME AND PLACE OF CLOSING. The closing of the transactions
contemplated hereby (the "Closing") will take place at the offices of Stuzin and
Camner, P. A. in Miami, Florida at 10:00 A.M. on the date that the Effective
Time occurs, or at such other time, and at such other place, as may be mutually
agreed upon by BankUnited and Consumers.
2.03 EFFECTIVE TIME. The effective time of the consummation of the
Merger (the "Effective Time") shall occur on or promptly after the first
business day following the last to occur of (i) the date that is 30 days after
the date of the order of the OTS approving the Merger and the Subsidiaries
Merger, (ii) the effective date of the last order, approval, or exemption of any
other federal or state regulatory agency approving or exempting the Merger and
the Subsidiaries Merger, if such action is required, (iii) the expiration of all
required waiting periods after the filing of all notices to all federal or state
regulatory agencies required for consummation of the Merger and the Subsidiaries
Merger, and (iv) the date on which the stockholders of Consumers approve this
Agreement, in each case as contemplated hereby. The Effective Time may occur at
such other date and time as the parties hereto shall agree to in writing.
2.04 FURTHER ACTIONS. To facilitate the Merger and the acquisition of
Consumers by BankUnited, each of the parties will execute or will cause to be
executed, such additional agreements and documents and take such other actions
as BankUnited determines to be reasonably necessary or appropriate.
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ARTICLE III
MANNER OF CONVERTING SHARES
3.01 CONVERSION.
(a) Subject to the provisions of this Article III and of Article I,
at the Effective Time, by virtue of the Merger and without any action on
the part of the holders thereof, the shares of the constituent
corporations shall be converted as follows:
(i) Each share of capital stock of BankUnited issued and
outstanding immediately prior to the Effective Time shall remain
outstanding as one share of capital stock of the Surviving
Corporation;
(ii) Subject to adjustment as described in subsection (b)
hereof, and Section 10.01(g), each share of Consumers Common Stock
issued and outstanding immediately prior to the Effective Time
shall be converted into and become the right to receive a payment
(the "Merger Consideration") of $21.33 in cash or 2.081 shares of
BankUnited Common Stock (the "Agreed Value"). Each shareholder may
elect to receive his, her or its total Merger Consideration in
cash, BankUnited Common Stock or a combination thereof, provided,
however, that (1) in the aggregate, the cash portion shall not
exceed 55% of the total amount of Merger Consideration, including
any cash paid in respect of fractional shares pursuant to
subsection (b) hereof, (2) the Merger Consideration shall not be
paid on shares as to which dissenters rights have been asserted
pursuant to ss.607.24 of the Florida General Corporation Act, and
(3) if the average fair market value of BankUnited Common Stock, as
determined by using the average closing price of one share of the
security computed for the 15-day trading period on the NASDAQ
system (as reported by THE WALL STREET JOURNAL or, if not reported
thereby, any other authoritative source), ending three days prior
to the Effective Time (the "Fair Market Value" or "FMV"), is
greater than $12.00 per share, the Agreed Value shall be determined
under the following formula:
2.081 X 12 = Agreed Value
----------
FMV
(iii) Each Consumers Option outstanding as of the Effective
Time shall be treated in accordance with the provisions of Section
8.09; and
(iv) At or before the Effective Time, BankUnited shall cause to
be deposited with the Exchange Agent an amount sufficient to pay
the cash portion of the Merger Consideration;
(b) Notwithstanding, any other provision of this Agreement, each
holder of shares of Consumers capital stock exchanged pursuant to the
Merger, who would otherwise have been entitled to receive a fraction of
a share of BankUnited Common Stock (after taking into
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account all certificates delivered by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to such
fractional part of a share of BankUnited Common Stock multiplied by the
Fair Market Value. No such holder will be entitled to dividends, voting
rights or any other rights as a stockholder in respect of any fractional
share.
(c) Notwithstanding the provisions of subsections (a) and (b)
hereof, and subject to adjustment as described in Section 10.01(g), if
the Fair Market Value of BankUnited Common Stock is less than $9.80 per
share, then BankUnited shall pay Consumers, in cash, a total purchase
price, including all amounts paid for Consumers Options pursuant to
Section 8.09, of $10,800,000.
(d) At the Effective Time, the stock transfer books of Consumers
shall be closed as to holders of Consumers capital stock immediately
prior to the Effective Time and no transfer of Consumers capital stock
by any such holder shall thereafter be made or recognized. If, after the
Effective Time, certificates are properly presented in accordance with
Article IV of this Agreement to the exchange agent, which shall be
selected by BankUnited and is deemed reasonably acceptable to Consumers
(the "Exchange Agent"), such certificates shall be canceled and
exchanged for certificates representing the appropriate number of shares
of BankUnited Common Stock and a check representing the amount of cash
selected as part of the Merger Consideration by such holder, or the
amount of cash in lieu of fractional shares, if any, into which the
Consumers capital stock represented thereby was converted in the Merger.
Any other provision of this Agreement notwithstanding, neither
BankUnited nor the Exchange Agent shall be liable to a holder of
Consumers capital stock for any amount paid or property delivered in
good faith to a public official pursuant to any applicable abandoned
property, escheat, or similar law. In the event any certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the person claiming such certificate to be lost, stolen or
destroyed and, if required by the Exchange Agent, the posting by such
person of a bond in such amount as the Exchange Agent may direct as
indemnity against any claim that may be made against it with respect to
such certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed certificate the Merger Consideration
deliverable in respect thereof pursuant to this Agreement.
ARTICLE IV
EXCHANGE OF SHARES
4.01 EXCHANGE PROCEDURES. Promptly after the Effective Time (but in no
event more than three business days following the Effective Time), BankUnited
and Consumers shall cause the Exchange Agent to mail appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of loss
and title to the certificates theretofore representing shares of Consumers
Common Stock shall pass, only upon proper delivery of such certificates to the
Exchange Agent) to the former stockholders of Consumers. After the Effective
Time, each holder of shares of Consumers Common Stock issued and outstanding at
the Effective Time (other than shares as to which dissenters' rights have been
asserted) shall surrender the certificate or certificates theretofore
representing such shares, together with such transmittal materials properly
executed, to the Exchange Agent and
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promptly upon surrender (but in no event more than three business days following
receipt by the Exchange Agent) shall receive in exchange therefor the
consideration provided in Section 3.01 of this Agreement. The certificate or
certificates for Consumers Common Stock so surrendered shall be duly endorsed as
the Exchange Agent may require. To the extent provided by Section 3.01 (c), each
holder of shares of Consumers Common Stock issued and outstanding at the
Effective Time also shall receive, upon surrender of the certificate or
certificates representing such shares, cash in lieu of any fractional shares of
BankUnited Common Stock to which such holder would otherwise be entitled.
BankUnited shall not be obligated to deliver the consideration to which any
former holder of Consumers Common Stock is entitled as a result of the Merger
until such holder surrenders his certificate or certificates representing shares
of Consumers capital stock for exchange as provided in this Article IV or the
Exchange Agent receives documents sufficient, in the discretion of the Exchange
Agent and BankUnited, to evidence the holders ownership interest in Consumers
Common Stock. In addition, certificates surrendered for exchange by any person
constituting an "affiliate" of Consumers for purposes of Rule 145(c) under the
Securities Act shall not be exchanged for certificates representing whole shares
of BankUnited Common Stock until BankUnited has received a written agreement
from such person as provided in Section 8.06. Certificates representing
BankUnited Common Stock issued in the Merger to any person constituting an
"affiliate" of Consumers for purposes of Rule 145(c) under the Securities Act
shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, APPLIES. NO TRANSFER OF SUCH SHARES
SHALL BE VALID OR EFFECTIVE UNTIL THE CONDITIONS OF SUCH RULE
HAVE BEEN FULFILLED."
If any certificate for shares of BankUnited Common Stock, or any check
representing cash, is to be issued in a name other than that in which a
certificate surrendered for exchange is issued, the certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and the
person requesting such exchange shall affix any requisite stock transfer tax
stamps to the certificate surrendered or provide funds for their purchase or
establish to the satisfaction of the Exchange Agent that such taxes are not
payable.
4.02 VOTING AND DIVIDENDS. Former stockholders of record of Consumers
shall be entitled to vote after the Effective Time at any meeting of BankUnited
stockholders the number of whole shares of BankUnited Common Stock into which
their respective shares of Consumers capital stock are converted, regardless of
whether such holders have exchanged their certificates representing Consumers
capital stock for certificates representing BankUnited Common Stock in
accordance with the provisions of this Agreement. Until surrendered for exchange
in accordance with the provisions of Section 4.01, each certificate theretofore
representing shares of Consumers capital stock shall from and after the
Effective Time represent for all purposes only the right to receive shares of
BankUnited Common Stock and cash, as set forth in this Agreement. No dividend or
other distribution payable to the holders of record of BankUnited Common Stock,
at or as of any time after the Effective Time, shall be paid to the holder of
any certificate representing shares of Consumers capital stock issued and
outstanding at the Effective Time until such holder physically surrenders such
certificate for exchange as provided in Section 4.01, promptly after which time
all such dividends or distributions which have been declared and paid following
the Effective Time shall be paid (without interest).
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CONSUMERS
Consumers represents and warrants to BankUnited, subject to such
exceptions and limitations as are set forth below or in the Consumers Disclosure
Schedule, as follows:
5.01 ORGANIZATION, STANDING, AND AUTHORITY. Consumers is a corporation
duly organized validly existing and in good standing under the laws of the State
of Florida. Consumers is duly qualified to do business and in good standing in
all jurisdictions (whether federal, state, local or foreign) where its ownership
or leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be duly qualified would have a material
adverse effect on the financial condition, results of operations or business
(the "Condition") of Consumers and its Subsidiaries on a consolidated basis or
on the ability of Consumers to consummate the transactions contemplated hereby
(a "Material Adverse Effect"). Consumers has all requisite corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its assets, properties and business, except where the failure to have
such power and authority would not have a Material Adverse Effect, and to
execute and deliver this Agreement and perform the terms of this Agreement.
Consumers has in effect all federal, state, local and foreign governmental,
regulatory and other authorizations, permits and licenses (collectively,
"Authorizations") necessary for it to own or lease its properties and assets and
to carry on its business as now conducted, the absence of which, either
individually or in the aggregate, would have a Material Adverse Effect.
5.02 CONSUMERS CAPITAL STOCK.
(a) The authorized capital stock of Consumers consists of
15,000,000 shares of Consumers Common Stock. At March 31, 1997, there
were outstanding 485,509 shares of Consumers Common Stock. All of the
issued and outstanding shares of Consumers capital stock are duly and
validly issued and outstanding and are fully paid and nonassessable.
None of the outstanding shares of the Consumers capital stock has been
issued in the violation of any preemptive rights or any provision of
Consumers' Articles of Incorporation. As of March 31, 1997 Consumers had
reserved 48,264 shares of Consumers Common Stock for issuance under the
Consumers Options, and no other shares of capital stock have been
reserved for any purpose. None of the Consumers Options are incentive
stock options within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended from time to time.
(b) Except as set forth in Section 5.02 of the Consumers Disclosure
Schedule, there are no shares of capital stock, or other equity
securities of Consumers outstanding and no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible
into or exchangeable for, shares of the capital stock of Consumers or
contracts, commitments, understandings or arrangements by which
Consumers is or may be bound to issue any equity security of Consumers
including any additional shares of its capital stock or options,
warrants or rights to purchase or acquire any additional shares of its
capital stock. There are no contracts, commitments, understandings or
arrangements by which Consumers or any of its Subsidiaries
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is or may be bound to transfer any shares of the capital stock of any
Subsidiary of Consumers, except for a transfer to Consumers or any of
its wholly owned Subsidiaries and except as set forth in Section 5.02 of
the Consumers Disclosure Schedule, and there are no agreements,
understandings or commitments relating to the right of Consumers to vote
or to dispose of such shares, other than such as are held in a fiduciary
capacity.
(c) Except as set forth in Section 5.02 of the Consumers Disclosure
Schedule, there are no securities required to be issued by Consumers
under any Consumers Stock Plan, dividend reinvestment plan or similar
plan.
5.03 SUBSIDIARIES. Section 5.03 of the Consumers Disclosure Schedule
contains a complete list of Consumers' Subsidiaries. All of the issued and
outstanding shares of each Subsidiary are owned by Consumers and no equity
securities are or may become required to be issued by reason of any options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of any Subsidiary, and there are no contracts, commitments,
understandings or arrangements by which any Subsidiary is bound to issue
additional shares of its capital stock or options, warrants or rights to
purchase or acquire any additional shares of its capital stock. All of the
shares of capital stock of each Subsidiary are fully paid and nonassessable and
are owned free and clear of any claim, lien, pledge or encumbrance of whatsoever
kind ("Liens"). Each Subsidiary (i) is duly organized, validly existing, and in
good standing under the laws of the jurisdiction in which it is incorporated or
organized, (ii) is duly qualified to do business and in good standing in all
jurisdictions (whether federal, state, local or foreign) where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be so qualified would have a Material
Adverse Effect, (iii) has all requisite corporate power and authority to own or
lease its properties and assets and to carry on its business as now conducted
and (iv) has in effect all Authorizations necessary for it to own or lease its
properties and assets and to carry on its business as now conducted, the absence
of which Authorizations, individually or in the aggregate, would have a Material
Adverse Effect.
5.04 AUTHORIZATION OF MERGER AND RELATED TRANSACTIONS.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof
on the part of Consumers, including approval of the Merger by its Board
of Directors, subject to the approval of the stockholders of Consumers
with respect to the Merger to the extent required by the applicable law.
This Agreement, subject to any requisite regulatory and stockholder
approval hereof with respect to the Merger, represents a valid and
legally binding obligation of Consumers, enforceable against Consumers
in accordance with its terms, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium, and similar laws
of general applicability affecting creditors rights generally and by
general principles of equity (whether applied in a proceeding at law or
in equity).
(b) Except as set forth in Section 5.04 of the Consumers Disclosure
Schedule, neither the execution and delivery of this Agreement by
Consumers, nor the consummation by Consumers of the transactions
contemplated hereby or thereby nor compliance by
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Consumers with any of the provisions hereof or thereof will (i) conflict
with or result in a breach of any provision of Consumers' Articles of
Incorporation or bylaws or (ii) constitute or result in a breach of any
term, condition or provision of, or constitute a default (or an event
which with notice or lapse of time or both would become a default)
under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any Lien
upon, any property or assets of any of Consumers or its Subsidiaries
pursuant to any note, bond, mortgage, indenture, license, agreement,
lease or other instrument or obligation to which any of them is a party
or by which any of them or any of their properties or assets may be
subject and that would individually or in the aggregate have a Material
Adverse Effect, or (iii) subject to receipt of the requisite approvals
referred to in Section 9.01 of this Agreement, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Consumers
or its Subsidiaries or any of their properties or assets.
(c) Other than (i) in connection with complying with the provisions
of applicable state corporate, banking and securities laws, the
Securities Act, the Exchange Act, and the rules and regulations of the
SEC or the OTS promulgated thereunder (the "Securities Laws"), and (ii)
consents, authorizations, approvals or exemptions required from the OTS,
no notice to, filing with, authorization of, exemption by, or consent or
approval of any public body or authority is necessary for the
consummation by Consumers of the Merger and the other transactions
contemplated in this Agreement.
5.05 CONSUMERS FINANCIAL STATEMENTS. Consumers (i) has delivered to
BankUnited copies of the consolidated statements of financial condition of
Consumers and its Subsidiaries as of March 31, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended March 31, 1997, (ii) until the
Closing will deliver to BankUnited promptly upon the filing thereof with the OTS
copies of the consolidated statements of financial condition and related
consolidated statements of operations, stockholders' equity and cash flows
included in any filing with the OTS, and (iii) until the Closing will deliver to
BankUnited within 10 business days of the end of each month copies of monthly
consolidated statements of financial condition and related consolidated
statements of operations (collectively, the "Consumers Financial Statements").
The Consumers Financial Statements (as of the dates thereof and for the periods
covered thereby) (A) are or will be in accordance with the books and records of
Consumers and its Subsidiaries, which are or will be complete and accurate in
all material respects and which have been or will have been maintained in
accordance with good business practices, and (B) present or will present fairly
the consolidated financial position and the consolidated results of operations,
changes in stockholders' equity and cash flows of Consumers and its Subsidiaries
as of the dates and for the periods indicated, in accordance with GAAP
consistently applied except as disclosed, subject in the case of interim
financial statements to normal recurring year-end adjustments and except for the
absence of certain footnote information in the unaudited statements. Consumers
has delivered to BankUnited (i) copies of all management letters prepared by
Deloitte & Touche LLP (and any predecessor thereto) delivered to Consumers since
January 1, 1993 and (ii) copies of audited balance sheets and related statements
of income, changes in stockholders' equity and cash flows for any Subsidiary of
Consumers since January 1, 1993 for which a separate audit has been performed.
5.06 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
Consumers Disclosure Schedule, neither Consumers nor any of its Subsidiaries has
any obligations or liabilities (contingent
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or otherwise) in the aggregate amount of $35,000 or more, except obligations and
liabilities (i) which are fully accrued or reserved against in the consolidated
balance sheet of Consumers and its Subsid iaries as of March 31, 1997 included
in the Consumers Financial Statements or reflected in the notes thereto, or (ii)
which were incurred after March 31, 1997 in the ordinary course of business
consistent with past practice. Except as set forth in Section 5.06 of the
Consumers Disclosure Schedule, since March 31, 1997 neither Consumers nor any of
its Subsidiaries has incurred or paid any obligation or liability which would
have a Material Adverse Effect.
5.07 TAX MATTERS. Except as set forth in Section 5.07 of the Consumers
Disclosure Schedule:
(a) All Tax Returns required to be filed by or on behalf of
Consumers or any of its Subsidiaries have been timely filed, or requests
for extensions have been timely filed, granted and have not expired, for
periods ending on or before March 31, 1997, and all such returns filed
are complete and accurate in all material respects.
(b) There are no audits, examinations, deficiencies or refund
litigation or matters in controversy with respect to any Taxes that
might reasonably be expected individually or in the aggregate to result
in a determination the effect of which would have a Material Adverse
Effect. All Taxes due with respect to completed and settled examinations
or concluded litigation have been paid or adequately reserved for.
(c) Consumers has not executed an extension or waiver of any
statute of limitations on the assessment or collection of any Tax due
that is currently in effect.
(d) Adequate provision for any Taxes due or to become due for
Consumers and any of its Subsidiaries for any period or periods through
and including March 31, 1997, has been made and is reflected on the
March 31, 1997 financial statements included in the Consumers Financial
Statements. Deferred Taxes of Consumers and its Subsidiaries have been
provided for in the Consumers Financial Statements in accordance with
GAAP, applied on a consistent basis.
(e) Consumers and its Subsidiaries have collected and withheld all
Taxes which they have been required to collect or withhold and have
timely submitted all such collected and withheld amounts to the
appropriate authorities. Consumers and its Subsidiaries are in
compliance with the back-up withholding and information reporting
requirements under (1) the Code, and (2) any state, local or foreign
laws, and the rules and regulations, thereunder.
(f) Neither Consumers nor any of its Subsidiaries has made any
payments, is obligated to make any payments, or is a party to any
contract, agreement or other arrangement that could obligate it to make
any payments that would not be deductible under Section 28OG of the
Code.
5.08 ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses (the
"Allowance") shown on the consolidated statement of condition of Consumers and
its Subsidiaries as of March 31, 1997 included in the Consumers Financial
Statements and the Allowance shown on the consolidated
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statement of condition of Consumers and its Subsidiaries, as of dates subsequent
to the execution of this Agreement included in the Consumers Financial
Statements will be, in each case as of the dates thereof, sufficient, in
accordance with generally accepted accounting principles, to provide for losses
relating to or inherent in the loan and lease portfolios (including accrued
interest receivables) of Consumers and its Subsidiaries; other extensions of
credit (including letters of credit and commitments to make loans or extend
credit) by Consumers and its Subsidiaries; and the off balance sheet exposures,
if any, of Consumers and its Subsidiaries.
5.09 OTHER TAX AND REGULATORY MATTERS. Neither Consumers nor any of its
Subsidiaries has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would (i) prevent the transactions contemplated
hereby, including the Merger, from qualifying as a reorganization within the
meaning of Section 368 of the Code, or (ii) materially impede or delay receipt
of any approval referred to in Section 9.01(b).
5.10 PROPERTIES. Except as disclosed in any Reporting Document filed
since March 31, 1997 and prior to the date hereof and except for Liens arising,
in the ordinary course of business after the date hereof, Consumers and its
Subsidiaries have good and marketable title, free and clear of all Liens that
are material to the Condition of Consumers and its Subsidiaries on a
consolidated basis, to all their material properties and assets whether tangible
or intangible, real, personal or mixed, reflected in the Consumers Financial
Statements as being owned by Consumers and its Subsidiaries as of the date
hereof. All buildings, and all fixtures, equipment and other property and assets
which are material to its business on a consolidated basis, held under leases or
subleases by any of Consumers or its Subsidiaries are held under valid
instruments enforceable in accordance with their respective terms, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability affecting creditors rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity). Substantially all of Consumers' and Consumers'
Subsidiaries' equipment in regular use has been well maintained and is in good
serviceable condition, reasonable wear and tear excepted.
5.11 COMPLIANCE WITH LAWS.
(a) Except as set forth in Section 5.11(a) of the Consumers
Disclosure Schedule, each of Consumers and its Subsidiaries is in
compliance with all laws, rules, regulations, policies, guidelines,
reporting and licensing requirements and orders applicable to its
business or to its employees conducting its business, and with its
internal policies and procedures except for failures to comply which
will in the aggregate not result in a Material Adverse Effect.
(b) Except as set forth in Section 5.11(b) of the Consumers
Disclosure Schedule, neither Consumers nor any of its Subsidiaries has
received any notification or communication from any agency or department
of any federal, state or local government, including, the OTS, the FDIC,
and the staffs thereof (collectively, the "Regulatory Authorities") (i)
asserting that any of Consumers or its Subsidiaries is not in
substantial compliance with any of the statutes, regulations, or
ordinances which such agency, department or Regulatory Authority
enforces, or the internal policies and procedures of such company, (ii)
threatening to revoke any license, franchise, permit or governmental
authorization which is material to the Condition of
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Consumers and its Subsidiaries on a consolidated basis, (iii) requiring
or threatening to require Consumers or any of its Subsidiaries, or
indicating that Consumers or any of its Subsidiaries may be required to
enter into a cease and desist order, agreement or memorandum of
understanding or any other agreement restricting or limiting or
purporting to restrict or limit in any manner the operations of
Consumers or any of its Subsidiaries, including, without limitation, any
restriction on the payment of dividends, or (iv) directing, restricting
or limiting, or purporting to direct, restrict or limit in any manner
the operations of Consumers or any of its Subsidiaries, including,
without limitation, any restriction on the payment of dividends (any
such notice, communication, memorandum, agreement or order described in
this sentence herein referred to as a "Regulatory Agreement").
(c) Neither Consumers nor any of its Subsidiaries has consented to
or entered into any Regulatory Agreement or memorandum of understanding.
(d) Neither Consumers nor any of its Subsidiaries is required by
Section 32 of FDIA to give prior notice to a federal banking agency of
the proposed addition of an individual to its board of directors or the
employment of an individual as a senior executive officer.
5.12 EMPLOYEE BENEFIT PLANS.
(a) Consumers has delivered or made available to BankUnited prior
to the execution of this Agreement true and complete copies (or, in the
case of bonus or other incentive plans, summaries thereof and financial
data with respect thereto) of all material pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus or other material incentive
plans, all other material employee programs, arrangements or agreements,
whether arrived at through collective bargaining or otherwise, all
material medical, vision, dental or other health plans, all life
insurance plans and all other material employee benefit plans or fringe
benefit plans, including, without limitation, all "employee benefit
plans" as that term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), currently
adopted by, maintained by, sponsored in whole or in part by, or
contributed to by Consumers or any of its Subsidiaries or any affiliate
thereof for the benefit of any Employee or under which any Employee is
eligible to participate and under which Consumers or any of its
Subsidiaries could have any liability contingent or otherwise
(collectively, the "Consumers Benefit Plans"). Any of the Consumers
Benefit Plans which is an "employee pension benefit plan," as that term
is defined in Section 3(2) of ERISA, is referred to herein as a
"Consumers ERISA Plan." Any of the Consumers Benefit Plans pursuant to
which Consumers is or may become obligated to, or obligated to cause any
of its Subsidiaries or any other Person to, issue, deliver or sell
shares of capital stock of Consumers or any of its Subsidiaries, or
grant, extend or enter into any option, warrant, call, right, commitment
or agreement to issue, deliver or sell shares, or any other interest in
respect of capital stock of Consumers or any of its Subsidiaries, is
referred to herein as a "Consumers Stock Plan." No Consumers Benefit
Plan is or has been a multiemployer plan within the meaning of Section
3(37) of ERISA. Consumers has set forth in Section 5.12 of the Consumers
Disclosure Schedule (i) a list of all of the Consumers Benefit Plans,
(ii) a list of
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Consumers Benefit Plans that are Consumers ERISA Plans, (iii) a list of
Consumers Benefit Plans that are Consumers Stock Plans and (iv) a list
of the number of shares covered by, exercise prices for, and holders of,
all stock options granted and available for grant under the Consumers
Stock Plans.
(b) All Consumers Benefit Plans are in compliance with the
applicable terms of ERISA and the Code and any other applicable laws,
rules and regulations the breach or violation of which could reasonably
be expected to result in a Material Adverse Effect.
(c) All liabilities under any Consumers Benefit Plan are fully
accrued or reserved against in the Consumers Financial Statements in
accordance with GAAP. No Consumers ERISA Plan which is a defined benefit
pension plan has any "unfunded current liability," as that term is
defined in Section 302(d)(8)(A) of ERISA, and the present fair market
value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA,
when determined under actuarial factors that would apply if the plan
terminated in accordance with all applicable legal requirements.
(d) Neither Consumers nor any of its Subsidiaries has any
obligations for retiree health and life benefits under any Consumers
Benefit Plan or otherwise, except as set forth in the Consumers
Disclosure Schedule. There are no restrictions on the rights of
Consumers or its Subsidiaries to amend or terminate any such Consumers
Benefit Plan without incurring any material liability thereunder, except
for such restrictions as would not have a Material Adverse Effect.
(e) Except as set forth in the Consumers Disclosure Schedule.
neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby or thereby will (i)
result in any payment (including, without limitation, severance, golden
parachute or otherwise) becoming due to any Employees under any
Consumers Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any Consumers Benefit Plan or (iii) result in
any acceleration of the time of payment or vesting of any such benefits.
5.13 COMMITMENTS AND CONTRACTS. Except as set forth in the Consumers
Disclosure Schedule, neither Consumers nor any of its Subsidiaries is a party or
subject to, or has amended or waived any rights under, any of the following
(whether written or oral, express or implied):
(a) any employment contract or understanding (including any
understandings or obligations with respect to severance or termination
pay liabilities or fringe benefits) with any Employees, including in any
such person's capacity as a consultant (other than those which are
terminable at will by Consumers or such Subsidiary without cost to
Consumers or any Subsidiary;
(b) any labor contract or agreement with any labor union;
(c) any contract not made in the usual, regular and ordinary course
of business containing non-competition covenants which limit the ability
of Consumers or any of its
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Subsidiaries to compete in any line of business or which involve any
restriction of the geographical area in which Consumers or its
Subsidiaries may carry on its business (other than as may be required by
law or applicable Regulatory Authorities);
(d) any real or personal property lease with annual rental payments
aggregating $5,000 or more;
(e) any employment or other contract requiring the payment of
additional amounts as "change in control" payments as a result of
transactions contemplated by this Agreement;
(f) any agreement with respect to (i) the acquisition of the assets
or stock of another financial institution or (ii) the sale of one or
more bank branches which would require additional payments by Consumers
after the date of this Agreement; or
(g) any outstanding, interest rate exchange or other derivative
contracts.
(h) any commitment or contract to acquire real property; or
(i) any other agreement to which Consumers or any of its
Subsidiaries is a party requiring payment by Consumers or any of its
Subsidiaries in excess of $10,000 during the remainder of the term of
such agreement, except as set forth in Section 5.13 of the Consumers
Disclosure Schedule.
5.14 MATERIAL CONTRACT DEFAULTS. Neither Consumers nor any of its
Subsidiaries is, or has received any notice or has any knowledge that any party
is, in default in any respect under any contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which Consumers or
any of its Subsidiaries is a party or by which Consumers or any of its
Subsidiaries or the assets, business or operations thereof may be bound or
affected or under which it or its respective assets, business or operations
receives benefits, except for those defaults which would not have, individually
or in the aggregate, a Material Adverse Effect; and there has not occurred any
event that with the lapse of time or the giving of notice of both would
constitute such a default. No consent of any party to any contract to which
Consumers or any of its Subsidiaries is a party is required in connection with
the consummation of the transactions contemplated by this Agreement.
5.15 LEGAL PROCEEDINGS. Except as set forth in Section 5.15 of the
Consumers Disclosure Schedule, there are no actions, suits, proceedings or
investigations by Regulatory Authorities or any other Person instituted or
pending or, to the best knowledge of Consumers' management, threatened against
Consumers or any of its Subsidiaries, or against any property, asset, interest
or right of any of them, that might reasonably be expected to result in a
judgment in excess of $25,000 or that might reasonably be expected to threaten
or impede the consummation of the transactions contemplated by this Agreement.
Neither Consumers nor any of its Subsidiaries is a party to any agreement or
instrument or is subject to any charter or other corporate restriction or any
judgment, order, writ, injunction, decree, rule, regulation, code or ordinance
that, individually or in the aggregate, might reasonably be expected to have a
Material Adverse Effect or, might reasonably be expected to threaten or impede
the consummation of the transactions contemplated by this Agreement.
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5.16 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1997, except
as set forth in Section 5.16 of the Consumers Disclosure Schedule, neither
Consumers nor any of its Subsidiaries has (A) incurred or paid any liability or
obligation (contingent or otherwise) which individually or in the aggregate had
or is reasonably likely to have a Material Adverse Effect, (B) suffered any
change in its Condition which individually or in the aggregate is reasonably
likely to have a Material Adverse Effect, (C) failed to operate its business
consistent in all material respects with past practice, or (D) changed any
accounting practices.
5.17 REPORTS. Since July 1, 1992, Consumers and each of its Subsidiaries
have filed on a timely basis all reports and statements, together with all
amendments required to be made with respect thereto (collectively "Reports"),
that they were required to file with (i) the OTS, (ii) the FDIC, and (iii) any
other applicable state securities or banking authorities (except, in the case of
state securities authorities, filings which are not material). No Reports with
respect to periods beginning on or after July 1, 1992, and until the Closing
contained or will contain any information that was false or misleading, with
respect to any material fact or omitted or will omit to state any material fact
necessary in order to make the statements therein not misleading and each such
Report contained or will contain all information required to be stated therein.
5.18 STATEMENTS TRUE AND CORRECT. None of the information supplied or to
be supplied by Consumers for inclusion in the registration statement on Form
S-4, or other appropriate form, to be filed with the SEC by BankUnited under the
Securities Act in connection with the transactions contemplated by this
Agreement (the "Registration Statement"), or the proxy statement to be used by
Consumers in connection with obtaining all required approvals of its
stockholders as contemplated by this Agreement (the "Proxy Statement") will, in
the case of the Proxy Statement, when it is first mailed to the stockholders of
Consumers, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which such statements are made, not misleading, or,
in the case of the Registration Statement, when it becomes effective, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not misleading, or in the
case of the Proxy Statement or any amendment thereof or supplement thereto, at
the time of the meeting of the stockholders of Consumers to be held pursuant to
Section 8.03 of this Agreement, including any adjournments thereof (the
"Stockholders' Meeting"), be false or misleading with respect to any material
fact or omit to state any material fact necessary to correct any statement or
remedy any omission in any earlier communication with respect to the
solicitation of any proxy for the Stockholders' Meeting. All documents that
Consumers is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable law. No representation or warranty of
Consumers contained in this Agreement, and no statement or disclosure contained
in the Consumer Disclosure Schedule contains any untrue statement of a material
fact or omits to state a material fact necessary to make such representations,
warranties, statements or disclosures not misleading.
5.19 INSURANCE. Consumers and each of its Subsidiaries are presently
insured, and during each of the past five calendar years has been insured, for
reasonable amounts against such risks as companies engaged in a similar business
would, in accordance with good business practice, customarily be insured. The
policies of fire, theft, banker's blanket bond, liability (including directors
and officers liability insurance) and other insurance maintained with respect to
the assets or businesses
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of Consumers and its Subsidiaries provide adequate coverage against all pending
or threatened claims, and the fidelity bonds in effect as to which any of
Consumers or any of its Subsidiaries is a named insured are sufficient for their
purpose, except where the failure to have such coverage would not have a
Material Adverse Effect. Such policies are listed and briefly described in
Section 5.19 of the Consumers Disclosure Schedule.
5.20 LABOR. No material work stoppage involving Consumers or its
Subsidiaries is pending or, to the best knowledge of Consumers' management,
threatened. Neither Consumers nor any of its Subsidiaries is involved in, or, to
the best knowledge of Consumers' management threatened with or affected by, any
labor or other employment-related dispute, arbitration, lawsuit or
administrative proceeding which might reasonably be expected to have a Material
Adverse Effect. Employees of Consumers and its Subsidiaries are not represented
by any labor union, and, to the best knowledge of Consumers' management, no
labor union is attempting to organize employees of Consumers or any of its
Subsidiaries.
5.21 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as set forth in the
Consumers Disclosure Schedule, no executive officer or director of Consumers, or
any "associate" (as such term is defined in Rule 14a-1 under the Exchange Act)
of any such executive officer or director, has any material interest in any
material contract or property real or personal, tangible or intangible, used in
or pertaining to the business of Consumers or any of its Subsidiaries.
5.22 REGISTRATION OBLIGATIONS. Neither Consumers nor any of its
Subsidiaries is under any obligation, contingent or otherwise, presently in
effect or which will survive the Merger to register any of its securities under
the Securities Act.
5.23 BROKERS AND FINDERS. Neither Consumers nor any of its Subsidiaries
nor any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees in connection with this Agreement
or the transactions contemplated hereby, except that Consumers has engaged, and
will pay a fee or commission to Gibson & Co, in accordance with the terms of a
letter agreement between that entity and Consumers, a copy of which is set forth
in Section 5.23 of the Consumers Disclosure Schedule.
5.24 TAKEOVER LAWS. Consumers has taken all steps necessary to
irrevocably exempt the transactions contemplated by this Agreement from any
applicable state or federal takeover law and from any applicable charter or
contractual provision containing change of control or anti-takeover provisions.
5.25 ENVIRONMENTAL MATTERS. Except as set forth in Section 5.25 of the
Consumers Disclosure Schedule, neither Consumers, any of its Subsidiaries, nor
any properties owned or operated by Consumers or any of its Subsidiaries or held
as collateral by any of its Subsidiaries has been or is in violation of or
liable under any Environmental Law (as hereinafter defined) and no properties
owned or leased by Consumers or any of its Subsidiaries or held as collateral by
Consumers or any of its Subsidiaries, while owned or leased by Consumers or any
of the Subsidiary or while held as collateral by Consumers or any of its
Subsidiaries, have been or are in violation of any Environmental Law, except for
such violations or liabilities that, individually or in the aggregate, are not
reasonably
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likely to have a Material Adverse Effect. There are no actions, suits or
proceedings, or demands, claims, notices or investigations (including without
limitation notices, demand letters or requests for information from any
environmental agency) instituted or pending, or to the best knowledge of
Consumers' management, threatened relating to the liability of any properties
owned, leased or operated by Consumers or any of its Subsidiaries under any
Environmental Law, except for liabilities or violations that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
"Environmental Law" means any federal, state, local or foreign law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
Regulatory Authority relating to (i) the protection. preservation or restoration
of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of any substance presently listed,
defined, designated or classified as hazardous, toxic radioactive or dangerous,
or otherwise regulated, whether by type or by quantity, including any material
containing any such substance as a component.
5.26 SUPPORT OF STOCKHOLDERS. All members of the Consumers Board of
Directors and any Consumers officers who are stockholders have agreed to
actively support the Merger by, among other things, voting in favor of the
Merger at the Stockholders Meeting and not disposing of any Consumers Common
Stock.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BANKUNITED
BankUnited represents and warrants to Consumers as follows:
6.01 ORGANIZATION, STANDING AND AUTHORITY. BankUnited is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida. BankUnited is duly qualified to do business and in good
standing in all jurisdictions (whether federal, state, local or foreign) where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified and in which the failure to be duly qualified would have a
material adverse effect on the financial condition, results of operations or
business (the "Condition") of BankUnited and its Subsidiaries on a consolidated
basis or on the ability of BankUnited to consummate the transactions
contemplated hereby ("Material Adverse Effect on BankUnited"). BankUnited has
all requisite corporate power and authority to carry on its business as now
conducted and to own, lease and operate its assets, properties and business, and
to execute and deliver this Agreement and perform the terms of this Agreement.
BankUnited is duly registered as a savings and loan holding company under the
HOLA, BankUnited has in effect all Authorizations necessary for it to own or
lease its properties and assets and to carry on its business as now conducted,
the absence of which, either individually or in the aggregate, would have a
Material Adverse Effect on BankUnited.
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6.02 BANKUNITED CAPITAL STOCK. The authorized capital stock of
BankUnited consists of 33,000,000 shares of BankUnited common stock and
10,000,000 shares of BankUnited Preferred Stock. At June 30, 1997, there were
issued and outstanding 8,869,041 shares of BankUnited common stock and 2,998,688
shares of BankUnited Preferred Stock and no other shares of capital stock of any
class. All of the issued and outstanding shares of BankUnited common stock and
BankUnited Preferred Stock are duly and validly issued and outstanding and are
fully paid and nonassessable.
6.03 SUBSIDIARIES. Section 6.03 of the BankUnited Disclosure Schedule
contains a complete list of BankUnited's Subsidiaries. All of the issued and
outstanding shares of each Subsidiary are owned by BankUnited and no equity
securities are or may become required to be issued by reason of any options,
warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of any Subsidiary, and there are no contracts, commitments,
understandings or arrangements by which any Subsidiary is bound to issue
additional shares of its capital stock or options, warrants or rights to
purchase or acquire any additional shares of its capital stock. All of the
shares of capital stock of each Subsidiary are fully paid and nonassessable and
are owned free and clear of any Liens. Each Subsidiary (i) is duly organized,
validly existing, and in good standing under the laws of the jurisdiction in
which it is incorporated or organized, (ii) is duly qualified to do business and
in good standing in all jurisdictions (whether federal, state, local or foreign)
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and in which the failure to be so qualified would
have a Material Adverse Effect on BankUnited, (iii) has all requisite corporate
power and authority to own or lease its properties and assets and to carry on
its business as now conducted and (iv) has in effect all Authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as now conducted, the absence of which Authorizations, individually or
in the aggregate, would have a Material Adverse Effect on BankUnited.
6.04 AUTHORIZATION OF MERGER AND RELATED TRANSACTIONS.
(a) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof
on the part of BankUnited, including approval of the Merger by its Board
of Directors. Stockholder approval is not required. This Agreement,
subject to any requisite regulatory approval hereof with respect to the
Merger and the Subsidiaries Merger, represents a valid and legally
binding obligation of BankUnited, enforceable against BankUnited in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, and similar laws of
general applicability affecting creditors rights generally and by
general principles of equity (whether applied in a proceeding at law or
in equity).
(b) Neither the execution and delivery of this Agreement by
BankUnited, nor the consummation by BankUnited of the transactions
contemplated hereby or thereby nor compliance by BankUnited with any of
the provisions hereof or thereof will (i) conflict with or result in a
breach of any provision of BankUnited's articles of incorporation or
bylaws or (ii) constitute or result in a breach of any term, condition
or provision of, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give rise to
any right of termination, cancellation. or acceleration with respect to,
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or result in the creation of any Lien upon any property or assets of any
of BankUnited or its Subsidiaries pursuant to any note, bond, mortgage,
indenture, license, agreement, lease or other instrument or obligation
to which any of them is a party or by which any of them or any of their
properties or assets may be subject, and that would, in any such event,
have a Material Adverse Effect on BankUnited or the transactions
contemplated hereby or thereby or (iii) subject to receipt of the
requisite approvals referred to in Section 9.01 of this Agreement,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to BankUnited or any of its Subsidiaries or any of their
properties or assets.
(c) Other than (i) in connection with complying with the provisions
of applicable state corporate and securities laws, the Securities Act,
the Exchange Act, and the rules and regulations of the SEC or the OTS
promulgated thereunder (the "Securities Laws"), and (ii) consents,
authorizations, approvals or exemptions required from the OTS, no notice
to, filing with, authorization of, exemption by, or consent or approval
of any public body or authority is necessary for the consummation by
Consumers of the Merger and the other transactions contemplated in this
Agreement.
6.05 FINANCIAL STATEMENTS. BankUnited (i) has delivered to Consumers
copies of the consolidated balance sheets and the related consolidated
statements of income, consolidated statements of changes in shareholders' equity
and consolidated statements of cash flows (including related notes and
schedules) of BankUnited and its consolidated Subsidiaries as of and for the
period ended June 30, 1997 included in the quarterly report filed on Form 10-Q,
and for the period ended September 30, 1996 included on an annual report filed
on Form 10-K, as the case may be, filed by BankUnited pursuant to the Securities
Laws (a "BankUnited SEC Document"), and (ii) until the Closing will deliver to
Consumers promptly upon the filing thereof with the SEC copies of the
consolidated balance sheets and related consolidated statements of income,
consolidated statements of changes in shareholders' equity and consolidated
statements of cash flows (including related notes and schedules) included in any
BankUnited SEC Documents filed subsequent to the execution of this Agreement
(clauses (i) and (ii) collectively, the "BankUnited Financial Statements"). The
BankUnited Financial Statements (as of the dates thereof and for the periods
covered thereby) (A) are or will be in accordance with the books and records of
BankUnited and its Consolidated Subsidiaries, which are or will be complete and
accurate in all material respects and which have been or will have been
maintained in accordance with good business practices, and (B) present or will
present fairly the consolidated financial position and the consolidated results
of operations, changes in shareholders' equity and cash flows of BankUnited and
its Subsidiaries as of the dates and for the periods indicated, in accordance
with GAAP, subject in the case of interim financial statements to normal
recurring year-end adjustments and except for the absence of certain footnote
information in the unaudited statements.
6.06 SECURITIES REPORTING DOCUMENTS. Since October 1, 1992, BankUnited
and each of its Subsidiaries has filed on a timely basis all material reports,
schedules, registration statements and definitive proxy statements ("Securities
Reporting Documents"), together with all amendments required to be made with
respect thereto, that they were required to file with (i) the SEC, including
without limitation, all quarterly reports on Form 10-Q, annual reports on Form
10-K, and current reports of Form 8-K, (ii) the OTS, (iii) the FDIC, (iv) any
other applicable state securities or banking authorities (except in the case of
state securities authorities, filings that were not material), and (v)
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the NASD. No Securities Reporting Document of BankUnited with respect to periods
beginning on or after October 1, 1992 and until the Closing contained or will
contain any information that was false or misleading with respect to any
material fact or omitted or will omit to state any material fact necessary in
order to make the statements therein not misleading and each Securities
Reporting Document of BankUnited contained or will contain all information
required to be stated therein.
6.07 ABSENCE OF UNDISCLOSED LIABILITIES. Neither BankUnited nor any of
its Subsidiaries has any obligations or liabilities (contingent or otherwise) in
the aggregate amount of $630,000 or more, except obligations and liabilities (i)
which are fully accrued or reserved against in the consolidated balance sheet of
BankUnited and its Subsidiaries as of June 30, 1997 included in the BankUnited
Financial Statements or reflected in the notes thereto, or (ii) which were
incurred after June 30, 1997 in the ordinary course of business consistent with
past practice. Since June 30, 1997 neither BankUnited nor any of its
Subsidiaries has incurred or paid any obligation or liability which would have a
Material Adverse Effect on BankUnited.
6.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1997, except
as set forth in Section 6.08 of the BankUnited Disclosure Schedule, neither
BankUnited nor any of its Subsidiaries has (A) incurred or paid any liability or
obligation (contingent or otherwise) which individually or in the aggregate had
or is reasonably likely to have a Material Adverse Effect on BankUnited, (B)
suffered any change in its Condition which individually or in the aggregate is
reasonably likely to have a Material Adverse Effect on BankUnited, (C) failed to
operate its business consistent in all material respects with past practice, or
(D) changed any accounting practices.
6.09 COMPLIANCE WITH LAWS.
(a) Each of BankUnited and its Subsidiaries is in compliance with
all laws, rules, regulations, policies, guidelines, reporting and
licensing requirements and orders applicable to its business or to its
employees conducting its business, and with its internal policies and
procedures except for failures to comply which will in the aggregate not
result in a Material Adverse Effect on BankUnited.
(b) Neither BankUnited nor any of its Subsidiaries has received any
notification or communication from any agency or department of any
federal, state or local government, including, the OTS, the FDIC, and
the staffs thereof (collectively, the "Regulatory Authorities") (i)
asserting that any of BankUnited or its Subsidiaries is not in
substantial compliance with any of the statutes, regulations, or
ordinances which such agency, department or Regulatory Authority
enforces, or the internal policies and procedures of such company, (ii)
threatening to revoke any license, franchise, permit or governmental
authorization which is material to the Condition of BankUnited and its
Subsidiaries on a consolidated basis, (iii) requiring or threatening to
require BankUnited or any of its Subsidiaries, or indicating that
BankUnited or any of its Subsidiaries may be required to enter into a
cease and desist order, agreement or memorandum of understanding or any
other agreement restricting or limiting or purporting to restrict or
limit in any manner the operations of BankUnited or any of its
Subsidiaries, including, without limitation, any restriction on the
payment of dividends, or (iv) directing, restricting or limiting, or
purporting to direct, restrict or limit in any manner the operations of
BankUnited or any of its Subsidiaries, including, without limitation,
any
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restriction on the payment of dividends (any such notice, communication,
memorandum, agreement or order described in this sentence herein
referred to as a "Regulatory Agreement").
(c) Neither BankUnited nor any of its Subsidiaries has consented to
or entered into any Regulatory Agreement or memorandum of understanding.
(d) Neither BankUnited nor any of its Subsidiaries is required by
Section 32 of FDIA to give prior notice to a federal banking agency of
the proposed addition of an individual to its board of directors or the
employment of an individual as a senior executive officer.
6.10 ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses (the
"Allowance") shown on the consolidated statement of condition of BankUnited and
its Subsidiaries as of June 30, 1997 included in the BankUnited Financial
Statements and the Allowance shown on the consolidated statement of condition of
BankUnited and its Subsidiaries, as of dates subsequent to the execution of this
Agreement included in the BankUnited Financial Statements will be, in each case
as of the dates thereof, adequate to provide for losses relating to or inherent
in the loan and lease portfolios (including accrued interest receivables) of
BankUnited and its Subsidiaries; other extensions of credit (including letters
of credit and commitments to make loans or extend credit) by BankUnited and its
Subsidiaries; and the off balance sheet exposures, if any, of BankUnited and its
Subsidiaries.
6.11 STATEMENTS TRUE AND CORRECT. None of the information supplied or to
be supplied by BankUnited for inclusion in the Registration Statement or the
Proxy Statement will, in the case of the Proxy Statement, when it is first
mailed to the stockholders of Consumers contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which such
statements are made, not misleading or, in the case of the Registration
Statement, when it becomes effective, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements therein not misleading, or in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the Stockholders'
Meeting, be false or misleading with respect to any material fact or omit to
state any material fact necessary to correct any statement or remedy any
omission in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meeting. All documents that BankUnited is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable law, including applicable provisions of the
Securities Laws.
6.12 CAPITAL STOCK. At the Effective Time, and upon issuance pursuant to
this Agreement the BankUnited Common Stock issued pursuant to the Merger will be
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights.
6.13 PROPERTIES. Except as disclosed in any Reporting Document filed
since June 30, 1997 and prior to the date hereof and except for Liens arising,
in the ordinary course of business after the date hereof, BankUnited and its
Subsidiaries have good and marketable title, free and clear of all Liens that
are material to the Condition of BankUnited and its Subsidiaries on a
consolidated basis, to all their material properties and assets whether tangible
or intangible, real, personal or mixed,
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reflected in the BankUnited Financial Statements as being owned by BankUnited
and its Subsidiaries as of the date hereof. All buildings, and all fixtures,
equipment and other property and assets which are material to its business on a
consolidated basis, held under leases or subleases by any of BankUnited or its
Subsidiaries are held under valid instruments enforceable in accordance with
their respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws of general applicability
affecting creditors rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity). Substantially all of
BankUnited's and BankUnited's Subsidiaries' equipment in regular use has been
well maintained and is in good serviceable condition, reasonable wear and tear
excepted.
6.14 TAX AND REGULATORY MATTERS. Neither BankUnited nor any of its
Subsidiaries has taken or agreed to take any action or has any knowledge of any
fact or circumstance that would prevent the transactions contemplated hereby,
including the Merger, from qualifying as a reorganization within the meaning of
Section 368 of the Code; or materially impede or delay receipt of any approval
referred to in Section 9.01.
6.15 LITIGATION. There are no judicial proceedings of any kind or nature
pending or, to the knowledge of BankUnited, threatened against BankUnited before
any court or arbitral tribunal or before or by any governmental department,
agency or instrumentality involving the validity of the BankUnited Common Stock,
the transactions contemplated by this Agreement or which would result in a
Material Adverse Effect on BankUnited.
6.16 BROKERS AND FINDERS. Neither BankUnited nor any of its Subsidiaries
nor any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker or finder has acted
directly or indirectly for BankUnited or any of its Subsidiaries in connection
with this Agreement or the transactions contemplated hereby.
6.17 MATERIAL CONTRACT DEFAULTS. Neither BankUnited nor any of its
Subsidiaries is, or has received any notice or has any knowledge that any party
is, in default in any respect under any contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which BankUnited or
any of its Subsidiaries is a party or by which BankUnited or any of its
Subsidiaries or the assets, business or operations thereof may be bound or
affected or under which it or its respective assets, business or operations
receives benefits, except for those defaults which would not have, individually
or in the aggregate, a Material Adverse Effect on BankUnited; and there has not
occurred any event that with the lapse of time or the giving of notice of both
would constitute such a default. No consent of any party to any contract to
which BankUnited or any of its Subsidiaries is a party is required in connection
with the consummation of the transactions contemplated by this Agreement.
6.18 INSURANCE. BankUnited and each of its Subsidiaries are presently
insured, and during each of the past five calendar years has been insured, for
reasonable amounts against such risks as companies engaged in a similar business
would, in accordance with good business practice, customarily be insured. The
policies of fire, theft, banker's blanket bond, liability (including directors
and officers liability insurance) and other insurance maintained with respect to
the assets or businesses of BankUnited and its Subsidiaries provide adequate
coverage against all pending or threatened
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claims, and the fidelity bonds in effet as to which any of BankUnited or any of
its Subsidiaries is a named insured are sufficient for their purpose, except
where the failure to have such coverage would not have a Material Adverse Effect
on BankUnited.
ARTICLE VII
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
7.01 CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME. During the period
from the date of this Agreement to the Effective Time, Consumers shall, and
shall cause each of its Subsidiaries to, (i) conduct its business in the usual,
regular and ordinary course consistent with past practice (other than
transactions made pursuant to contracts in existence on the date hereof and
described in Sections 7.01 or 7.02 of the Consumers Disclosure Schedule) and
(ii) use its best efforts to maintain and preserve intact its business
organization, employees and advantageous business relationships and retain the
services of its officers and key Employees.
7.02 FORBEARANCES OF CONSUMERS. Except as required by law, regulation or
Regulatory Authorities or as disclosed in the Consumers Disclosure Schedule as
delivered to BankUnited prior to the signing of this Agreement, during the
period from the date of this Agreement to the Effective Time, Consumers shall
not, and shall not permit any of its Subsidiaries to, without the prior written
consent of BankUnited (and Consumers shall provide BankUnited with prompt notice
of any events referred to in this Section 7.02 occurring after the date hereof):
(a) other than in the ordinary course of business consistent with
past practice since December 31, 1996 ("In the Ordinary Course"), incur
any indebtedness for borrowed money, including Federal Home Loan Bank
advances (other than (i) Federal Home Loan Bank advances having
maturities of six months or less and (ii) short-term indebtedness
incurred to refinance short-term indebtedness and indebtedness of
Consumers or any of its Subsidiaries to Consumers or any of its
Subsidiaries) (it being understood and agreed that incurrence of
indebtedness In the Ordinary Course shall include, without limitation,
the creation of deposit liabilities, purchases of federal funds, sales
of certificates of deposit and entering into repurchase agreements),
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or
other entity, or make any loan or advance other than In the Ordinary
Course.
(b) adjust, split, combine or reclassify any capital stock; make,
declare or pay any dividend or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares
of its capital stock or any securities or obligations convertible into
or exchangeable for any shares of its capital stock, or grant any stock
appreciation rights or grant any individual, corporation or other entity
any right to acquire any shares of its capital stock; or issue any
additional shares of capital stock, or any securities or obligations
convertible into or exchangeable for any shares of its capital stock.
(c) sell, transfer, mortgage, encumber or otherwise dispose of any
of its properties or assets to any individual, corporation or other
entity, or cancel, release or assign any
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indebtedness to any such person or any claims held by any such person,
except in the ordinary course of business consistent with past practice
or pursuant to contracts or agreements in force at the date of this
Agreement;
(d) make any material investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of
any property or assets of any other individual, corporation or other
entity other than in connection with contracts in existence on the date
hereof and described in Section 7.02 of the Consumers Disclosure
Schedule;
(e) enter into or terminate any contract or agreement involving
annual payments in excess of $20,000 and which cannot be terminated
without penalty upon 30 days notice, or make any change in, or extension
of, any of its leases or contracts involving, annual payments in excess
of $20,000 and which cannot be terminated without penalty upon 30 days
notice;
(f) except as set forth in the Consumers Disclosure Schedule for
severance pay up to $200,000, increase or modify in any manner the
compensation or fringe benefits of any of its Employees or pay any
pension or retirement allowance not required by any existing plan or
agreement to any such Employees, or become a party to, amend or commit
itself to any pension, retirement, profit-sharing or welfare benefit
plan or agreement or employment agreement with or for the benefit of any
Employee other than routine adjustments in compensation and fringe
benefits In the Ordinary Course or accelerate the vesting of any stock
options or other stock-based compensation;
(g) take any action that would prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368 of the
Code.
(h) settle any claim, action or proceeding involving the payment of
money damages in excess of $20,000, except In the Ordinary Course;
(i) amend its articles of incorporation or its bylaws;
(j) fail to maintain any Regulatory Agreements, material licenses
and permits or to file in a timely fashion all federal, state, local and
foreign tax returns;
(k) make any capital expenditures of more than $5,000 individually
or $20,000 in the aggregate;
(1) fail to maintain each Consumers Benefit Plan or timely make all
contributions or accruals required thereunder in accordance with GAAP
applied on a consistent basis;
(m) issue any additional shares of Consumers capital stock, except
pursuant to the exercise of Consumers Options by the holders thereof;
(n) agree to, or make any commitment to, take any of the actions
prohibited by this Section 7.02;
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(o) take any action or enter into any contract or agreement
regarding the Falls branch located at 8941 S.W. 136 Street, Miami,
Florida; or
(p) take any action to collect, nor file any collection or
foreclosure proceedings with respect to, any loans with a principal
balance in excess of five hundred thousand dollars ($500,000).
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.01 ACCESS AND INFORMATION.
(a) During the period from the date of this Agreement through the
Effective Time:
(i) Each of Consumers and BankUnited shall, and shall cause its
Subsidiaries to, afford the other, and their respective
accountants, counsel and other representatives, reasonable access
during normal business hours to their respective properties, books,
contracts, tax returns, commitments and records at any time, and
from time to time, for the purpose of conducting any review or
investigation reasonably related to the Merger and the Subsidiaries
Merger, and each of the parties will cooperate fully with all such
reviews and investigations.
(ii) BankUnited shall provide copies of its Securities
Reporting Documents to Consumers and its advisors for purposes of
any review or report to its Board of Directors in evaluating the
Merger.
(b) During the period from the date of this Agreement through the
Effective Time, Consumers shall furnish to BankUnited (i) all Reports
referred to in Section 5.17 promptly upon the filing thereof, (ii) a
copy of each Tax Return filed by it and (iii) monthly and other interim
financial statements in the form prepared by Consumers for its internal
use. During this period, Consumers also shall notify BankUnited promptly
of any material change in the Condition of Consumers or any of its
Subsidiaries.
(c) During the period from the date of this Agreement through the
Effective Time BankUnited shall promptly furnish to Consumers (i) all
BankUnited Financial Statements referred to in Section 6.05(ii), (ii) a
copy of each Tax Return filed by it and (iii) monthly and other interim
financial statements in the form prepared by BankUnited for its internal
use. During this period BankUnited also shall notify Consumers promptly
of any material change in the Condition of BankUnited or any of its
Subsidiaries.
(d) Notwithstanding the foregoing provisions of this Section 8.01,
no investigation by the parties hereto made heretofore or hereafter
shall affect the representations and warranties of the parties which are
contained herein and each such representation and warranty shall survive
such investigation.
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(e) BankUnited agrees that it will keep confidential for a period
of one year any information furnished to it in connection with the
transactions contemplated by this Agreement which is reasonably
designated as confidential at the time of delivery, except to the extent
that such information (i) was already known to BankUnited and was
received from a source other than Consumers or any of its Subsidiaries,
directors, officers, employees or agents, (ii) thereafter was lawfully
obtained from another source, or (iii) is required to be disclosed by
BankUnited or its agents or representatives to the SEC, the NASD, the
OTS, the FDIC or any other governmental agency or authority, or is
otherwise required to be disclosed by BankUnited or its agents or
representatives by law. BankUnited agrees not to use such information,
and to implement safeguards and procedures that are reasonably designed
to prevent such information from being used, for any purpose other than
in connection with the transactions contemplated by this Agreement.
(f) Consumers shall cooperate, and shall cause its Subsidiaries,
accountants, counsel and other representatives to cooperate, with
BankUnited and its accountants, counsel and other representatives, in
connection with the preparation by BankUnited of any applications and
documents required to obtain the Approvals which cooperation shall
include providing all information, documents and appropriate
representations as may be necessary in connection therewith.
(g) From and after the date of this Agreement, each of BankUnited
and Consumers shall use its reasonable best efforts to satisfy or cause
to be satisfied all conditions to their respective obligations under
this Agreement. While this Agreement is in effect, neither BankUnited
nor Consumers shall take any actions, or omit to take any actions, which
would cause this Agreement to become unenforceable in accordance with
its terms.
8.02 REGISTRATION STATEMENT; REGULATORY MATTERS.
(a) BankUnited shall (i) prepare and file the Registration
Statement with the SEC as soon as is reasonably practicable, (ii) use
its best efforts to cause the Registration Statement to become
effective, and (iii) take any action required to be taken under any
applicable state blue sky or securities laws in connection therewith.
Consumers and its Subsidiaries shall furnish BankUnited with all
information concerning Consumers, its Subsidiaries and the holders of
Consumers Common Stock as BankUnited may reasonably request in
connection with the foregoing.
(b) BankUnited and Consumers shall cooperate and use their
respective best efforts (i) to prepare all documentation, to effect all
filings and to obtain all permits, consents, approvals and
authorizations of all third parties, Regulatory Authorities and other
governmental authorities necessary to consummate the transactions
contemplated by this Agreement, including, without limitation, any such
approvals or authorizations required by the OTS and (ii) to cause the
Merger to be consummated as expeditiously as reasonably practicable.
8.03 STOCKHOLDERS' APPROVAL. Consumers shall use its best efforts to
call a meeting of its stockholders to be held no later than sixty (60) days
after the date this Agreement is executed, for
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the purpose of voting upon the Merger and related matters. The Board of
Directors of Consumers shall submit for approval of its stockholders the matters
to be voted upon at the Stockholders' Meeting, and shall recommend approval of
such matters and use its best efforts (including, without limitation, soliciting
proxies for such approvals) to obtain such stockholder approval. The covenants
under this Section 8.03 are subject to the exercise by the Board of Directors of
Consumers of its fiduciary obligations.
8.04 PRESS RELEASES. Prior to the public dissemination of any press
release or other public disclosure of information about this Agreement, the
Merger or any other transaction contemplated hereby, the parties to this
Agreement shall mutually agree as to the form and substance of such release or
disclosure.
8.05 NOTICE OF DEFAULTS. Consumers and BankUnited shall each promptly
notify the other of (i) any material change in its business, operations or
prospects, (ii) any complaints, investigations or hearings (or communications
indicating that the same may be contemplated) of any Regulatory Authority, (iii)
the institution or the threat of material litigation involving such party, or
(iv) any event or condition that might be reasonably expected to cause any of
its representations, warranties or covenants set forth herein not to be true and
correct in all material respects as of the Effective Time.
8.06 MISCELLANEOUS AGREEMENTS AND CONSENTS; AFFILIATES AGREEMENTS.
Subject to the terms and conditions of this Agreement, each of the parties
hereto agrees to use its respective best efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement as expeditiously as reasonably
practicable, including, without limitation, using their respective best efforts
to lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby. BankUnited and Consumers shall, and shall cause each of their respective
Subsidiaries to, use their best efforts to obtain consents of all third parties
and Regulatory Authorities necessary or, in the reasonable opinion of BankUnited
or Consumers, desirable for the consummation of the transactions contemplated by
this Agreement. In case at any time after the Effective Time any further action
is necessary or desirable to carry out the purposes of this Agreement, the
proper officers and directors of BankUnited shall be deemed to have been granted
authority in the name of Consumers to take all such necessary or desirable
action.
Without limiting the foregoing, Consumers will, at the request of
BankUnited, take such actions, or forbear from taking such actions, as may be
reasonably necessary to identify each of its "affiliates" for purposes of Rule
145 under the Securities Act and to cause each person so identified to deliver
to BankUnited within 10 days after the execution of this Agreement a written
agreement in the form attached hereto as Exhibit C providing that such person
shall not sell, pledge, transfer or otherwise dispose of any capital stock to be
received by such person as part of the Merger Consideration except in compliance
with the applicable provisions of the Securities Act.
8.07 INDEMNIFICATION OF CONSUMERS. For three years after the Effective
Time, BankUnited shall indemnify, defend and hold harmless the present and
former officers, directors, employees and agents of Consumers and its
Subsidiaries (each, an "Indemnified Party") after the
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Effective Time against all losses, expenses, claims, judgments, fines, damages
or liabilities arising out of any claim, action, suit, proceedings or
investigations arising out of any actions or omissions occurring on or prior to
the Effective Time to the full extent then permitted under Florida law.
At or prior to the Effective Time, BankUnited shall purchase $1 million
of directors and officers liability insurance coverage for the Indemnified
Parties with respect to Costs that may be incurred by the Indemnified Parties,
which coverage shall be for a term of three years commencing at the Effective
Time and shall have a deductible of $50,000; provided, however, that in no event
shall BankUnited expend in order to obtain such insurance, an amount in excess
of a total of $15,000 in premiums (the "Maximum Amount") for coverage for such
three year period. If the amount of the total premiums necessary to maintain or
procure such insurance coverage exceeds the Maximum Amount, BankUnited shall use
its reasonable best efforts to maintain the most advantageous policies (in terms
of coverage) of directors and officers insurance for a total three year premium
equal to the Maximum Amount.
If BankUnited or any of its successors or assigns (i) shall consolidate
with or merge into any other corporation or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) shall transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then and in each such case, proper
provision shall be made so that the successors and assigns of the BankUnited
shall assume the obligations set forth in this Section 8.07.
8.08 FALLS BRANCH SUBLEASE. Consumers will use its best efforts to
obtain the consent of NationsBank to the assignment to BankUnited of the
Sublease for the premises.
8.09 STOCK OPTIONS.
(a) Immediately prior to the Effective Time, all rights with
respect to Consumers Common Stock pursuant to stock options ("Consumers
Options") granted by Consumers under the Consumers Benefit Plans, which
are outstanding at the Effective Time, whether or not then exercisable,
shall be cancelled, and each holder of any such option shall be paid for
each such option an amount in cash without interest determined by
multiplying (i) the excess, if any, of $21.33 (subject to adjustment as
provided in Section 10.01(g)) over the applicable exercise price of such
option by (ii) the number of shares of Consumers Common Stock such
holder could have purchased had such holder exercised such option in
full, assuming full vesting of such options, immediately prior to the
Effective Time.
(b) Prior to the Effective Time, Consumers shall (i) obtain any
consents which are necessary from holders of Consumers Options and (ii)
make any amendments to the terms of such option or compensation plans
for arrangements that are necessary to give effect to the transactions
contemplated by Section 8.09(a). Notwithstanding any other provision of
this Section 8.09, payment may be withheld in respect of any Consumers
Option until necessary consents, if any, are obtained.
(c) BankUnited shall be entitled to deduct and withhold from any
Option Payments payable pursuant to this Agreement to any holder of
Consumers Options such
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amounts as BankUnited is required to deduct and withhold with respect to
making such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so deducted and withheld
and paid over to the appropriate taxing authority by BankUnited, such
amounts shall be treated for all purposes of this Agreement as having
been paid to the hold of the Consumers Options in respect of which such
deduction and withholding was made by the Surviving Corporation.
(d) Except as provided herein or as otherwise agreed in writing by
the parties, (i) the provisions of the Consumers Stock Plans and any
other plan, program or arrangement pursuant to which Consumers may, or
may be required to, issue stock or stock-based compensation, shall be
terminated by the Effective Time, and (ii) Consumers shall ensure that
following the Effective Time no holder of Consumers Options or any
participant in any Consumers Stock Plan shall have any right thereunder
to acquire any equity securities of Consumers or any of its
Subsidiaries.
(e) Notwithstanding any other provision of this Section 8.09,
nothing shall restrict the ability of holders of Consumers Options to
exercise such options prior to the Effective Time and upon such exercise
to be treated like any other holder of Consumers Common Stock.
8.10 CERTAIN CHANGE OF CONTROL MATTERS. From and after the date hereof,
Consumers shall take all action necessary so that the execution and delivery of
this Agreement will not increase any benefits otherwise payable under any
Consumers Benefit Plan.
8.11 STOCK EXCHANGE LISTING. BankUnited shall use its best efforts to
list, prior to the Effective Time, on the NASDAQ, upon official notice of
issuance, the shares of BankUnited Common Stock to be issued to holders of
Consumers capital stock in the Merger.
8.12 EMPLOYEE BENEFITS.
(a) Consumers shall provide BankUnited in Section 8.12 of the
Consumers Disclosure Schedule the names of all Consumers Employees
(including full and part-time employees) as of the date of the Consumers
Disclosure Schedule (the "Current Employees"), and, as to each Current
Employee, such Current Employee's date of hire, current compensation,
and current severance benefits.
(b) BankUnited and Consumers agree as follows:
(i) BankUnited shall offer, where possible, employment to the
employees of Consumers and its subsidiary following the Effective Time.
As soon as reasonably practicable after the date of this Agreement
BankUnited and Consumers shall consult with each other in order for
BankUnited in its sole discretion to determine which employees of
Consumers will become employees of BankUnited after the Effective Time.
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(ii) All employees of Consumers and their dependents, who are
enrolled in a group health plan made available by Consumers, who would
lose coverage in the event such employee's employment is terminated by
Consumers or BankUnited in connection with the Merger, shall be eligible
for group health coverage, consistent with the requirements of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA") requirements of
the Internal Revenue Code and ERISA, as in effect on the date of such
termination, for the applicable period set forth in the Internal Revenue
Code. BankUnited agrees that any pre-existing condition, limitation or
exclusion in its health plan shall not apply to Continuing Employees or
their covered dependents who are covered under a group health plan
maintained by Consumers and who then change that coverage to the group
health plan coverage offered by BankUnited at the time that such
Continuing Employees are first given the option to enroll in
BankUnited's group health plan.
(iii) All employees who accept employment with BankUnited as of
the Effective Time ("Hired Employees") shall be eligible to participate
in the employee benefit plans and other fringe benefits of BankUnited,
including sickness benefit days and vacation days, on the same terms and
conditions as those provided from time to time by BankUnited to its
similarly situated officers and employees, giving effect, for
eligibility and vesting of benefits, to years of service with Consumers
as if such service were with BankUnited.
(iv) All employees who are not offered employment by BankUnited
shall be entitled to receive payment in lieu of accrued vacation and
sick days, consistent with Consumers past practice and policy.
8.13 CERTAIN ACTIONS. No party shall take any action which would
adversely affect or delay the ability of either BankUnited or Consumers to
obtain any necessary approvals of any Regulatory Authority or other governmental
authority required for the transactions contemplated hereby or to perform its
covenants and agreements under this Agreement. No party shall take any action
that would prevent or impede the Merger from qualifying as a reorganization
within the meaning of Section 368 of the Code.
8.14 ACQUISITION PROPOSALS. Consumers shall not, and shall use its best
efforts to cause its officers, directors and employees and any investment
banker, attorney, accountant, or other agent retained by it or its Subsidiaries
not to (i) initiate, encourage or solicit, directly or indirectly, the making of
any proposal or offer (an "Acquisition Proposal") to acquire all or any
significant part of the business and properties or capital stock of Consumers or
its Subsidiaries, whether by merger, purchase of securities or assets, tender
offer or otherwise (an "Acquisition Transaction"), or initiate, directly or
indirectly, any contact with any person in an effort to or with a view towards
soliciting any Acquisition Proposal or (ii) participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, an Acquisition Proposal. Notwithstanding the foregoing, Consumers
may (i) furnish or cause to be furnished information subject to a
confidentiality agreement similar to that contained in Section 8.01(e) hereof,
(ii) in response to an Acquisition Proposal, issue a communication to its
security holders of the type contemplated by Rule 14d-9(e) under the Exchange
Act, and (iii) participate in discussions and negotiations directly and through
its representatives with persons who have sought the same if, in each instance
the Consumers Board determines, based as to legal matters on the reasonable
advice of outside legal counsel, that the failure
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to furnish such information or to negotiate with such entity or group or to take
and disclose such position would be inconsistent with the proper exercise of the
fiduciary duties of the Consumers Board. In the event Consumers receives an
Acquisition Proposal or such discussions are sought to be initiated or continued
with Consumers, it shall promptly inform BankUnited as to the material terms
thereof.
8.15 TERMINATION FEE. To compensate BankUnited for entering into this
Agreement, taking action to consummate the transactions hereunder and incurring
the costs and expenses related thereto and other losses and expenses, including
the foregoing by BankUnited of other opportunities, Consumers and BankUnited
agree as follows:
(a) (i) Provided that BankUnited shall not be in material breach of
its obligations under this Agreement (which breach has not been cured
promptly following receipt of written notice thereof by Consumers
specifying in reasonable detail the basis of such alleged breach),
Consumers shall pay to BankUnited the sum of $325,000 (the "Termination
Fee") plus reasonable out-of-pocket expenses, not in excess of $25,000
(including, without limitation, amounts paid or payable to banks and
investment bankers, fees and expenses of counsel, filing fees and
printing expenses) (such expenses are hereinafter referred to as the
"Expenses") incurred by BankUnited or any of its affiliates in
connection with or arising out of transactions contemplated by this
Agreement, regardless of when those expenses are incurred, if this
Agreement is terminated (x) by Consumers: under the provisions of
Section 10.01(f) or as a result of Section 9.02(c), or (y) by BankUnited
under the provisions of 10.01(c), if an Acquisition Event shall occur
after the date hereof and prior to the date that is 9 months after the
date of such termination and as a result of such Acquisition Event
Consumers stockholders shall receive payment in the aggregate that is
valued at more than $11 million (the "Acquisition Price"); provided,
however, that if the Acquisition Price is between $11 million and
$11,325,000, the Termination Fee shall be limited to the excess over $11
million. "Acquisition Event" shall mean any of the following: (i) any
person or group (as defined in Section 13(d)(3) of the Exchange Act),
other than BankUnited, shall have acquired, pursuant to a tender offer,
exchange offer or otherwise, beneficial ownership (including pursuant to
the acquisition of options) of 25% or more of any class of equity
securities of Consumers; (ii) any such person or group shall have
received approval from the OTS to acquire ownership of 25% or more of
any class of equity securities of Consumers; or (iii) Consumers shall
have authorized, recommended, proposed or publicly announced an
intention to authorize, recommend or propose, or shall have entered
into, an agreement with any person (other than BankUnited) to (w) effect
a merger, consolidation, business combination, sale of substantially all
assets, or similar transaction involving Consumers, (x) sell, lease or
otherwise dispose of assets of Consumers representing 25% or more of the
consolidated assets of Consumers, (y) issue, sell or otherwise dispose
of other than by means of a widely disbursed public offering (including
by way of merger, consolidation, share exchange, or any similar
transaction) securities representing 25% or more of any class of equity
securities of Consumers in the aggregate, or (z) have such person effect
a tender offer or exchange offer that if consummated would result in any
person beneficially owning 25% or more of any class of equity securities
of Consumers in the aggregate.
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(ii) If BankUnited terminates this Agreement under the
provisions of Section 10.01(c), and paragraph (a)(i) hereof does not
apply, and BankUnited is not in breach of any representation, warranty
or covenant or other obligation, Consumers shall pay BankUnited, upon
demand, liquidated damages in the amount of $100,000 plus BankUnited's
reasonable out-of-pocket costs incurred in connection with this
transaction, including legal and accounting fees.
(b) Any payment required by paragraph (a) of this Section shall
become payable within five business days after demand therefor by
BankUnited.
(c) Consumers acknowledges that the agreements contained in this
Section 8.15 are an integral part of the transactions contemplated in
this Agreement, and that. without these agreements, BankUnited would not
enter into this Agreement; accordingly, if Consumers fails to promptly
pay the Termination Fee or Expenses or the amounts specified in Section
8.15(a)(ii) when due, Consumers shall in addition thereto pay to
BankUnited all reasonable costs and expenses (including fees and
disbursements of counsel) incurred in collecting such amounts together
with interest on said amounts (or any unpaid portion thereof) from the
date such payment was required to be made until the date such payment is
received by BankUnited at the prime rate of BankUnited, FSB as in effect
from time to time during such period.
8.16 EXPENSES OF CONSUMERS. If Consumers terminates this Agreement
pursuant to Section 10.01(b) or (d) and Consumers is not in breach of any
representation, warranty or covenant or other obligation, BankUnited shall pay
Consumers, upon demand, liquidated damages of $100,000 plus Consumers'
reasonable out-of-pocket costs incurred in connection with this transaction,
including legal and accounting fees (including fees and disbursements incurred
in collecting such amounts).
ARTICLE IX
CONDITIONS
9.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each of BankUnited and Consumers to effect the Merger
and the other transactions contemplated hereby shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) The stockholders of Consumers shall have approved all matters
relating to the Merger required under applicable law at the
Stockholders' Meeting.
(b) This Agreement, the Merger, the Subsidiaries Merger and the
other transactions contemplated hereby shall have been approved by the
OTS and any other Regulatory Authorities whose approval is required for
consummation of the transactions contemplated hereby, which approvals
are subject to no conditions that in the judgment of BankUnited would
restrict it or its Subsidiaries or affiliates in their respective
spheres of operations and business activities after the Effective Time.
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(c) The Registration Statement shall have been declared effective
and shall not be subject to a stop order or any threatened stop order.
(d) Neither BankUnited nor Consumers shall be subject to any order,
decree, or injunction of any court or agency of competent jurisdiction,
directing that the consummation of the transactions contemplated by this
Agreement be prohibited or enjoined.
(e) The shares of BankUnited Common Stock issuable pursuant to the
Merger shall have been authorized for trading on the NASDAQ upon
official notice of issuance.
(f) Holders of no more than ten percent of the outstanding capital
stock of Consumers shall have exercised dissenters' rights under Florida
law.
9.02 CONDITIONS TO OBLIGATIONS OF CONSUMERS TO EFFECT THE MERGER. The
obligations of Consumers to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
(a) The representations and warranties of BankUnited set forth in
Article VI hereof shall be true and correct in all material respects as
of the date of this Agreement and as of the Effective Time (as though
made on and as of the Effective Time except to the extent such
representations and warranties are by their express provisions made as
of a specified date) and Consumers shall have received a certificate
signed by the chairman and chief executive officer, executive vice
president or other duly authorized officer of BankUnited to that effect.
(b) BankUnited shall have performed in all material respects all
obligations required to be performed by it under this Agreement prior to
the Effective Time, and Consumers shall have received a certificate
signed by the chairman and chief executive officer, executive vice
president or other duly authorized officer of BankUnited to that effect.
(c) As of the Effective Time the Closing Net Worth shall be not
less than $6,100,000.
(d) No event, occurrence, or circumstance shall have occurred that
would constitute a Material Adverse Effect as to BankUnited.
(e) Consumers will have received an opinion of counsel mutually
agreed upon by Consumers and BankUnited addressed to Consumers and/or
BankUnited in form reasonably satisfactory to them that for federal
income tax purposes the Merger will qualify as a reorganization under
the provisions of Section 368 of the Code, and that the conversion of
Consumers Common Stock solely into BankUnited Common Stock will be
treated as a tax free exchange.
(f) The fair market value of BankUnited Common Stock shall not be
less than $8.50, as determined by using the average of the mean of the
closing prices of such stock as
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quoted on the NASDAQ system on each of the ten (10) trading days
immediately preceding the Effective Time.
9.03 CONDITIONS TO OBLIGATIONS OF BANKUNITED TO EFFECT THE MERGER. The
obligations of BankUnited to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
(a) The representations and warranties of Consumers set forth in
Article V hereof shall be true and correct in all material respects as
of the date of this Agreement as of the Effective Time (as though made
on and as of the Effective Time except to the extent such
representations and warranties are by their express provisions made as
of a specified date) and BankUnited shall have received a certificate
signed by the chairman or the chief executive officer or other duly
authorized officer of Consumers to that effect.
(b) Consumers shall have performed in all material respects all
obligations required to be performed by it under this Agreement prior to
the Effective Time, and BankUnited shall have received a certificate
signed by the chairman or the chief executive officer or other duly
authorized officer of Consumers to that effect.
(c) As of the Effective Time the Closing Net Worth shall be not
less than $6,500,000.
(d) BankUnited will receive an opinion of counsel for Consumers
addressed to BankUnited and in form satisfactory to it as to the
validity of the approvals of the Merger by the directors and
stockholders of Consumers.
(e) No event, occurrence, or circumstance shall have occurred that
would constitute a Material Adverse Effect as to Consumers.
(f) BankUnited will receive an opinion of counsel mutually agreed
upon by BankUnited and Consumers addressed to BankUnited and/or
Consumers in form reasonably satisfactory to them that for federal
income tax purposes the Merger will qualify as a reorganization under
the provisions of Section 368 of the Code, that the conversion of
Consumers Common Stock solely into BankUnited Common Stock will be a tax
free exchange, that the BankUnited Common Stock to be issued in the
Merger has been registered with the SEC, and that to their best
knowledge such registration is in full force and effect and not subject
to a stop order.
ARTICLE X
TERMINATION
10.01 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement, the Merger and
the other transactions contemplated
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hereby by the stockholders of BankUnited and Consumers or both, this Agreement
may be terminated and the Merger abandoned at any time prior to the Effective
Time:
(a) by mutual consent of the Board of Directors of BankUnited and
the Board of Directors of Consumers; or
(b) by the Board of Directors of BankUnited or the Board of
Directors of Consumers if (i) the OTS has denied approval of the Merger
and such denial has become final and nonappealable or has approved the
Merger subject to conditions that in the judgment of BankUnited would
restrict it or its Subsidiaries or affiliates in their respective
spheres of operations and business activities after the Effective Time
or (ii) the Effective Time does not occur by March 15, 1998, unless
mutually extended by the parties; or
(c) by BankUnited (if it is not in material breach of any of its
obligations hereunder) pursuant to notice in the event of a breach or
failure by Consumers that is material in the context of the transactions
contemplated hereby of any representation, warranty, covenant or
agreement by Consumers contained herein which has not been, or cannot
be, cured within 30 days after written notice of such breach is given to
Consumers; or
(d) by Consumers (if it is not in material breach of any of its
obligations hereunder) pursuant to notice in the event of a breach or
failure by BankUnited that is material in the context of the
transactions contemplated hereby of any representation, warranty,
covenant or agreement by BankUnited contained herein which has not been,
or cannot be, cured within 30 days after written notice of such breach
is given to BankUnited; or
(e) by either party if the stockholders of Consumers fail to
approve the Merger at the Stockholder's Meeting; or
(f) by Consumers if (i) there shall not have been a material breach
of any covenant or agreement on the part of Consumers under this
Agreement and (ii) prior to the Effective Time, a corporation,
partnership, person or other entity or group shall have made a bona fide
Acquisition Proposal that the Consumers Board determines in its good
faith judgment and in the exercise of its fiduciary duties, based as to
legal matters on the reasonable advice of legal counsel and as to
financial matters on the reasonable advice of an investment banking firm
of national reputation, is more favorable to the Consumers stockholders
than the Merger and that the failure to terminate this Agreement and
accept such alternative Acquisition Proposal would be inconsistent with
the proper exercise of such fiduciary duties; provided, however, that
termination under this clause (ii) shall not be deemed effective until
payment of the Termination Fee required by Section 8.15.
(g) If the Closing Net Worth is less than $6,500,000, then
at BankUnited's option, it may either terminate this Agreement, or
proceed to consummate the Merger by reducing the aggregate Merger
Consideration to be paid to holders of Consumers stock and the amounts
to be paid to holders of Consumers stock options by $1.25 for each
dollar that the Closing Net Worth is less than $6,500,000.
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10.02 [INTENTIONALLY OMITTED.]
10.03 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Sections 10.01 or 10.02, this
Agreement shall become void and have no effect, except that (i) the provisions
of Section 8.01(e), 8.15, 10.03 and Section 11.01 shall survive any such
termination and abandonment, and (ii) no party shall be relieved or released
from any liability arising out of an intentional breach of any provision of this
Agreement.
10.04 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS FOLLOWING
THE EFFECTIVE TIME. The parties hereto agree that none of the respective
representations, warranties, obligations, covenants and agreements of the
parties contained in this Agreement except for Sections 8.01(e), 8.15 and 8.16,
or in any certificate, document or instrument delivered in connection herewith,
shall survive the Effective Time, regardless of any investigation made by the
parties hereto.
ARTICLE XI
GENERAL PROVISIONS
11.01 EXPENSES. Unless otherwise agreed by the parties in writing, each
party hereto shall bear its own expenses incident to preparing, entering into
and carrying out this Agreement and to consummating the Merger, except that
BankUnited and Consumers shall divide equally all printing expenses and filing
fees incurred in connection with this Agreement, the Registration Statement and
the Proxy Statement.
11.02 ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
this Agreement contains the entire agreement between the parties hereto with
respect to the transactions contemplated hereunder and thereunder, and such
agreements supersede all prior arrangements or understandings with respect
thereto, written or oral. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors. Other than as expressly set forth in this Agreement, nothing in this
Agreement, expressed or implied, is intended to confer upon any individual,
corporation or other entity, other than BankUnited, Consumers and the Resulting
Institution, or their respective successors, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
11.03 AMENDMENTS. To the extent permitted by law, this Agreement may be
amended by a subsequent writing signed by each of BankUnited and Consumers;
provided, however, that the provisions hereof relating to the manner or basis in
which shares of Consumers capital stock will be exchanged for the Merger
Consideration shall not be amended after the Stockholders' Meeting without any
requisite approval of the holders of the issued and outstanding shares of
Consumers capital stock entitled to vote thereon.
11.04 WAIVERS. Prior to or at the Effective Time, each of BankUnited and
Consumers shall have the right to waive any default in the performance of any
term of this Agreement by the other, to waive or extend the time for the
compliance or fulfillment by the other of any and all of the
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other's obligations under this Agreement and to waive any or all of the
conditions precedent to its obligations under this Agreement, except any
condition which, if not satisfied, would result in the violation of any law or
applicable governmental regulation.
11.05 NO ASSIGNMENT. None of the parties hereto may assign any of its
rights or delegate any of its obligations under this Agreement to any other
person or entity. Any such purported assignment or delegation that is made
without the prior written consent of the other parties to this Agreement shall
be void and of no effect.
11.06 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand
(including overnight delivery service), or by registered or certified mail,
postage prepaid to the persons at the addresses set forth below (or at such
other address as may be provided hereunder), and shall be deemed to have been
delivered as of the date so delivered:
Consumers: Consumers Bancorp, Inc.
9400 South Dadeland Boulevard - Suite 620
Miami, Florida 33156
Attention: Bernard Janis, Chairman of the Board
and Chief Executive Officer
Copy to Counsel: Luse Lehman Gorman Pomerenk & Schick
5335 Wisconsin Avenue, N.W. - Suite 400
Washington, DC 20015
Attention: Alan Schick, Esq.
BankUnited: BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
Attention: Alfred R. Camner, Chairman of the Board
and President
Samuel A. Milne, Chief Financial
Officer
Copy to Counsel: Stuzin and Camner, P.A.
550 Biltmore Way, Suite 700
Coral Gables, Florida 33134
Attention: Marsha D. Bilzin, Esq.
11.07 SPECIFIC PERFORMANCE. The parties hereby acknowledge and agree
that the failure of either party to fulfill any of its covenants and agreements
hereunder, including the failure to take all such actions as are necessary on
its part to cause the consummation of the Merger, will cause irreparable injury
for which damages, even if available, will not be an adequate remedy.
Accordingly,
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each party hereby consents to the issuance of injunctive relief by any court of
competent jurisdiction to compel performance of the other party's obligations or
any arbitration award hereunder and to the granting by any such court of the
remedy of the specific performance hereunder.
11.08 GOVERNING LAW. This Agreement shall in all respects be governed by
and construed in accordance with the laws of the State of Florida.
11.09 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.
11.10 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.11 SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement, or in any other instrument referred to herein,
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
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IN WITNESS WHEREOF, BankUnited and Consumers have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
BANKUNITED FINANCIAL CORPORATION
By:
-----------------------------
Alfred R. Camner
Chairman of the Board and President
CONSUMERS BANCORP, INC.
By:
-----------------------------
Bernard Janis
Chairman of the Board and
Chief Executive Officer
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APPENDIX B
SECTIONS 607.1301, 607.1302 AND 607.1320 OF THE
FLORIDA 1989 BUSINESS CORPORATION ACT
<PAGE>
7-1-94 FLORIDA 1989 BUSINESS CORPORATION ACT CORP.--165
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607.1301 DISSENTER'S RIGHTS; DEFINITIONS.--The following definitions
apply to ss. 607.1302 and 607.132:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the value of
the shares as of the close of business on the day prior to the shareholders'
authorization date, excluding any appreciation or depreciation in anticipation
of the corporate action unless exclusion would be inequitable.
(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date on which
the corporation received written consents without a meeting from the requisite
number of shareholders in order to authorize the action, or, in the case of a
merger pursuant to s. 607.1104, the day prior to the date on which a copy of the
plan of merger was mailed to each shareholder of record of the subsidiary
corporation.
607.1302 RIGHT OF SHAREHOLDERS TO DISSENT.--(1) Any shareholder has the
right to dissent from, and obtain payment of the fair value of his shares in the
event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party:
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its parent under
s. 607.1104, and the shareholders would have been entitled to vote on action
taken, except for the applicability of s. 607.1104;
(b) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation, other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange
pursuant to s. 607.1202, including a sale in dissolution but not including a
sale pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to the
shareholders within 1 year after the date of sale;
(c) As provided in s. 607.0902(11), the approval of a control-share
acquisition;
(d) Consummation of a plan of share exchange to which the corporation is a
party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the shareholder is
entitled to vote on the amendment and if such amendment would adversely affect
such shareholder by:
1. Altering or abolishing any preemptive rights attached to any of his
shares;
2. Altering or abolishing the voting rights pertaining to any of his shares,
except as such rights may be affected by the voting rights of new shares then
being authorized of any existing of new class or series of shares;
3. Effecting an exchange, cancellation, or reclassification of any of his
shares, when such exchange, cancellation, or reclassification would alter or
abolish his voting rights or alter his percentage of equity in the corporation,
or effecting a reduction or cancellation of accrued dividends or other
arrearages in respect to such shares;
4. Reducing the stated redemption price of any of his redeemable shares,
altering or abolishing any provision relating to any sinking fund for the
redemption or purchase of any of his shares, or making any of his shares subject
to redemption when they are not otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of any of his
preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of his preferred shares;
or
7. Reducing any stated preferential amount payable on any of his preferred
shares upon voluntary or involuntary liquidation; or
(f) Any corporation action taken, to the extent the articles of
incorporation provide that a voting of nonvoting shareholder is entitled to
dissent and obtain payment for his shares.
(2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his shares which are
adversely affected by the amendment.
<PAGE>
7-1-94 FLORIDA 1989 BUSINESS CORPORATION ACT CORP.--166
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(3) A shareholder may dissent as to less than all the shares registered in
his name. In that event, his rights shall be determined as if the shares as to
which he has dissented and his other shares were registered in the names of
different shareholders.
(4) Unless the articles of incorporation otherwise provide, this section
does not apply with respect to a plan of merger or share exchange or a proposed
sale or exchange of property, to the holders of shares of any class or series
which, on the record date fixed to determine the shareholders entitled to vote
at the meeting of shareholders at which such action is to be acted upon or to
consent to any such action without a meeting, were either registered on a
national securities exchange OR DESIGNATED AS A NATIONAL MARKET SYSTEM SECURITY
ON AN INTERDEALER QUOTATION SYSTEM BY THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC., or held of record by not fewer than 2,000 shareholders.
(5) A shareholder entitled to dissent and obtain payment for his shares
under this section may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation. (Last amended by Ch. 94-327, L. '94, eff. 6-2-
94.)
607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.--(1)(a) If a proposed
corporate action creating dissenters' rights under s. 607.1320 is submitted to a
vote at a shareholders' meeting, the meeting notice shall state that
shareholders are or may be entitled to asset dissenters' rights and be
accompanied by a copy of ss. 607.1301, 607.1302, and 607.1320. A shareholder who
wishes to assert dissenters' rights shall:
1. Deliver to the corporation before the vote is taken written notice of his
intent to demand payment for his shares if the proposed action is effectuated,
and
2. Not vote his shares in favor of the proposed action. A proxy or vote
against the proposed action does not constitute such a notice of intent to
demand payment.
(b) If proposed corporate action creating dissenters' rights under s.
607.1302 is effectuated by written consent without a meeting, the corporation
shall deliver a copy of ss. 607.1301, 607.1302, and 607.1320 to each shareholder
simultaneously with any request for his written consent, or, of such a request
is not made, within 10 days after the date the corporation received written
consents without a meeting from the requisite number of shareholders necessary
to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his shares pursuant to paragraph
(1)(a) or, in the case of action authorized by written consent, to each
shareholder, excepting any who voted for, or consented in writing to, the
proposed action.
(3) Within 20 days after the giving of notice to him, any shareholder who
elects to dissent shall file with the corporation a notice of such election,
stating his name and address, the number, classes, and series of shares as to
which he dissents, and a demand for payment of the fair value of his shares. Any
shareholder failing to file such election to dissent within the period set forth
shall be bound by the terms of the proposed corporate action. Any shareholder
filing an election to dissent shall deposit his certificates for certificated
shares with the corporation simultaneously with the filing of the election to
dissent. The corporation may restrict the transfer of uncertificated shares from
the date the shareholder's election to dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall not
be entitled to vote or to exercise any other rights of a shareholder. A notice
of election may be withdrawn in writing by the shareholder at any time before an
offer is made by the corporation, as provided in subsection (5), to pay for his
shares. After such offer, no such notice of election may be withdrawn unless the
corporation consents thereto. However, the right of such shareholder to be paid
the fair value of his shares shall cease, and he shall be reinstated to have all
his rights as a shareholder as of the filing of his notice of election,
including any intervening preemptive rights and the right to payment of any
intervening dividend or other distribution or, if any such rights have expired
or any such dividend or distribution other than in cash has been completed, in
lieu thereof, at the election of the corporation, the fair value thereof in cash
as determined by the board as of the time of such expiration or completion,
<PAGE>
7-1-94 FLORIDA 1989 BUSINESS CORPORATION ACT CORP.--167
- --------------------------------------------------------------------------------
but without prejudice otherwise to any corporate proceedings that may have been
taken in the interim, if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a court has
been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such shareholder is
not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided in
this section to pay an amount the corporation estimates to be the fair value for
such shares. If the corporate action has not been consummated before the
expiration of the 90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such action. Such notice
and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which the dissenting
shareholder holds, as of the latest available date and not more than 12 months
prior to the making of such offer; and
(b) A profit and loss statement of such corporation for the 12-month period
ended on the date of such balance sheet or, if the corporation was not in
existence throughout such 12-month period, for the portion thereof during which
it was in existence.
(6) If within 30 days after the making of such offer any shareholder accepts
the same, payment for his shares shall be made within 90 days after the making
of such offer or the consummation of the proposed action, whichever is later.
Upon payment of the agreed value, the dissenting shareholder shall cease to have
any interest in such shares.
(7) If the corporation fails to make such offer within the period specified
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30 days
thereafter, then the corporation, within 30 days after receipt of written demand
from any dissenting shareholder given within 60 days after the date on which
such corporate action was effected, shall, or at its election at any time within
such period of 60 days may, file an action in any court of competent
jurisdiction in the county in this state where the registered office of the
corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting shareholder,
as to whom the corporation requests the court to make such determination, is
entitled to receive payment for his shares. If the corporation fails to
institute the proceeding as herein provided, any dissenting shareholder may do
so in the name of the corporation. All dissenting shareholders (whether or not
residents of this state), other than shareholders who have agreed with the
corporation as to the value of their shares, shall be made parties to the
proceeding as an action against their shares. The corporation shall serve a copy
of the initial pleading in such proceeding upon each dissenting shareholder who
is a resident of this state in the manner provided by law for the service of a
summons and complaint and upon each nonresident dissenting shareholder either by
registered or certified mail and publication or in such other manner as is
permitted by law. The jurisdiction of the court is plenary and exclusive. All
shareholders who are proper parties to the proceeding are entitled to judgment
against the corporation for the amount of the fair value of their shares. The
court may, if it so elects, appoint one or more persons as appraisers to receive
evidence and recommend a decision on the question of fair value. The appraisers
shall have such power and authority as is specified in the order of their
appointment or an amendment thereof. The corporation shall pay each dissenting
shareholder the amount found to be due him within 10 days after final
determination of the proceedings. Upon payment of the judgment, the dissenting
shareholder shall cease to have any interest in such shares.
(8) The judgment may, at the discretion of the court, include a fair rate of
interest, to be determined by the court.
<PAGE>
7-1-94 FLORIDA 1989 BUSINESS CORPORATION ACT CORP.--168
- --------------------------------------------------------------------------------
(9) The costs and expenses of any such proceeding shall be determined by the
court and shall be assessed against the corporation, but all or any part of such
costs and expenses may be apportioned and assessed as the court deems equitable
against any or all of the dissenting shareholders who are parties to the
proceeding, to whom the corporation has made an offer to pay for the shares, if
the court finds that the action of such shareholders in failing to accept such
offer was arbitrary, vexatious, or not in good faith. Such expenses shall
include reasonable compensation for, and reasonable expenses of, the appraisers,
but shall exclude the fees and expenses of counsel for, and experts employed by,
any party. If the fair value of the shares, as determined, materially exceeds
the amount which the corporation offered to pay therefor or if no offer was
made, the court in its discretion may award to any shareholder who is a party to
the proceeding such sum as the court determines to be reasonable compensation to
any attorney or expert employed by the shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation as
AUTHORIZED BUT UNISSUED SHARES OF THE CORPORATION, except that, in the case of a
merger, they may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the shares of such
dissenting shareholders would have been converted had they assented to the
merger shall have the status of authorized but unissued shares of the surviving
corporation. (Last amended by Ch. 93-281, L. '93, eff. 5-15-93.)
<PAGE>
APPENDIX C
AUDITED FINANCIAL STATEMENTS OF CONSUMERS BANCORP, INC.
<PAGE>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
----
INDEPENDENT AUDITORS' REPORT F-2
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Statements of Financial Condition
as of March 31, 1997 and 1996 F-3
Consolidated Statements of Operations
for the years ended March 31, 1997, 1996 and 1995 F-4
Consolidated Statements of Stockholders' Equity
for the years ended March 31, 1997, 1996 and 1995 F-5
Consolidated Statements of Cash Flows
for the years ended March 31, 1997, 1996 and 1995 F-6
Notes to Consolidated Financial Statements F-7
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Consumers Bancorp, Inc.:
We have audited the accompanying consolidated statements of financial condition
of Consumers Bancorp, Inc. (the "Company") and subsidiaries as of March 31, 1997
and 1996, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the three years in the period ended March 31,
1997. These consolidated financial statements are the responsibility of the
Company'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 referred to above present
fairly, in all material respects, the financial position of the Company and
subsidiaries as of March 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
1997, in conformity with generally accepted accounting principles.
May 9, 1997
F-2
<PAGE>
<TABLE>
<CAPTION>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
MARCH 31, 1997 AND 1996
- -------------------------------------------------------------------------------
ASSETS 1997 1996
------------ ------------
<S> <C> <C>
CASH AND OVERNIGHT FUNDS $ 6,320,354 $ 4,370,069
LOANS HELD FOR SALE 5,107,367 5,661,465
SECURITIES AVAILABLE FOR SALE 4,956,213 2,959,500
SECURITIES HELD TO MATURITY (Market value:
1997 - $1,980,000; 1996 - $1,969,500) 1,999,077 1,998,465
INVESTMENT IN MUTUAL FUND AVAILABLE FOR SALE 2,399,036 4,394,615
MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE 9,950,713 12,084,800
MORTGAGE-BACKED SECURITIES HELD TO MATURITY
(Market value: 1997 - $4,752,019; 1996 - $5,694,882) 4,708,941 5,622,439
LOANS - Net 56,304,643 49,749,357
REAL ESTATE OWNED 157,817
FEDERAL HOME LOAN BANK STOCK - At cost 673,100 624,700
ACCRUED INTEREST RECEIVABLE 563,271 525,718
OFFICE PROPERTIES AND EQUIPMENT - Net 351,951 348,027
OTHER ASSETS 529,573 308,967
------------ ------------
TOTAL $ 94,022,056 $ 88,648,122
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 79,079,330 $ 72,616,509
Federal Home Loan Bank advances 3,500,000 3,500,000
Reverse repurchase agreements 1,833,000
Advance payments by borrowers for taxes and insurance 714,082 707,985
Official checks 3,820,486 3,196,097
Other liabilities 195,726 196,141
------------ ------------
Total liabilities 87,309,624 82,049,732
------------ ------------
COMMITMENTS
STOCKHOLDERS' EQUITY:
Class A common stock - $.01 par value; 15,000,000
shares authorized; 485,509 shares issued and outstanding 4,855 4,855
Additional paid-in capital 4,147,895 4,147,895
Retained earnings 2,598,472 2,474,142
Net unrealized losses on securities available for sale,
net of tax of $23,000 in 1997 and $17,000 in 1996 (38,790) (28,502)
------------ ------------
Total stockholders' equity 6,712,432 6,598,390
------------ ------------
TOTAL $ 94,022,056 $ 88,648,122
============ ============
</TABLE>
See notes to consolidated financial statement.
F-3
<PAGE>
<TABLE>
<CAPTION>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 1997, 1996 AND 1995
- -------------------------------------------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
INTEREST INCOME:
Interest on loans $ 4,775,838 $ 4,483,800 $ 3,103,313
Interest on mortgage-backed securities 1,150,759 1,248,234 760,239
Other 809,561 813,231 1,007,531
----------- ----------- -----------
Total 6,736,158 6,545,265 4,871,083
----------- ----------- -----------
INTEREST EXPENSE:
Interest on savings deposits 3,721,738 3,563,681 1,773,231
Interest on demand deposits 115,895 149,396 312,764
Interest on FHLB advances 227,858 240,342 224,709
Interest on other borrowings 23,250 189,451 161,078
----------- ----------- -----------
Total 4,088,741 4,142,870 2,471,782
----------- ----------- -----------
NET INTEREST INCOME 2,647,417 2,402,395 2,399,301
----------- ----------- -----------
PROVISION FOR LOAN LOSSES 15,000
----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,647,417 2,402,395 2,384,301
----------- ----------- -----------
OTHER INCOME:
Gains (losses) on sales of loans and mortgage-backed
securities - net (31,620) (59,268) (94,469)
Gains on sales of loan servicing rights 336,583 386,213 618,564
Brokered loan fees 186,337 294,999 60,368
Other 137,037 174,490 126,090
----------- ----------- -----------
Total 628,337 796,434 710,553
----------- ----------- -----------
OTHER EXPENSE:
Salaries and employee benefits 1,353,143 1,391,824 1,045,681
Occupancy and equipment expense 435,954 467,414 411,619
FDIC and other insurance premiums 197,773 200,945 184,273
FDIC special assessment (Note 1) 393,865
Data processing 123,510 112,072 119,532
Legal, professional, and consulting fees 89,252 104,164 120,246
Stationery and supplies 61,388 64,437 58,585
Costs of proposed merger 33,278 68,410
Lease termination 64,158
Other general and administrative expenses 385,771 382,869 347,803
----------- ----------- -----------
Total 3,073,934 2,856,293 2,287,739
----------- ----------- -----------
INCOME BEFORE INCOME TAX PROVISION 201,820 342,536 807,115
INCOME TAX PROVISION 77,490 136,850 307,000
----------- ----------- -----------
NET INCOME $ 124,330 $ 205,686 $ 500,115
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED MARCH 31, 1997, 1996 AND 1995
- -------------------------------------------------------------------------------
NET UNREALIZED
COMMON ADDITIONAL GAINS (LOSSES) TOTAL
STOCK PAID-IN RETAINED ON SECURITIES STOCKHOLDERS'
CLASS A CAPITAL EARNINGS AVAILABLE FOR SALE EQUITY
----------- ----------- ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1994 $ 5,138 $ 4,607,780 $ 1,816,892 $ (58,068) $ 6,371,742
Net income 500,115 500,115
Repurchase and retirement
of common stock (283) (459,885) (460,168)
Cash dividends ($.10 per share) (48,551) (48,551)
Net unrealized gains (losses) on
securities available for sale (3,112) (3,112)
----------- ----------- ----------- ----------- -----------
BALANCE, MARCH 31, 1995 4,855 4,147,895 2,268,456 (61,180) 6,360,026
Net income 205,686 205,686
Net unrealized gains (losses) on
securities available for sale 32,678 32,678
----------- ----------- ----------- ----------- -----------
BALANCE, MARCH 31, 1996 4,855 4,147,895 2,474,142 (28,502) 6,598,390
Net income 124,330 124,330
Net unrealized gains (losses) on
securities available for sale (10,288) (10,288)
----------- ----------- ----------- ----------- -----------
BALANCE, MARCH 31, 1997 $ 4,855 $ 4,147,895 $ 2,598,472 $ (38,790) $ 6,712,432
=========== =========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 1997, 1996 AND 1995
- ------------------------------------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 124,330 $ 205,686 $ 500,115
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Loans originated for sale (40,225,493) (46,641,750) (50,652,017)
Loans sold 40,779,592 44,673,545 55,387,695
Provision for loan losses 15,000
Depreciation 150,882 117,362 102,950
(Gain) loss on sale of property (10,358) 2,117
Premium amortization and discount accretion - net (49,030) (114,625) (44,747)
Gain on sale of mortgage-backed security (49,513)
Loss on sale of mutual fund 11,457
Increase (decrease) in official checks 624,389 1,594,983 (832,529)
(Decrease) increase in deferred income taxes (54,000) 51,000 (97,000)
Increase (decrease) in other liabilities 53,585 (158,394) (208,750)
Increase in accrued interest receivable (37,553) (102,663) (111,226)
Increase (decrease) in advance payments by
borrowers for taxes and insurance 6,097 40,506 (172,119)
Increase in other assets (220,607) (94,148) (41,369)
------------ ------------ ------------
Net cash provided by (used in) operating activities 1,103,778 (428,498) 3,848,120
------------ ------------ ------------
INVESTING ACTIVITIES:
Purchases of securities available for sale (2,997,899) (3,999,688)
Maturity of securities available for sale 1,000,000 3,000,000
Maturity of securities held to maturity 1,000,000 1,000,000
Purchases of property (158,947) (274,508) (47,842)
Proceeds from sale of property 14,500
Sales (purchases) of mutual fund 2,003,009 1,000,000 (92,979)
Disposal of real estate owned 125,200 107,000
Increase in loans - net (6,790,628) (10,364,729) (10,206,657)
Purchases of mortgage-backed securities available for sale (1,007,127) (1,198,945)
Sales of mortgage-backed securities available for sale 2,046,969
Principal reductions of mortgage-backed securities available for sale 1,116,243 940,697
Purchases of mortgage-backed securities held to maturity (182,123) (8,258,468)
Principal reductions of mortgage-backed securities held to maturity 1,095,889 1,397,733 1,846,047
Sales (purchases) of FHLB stock (48,400) (132,300) 339,300
------------ ------------ ------------
Net cash used in investing activities (3,783,314) (8,631,740) (15,313,599)
------------ ------------ ------------
FINANCING ACTIVITIES:
Increase in deposits 6,462,821 13,832,749 6,985,426
Federal Home Loan Bank advances (repayment), net (1,000,000) 1,500,000
(Decrease) increase in reverse repurchase agreements (1,833,000) (1,729,000) 3,562,000
Repurchase of common stock (460,168)
Cash dividends paid (48,551)
------------ ------------ ------------
Net cash provided by financing activities 4,629,821 11,103,749 11,538,707
------------ ------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS 1,950,285 2,043,511 73,228
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,370,069 2,326,558 2,253,330
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 6,320,354 $ 4,370,069 $ 2,326,558
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest $ 4,087,279 $ 4,163,481 $ 1,820,077
============ ============ ============
Cash paid during the year for income taxes $ 125,000 $ 264,500 $ 323,100
============ ============ ============
Transfers of loans to real estate owned $ 314,678 $ 107,000
============ ============
Reclassification of securities held to maturity to securities
available for sale $ 11,794,990 $ 1,993,987
============ ============
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1997, 1996 AND 1995
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consumers Bancorp, Inc. (the "Company"), a Florida chartered unitary
holding company, was formed on November 10, 1995 for the purposes of a
reorganization whereby the Company became the holding company of Consumers
Savings Bank (the "Savings Bank"). On April 14, 1994, regulatory approval
was obtained at which time the reorganization became effective and the
outstanding stock of the Savings Bank was converted on a share-for-share
basis to shares of the Company. The reorganization has been accounted for
in a manner similar to a pooling of interests and, accordingly,
stockholders' equity accounts have been retroactively restated to reflect
the capital structure of the Company. The Savings Bank offers general
banking services and residential mortgage, commercial real estate and
consumer lending through its two branches in South Florida.
The accounting and reporting policies of the Company and the Savings Bank
conform, in all material respects, to generally accepted accounting
principles and to general practices within the savings and loan industry.
The following summarizes the more significant of these policies and
practices.
IMPACT OF NEW LEGISLATIVE ISSUES - In August 1996, Congress passed
legislation which repeals the Savings Bank's present method of accounting
for bad debts for federal income tax purposes. The Savings Bank currently
uses the percentage of taxable income tax method to determine its bad debt
deduction, in the computation of its taxable income. Under the new
legislation, the Savings Bank will be required to use the specific
charge-off method, which may result in a different deduction for bad debts
in determining taxable income than are presently computed under the current
method. Additionally, the Savings Bank will be required to recapture its
post-1987 additions to its bad debt reserves. As the Savings Bank had
provided deferred taxes for the income tax bad debt reserves established
after 1987, management does not anticipate any additional income tax
liability related to the recapture. The new legislation is effective for
taxable years beginning after December 31, 1995.
On September 30, 1996, Congress passed, and the President signed, the
Deposit Insurance Fund Act of 1996 which mandated that all institutions
which have SAIF-insured deposits are required to pay a one-time special
assessment of 65.7 basis points (subject to certain adjustments) on
SAIF-insured deposits that were held at March 31, 1995 payable by November
27, 1996 to recapitalize the SAIF which is administered by the Federal
Deposit Insurance Corporation ("FDIC"). The assessment will bring the
SAIF's reserve ratio to a comparable level of the Bank Insurance Fund at
1.25 percent of total insured deposits. The FDIC in connection with the
recapitalization also lowered SAIF premiums beginning in January 1997. The
Savings Bank's shares of this special assessment totaled $393,865, and is
included in the accompanying financial statements for the year ended March
31, 1997.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of the Company and its subsidiary, the Savings Bank, and the
Savings Bank's wholly-owned subsidiary, Consumers Savings Mortgage Corp.
Intercompany balances and transactions have been eliminated.
F-7
<PAGE>
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect 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 the revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
SECURITIES AND MORTGAGE-BACKED SECURITIES HELD TO MATURITY - Investment and
mortgage-backed securities held to maturity are carried at cost, adjusted
for discount accretion and premium amortization. The Savings Bank has the
intent and ability to hold these securities to maturity. At March 31, 1997,
neither a disposal nor conditions that could lead to a decision not to hold
these securities to maturity were reasonably foreseen.
SECURITIES, MORTGAGE-BACKED SECURITIES AND INVESTMENT IN MUTUAL FUND
AVAILABLE FOR SALE Investment and mortgage-backed securities available for
sale consist of securities not classified as trading securities nor as
securities held to maturity. Securities available for sale and investments
in mutual funds are carried at fair value. Unrealized holding gains and
losses, net of tax, are reported as a net amount in a separate component of
stockholders' equity until realized. Gains and losses on the sale of
securities are determined using the specific identification method.
Premiums and discounts are recognized in interest income using the interest
method over the period to maturity.
The Savings Bank's mutual fund investment has a portfolio that consists
primarily of adjustable rate mortgage-backed securities.
LOANS HELD FOR SALE - Sales of loans are recorded at the date funds are
received from the purchaser. Generally, at the time these loans are
originated, the Savings Bank obtains a firm commitment (generally for 30
days) to sell the loan to a third party. Such loans are carried at the
lower of cost or market value.
ALLOWANCE FOR LOAN LOSSES - The allowance for loan losses is established by
charges to income through the provision for loan losses. Loans or portions
thereof which are considered by management to be uncollectible are charged
to the allowance and recoveries of amounts previously charged off are
credited to the allowance. The allowance represents the amount which, in
management's judgment, is adequate to absorb charge-offs of existing loans
which may become uncollectible. The adequacy of the allowance is determined
by management's continuing evaluation of the loan portfolio, current
economic conditions, past loan loss experience and other pertinent factors.
Many of these factors involve a significant degree of estimation and are
subject to rapid change which may be unforeseen by management. Changes in
these factors could result in material adjustments to the allowance in the
near term.
On April 1, 1995, the Savings Bank adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, ACCOUNTING BY CREDITORS FOR
IMPAIRMENTS OF A LOAN, and SFAS No. 118, ACCOUNTING FOR IMPAIRMENT OF A
LOAN - RECOGNITION AND DISCLOSURES, an amendment of SFAS No. 114. These
standards address the accounting for impairment of certain loans when it is
probable that all amounts due pursuant to the contractual terms of the loan
will not be collected. Adoption of these standards entailed the
identification of commercial and commercial real estate loans which are
considered impaired under the provisions of SFAS No. 114. Groups of
smaller-balance homogeneous loans (generally residential mortgage and
installment loans) are collectively evaluated for impairment. Adoption of
these statements did not have a material impact on the Savings Bank's
financial position or results of operations.
Under the provisions of these standards, a loan is impaired when, based on
current information and events, it is probable that the Savings Bank will
be unable to collect all amounts due according to the contractual terms of
the loan agreement. Individually identified impaired loans are measured
based on the present value of payments expected to be received, using the
historical effective loan rate as the discount rate. Alternatively,
measurement may also be based on observable market prices or for loans that
are
F-8
<PAGE>
solely dependent on the collateral for repayment, measurement may be based
on the fair value of the collateral. Loans that are to be foreclosed are
measured based on the fair value of the collateral. If the recorded
investment in the impaired loan exceeds that measure of fair value, a
valuation allowance is required as a component of the allowance for loan
losses. Changes to the valuation allowance are recorded as a component of
the provision for loan losses.
Commercial loans where reasonable doubt exists as to timely collection,
including loans that are individually identified as being impaired under
SFAS No. 114, are generally classified as nonperforming loans unless, based
on the evaluation of management, the loan is well secured and in the
process of collection.
Interest collections on nonperforming loans, including impaired loans, for
which the ultimate collectibility of principal and interest is uncertain,
are applied as reduction in book value. Otherwise, such collections are
credited to income when received.
UNCOLLECTED INTEREST - Interest on loans is accrued as earned. The Savings
Bank generally will provide an allowance for the loss of uncollected
interest on loans which become more than 90 days past due and cease
accruing interest thereafter. At March 31, 1997 and 1996, approximately
$8,600 and $10,000, respectively, was reserved for uncollected interest.
LOAN ORIGINATION AND COMMITMENT FEES - Loan origination fees and certain
loan commitment fees, net of related direct loan origination costs, are
deferred and amortized over the life of the related loan as an adjustment
of yield.
REAL ESTATE OWNED - Property acquired by foreclosure or deed in lieu of
foreclosure is initially recorded at fair value less estimated costs to
sell. These properties are subsequently evaluated and carried at the lower
of cost or fair market value less estimated costs to sell. Expenses
incurred from ownership of such properties and gains and losses on
dispositions are included in other expenses.
The amounts the Savings Bank could ultimately recover from property
acquired by foreclosure or deed in lieu of foreclosure could differ
materially from the amounts used in arriving at the net carrying value of
the assets because of future market factors beyond the Savings Bank's
control or changes in the Savings Bank's strategy for recovering its
investment.
OFFICE PROPERTIES AND EQUIPMENT - Office properties and equipment are
carried at cost less accumulated depreciation. Depreciation is computed on
the straight-line method over the estimated useful lives of the assets
which range from 3 to 10 years.
INCOME TAXES - The Company provides for income taxes in accordance with
SFAS No. 109, ACCOUNTING FOR INCOME TAXES. Deferred income tax assets and
liabilities are computed annually for differences between the financial
statements and tax bases of assets and liabilities that will result in
taxable or deductible amounts in the future based on enacted tax laws and
rates applicable to the periods in which the differences are expected to
affect taxable income. Valuation allowances are established when necessary
to reduce deferred tax assets to the amounts expected to be realized.
Income tax expense is the tax payable or refundable for the period plus or
minus the change during the period in deferred tax assets and liabilities.
INTEREST RATE RISK - The Savings Bank is engaged principally in providing
first mortgage loans (both adjustable rate and fixed rate mortgage loans)
to individuals (see Note 6 for the composition of the mortgage loan
portfolio at March 31, 1997 and 1996). Mortgage loans and securities held
to maturity are funded primarily with short-term liabilities that have
interest rates that vary with market rates over time.
F-9
<PAGE>
At March 31, 1997, the Savings Bank had interest-earning assets of
approximately $92.0 million having a weighted-average effective interest
rate of 7.94% and a remaining term of 8.3 years, and interest-bearing
liabilities of approximately $81.3 million having a weighted-average
effective interest rate of 5.27% and a remaining term of .65 years based
upon the contractual repricing or stated maturity of the underlying
instrument and commitments to sell mortgage loans. The shorter remaining
term of the interest-bearing liabilities indicates that the Savings Bank is
exposed to interest rate risk because, in a rising rate environment,
liabilities will be repricing faster at higher interest rates, thereby
reducing the market value of long-term assets and net interest income. Net
interest income and the market value of net interest-earning assets will
fluctuate based on changes in interest rates and changes in the levels of
interest-sensitive assets and liabilities. The actual remaining term of
interest-earning assets and interest-bearing liabilities may differ
significantly from the stated remaining term as a result of prepayment,
early withdrawals and similar factors.
STATEMENT OF CASH FLOWS - For purposes of the statement of cash flows, cash
and overnight funds are considered to be cash equivalents.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS - In May 1995, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards No. 122, ACCOUNTING FOR MORTGAGE SERVICING RIGHTS
("SFAS 122"). This Statement, which amends SFAS No. 65, ACCOUNTING FOR
CERTAIN MORTGAGE BANKING ACTIVITIES, requires mortgage banking enterprises
that acquire mortgage servicing rights through either the purchase of or
origination of mortgage loans and sell or securitize those loans with
servicing rights retained to allocate the total cost of the mortgage loans
to the mortgage servicing rights and the loans based on their relative fair
values. Mortgage banking enterprises include commercial banks and thrift
institutions that conduct operations substantially similar to the primary
operations of a mortgage banking enterprise. SFAS No. 122 applies
prospectively in fiscal years beginning after December 15, 1995 to sales of
mortgage loans with servicing rights retained and to impairment evaluations
of all amounts capitalized as mortgage servicing rights, including those
purchased before the adoption of this Statement. Adoption of this statement
did not have a material impact on the Savings Bank's financial position or
results of operations.
In October 1995, the FASB issued SFAS No. 123, ACCOUNTING FOR STOCK-BASED
COMPENSATION, which encourages, but does not require, companies to record
compensation cost for stock-based employee compensation plans at fair
value. However, even though compensation costs may not be recorded, the
Company must make certain pro forma disclosures as if such compensation
costs were recorded. The Company has chosen to account for stock-based
compensation to employees using the intrinsic value method prescribed by
Accounting Principles Board Opinion ("APB") No. 25, ACCOUNTING FOR STOCK
ISSUED TO EMPLOYEES, and related interpretations. Accordingly, compensation
cost for stock options issued to employees are measured as the excess, if
any, of the fair value of the Company's stock at the date of grant over the
amount an employee must pay for the stock. Compensation costs in 1996 would
have been immaterial to the consolidated financial statements had the fair
market value of stock options been recognized as compensation expense as
prescribed by SFAS No. 123.
In June 1996, the FASB issued SFAS No. 125, ACCOUNTING FOR TRANSFERS AND
SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES. SFAS No.
125 provides accounting and reporting standards for transfers and servicing
of financial assets and extinguishments of liabilities. Those standards are
based on consistent application of a FINANCIAL-COMPONENTS APPROACH that
focuses on control. Under that approach, after a transfer of financial
assets, an entity recognizes the financial and servicing assets it controls
and the liabilities it has incurred, derecognizes financial assets when
control has been surrendered, and derecognizes liabilities when
extinguished. SFAS No. 125 also provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. SFAS No. 125 is effective for transfers and
servicing of financial assets and extinguishments
F-10
<PAGE>
of liabilities occurring after December 31, 1996, and is to be applied
prospectively. The Savings Bank is in the process of evaluating the impact
of SFAS No. 125.
2. SECURITIES AVAILABLE FOR SALE
Securities available for sale at March 31, 1997 and 1996 are summarized as
follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
MARCH 31, 1997:
U.S. Agency Securities $4,995,215 $ -- $ 39,002 $4,956,213
========== ========= ========== ==========
Weighted average interest rate 6.11 %
==========
MARCH 31, 1996:
U.S. Agency Securities $2,999,688 $ -- $ 40,188 $2,959,500
========== ========= ========== ==========
Weighted average interest rate 5.94 %
==========
</TABLE>
The securities held at March 31, 1997 will mature between the years ending
March 31, 1998 and March 31, 2002.
3. SECURITIES HELD TO MATURITY
Securities held to maturity are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
MARCH 31, 1997:
U.S. Agency Securities $ 1,999,077 $ -- $ 19,077 $1,980,000
=========== ======== =========== ==========
Weighted average interest rate 5.39 % -- -- --
=========== ======== =========== ==========
MARCH 31, 1996:
U.S. Agency Securities $ 1,998,465 $ -- $ 28,965 $1,969,500
=========== ======== =========== ==========
Weighted average interest rate 4.92 % -- -- --
=========== ======== =========== ==========
</TABLE>
The following table sets forth the maturity/repricing of the Savings Bank's
investment securities held to maturity at March 31, 1997 and 1996:
<TABLE>
<CAPTION>
MARCH 31, 1997 MARCH 31, 1996
------------------------- ------------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Matures/reprices in one year
or less $1,000,000 $1,000,000 $1,000,000 $ 996,000
Matures/reprices after one
year through three years 999,077 980,000 998,465 973,500
---------- ---------- ---------- ----------
Total $1,999,077 $1,980,000 $1,998,465 $1,969,500
========== ========== ========== ==========
</TABLE>
F-11
<PAGE>
4. MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE
Mortgage-backed securities available for sale are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
MARCH 31, 1997: COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CMO's $3,237,716 $ 25,494 $ 60,370 $3,202,840
FNMA, GNMA, FHLMC 5,726,740 32,547 11,414 5,747,873
Other mortgage-backed securities 996,058 3,942 1,000,000
---------- ---------- ---------- ----------
Total $9,960,514 $ 61,983 $ 71,784 $9,950,713
========== ========== ========== ==========
Weighted average interest rate 6.93 %
==========
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
MARCH 31, 1997: COST GAINS LOSSES VALUE
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
CMO's $ 3,291,999 $ 19,222 $ 51,871 $ 3,259,350
FNMA, GNMA, FHLMC 7,770,220 53,814 3,384 7,820,650
Other mortgage-backed securities 995,500 9,300 -- 1,004,800
----------- ----------- ----------- -----------
Total $12,057,719 $ 82,336 $ 55,255 $12,084,800
=========== =========== =========== ===========
Weighted average interest rate 6.73%
===========
</TABLE>
The following table sets forth the maturity/repricing of the Savings Bank's
mortgage-backed securities available for sale at March 31, 1997 and 1996:
<TABLE>
<CAPTION>
MARCH 31, 1997 MARCH 31, 1996
-------------------------- --------------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Matures/reprices in
one year $ 5,733,547 $ 5,726,062 $ 7,334,862 $ 7,318,223
Matures/reprices after
one year through
five years 2,650,778 2,649,535 2,788,822 2,816,789
Matures/reprices after
ten years through
twenty years 1,576,189 1,575,116 1,934,035 1,949,788
----------- ----------- ----------- -----------
$ 9,960,514 $ 9,950,713 $12,057,719 $12,084,800
=========== =========== =========== ===========
</TABLE>
On December 20, 1995, the Company transferred $13.1 million of
mortgage-backed securities held to maturity with aggregate unrealized gains
of $188,000 to mortgage-backed securities available for sale. This transfer
was a result of the Company adopting the provisions of FASB's Special
Report, A GUIDE TO IMPLEMENTATION OF STATEMENT 115 ON ACCOUNTING FOR
CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES - QUESTIONS AND ANSWERS,
issued in November 1995.
F-12
<PAGE>
5. MORTGAGE-BACKED SECURITIES HELD TO MATURITY
Mortgage-backed securities held to maturity are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
MARCH 31, 1997:
CMO'S $ 727,565 $ 7,661 -- $ 735,226
FNMA, GNMA, FHLMC 2,164,182 44,574 $ 2,448 2,206,308
Other mortgage-backed securities 1,817,194 -- 6,709 1,810,485
---------- ---------- ---------- ----------
Total $4,708,941 $ 52,235 $ 9,157 $4,752,019
========== ========== ========== ==========
Weighted average interest rate 7.05 %
==========
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
MARCH 31, 1996:
CMO's $ 911,146 $ 6,489 $ 92 $ 917,543
FNMA, GNMA, FHLMC 2,456,065 55,275 -- 2,511,340
Other mortgage-backed securities 2,255,228 10,909 138 2,265,999
---------- ---------- ---------- ----------
Total $5,622,439 $ 72,673 $ 230 $5,694,882
========== ========== ========== ==========
Weighted average interest rate 6.53 %
==========
</TABLE>
The Savings Bank purchases both adjustable and fixed rate mortgage-backed
securities. The securities held at March 31, 1997 will mature/reprice
during the year ended March 31, 1998.
At March 31, 1997, all mortgage-backed securities held to maturity were
adjustable rate securities with interest rate adjustment limitations and
are generally indexed to the one-year U.S. Treasury Note rate, the Eleventh
District Cost of Funds Index, prime or LIBOR.
F-13
<PAGE>
6. LOANS
Loans are summarized as follows:
MARCH 31, MARCH 31,
1997 1996
------------ ------------
Residential real estate $ 50,913,742 $ 46,758,896
Residential construction 260,000 994,127
Commercial real estate 4,752,301 2,251,251
Commercial business 116,100 171,454
Consumer 696,024 205,789
Home equity 376,951
------------ ------------
Total 57,115,117 50,381,517
Loans in process (312,103) (87,390)
Net deferred interest (16,028) (35,922)
Net deferred loan fees (151,356) (142,321)
Allowance for loan losses (330,987) (366,527)
------------ ------------
Loans - net $ 56,304,643 $ 49,749,357
============ ============
Activity in the allowance for loan losses is summarized as follows for the
years ended March 31:
1997 1996 1995
--------- --------- ---------
Balance at beginning of year $ 366,527 $ 366,527 $ 378,500
Provision charged to income 15,000
Charge-offs and recoveries, net (35,540) (26,973)
--------- --------- ---------
Balance at end of year $ 330,987 $ 366,527 $ 366,527
========= ========= =========
At March 31, 1997, the Savings Bank had outstanding commitments of
approximately $5,126,000 to originate loans and approximately $5,107,000 to
sell loans. All such commitments expire within the following fiscal year.
The Savings Bank originates both adjustable and fixed interest rate loans.
At March 31, 1997, the composition of these loans was as follows:
<TABLE>
<CAPTION>
FIXED ADJUSTABLE
RATE RATE TOTAL
----------- ----------- -----------
<S> <C> <C> <C>
Matures/reprices in one year or less $ 1,003,007 $22,704,901 $23,707,908
Matures/reprices after one year
through five years 4,059,599 8,506,908 12,566,507
Matures/reprices after five years
through ten years 805,343 1,608,624 2,413,967
Matures/reprices after ten years
through twenty years 4,680,328 4,680,328
Matures/reprices after twenty years
through thirty years 13,434,304 13,434,304
----------- ----------- -----------
Total $23,982,581 $32,820,433 $56,803,014
=========== =========== ===========
</TABLE>
F-14
<PAGE>
At March 31, 1997 and 1996, loans serviced for the benefit of others
totaled approximately $15,950,000 and $18,941,000, respectively. In
connection with these loans serviced for others, borrower's escrow balances
of $191,000 and $198,000 were held at March 31, 1997 and 1996,
respectively.
The Savings Bank's real estate and commercial lending activities are
primarily with customers located in Dade and Broward counties, Florida.
Collateral required for these types of loans is based upon management's
evaluation of the respective credit risk in accordance with the Savings
Bank's credit policies. However, these types of loans are dependent on,
among other things, economic conditions in these counties. Management
monitors its loan concentrations by industry and type of collateral as well
as by individual borrowers.
7. OFFICE PROPERTIES AND EQUIPMENT
Office properties and equipment consist of the following at March 31:
1997 1996
---------- ----------
Furniture, fixtures, and equipment $ 988,954 $ 885,733
Leasehold improvements 388,879 366,354
---------- ----------
Total 1,377,833 1,252,087
Less accumulated depreciation 1,025,882 904,060
---------- ----------
Office properties and equipment - net $ 351,951 $ 348,027
========== ==========
The Savings Bank is a lessee under operating leases for real estate
extending into the 2001 fiscal year. The leases contain clauses which grant
options to renew for periods up to an additional 12 years and require
additional payments for a proportionate share of real estate taxes and
common area maintenance expenses.
The future minimum annual rentals at March 31, 1997 are as follows:
YEAR ENDING
MARCH 31 AMOUNT
----------- --------
1998 $154,138
1999 106,748
2000 78,932
2001 60,576
--------
Total future minimum lease payments $400,394
========
Total rental expense for the years ended March 31, 1997, 1996 and 1995 was
approximately $232,000, $278,000, and $252,000, respectively. In addition,
in February 1996, the Savings Bank made a one-time payment of $64,158 in
order to cancel the remaining 40 months on one of its office leases. The
future minimum rental payments remaining at the time of cancellation were
approximately $284,000.
F-15
<PAGE>
8. DEPOSITS
Deposit accounts, including the nominal rates at which the Savings Bank
paid interest on such accounts, are as follows at March 31:
<TABLE>
<CAPTION>
RATE 1997 1996
----------- -----------
<S> <C> <C>
Passbook, statement and NOW accounts:
Non-interest bearing checking accounts $ 1,326,643 $ 1,029,496
Passbook - 2.00% - 4.25% at March 31, 1997 and 1996 10,925,958 8,634,303
NOW - 2.0% at March 31, 1997 and 1996 2,045,351 1,982,310
Super NOW - 2.25% at March 31, 1997 and 1996 243,080 308,986
Money market accounts - 2.0% - 3.15% at
March 31, 1997 and 1996 2,210,392 2,525,088
----------- -----------
Total 16,751,424 14,480,183
----------- ----------
Certificate accounts:
3.01% - 4.00% 143,276
4.01% - 5.00% 6,879,927 8,023,887
5.01% - 6.00% 43,278,730 39,542,563
6.01% - 7.00% 11,925,973 10,182,402
7.01% - 8.00% 100,000 387,474
----------- -----------
Total 62,327,906 58,136,326
----------- ----------
Total deposits $79,079,330 $72,616,509
=========== ==========
</TABLE>
The weighted average nominal interest rate payable on all deposits at March
31, 1997 and 1996 was 5.16%.
At March 31, 1997, certificate accounts are scheduled to mature as follows:
YEAR ENDING
MARCH 31 AMOUNT
----------- -----------
1997 $39,288,826
1998 18,827,578
1999 2,101,142
2000 912,909
2001 54,828
2002 1,142,623
---- -----------
Total $62,327,906
===========
9. FEDERAL HOME LOAN BANK ADVANCES
The Savings Bank's Federal Home Loan Bank advances at March 31, 1997 and
1996 consist of a $1,500,000 advance with a fixed rate of 6.56% which
matures in June 1997, a $1,000,000 advance with a fixed rate of 6.33% which
matures in June 1998 and a $1,000,000 advance with a fixed rate of 6.52%
which matures in June 2000. The advances are secured by a blanket floating
lien on first mortgage loans with balances totaling approximately 150% of
such advances.
F-16
<PAGE>
10. SECURITIES SOLD UNDER AGREEMENT TO REPURCHASE
The Savings Bank has sold investment securities under agreements to
repurchase the identical securities. The amounts received under the
agreements represent short-term borrowings and are reflected as reverse
repurchase agreements in the statement of financial condition. There were
no such borrowings outstanding at March 31, 1997. At March 31, 1996, the
borrowings bear interest at a rate of 5.78% and matured on June 16, 1996.
At March 31, 1996, the borrowings under such agreements were transacted
with one primary dealer and involve mortgage-backed securities with a book
value and market value of $1,949,000. The dealer may have sold, loaned, or
otherwise disposed of such securities to other parties in the normal course
of their operations, and had agreed to resell identical securities to the
Savings Bank at the maturities of the agreements.
11. INCOME TAXES
The components of the provision for income taxes consist of the following
for the year ended March 31:
1997 1996 1995
--------- --------- ---------
Current - Federal $ 104,500 $ 90,350 $ 313,000
Current - State 18,990 15,500 54,000
--------- --------- ---------
Total current 123,490 105,850 367,000
Deferred - Federal and State (46,000) 31,000 (60,000)
--------- --------- ---------
Total $ 77,490 $ 136,850 $ 307,000
========= ========= =========
The Savings Bank's provision for income taxes differs from the amounts
determined by applying the Federal income tax rate to income before income
taxes for the following reasons:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Tax provision at
federal rate $ 68,700 34.0 % $116,462 34.0 % $274,419 34.0 %
State income taxes 7,300 3.6 12,331 3.6 29,056 3.6
Other 1,490 0.8 8,057 2.4 3,525 0.4
-------- ------ -------- ------ -------- ----
Total provision for
income taxes $ 77,490 38.4 % $136,850 40.0 % $307,000 38.0 %
======== ====== ======== ====== ======== ====
</TABLE>
F-17
<PAGE>
The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities are as follows:
MARCH 31, MARCH 31,
1997 1996
---------- ---------
Deferred tax liabilities:
Loan fee income $ 73,000 $ 85,000
FHLB stock dividends 64,000 64,000
Deferred payments to loan brokers -- 18,000
-------- --------
137,000 167,000
Deferred tax assets:
Excess of book bad debt reserve
over tax bad debt reserve 11,000
Depreciation and amortization 23,000 17,000
Unrealized depreciation in securities 23,000 17,000
Other 3,000 2,000
-------- --------
Net deferred tax liability $ 77,000 $131,000
======== ========
12. STOCKHOLDERS' EQUITY
The Company has reserved 50,400 shares of common stock for stock options
granted to certain key officers. The officers' right to exercise such
options is restricted by the passage of time and the continuation of their
employment through specified dates. The exercise price per share of the
options is $8.33 and the options expire on March 31, 2002. At March 31,
1997, options for 38,400 shares were outstanding, all of which are
exercisable. If the employment of an officer terminates for any reason, all
unexercised options which have been earned will expire one year from the
day of such termination of employment.
On May 18, 1989, the Board of Directors approved an incentive stock option
plan (the "Plan") in which a total of 14,400 shares of common stock were
reserved for the benefit of the Company's directors. The exercise price of
the options under the Plan is $6.46 and such options expire on March 31,
2002. At March 31, 1997, options for 9,864 shares were outstanding, all of
which are exercisable.
During the year ended March 31, 1995, the Company paid cash dividends of
$.10 per share.
In connection with the reorganization in 1994, certain of the Savings
Bank's stockholders, representing 28,322 outstanding shares, exercised
their rights of dissent as provided for in the Florida 1989 Business
Corporation Act. During the year ended March 31, 1995, the dissenting
stockholders received $460,168 for the repurchase of these shares.
The Company has authorized 5,000,000 shares of Preferred Stock, $.01 par
value of which no shares have been issued.
REGULATORY CAPITAL - The Company and the Savings Bank are subject to
various regulatory capital requirements administered by the Office of
Thrift Supervision ("OTS"). Failure to meet minimum capital requirements
can initiate certain mandatory and possibly additional discretionary
actions by regulators that, if undertaken, could have direct material
effect on the Company's and the Savings Bank's financial statements. Under
capital adequacy guidelines, the Company and the Savings Bank must meet
specific capital guidelines that involve quantitative measures of the
Company's and the Savings Bank's assets, liabilities, and certain
off-balance sheet items as calculated under regulatory accounting
practices. The Company's and the Savings Bank's capital amounts and the
Savings Bank's classification under the
F-18
<PAGE>
regulatory framework for prompt corrective action are also subject to
qualitative judgments by the regulators about components, risk weightings,
and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Savings Bank to maintain minimum amounts and
ratios (set forth in the table below) of tangible capital to adjusted total
assets, total capital to risk-weighted total assets and tier I (core)
capital equal to adjusted total assets, as defined in the regulations.
Management believes, as of March 31, 1997, that the Company and the Savings
Bank meet all capital adequacy requirements to which they are subject.
As of March 31, 1997, the most recent notification from the OTS categorized
the Savings Bank as well capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, the
Savings Bank must maintain risk-based and core capital ratios as set forth
in the table. There are no conditions or events since that notification
that management believes have changed the institution's category.
The Savings Bank's actual capital amounts and ratios are also presented in
the table.
<TABLE>
<CAPTION>
TO BE CONSIDERED
WELL CAPITALIZED
MINIMUM FOR CAPITAL FOR PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PURPOSES
------------------------- ---------------------- ------------------------
RATIO AMOUNT RATIO AMOUNT RATIO AMOUNT
--------- ------------ ------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
AS OF MARCH 31, 1997
Stockholders' equity, and
ratio to total assets 7.10 % $ 6,690,000
=====
Unrealized loss on securities
available for sale 39,000
------------
Tangible capital, and ratio to
adjusted total assets 7.14 % $ 6,729,000 1.50 % $ 1,414,000 N/A
===== ============ ===== =========== =====================
Tier 1 (core) capital, and ratio
to adjusted total assets 7.14 % $ 6,729,000 3.00 % $ 2,829,000 5.00 % $ 4,715,000
===== ----------- ----- ----------- ----- -----------
Tier 1 (core) capital, and ratio
to risk weighted total assets 16.06 % $ 6,729,000 N/A 6.00 % $ 2,514,000
===== ====================== ===== ===========
Allowance for loan losses 331,000
------------
Total risk-based capital, and
ratio to risk-based total assets 16.85 % $ 7,060,000 8.00 % $ 3,352,000 10.0 % $ 4,190,000
===== ============ ===== =========== ===== ===========
Total assets $ 94,257,000
============
Adjusted total assets $ 94,296,000
============
Risk-weighted total assets $ 41,902,000
============
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
TO BE CONSIDERED
WELL CAPITALIZED
MINIMUM FOR CAPITAL FOR PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PURPOSES
------------------------- ------------------------ ----------------------
RATIO AMOUNT RATIO AMOUNT RATIO AMOUNT
---------- ------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
AS OF MARCH 31, 1996
Stockholders' equity, and ratio to
total assets 7.38 % 6,548,000
====
Unrealized loss on securities
available for sale 28,000
-------------
Tangible capital and ratio to
adjusted total assets 7.41 % $ 6,576,000 1.50 % $ 1,332,000 N/A
==== ============= ==== =========== ====================
Tier 1 (core) capital, and ratio
to adjusted total assets 7.41 % $ 6,576,000 3.00 % $ 2,663,000 5.00 % $ 4,438,000
==== ============= ==== =========== ==== ===========
Tier 1 (core) capital, and ratio
to risk weighted total assets 17.75 % $ 6,576,000 N/A 6.00 % $ 2,223,000
===== ==================== ==== ===========
Allowance for loan losses 367,000
-------------
Total risk-based capital, and
ratio to risk-based total assets 18.74 % $ 6,943,000 8.00 % $ 2,964,000 10.0 % $ 3,705,000
===== ============= ==== =========== ==== ===========
Total assets $ 88,732,000
=============
Adjusted total assets $ 88,760,000
=============
Risk-weighted total assets $ 37,051,000
=============
</TABLE>
The Company's actual capital amounts and ratios were substantially the same
as the Savings Bank's at March 31, 1997 and 1996, respectively.
Banking regulations may limit the amount of dividends that may be paid
without prior regulatory approval.
13. RELATED PARTIES
At March 31, 1997 and 1996, the Savings Bank had loans of approximately
$231,000 and $237,000, respectively, outstanding to officers and directors.
* * * * * *
F-20
<PAGE>
APPENDIX D
OPINION OF RP FINANCIAL, INC.
<PAGE>
[RP FINANCIAL LETTERHEAD] _________________, 1997
Board of Directors
Consumers Bancorp, Inc.
9400 South Dadeland Boulevard
Suite 620
Miami, Florida 33156
Members of the Board:
You have requested RP Financial, L.C. ("RP Financial") to provide you with
its opinion as to the fairness from a financial point of view to the
shareholders of Consumers Bancorp, Inc., Miami, Florida, a Florida Corporation
("Consumers"), of the Agreement and Plan of Merger (the "Agreement"), by and
between BankUnited Financial Corporation, Coral Gables, Florida, a Florida
Corporation ("BankUnited"), Consumers and Consumers Savings Bank (the "Bank"), a
wholly-owned subsidiary of Consumers. The Agreement is incorporated herein by
reference. Unless otherwise defined, all capitalized terms incorporated herein
have the meanings ascribed to them in the Agreement.
SUMMARY DESCRIPTION OF CONSIDERATION
At the Effective Time, each share of common stock of Consumers, $0.01 par
value per share, issued and outstanding immediately prior to the Effective Time
shall cease to be outstanding and shall be converted into and become the right
to receive a payment (the "Merger Consideration") of $21.33 in cash or 2.081
shares of BankUnited Common Stock (the "Agreed Value"). Each shareholder may
elect to receive his, her, or its total of the Merger Consideration in cash,
BankUnited Common Stock or a combination thereof, provided, however, that (1)
in the aggregate, the cash portion of the consideration shall not exceed 55
percent of the total amount of the Merger Consideration, including any cash
paid in lieu of fractional shares, (2) the Merger Consideration shall not be
paid on shares as to which dissenters rights have been asserted pursuant to
Florida law, and (3) if the average fair market value of BankUnited Common
Stock, as determined by using the average closing price of one share of the
security computed for the 20-day trading period on the NASDAQ system (as
reported by the WALL STREET JOURNAL or, if not reported thereby, any other
authorative source), ending three days prior to the Effective Time (the "Fair
Market Value" or "FMV"), is greater than $12.00 per share, the number of
BankUnited shares received by Consumers shareholders shall be equal to 2.081
times a fraction, the numerator of which is $12.00 and the denominator of which
is the Fair Market Value. If the Fair Market Value falls below $9.80 per share,
then BankUnited shall pay Consumers, in cash, a total purchase price, including
all amounts paid for Consumers Options, of $10,800,000. If the fair market value
of BankUnited Common Stock is less than $8.50 per share, as determined by using
the average of the mean closing prices of such stock as quoted on the NASDAQ
system on each of the ten trading days immediately preceding the Effective
Time, then Consumers may terminate the transaction at the discretion of the
Board of Directors. Additionally, each Consumers stock option outstanding
("Consumers Options") granted by Consumers under the Consumers Benefit Plans,
which are outstanding at the Effective Time, whether or not then exercisable,
shall be cancelled, and each holder shall be paid for each such option an
amount of cash without interest earned determined by multiplying (i) the excess,
if any, of $21.33 over the applicable exercise price of such option by (ii)
the number of shares of Consumers Common Stock subject to option. As of the
date hereof, Consumers had 485,509 shares of common stock issued and outstanding
and 48,264 stock options outstanding. Cash will be paid in lieu of fractional
shares.
<PAGE>
RP FINANCIAL, LC.
BOARD OF DIRECTORS
_____________________, 1997
PAGE 2
Notwithstanding the foregoing, if the Closing Net Worth of Consumers is
less than $6,500,000, then at BankUnited's option, it may either terminate the
Agreement, or proceed to consummate the Merger by reducing the aggregate Merger
Consideration to be paid the holders of Consumers Common Stock and the amounts
to be paid to holders of Consumers stock options by $1.25 for each dollar that
the Closing Net Worth is less than $6,500,000. If the Closing Net Worth of
Consumers is less than $6,100,000, then Consumers may terminate the transaction
at the discretion of the Board of Directors.
RP FINANCIAL BACKGROUND AND EXPERIENCE
RP Financial, as part of its financial institution valuation and consulting
practics, is regularly engaged in the valuation of financial institutional
securities in connection with mergers and acquisitions of commercial banks and
thrift institutions, initial and secondary offerings, mutual-to-stock
conversions of thrift institutions, and business valuations for other corporate
purposes for financial institutions. As specialists in the valuation of
securities of financial institutions, RP Financial has experience in, and
knowledge of, the Florida and Southeast markets for thrift and bank securities
and financial institutions operating in Florida.
MATERIALS REVIEWED
In rendering this fairness option, RP Financial reviewed the following
material: (1) the Agreement including exhibits; (2) financial and other
information for Consumers, all with regard to balance and off-balance sheet
composition, profitability, interest rates, volumes, maturities, trends, credit
risk, interest rate risk, liquidity risk and operations: (a) audited financial
statements for the fiscal years ended March 31, 1993 through 1997, (b)
shareholder, regulatory and internal financial and other reports through
August 31, 1997, (c) the most recent proxy statement for Consumers, (d)
internal budgets and financial projections prepared by management and (e)
Consumers' management and Board comments regarding past and current business,
operations, financial condition, and future prospects; and (3) financial and
other information for BankUnited including: (a) audited financial statements
for the fiscal years ended December 31, 1995 and 1996, incorporated in Annual
Reports to shareholders, (b) Form 10K as of December 31, 1996, (c) regulatory
and internal financial and other reports through June 30, 1997, (d) internal
budgets and financial projections prepared by management of BankUnited, (e)
registration statement on Form S-3 as filed with the Securities and Exchange
Commission on September 17, 1997 in conjunction with a secondary offering of
common stock, and (f) BankUnited's management comments regardingpast and
current business, operations, financial condition, and future prospects.
In addition, RP Financial reviewed financial, operational, market area
and stock price and trading characteristics for BankUnited and the stock price
and relatively limited trading information available for Consumers relative to
publicly-traded savings institutions, repsectively, with comparable resources,
financial condition, earnings, operations and markets. RP Financial also
considered the economic and demographic characteristics in the local market
area, and the potential impact of the regulatory, legislative and economic
environments on operations for Consumers and BankUnited and the public
preception of savings institutions. RP Financial also considered: (a) a
transaction summary of the financial terms of the Merger, including the
aggregate Merger Consideration relative to tangible book value, annualized
earnings for the first five months of fiscal 1998, fiscal 1998 budgeted
earnings, assets, and deposit liabilities of Consumers; (b) the financial terms,
financial condition, operating performance, and market area of other recently
completed and pending mergers and acquisitions of comparable financial
institution entities, including Florida transactions specifically and Southeast
U.S. transactions both generally and specifically; (c) discounted cash flow
analyses for Consumers on a stand-alone basis, incorporating estimated
earnings and equity levels implied by Consumers' current business plan and
future prospects; and (d) the pro forma impact on Bank United of the planned
secondary offering of common stock as well the acquisition of Consumers, which
is expected to be accounted for as a purchase.
<PAGE>
RP FINANCIAL, LC.
BOARD OF DIRECTORS
_____________________, 1997
PAGE 3
Furthermore, RP Financial also considered the pro forma impact of the Merger to
the holders of Consumers Common Stock (incorporating the Agreed Value,
transaction adjustments and potential earnings improvements), including the
pro forma impact to the market value per share, tangible book value per share,
and earnings per share of the Consumers Common Stock. RP Financial also
considered the improved liquidity characteristics of the BankUnited Common
Stock relative to the Consumers Common Stock, the enhanced competitive position
of BankUnited resulting from the Merger, and the opportunities for BankUnited
to increase earnings in the future. The results of these analyses and the other
factors considered were evaluated as a whole, with the aggregate results
indicating a range of financial parameters utilized to access the Agreed Value
as described in the Agreement.
In rendering its opinion, RP Financial relied, without independent
verification, on the accuracy and completeness of the information concerning
Consumers and BankUnited furnished by the respective institutions to RP
Financial for review, as well as publicly-available information regarding
other financial institutions and economic and demographic data. Consumers and
BankUnited did not restrict RP Financial as to the material it was permitted to
review. RP financial did not perform or obtain any independent appraisals or
evaluations of the assets and liabilities and potential and/or contingent
liabilities of Consumers or BankUnited.
RP Financial expresses no opinion on matters of a legal, regulatory, tax or
accounting nature or the ability of the merger as set forth in the Agreement to
be consummated. In rendering its opinion, RP Financial assumed that, in the
course of obtaining the necessary regulatory and governmental approvals for the
Merger, no restriction will be imposed on BankUnited that would have a material
adverse effect on the ability of the Merger to be consummated as set forth in
the Agreement.
OPINION
It is understood that this letter is directed to the Board of Directos of
Consumers in its consideration of the Agreement, and does not constitute a
recommendation to any shareholder of Consumers as to any action that such
shareholder should take in connection with the Agreement, or otherwise.
It is understood that this opinion is based on market conditions and
other circumstances existing on the date hereof.
It is understood that this opinion may be included in its entirety in any
communication by Consumers or its Board of Directors to the stockholders of
Consumers. It is also understood that this opinion may be included in its
entirety in any regulatory filing by Consumers or BankUnited, and that RP
Financial consents to the summary of the opinion in the proxy materials of
Consumers, and any amendments thereto. Except as described above, this opinion
may not be summarized, excerpted from or otherwise publicly referred to
without RP Financial's prior written consent.
Based upon and subject to the the foregoing, and other such matters
considered relevant, it is RP Financial's opinion that, as of the date hereof,
the Merger Consideration to be received by Consumers' shareholders, as described
in the Agreement, is fair to such shareholders from a financial point of view.
Respectfully submitted,
RP FINANCIAL, LC.
<PAGE>
REVOCABLE PROXY
CONSUMERS BANCORP, INC.
9400 DADELAND BOULEVARD, SUITE 620
MIAMI, FLORIDA
SPECIAL MEETING OF STOCKHOLDERS
NOVEMBER __, 1997, ____ P.M.
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CONSUMERS
BANCORP, INC. FOR USE ONLY AT THE SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON
NOVEMBER __, 1997, AND AT ANY ADJOURNMENTS THEREOF.
The undersigned hereby appoints the Chairman of the Board, with the full
power of substitution, to act as attorneys and proxies for the undersigned, and
to vote all shares of Common Stock of Consumers Bancorp, Inc. (the "Company")
which the undersigned is entitled to vote, at the Special Meeting of
Stockholders to be held at the Company's main office located at 9400 South
Dadeland Boulevard, Suite 620, Miami, Florida on November __, 1997 at ____ p.m.,
local time, and at any and all adjournments thereof.
You are encouraged to specify your choices by marking the appropriate box
BELOW. You need not mark any box if you wish to vote in accordance with the
Board of Directors' recommendations, only sign on the REVERSE SIDE. The proxies
cannot vote your shares unless you sign, date and return this card.
1. The adoption of an Agreement and Plan of Merger (the "Merger Agreement")
by and among BankUnited Financial. ("BankUnited Financial") and the
Company, pursuant to which, the Company will merge with and into
BankUnited Financial, with BankUnited Financial being the surviving
institution, to be followed by the merger of Consumers Savings Bank with
and into BankUnited, FSB, with BankUnited, FSB as the resulting
institution. In connection with the Merger, each share of common stock,
$.01 par value per share, of the Company shall be canceled and
automatically converted into the right to receive either $21.33 in cash,
2.081 shares of BankUnited Common Stock, or a combination thereof. The
Merger Consideration is subject to adjustment under certain
circumstances.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. If necessary, a proposal to adjourn the Special Meeting to solicit
additional proxies.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(CONTINUED ON BACK SIDE)
<PAGE>
(CONTINUED FROM REVERSE SIDE)
3. The transaction of such other business as may properly come before the
Special Meeting, or any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
The undersigned further gives the proxies authority in their discretion to
vote upon such other business as may properly come before the Special Meeting.
THE PROXY IS REVOCABLE AND, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTIONS ARE MADE BUT THIS PROXY IS
PROPERLY EXECUTED, THIS PROXY WILL BE VOTED FOR PROPOSAL NO. 1 AND PROPOSAL NO.
2.
The undersigned acknowledges receipt of the Notice of the Special Meeting of
Stockholders and of a Proxy Statement, both dated ____________, 1997.
Please mark, date and sign as your name appears below and return in the
envelope.
----------------------------------------------------------
Signature
----------------------------------------------------------
Signature if held jointly
DATED: __________________, 1997
Please sign exactly as your name appears on this card.
When signing as attorney, executor, administrator,
trustee or guardian, please give your full title. If
shares are held jointly, each holder may sign but only
one signature is required.
