CUSIP No. 133425108 Page 11 of 13 Pages
EXHIBIT 3
[ON LETTERHEAD]
July 17, 2000
Mr. David Just
Cameron Financial Corporation
1304 North Walnut Street
Cameron, MO 64429
Dear David:
We appreciate the time you and Duane spent with us on Tuesday, however, we are
disappointed by what we heard. We are also concerned about Cameron's prospects
given its lackluster track record over the past 5 years as a public company.
Specifically, our concerns are as follows:
(1) You stated that Cameron's Board and management fully understand the
pros/cons of stock repurchases. If that is true, why didn't Cameron buy
back stock in the last few months when the stock was in the $11-$14 range
(i.e. 55%-70% of book value)? We told you in May, during our previous
visit, when the stock was trading at $12.00, that Cameron's stock was
likely to never again be materially lower and even if the stock declined
after Cameron bought back stock, Cameron should view a decline as an even
better opportunity to purchase additional shares. At that time, you
indicated that Cameron still had 35,000 shares left under its current
repurchase program. We specifically indicated to you that a broker was
offering a 40,000 share block at approximately $12.00. We suggested that
the Company buy at least 35,000 shares of the block to complete the current
buyback authorization and begin another repurchase program immediately
thereafter. Apparently, Cameron's management didn't feel the stock was an
attractive purchase at $12.00, because approximately two weeks later the
block was still available. As you now know, we bought 25,000 shares of the
block at $12.00, thus necessitating our initial form 13D filing. In our
estimation, over the past two to three months at least 20% of Cameron's
stock changed hands to buyers other than the Company, at prices
significantly lower than the current price of $17.25. That is stock that
Cameron itself should have been buying for the benefit of all shareholders.
At this time, it appears most of the anxious sellers have sold their shares
and the Company is unlikely to have an opportunity to buy back stock again
at 60% of book value anytime soon. With the amount of excess capital that
Cameron has, someone in management or on the Board should be held
accountable for passing up the opportunity to aggressively buy back a
significant amount of Cameron's stock at very attractive prices.
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CUSIP No. 133425108 Page 12 of 13 Pages
(2) When the stock was in the $12.00-$13.00 range we also provided you and
Cameron's Board of Directors with a written analysis highlighting the
tremendous benefits of a large stock repurchase or dutch tender in the
$14.00-16.00 price range. Although Cameron still has excess capital that
should be used to buy back stock, for the reasons noted above, Cameron's
opportunity to repurchase large amounts of stock in the $14.00 to $16.00
range have probably passed.
(3) Now that the Company has missed the opportunity to repurchase a large
amount of shares at attractive prices, we are extremely concerned when we
realize shareholders have to rely solely on Cameron's earnings to create
shareholder value. Surprisingly, in our recent meeting you seemed to not
understand why we are concerned that Cameron's Return on Assets (ROA) and
Return on Equity (ROE) have dropped every year for 5 years straight and
that Cameron's Return on Equity (ROE) is only 5%, after 5 years as a public
company. You responded that we, as CPA's and financial analysts, should be
better able to understand Cameron's financials. Your comment suggests, as
absurd as this sounds, that Cameron's historical financial performance
isn't poor, it is just misunderstood. We told you that public companies
such as Cameron have to earn the right to remain independent and that 5%
ROE's for 5 years straight were completely insufficient.
(4) We also told you we are concerned that Cameron has too much capital
invested in its headquarters and the ongoing costs were excessive for
Cameron's needs. You stated that the headquarters was built to accommodate
the Company's growth over a "20 year plan". We believe that type of
decision-making shows not just a total disregard for the shareholders of
the Company but is inappropriate for any company in a rapidly consolidating
and changing industry such as banking.
We believe these issues indicate a failure in Cameron's corporate governance and
a total disregard for the board's fiduciary responsibility to shareholders.
Additionally, given Cameron's horrendous financial performance as a public
company and its poor prospects to achieve reasonable levels of profitability
anytime soon, we now believe that Cameron's only viable option to create
shareholder value over a realistic time frame, is to seek the sale of the
Company to a more efficient and profitable banking institution. We recommend
that Cameron identify and contact institutions in its marketplace which may have
an interest in acquiring Cameron. We also recommend that Cameron seek the advice
and assistance of a reputable investment banking firm to assist it in this
process. Cameron should also continue to consider a large stock repurchase,
however, we are no longer confident that such a program can now be executed
successfully.
We plan to amend our 13D filing to include this letter and modify our intent.
Please feel free to contact us at any time if you or any other member of
management or board would like to discuss this further. We would be pleased to
meet with Cameron's Board at anytime.
<PAGE>
CUSIP No. 133425108 Page 13 of 13 Pages
Sincerely,
/s/ Richard Lashley /s/ John Palmer
Richard Lashley John Palmer
Principal Principal
CC: Cameron Financial Corporation's Board of Directors:
Mr. Harold Lee, Chairman
c/o Cameron Financial Corporation
1304 North Walnut Street
Cameron, MO 64429
Mr. William J. Heavner
Red X Motors Inc.
509 Northland Drive
Cameron, MO 64429
Mr. Jon N. Crouch
525 Country Club Square Drive
Cameron, MO 64429
Mr. William F. Barker, DDS
Highway 69 North
Cameron, MO 64429
Mr. Dennis Marshall
2150 SE Grindstone Road
Cameron, MO 64429
