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Title: |
Conversion Valuation Appraisal Report |
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Date: |
2004 |
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Preview shows 12KB of 166KB total |
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$64 |
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#1355145 |
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CONVERSION VALUATION APPRAISAL REPORT
Prepared for:
Third Century Bancorp
Franklin, Indiana
------------------------------------------------------------------
As Of:
February 27, 2004
Prepared By:
Keller & Company, Inc.
555 Metro Place North
Suite 524
Dublin, Ohio 43017
(614) 766-1426
KELLER & COMPANY
<PAGE>
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CONVERSION VALUATION APPRAISAL REPORT
Prepared for:
Third Century Bancorp
Franklin, Indiana
------------------------------------------------------------------
As Of:
February 27, 2004
ii
<PAGE>
KELLER & COMPANY, INC.
FINANCIAL INSTITUTION CONSULTANTS
555 Metro Place North
614-766-1426
Suite 524 614-766-1459 (fax)
Dublin, Ohio 43017
March 18, 2004
Board of Directors
Mutual Savings Bank
80 East Jefferson St.
Franklin, IN 46131
To the Board:
We hereby submit an independent appraisal of the pro forma market value of the
to-be-issued stock of Third Century Bancorp (the "Corporation"), which is the
newly formed holding company of Mutual Savings Bank ("Mutual" or the "Bank").
The Corporation will hold all of the shares of the common stock of the Bank.
Such stock is to be issued in connection with the Bank's conversion from a state
chartered mutual savings bank to a state chartered stock savings bank in
accordance with the Bank's plan of conversion. This appraisal was prepared and
provided to the Bank in accordance with the conversion requirements and
regulations of the Federal Deposit Insurance Corporation and the Indiana
Department of Financial Institutions
Keller & Company, Inc., as described in more detail in Exhibit A, is an
independent, full-service, financial institution consulting firm that serves
both thrift institutions and banks, specializing in conversion and
reorganization appraisals, fairness opinions, stock valuations, business and
strategic plans and market studies. The firm has affirmed its independence in
this transaction with the preparation of its Affidavit of Independence, a copy
of which is included as Exhibit C.
Our appraisal is based on the assumption that the data provided to us by Mutual
and the material provided by the independent auditor, BKD LLP, Indianapolis,
Indiana, are both accurate and complete. We did not verify the financial
statements provided to us, nor did we conduct independent valuations of the
Bank's assets and liabilities. We have also used information from other public
sources, but we cannot assure the accuracy of such material.
In the preparation of this appraisal, we held discussions with the management of
Mutual, with the law firm of Barnes & Thornburg, Indianapolis, Indiana, the
Bank's conversion counsel, and with BKD LLP. Further, we viewed the Bank's local
economy and primary market area.
iii
<PAGE>
Board of Directors
Mutual Savings Bank
March 18, 2004
Page 2
This valuation must not be considered to be a recommendation as to the purchase
of stock in the Corporation, and we can provide no guarantee or assurance that
any person who purchases share of the Corporation's stock in this reorganization
and public offering will be able to later sell such shares at a price equivalent
to the price designated in this appraisal.
Our valuation will be updated as required, giving consideration to any new
developments in the Bank's operation that have an impact on its operations or
financial condition, further recognizing any changes in general market
conditions and pertinent changes in the market for publicly-traded thrift
institutions. Based on the material effect of any such developments and changes
on the pro forma market value of the Corporation as opined in this report, we
will make necessary adjustments to the Corporation's appraised value in an
appraisal update.
In it our opinion that as of February 27, 2004, the pro forma market value or
appraised value of Third Century Bancorp was $12,500,000. Further, a range for
this valuation is from a minimum of $10,650,000 to a maximum of $14,375,000,
with a maximum, as adjusted, of $16,531,250.
Very truly yours,
KELLER & COMPANY, INC.
/s/ Keller & Company, Inc.
iv
<PAGE>
TABLE OF CONTENTS
PAGE
INTRODUCTION 1
I. Description of Mutual Savings Bank
General 3
Performance Overview 7
Income and Expense 8
Yields and Costs 12
Interest Rate Sensitivity 13
Lending Activities 15
Nonperforming Assets 20
Investments 22
Deposit Activities 23
Borrowings 24
Subsidiaries 24
Office Properties 25
Management 25
II. Description of Primary Market Area 26
III. Comparable Group Selection
Introduction 32
General Parameter
Merger/Acquisition 33
Mutual Holding Companies 33
Trading Exchange 34
IPO Date 35
Geographic Location 35
Asset Size 36
Balance Sheet Parameters
Introduction 37
Cash and Investments to Assets 37
Mortgage-Backed Securities to Assets 38
One- to Four-Family Loans to Assets 38
Total Net Loans to Assets 39
Total Net Loans and Mortgage-Backed Securities to Assets 39
Borrowed Funds to Assets 40
Equity to Assets 40
Performance Parameters
Introduction 41
v
<PAGE>
TABLE OF CONTENTS (cont.)
PAGE
III. Comparable Group Selection (cont.)
Performance Parameters (cont.)
Return on Average Assets 41
Return on Average Equity 42
Net Interest Margin 43
Operating Expenses to Assets 43
Noninterest Income to Assets 43
Asset Quality Parameters
Introduction 44
Nonperforming Assets to Assets 44
Repossessed Assets to Assets 45
Loan Loss Reserves to Assets
45
The Comparable Group 46
IV. Analysis of Financial Performance
47
V. Market Value Adjustments
Earnings Performance 50
Market Area 54
Financial Condition 55
Asset, Loan and Deposit Growth 58
Dividend Payments 60
Subscription Interest 60
Liquidity of Stock 61
Management 62
Marketing of the Issue 62
VI. Valuation Methods
64
Price to Book Value Method 65
Price to Core Earnings Method 66
Price to Assets Method 67
Valuation Conclusion
68
vi
<PAGE>
LIST OF EXHIBITS
NUMERICAL PAGE
EXHIBITS
1 Statement of Financial Condition at
December 31, 2003 70
2 Consolidated Balance Sheets - At December 31,
1999 through 2002 71
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