As filed with the Securities and Exchange Commission on December 9, 1997
Registration No. 333-39921
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
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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<S> <C> <C>
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 [ ].
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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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 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 Class A 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 each of the
last 30 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 December 4, 1997 the
closing bid and asked prices of the Class A Common Stock, were $12.75 and
$12.875, respectively, and the reported last sale price was $12.875. If the fair
market value of the BankUnited Common Stock was $12.875 at the time of
consummation of the Merger, each share of Consumers Common Stock would be
converted into the right to receive 1.94 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 25 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 December 9, 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
September 30, 1997, BankUnited had $1.2 billion in deposits and $99.6 million in
shareholders' equity. With over $2.1 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 $107.9 million at September 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 $2.1 billion
at September 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 $107.9 million at September 30, 1997.
BankUnited also opened branches in Delray Beach, Florida in June 1996,
West Palm Beach, Florida in September 1996, Boca Hamptons, Florida in August
1997, Coconut Creek, Florida in October 1997, and Aventura, Florida in November
1997. BankUnited currently has one additional branch under construction in the
West Miami area of South Florida, which is scheduled to open in early 1998.
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
5,696 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%.
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RECENT DEVELOPMENTS
DISCUSSION OF FINANCIAL CONDITION CHANGES FROM SEPTEMBER 30, 1996 TO
SEPTEMBER 30, 1997.
ASSETS. Total assets increased by $1.32 billion, or 160.0%, from $824
million at September 30, 1996, to $2.15 billion at September 30, 1997, due
primarily to the purchase of residential loans and acquisition of Suncoast on
November 15, 1996. On the date of the acquisition, Suncoast had total assets of
$409.4 million.
Cash and due from banks increased $5.1 million from $5.5 million as of
September 30, 1996 to $10.6 million at September 30, 1997. This increase was
primarily in response to the additional cash requirements resulting from the
acquisition of Suncoast's mortgage loan servicing operations.
BankUnited's short-term investments, consisting of FHLB overnight
deposits and federal funds sold, increased by $50.8 million, to $79.4 million at
September 30, 1997, from $28.6 million at September 30, 1996. This increase was
due primarily to additional liquidity requirements related to the growth in
total assets.
Mortgage-backed securities available for sale increased $53.4 million
from $55.5 million at September 30, 1996 to $108.9 million at September 30,
1997, due primarily to $18.7 million of mortgage-backed securities acquired with
Suncoast and the purchase of $56.4 million mortgage backed securities. All
mortgage-backed securities acquired with Suncoast, as well as all
mortgage-backed securities purchased during the year ended September 30, 1997,
have been classified as available for sale.
BankUnited's net loan portfolio increased by $1.1 billion, or 173.2%, to
$1.7 billion at September 30, 1997, from $646.4 million at September 30, 1996,
primarily due to the acquisition of $341.4 million of loans with Suncoast and
the purchase of $913.7 million of residential loans.
Loans available for sale as of September 30, 1997 were $104.3 million as
compared with no such loans available for sale as of September 30, 1996.
Beginning in BankUnited's fiscal 1997 fourth quarter, management began a program
to sell certain internally generated residential loans and estimates that 50% to
75% of internally generated loans production will be sold each quarter.
The increase in mortgage servicing rights, goodwill, prepaid expenses
and other assets totaling $33.2 million relates to the acquisition of Suncoast.
In the second quarter, BankUnited sold $292 million of Ginnie Mae ("GNMA")
mortgage servicing rights for $4.7 million. No gain or loss was recorded on the
sale.
Total non-performing assets as of September 30, 1997 were $14.3 million
which represents an increase of $6.5 million from $7.8 million as of September
30, 1996; while non-performing assets as a percentage of total assets declined
28 basis points from .95% as of September 30, 1996 to .67% as of September 30,
1997. Approximately $2.4 million of non-performing assets were acquired with
Suncoast with the remainder of the increase related to the increase in loans.
The allowance for loan losses increased $1.5 million from $2.2 million
as of September 30, 1996 to $3.7 million as of September 30, 1997. The increase
was attributable to the allowance acquired from Suncoast of $775,000 and the
remainder is related to the increase in loans and the increase in non-performing
loans.
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The following table sets forth information concerning BankUnited's
non-performing assets for the dates indicated:
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<CAPTION>
SEPTEMBER
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1997 1996
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(DOLLARS IN THOUSANDS)
<S> <C> <C>
Non-accrual loans (1) $ 10,866 $ 4,939
Restructured loans 1,888 1,457
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Total non-performing loans 12,754 6,396
Non-accrual tax certificates 958 800
REO 611 632
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Total non-performing assets $ 14,323 $ 7,828
========== ==========
Allowance for tax certificates $ 697 $ 614
Allowance for loan losses 3,693 2,158
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Total allowance $ 4,390 $ 2,772
========== ==========
Non-performing assets as a percentage of total assets .67% .95%
Non-performing loans as a percentage of total loans .72% .99%
Allowance for loan losses as a percentage of total loans .21% .34%
Allowance for loan losses as a percentage of
non-performing loans 28.96% 33.74%
</TABLE>
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(1) In addition, management had concerns as to the borrower's ability to
comply with present repayment terms on $1,878,192 and $109,000 of accruing
loans as of September 30, 1997 and 1996, respectively.
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LIABILITIES. Deposits increased by $689.8 million, or 136.3%, to $1.2
billion at September 30, 1997 from $506.1 million at September 30, 1996. Of this
growth, $323.7 million was acquired with Suncoast; $96.6 million of the increase
represents growth in former Suncoast branches since acquisition; $128.1 million
represents growth in the four branches opened in the two years; and $22.0
million represents deposits from the State of Florida. Management believes this
strong deposit growth was primarily attributable to BankUnited offering
competitive interest rates and personalized service. BankUnited intends to open
six or more branches in the next 12 months.
FHLB ADVANCES. FHLB advances were $671.5 million at September 30, 1997,
up $434.5 million from $237.0 million at September 30, 1996. This increase was
the result of FHLB advances being used to fund the purchase of residential loans
as well as $26.5 million of advances assumed by the Bank in connection with the
acquisition of Suncoast.
TRUST PREFERRED SECURITIES. In December 1996, BankUnited's subsidiary,
BankUnited Capital, issued $50 million of Trust Preferred Securities; in March
1997, BankUnited Capital issued an additional $20 million of Trust Preferred
Securities; and in September 1997, BankUnited's subsidiary, BankUnited Capital
II, issued $46 million of Trust Preferred Securities. The net proceeds from the
sales of the Trust Preferred Securities were $112 million. These funds may be
used for general corporate purposes, including, but not limited to, acquisitions
by either BankUnited or the Bank, capital contributions to support the Bank's
growth and for working capital, and the possible repurchase of shares of
BankUnited's preferred stock subject to acceptable market conditions. In the
year ended September 30, 1997, BankUnited contributed $85 million of additional
capital to the Bank.
CAPITAL. BankUnited's total shareholders' equity was $99.6 million at
September 30, 1997, an increase of $30.5 million, or 44.1%, from $69.1 million
at September 30, 1996. The increase was due primarily to the issuance of
2,199,930 shares of Class A Common Stock and 920,000 shares of 8% Noncumulative
Convertible Preferred Stock, Series 1996, issued in connection with the Suncoast
acquisition. The estimated value of the stock issued to acquire Suncoast was
$27.8 million.
In February 1997, the holder of BankUnited's Series C and Series C-II
classes of preferred stock exercised the right to convert both classes to Class
A Common Stock at exchange ratios of 1.45475 shares of Class A Common Stock for
each share of Series C preferred stock and 1.3225 shares of Class A Common Stock
for each share of Series C-II preferred stock. BankUnited had previously
exercised its right to call both classes of preferred stock. In July 1997,
BankUnited began a tender offer to purchase any and all of its outstanding
shares of 9% Preferred Stock at $10.25 per share. The offer expired on August
15, 1997, and BankUnited purchased 448,583 shares pursuant thereto. The number
of shares remaining outstanding after the tender offer is 701,417 shares.
In September, 1997, the Company exercised its right to call all the
outstanding shares of its 8% Non Cumulative Convertible Preferred Stock since
1996 effective October 10, 1997. As a result 922,204 shares (387,709 shares as
of September 30, 1997) converted to 1,548,410 Class A Common Stock at a ratio of
1-2/3 shares of common stock for each share of preferred. The remaining 5,696
shares of preferred shares were redeemed at $15 per share.
In October 1997, the Company issued 3,680,000 shares of Class A Common
Stock pursuant to a public stock offering. Net proceeds from the offering were
approximately $43.9 million.
COMPARISON OF OPERATING RESULTS FOR THE FISCAL YEARS ENDED SEPTEMBER
30, 1997 AND 1996
NET INCOME AFTER PREFERRED STOCK DIVIDENDS. BankUnited had net income
after preferred stock dividends of $4.7 million for the year ended September 30,
1997, compared to net income after preferred stock dividends of $441,000 for the
year ended September 30, 1996. All major categories of income and expense
increased significantly
9
<PAGE>
in the year ended September 30, 1997 as compared to the year ended September 30,
1996 and reflect the significant growth BankUnited has experienced in the last
year. A significant factor in such growth was the acquisition of Suncoast, which
was completed on November 15, 1996. BankUnited's Consolidated Statement of
Operations for the year ended September 30, 1997 reflects Suncoast's operations
from the date of acquisition. Below is a more detailed discussion of each major
category of income and expenses.
NET INTEREST INCOME. Net interest income increased $13.9 million, or
78.8%, to $31.5 million for the year ended September 30, 1997 from $17.6 million
for the year ended September 30, 1996. This increase was attributable to an
increase in average interest-earning assets of $726.0 million, or 104.3%, to
$1.4 billion for the year ended September 30, 1997 from $696.4 million for the
year ended September 30, 1996. Approximately $350 million of the increase in
average interest-earning assets for the year ended September 30, 1997 was a
result of the acquisition of Suncoast. The remaining increase in average
interest-earning assets is due primarily to loan purchases. The average yield on
interest-earning assets increased 16 basis points to 7.65% for the year ended
September 30, 1997 from 7.49% for the year ended September 30, 1996. The
increase in average yield was attributable to an increase in the yield on loans
receivable relating primarily to commercial real estate and construction loans
acquired with Suncoast. Suncoast had a greater percentage of higher yielding
commercial real estate and construction loans than the Bank.
The increase in interest income of $56.6 million, or 108.7%, to $108.7
million for the year ended September 30, 1997 from $52.1 million for the year
ended September 30, 1996, primarily reflects increases in interest and fees on
loans of $53.3 million. The average yield on loans receivable increased to 7.78%
for the year ended September 30, 1997 from 7.65% for the year ended September
30, 1996 and the average balance of loans receivable increased $676.9 million,
or 125.3%, to $1.2 billion for the year ended September 30, 1997. Approximately
$300 million of the increase in loans was due to the acquisition of Suncoast
and, as stated above, the increase in the yield on loans was also attributed to
Suncoast.
The increase in interest expense of $41.3 million, or 119.4%, to $76.0
million for the year ended September 30, 1997 from $34.6 million for the year
ended September 30, 1996 primarily reflects an increase in interest expense on
interest-bearing deposits of $29.3 million, or 141.1%, from $20.8 million for
the year ended September 30, 1996, to $50.1 million for the year ended September
30, 1997, an increase in interest expense on FHLB advances of $5.0 million from
$13.8 million for the year ended September 30, 1996 to $18.8 million for the
year ended September 30, 1997, and interest expense of $6.5 million on Trust
Preferred Securities which were issued in fiscal 1997. This increase was due to
an increase in average interest-bearing deposits of $557.8 million, or 137.2%,
from $406.6 million for the year ended September 30, 1996 to $964.4 million for
the year ended September 30, 1997. Approximately $250 million of this increase
represents deposits acquired with Suncoast. The average rate paid on
interest-bearing deposits increased 9 basis points from 5.11% for the year ended
September 30, 1996 to 5.20% for the year ended September 30, 1997.
PROVISION FOR LOAN LOSSES. The provision for loan losses for the year
ended September 30, 1997 was $1.3 million as compared with a credit for loan
losses of $120,000 for the year ended September 30, 1996. The credit in 1996 was
due to a recovery of approximately $1 million as a result of a legal settlement
relating to certain loans previously purchased. The provision for loan losses
represents management's estimate of the charge to operations after reviewing the
nature, volume, delinquency status, and inherent risk in the loan portfolio in
relation to the allowance for loan losses. For a detailed discussion of
BankUnited's asset quality and allowance for loan losses, see "--Description of
Financial Condition Changes for the Years Ended September 30, 1997, 1996 and
1995--Credit Quality."
NON-INTEREST INCOME. Non-interest income for the year ended
September 30, 1997 was $4.1 million compared with $650,000 for the year ended
September 30, 1996, an increase of $3.4 million. Of this increase, $1.6 million
represents loan servicing fees (net of amortization of capitalized servicing
rights) from operations acquired with
10
<PAGE>
Suncoast, and $819,000 represent gains on the sale of loans and mortgage backed
securities. The remaining increase was primarily attributable to service fees on
deposits reflecting the increase in the amount of deposits outstanding.
NON-INTEREST EXPENSES. Operating expenses increased $8.9 million, or
63.5%, to $22.9 million for the year ended September 30, 1997 compared to $14.0
million for the year ended September 30, 1996. The increase in expenses was
attributable to the growth BankUnited has experienced including the expenses of
Suncoast's operations. The year ended September 30, 1996 included a one time
SAIF assessment to replenish the Savings Association Insurance Fund of the
Federal Deposit Insurance Corporation (FDIC) of $2.6 million.
INCOME TAXES. The income tax provision was $5.0 million for the year
ended September 30, 1997 compared to $1.7 million for the year ended September
30, 1996. The increase in income taxes was the result of BankUnited's higher
pre-tax earnings during the year ended September 30, 1997, compared to the year
ended September 30, 1996.
PREFERRED STOCK DIVIDENDS. Preferred stock dividends for the year ended
September 30, 1997 were $2.9 million, an increase of $745,000, as compared to
$2.1 million for the year ended September 30, 1996. This increase is the result
of dividends paid on the 8% Noncumulative Convertible Preferred Stock, Series
1996, issued in connection with the acquisition of Suncoast and retired in
October, 1997, partially offset by the conversion of the Noncumulative
Convertible Preferred Stock, Series C and C-II in February 1997.
11
<PAGE>
<TABLE>
<CAPTION>
BANKUNITED FINANCIAL CORPORATION
YEAR ENDING SEPTEMBER 30, 1997
YEAR ENDED SEPTEMBER 30,
------------------------
1997 1996(A)
---- -------
(Dollars in thousands, except per share data)
<S> <C> <C>
Total interest income ................................................... $ 108,774 $ 52,132
Total interest expense .................................................. 75,960 34,622
--------- ---------
Net interest income before provision (credit) for loan losses ......... 32,814 17,510
Provision (credit) for loan losses ...................................... 1,295 (120)
--------- ---------
Net interest income after provision (credit) for loan losses........... 31,519 17,630
Net gain (loss) on sale of assets ....................................... 821 (1)
Total other income ...................................................... 3,239 650
Total other expense ..................................................... 22,947 14,036
--------- ---------
Income before income taxes and preferred stock dividends............... 12,632 4,243
Provision for income taxes .............................................. 5,033 1,657
--------- ---------
Net income before preferred stock dividends.............................. 7,599 2,586
Preferred stock dividends ............................................... 2,890 2,145
--------- ---------
Net income after preferred stock dividends............................... $ 4,709 $ 441
========= =========
Primary earnings per common share ....................................... $ 0.54 $ 0.10
========= =========
Weighted average common shares and equivalents........................... 8,679,845 4,558,521
========= =========
Fully-diluted earnings per common share: ................................ $ 0.54 $ 0.10
========= =========
Weighted average fully-diluted common shares............................. 9,030,843 4,558,521
========= =========
Return on average equity ................................................ 8.06% 4.30%
Return on average assets ................................................ 0.51% 0.36%
Net interest yield on earning assets .................................... 2.31% 2.52%
Net interest spread ..................................................... 2.07% 2.10%
<CAPTION>
AS OF SEPTEMBER 30,
-------------------------
1997 1996
---- ----
<S> <C> <C>
Total assets ............................................................ $ 2,145,406 $ 824,367
Loans receivable, net ................................................... 1,661,381 646,385
Mortgage-backed securities .............................................. 120,271 70,165
Deposits ................................................................ 1,195,892 506,106
Borrowings .............................................................. 817,484 237,775
Stockholders' equity .................................................... 99,645 69,111
Book value per common share. ............................................ 7.94 7.85
Fully converted tangible book value per common share..................... 6.88 7.42
Pro forma book value per common share(B) ................................ 9.04 N/A
Pro forma fully converted tangible book value per common share(B)........ 7.99 N/A
</TABLE>
- ---------------------
(A) 1996 includes the one time SAIF special assessment of $2,641,000
($1,621,000 after tax)
(B) Pro forma book value per common share and fully converted tangible book
value per common share represent book value as of September 30, 1997
adjusted to reflect the issuance of 3,680,000 shares of Class A stock and
the conversion of the 8% Convertible Preferred Stock, Series 1996, both of
which occurred in October 1997.
12
<PAGE>
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 September
30, 1997, BankUnited had $1.2 billion in deposits, $99.6 million in
shareholders' equity, and over $2.1 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 September 30,
1997, Consumers had consolidated total assets of $107.9 million, deposit
liabilities of $87.7 million and shareholders' equity of $6.97 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 January 15, 1998 at 2:00 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 December 5,
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 December 5, 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.
13
<PAGE>
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 and 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 each of the last 30 trading days.
For example, if the fair market value of BankUnited Common Stock was $12.875 per
share (the reported last sales price on December 4, 1997) at the time of
consummation of the Merger, each share of Consumers Common Stock would be
converted into the right to receive 1.94 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.
14
<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 December 5, 1997 are
entitled to one vote for each share then held. As of December 5, 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.
15
<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 December 4, 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 as of December 5, 1997 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>
16
<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 system, 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
Merger Agreement is terminated under certain circumstances, it 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 in early 1998. 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
17
<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 Class A 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 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 system under the symbol "BKUNA." As of October 31, 1997, there
were approximately 425 record holders of Class A Common Stock and 13,861,960
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
18
<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 December 4, 1997 (the latest
practicable trading day before the printing of this Prospectus).
BANKUNITED CLASS A
COMMON STOCK
------------------
September 18, 1997 $12.75
December 4, 1997 $12.875
Since the number of shares of BankUnited Class A Common Stock which
Consumers shareholders may receive in the Merger is dependent on the fair market
value of BankUnited Class A Common Stock, Consumers shareholders are advised to
obtain current market quotations for the BankUnited Common Stock. If the average
fair market value of BankUnited Class A 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 $12.875 per
share (the reported last sales price on December 4, 1997) at the time of
consummation of the Merger, each share of Consumers Common Stock would be
converted into the right to receive 1.94 shares of BankUnited Class A 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.
19
<PAGE>
SELECTED HISTORICAL AND PRO FORMA PER SHARE DATA
The unaudited information set forth in the following tables reflects
certain comparative per common share data related to income per share, cash
dividends declared per share, and book value per share (i) on an historical
basis for BankUnited and Consumers; (ii) on a pro forma combined basis per share
of the BankUnited Class A Common Stock assuming consummation of the Merger; and
(iii) on an equivalent pro forma combined basis per share of the Consumers
Common Stock assuming consummation of the Merger.
The information shown below should be read in conjunction with the
consolidated historical financial statements of BankUnited and Consumers,
including the respective notes thereto, which are included or incorporated by
reference in this Prospectus. The pro forma data is presented for comparative
purposes only and is not necessarily indicative of the combined financial
position or results of operations which would have been realized had the Merger
been consummated during the period or as of the dates for which the pro forma
data is presented.
See "Information Incorporated by Reference," and the consolidated
financial statements of Consumers and the notes thereto contained in Appendix A
to this Prospectus.
AT OR FOR
YEAR ENDED
SEPTEMBER 30,
------------
1997
----
BANKUNITED CLASS A COMMON STOCK
Earnings per share-primary (a):
Historical.............................................. $ .54
Pro forma (b) .......................................... .48
Earnings per share-fully diluted(a):
Historical ............................................. .54
Pro forma (b) .......................................... .48
Cash dividends declared per share:
Historical ............................................. -
Pro forma .............................................. -
Book value per share-end of period:
Historical.............................................. 7.94
Pro forma (c) .......................................... 8.16
AT OR FOR
YEAR ENDED
SEPTEMBER 30,
------------
1997
----
CONSUMERS COMMON STOCK
Earnings (loss) per share-primary (a):
Historical............................................. $ .75
Equivalent pro forma (d) .............................. 1.00
Earnings (loss) per share-fully diluted(a):
Historical ............................................ .75
Equivalent pro forma (d) .............................. 1.00
Cash dividends declared per share:
Historical ............................................ -
Equivalent pro forma (d) .............................. -
Book value per share-end of period:
Historical ............................................ 14.35
Equivalent pro forma (d) .............................. 16.98
(a) In calculating pro forma earnings per share no adjustments to the pro
forma amounts have been made to reflect potential expense reductions or
revenue enhancements which may result from the Merger.
(b) Gives effect to the Merger as if it had occurred at October 1, 1996.
(c) Gives effect to the Merger as if it had occurred at September 30, 1997.
(d) The equivalent pro forma computations assume that each share of
Consumers Common Stock is equivalent to 2.08098 shares of the combined
entity.
20
<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)
21
<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>
22
<PAGE>
CONSUMERS SELECTED FINANCIAL DATA
The information for, and as of the end of, the six months ended
September 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 the results for such periods. The
results for the six months ended September 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 SEPTEMBER 30, AT MARCH 31,
-------------------- ------------------
1997 1996 1997 1996
---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets .................................. $ 107,852 $ 88,760 $ 94,022 $ 88,648
Loans held for sale ........................... 5,495 2,239 5,107 5,661
Loans receivable, net.......................... 67,505 53,179 56,305 49,749
Mortgage-backed securities held to maturity.... 3,820 4,923 4,709 5,622
Mortgage-backed securities available for sale.. 14,541 11,504 9,951 12,085
Investment securities ......................... 9,017 5,965 6,955 4,958
Cash and cash equivalents ..................... 2,584 4,719 6,320 4,370
Deposits ...................................... 87,680 75,306 79,079 72,617
Borrowed funds ................................ 8,000 3,500 3,500 5,333
Shareholders' equity .......................... 6,967 6,507 6,712 6,598
<CAPTION>
SIX MONTHS YEARS
ENDED SEPTEMBER 30, ENDED MARCH 31,
-------------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Interest income ............................... $ 3,779 $ 3,277 $ 6,736 $ 6,545
Interest expense .............................. 2,363 2,011 4,089 4,143
--------- ------- ------- -------
Net interest income before provision
for loan losses ............................. 1,416 1,266 2,647 2,402
Provision for loan losses ........ -- -- -- --
Net interest income after provision
for loan losses ............................. 1,416 1,266 2,647 2,402
Other income:
Gain (loss) on sale of loans and mortgage -
backed securities .......................... (98) 9 (32) (59)
Gain on sale of loan servicing rights 202 122 337 386
Brokered loan fees ............................ -- 113 186 295
Other income .................................. 124 68 137 174
--------- ------- ------- -------
Total other income ......................... 228 312 628 796
--------- ------- ------- -------
Other expense:
Salaries and employee benefits................. 743 663 1,353 1,392
Occupancy and equipment expense................ 234 219 436 467
FDIC and other insurance premiums.............. 26 480 592 201
Data processing ............................... 61 61 124 112
Legal, professional and consulting fees........ 88 75 89 104
Stationery and supplies ....................... 25 30 61 64
Other expense ................................. 226 218 419 515
--------- ------- ------- -------
Total other expense ........................ 1,403 1,746 3,074 2,856
--------- ------- ------- -------
Income (loss) before income taxes ............. 241 (168) 201 343
Income tax expense (benefit)................... 92 (56) 77 137
--------- ------- ------- -------
Net income (loss)........................... $ 149 $ (112) $ 124 $ 206
========= ======= ======= =======
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT MARCH 31,
--------------------- --------------------
1997 1996 1997 1996
---- ---- ---- ----
OTHER DATA:
<S> <C> <C> <C> <C>
Equity to assets at period end..................... 6.46% 7.33% 7.14% 7.44%
Net interest spread................................ 2.65% 2.56% 2.65% 2.47%
Net interest margin................................ 2.96% 2.98% 3.06% 2.91%
Return on average assets........................... 0.30% (0.26)% 0.14% 0.25%
Return on average equity........................... 4.37% (3.38)% 1.87% 3.14%
Non-interest income to average asset ratio......... 0.47% 0.72% 0.71% 0.95%
Non-interest expense to average asset ratio........ 2.86% 4.01% 3.48% 3.40%
Non-performing loans to total loans ............... 1.08% 0.28% 0.30% 0.32%
Non-performing assets to total assets.............. 0.85% 0.17% 0.34% 0.18%
Average interest-earning assets to average
interest-bearing liability....................... 106.25% 108.91% 108.78% 108.71%
Allowance for loan losses to
non-performing assets ........................... 36.06% 214.93% 102.16% 233.46%
Net interest income to non-interest expense........ 100.97% 72.51% 86.13% 84.11%
Net interest income after provision for loan
losses to non-interest expense .................. 100.97% 72.51% 86.13% 84.11%
</TABLE>
24
<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
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<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
26
<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.
27
<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."
28
<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.
29
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of
BankUnited as of September 30, 1997, as adjusted to give effect to the
consummation of (i) the conversion to 899,158 shares of Class A Common Stock of
539,495 shares of BankUnited's outstanding 8% Noncumulative Convertible
Preferred Stock, Series 1996, and the redemption of the remaining 5,696 shares
of the 8% Noncumulative Convertible Preferred Stock, Series 1996, (ii) 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 (iii) 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.......................................................... $1,195,892 $1,283,572
FHLB advances and other borrowings................................ 701,484 709,484
Company Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trusts Holding Solely Junior Subordinated
Deferrable Interest Debentures of BankUnited................... 116,000 116,000
---------- ----------
Total deposits and borrowed funds............................ 2,013,376 2,109,056
---------- ----------
Shareholders' equity:
Preferred Stock, Series B, 8% Convertible and 9% Perpetual,
$.01 par value; authorized--10,000,000 shares; issued and
outstanding--2,175,296 shares as of September 30, 1997 and
1,630,105 shares as adjusted(1) 22 16
Class A Common Stock, $.01 par value; authorized--30,000,000
shares; issued and outstanding--9,257,098 shares as of
September 30, 1997 and 14,947,038 shares as adjusted........... 92 149
Class B Common Stock, $.01 par value; authorized--3,000,000
shares, issued and outstanding--275,685 shares as of
September 30, 1997 and as adjusted............................. 3 3
Additional paid-in capital....................................... 86,678 140,823
Retained earnings................................................ 11,989 11,989
Net unrealized losses on securities available for sale,
net of tax..................................................... 861 861
---------- ----------
Total shareholders' equity.................................... 99,645 153,841
---------- ----------
Total deposits, borrowed funds and shareholders' equity....... $2,113,021 $2,262,897
========== ==========
- -----------------------------
<FN>
(1) Such shares had an aggregate liquidation preference of $24.0 million at
September 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."
</FN>
</TABLE>
30
<PAGE>
THE MERGER
GENERAL
The Merger Agreement was executed on September 19, 1997 and 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 of
interest 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 offers. 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 transactions 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 merger agreement.
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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<PAGE>
(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's 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
operations of CSB and the Bank;
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<PAGE>
(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 Class A Common Stock, and 28.07x
Consumers' earnings (excluding the impact of the special SAIF
assessment) if paid in BankUnited Class A 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 Class A
Common Stock as merger consideration.
On September 15, 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 December 4, 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. RP Financial has consented to
the inclusion and description of its written opinion in this Prospectus.
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 $15,000 has been
paid to date, plus reimbursement 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
33
<PAGE>
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) audited financial
statements for the fiscal years ended March 31, 1993 through 1997, (b)
shareholder, regulatory and internal financial and other reports through
September 30, 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) 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) fourth quarter and
fiscal year end earnings reported as of September 30, 1997, as released to the
public in November 1997; (e) internal budgets and financial projections prepared
by management of BankUnited; (f) BankUnited's registration statement on Form S-3
as filed with the Securities and Exchange Commission on September 30, 1997 in
conjunction with a secondary offering of common stock; (g) BankUnited's
registration statement on Form S-4 filed on November 10, 1997, in connection
with the issuance of BankUnited Class A Common Stock to Consumers shareholders;
(h) the Proxy Statement furnished in connection with the adoption of the Merger
Agreement by the shareholders of Consumers; and (i) 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 December 4, 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 December 4, 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, and
updated as of December 4, 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 or announced 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 1996 or 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 eight institutions. The acquisition pricing ratios of this
group were: (i) price/earnings ratios ranging from 9.17x to 35.95x, with a
median of 19.66x; (ii) price/tangible book ratios ranging from 141% to 180%,
with a median of 157% percent; and (iii) price/assets ratios ranging from 7.10%
to 15.22%, with a median of 10.53%.
The Southeast institutions with similar resources and scope of
operations (Comparable Group #2) completing or announcing acquisitions since the
beginning of 1996 included a total of twenty-five institutions. The acquisition
pricing ratios of this group were: (i) price/earnings ratios ranging from 9.17x
to 68.36x, with a median of 22.65x; (ii) price/tangible book ratios ranging from
104% to 400%, with a median of 151%; and (iii) price/assets ratios ranging from
6.48% to 35.63%, with a median of 12.66%.
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 two
groups based on the merger consideration as of September 18, 1997, and December
4, 1997, while the price/assets ratio was in the range exhibited by Comparable
Group #1 and Comparable Group #2. Specifically, the Merger Consideration of
$22.92, based on the exchange ratio and the Fair Market Value as of December 4,
1997 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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Consumers Common Stock, based on financial statements as of or for the six
months ended September 30, 1997: 37.58x annualized earnings, 159.73% of reported
tangible book value, 10.32% of assets and 4.75% premium on core deposits.
Assuming that 100% of the merger consideration is in the form of BankUnited
Class A Common Stock, the following pricing ratios for shares of Consumers
Common Stock are indicated, based on financial statements as of or for the six
months ended September 30, 1997: 40.68x earnings, 174.01% of reported tangible
book value, 11.24% of assets and 5.88% 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
September 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, 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 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 $12.875 per
share (the reported last sales price on December 4, 1997) at the time of
consummation of the Merger, each share of Consumers Common Stock would be
converted into the right to receive 1.94 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 Class A 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 Class A 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 Class A 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 Class A Common Stock and cash. No dividend or other distribution
payable to the holders of the record of BankUnited Class A 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 Class A 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 Class A
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 system
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 Class A Common Stock will be treated as a
tax-free exchange; and
(d) The fair market value of BankUnited Class A 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
43
<PAGE>
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.
44
<PAGE>
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.
45
<PAGE>
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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<PAGE>
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 either party (if such party is not in material breach of
any of its obligations under the Merger Agreement) 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 of the other contained
in the Merger Agreement which has not been, or cannot be, cured within
30 days after written notice of such breach is given; 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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<PAGE>
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 CLASS A COMMON STOCK RECEIVED/ISSUED IN THE MERGER
The BankUnited Class A 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 Class A
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 Class A
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 Class A 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 Class A
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.
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<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Combined Statement of
Financial Condition as of September 30, 1997, and the Unaudited Pro Forma
Condensed Combined Statement of Operations for the year ended September 30,
1997 give effect to the Merger accounted for as a purchase of Consumers by
BankUnited. Under the purchase method of accounting, all assets and liabilities
of Consumers at September 30, 1997 have been adjusted to their current estimated
fair values and combined with the asset and liability book values of BankUnited.
The Unaudited Pro Forma Condensed Combined Statement of Financial Condition
assumes the Merger was effective on September 30, 1997. The Unaudited Pro Forma
Condensed Combined Statement of Operations gives effect to the Merger as if the
Merger had occurred at October 1, 1996.
The pro forma information is based on the historical consolidated
financial statements of BankUnited and of Consumers, as adjusted, as set forth
in the accompanying Notes to the Unaudited Pro Forma Condensed Combined
Financial Statements. Consumers' fiscal year-end is March 31, and thus
Consumers' financial statements have been adjusted to reflect an unaudited
fiscal year ending September 30, 1997. The Unaudited Pro Forma Condensed
Combined Financial Statements do not give effect to any anticipated cost savings
or potential revenue enhancements in connection with the Merger.
The information shown below should be read in conjunction with the
consolidated historical financial statements of BankUnited and of Consumers,
including the respective notes thereto, which are included or incorporated by
reference in this Registration Statement on Form S-4. The pro forma data are
presented for comparative purposes only and are not necessarily indicative of
the combined financial position or results of operations in the future or of the
combined financial position or results of operations which would have been
realized had the Merger been consummated during the periods or as of the dates
for which the pro forma data are presented.
Pro forma per share amounts for BankUnited giving effect to the Merger
are based on the Exchange Ratio of 2.08098 shares of BankUnited's Class A Common
Stock for each share of the Consumers' common stock.
49
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF FINANCIAL CONDITION
September 30, 1997
COMBINED
BANKUNITED CONSUMERS ADJUSTMENTS PRO FORMA
---------- --------- ----------- ---------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks .................................... $ 10,571 $ 464 $ (646)(2) $ 10,389
FHLB overnight deposits and federal funds sold.............. 79,413 2,120 - 81,533
Tax certificates, net ...................................... 49,283 - - 49,283
Investments, held to maturity .............................. 14,494 1,999 - 16,493
Investments, available for sale, at market.................. 10,166 9,429 - 19,595
Mortgage-backed securities, held to maturity................ 11,352 3,820 70(1) 15,242
Mortgage-backed securities, available for sale, at market... 108,919 14,541 - 123,460
Loans receivable, net ...................................... 1,661,381 67,505 2,000(1) 1,730,886
Mortgage loans held for sale ............................... 104,342 5,495 - 109,837
Other interest earning assets .............................. 33,599 673 - 34,272
Mortgage servicing rights .................................. 4,783 - - 4,783
Office properties and equipment, net........................ 7,371 539 - 7,910
Real estate owned, net ..................................... 611 206 - 817
Accrued interest receivable ................................ 16,261 641 - 16,902
Cost over fair value of net assets acquired and
other intangible assets .................................. 14,278 - 3,515(1) 17,793
Prepaid expenses and other assets .......................... 18,582 420 - 19,002
------------ ----------- --------- ------------
Total assets ........................................... $ 2,145,406 $ 107,852 $ 4,939 $ 2,258,197
============ =========== ========= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits................................................. $ 1,195,892 $ 87,680 $ - $ 1,283,572
Advances from FHLB and other borrowings.................. 701,484 8,000 - 709,484
Trust Preferred Securities .............................. 116,000 - - 116,000
Advance payments by borrowers for taxes and insurance ... 10,688 1,936 765(3) 12,624
Accrued expenses and other liabilities................... 21,697 3,269 787(6) 26,518
------------ ----------- --------- ------------
Total liabilities ..................................... 2,045,761 100,885 1,552 2,148,198
------------ ----------- --------- ------------
Stockholders' Equity:
Preferred Stock ......................................... 22 - - 22
Class A Common Stock .................................... 92 5 5(2) 102
Class B Common Stock .................................... 3 - - 3
Additional paid-in capital .............................. 86,678 4,148 6,196(2) 97,022
Retained earnings ....................................... 11,989 2,748 (2,748)(2) 11,989
Net unrealized gains on securities available for sale ... 861 66 (66)(2) 861
------------ ----------- --------- ------------
Total stockholders' equity ............................ 99,645 6,967 3,387 109,999
------------ ----------- --------- ------------
Total liabilities and stockholders' equity............. $ 2,145,406 $ 107,852 $ 4,939 $ 2,258,197
============ =========== ========= ============
Book value per common share ............................... 7.94 8.16
Fully converted tangible book value per share.............. 6.88 7.12
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
for the year ended September 30, 1997
COMBINED
BANKUNITED CONSUMERS ADJUSTMENTS(5) PRO FORMA
---------- --------- -------------- ---------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
OPERATIONS DATA:
Interest income ......................................... $ 108,774 $ 7,238 $ (414)(1) $ 115,598
Interest expense ........................................ 75,960 4,441 - 80,401
---------- ---------- -------- ----------
Net interest income before provision for loan losses..... 32,814 2,797 (414) 35,197
Provision for loan losses ............................... 1,295 - - 1,295
---------- ---------- -------- ----------
Net interest income after provision for loan losses...... 31,519 2,797 (414) 33,902
Non-interest income:
Loan servicing income, net ............................ 1,568 279 - 1,847
Gain on sale of assets ................................ 821 47 (21)(4) 847
Other.................................................. 1,671 219 - 1,890
---------- ---------- -------- ----------
Total non-interest income ........................... 4,060 545 (21) 4,584
Non-interest expense:
Employee compensation and benefits .................... 8,880 1,432 - 10,312
Occupancy and equipment ............................... 3,568 451 - 4,019
Other operating expenses .............................. 10,499 847 (141)(1) 11,487
---------- ---------- -------- ----------
Total non-interest expenses ......................... 22,947 2,730 (141)(1) 25,818
---------- ---------- -------- ----------
Income before income taxes and preferred stock dividends. 12,632 612 (576) 12,668
Provision for income taxes .............................. 5,033 226 (l65)(6) 5,094
---------- ---------- -------- ----------
Net income before preferred stock dividends.............. 7,599 386 (411) 7,574
Preferred stock dividends ............................... 2,890 - - 2,890
---------- ---------- -------- ----------
Net income after preferred stock dividends............... $ 4,709 $ 386 $ (411) $ 4,684
========== ========== ======== ==========
PER COMMON SHARE DATA:
Primary earnings per common share and common
equivalent share ...................................... $ 0.54 $ 0.48
Earnings per common share assuming full dilution......... $ 0.54 $ 0.48
Weighted average number of common shares and common
equivalent shares assumed outstanding during the period:
Primary ............................................... 8,679,845 9,689,991
Fully diluted ......................................... 9,030,843 10,159,051
</TABLE>
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NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
(1) Adjustments to fair value for Consumer's assets and liabilities are as
follows (dollars in thousands):
<TABLE>
<CAPTION>
AMORTIZATION ANNUAL IMPACT ON
ADJUSTMENTS PERIOD AND METHOD STATEMENT OF OPERATIONS
----------- ----------------- -----------------------
<S> <C> <C> <C>
Loans Receivable $ 2,000 9 years/interest method $ (400)
Mortgage-Backed Securities, 70 9 years/interest method (14)
Held to maturity ------
$ (414)
Cost over fair value of
net assets acquired 3,515 25 years/straight line (141)
</TABLE>
(2) The purchase price of $11,000,000 represents the issuance of 1,110,782
shares of BankUnited Class A Common Stock at a price of $10.25 per share
(the negotiated cash price in the Merger Agreement) and $646,000 to cash out
Consumers' outstanding stock options.
The following summarizes the entries to Stockholders' Equity (dollars in
thousands):
<TABLE>
<CAPTION>
ENTRIES TO ENTRIES TO
ELIMINATE CONSUMERS RECORD STOCK TO
EQUITY BE ISSUED TOTAL
------------------ ---------------- ------
<S> <C> <C> <C>
Class A Common $ (5) $ 10 $ 5
Additional Paid-in Capital (4,148) 10,344 6,196
Retained Earnings (2,748) - (2,748)
Net unrealized gains on securities available for sale (66) - (66)
---------- ---------- ---------
Total Stockholders' Equity $ (6,967) $ 10,354 $ 3,387
========== ========== =========
</TABLE>
(3) The total purchase price includes $765,000 of accrued liabilities for
direct acquisition costs such as legal, accounting, investment banking and
other professional fees and expenses.
(4) The pro forma adjustments reflect the reversal of securities gains recorded
by Consumers as these gains would have been recorded as market value
adjustments in purchase accounting.
(5) The pro forma adjustments do not include the effect of any potential
expense reductions, revenue enhancements or restructuring charges.
(6) The statutory income tax rate is assumed to be 38%. Amortization of the
cost over fair value of net assets acquired (goodwill) is not deductible for
tax purposes.
52
<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 BankUnited 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..................................... 13,861,960 13,861,960
Class B Common Stock..................................... 278,685 278,685
Series 1993 Preferred Stock.............................. 743,870 743,870
Series B Preferred Stock................................. 203,818 304,891
9% Preferred Stock....................................... 697,117 0
Stock Options............................................ 1,586,624 1,586,624
Warrants................................................. 55,200 93,034
---------- -----------
Total............................................. 17,427,274 16,869,064
========== ==========
</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, 13,861,960 shares of Class A Common
Stock were issued and outstanding and 3,004,940 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.
53
<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
1,885,716 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, 743,870 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.
54
<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 $1.3 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.
55
<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.
56
<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 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.
57
<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 eight.
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, 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
58
<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 said 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.
LEGAL MATTERS
The validity of the shares of the BankUnited Class A Common Stock to be
issued to the holders of Consumers capital stock pursuant to the Merger will be
passed upon for BankUnited by Stuzin and Camner, Professional Association
("Stuzin and Camner"), Miami, Florida. Alfred R. Camner, Chairman of the Board,
Chief Executive Officer, President and Director of BankUnited, is the senior
managing director and shareholder of Stuzin and Camner, and Earline G. Ford,
Executive Vice President, Treasurer and Director of BankUnited was the legal
administrator of Stuzin and Camner until October, 1996. As of December 1, 1997,
directors and employees of Stuzin and Camner directly and indirectly owned in
the aggregate approximately 367,335 shares of the BankUnited Class A Common
Stock, 853,817 shares of the BankUnited Class B Common Stock and 257,578 shares
of the BankUnited Preferred Stock (including shares that may be acquired by the
exercise of options, but not including shares received upon the conversion of
other classes of stock).
59
<PAGE>
APPENDIX A
FINANCIAL STATEMENTS OF CONSUMERS BANCORP, INC.
AND MANAGEMENT'S DISCUSSION AND ANALYSIS
60
<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
SEPTEMBER 30, 1997 (unaudited) and MARCH 31, 1997
- -----------------------------------------------------------------------------------------------------------
SEPTEMBER 30 MARCH 31
<S> <C> <C>
ASSETS
CASH AND OVERNIGHT FUNDS $ 2,583,562 $ 6,320,354
LOANS HELD FOR SALE 5,494,845 5,107,367
SECURITIES AVAILABLE FOR SALE 7,017,502 4,956,213
SECURITIES HELD TO MATURITY 1,999,390 1,999,077
INVESTMENT IN MUTUAL FUND AVAILABLE FOR SALE 2,411,092 2,399,036
MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE 14,541,224 9,950,713
MORTGAGE-BACKED SECURITIES HELD TO MATURITY 3,819,986 4,708,041
LOANS - Net 67,505,500 56,304,643
REAL ESTATE OWNED 205,751 157,817
FEDERAL HOME LOAN BANK STOCK - At cost 673,100 673,100
ACCRUED INTEREST RECEIVABLE 641,183 563,271
OFFICE PROPERTIES AND EQUIPMENT - Net 539,254 351,951
OTHER ASSETS 419,757 529,573
------------ ------------
TOTAL $107,852,146 $ 94,022,056
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 87,680,474 $ 79,079,330
Federal home Loan Bank Advances 8,000,000 3,500,000
Advance payments by borrowers for taxes and insurance 1,936,180 714,082
Official Checks 2,823,517 3,820,486
Other liabilities 445,133 195,726
------------ ------------
Total liabilities 100,885,304 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 2,747,730 2,598,472
Net unrealized gains on securities - net of tax 66,362 (38,790)
------------ ------------
Total stockholders' equity 6,966,842 6,712,432
------------ ------------
TOTAL $107,852,146 $ 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 SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
- -------------------------------------------------------------------------------
1997 1996
---- ----
<S> <C> <C>
INTEREST INCOME:
Interest on loans $2,756,354 $2,278,722
Interest on mortgage-backed securities 591,541 579,221
Other 430,997 419,038
--------- ---------
Total 3,778,892 3,276,981
--------- ---------
INTEREST EXPENSE:
Interest on savings deposits 2,110,037 1,816,283
Interest on demand deposits 54,605 57,802
Interest on FHLB advances 198,151 113,672
Interest on other borrowings 23,249
--------- ---------
Total 2,362,793 2,011,006
NET INTEREST INCOME 1,416,099 1,265,975
PROVISION FOR LOAN LOSSES
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,416,099 1,265,975
OTHER INCOME:
Gains (losses) on sales of loans and mortgage-backed (97,815) 8,764
securities - net
Gains on sales of loan servicing 202,274 122,034
Brokered loan fees 113,394
Other 123,480 67,542
--------- ---------
Total 227,939 311,734
--------- ---------
OTHER EXPENSE:
Salaries and employee benefits 742,601 663,516
Occupancy and equipment expense 234,228 218,710
FDIC and other insurance premiums 25,787 480,110
Data processing 60,524 60,659
Legal, professional, and consulting fees 87,838 74,661
Stationery and supplies 25,409 29,970
Other expense 226,103 218,329
--------- ---------
Total 1,402,490 1,754,955
--------- ---------
INCOME BEFORE INCOME TAX PROVISION 241,548 (168,246)
INCOME TAX PROVISION 92,290 (56,150)
--------- ---------
NET INCOME $ 149,258 $ (112,096)
========= =========
</TABLE>
See condensed notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
CONSUMERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
- -------------------------------------------------------------------------------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 149,258 $ (112,096)
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Loans originated for sale (23,985,150)(19,234,600)
Loans sold 23,597,672 22,657,111
Depreciation 67,496 77,957
Premium amortization and discount accretion - net (41,294) (26,509)
Increase (decrease) in official checks (996,969) (1,612,966)
(Decrease) increase in deferred income taxes (109,935) (60,800)
Increase (decrease) in other liabilities 359,342 331,180
Increase (decrease) in accrued interest receivable (77,912) (11,000)
Increase (decrease) in advance payments by borrowers
for taxes and insurance 1,222,098 690,487
(Decrease) increase in other assets 109,816 13,286
---------- -----------
Net cash provided by (used in) operating activities 294,422 2,712,050
---------- -----------
INVESTING ACTIVITIES:
Purchases of securities available for sale (3,004,321) (1,000,000)
Proceeds from maturities of investment securities 1,000,000
Purchases of property (254,799) (113,995)
Increases in loans - net (11,239,585) (3,554,702)
Disposal of Real Estate Owned - 125,200
Purchases of mortgage-backed securities available for sale (5,337,635)
Principal reductions of mortgage-backed securities available for
sale 814,942 624,666
Principal reductions of mortgage-backed securities held to
maturity 889,040 699,682
---------- -----------
Net cash used in investing activities (17,132,358) (3,219,149)
---------- -----------
FINANCING ACTIVITIES:
Increase in deposits 8,601,144 2,689,096
Federal Home Loan Bank advances (repayment), net 4,500,000
(Decrease) increase in reverse repurchase agreements (1,833,000)
---------- -----------
Net cash provided by financing activities 13,101,144 856,096
---------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS (3,736,792) 348,997
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,320,354 4,370,069
---------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,583,562 $ 4,719,066
========== ===========
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 six months ended September
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 six months
ended September 30, 1997 are not necessarily indicative of the results to be
expected for the year ending March 31, 1998.
2. MERGER
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 Corporation Class A Common Stock, or a combination
thereof.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Total assets increased $13.9 million, or 14.7% to $107.9 million at
September 30, 1997 from $94.0 million at March 31, 1997.
LOANS AND LOANS HELD FOR SALE. Loans and loans held for sale increased
$11.6 million, or 18.9% to $73.0 million at September 30, 1997 from $61.4
million at March 31, 1997. This increase is primarily the result of loans
originated of $40.2 million that were partially offset by principal reductions
of $4.9 million and loan sales of $23.6 million.
CREDIT QUALITY. At September 30, 1997 non-performing assets totaled
$918,000, as compared to $324,000 at March 31, 1997. Expressed as a percentage
of total assets, non-performing assets increased to .85% of total assets at
September 30, 1997 from .34% of total assets at March 31, 1997.
MORTGAGE-BACKED SECURITIES. Consumers' mortgage-backed securities
portfolio at September 30, 1997 was divided into $14.5 million classified as
available for sale and $3.8 million classified as held to maturity. Consumers'
mortgage-backed securities portfolio increased by $3.7 million, or 25.2% to
$18.4 million at September 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 that were partially offset by principal repayments totaling $1.7
million.
DEPOSITS. Deposits increased $8.6 million, or 10.9% to $87.7 million at
September 30, 1997 from $79.1 million at March 31, 1997.
BORROWINGS. Borrowings increased $4.5 million, or 128.6% to $8.0
million at September 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 $255,000 or 3.8%
to $7.0 million at September 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%
<PAGE>
for fiscal 1996 combined with a $3.9 million increase in average interest
earning assets. The 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 2.7%, 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
2
<PAGE>
remaining term on the lease of its administrative office space and relocating to
less expensive 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 SIX MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
NET INCOME. The Company had Net Income for the six months ended
September 30, 1997 of $149,000 and a Net Loss for the six months ended September
30, 1996 of $112,000.
NET INTEREST INCOME. Net interest income for the six months ended
September 30, 1997 was $1,416,000 compared to $1,266,000 for the six months
ended September 30, 1996, an increase of 11.8%. The $150,000 increase in net
interest income resulted from an increase in the net interest spread to 2.65%
for the six months ended September 30, 1997 from 2.56% for the six months ended
September 30, 1996 combined with a $10.7 million increase in average interest
earning assets. The average yield on interest earning assets increased to 7.89%
for the six months ended September 30, 1997 from 7.71% for the six months ended
September 30, 1996. The average cost of interest bearing liabilities increased
to 5.24% for the six months ended September 30, 1997 from 5.15% for the six
months ended September 30, 1996.
Interest income increased $502,000, or 15.3% to $3.78 million for the
six months ended September 30, 1997 from $3.28 million for the six months ended
September 30, 1996. Interest on loans increased $477,000, or 20.9%, to $2.76
million for the six months ended September 30, 1997 while interest on
mortgage-backed securities and other investments increased by $25,000, or 2.5%,
to $1,023,000 for the six months ended September 30, 1997. The yield on loans
3
<PAGE>
increased to 8.60% for the six months ended September 30, 1997 from 8.48% for
the six months ended September 30, 1996. The average balance of loans increased
$10.3 million, or 19.2%, to $64.1 million for the six months ended September 30,
1997 from $53.8 million for the six months ended September 30, 1996. The yield
on mortgage-backed securities increased to 6.91% for the six months ended
September 30, 1997 from 6.78% for the six months ended September 30, 1996. The
average balance of mortgage-backed securities increased $52,000, or .30%, to
$17.14 million for the six months ended September 30, 1997 from $17.09 million
for the six months ended September 30, 1996.
Interest expense increased $352,000, or 17.5%, to $2.36 million for the
six months ended September 30, 1997 from $2.01 million for the six months ended
September 30, 1996. The average cost of deposits increased to 5.24% for the six
months ended September 30, 1997 from 5.15% for the six months ended September
30, 1996. The average balance of deposits increased $9.8 million, or 13.3%, to
$83.6 million for the six months ended September 30, 1997 from $73.8 million for
the six months ended September 30, 1996. The average cost of borrowings
decreased to 6.07% for the six months ended September 30, 1997 from 6.38% for
the six months ended September 30, 1996. The average balance of borrowings
increased $2.2 million, or 52.0%, to $6.5 million for the six months ended
September 30, 1997 from $4.3 million for the six months ended September 30,
1996.
PROVISIONS FOR LOAN LOSSES. There was no provision for loan losses
during either of the six month periods ended September 30, 1997 and 1996. Net
charge-offs were -0- and $35,500 for the six months ended September 30, 1997 and
1996 respectively.
OTHER INCOME. Other income for the six months ended September 30, 1997
and 1996 was $228,000 and $312,000, respectively. This decrease is primarily
attributable to lesser income from Consumers' mortgage banking operations.
OTHER EXPENSES. Operating expenses decreased $343,000, or 19.7%, to
$1,403,000 for the six months ended September 30, 1997 from $1,746,000 for the
six months ended September 30, 1996.
Salaries and employee benefits increased $80,000, or 11.9%, to $743,000
for the six months ended September 30, 1997 from $663,000 for the six months
ended September 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 $15,000, or 7.1%, to $234,000
for the six months ended September 30, 1997 from $219,000 for the six months
ended September 30, 1996.
FDIC and other insurance premiums decreased $454,000 to $26,000 for the
six months ended September 30, 1997 from $480,000 for the six months ended
September 30, 1996. This
4
<PAGE>
decrease is the result of the SAIF recapitalization that occurred in the
September 1996 quarter. In connection with the SAIF recapitalization, Consumers
was charged a one-time special assessment of $394,000 during the September 30,
1996 quarter. Subsequent to the SAIF recapitalization, Consumers FDIC insurance
premiums were reduced significantly.
Other operating expenses increased $16,000, or 4.2%, to $400,000 for
the six months ended September 30, 1997 from $384,000 for the six months ended
September 30, 1996.
INCOME TAX PROVISION. The income tax provision was $92,000 for the six
months ended September 30, 1997 compared to a $56,000 income tax benefit for the
six months ended September 30, 1996. The increase is attributable to Consumers
having pre-tax operating income for the six months ended September 30, 1997
compared to a pre-tax operating loss for the six months ended September 30,
1996. The effective tax rate was 38.2% for the six months ended September 30,
1997 compared to -33.4% for the six months ended September 30, 1996.
5
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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>
RP FINANCIAL, LC.
- ---------------------------------------------------------------
Financial Services Industry Consultants
December 4, 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, LC. ("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 authoritative 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.
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
- --------------------------------------------------------------------------------
WASHINGTON HEADQUARTERS
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
<PAGE>
RP FINANCIAL, LC.
BOARD OF DIRECTORS
DECEMBER 4, 1997
PAGE 2
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 practice, is regularly engaged in the valuation of financial
institution 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 opinion, 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
September 30, 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 September 30, 1995 and 1996, incorporated in Annual
Reports to shareholders, (b) Form 10K as of September 30, 1996, (c) shareholder,
regulatory and internal financial and other reports through September 30, 1997,
(d) fourth quarter and fiscal year end earnings report as of September 30, 1997,
as released to the public in November 1997; (e) internal budgets and financial
projections prepared by management of BankUnited, (f) registration statement on
Form S-3 as filed with the Securities and Exchange Commission on September 30,
1997 in conjunction with a secondary offering of common stock; (g) registration
statement on Form S-4 filed on November 10, 1997, in conjunction with the
issuance of common stock to Consumers' stockholders; (h) the Proxy Statement
furnished to Consumers' stockholders in connection with the adoption of the
Agreement; and (i) BankUnited's management comments regarding past 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, respectively, 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 savings institutions. RP Financial also considered: (a) a
transaction summary, as set forth in the Proxy Statement, of the financial terms
of the Merger, including the aggregate Merger Consideration relative to tangible
book value, annualized earnings for the first six 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 BankUnited of the planned
secondary offering of common stock as well the acquisition of Consumers, which
is expected to be accounted for as a
<PAGE>
RP FINANCIAL, LC.
BOARD OF DIRECTORS
DECEMBER 4, 1997
PAGE 3
purchase. 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 BankUnited Common Stock. RP Financial also considered
the greater 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 assess 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 Directors
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 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.
/s/ 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
----
AVAILABLE INFORMATION.................................................. 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................ 3
SUMMARY ............................................................... 4
RISK FACTORS........................................................... 25
CAPITALIZATION......................................................... 30
THE MERGER............................................................. 31
DESCRIPTION OF CAPITAL STOCK........................................... 53
COMPARISON OF SHAREHOLDERS' RIGHTS..................................... 57
EXPERTS................................................................ 59
LEGAL MATTERS.......................................................... 59
APPENDIX A - FINANCIAL STATEMENTS OF
CONSUMERS BANCORP, INC.
AND MANAGEMENT'S DISCUSSION
AND ANALYSIS.............................................. 60
APPENDIX B - SECTIONS 607.1301, 607.1302 AND 607.1320 OF THE FLORIDA
BUSINESS CORPORATION ACT.................................. 92
APPENDIX C - FAIRNESS OPINION OF RP FINANCIAL, LC...................... 97
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
--------------------
December 9, 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.
** 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 Amendment No. l to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Coral
Gables, State of Florida on December 5, l997.
BANKUNITED FINANCIAL CORPORATION
By: /s/ ALFRED R. CAMNER
-------------------------------------
Alfred R. Camner
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement has been signed on December 5,
1997 by the following persons in the capacities indicated.
<TABLE>
<CAPTION>
<S> <C>
* Chairman of the Board, Chief Executive
- ------------------------------------- Officer, President and Director
Alfred R. Camner (Principal Executive Officer)
* Vice Chairman of the Board and Director
- -------------------------------------
Lawrence H. Blum
* Chief Operating Officer, Executive Vice
- ------------------------------------- President and Director
James A. Dougherty
* Executive Vice President, Treasurer and
- ------------------------------------- Director
Earline G. Ford
* Executive Vice President and Chief Financial
- ------------------------------------- Officer (Principal Financial Officer and
Samuel A. Milne Principal Accounting Officer)
* Corporate Secretary and Director
- -------------------------------------
Marc Lipsitz
* Director
- -------------------------------------
Allen M. Bernkrant
* Director
- -------------------------------------
Irving P. Cohen
</TABLE>
II-6
<PAGE>
* Director
- -------------------------------------
Christina Cuervo
* Director
- -------------------------------------
Bruce Friesner
Director
- -------------------------------------
Patricia Frost
* Director
- -------------------------------------
E. J. Giusti
* Director
- -------------------------------------
Marc D. Jacobson
* Director
- -------------------------------------
Norman Mains
* Director
- -------------------------------------
Neil Messinger
* Director
- -------------------------------------
Anne W. Solloway
* By: /s/ ALFRED R. CAMNER
- -------------------------------------
Alfred R. Camner
Attorney-in-fact
II-7
<PAGE>
<TABLE>
<CAPTION>
BANKUNITED FINANCIAL CORPORATION
INDEX TO EXHIBITS
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER PAGE
- -------- ------------
<S> <C> <C>
5.1 Opinion of Stuzin and Camner, P.A. as to the validity of the issuance
of the BankUnited Class A Common Stock.
8.1 Opinion of Kronish, Lieb, Weiner & Hellman LLP regarding federal income
tax matters.
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.
</TABLE>
December 5, 1997
BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
Ladies and Gentlemen:
We are acting as your counsel with regard to the issuance by BankUnited
Financial Corporation (the "Company") of shares of its Series I Class A Common
Stock, $.01 par value (the "Class A Common Stock"), pursuant to a Registration
Statement on Form S-4 filed with the Securities and Exchange Commission on
November 10, 1997 (the "Registration Statement"). The Class A Common Stock will
be issued and exchanged pursuant to the Agreement and Plan of Merger dated
September 19, 1997 between the Company and Consumers Bancorp, Inc. which is
described in the Registration Statement.
We are familiar with the relevant documents and materials used in
preparing the Registration Statement. Based on our review of such relevant
documents and materials, and of such other documents and materials as we have
deemed necessary and appropriate, we are of the following opinion:
The Class A Common Stock when issued and exchanged pursuant to the
Agreement and Plan of Merger dated September 19, 1997 between the Company and
Consumers Bancorp, Inc. in the manner described in the Registration Statement
will be legally issued, fully paid and non-assessable.
We hereby consent to the use of our opinion as an Exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus that is a part of the Registration Statement.
Very truly yours,
/s/ Stuzin and Camner, Professional Association
-----------------------------------------------
STUZIN AND CAMNER,
PROFESSIONAL ASSOCIATION
EXHIBIT 8.1
December 5, 1997
BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
Consumers Bancorp, Inc.
9400 South Dadeland Boulevard, Suite 620
Miami, Florida 33156
Ladies and Gentleman:
We have acted as special tax counsel to BankUnited Financial Corporation
("BankUnited") in connection with the proposed merger of Consumers Bancorp, Inc.
("Consumers"), into BankUnited (the "Merger") and the proposed merger of
Consumers Savings Bank ("CSB"), a subsidiary of Consumers, into BankUnited FSB
("BUFSB"), a subsidiary of BankUnited (the "Subsidaries Merger"), as described
herein. BankUnited has requested our opinion concerning certain federal income
tax consequences of the proposed transaction.
FACTS
BankUnited is a savings and loan holding company organized under the laws
of the State of Florida. BUFSB is a federal stock savings bank. All the capital
stock of BUFSB is owned by BankUnited. BankUnited and BUFSB file consolidated
federal income tax returns on a September 30 fiscal year basis.
Consumers is a unitary savings and loan holding company organized under the
laws of the State of Florida. CSB is a Florida-chartered savings and loan
association. All the capital stock of CSB is owned by Consumers. Consumers and
CSB file consolidated federal income tax returns on a March 31 fiscal year
basis.
<PAGE>
BankUnited Financial Corporation
Consumers Bancorp, Inc.
December 5, 1997
Page 2
The authorized capital stock of Consumers consists of 15,000,000 shares of
common stock, par value $.01 per share. On October 31, 1997, there were
ourstanding 485,509 shares of Consumers common stock, held of record by
approximately 65 stockholders. As of October 31, 1997, Consumers had reserved
48,264 shares of common stock for issuance pursuant to stock options granted by
Consumers under one or more employee benefit plans.
The Boards of Directors of BankUnited and Consumers believe that the Merger
and the Subsidiaries Merger will provide and opportunity for each institution to
enhance shareholder value through the utilization of combined resources. The
combined entity will reflect a stronger capital position for BUFSB and an
opportunity for an enhancement to earnings.
Consumers will be merged with and into BankUnited pursuant to an Agreement
and Plan of Merger between BankUnited and Consumers dated as of September 19,
1997, as amended (the "Merger Agreement"). BankUnited will survive the Merger,
and the separate corporate existence of Consumers will cease.
Promptly following the consummation of the Merger, CSB will be merged with
and into BUFSB. BUFSB will survive the Subsidiaries Merger, and the separate
corporate existence of CSB will cease. The banking business of CSB will be
continued by BUFSB in a substantially unchanged manner.
Depending on the Fair Market Value (as defined in the Merger Agreement) of
BankUnited Series I Class A Common Stock ("BankUnited Common Stock"), the
combination of BankUnited and Consumers will be structured in one of two ways.
If the Fair Market of BankUnited Common Stock is at least $9.80 per share, the
Consumers shareholders will receive a combination of cash and BankUnited Common
Stock in the Merger ("Structure I"). If the Fair Market Value of BankUnited
Common Stock is less than $9.80 per share, BankUnited will aquire all the
outstanding stock of Consumers for cash bafore the Merger ("Structure II").
<PAGE>
BankUnited Financial Corporation
Consumers Bancorp, Inc.
December 5, 1997
Page 3
STRUCTURE I
At the effective time of the Merger (the "Effective Time"), each share of
Consumers common stock issued and outstanding immediately prior to the Effective
Time, other than shares held by shareholders who have timely and properly
exercised dissenters' rights under Florida law ("Dissenting Shareholders"),
will be converted into the right to receive a payment (the "Merger
Consideration") of $21.33 in cash or 2.081 shares (the "Agreed Value") of
BankUnited Common Stock. Each shareholder may elect to receive such
shareholders' total Merger Consideration in cash, BankUnited Common Stock, or
a combination thereof; however, in the aggregate, the cash portion (including
cash paid in lieu of fractional shares of BankUnited Common Stock) may not
exceed 55% of the total amount of Merger Consideration. The aggregate Merger
Consideration payable to the Consumers shareholders and the Agreed Value are
subject to adjustment in certain circumstances.
No fractional shares of BankUnited Common Stock will be issued in the
Merger. Instead, each shareholder 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 shareholder) will receive an amount
of cash equal to such fraction multiplied by the Fair Market Value of a share of
BankUnited Common Stock.
Dissenting Shareholders, if any, will be entitled to receive payment for
their Consumers common stock from BankUnited. It is a condition to BankUnited'
obligation to effect the Merger that the number of shares held by Dissenting
Shareholders not exceed ten percent of the outstanding capital stock of
Consumers.
STRUCTURE II
BankUnited will form a subsidiary ("Newco") solely for the purpose of
effectuating the acquisition by BankUnited of all of the capital stock of
Consumers. Newco will not engage in any business. Newco will be merged with and
into Consumers (the "Newco Merger"). Consumers will survive the Newco Merger,
and the separate corporate existence of Newco will cease. At the effective time
of the Newco Merger, each share of Newco stock
<PAGE>
BankUnited Financial Corporation
Consumers Bancorp, Inc.
December 5, 1997
Page 4
issued and outstanding immediately prior to such effective time will be
converted into one share of Consumers common stock, and each share of Consumers
common stock issued and outstanding immediately prior to such effective time
(other than shares, if any, held by Dissenting Shareholders) will be converted
into the right to receive a payment of $20.95 in cash. Promptly following the
consummation of the Newco Merger, the Merger will take place. Promptly
following the consummation of the Merger, the Subsidiaries Merger will take
place.
REPRESENTATIONS
The following representations have been made in connection with the
proposed transactions:
(a) BankUnited has no plan or intention to liquidate BUFSEB, to merge BUFSB
into another corporation, or to sell or otherwise dispose of the stock
of BUFSB.
(b) BankUnited has no plan or intention to cause BUFSB to sell or otherwise
dispose of any of the assets of CSB to be acquired in the Subsidiaries
Merger, except for dispositions made in the ordinary course of business.
(c) The liabilities of Consumers to be assumed by BankUnited and the
liabilities to which the transferred assets of Consumers are subject were
incurred by Consumers in the ordinary course of its business.
(d) The liabilities of CSB to be assumed by BUFSB and the liabilities to
which the transferred assets of CSB are subject were incurred by CSB in the
ordinary course of its business.
(e) Following the transaction, BUFSB will continue the historic business of CSB
or use a significant portion of CSB's business assets in a business.
(f) BankUnited, Consumers, and the shareholders of Consumers will pay their
respective expenses, if any, incurred in connection with the proposed
transactions, except that BankUnited and Consumers will divide equally all
printing
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BankUnited Financial Corporation
Consumers Bancorp, Inc.
December 5, 1997
Page 5
expenses and filing fees incurred in connection with the Merger Agreement
and the Registration Statement and Proxy Statement (as defined in the
Merger Agreement).
(g) There is no intercorporate indebtedness existing between BankUnited or
BUFSB and Consumers or CSB that was issued, acquired, or will be settled at
a discount.
(h) None of the parties to the transactions is an investment company as
defined in Section 368(a)(2)(F)(iii) of the Internal Revenue Code of
1986, as amended (the "Code").
(i) Neither Consumers nor CSB is under the jurisdiction of a court in a Title
11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
(j) The fair market value of the assets of Consumers transferred to BankUnited
will equal or exceed the sum of the liabilities assumed by BankUnited and
the liabilities, if any, to which the transferred assets are subject.
(k) The fair market value of the assets of CSB transferred to BUFSB will equal
or exceed the sum of the liabilities assumed by BUFSB and the liabilities,
if any, to which the transferred assets are subject.
(l) The aggregate adjusted tax basis of the assets of CSB transferred to BUFSB
will equal or exceed the sum of the liabilities assumed by BUFSB and the
liabilities, if any, to which the transferred assets are subject.
STRUCTURE I
(a) The sum of (i) the cash received by the Consumers shareholders pursuant to
the Merger (including cash paid in lieu of fractional shares of BankUnited
Common Stock), (ii) the cash (if any) received by Dissenting Shareholders,
and (iii) the cash (if any) received by Consumers shareholders whose stock
is redeemed in anticipation of the Merger will not exceed 62.5% of an
amount equal to such sum plus the fair market value, as of the Effective
Time, of the
<PAGE>
BankUnited Financial Corporation
Consumers Bancorp, Inc.
December 5, 1997
Page 6
BankUnited Common Stock received by the Consumers shareholders pursuant to
the Merger.
(b) The payment of cash in lieu of fractional shares of BankUnited Common Stock
will be solely for the purpose of avoiding the expense and inconvience to
BankUnited of issuing fractional shares, and it does not represent
separately bargained-for consideration. Such cash will not exceed 1% of the
total consideration paid to effect the Merger.
(c) There is no plan or intention on the part of the Consumers shareholders who
own five percent or more of Consumers' stock, and to the best of the
knowledge of the management of Consumers there is no plan or intention on
the part of the remaining Consumers shareholders, to sell, exchange, or
otherwise dispose of shares of BankUnited Common Stock to be received in
the Merger that would reduce such shareholders' ownership of such
BankUnited Common Stock to a number of shares having, in the aggregate, a
value as of the Effective Time of less than 37.5% of the total value of all
the Consumers stock outstanding immediately prior to the Merger. For
purposes of this representation, shares of Consumers stock, if any,
redeemed prior to the Merger in anticipation of the Merger are taken into
account as if such shares were shares of BankUnited Common Stock received
in the Merger and then disposed of.
(d) BankUnited has no plan or intention to redeem or otherwise reacquire any of
the BankUnited Common Stock to be received by the shareholders of
Consumers.
OPINION
STRUCTURE I
Based upon the foregoing, and provided that the Merger and the Subsidiaries
Merger qualify as statutory mergers under applicable law, it is our opinion that
the Merger and the Subsidiaries Merger will each constitute a reorganization
within the meaning of Section 368(a) of the Code, and that BankUnited and
Consumers, and BUFSB and CSB, will each be "a party to a
<PAGE>
BankUnited Financial Corporation
Consumers Bancorp, Inc.
December 5, 1997
Page 7
reorganization" within the meaning of Section 368(b) of the Code. Accordingly,
it is our opinion that:
(a) No gain or loss will be reorganized by Consumers on the transfer of its
assets to BankUnited in exchange for BankUnited Common Stock, cash, and
the assumption by BankUnited of Consumers' liabilities, since the cash will
be distributed to Consumers' shareholders pursuant to the plan of
reorganization.
(b) No gain or loss will be recognized by BankUnited on the receipt by
BankUnited of the assets of Consumers in exchange for BankUnited Common
Stock, cash, and the assumption by BankUnited of Consumers' liabilities.
(c) The bases of the assets of Consumers in the hands of BankUnited will be
the same as the bases of such assets in the hands of Consumers
immediately prior to the Merger.
(d) The holding periods of the assets of Consumers received by BankUnited will
include the periods during which such assets were held by Consumers.
(e) No gain or loss will be recognized by CSB on the transfer of its assets to
BUFSB in a deemed exchange for BUFSB stock and the assumption by BUFSB or
CSB's liabilities.
(f) No gain or loss will be recognized by BUFSB on the receipt of the assets
of CSB in a deemed exchange for BUFSB stock and the assumption by BUFSB of
CSB's liabilities.
(g) No gain or loss will be recognized by BankUnited on the deemed receipt of
BUFSB stock in exchange for the stock of CSB.
(h) The bases of the assets of CSB in the hands of BUFSB will be the same as
the bases of those assets in the hands of CSB.
(i) The holding periods of the assets of CSB in the hands of BUFSB will include
the periods during which such assets were held by CSB.
<PAGE>
BankUnited Financial Corporation
Consumers Bancorp, Inc.
December 5, 1997
Page 8
(j) No gain or loss (other than with respect to cash received in lieu of a
fractional share of BankUnited Common Stock) will be recognized by
Consumers shareholders who receive only BankUnited Common Stock
(including fractional share interests deemed received) pursuant to the
Merger.
(k) The basis of the BankUnited Common Stock received (including fractional
share interests deemed received) by Consumers shareholders who receive
only BankUnited Common Stock pursuant to the Merger will, in each instance,
be the same as the basis of the Consumers stock surrendered in exchange
therefor.
(l) The holding period of the BankUnited Common Stock received (including
fractional share interests deemed received) by the Consumers shareholders
pursuant to the Merger will, in each instance, include the holding period
of the stock surrendered in exchange therefor, provided such stock is held
as a capital asset on the date of the exchange.
(m) Gain, if any (but not loss, other than with respect to cash received in
lieu of a fractional share of BankUnited Common Stock), will be
recognized by Consumers shareholders who exchange their Consumers stock
for both BankUnited Common Stock (including fractional share interests
deemed received) and cash pursuant to the Merger, but in an amount not in
excess of the cash received.
(n) Where fractional share interests, if any, to which each Consumers
shareholder would otherwise be entitled are aggregated to form whole shares
and each shareholder receives a cash payment in lieu of a fractionsl share
interest for no more than a single share, such payment of cash in lieu of
a fractional share of BankUnited Common Stock will be treated as if the
fractional share were distributed as part of the exchange and then
redeemed by BankUnited. Such cash payment will be treated as having been
received as a distribution in full payment in exchange for the stock
redeemed as provided in Seciton 302(a) of the Code.
<PAGE>
BankUnited Financial Corporation
Consumers Bancorp, Inc.
December 5, 1997
Page 9
STRUCTURE II
It is our opinion that the formation of Newco and the Newco Merger will be
disregarded for federal income tax purposes and the transaction will be viewed
as a cash purchase by BankUnited of all the outstanding stock of Consumers. It
is also our opinion that:
(a) No gain or loss will be recognized by Consumers or BankUnited in the
Merger.
(b) No gain or loss will be recognized by CSB, BUFSB, or BankUnited in the
Subsidiaries Merger.
(c) The bases of the assets of Consumers in the hands of BankUnited will be
the same as the bases of such assets in the hands of Consumers
immediately prior to the Merger.
(d) The holding periods of the assets of Consumers received by BankUnited will
include the periods during which such assets were held by Consumers.
(e) The bases of the assets of CSB in the hands of BUFSB will be the same as
the bases of those assets in the hands of CSB.
(f) The holding periods of the assets of CSB in the hands of BUFSB will include
the periods during which such assets were held by CSB.
Our conclusions as expressed in this letter have been reached on the basis
of the facts and representations described herein and such analysis of the law
as we have deemed necessary. Our views are based on existing law, which is
subject to change or modification at any time. We express no opinion as to any
tax consequences of the Merger, the Subsidiaries Merger, or the Newco Merger
other than those explicitly set forth above.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-4 filed by BankUnited with the Securities and
Exchange Commission (Registration No. 333-39921) and to the use of our name
under the heading "Certain Federal Income Tax Consequences" in the Prospectus
forming a part thereof. In giving such consent, we do
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BankUnited Financial Corporation
Consumers Bancorp, Inc.
December 5, 1997
Page 10
not admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
/s/ Kronish, Lieb, Weiner & Hellman LLP
----------------------------------------
Kronish, Lieb, Weiner & Hellman LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No.1 to 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.
/s/ Price Waterhouse LLP
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PRICE WATERHOUSE LLP
Miami, Florida
December 5, 1997
EXHIBIT 23.2
INDEPENDENT AUDITOR'S CONSENT
We consent to the use in this Amendment No. 1 to Registration Statement No.
333-39921 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.
/s/ Deloitte & Touche LLP
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DELOITTE & TOUCHE LLP
Miami, Florida
December 8, 1997
EXHIBIT 23.5
[LETTERHEAD]
December 5, 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.
/s/ James P. Hennessey
-----------------------------
James P. Hennessey
Senior Vice President
