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Title: |
Conversion Valuation Appraisal Report |
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Date: |
2001 |
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Preview shows 12KB of 167KB total |
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Price: |
$64 |
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ID: |
#883678 |
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CONVERSION VALUATION APPRAISAL REPORT
Prepared for:
Michigan City Savings & Loan Association
and
City Savings Financial Corporation
Michigan City, Indiana
As Of:
August 24, 2001
Prepared By:
Keller & Company, Inc.
555 Metro Place North
Suite 524
Dublin, Ohio 43017
(614) 766-1426
KELLER & COMPANY
<PAGE>
CONVERSION VALUATION APPRAISAL REPORT
Prepared for:
Michigan City Savings & Loan Association
and
City Savings Financial Corporation
Michigan City, Indiana
As Of:
August 24, 2001
<PAGE>
KELLER & COMPANY, INC.
Financial Institution Consultants
Investment and Financial Advisors
555 Metro Place North 614-766-1426
Suite 524 614-766-1459 (fax)
Dublin Ohio 43017
September 19, 2001
Board of Directors
Michigan City Savings and Loan Association
2000 Franklin Street
Michigan City, IN 46360
To the Board:
We hereby submit an independent appraisal of the pro forma market value of the
to-be-issued stock of City Savings Financial Corporation (the "Corporation"),
which is the newly formed holding company of Michigan City Savings and Loan
Association ("City Savings" or the "Association"). The Corporation will hold all
of the shares of the common stock of the Association. Such stock is to be issued
in connection with the Association's conversion from a federally chartered
mutual savings Association to a federally chartered stock savings Association in
accordance with the Association's plan of conversion. This appraisal was
prepared and provided to the Association in accordance with the conversion
requirements and regulations of the Office of Thrift Supervision of the United
States Department of the Treasury.
Keller & Company, Inc. is an independent financial institution consulting firm
that serves both thrift institutions and Associations. The firm is a
full-service consulting organization, as described in more detail in Exhibit A,
specializing in market studies, business and strategic plans, stock valuations,
conversion appraisals, and fairness opinions for thrift institutions and
Associations. 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 the
Association 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 Association's assets and liabilities. We have also used information from
other public sources, but we cannot assure the accuracy of such material.
In the completion of this appraisal, we held discussions with the management of
First Association, with the law firm of Barnes & Thornburgh, Indianapolis,
Indiana, the Association's conversion counsel, and with BKD, LLP. Further, we
viewed the Association's local economy and primary market area.
This valuation must not be considered to be a recommendation as to the purchase
of stock in the Corporation, as we can provide no guarantee or assurance that
any person who purchases shares of the Corporation's stock in this conversion
will subsequently be able to sell such shares at a price equivalent to the price
designated in this appraisal.
Our valuation will be updated as required and will give consideration to any new
developments in the Association's operation that have an impact on operations or
financial condition. Further, we will give consideration to any changes in
general market conditions and to specific changes in the market for
publicly-traded thrift institutions. Based on the material impact of any such
changes on the pro forma market value of the Corporation as determined by this
firm, we will make necessary adjustments to the Corporation's appraised value in
such appraisal update.
It is our opinion that as of August 24, 2001, the pro forma market value or
appraised value of City Savings Financial Corporation was $4,200,000. Further, a
range for this valuation is from a minimum of $3,570,000 to a maximum of
$4,830,000, with a maximum, as adjusted, of $5,554,500.
Very truly yours,
KELLER & COMPANY, INC.
/s/ Keller & Company, Inc.
<PAGE>
TABLE OF CONTENTS
PAGE
INTRODUCTION 1
I. Description of Michigan City Savings & Loan Association
General 4
Performance Overview 8
Income and Expense 10
Yields and Costs 13
Interest Rate Sensitivity 15
Lending Activities 17
Non-Performing Assets 22
Investments 24
Deposit Activities 24
Borrowings 25
Subsidiaries 26
Office Properties 26
Management 26
II. Description of Primary Market Area 27
III. Comparable Group Selection
Introduction 33
General Parameters
Merger/Acquisition 34
Mutual Holding Companies 35
Trading Exchange 36
IPO Date 36
Geographic Location 36
Asset Size 37
Balance Sheet Parameters
Introduction 38
Cash and Investments to Assets 39
Mortgage-Backed Securities to Assets 39
One- to Four-Family Loans to Assets 40
Total Net Loans to Assets 40
Total Net Loans and Mortgage-Backed Securities to Assets 40
Borrowed Funds to Assets 41
Equity to Assets 42
Performance Parameters
Introduction 42
<PAGE>
TABLE OF CONTENTS (cont.)
PAGE
III. Comparable Group Selection (cont.)
Performance Parameters (cont.)
Return on Average Assets 43
Return on Average Equity 43
Net Interest Margin 44
Operating Expenses to Assets 44
Noninterest Income to Assets 45
Asset Quality Parameters
Introduction 45
Nonperforming Assets to Asset Ratio 45
Repossessed Assets to Assets 46
Loan Loss Reserves to Assets 46
The Comparable Group 47
IV. Analysis of Financial Performance 48
V. Market Value Adjustments
Earnings Performance 51
Market Area 55
Financial Condition 56
Asset, Loan and Deposit Growth 59
Dividend Payments 60
Subscription Interest 60
Liquidity of Stock 61
Management 62
Marketing of the Issue 63
VI. Valuation Methods 64
Price to Book Value Method 65
Price to Earnings Method 66
Price to Assets Method 67
Valuation Conclusion 69
<PAGE>
LIST OF EXHIBITS
NUMERICAL PAGE
EXHIBITS
1 Balance Sheets - At June 30, 2001 70
2 Balance Sheets - at June 30, 1997 through 2000 71
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