CUSIP No. 133425108 Page 12 of 13 Pages
EXHIBIT 2
May 26, 2000
Mr. Ronald Hill
Cameron Financial Corporation
1304 North Walnut Street
Cameron, MO 64429
Dear Ron:
John Palmer and I enjoyed our recent visit to Cameron. Thanks again to you and
Duane for spending time with us.
As promised, we have run an analysis of the benefits to Cameron of a large stock
buyback. We believe strongly that the current price of Cameron stock is
temporarily depressed (along with many other bank/thrift stocks) and Cameron's
Board and management should immediately take advantage of this opportunity by
implementing a large (one time, or continuous) buyback. The attached analysis
shows, even with no asset and deposit growth and no increase in the base level
of income (in total dollars), that Cameron can dramatically increase its
tangible book value, earnings and dividend per share, while preserving a healthy
level of tangible capital for future growth.
The highlights of the analysis follow (assumes 800,000 shares repurchased now
and 100,000 shares in one year, at the following prices; no asset or deposit
growth; and no increase in earnings in total dollars):
-------- --------- -------- --------- -------- ---------- --------
% % Franchise %
Buyback Change Change Value Change
Price TBV/Share Vs. No EPS Vs. No Per Share Vs. No
Share (3/31/02) Buybacks (3/31/02) Buybacks (3/31/02) Buybacks
-------- --------- -------- --------- -------- ---------- --------
$14.00 $27.39 29% $1.40 40% $34.44 37%
-------- --------- -------- --------- -------- ---------- --------
$15.00 $26.48 24% $1.36 36% $33.53 34%
-------- --------- -------- --------- -------- ---------- --------
$16.00 $25.57 20% $1.33 33% $32.62 30%
-------- --------- -------- --------- -------- ---------- --------
No
Buybacks $21.31 $1.00 $25.06
-------- --------- -------- --------- -------- ---------- --------
As you can see, buybacks at these low prices are incredibly accretive to
earnings and tangible book value per share. Quite simply, there is no better and
faster way for Cameron to create shareholder value (except to sell the company,
of course). There is no logical argument not to do massive buybacks at these
price levels. As long as investors are willing to sell Cameron stock at these
prices, Cameron should buy until the capital level falls to the "comfort" level
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CUSIP No. 133425108 Page 13 of 13 Pages
(which we define as $22-$28 million). By the way, the math works even at higher
price levels than $16.00 per share.
Please also remember, Cameron stock has traded above its current price level for
most of its 5 year history as a public company. Why try to outguess the market
and presume Cameron can buy back any appreciable volume of stock at lower
prices. It will likely not happen. As owners of approximately 5% of Cameron, we
strongly urge you to pursue an aggressive buyback as soon as possible. We also
request that this analysis and letter be provided to each member of Cameron's
Board. If we go over 5% ownership, as you know we will be required to file Form
13D with the SEC and we would likely have to file this letter and analysis as an
exhibit, thereby making this letter, and our recommendation, available to the
public. We would be pleased to discuss this with the Board of Cameron (in person
or by phone) at any time. Please feel free to call me (973-360-1666) or John
Palmer (630-928-0231) at any time.
Sincerely,
/s/ Richard Lashley
Richard Lashley
Principal
Attach.
