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ANNEX C
Investment Banking Group
World Financial Center
North Tower
New York, New York 10282-1325
212-449-1000
(LOGO)
March 7, 1997
Board of Directors
Standard Federal Bancorporation
2600 West Big Beaver Road
Troy, Michigan 48084
Members of the Board:
Standard Federal Bancorporation and its wholly owned subsidiary Standard Federal
Bank (together the "Company") and ABN-AMRO North America, Inc. (the "Acquiror)
have entered into an agreement dated November 21, 1996 (the "Agreement")
pursuant to which a subsidiary of the Acquiror will be merged into the Company
in a transaction (the "Merger") in which each outstanding share of the Company's
common stock (the "Shares") will be converted, as more fully described in the
Agreement, into the right to receive $59.00 in cash (the "Proposed
Consideration"). The merger is to be considered and voted upon by the
shareholders of the Company at a special shareholders' meeting to be held on
April 17, 1997. The terms and conditions of the Acquisition are more fully set
forth in the Agreement.
You have asked us whether, in our opinion, the Proposed Consideration is fair to
the holders of Shares (other than the Acquiror or its affiliates) of the Company
from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
1. Reviewed the Company's Annual Reports, the Company's Annual Reports on Forms
10-K and related audited financial information for the three fiscal years
ended December 31, 1996;
2. Reviewed ABN-AMRO Holding N.V.'s Annual Report and related financial
information for the three fiscal years ended December 31, 1995 and ABN-AMRO
Holding N.V.'s unaudited financial report and related financial information
for the fiscal year ended December 31, 1996;
3. Reviewed certain information, including financial forecasts, relating to the
business, earnings, assets and prospects of the Company furnished to us by
the Company;
4. Conducted limited discussions with members of senior management of the
Company concerning the business, earnings, assets and prospects and senior
management's views as to future financial performance of the Company;
5. Reviewed the historical market prices and trading activity for the Shares and
compared them with those of certain publicly traded companies which we deemed
to be relevant;
6. Compared the results of operations of the Company with those of certain
companies which we deemed to be relevant;
7. Compared the proposed financial terms of the Merger contemplated by the
Agreement with the financial terms of certain other mergers and acquisitions
which we deemed to be relevant;
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8. Reviewed the Agreement and the Option Agreement;
9. Reviewed such other financial studies and analyses and performed such other
investigations and took into account such other matters as we deemed
necessary.
For the purpose of this opinion, with your consent, we have excluded from our
analysis the value of the supervisory goodwill litigation claim (the "Claim")
held by the Company against the United States government given what we
understand to be the inability to value this litigation claim as of the date
hereof. In preparing our opinion, we have assumed and relied upon the accuracy
and completeness of all financial and other information supplied or otherwise
made available to us for purposes of this opinion, and we have not assumed any
responsibility for independently verifying such information or undertaking an
independent evaluation or appraisal of the assets or liabilities of the Company
or any of its subsidiaries (including, as noted above, the Claim), nor have we
been furnished any such evaluation or appraisal. We have also assumed and relied
upon the senior management of the Company referred to above as to the
reasonableness and achievability of the financial and operating forecasts (and
the assumptions and bases therefore) provided to us. In that regard, we have
assumed with your consent that such forecasts, including without limitation
financial forecasts and projections regarding underperforming and non-performing
assets, net charge-offs and the adequacy of reserves, reflect the best currently
available estimates and judgments of management as to the future financial
performance of the Company. We are not experts in the evaluation of allowances
for loan losses, and we have not made an independent evaluation of the adequacy
of the allowance for loan losses of the Company nor have we reviewed any
individual credit files, and we have assumed that the aggregate allowance for
loan losses of the Company is adequate to cover such losses. Our opinion is
necessarily based on economic, market and other conditions as in effect on, and
the information made available to us as of, the date hereof.
Our opinion has been rendered without regard to the necessity for, or level of,
any restrictions, obligations, undertakings or divestitures which may be imposed
or required in the course of obtaining regulatory approvals for the Merger.
We have been retained by the Board of Directors of the Company as an independent
contractor to act as financial advisor to the Company with respect to the Merger
and will receive a fee for our services. We have within the past two years
provided financial advisory, investment banking and other services to the
Company and the Acquiror and have received customary fees for the rendering of
such services. In addition, in the ordinary course of our securities business,
we may actively trade debt and/or equity securities of the Company and the
Acquiror and their respective affiliates for our own account and the accounts of
our customers, and we therefore may, from time to time, hold a long or short
position in such securities.
Our opinion is directed to the Board of Directors of the Company and does not
constitute a recommendation to the Board of Directors of the Company in
connection with any matter relating to the Merger. This letter does not
constitute a recommendation to any shareholders of the Company with respect to
any approval of the Merger.
On the basis of, and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Proposed Consideration is fair to the holders of Shares
(other than the Acquiror or its affiliates) of the Company from a financial
point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ MICHAEL F. BARRY
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Director - Merrill Lynch & Co.
Investment Banking Group
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