-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HtGpd3T6ZrMyg2KPd+PJinuzTodD1CnOles51oPFumAIB4RiNz8b35/GLgb7mr/H s1H8D/nHwrRECbKCv5G0sQ== 0000950114-97-000487.txt : 19971117 0000950114-97-000487.hdr.sgml : 19971117 ACCESSION NUMBER: 0000950114-97-000487 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENTERBANK HOLDINGS INC CENTRAL INDEX KEY: 0001025835 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 431706259 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-14737 FILM NUMBER: 97718650 BUSINESS ADDRESS: STREET 1: 150 NORTH MERAMEC STREET 2: P O BOX 16020 CITY: CLAYTON STATE: MO ZIP: 63105 BUSINESS PHONE: 3147255500 MAIL ADDRESS: STREET 1: 150 NORTH MERAMEC STREET 2: P O BOX 16020 CITY: CLAYTON STATE: MO ZIP: 63105 10-Q 1 ENTERBANK HOLDINGS, INC. FORM 10-Q 1 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 - For the quarterly period ended September 30, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the transition period from to Commission file number 333-14737 -------------- ENTERBANK HOLDINGS, INC. (Exact Name of Registrant as Specified in its Charter) DELAWARE 43-1706259 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 150 NORTH MERAMEC, CLAYTON, MO 63105 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 314-725-5500 -------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ Indicate the number of shares outstanding of each of the registrant's classes of common stock as of October 31, 1997: Common Stock, $.01 par value -------- 2,297,412 shares outstanding as of October 31, 1997. 2 ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES TABLE OF CONTENTS - -------------------------------------------------------------------------------
Page ---- PART I - FINANCIAL INFORMATION Item 1: Consolidated Balance Sheets 1 Consolidated Statements of Income 2 Consolidated Statements of Cash Flows 3 Notes to Consolidated Financial Statements 4 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 5 PART II - OTHER INFORMATION Item 2: Changes in Securities and use of proceeds 14 Item 5: Other Information 14 Item 6: Exhibits and Reports on Form 8-K 14 SIGNATURES 15
3 PART I ITEM 1 ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES Consolidated Balance Sheets September 30, 1997 and December 31, 1996
==================================================================================================================== (Unaudited) September 30, December 31, ASSETS 1997 1996 - -------------------------------------------------------------------------------------------------------------------- Cash and due from banks $ 15,769,231 9,261,035 Federal funds sold 14,850,000 23,250,000 Interest bearing deposits 40,091 -- Investments in debt and equity securities: Available for sale, at estimated fair value 13,554,520 14,005,797 Held to maturity, at amortized cost (estimated fair value of $824,376 at September 30, 1997 and $1,239,498 at December 31, 1996) 822,715 1,240,183 - -------------------------------------------------------------------------------------------------------------------- Total investments in debt and equity securities 14,377,235 15,245,980 - -------------------------------------------------------------------------------------------------------------------- Loans, less unearned loan fees 201,537,575 134,133,092 Less allowance for loan losses 2,255,000 1,765,000 - -------------------------------------------------------------------------------------------------------------------- Loans, net 199,282,575 132,368,092 - -------------------------------------------------------------------------------------------------------------------- Other real estate owned 806,072 874,426 Office equipment and leasehold improvements 2,205,614 1,119,268 Accrued interest receivable 1,360,817 935,864 Investment in Enterprise Fund, L.P. 227,237 550,087 Prepaid expenses and other assets 2,044,405 979,361 - -------------------------------------------------------------------------------------------------------------------- Total assets $250,963,277 184,584,113 ==================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY ==================================================================================================================== Deposits: Demand 38,912,010 31,137,649 Interest-bearing transaction accounts 16,344,330 16,648,185 Money market accounts 82,088,461 54,637,747 Savings 1,331,745 1,030,346 Certificates of deposits: $100,000 and over 37,388,411 24,067,363 Other 50,922,070 41,439,799 - -------------------------------------------------------------------------------------------------------------------- Total deposits 226,987,027 168,961,089 Notes payable -- 300,000 Accounts payable and accrued expenses 735,580 565,131 - -------------------------------------------------------------------------------------------------------------------- Total liabilities 227,722,607 169,826,220 - -------------------------------------------------------------------------------------------------------------------- Shareholders' equity: Common stock, $.01 par value; authorized 3,000,000 shares; issued and outstanding 2,144,972 shares at September 30, 1997 and 1,662,360 shares at December 31, 1996 21,450 16,624 Surplus 16,602,648 9,595,956 Retained earnings 6,603,657 5,138,612 Net unrealized holding gains on available-for-sale securities 12,915 6,701 - -------------------------------------------------------------------------------------------------------------------- Total shareholders' equity 23,240,670 14,757,893 - -------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $250,963,277 184,584,113 ==================================================================================================================== See accompanying notes to consolidated financial statements.
1 4 ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statements of Income Three months and nine months ended September 30, 1997 and 1996
========================================================================================================================== (Unaudited) (Unaudited) Three months ended Nine months ended September 30, September 30, ------------------ ----------------- 1997 1996 1997 1996 - -------------------------------------------------------------------------------------------------------------------------- Interest income: Interest and fees on loans $4,503,988 2,937,564 11,673,201 8,325,759 Interest on debt securities: Taxable 243,115 140,632 806,687 496,017 Nontaxable 8,498 9,311 26,038 26,334 Interest on federal funds sold 63,677 100,273 543,084 260,374 Interest on interest earning deposits 403 -- 761 -- - -------------------------------------------------------------------------------------------------------------------------- Total interest income 4,819,681 3,187,780 13,049,771 9,108,484 - -------------------------------------------------------------------------------------------------------------------------- Interest expense: Interest-bearing transaction accounts 99,065 75,878 289,186 251,667 Money market accounts 897,824 501,793 2,506,173 1,409,203 Savings 7,643 8,404 22,937 23,505 Certificates of deposit: $100,000 and over 439,906 290,232 1,183,601 1,018,983 Other 635,255 513,386 1,899,819 1,277,152 Federal funds purchased 5,772 871 5,772 949 Notes payable -- 8,949 2,888 8,949 - -------------------------------------------------------------------------------------------------------------------------- Total interest expense 2,085,465 1,399,513 5,910,376 3,990,408 - -------------------------------------------------------------------------------------------------------------------------- Net interest income 2,734,216 1,788,267 7,139,395 5,118,076 Provision for loan losses 193,215 50,842 570,972 143,739 - -------------------------------------------------------------------------------------------------------------------------- Net interest income after provision for loan losses 2,541,001 1,737,425 6,568,423 4,974,337 - -------------------------------------------------------------------------------------------------------------------------- Noninterest income: Service charges on deposit accounts 48,921 31,071 128,805 95,034 Other service charges and fee income 54,272 232,717 194,005 744,788 Gain on investment in Enterprise Fund, L.P. 662 (3,328) (3,351) (59,378) - -------------------------------------------------------------------------------------------------------------------------- Total noninterest income 103,855 260,460 319,459 780,444 - -------------------------------------------------------------------------------------------------------------------------- Noninterest expense: Salaries 761,369 533,311 2,018,143 1,506,699 Payroll taxes and employee benefits 244,498 143,419 674,172 516,218 Occupancy 162,898 91,003 357,233 236,598 FDIC insurance 6,040 500 15,364 1,500 Data processing 62,517 58,334 176,131 172,893 Other 450,695 462,376 1,083,823 1,261,980 - -------------------------------------------------------------------------------------------------------------------------- Total noninterest expense 1,688,017 1,288,943 4,324,866 3,695,888 - -------------------------------------------------------------------------------------------------------------------------- Income before income tax expense 956,839 708,942 2,563,016 2,058,893 Income tax expense 351,848 279,608 954,577 792,553 - -------------------------------------------------------------------------------------------------------------------------- Net income $ 604,991 429,334 1,608,439 1,266,340 ========================================================================================================================== Earnings per share $ 0.27 0.25 0.74 0.74 Weighted average common shares and common stock equivalents outstanding 2,254,021 1,728,691 2,176,712 1,702,870 ========================================================================================================================== See accompanying notes to consolidated financial statements.
2 5 ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Nine months ended September 30, 1997 and 1996
=================================================================================================================== (Unaudited) -------------------------------- 1997 1996 - ------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 1,608,439 1,266,340 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 226,781 160,607 Provision for loan losses 570,972 143,739 (Gains) losses on sale of other real estate owned, net of write-downs and expenses (25,728) 6,646 Net (amortization) accretion of debt securities (181,310) 23,832 Loss on investment in Enterprise Fund, L.P. 3,351 59,378 (Increase) decrease in accrued interest receivable (424,953) 70,397 (Increase) decrease in prepaid expenses and other assets (1,065,044) 71,208 Increase (decrease) in accounts payable and accrued expenses 167,260 (229,899) - ------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 879,768 1,572,248 - ------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Decrease in federal funds sold 8,400,000 10,605,000 Increase in interest earning deposits (40,091) -- Purchases of available-for-sale debt securities (17,837,997) (8,922,967) Purchases of available-for sale equity securities (90,500) (94,200) Purchases of held-to-maturity debt securities -- (109,004) Proceeds from maturities of available-for-sale debt securities 18,580,000 10,140,000 Proceeds from maturities and principal paydowns on held-to-maturity debt securities 407,956 5,229 Net increase in loans (67,575,468) (19,246,166) Proceeds from sales of other real estate owned 184,093 -- Purchases of office equipment and leasehold improvements (1,313,127) (241,686) Decrease (increase) in Investment in Enterprise Fund, L.P. 319,499 (520,500) - ------------------------------------------------------------------------------------------------------------------- Net cash used in investing activities (58,965,635) (8,384,294) - ------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Net increase (decrease) in demand and savings accounts 35,222,619 (4,229,610) Net increase in certificates of deposit 22,803,319 8,650,813 (Decrease) increase in notes payable (300,000) 300,000 Cash dividends paid (143,393) (84,146) Proceeds from the issuance of common stock 7,011,518 1,094,280 - ------------------------------------------------------------------------------------------------------------------- Net cash provided by financing activities 64,594,063 5,731,337 - ------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and due from banks 6,508,196 (1,080,709) Cash and due from banks, beginning of period 9,261,035 8,109,804 - ------------------------------------------------------------------------------------------------------------------- Cash and due from banks, end of period $ 15,769,231 7,029,095 =================================================================================================================== Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $ 5,869,541 4,017,213 Income taxes 1,095,258 739,759 Noncash transactions: Transfers to other real estate owned in settlement of loans 195,000 50,000 Loans made to facilitate the sale of other real estate owned 104,987 50,000 =================================================================================================================== See accompanying notes to consolidated financial statements.
3 6 ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 1997 and 1996 - ------------------------------------------------------------------------------- (1) BASIS OF PRESENTATION The accompanying consolidated financial statements of Enterbank Holdings, Inc. and subsidiaries (the Company) are unaudited and should be read in conjunction with the consolidated financial statements contained in the 1996 annual report on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation of the results of operations for the interim periods presented herein, have been included. Operating results for the nine month period ended September 30, 1997 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 1997. The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. (2) STOCK OFFERINGS AND OTHER TRANSACTIONS On February 14, 1997, the Company completed a stock offering of 451,612 shares of common stock registered under the Securities Act of 1933 on Form S-1. These shares were offered to the public at $15.50 per share. The offering allowed for the sale of a minimum of 193,548 shares, or $3,000,000, and a maximum of 451,612 shares, or $7,000,000 in common stock. The maximum number of shares was sold at $15.50 per share. On October 31, 1997, the Company completed a private stock offering of 130,940 shares of common stock exempt from registration under the Securities Act of 1933 pursuant to Regulation D thereunder. These shares were offered at $16.75 per share. The offering allowed for the sale of a minimum of 59,701 shares, or $1,000,000, and a maximum of 131,343 shares, or $2,200,000 in common stock. The offering and substantially all sales of common stock were made to accredited investors. In a related transaction, on October 31, 1997, the Company entered into an agreement with Moneta Group, Inc., a St. Louis based financial planning and investment advisory firm (Moneta), to enter into a business referral and financial planning servicing arrangement. The business referral arrangement will provide for compensation in the form of non-qualified Company stock options for up to 200,000 shares of the Company's common stock to Moneta personnel based upon cumulative net incremental revenues generated by deposit accounts and loan transactions referred to the Company's wholly-owned subsidiary, Enterprise Bank, by such Moneta personnel. The options, when granted, and the common stock to be issued pursuant to such option, when issued, will be unregistered and issued pursuant to available exemptions from registration. The financial planning arrangement will enable Enterprise Bank to offer its customers financial planning services by Moneta personnel in return for a percentage share of the earnings generated from such services. The business referral and financial planning servicing arrangement is subject to execution of the agreement by all parties thereto. 4 7 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION Total assets at September 30, 1997 were $251 million, an increase of $66 million, or 36%, over total assets of $185 million at December 31, 1996. Loans and leases were $202 million, an increase of $68 million, or 51%, over total loans and leases of $134 million at December 31, 1996. Federal funds sold and investment securities were $29 million, a decrease of $9 million, or 24%, from total federal funds sold and investment securities of $38 million at December 31, 1996. The decrease resulted from the shift in earning assets from short-term investments into loans during the first five months of 1997. Total deposits at September 30, 1997 were $227 million, an increase of $58 million, or 34%, over total deposits of $169 million at December 31, 1996. Deposit growth during the first nine months of 1997 occurred primarily in money market accounts and demand deposit accounts. Deposit growth in the third quarter occurred primarily in certificates of deposits due to advertising programs. Total shareholders' equity increased $8.5 million primarily due to retained earnings of $1.5 million for the nine months ended September 30, 1997 and net proceeds of $7.0 million from the sale of common stock and the exercise of incentive stock options by some employees. RESULTS OF OPERATIONS Net income was $1,608,000 for the nine month period ended September 30, 1997, an increase of 27% over net income of $1,266,000 for the same period in 1996. Net income for the three month period ended September 30, 1997 was $605,000, an increase of 41% over net income of $429,000 for the same period in 1996. Earnings per share for the nine months ended September 30, 1997 and 1996 were $0.74. Earnings per share for the three months ended September 30, 1997 and 1996 were $0.27 and $0.25, respectively. Earnings per share did not increase in line with the increase in net income due to the increase in weighted average common stock equivalents outstanding of 514,696 from September 30, 1996 to September 30, 1997. Weighted average common stock equivalents increased primarily from the issuance of 198,960 shares of common stock upon the exercise of outstanding warrants in August 1996, and the issuance of 451,612 shares of common stock on February 14, 1997 in the Company's common stock offering. NET INTEREST INCOME Net interest income (presented on a tax-equivalent basis) was $7.1 million, or 4.82% of average earning assets, for the nine months ended September 30, 1997 compared to $5.1 million, or 5.04% of average earning assets, for the same period in 1996. The $2.0 million, or 39%, increase in net interest income resulted primarily from a $62 million increase in average earning assets to $198 million for the nine months ended September 30, 1997 from $136 million during the same period in 1996, offset by a lower average earning asset yield and a higher cost of deposits. Net interest income (presented on a tax-equivalent basis) was $2.7 million, or 5.19% of average earning assets, for the three months ended September 30, 1997 compared to $1.8 million, or 5.03% of average earning assets, for the same period in 1996. The $946,000, or 53%, increase in net interest income resulted primarily from a $68 million increase in average earning assets to $210 million for the three months ended September 30, 1997 from $142 million during the same period in 1996 and a higher average earning asset yield and lower cost of deposits. The asset yield increase is primarily due to a change in the mix of earning assets from lower yielding federal funds sold to higher yielding loans. 5 8 The yield on average earning assets decreased to 8.83% for the nine month period ended September 30, 1997 from 8.96% for the same period in 1996. The yield on average earning assets increased to 9.14% for the three month period ended September 30, 1997 from 8.95% for the same period in 1996. The yield on interest bearing deposits increased to 5.01% for the nine month period ended September 30, 1997 from 4.88% for the same period in 1996 and remained relatively constant for the two three-month periods ended September 30, 1997 and 1996. The following table sets forth, on a tax-equivalent basis, certain information relating to the Company's average balance sheet, and reflects the average yield earned on interest-earning assets, the average cost of interest-bearing liabilities and the resulting net interest income for the three and nine month periods ended September 30: 6 9 ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES Distribution of Average Assets, Liabilities and Shareholder's Equity and Interest Rates
=============================================================================================================================== Three months ended September 30, ----------------------------------------------------------------------- 1997 1996 ------------------------------------ ---------------------------------- Percent Interest Average Percent Interest Average Average of total income/ yield/ Average of total income/ yield/ ASSETS balance assets expense rate balance assets expense rate - ------------------------------------------------------------------------------------------------------------------------------- (Dollars in thousands) Interest-earning assets: Loans $187,817 83.13% $4,517 9.54% $123,648 80.63% $2,946 9.48% Taxable investments in debt securities 16,868 7.47 243 5.72 10,022 6.54 141 5.60 Non-taxable investments in debt securities 825 0.37 13 6.25 895 0.58 14 6.22 Federal funds sold 4,419 1.96 64 5.75 7,652 4.99 100 5.20 Interest earning deposits 39 0.02 -- 4.48 -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------- Total interest-earning assets 209,968 92.95 4,837 9.14 142,217 92.74 3,201 8.95 - ------------------------------------------------------------------------------------------------------------------------------- Non-interest earning assets: Cash and due from banks 12,243 5.41 8,648 5.64 Office equipment and leasehold improvements 1,871 0.83 884 0.58 Prepaid expenses and other assets 3,988 1.77 3,126 2.03 Allowance for possible loan losses (2,171) (0.96) (1,525) (0.99) - ------------------------------------------------------------------------------------------------------------------------------- Total assets $225,899 100.00% $153,350 100.00% =============================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------------------------------------------------------------------------------------------------- Interest-bearing liabilities: Interest-bearing transaction accounts 16,303 7.22 108 2.63 12,149 7.92 78 2.55 Money market 75,782 33.55 898 4.70 41,907 27.33 502 4.77 Savings 1,222 0.54 8 2.60 1,114 0.73 9 3.21 Certificates of deposit 73,175 32.39 1,075 5.83 55,467 36.17 803 5.76 Notes payable -- -- -- -- 266 0.17 9 13.46 Federal funds purchased 416 0.18 3 2.86 60 0.04 1 6.63 - ------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities 166,898 73.88 2,092 4.97 110,963 72.36 1,402 5.03 Noninterest-bearing liabilities: Demand deposits 35,304 15.63 24,892 16.23 Other liabilities 839 0.37 3,661 2.39 - ------------------------------------------------------------------------------------------------------------------------------- Total liabilities 203,041 89.88 139,516 90.98 Shareholders' equity 22,858 10.12 13,834 9.02 - ------------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $225,899 100.00% $153,350 100.00% =============================================================================================================================== Net interest income $2,745 $1,799 =============================================================================================================================== Net interest margin 5.19% 5.03% =============================================================================================================================== Average balances include non-accrual loans. The income on such loans is included in interest but is recognized only upon receipt. Loan fees included in interest income are approximately $195,000 and $106,000 for the three month period ended September 30, 1997 and 1996, respectively. Loan fees included in interest income are approximately $500,000 and $375,000 for the nine month period ended September 30, 1997 and 1996, respectively. Non-taxable investment income is presented on a fully tax-equivalent basis assuring a tax rate of 34%. =============================================================================================================================== Nine months ended September 30, ----------------------------------------------------------------------- 1997 1996 ----------------------------------- ----------------------------------- Percent Interest Average Percent Interest Average Average of total income/ yield/ Average of total income/ yield/ ASSETS balance assets expense rate balance assets expense rate - ------------------------------------------------------------------------------------------------------------------------------- (Dollars in thousands) Interest-earning assets: Loans $164,618 77.65% $11,692 9.50% $116,958 79.41% $8,340 9.53% Taxable investments in debt securities 19,008 8.96 807 5.68 11,727 7.96 496 5.65 Non-taxable investments in debt securities 851 0.40 40 6.28 850 0.58 40 6.29 Federal funds sold 13,539 6.39 543 5.36 6,631 4.50 260 5.24 Interest earning deposits 30 0.01 1 4.46 -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------- Total interest-earning assets 198,046 93.41 13,083 8.83 136,166 92.45 9,136 8.96 - ------------------------------------------------------------------------------------------------------------------------------- Non-interest earning assets: Cash and due from banks 10,751 5.07 8,699 5.91 Office equipment and leasehold improvements 1,472 0.69 859 0.58 Prepaid expenses and other assets 3,755 1.77 3,053 2.07 Allowance for possible loan losses (1,984) (0.94) (1,483) (1.01) - ------------------------------------------------------------------------------------------------------------------------------- Total assets $212,040 100.00% $147,294 100.00% =============================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------------------------------------------------------------------------------------------------- Interest-bearing liabilities: Interest-bearing transaction accounts 15,680 7.39 317 2.70 13,340 9.05 264 2.64 Money market 71,033 33.50 2,506 4.72 42,178 28.64 1,409 4.46 Savings 1,190 0.56 23 2.58 1,048 0.71 24 3.06 Certificates of deposit 70,473 33.24 3,084 5.85 52,866 35.89 2,296 5.80 Notes payable 33 0.02 3 12.15 172 0.12 9 6.99 Federal funds purchased 141 0.07 6 5.73 22 0.01 1 6.07 - ------------------------------------------------------------------------------------------------------------------------------- Total interest-bearing liabilities 158,550 74.78 5,939 5.01 109,626 74.42 4,003 4.88 Noninterest-bearing liabilities: Demand deposits 31,356 14.78 23,800 16.16 Other liabilities 470 0.22 910 0.62 - ------------------------------------------------------------------------------------------------------------------------------- Total liabilities 190,376 89.78 134,336 91.20 Shareholders' equity 21,664 10.22 12,958 8.80 - ------------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $212,040 100.00% $147,294 100.00% =============================================================================================================================== Net interest income $7,144 $5,133 =============================================================================================================================== Net interest margin 4.82% 5.04% =============================================================================================================================== Average balances include non-accrual loans. The income on such loans is included in interest but is recognized only upon receipt. Loan fees included in interest income are approximately $195,000 and $106,000 for the three month period ended September 30, 1997 and 1996, respectively. Loan fees included in interest income are approximately $500,000 and $375,000 for the nine month period ended September 30, 1997 and 1996, respectively. Non-taxable investment income is presented on a fully tax-equivalent basis assuring a tax rate of 34%.
7 10 PROVISION FOR POSSIBLE LOAN LOSSES The provision for possible loan losses was $193,000 and $571,000 for the three and nine month periods ended September 30, 1997, respectively, in comparison to $51,000 and $144,000 for the same periods in 1996. The increase in the provision reflects an increase in net loan charge-offs to $81,000 from net recoveries of $12,000 for the nine months ended September 30, 1997 and 1996, respectively, and loan growth of $68 million versus $19 million during those same periods. The following table summarizes changes in the allowance for loan losses arising from loans charged-off and recoveries on loans previously charged-off, by loan category, and additions to the allowance that have been charged to expense:
========================================================================================================================= September 30, ---------------------- 1997 1996 - ------------------------------------------------------------------------------------------------------------------------- (dollars in thousands) Allowance at beginning of period $ 1,765 1,400 - ------------------------------------------------------------------------------------------------------------------------- Loans charged off: Commercial and industrial 80 -- Real estate: Commercial 27 -- Construction 5 -- Residential -- -- Consumer and other -- -- - ------------------------------------------------------------------------------------------------------------------------- Total loans charged off 112 -- - ------------------------------------------------------------------------------------------------------------------------- Recoveries of loans previously charged off: Commercial and industrial 20 -- Real estate: Commercial -- -- Construction -- -- Residential 11 10 Consumer and other -- 1 - ------------------------------------------------------------------------------------------------------------------------- Total recoveries of loans previously charged off 31 11 - ------------------------------------------------------------------------------------------------------------------------- Net loans charged off (recovered) 81 (11) - ------------------------------------------------------------------------------------------------------------------------- Provisions charged to operations 571 144 - ------------------------------------------------------------------------------------------------------------------------- Allowance at end of period $ 2,255 1,555 ========================================================================================================================= Average loans 164,618 116,958 Total loans 201,538 129,721 Nonperforming loans 183 107 Net charge-offs (recoveries) to average loans 0.05% (0.01)% Allowance for possible loan losses to loans 1.12 1.20 Allowance for possible loan losses to nonperforming loans 1,232.24 1,453.27 =========================================================================================================================
8 11 The allowance for loan losses is maintained at a level considered adequate to provide for potential losses. The provision for loan losses is based on a periodic analysis which considers, among other factors, current economic conditions, loan portfolio composition, past loan loss experience, independent appraisals, loan collateral and payment experience. In addition to the allowance for estimated losses on identified problem loans, an overall unallocated allowance is established to provide for unidentified credit losses inherent in the portfolio. As increases to the allowance for loan losses become necessary, they are reflected in the results of operations in the periods in which they become known. Management believes the allowance for loan losses is adequate to absorb losses in the loan portfolio. While management uses available information to recognize loan losses, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses. Such agencies may require the Company to increase the allowance for loan losses based on their judgments and interpretations about information available to them at the time of their examinations. While the Company has benefited from very low historical net charge-off experience during an extended period of rapid loan growth, management remains cognizant that historical loan loss and nonperforming asset experience may not be indicative of future results. If the experience were to deteriorate and additional provisions for loan losses were required, future operating results would be negatively impacted. Both management and the Board of Directors continually monitor changes in asset quality, market conditions, concentration of credit and other factors which impact the credit risk associated with the Company's loan portfolio. The following table sets forth information concerning the Company's nonperforming assets as of the dates indicated:
========================================================================================================================= September 30, December 31, 1997 1996 - ------------------------------------------------------------------------------------------------------------------------- (dollars in thousands) Nonaccrual loans $ 183 131 Loans past due 90 days or more and still accruing interest -- 30 Restructured loans -- -- - ------------------------------------------------------------------------------------------------------------------------- Total nonperforming loans 183 161 Foreclosed property 806 874 - ------------------------------------------------------------------------------------------------------------------------- Total nonperforming assets $ 989 1,035 ========================================================================================================================= Total assets $250,963 184,584 Total loans 201,538 134,133 Total loans plus foreclosed property 202,344 135,007 Nonperforming loans to loans 0.09% 0.12% Nonperforming assets to loans plus foreclosed property 0.49 0.77 Nonperforming assets to total assets 0.39 0.56 =========================================================================================================================
9 12 NONINTEREST INCOME Noninterest income was $104,000 and $319,000 for the three and nine months periods ended September 30, 1997, respectively, compared to $260,000 and $780,000 for the same periods in 1996. The decrease is primarily attributable to merchant credit card income. The company sold its merchant credit card portfolio in November 1996. Merchant credit card income in 1997 was $0 compared to $174,000 and $557,000 for the three and nine month periods ended September 30, 1996. Noninterest income from other sources consists primarily of service charges and other fees related to deposit accounts. NONINTEREST EXPENSE Noninterest expense increased $399,000 and $629,000 to $1,688,000 and $4,325,000 for the three and nine month periods ended September 30, 1997, respectively. The increases are primarily due to increases in salaries and benefits expense and occupancy expense, offset by a reduction of $139,000 and $407,000 for the three and nine month periods ended September 30, 1997 in expenses related to the previously mentioned merchant credit card operation. Increases in salaries and benefits and occupancy expense are primarily due to the personnel and occupancy expenses for the new banking facilities located in St. Charles County and Sunset Hills. LIQUIDITY AND INTEREST RATE SENSITIVITY Liquidity is provided by the Company's earning assets, including short-term investments in federal funds sold, maturities in the loan portfolio, maturities in the investment portfolio, amortization of term loans, and by the Company's deposit inflows, proceeds from borrowings, and retained earnings. Since inception, the Company has experienced rapid loan and deposit growth primarily due to an aggressive direct calling effort and sustained economic growth in the local market served by the Company. Management has pursued privately held businesses who desire a close working relationship with a locally-managed, full service bank. Due to the relationship developed with these customers, management views deposits from this source as a stable deposit base. Additionally, the Company belongs to a national network of time depositors (primarily credit unions) who place time deposits with the Company, typically in increments of $99,000. The Company has used this source of deposits for four years and considers it to be a stable source of deposits that allows the Company to acquire funds at a cost below its alternative cost of funds. There were $38 million and $31 million of deposits from the national network with the Company at September 30, 1997 and December 31, 1996, respectively. The following table sets forth the amount and maturity of certificates of deposit that had balances of more than $100,000 at September 30, 1997:
=========================================================================== Remaining maturity Amount - --------------------------------------------------------------------------- (dollars in thousands) Three months or less $20,932 Over three through six months 7,974 Over six through twelve months 7,296 Over twelve months 1,186 - --------------------------------------------------------------------------- $37,388 ===========================================================================
The asset/liability management process, which involves management of the components of the balance sheet to allow assets and liabilities to reprice at approximately the same time, is an ever-changing process essential to minimizing the effect of interest rate fluctuations on net interest income. 10 13 CAPITAL ADEQUACY In April 1996, the Company obtained a $1,000,000 unsecured line of credit. The line of credit was a one year interest only note accruing interest at the prime rate. The outstanding principal balance on the loan as of December 31, 1996 was $300,000 which was repaid during the three month period ended March 31, 1997 from the proceeds of the common stock offering. The line of credit was not renewed at the maturity date in April 1997 at the request of the Company. Risk-based capital guidelines for financial institutions were adopted by regulatory authorities effective January 1, 1991. These guidelines were designed to relate regulatory capital requirements to the risk profile of the specific instructions and to provide for uniform requirements among the various regulators. Currently, the risk-based guidelines require the Company to meet a minimum total capital ratio of 8.0% of which at least 4.0% must consist of Tier 1 capital. Tier 1 capital generally consists of (a) common shareholders' equity (excluding the unrealized market value adjustments on the available-for-sale securities), (b) qualifying perpetual preferred stock and related surplus subject to certain limitations specified by the FDIC, and (c) minority interests in the equity accounts of consolidated subsidiaries less goodwill and any other intangible assets and investments in subsidiaries that the FDIC determines should be deducted from Tier 1 capital. The FDIC also requires a minimum leverage ratio of 3.0%, defined as the ratio of Tier 1 capital less purchased mortgage servicing rights to total assets, for banking organizations deemed the strongest and most highly rated by banking regulators. A higher minimum leverage ratio is required of less highly rated banking organizations. The following table summarizes the Company's risk-based capital and leverage ratios at the dates indicated:
========================================================================================================================== To be well capitalized under For capital prompt corrective Actual adequacy purposes action provisions -------------------- ----------------- ----------------- Amount Ratio Amount Ratio Amount Ratio - -------------------------------------------------------------------------------------------------------------------------- As of September 30, 1997: Total capital (to risk weighted assets: Enterbank Holdings, Inc. $25,436,500 12.53% $16,238,133 8.00% $20,297,666 10.00% Enterprise Bank 22,411,000 11.03 16,255,696 8.00 20,319,619 10.00 Tier I Capital (to risk weighted assets): Enterbank Holdings, Inc. 23,181,500 11.42 8,119,067 4.00 12,178,600 6.00 Enterprise Bank 20,156,000 9.92 8,127,848 4.00 12,191,772 6.00 Tier I Capital (to average assets): Enterbank Holdings, Inc. 23,181,500 10.26 9,035,960 4.00 11,294,950 5.00 Enterprise Bank 20,156,000 9.54 8,451,200 4.00 10,564,000 5.00 As of December 31, 1996: Total capital (to risk weighted assets: Enterbank Holdings, Inc. 16,461,861 11.53% 11,424,028 8.00 14,280,035 10.00 Enterprise Bank 15,979,917 11.28 11,334,400 8.00 14,168,000 10.00 Tier I Capital (to risk weighted assets): Enterbank Holdings, Inc. 14,696,861 10.29 5,712,014 4.00 8,568,021 6.00 Enterprise Bank 14,214,917 10.03 5,667,200 4.00 8,500,800 6.00 Tier I Capital (to average assets): Enterbank Holdings, Inc. 14,696,861 9.62 6,108,240 4.00 7,635,300 5.00 Enterprise Bank 14,214,917 9.35 6,085,960 4.00 7,607,450 5.00 ==========================================================================================================================
11 14 Primary capital, a measure of capital adequacy, includes equity capital, allowance for possible loan losses, and debt considered equity for regulatory capital purposes. Tangible primary capital represents primary capital reduced by total intangible assets included in the balance sheet. At September 30, 1997, the Company's primary capital was $25.5 million compared to $16.5 million at December 31, 1996. The Company's primary capital to asset ratio on a consolidated basis was 10.09% and 8.95% at September 30, 1997 and December 31, 1996, respectively. The Company's tangible primary capital was $25.5 million and $16.5 million at September 30, 1997 and December 31, 1996, respectively. IMPLEMENTATION OF NEW ACCOUNTING PRONOUNCEMENTS The Company adopted the provisions of SFAS 125, Accounting for Transfers and Servicing of Financial Assets and Liabilities (SFAS 125) prospectively on January 1, 1997. SFAS 125 established accounting and reporting standards for transfers and servicing of financial assets and extinguishment of liabilities. The standards established by SFAS 125 are based on consistent application of a financial-components approach that focuses on control. Under that approach, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes financial assets when control has been surrendered, and derecognizes liabilities when extinguished. SFAS 125 provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. The implementation of SFAS 125, which is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after December 31, 1996, did not have a material effect on the consolidated financial position or results of operations of the Company. During February 1997, the FASB issued SFAS 128, Earnings per Share (SFAS 128). SFAS 128 establishes standards for computing and presenting earnings per share (EPS) and applies to entities which publicly held common stock or potential common stock. SFAS 128 supersedes Opinion 15 and AICPA Accounting Interpretations 1-102 of Opinion 15 making EPS calculations comparable to international EPS standards. SFAS 128 replaces the presentation of primary EPS with a presentation of basic EPS and replaces fully diluted EPS with diluted EPS. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is computed similarly to fully diluted EPS pursuant to Opinion 15. SFAS 128 is effective for financial statements issued for periods ending after December 15, 1997, including interim periods; earlier application is not permitted. After adoption, all prior-period EPS data presented shall be restated to conform with SFAS 128. The majority of the Company's outstanding options are fully vested and therefore, most of the dilution from outstanding options is already included in the current EPS calculation. The Company does not believe the implementation of SFAS 128 will have a material effect on its computation of EPS. In February 1997, the FASB issued SFAS 129, Disclosure of Information about Capital Structure (SFAS 129). SFAS 129 establishes standards for disclosing information about an entity's capital structure and applied to all entities. SFAS 129 continues the previous requirements to disclose certain information about an entity's capital structure found in APB Opinions No. 10, Omnibus Opinion-1966, and No. 15, Earnings per Share, and FASB Statement No. 47, Disclosure of Long-Term Obligations, for entities that were subject to the requirements of those standards. SFAS 129 eliminates the exemption of nonpublic entities from certain disclosure requirements on APB 15 as provided by SFAS 21, Suspension of the Reporting of Earnings per Share and Segment Information by Nonpublic Enterprises. SFAS 129 supersedes specific disclosure requirements of APB 10, APB 15 and SFAS 47 and consolidates them in SFAS 129 for ease of retrieval and for greater visibility to nonpublic entities. SFAS 129 is effective for financial statements for periods ending after December 15, 1997. It contains no change in disclosure requirements for entities that were previously subject to the requirements of APB 10, APB 15 and SFAS 47. Therefore, the implementation of SFAS 129 is not expected to have a material impact on the Company's financial position or results of operations. 12 15 In June 1997, the FASB issued SFAS 130, Reporting Comprehensive Income (SFAS 130). SFAS 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general-purpose financial statements. Comprehensive income is defined as "the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners." SFAS 130 requires all items recognized under accounting standards as components of comprehensive income to be reported in a financial statement that is displayed with the same prominence as other financial statements. It also requires publicly traded companies to report a total for comprehensive income in condensed financial statements of interim periods issued to shareholders. SFAS 130 requires an entity to: (1) classify items of other comprehensive income by their nature in a statement of financial performance and (2) display the accumulated balances of items of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. SFAS 130 is effective for fiscal years beginning after December 15, 1997. Reclassification of financial statements for earlier periods provided for comparative purposes is required. The Company's management is in the process of analyzing SFAS 130 and its impact on the Company's financial position and results of operations. In June 1997, the FASB issued SFAS 131, Disclosures about Segments of an Enterprise and Related Information (SFAS 131). SFAS 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. SFAS 131 requires that a public business enterprise report financial and descriptive information about its reportable operating segments. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Generally, financial information is required to be reported on the basis that it is used internally for evaluating segment performance and deciding how to allocate resources to segments. SFAS 131 is effective for financial statements for periods beginning after December 15, 1997. In the initial year of application, comparative information for earlier years is to be restated. SFAS 131 need not be applied to interim financial statements in the initial year of application, but comparative information for interim periods in the initial year of application is to be reported in financial statements for interim periods in the second year of application. The Company's management is in the process of analyzing SFAS 131 and its impact on the Company's financial position and results of operations. 13 16 EFFECT OF INFLATION Persistent high rates of inflation can have a significant effect on the reported financial condition and results of operations of all industries. However, the asset and liability structure of commercial banks is substantially different from that of an industrial company in that virtually all assets and liabilities of commercial banks are monetary in nature. Accordingly, changes in interest rates may have a significant impact on a commercial bank's performance. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services. Inflation does have an impact on the growth of total assets in the banking industry, often resulting in a need to increase equity capital at higher than normal rates to maintain an appropriate equity-to-assets ratio. PART II - OTHER INFORMATION Item 2 - Changes in Securities and use of proceeds See Part I - Item 1 - Note 2 to the Consolidated Financial Statements for the information required by this Item. Item 5 - Other Information See Part I - Item 1 - Note 2 to the Consolidated Financial Statements for the information required by this Item. Item 6 - Exhibits and Reports on Form 8-K The exhibits are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.
Exhibit Number Description ------- ----------- 10 Customer Referral Agreement by and among Enterbank Holdings, Inc., Enterprise Bank and Moneta Group Investment Advisors, Inc. 11 Statement Re: Computation of Earnings Per Share 27 Financial Data Schedule
The Company filed no current reports on Form 8-K during the three months ended September 30, 1997. 14 17 SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Clayton, State of Missouri, on the 14th day of November, 1997. ENTERBANK HOLDINGS, INC. By: /s/ Fred H. Eller ------------------------------ Fred H. Eller Chief Executive Officer By: /s/ James C. Wagner ------------------------------ James C. Wagner Chief Financial Officer 15 EX-10 2 CUSTOMER REFERRAL AGREEMENT 1 CUSTOMER REFERRAL AGREEMENT This Agreement is made and entered as of October 31, 1997, by and among Enterbank Holdings, Inc. ("Holdings"), a bank holding company organized under the laws of the State of Delaware, Enterprise Bank ("Bank"), a banking subsidiary of Holdings organized under the laws of the State of Missouri, and Moneta Group Investment Advisers, Inc. ("Moneta"), a corporation organized under the laws of Missouri. WITNESSETH THAT Moneta is registered as an investment adviser under the Investment Advisers Act of 1940, as amended, and provides financial planning and investment advisory services to individuals, fiduciaries and business organizations; In the regular course of its business, Moneta provides advice with respect to, or exercises discretionary authority from its clients to effect, short-term investments in money market funds and similar deposit accounts; Clients of Moneta, either independently or as the result of financial planning and investment advice provided by Moneta, borrow funds or engage in other financing transactions for personal, business or investment purposes; Bank is regularly engaged in accepting deposit accounts and in making loans or otherwise extending credit and providing commercial banking services; Prior to the date of this Agreement, Moneta in the regular course of its business recommended to certain of its clients the banking services offered by and available through the Bank and Moneta believes that it may be appropriate for certain of its other current and prospective clients to utilize the various banking services offered by and available through Bank, either for such clients or for related persons and entities. Subject to the discharge of its fiduciary obligations to its clients and to the extent consistent therewith, Moneta believes that it is appropriate to make referrals of such clients, related persons and entities to Bank. Holdings and Bank believe that referrals of Moneta's clients to the Bank will contribute to the growth of the Bank's deposit and lending activity and desires to enter into this Agreement with Moneta to promote and encourage such referrals. Bank believes that certain of its existing customer base may have an interest in engaging the services of an investment adviser with respect to financial planning and portfolio management services offered by Moneta and intends to refer such customers to Moneta in accordance with the terms of a separate agreement of even date herewith. In consideration of the premises and the covenants herein contained, Holdings, the Bank and Moneta agree as follows: 2 1. Referrals of clients and customers of Moneta to Bank for Deposit Accounts. Subject to and to the extent consistent with its fiduciary obligations to its clients and customers, Moneta agrees that it will recommend that its clients and customers establish deposit accounts at the Bank to be used as the principal depository of the cash portion of funds of Moneta customers under investment advisory management by Moneta including, without limitation, funds deposited pending investment, funds representing proceeds of securities or other investments sold on behalf of such clients and customers and income derived from such investments prior to disbursement thereof to the client or customer. In connection with such deposit accounts each client or customer of Moneta will provide such account documentation as is required by Bank and in addition thereto will provide to Bank an executed original limited power of attorney in favor of Moneta authorizing Moneta, inter alia, to withdraw funds from such account for the purpose of settlements in respect of purchases of securities on behalf of the client or customer and for the purpose of disbursing funds to the client or customer. Such limited powers of attorney will expressly authorize the Bank to rely upon instructions received from Moneta with respect to disbursements made from such accounts and Moneta agrees to indemnify and hold Bank harmless from and against any loss, claim, damage or expense suffered by Bank as a result of Bank's reliance upon instructions or directions received from Moneta with respect to any such account. Unless otherwise requested by the customer, any such deposit account relating to the customer's investment account managed by Moneta shall be maintained separately from any other deposit account of such customer with the Bank. 2. Referrals of clients and customers of Moneta to Bank for loan, deposit and other Bank services. Subject to and to the extent consistent with its fiduciary obligations to its clients and customers, Moneta agrees that it will refer such customers to Bank for loans, deposits and other credit and financial services provided by Bank. In connection with each such referral, Moneta will provide to its customers and clients disclosure of the relationship between Moneta and the Bank arising under this Agreement or otherwise, in a manner consistent with applicable legal and regulatory requirements and good business practice. It is expected that such disclosure will be substantially in the form of Exhibit I hereto and that subject to applicable legal and regulatory disclosure requirements changes in the form and substance of such disclosures will be subject to the reasonable approval of the Bank prior to the use thereof by Moneta. Moneta and the Bank recognize and acknowledge that any client or customer referred to Bank by Moneta will have free discretion to elect the use of any banking services offered by Bank subject to such terms and fees as may be agreed upon between Bank and the client or customer so referred. 3. Exclusivity with respect to referrals of Moneta clients and customers to Bank. Although in the exercise of its fiduciary responsibility to its clients Moneta may recommend other banking or financial institutions that provide deposit, loan and other services provided by the Bank, Moneta agrees with Bank and Holdings that this Agreement shall constitute an exclusive arrangement and that during the term of this Agreement it will not, and will not permit any principal or employee of Moneta to, enter into an agreement or receive compensation from any other banking or financial institution for referrals of clients to such institution with respect to services which are offered by and available through the Bank. 3 4. Referrals of clients and customers of Bank to Moneta for financial planning and investment advisory services. Moneta and the Bank agree to enter a "Moneta Bank Marketing and Solicitation Agreement" in the form of Exhibit II hereto, such agreement to become effective upon the further execution and delivery thereof by WS Griffith & Co. Inc., a broker-dealer registered under the Securities Exchange Act of 1934, as amended, and a member of the National Association of Securities Dealers, Inc. 5. Exclusivity with respect to referrals of Bank clients and customers to Moneta. Although in the exercise of its fiduciary responsibility to its clients Bank may recommend other investment advisory or brokerage institutions to its customers, Bank agrees with Moneta that this Agreement shall constitute an exclusive arrangement and that during the term of this Agreement it will not, and will not permit any principal or employee of Bank to, enter into an agreement or receive compensation from any other investment advisory or brokerage institution for referrals of clients to such institution with respect to services which are offered by and available through Moneta. 6. Identification of certain Bank Customer Accounts as "Moneta Referral Accounts." Accounts of customers and clients of Moneta whom or which Moneta refers to the Bank shall be identified as "Moneta Referral Accounts" in accordance with the terms hereof as follows: (a) Each Moneta client or customer hereafter establishing a deposit account with Bank in accordance with paragraph 1 of this Agreement shall, to the extent of such account, be deemed to be a "Moneta Referral Account." (b) Moneta will identify to the Bank at the time of introduction to the Bank such of Moneta's clients and customers as it shall refer to Bank in accordance with paragraph 2 of this Agreement for other loan, deposit or banking services. Each deposit or loan account established with respect to any such client or customer shall be regarded as a "Moneta Referral Account"; provided, however, that in the case of any such customer or client having a banking relationship with the Bank prior to the date of such introduction or reference by Moneta shall not be deemed to have established a "Moneta Referral Account" except to the extent that the Joint Relationship Committee established under this Agreement determines that one or more accounts established by such customer after the date of referral to the Bank by Moneta has resulted in an expanded relationship with the Bank solely as a result of such reference. (c) The Joint Relationship Committee will also identify as "Moneta Referral Accounts" such deposit and loan accounts with the Bank as may result from "primary relationships" with holders of accounts designated as "Moneta Referral Accounts" in accordance with clause (b) above. For purposes of such designation, a "primary relationship" shall mean that the holder of the account is either (i) a member of the immediate family of the holder of a "Moneta Referral Account" designated in accordance with clause (b) above, (ii) a trust or other fiduciary 4 account as to which the holder of a "Moneta Referral Account" is either the settlor or the fiduciary, or (iii) an account which is established by or for the benefit of an entity or person which is controlled by or under common control with the holder of a "Moneta Referral Account" designated in accordance with clause (b) above. (d) In addition to the foregoing, the Joint Relationship Committee may identify as "Moneta Referral Accounts" any other accounts which it determines represents deposit or loan accounts of customers of the Bank who would not have become customers of the Bank but for a direct or indirect referral to the Bank made by Moneta. In this connection it is contemplated that the Joint Relationship Committee will review the names of existing Moneta clients who are holders of deposit accounts at the Bank to determine which of such holders established a relationship with Bank as a result of a prior reference by Moneta and that such relationships and references will also give rise to identification of "Moneta Referral Accounts" in the discretion of the Joint Relationship Committee. In connection with the designation of accounts at the Bank as "Moneta Referral Accounts" under clauses (b), (c) and (d) above, there shall be established a Joint Relationship Committee. Such Committee shall initially consist of Peter Schick and one other representative designated by Moneta and of Fred Eller and one other representative designated by the Bank. Either Moneta or the Bank shall have the right, from time to time, to change its representation on the Joint Relationship Committee by written notice. The Joint Relationship Committee shall have access to such customer records and account information as it shall deem reasonably necessary in order to determine in good faith whether a particular account should be designated as a "Moneta Referral Account" and each of Moneta and Bank agree to provide such information upon request. Each member of the Committee, by serving thereon, agrees to maintain the confidentiality of information concerning the accounts of customers of the other party confidential except as may be required under this Agreement. 7. Imputation of Pro Forma Net Interest Margin accruing to Bank as a result of Moneta Referral Accounts. For each accounting period during the term of this Agreement as set forth in subsection (d) below, the Bank shall generate a Pro Forma Income Statement reflecting the income and cost to the Bank in respect of the Moneta Referral Accounts in accordance with the following items of income and expense to arrive at a Pro Forma Net Interest Margin with respect to the Moneta Referral Accounts: (a) Items of pro forma income attributable to Moneta Referral Accounts for each accounting period shall be as follows: (1) Mortgage income received and gains recorded on account of mortgages sold, net of originating commissions and net of documentation costs (as imputed by Bank in its normal course of operations), 5 (2) Interest income received in respect of loan accounts (other than mortgages sold), and (3) Attributed interest income on the excess, if any, of aggregate Moneta Referral Account deposits over the aggregate of Moneta Referral Account loans determined on the basis of the Bank's weighted average rate of return during the accounting period with respect to (i) its cash and due from, (ii) its federal funds sold portfolio and (iii) its yield from investment securities. For purposes of the determinations in clause (3) above, the amount of deposits in excess of loans, if any, will be determined using the average daily balances in deposit accounts. (b) Items of pro forma expense attributable to Moneta Referral Accounts for each accounting period shall be as follows: (1) interest expense on deposit accounts (2) a provision expense equal to the sum of: (i) the amount required to preserve a 1.25% reserve for all loans which are Moneta Referral Accounts based on the amount of such loans outstanding as of the last day for the reporting period, and (ii) .15% of average loans during the accounting period which are Moneta Referral Accounts for assumed actual losses; and (3) in the event that during the accounting period the amount of average loans to Moneta Referral Accounts exceeds that amount of average deposits from Moneta Referral Accounts, then there shall be charged as an item of expense an amount equal to such excess times the average cost of funds to the Bank. (c) The difference between the pro forma income items and the pro forma expense items shall be the Pro Forma Net Interest Margin attributable to the Moneta Referral Accounts. Such Pro Forma Net Interest Margin shall not be reduced by expenses related to the general overhead of the Bank or any actual charge off or losses arising with respect to loans which are Moneta Referral Accounts. (d) The preparation of the Pro Forma Income Statement and the determination 6 of the Pro Forma Net Interest Margin shall be made by the Chief Financial Officer of the Bank for the accounting periods ending September 30 each calendar year during the term of this Agreement; it being recognized that the initial period ending September 30, 1998, will be for a period of eleven months and may contain such other adjustments as are determined by the Joint Relationship Committee. In the event of a termination of the relationship established by this Agreement prior to its expiration, the Chief Financial Officer of the Bank shall determine the Net Interest Margin for any interim period ending with the date of such termination. (e) The Pro Forma Income Statement and related information concerning the determination of the Pro Forma Net Interest Margin shall be provided by the Chief Financial Officer of the Bank to the Joint Relationship Committee for review, provided, however, that such information shall not identify specific Moneta Referral Accounts giving rise to items of income or expense or permit the members of the Joint Relationship Committee to identify account balances of the holders of specific loan or deposit accounts. 8. Additional duties of Joint Relationship Committee; Resolution of Disputes. In addition to its role in designating certain Bank customer accounts as "Moneta Referral Accounts," the Joint Relationship Committee shall function to (i) review the determination by the Chief Financial Officer of the Bank of the Pro Forma Net Interest Margin and, upon acceptance of such determination by the Joint Relationship Committee, (ii) certify such result to the Chief Executive Officer of Moneta and to the Chief Executive Officer of Holdings and (iii) endeavor to resolve disputes arising under the terms of this Agreement or under the "Moneta Bank Marketing and Solicitation Agreement" constituting Exhibit II hereto. In the event that the Joint Relationship Committee shall be divided and in dispute as to any matter and unable to resolve such dispute internally, such dispute shall be resolved as follows: (a) if the dispute relates to the determination of the Pro Forma Net Interest Margin or other financial calculation, the dispute will be referred to the then current independent accountants engaged by Holdings and the Bank for resolution and the determination of such firm shall be conclusive; or (b) if the dispute relates to facts concerning the designation of an account as a "Moneta Referral Account" or other factual matter or to a matter arising under the "Moneta Bank Marketing and Solicitation Agreement", the dispute will be resolved by means of an "abbreviated arbitration" whereby Moneta and the Bank shall agree upon a single person to be designated as arbitrator and the decision of such arbitrator shall be final; provided, however, that in the event that Moneta and Bank are unable to agree on a single arbitrator to resolve such dispute, each of Moneta and Bank shall appoint one arbitrator and the arbitrators so selected shall appoint a third arbitrator who will serve as chairman of the panel. Any arbitration in accordance with clause (b) shall be conducted in accordance with the rules of the American Arbitration Association unless otherwise then agreed by the parties. 7 9. Award and issuance of Options to acquire shares of the Common Stock of Holdings to principals and employees of Moneta based upon Pro Forma Net Interest Margin. As an inducement to Moneta and its personnel to provide referrals of clients and customers of Moneta to the Bank leading to the establishment of Moneta Referral Accounts, Holdings agrees to issue options ("Options") to acquire shares of its common stock as follows: (a) Following certification by the Joint Relationship Committee of the Pro Forma Net Interest Margin for each accounting period in the term of this Agreement, Holdings will issue Options to acquire shares of its common stock relating to a number of shares of such common stock equal in the aggregate to the lesser of: (1) 50,000 shares of such common stock (subject to adjustment to reflect any stock split, stock dividend, combination or other recapitalization of the common stock of Holdings subsequent to the date of this Agreement); or (2) a number of shares equal to 75% of (x) the amount by which such Pro Forma Net Interest Margin exceeds the highest level of Pro Forma Net Interest Margin attained in any prior accounting period in the term of this Agreement divided by (y) the Market Value Per Share of Holdings' common stock, as hereinafter defined; provided, however, that for the accounting period ending September 30, 1998, as to which there is no prior accounting period in the term of this Agreement, "(x)" in the foregoing formula shall be an amount equal to the Pro Forma Net Interest Margin for such accounting period; plus the number of shares included in any Options being re-issued as a result of forfeitures, if any, as provided in paragraph 10(d) below. In the event that the number of shares determined in accordance with clause (2) above exceeds, as to any accounting period, the limitation imposed by clause (1) above, such excess number of shares shall be carried forward and added to the number of shares to be placed under option for the following accounting period to the extent that shares are then available but the exercise price for any such deferred awards shall be based on the Market Value Per Share as of the actual date of award of the Option and such carry-forward shall not increase the limitation in (1) above applicable to such later accounting period, but may result in a further carry-forward. (b) Each Option to be awarded and issued as a result of the foregoing shall be issued and evidenced by a Stock Option Agreement in the form of Exhibit III hereto and shall provide for an exercise price per share equal to the Market Value 8 Per Share as of the date of award of the Option. Notwithstanding the actual date of award of such Option and execution of the related Stock Option Agreement, each such Option shall bear a date of grant as of the last day of the period for which it is awarded. (c) Anything in this Agreement to the contrary notwithstanding, the maximum number of shares of the common stock of Holdings to be subject to Options awarded hereunder shall not exceed 200,000 (subject to adjustment to reflect any stock split, stock dividend, combination or other recapitalization of the common stock of Holdings subsequent to the date of this Agreement). (d) For purposes of this Agreement and any Options granted pursuant hereto, the Market Value Per Share of Holdings' common stock shall be determined as follows: (1) if the common stock of Holdings is traded on a national securities exchange registered under the Securities Exchange Act of 1934 or if quotations for such stock are carried in the Nasdaq over- the-counter market maintained by the National Association of Securities Dealers, Inc., then the Market Value Per Share of Holdings' common stock shall be equal to the reported closing price per share of such stock as of the date of grant to be reflected in the Option; (2) if the common stock of Holdings is not traded as provided in (1) above, the Market Value Per Share shall be based upon the weighted average of the prices paid per share of such common stock in arm's-length transactions not involving Holdings or any director or executive officer of Holdings reflected in respect of blocks of 500 shares or more occurring within the 90 days preceding the date of grant to be reflected in the Option; or (3) if the common stock of Holdings is not traded as provided in (1) above and there are fewer than three transactions available to determine the price in (2) above, then the Market Value Per Share shall be determined in good faith by the Board of Directors of Holdings in consultation with the firm of J. A. Glynn & Co. or another broker-dealer as may be agreed by Holdings and Moneta. (e) As promptly as practicable following its receipt of the certification of the Pro Forma Net Interest Margin, Holdings shall advise Moneta in writing of the number of shares to be subject to Option as a result of the formula provided in (a) above and of the Market Value Per Share. (f) The Options to be awarded and issued by Holdings shall be issued to the 9 individuals designated to it by Moneta in accordance with paragraph 10 below. (g) Holdings agrees that it shall reserve from its authorized but unissued shares of common stock a sufficient number of shares to permit the award and exercise of Options issuable in accordance with the foregoing. (h) Concurrent with the first issuance of an Option to any optionee in accordance with the terms of this Agreement, Holdings will deliver to such optionee a copy of its most recent report on Form 10-K filed under the Securities Exchange Act of 1934, as amended, together with copies of all subsequent interim reports filed under such Act. For so long as such optionee holds any unexercised Option issued pursuant to this Agreement, Holdings shall deliver copies of all subsequent filings made by it under sections 13, 14 or 15 of the Securities Exchange Act of 1934, as amended. 10 10. Allocation and Designation of Option Awards to Individuals; Reallocation of Forfeited Option Awards. (a) As promptly as practicable following its receipt of written notice from Holdings relating to the number of shares to be covered by Options and the Market Value Per Share, and in any event within thirty days of such notice, Moneta shall provide to Holdings a listing of the principals and employees of Moneta to whom Options are to be granted and the number of shares to be covered by the Option to be granted to each individual so listed. Such allocation and designation shall be made in the sole discretion of Moneta, having due regard for the contributions of such personnel to the referrals resulting in "Moneta Referral Accounts"; provided, however, that the total number of individuals to whom Options may be granted during the term of this Agreement shall not exceed (i) the number of resulting optionees who are "accredited investors" as that term is defined in Regulation D under the Securities Act of 1933, as amended, plus (ii) 35. In providing the listing of optionees to Holdings, Moneta shall certify which of such individuals constitute "accredited investors" and shall provide to Holdings such optionees' respective taxpayer identification numbers, residence address and such other information as Holdings may reasonably request. In addition to the foregoing restrictions and provisions, Moneta agrees that Holdings may impose such additional limitations on the number and nature of the recipients as may be required, in the opinion of counsel to Holdings, to satisfy the availability of exemptions from registration of the offer and sale pursuant to the Options under the Securities Act of 1933, as amended, and any applicable state securities law. (b) Within thirty days following its receipt of the listing of optionees from Moneta as provided in (a), Holdings shall prepare, execute and deliver Stock Option Agreements in the form of Exhibit III reflecting each individual Option. (c) In the event of any termination of employment with Moneta which would give rise to a forfeiture of all or any part of an Option, Moneta shall immediately provide written notice of such event to Holdings. (d) Following any such termination of employment giving rise to a forfeiture of all or any part of an Option, Holdings shall advise Moneta of the number of shares subject to the Options, or any portions thereof, which have been forfeited as a result of such termination of employment, together with the number of shares subject to the exercisable portion of any such Option which are not purchased pursuant to an exercise of the Option in accordance with its terms. Such notice by Holdings shall be given as promptly as possible after the later of (i) receipt by Holdings of the notice of termination of employment from Moneta or (ii) the expiration date of the Option as provided in such Option. Holdings agrees to reissue one or more Options covering, in the aggregate, the number of forfeited shares and of unexercised shares subject to the following terms and conditions: 11 (1) Moneta shall designate to Holdings the names of reallocated recipients for any such reissued Options and number of shares to be covered by each such reissued Option within thirty days following its receipt of notice from Holdings as to the number of shares available for reallocation; (2) Holdings shall issue such reallocated Option(s) only if, and at the next such time as, any other Options are to be granted in accordance with paragraph 9(a)(2) of this Agreement. (It being understood that in the event of any forfeiture in the final year of this Agreement, no reissuance shall result.) (3) Any such reallocated and reissued Options shall be issued as new Options providing for an exercise price based upon the Market Value Per Share as of the date of award and a full ten year term and shall otherwise comply with the requirements of clause (a) above. (e) Moneta agrees to indemnify and hold Holdings harmless from and against any loss, damage, claim or expense arising out of or based upon allocation and issuance of Options in accordance with the listing and instructions provided to Holdings by Moneta. 11. Term of the Agreement; Termination. (a) This Agreement shall be for a term of five years commencing on the date hereof and expiring on September 30, 2002; provided, however, that: (1) the expiration of this Agreement at the end of the term or otherwise shall not relieve Bank of its obligation to determine the Pro Forma Net Interest Margin for the final accounting period of this Agreement or the obligation of Holdings to issue Options in accordance with the terms of this Agreement with respect to such final accounting period; (2) the expiration or termination of this Agreement shall not affect the validity of any outstanding Option except that (x) in the event of a forfeiture applicable to an Option occurring subsequent to the expiration or termination of this Agreement the unexercised and unexercisable portion of such Option shall lapse and become void and (y) in the event of termination of this Agreement prior to the expiration of its stated term, the right to further vesting under the Option and to exercise such Option shall be governed by paragraph 3(d) of the Stock Option Agreement; and 12 (3) the expiration of this Agreement at the end of the term or otherwise shall not terminate the indemnification and hold harmless obligations and covenants of the parties as set forth herein. (b) This Agreement may be terminated prior to the expiration of its term (i) upon the mutual agreement of the Bank and Moneta, (ii) at the election of any party in the event that Holdings or the Bank shall have been subject to an Extraordinary Event, as hereinafter defined, (iii) in the event of a default or breach of this Agreement by Moneta, this Agreement may be terminated at the written election of Holdings or the Bank unless such default or breach is curable and shall have been cured by Moneta within 30 days of its occurrence, and (iv) in the event of a default or breach of this Agreement by Bank or Holdings or of the Moneta Bank Marketing and Solicitation Agreement by Bank, this Agreement may be terminated at the written election of Moneta unless such default or breach is curable and shall have been cured by Holdings or Bank, as the case may be, within 30 days of its occurrence. An election of a party to terminate this Agreement in accordance with clause (iii) or clause (iv) above shall not relieve the defaulting or breaching party from liability to a non-defaulting party for loss or damage suffered as a result of such default. In addition to the foregoing, Holdings shall have the right to terminate this Agreement (a) in the event of any enforcement action or proceeding instituted against Moneta under the Securities Exchange Act of 1934 or the Investment Advisers Act of 1940 or instituted by the National Association of Securities Dealers, Inc. which, in the reasonable judgment of Holdings adversely affects the reputation or integrity of Moneta or jeopardizes regulatory licenses held by Moneta or (b) in the event that the business and operations of Moneta shall be acquired (whether by merger, sale of assets or sale of stock) or a change of control of Moneta shall occur. (c) For purposes of this Agreement, an Extraordinary Event relating to Holdings or the Bank shall be deemed to involve: (i) any merger or consolidation involving Holdings other than a merger or consolidation in which the outstanding capital stock of Holdings immediately prior to the effectiveness of such merger or consolidation is converted into (or remains outstanding and constitutes) a majority of the voting common stock of the surviving or resulting entity; or (ii) any transaction pursuant to which a majority of the outstanding capital stock of either Holdings or of the Bank is acquired by a person or group pursuant to a tender offer or plan of acquisition or reorganization. 13 12. Commencement and Effective Date; Void if not Effective. The accoutning period subject to this Agreement shall commence on the last of the following events to occur: (a) the opening of business on November 3, 1997; (b) the execution and delivery of this Agreement by all parties hereto; (c) the execution and delivery of the "Moneta Bank Marketing and Solicitation Agreement" among Moneta, the Bank and W. S. Griffith & Co., Inc. in the form of Exhibit II hereto by all parties thereto; (d) the closing of the sale(s) to one or more principals of Moneta from Holdings of not less than 59,701 and not more than 119,403 shares of the common stock of Holdings at a price of $16.75 per share in a private placement in accordance with the exemption provided by Regulation D under the Securities Act of 1933, as amended, and shall end on September 30, 1998; provided, however, that in the event that all of such conditions have not been met on or before November 15, 1997, this Agreement and the transactions contemplated hereby shall be null and void. 13. Representations, Warranties and Covenants of the Parties. As an inducement to enter and perform in accordance with the terms of this agreement, the parties hereto make the following representations, warranties and covenants to each of the other parties hereto. (a) By Holdings: (1) Holdings is a corporation duly organized and validly existing under the laws of the State of Delaware with full corporate power and authority to execute, deliver and perform this Agreement. Holdings has sufficient authorized but unissued shares of its common stock for the purpose of the Options to be issued under this Agreement. (2) The execution, delivery and performance of this Agreement by Holdings will not violate or conflict with any provision of, or constitute a default under, any law, or any order, writ, injunction, decree of any court or other governmental agency, or any contract, agreement or instrument to which Holdings is a party or by which Holdings or any of its subsidiaries is a party or by which any of them is bound or constitute an event which, with the lapse of time or action by a third party or both, could result in the creation of any lien, charge or encumbrance upon any of the assets or properties of Holdings. 14 (3) The Board of Directors of Holdings has authorized and approved the execution and delivery of this Agreement and the transactions contemplated hereby. This Agreement constitutes a valid and binding obligation of Holdings in accordance with its terms. (4) Holdings has heretofore delivered to Moneta true, correct and complete copies of all filings required of it under section 15(d) of the Securities Exchange Act of 1934, as amended. Holdings covenants and agrees that during the term of this Agreement and for so long thereafter as any Option issued pursuant hereto is outstanding, it will either (i) remain subject to and use its best efforts to file in a timely manner all reports required under section 15(d) of the Securities Exchange Act of 1934, as amended, or (ii) will cause its common stock to be registered as a class of securities under section 12 of the Securities Exchange Act of 1934, as amended, and in such event will use its best efforts to file in a timely manner all reports required under section 13 or 14 of the Securities Exchange Act of 1934. (b) By Bank. (1) Bank is a banking corporation duly organized and validly existing under the laws of the State of Missouri with full corporate power and authority to execute, deliver and perform this Agreement. (2) The execution, delivery and performance of this Agreement by Bank will not violate or conflict with any provision of, or constitute a default under, any law, or any order, writ, injunction, decree of any court or other governmental agency, or any contract, agreement or instrument to which Bank is a party or by which Bank is bound or constitute an event which, with the lapse of time or action by a third party or both, could result in the creation of any lien, charge or encumbrance upon any of the assets or properties of Bank. (3) The Board of Directors of Bank has authorized and approved the execution and delivery of this Agreement and the transactions contemplated hereby. This Agreement constitutes a valid and binding obligation of Bank in accordance with its terms. (c) By Moneta. (1) Moneta is a corporation duly organized and validly existing under the laws of the State of Missouri with full corporate power and 15 authority to execute, deliver and perform this Agreement. (2) The execution, delivery and performance of this Agreement by Moneta will not violate or conflict with any provision of, or constitute a default under, any law, or any order, writ, injunction, decree of any court or other governmental agency, or any contract, agreement or instrument to which Moneta is a party or by which Moneta is bound, or constitute an event which, with the lapse of time or action by a third party or both, could result in the creation of any lien, charge or encumbrance upon any of the assets or properties of Moneta. (3) The Board of Directors of Moneta has authorized and approved the execution and delivery of this Agreement and the transactions contemplated hereby. This Agreement constitutes a valid and binding obligation of Moneta in accordance with its terms. (4) Moneta is duly registered with the Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940, as amended, and has heretofore provided to each of Holdings and Bank true, correct and complete copies of its registration statement on form ADV as amended to date. Moneta covenants and agrees that during the term of this Agreement it will deliver to Holdings and Bank copies of all subsequent amendments to such form ADV and copies of all disciplinary order or proceedings instituted against Moneta or any other regulatory or self-regulatory body during the term of this Agreement. 14. Indemnification. (a) By Holdings and the Bank. Holdings and the Bank shall jointly and severally defend, reimburse, indemnify and hold Moneta harmless from and against any and all loss, claim, damage, liability, actions, costs or expenses to which Moneta may become subject (including any legal or other expenses reasonably incurred by Moneta in connection with investigating any claim against it and any amounts paid in settlement or compromise, provided the Bank shall have given its prior written approval of such settlement or compromise), insofar as such loss, claim, damage, liability, action, cost or expense arises in connection with: (i) the breach by Bank or Holdings of any representation, warranty or covenant made by the Bank herein; (ii) any act or omission to act, whether negligent, reckless or intentional, by the Bank or Holdings or their employees or affiliates in connection with the subject of this Agreement or (iii) as otherwise specifically provided in this Agreement. For purposes of the foregoing provision, the term "Moneta" shall be deemed to include its officers, directors and employees. 16 (b) By Moneta. Moneta shall defend, reimburse, indemnify and hold Bank and Holdings harmless from and against any and all loss, claim, damage, liability, actions, costs or expenses to which Bank or Holdings may become subject (including any legal or other expenses reasonably incurred by Bank or Holdings in connection with investigating any claim against it and any amounts paid in settlement or compromise, provided the Bank and Holdings shall have given their prior written approval of such settlement or compromise), insofar as such loss, claim, damage, liability, action, cost or expense arises in connection with: (i) the breach by Moneta of any representation, warranty or covenant made by Moneta herein; (ii) any act or omission to act, whether negligent, reckless or intentional, by Moneta or its employees or affiliates in connection with the subject of this Agreement; or (iii) as otherwise specifically provided in this Agreement. For purposes of the foregoing provision, the terms "Bank" and "Holdings" shall be deemed to include their respective officers, directors and employees. (c) Notice of Indemnification. In the event any legal proceeding is threatened or instituted or any claim or demand is asserted by any person for which payment may be sought by one party hereto from the other under the provisions of this Agreement, the party seeking indemnification (the "Indemnitee") will promptly cause written notice of the assertion of any such claim of which it has knowledge to be forwarded to the other party (the "Indemnitor"). Any notice of claim will state specifically the representation, warranty, covenant or other agreement with respect to which the claim is made, the facts giving rise to an alleged basis for the claim and, insofar as then determinable, the amount and nature of liability asserted against the Indemnitor by reason of the claim. (d) Indemnification Procedure for Third-Party Claims. In the event of the initiation of any legal proceeding against an Indemnitee by a third party, the Indemnitor will have the absolute right after the receipt of notice, at its option and at its own expense, to be represented by counsel of its choice, and to defend against, negotiate, settle or otherwise deal with any proceeding, claim or demand which relates to any loss, claim, liability or damage indemnified against hereunder; provided, however, that the Indemnitee may participate in any such proceeding, with counsel of its choice and at its own expense. The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such legal proceeding, claim or demand. To the extent the Indemnitor elects not to defend such proceeding, claim or demand, and the Indemnitee defends against or otherwise deals with any such proceeding, claim or demand, the indemnitee may retain counsel, at the Indemnitor's expense, and control the defense of such proceeding. Neither the Indemnitor nor the Indemnitee may settle any such proceeding without the consent of the other party, such consent not to be unreasonably withheld. After any final judgment or award has 17 been rendered by a court, arbitration panel or administrative agency of competent jurisdiction and the time in which to appeal therefrom has expired, or a settlement has been consummated, or the Indemnitee and the Indemnitor have arrived at a mutually binding agreement with respect to each separate matter alleged to be indemnified by the Indemnitor hereunder, the Indemnitee will forward to the Indemnitor notice of any sums due and owing by it with respect to such matter and the Indemnitor will pay all of the sums so owing to the Indemnitee by wire transfer, certified or bank cashier's check within thirty days after the date of such notice. 15. Non-Solicitation Covenants. Upon any termination of this Agreement, whether upon expiration of its stated term or otherwise, (a) Moneta agrees that it will not, for a period of 18 months following the date of such termination, solicit or otherwise induce the holder of any Moneta Referral Account to move, transfer or relocate any of such holder's accounts from the Bank; and (b) Holdings and Bank agree that (except in the event of a termination at the election of Bank arising under the last sentence of clause 11(b)) they will not, for a period of 18 months following the date of such termination, solicit or otherwise induce any Bank customer referred to Moneta under the terms of the Moneta Bank Marketing and Solicitation Agreement to move, transfer or relocate such customer's accounts from Moneta. For purposes of the foregoing, the phrase "solicit or otherwise induce" shall be deemed to include, without limitation, not only direct action but also indirect action such as providing or referring customers names to other parties for solicitation of any move, transfer or relocation of a customer's or holder's account(s). 16. Miscellaneous. (a) Entire Agreement. This Agreement, together with the Exhibits hereto, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements or understandings of the parties hereto. (b) Amendments. This Agreement may be amended by the parties hereto at any time by action taken by, or pursuant to authority delegated by, their respective Boards of Directors, provided, however that no amendment which shall alter the form or terms of any Option hereunder shall affect the terms or construction of any Option issued prior to the date of such amendment without the consent of the optionee. 18 (c) Captions and Headings. All headings or captions contained in this Agreement or in any Exhibit hereto are for convenience of reference only and shall not be deemed a part of this Agreement and shall not affect the meaning or interpretation of the Agreement. (d) No Third-Party Rights. Except for the rights of the optionees under any Option granted pursuant hereto and except for the treatment of officers, directors and employees of the parties as potential indemnitees in accordance with the terms of paragraph 14, no provision of this Agreement shall be deemed or construed in any way to result in the creation of any rights or obligations in any person or entity not a party to this Agreement. (e) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute a single instrument. (f) Governing Law. Except regarding matters controlled by federal law, this Agreement shall be governed and construed in accordance with the laws of the State of Missouri excluding any choice of law rules which may direct the application of the law of another state; provided, however, that matters of law concerning the internal corporate affairs of Holdings shall be governed by the general corporation laws of its state of incorporation. (g) Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that except by operation of law no party may assign any of its rights, duties or obligations hereunder without the prior written consent of each other party; and provided, further, that no assignment of this Agreement or any rights hereunder shall relieve the assigning party of any of its obligations or liability hereunder. (h) Notices. All notices or other communications required or permitted to be given hereunder shall be deemed validly given if in writing and sent (i) by certified United States Mail, postage prepaid, return receipt requested, (ii) by prepaid independent overnight courier or delivery service, or (iii) by confirmed tele-facsimile communication with receipt acknowledged from the receiving machine and addressed as follows: 19 If to Holdings or the Bank, as follows: Enterprise Bank/Enterbank Holdings, Inc. 150 North Meramec St. Louis, Missouri 63105 Attn: Chief Executive Officer facsimile: 314-727-3239 If to Moneta, as follows: Moneta Group Investment Advisors, Inc. 700 Corporate Park Drive Suite 300 St. Louis, Missouri 63105 Attn: President facsimile: 314-862-6139 or in any case to such other address or addresses as hereafter shall be furnished by any party hereto to the other parties hereto. (i) Severability. If any provision of this Agreement is found or declared to be invalid or unenforceable by any court or other competent governmental regulatory agency having jurisdiction, such finding or declaration shall not invalidate any other provision hereof and this Agreement shall thereafter continue in full force and effect except that such invalid or unenforceable provision, and (if necessary) other provision(s) thereof, shall be reformed by a court of competent jurisdiction so as to effect, insofar as is practicable, the intention of the parties as set forth in this Agreement, provided that if such court is unwilling or unable to effect such reformation, the invalid or unenforceable provision shall be deemed deleted to the same extent as if it had never existed. (j) Expenses. Except as otherwise specifically provided in this Agreement, each party to this Agreement shall pay its respective expenses incurred in connection with the preparation and performance of this Agreement and the transactions contemplated hereby. THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES. IN WITNESS WHEREOF, this Agreement has been executed and delivered by the respective parties as of the date first written above. ENTERBANK HOLDINGS, INC. By---------------------- ENTERPRISE BANK By----------------------- MONETA GROUP INVESTMENT ADVISERS, INC. By----------------------------- MONETA BANK MARKETING AND SOLICITATION AGREEMENT ------------------------------------------------ THIS AGREEMENT is made this 31st day of October, 1997, by and among Moneta Group Investment Advisors, Inc. ("Moneta"), W.S. Griffith & Co., Inc. ("WS Griffith") and Enterprise Bank (the "Bank"). BACKGROUND ---------- Moneta is a investment adviser registered with the Securities and Exchange Commission ("SEC") under the Investment Advisers Act of 1940 ("Advisers Act") that desires to offer certain investment advisory and financial planning services to customers of the Bank. Investment adviser representatives of Moneta are dually licensed as registered representatives of WS Griffith, a broker-dealer registered with the SEC under the Securities and Exchange Act of 1934 and a member of the National Association of Securities Dealers ("NASD"), who desire to offer certain securities and related services to customers of the Bank (collectively, "Moneta Representatives"). Moneta Representatives also are licensed insurance agents who desire to offer certain insurance products and related services to customers of the Bank. The Bank desires to make Moneta's investment advisory services and the securities products and services and insurance products and services offered by Moneta Representatives, as described in this Agreement, available to the Bank's customers. AGREEMENT --------- The Bank, Moneta and WS Griffith agree as follows: 1. MONETA BANK MARKETING PROGRAM. Moneta agrees to provide the ----------------------------- Moneta Bank Marketing Program primarily at its office located at 700 Corporate Park Drive, Suite 300, Clayton, Missouri 63105, although Moneta Representatives may, from time to time, choose to meet with Bank customers at the Bank's offices. The Moneta Bank Marketing Program consists of the following services: 1.1 Investment Advisory Services. Moneta may offer Bank ---------------------------- customers financial planning and investment advisory services designed to meet a variety of the customers' financial needs, including, but not limited to, financial planning with respect to money management, investments, tax strategies, retirement planning, insurance and risk management, education funding, estate valuation, retirement planning, life, health and disability insurance, 20 business continuation planning and IRA lump sum distribution analysis. Moneta will maintain client accounts on its books for advisory clients. 1.2 Bank Solicitation of Customers on Behalf of Moneta. The -------------------------------------------------- Bank, through its employees (the "Bank Employees"), will market the investment advisory services of Moneta to persons who would become clients of Moneta by opening investment advisory accounts with Moneta. 1.2.1 Neither the Bank nor any Bank Employee who will solicit customers on behalf of Moneta is subject to any disqualification from acting as a solicitor as specifically set forth on Schedule 1.2.1 attached -------------- hereto. 1.2.2 The Bank's solicitation activities on behalf of Moneta shall be limited to explaining the investment advisory services provided by Moneta and Moneta's fees for such services, and providing to prospective clients materials prepared by Moneta for use in the solicitation of prospective clients. Neither the Bank nor any Bank Employee shall make any investment recommendations or give any investment advice to clients or prospective clients while acting on behalf of Moneta hereunder. Without the prior written consent of Moneta, the Bank may not publish or disseminate any literature or other materials describing Moneta's investment advisory services. 1.2.3 The Bank and Moneta may prepare a brochure for mass mailing to the Bank's customers that describes Moneta's advisory services and permits the customer to: (1) return a reply card requesting additional information; (2) sign up for seminars sponsored by Moneta; or (3) sign up for individual meetings with a Moneta representative. The brochure will state that a solicitation agreement exists under which Moneta will pay the Bank a fee if the customer purchases investment advisory services from Moneta, and that further information regarding Moneta, including its brochure containing the information set forth in Part II of its Form ADV, the solicitor's disclosure statement required by Section 206(4)-3 of the Advisers Act, and other marketing materials will be provided at the time that the customer returns the reply card or attends a seminar or meeting. With respect to personal solicitations by a Bank Employee, the Bank Employee shall provide each potential client with a current copy of Moneta's written disclosure statement as required by Section 204-3 and Rule 206(4)-3 of the Advisers Act, and ensure that Moneta receives an original copy, signed by the client, of the separate disclosure statement (in the form of Schedule 1.2.3 hereto) -------------- containing information about the Bank and the relationship to Moneta, as required by Rule 206(4)-3(b) of the Advisers Act. In performing its duties under this Agreement, the Bank shall: (i) abide by the terms of this Agreement and in a manner consistent with the instructions of Moneta; and (ii) be governed by the provisions of the Advisers Act and the rules promulgated thereunder and any applicable state securities laws and rules. 2 21 1.2.4 The Bank understands and agrees that it will advise clients and prospective clients that Moneta does not guarantee any specific results from Moneta's investment advisory services. 1.2.5 All prospective clients are subject to acceptance by Moneta in its sole discretion. 1.2.6 The Bank and its Employees are independent contractors and not employees of Moneta. The Bank shall not take any actions or make any representations to any person that would suggest any other relationship between the Bank and Moneta exists. Neither the Bank nor its Employees shall have any right or authority to assume or create any obligations on the part of Moneta, express or implied, nor shall they represent to any person they have such authority. 1.3 Brokerage Services. Moneta Representatives will execute ------------------ purchases, sales and trades of securities and will sell insurance products in their capacity as registered representatives of WS Griffith and as licensed agents of various insurance companies. WS Griffith, acting as an introducing broker/dealer, will introduce clients to its clearing firm, Correspondent Services Corporation, an affiliate of Paine Webber, who will maintain client accounts on its books and will execute and clear securities transactions on a fully disclosed basis. 1.4 Bank Marketing Products. Securities and insurance products ----------------------- which may be sold by Moneta Representatives through the Moneta Bank Marketing Program ("Bank Marketing Products") may include equities, mutual funds, unit investment trusts, corporate, government or municipal bonds, variable annuities, fixed rate annuities, and other life and health insurance products and other investment products and instruments. Products shall be subject to the following restrictions: (i) all fixed income securities shall be investment grade or better at the time of sale; (ii) no commodities (including options for or contracts for future delivery of commodities) shall be included as Bank Marketing Products; (iii) no securities of the Bank or any affiliate of the Bank shall be recommended by Moneta, and if Moneta Representatives execute transactions in securities of the Bank or any affiliate of the Bank, no payment shall be made to the Bank; (iv) no "penny stocks," as defined by Rule 3a51-1 of the Securities Exchange Act of 1934, shall be included as Bank Marketing Products; (v) if prohibited by any regulation applicable to the Bank, no securities with respect to which WS Griffith may act as a dealer, market maker or underwriter shall be included as Bank Marketing Products; (vi) no options (other than covered call options) shall be included as Bank Marketing Products; and (vii) no futures contracts shall be included as Bank Marketing Products. The Bank shall have no involvement in Moneta's selection of securities or insurance products to offer through the Bank Marketing Program. Moneta Representatives may accept a sell order for any security. 2. MARKETING, TRAINING AND TECHNICAL ASSISTANCE. As part of -------------------------------------------- the Moneta Bank Marketing Program, Moneta and WS Griffith, at their sole expense, shall provide the following: 3 22 2.1 Trained, NASD-registered principals to assist and supervise Moneta Representatives; 2.2 Advice to the Bank regarding the preparation by the Bank of materials relating to the Moneta Bank Marketing Program, including a prior review of any such materials; 2.3 Compliance procedures for the implementation of the Moneta Bank Marketing Program and ongoing monitoring of compliance procedures. The supervisory and compliance requirements applicable to the Moneta Bank Marketing Program shall be set forth in a manual (the "Compliance Manual") prepared by WS Griffith. The Compliance Manual shall be made available to the Bank and each Moneta Representative (as defined in Section 3.1); ----------- 2.4 Compliance by Moneta and WS Griffith with federal and state securities laws, rules and regulations applicable to the Moneta Bank Marketing Program, as well as applicable rules and regulations of self-regulatory bodies and internal policies and procedures of Moneta and WS Griffith; 2.5 Appropriate due diligence in connection with Bank Marketing Products; 2.6 Information about to whom Bank Marketing Products were sold in such detail and in such format as Moneta determines, including providing copies of account opening forms; and 2.7 Design and lay-out of signs, advertising and promotional materials regarding the Moneta Bank Marketing Program. 3. MONETA REPRESENTATIVES. ---------------------- 3.1 Defined. Securities and insurance products marketed through ------- the Moneta Bank Marketing Program shall be offered and sold, and transactions in those securities and insurance products shall be effected only by Moneta Representatives, who, during the term of this Agreement, (i) shall be employees of Moneta and independent contractors of WS Griffith, (ii) shall be registered and qualified as necessary with the SEC, the NASD and appropriate state regulatory authorities, and (iii) shall be licensed as insurance agents with appropriate state regulatory authorities. 3.2 Restrictive Covenant. Moneta and the Bank expressly -------------------- acknowledge and agree that the relationships which Moneta has with Moneta Representatives are key assets of Moneta, and that by reason of this Agreement the Bank will have special and unique access and will occupy a special and unique position with respect to Moneta Representatives. Therefore, the Bank agrees and warrants that, during the period in which a Moneta Representative is participating in the Moneta Bank Marketing Program with the Bank described in this Agreement 4 23 and for one (1) year after termination of such participation, the Bank and its affiliates shall not, either directly or indirectly, on behalf of the Bank, or on behalf of any of the Bank's affiliates, or as an agent or shareholder of any corporation or other business, or member of any firm, or participant in any venture, (i) induce any Moneta Representative to terminate his or her contract with Moneta or one of its affiliates, or (ii) engage, hire, employ or solicit the employment of any Moneta Representative. The Bank expressly acknowledges that the foregoing limitation is reasonable and properly required for the adequate protection of the business of Moneta. 3.3 Recruitment, Training and Sales Management. Moneta and WS ------------------------------------------ Griffith will, at no cost to the Bank, recruit, train, test, compensate and provide ongoing sales management and continuing education of Moneta Representatives. Compensation paid by WS Griffith to Moneta Representatives will include commissions. Moneta Representatives shall devote their full time to the business of Moneta. 3.4 Control. Moneta and WS Griffith shall exercise exclusive ------- control over Moneta Representatives and shall be responsible for all activities of Moneta Representatives in connection with the Moneta Bank Marketing Program. The conduct of Moneta Representatives shall be governed in all respects by the Compliance Manual and instructions provided by Moneta and WS Griffith, as well as by applicable laws, rules and regulations. The Bank shall strictly honor such control relationship and shall not have any involvement whatsoever in any of the security brokerage, investment advisory and insurance services performed by Moneta Representatives. 3.5 Restrictions on Activities of Moneta Representatives. ---------------------------------------------------- No Moneta Representative shall engage in any activity that would cause a customer reasonably to believe that Moneta is engaged in the banking business or that the Bank is engaged in the investment advisory, securities or insurance business or that any Bank Marketing Product is FDIC insured. 3.6 Discipline. All Moneta Representatives shall be subject to ---------- discipline by Moneta and WS Griffith and by various federal and state regulatory authorities, securities exchanges, associations of securities brokers and dealers and certain other entities having jurisdiction over the operation of the Moneta Bank Marketing Program and the conduct of Moneta Representatives. The Bank shall cooperate with Moneta and WS Griffith in all respects in connection with the enforcement of any sanctions imposed by Moneta or WS Griffith or by any such entities on any Moneta Representative. The Bank has no obligation to Moneta or WS Griffith to monitor the compliance of Moneta Representatives with respect to applicable securities laws, rules or regulations. 4. BANK EMPLOYEES. -------------- 4.1 Support Services. The Bank shall provide reception, ---------------- secretarial and support services for the Moneta Bank Marketing Program satisfactory to Moneta through Bank 5 24 employees. The Bank and Moneta shall agree from time to time on the level of support services necessary to support the Moneta Bank Marketing Program. 4.2 Limited Activities. Employees of the Bank ("Bank ------------------ Employees") may distribute literature regarding the Moneta Bank Marketing Program and Bank Marketing Products, refer persons to representatives of Moneta and provide certain other limited types of assistance of a clerical or ministerial nature (such as filling literature racks or making customer appointments) but may not engage in any investment advisory, securities brokerage or insurance agent activities on behalf of Moneta. Bank Employees shall not recommend any security or insurance product, give any form of advice or discuss the merits of any security or insurance product with a customer. The Bank shall monitor the activities of, and cause compliance by, Bank Employees with the Compliance Manual and shall report to Moneta any known or suspected violations of the Compliance Manual in a manner calculated to give Moneta immediate notice of such suspected violation. 4.3 Training. The Bank shall train Bank Employees regarding -------- standards of conduct and permissible activities in connection with the Moneta Bank Marketing Program. 5. CONFIDENTIALITY. --------------- 5.1 "Customer Information" Defined. The Bank, to the fullest ------------------------------ extent permitted under applicable law, shall provide to Moneta information, excluding confidential and privileged financial information, concerning the then-existing customers of the Bank ("Customer Information"). 5.2 Protection of Customer Information. Moneta recognizes the ---------------------------------- proprietary and confidential nature of the Customer Information and will utilize the Customer Information only in accordance with, or as required to carry out the provisions of, this Agreement. 5.3 Obligations of Moneta. The obligations of Moneta to the --------------------- Bank with respect to the Customer Information shall include (but not be limited to) the following: 5.3.1 To obey any and all instructions of the Bank with respect to the Customer Information, and to exercise due care, skill and diligence in carrying out those instructions; and 5.3.2 Upon request, and after reasonable notice, to disclose to the Bank all material facts concerning use of the Customer Information by Moneta. 6. SEPARATION OF BUSINESSES. The Bank shall maintain total ------------------------ separation of its business from the business of Moneta, including separation of records, and shall conduct its business at all times so as not to lead to confusion between the Bank's business and the businesses conducted by Moneta. 6 25 7. ACCESS. The supervisory personnel of the Bank, of Moneta and of ------ WS Griffith, as well as representatives of state and federal banking, securities and insurance regulatory authorities, the NASD and any other entity having jurisdiction over the operation of Moneta and the conduct of Moneta Representatives shall have unimpeded access during Moneta's business hours to the client accounts and records maintained in connection with the operation of the Moneta Bank Marketing Program which are required to be maintained pursuant to banking, securities and insurance laws and regulations. 8. BANK COSTS AND EXPENSES. The Bank shall be directly ----------------------- responsible for the costs and expenses associated with the following items in connection with the operation of the Program: (i) salary and benefits for Bank Employees; (ii) production and printing of signs regarding the Bank Marketing Products in the Bank; and (iii) advertising and promotional materials regarding the Bank Marketing Products which are approved by the Bank; (iv) outside counsel's fees if such counsel is consulted to analyze federal and state banking laws regarding this Agreement. 9. ADVERTISING AND PROMOTION. ------------------------- 9.1 Responsibility. The Bank shall be responsible for the -------------- promotion of the Moneta Bank Marketing Program and Bank Marketing Products. Moneta shall advise and assist the Bank in the promotion of the Moneta Bank Marketing Program. From time to time, solely in their discretion, Moneta may promote the Moneta Bank Marketing Program and Bank Marketing Products. Nothing herein obligates Moneta or the Bank to conduct any media advertising. 9.2 Preparation. Advertising, direct mail, Moneta marketing ----------- material and other publicity regarding the Moneta Bank Marketing Program and Bank Marketing Products shall be prepared by Moneta, WS Griffith or by the Bank with the advice and assistance of Moneta or WS Griffith, or, in the case of material relating to a specific Bank Marketing Product, by the issuer thereof. Moneta, WS Griffith, or the issuer, as the case may be, shall be responsible for ensuring that all materials conform to applicable federal and state securities laws and regulations. Moneta may use the name of the Bank and/or its affiliates only to identify the locations where information regarding the Moneta Bank Marketing Program or Bank Marketing Products may be obtained. All advertising and promotional materials shall make it clear that the Bank is not a registered investment adviser or broker/dealer, that the customer will be dealing solely with Moneta, that Moneta is not affiliated with the Bank or its affiliates and that the Bank Marketing Products offered are not federally insured or obligations of the bank. 9.3 Costs. All costs incurred in connection with the ----- preparation, printing, and distribution of advertising and promotional materials, including (but not limited to) direct mail, lobby posters, solicitation cards, material distributed at seminars and public relations material, regarding the promotion of the Moneta Bank Marketing Program, whether initially proposed by the Bank or Moneta, shall be paid for solely by the Bank (except as otherwise provided in 7 26 Section 2). The Bank shall have sole discretion as to whether to incur these - --------- costs. The Bank is not obligated to pay any cost or expense unless an authorized officer of the Bank has given prior written approval of the cost. 10. MONETA AND WS GRIFFITH SERVICE MARKS. The Bank acknowledges that ------------------------------------ Moneta and WS Griffith are the owners of the Moneta and WS Griffith service marks, respectively, and all derivatives thereof. The Bank is not granted a license or right to use the Moneta or WS Griffith service marks in any manner without the prior written consent of Moneta or WS Griffith, as the case may be, and any use by the Bank of the Moneta or WS Griffith service marks pursuant to a written consent shall comply in all respects with the terms of that written consent. 11. COMPENSATION TO BANK. -------------------- 11.1 Advisory Fee Payments. Moneta shall pay to the Bank 30% --------------------- of its advisory fee for each client account which is attributable to the operation of the Moneta Bank Marketing Program in accordance with Schedule 11.1 ------------- attached hereto and made a part hereof. 11.2 Commission Payments. WS Griffith shall make payments to the ------------------- Bank with respect to all securities transactions which are attributable to the operation of the Moneta Bank Marketing Program in accordance with Schedule 11.2 ------------- attached hereto and made a part hereof. Commission Payments shall be made to the Bank twice a month in accordance with Schedule 11.2 (Commission Schedule). ------------- Each Commission Payment shall be accompanied by a record of transactions. 12. REPRESENTATIONS AND WARRANTIES OF MONETA. Moneta and WS ---------------------------------------- Griffith represent, warrant and agree that: 12.1 Moneta is duly registered with the SEC, and has complied with any applicable state securities notification laws and WS Griffith is duly registered with the SEC, the NASD and applicable state securities regulatory bodies; 12.2 Moneta Representatives are duly licensed with applicable state insurance regulatory bodies: 12.3 Moneta, WS Griffith and Moneta Representatives have all requisite authority, in conformity with applicable laws and regulations, to enter into and perform this Agreement; and 12.4 Moneta and WS Griffith shall conduct their activities in conformity with the Compliance Manual and all applicable laws, regulations, and rules. 8 27 13. REPRESENTATION AND WARRANTIES OF THE BANK. The Bank represents, ----------------------------------------- warrants and agrees that: 13.1 The Bank has all requisite authority, in conformity with applicable laws and regulations, to enter into this Agreement, to recommend the services of Moneta and to provide the services required of it under this Agreement; 13.2 All records of Moneta that by law or regulation must be maintained on the premises of the Bank and/or its affiliates shall be maintained by the Bank in accordance with the instructions of Moneta; and 13.3 The Bank shall conduct its activities in connection with the Moneta Bank Marketing Program in accordance with the Compliance Manual and all applicable laws, regulations, and rules. 14. INDEMNIFICATION. --------------- 14.1 By Moneta. Moneta shall defend, reimburse, indemnify and --------- hold harmless the Bank, its affiliates, officers, directors, employees and agents against any and all losses, claims, damages, liabilities, actions, costs or expenses, joint or several, to which any indemnified party may become subject (including any legal or other expenses reasonably incurred by it in connection with investigating any claim against it and any amounts paid in settlement or compromise, provided Moneta shall have given its prior written approval of such settlement or compromise), insofar as such losses, claims, damages, liabilities, actions, costs or expenses arise in connection with or are based upon: (i) the breach by Moneta of any representation, warranty or covenant made by Moneta herein; (ii) any act or omission to act, whether negligent, reckless or intentional, by Moneta or any Moneta Representative under this Agreement; (iii) the failure of Moneta to comply with securities and other laws, rules and regulations applicable to the Bank Marketing Products; or (iv) the failure of Moneta or to comply with insurance and other laws, rules and regulations applicable to the Moneta Bank Marketing Program. 14.2 By Bank. The Bank shall defend, reimburse, indemnify and ------- hold harmless Moneta, WS Griffith and their affiliates, officers, directors, employees and agents against any and all losses, claims, damages, liabilities, actions, costs or expenses, joint or several, to which any indemnified party may become subject (including any legal or other expenses reasonably incurred by it in connection with investigating any claim against it and any amounts paid in settlement or compromise, provided the Bank shall have given its prior written approval of such settlement or compromise), insofar as such losses, claims, damages, liabilities, actions, costs or expenses arise in connection with or are based upon: (i) the breach by the Bank of any representation, warranty or covenant made by the Bank herein; (ii) any act or omission to act, whether negligent, reckless or intentional, by the Bank or its affiliates to obtain the approval of Moneta for advertising and promotional material which mention the Bank Marketing Products or Bank Marketing Products marketed by Moneta; (iv) the failure of the Bank or its affiliates to 9 28 comply with the Compliance Manual; or (v) the failure of the Bank or its affiliates to comply with all banking laws, rules and regulations applicable to the Bank Marketing Products. 14.3 Notice of Indemnification. In the event any legal ------------------------- proceeding is threatened or instituted or any claim or demand is asserted by any person for which payment may be sought by one party hereto from the other party under the provisions of Section 14, the party seeking indemnification ---------- (the "Indemnitee") will promptly cause written notice of the assertion of any such claim of which it has knowledge to be forwarded to the other party (the "Indemnitor"). Any notice of a claim will state specifically the representation, warranty or covenant with respect to which the claim is made (if applicable), the facts giving rise to an alleged basis for the claim and the amount of the liability asserted against the Indemnitor by reason of the claim. 14.4 Indemnification Procedure for Third-Party Claims. In the ------------------------------------------------ event of the initiation of any legal proceeding against an Indemnitee by a third party, the Indemnitor will have the absolute right after the receipt of notice, at its option and at its own expense, to be represented by counsel of its choice, and to defend against, negotiate, settle or otherwise deal with any proceeding, claim or demand which relates to any loss, liability or damage indemnified against hereunder; provided, however, that the Indemnitee may participate in any such proceeding, with counsel of its choice and at its expense. The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such legal proceeding, claim or demand. To the extent the Indemnitor elects not to defend such proceeding, claim or demand, and the Indemnitee defends against or otherwise deals with any such proceeding, claim or demand, the Indemnitee may retain counsel, at the Indemnitor's expense, and control the defense of such proceeding. Neither the Indemnitor nor the Indemnitee may settle any such proceeding without the consent of the other party, such consent not to be unreasonably withheld. After any final judgment or award has been rendered by a court, arbitration board or administrative agency of competent jurisdiction and the time in which to appeal therefrom has expired, or a settlement has been consummated, or the Indemnitee and the Indemnitor have arrived at a mutually binding agreement with respect to each separate matter alleged to be indemnified by the Indemnitor hereunder, the Indemnitee will forward to the Indemnitor notice of any sums due and owing by it with respect to such matter and the Indemnitor will pay all of the sums so owing to the Indemnitee by wire transfer, certified or bank cashier's check within thirty (30) days after the date of such notice. 15. TERM AND TERMINATION. -------------------- 15.1 Term. This Agreement shall be for a term of five years ---- commencing on the date hereof and expiring on October 31, 2002; provided, however, that: (a) The expiration of this Agreement at the end of the term or otherwise shall not terminate the indemnification and hold harmless obligations and covenants of the parties as set forth herein. 10 29 (b) The expiration of this Agreement at the end of the term or otherwise, except in the case of termination for cause as set forth below in Section 15.2, shall not terminate the obligations of Moneta and WS Griffith to pay to the Bank the advisory fee payments and commission payments as set forth herein in Sections 11.1 and 11.2, respectively. (c) This Agreement may be terminated prior to the expiration of its term (i) upon the mutual agreement of the Bank and Moneta, (ii) at the election of any party in the event that Enterbank Holdings, Inc. ("Holdings") or the Bank shall have been subject to an Extraordinary Event, as hereinafter defined, (iii) in the event of a default or breach of this Agreement by Moneta, this Agreement may be terminated at the written election of the Bank unless such default or breach is curable and shall have been cured by Moneta within 30 days of its occurrence, and (iv) in the event of a default or breach of this Agreement by Bank or of the Customer Referral Agreement by Bank or Holdings, this Agreement may be terminated at the written election of Moneta unless such default or breach is curable and shall have been cured by Holdings or Bank, as the case may be, within 30 days of its occurrence. An election of a party to terminate this Agreement in accordance with clause (iii) or clause (iv) above shall not relieve the defaulting or breaching party from liability to a non-defaulting party for loss or damage suffered as a result of such default, nor shall it relieve Moneta or W.S. Griffith from its obligation to pay to the Bank the advisory fee payments and commission payments as required in Sections 11.1 and 11.2, respectively. In addition to the foregoing, the Bank shall have the right to terminate this Agreement (a) in the event of any enforcement action or proceeding instituted against Moneta under the Investment Advisers Act of 1940 which, in the reasonable judgment of the Bank adversely affects the reputation or integrity of Moneta or jeopardizes regulatory licenses held by Moneta or (b) in the event that the business and operations of Moneta shall be acquired (whether by merger, sale of assets or sale of stock) or a change of control of Moneta shall occur. (d) For purposes of this Agreement, an Extraordinary Event relating to Holdings or the Bank shall be deemed to involved: (i) any merger or consolidation involving Holdings other than a merger or consolidation in which the outstanding capital stock of Holdings immediately prior to the effectiveness of such merger or consolidation is converted into (or remains outstanding and constitutes) a majority of the voting common stock of the surviving or resulting entity; or 11 30 (ii) any transaction pursuant to which a majority of the outstanding capital stock of either Holdings or of the Bank is acquired by a person or group pursuant to a tender offer or plan of acquisition or reorganization. 15.2 Termination for Cause. --------------------- 15.2.1 By Moneta or WS Griffith. Moneta or WS Griffith may ------------------------ terminate this Agreement immediately upon the occurrence of any action (other than reporting possible violations of securities or insurance laws to the appropriate authorities) by the Bank or its affiliates in connection with the Bank Marketing Products which would entitle the SEC, the NASD, a state securities regulatory body, a state insurance commission, any other regulatory agency or any court to impose administrative or regulatory sanctions or penalties against Moneta or the Bank or any affiliate of any of the foregoing. This Agreement shall be deemed terminated immediately upon the occurrence of any event described in Schedule 15.2.1 hereto. In the event of termination of --------------- this Agreement pursuant to this section, all obligations of Moneta and WS Griffith to pay fees and commissions hereunder shall immediately terminate. 15.2.2 By Bank. The Bank may terminate this Agreement ------- immediately without notice upon the occurrence of any action by Moneta or WS Griffith that would entitle the SEC, the NASD, a state securities regulatory body, a state insurance commission, any other regulatory agency or any Court to impose administrative or regulatory sanctions or penalties against the Bank, Moneta or any affiliate of any of the foregoing. 16. NOTICES. Any notice required or permitted under this Agreement ------- shall be in writing, and either hand delivered mailed by certified mail, return receipt requested, to the following addresses: Moneta Group Investment Advisors, Inc.: 700 Corporate Park Drive Suite 300 Clayton, Missouri 63105 Attn: Joseph A. Sheehan W.S. Griffith & Co., Inc.: Mail Stop G P.O. Box 5056 Hartford, CT 06102-5056 Attn: Gerard Rocchi, Esq. Enterprise Bank: 150 N. Meramec Clayton, Missouri 63105 Attn: James Wagner 12 31 Notice shall be deemed given on the date of receipt, in the case of hand delivery, or on the date delivered, as shown on the U.S. Postal Service return receipt, in the case of mailing. Any party may change the address to which notice is to be delivered to it under this Agreement by giving notice to that effect to the other parties hereto in the manner provided in this Section. 17. AMENDMENT AND BINDING NATURE OF AGREEMENT; ASSIGNMENT. ----------------------------------------------------- Except as otherwise provided herein, this Agreement may be amended, modified or supplemented only by a writing signed by all parties hereto. This Agreement shall be binding upon all successors and assigns of the parties. This Agreement shall not be assignable by Moneta or the Bank, except that the Bank shall have the right to assign, or direct the payment of, to another person or entity any payment required to be made to it pursuant to this Agreement. 18. NO AGENCY. Neither this Agreement nor any operation hereunder is --------- intended to be, shall be deemed to be, or shall be treated as a general or limited partnership or a joint venture or as creating an agency relationship between and the Bank and/or their affiliates. 19. CONTROLLING LAW. Except regarding matters controlled by --------------- federal law, this Agreement shall be governed by and construed in accordance with the laws of the State of Missouri. 20. HEADINGS. The headings preceding the text hereof have been -------- inserted for convenience and reference only and shall not be construed to affect the meaning, construction or effect of this Agreement. 21. SEVERABILITY. If any term, provision or condition of this ------------ Agreement is held to be invalid, unenforceable or illegal by any court, regulatory agency or self-regulatory body, such invalidity, unenforceability or illegality shall attach only to that term, provision or condition, and the validity and enforceability of the remaining portions of this Agreement shall not be affected. 22. WAIVER. The failure by any party to exercise any right, power, ------ remedy or privilege contained herein, or existing under controlling law, nor or hereafter in effect, shall not be construed to be a waiver of that right, power, remedy or privilege or to preclude further exercise thereof. 23. DISPUTE RESOLUTION. Disputes shall be resolved by the Joint ------------------ Relationship Committee as established in the Customer Referral Agreement dated October 31, 1997 by and among Moneta, Bank and Holdings, which Committee shall initially consist of Peter Schick and 13 32 one other representative designated by Moneta and of Fred Eller and one other representative designated by the Bank. Either Moneta or the Bank shall have the right, from time to time, to change its representation on the Joint Relationship Committee by written notice. The Joint Relationship Committee shall have access to such customer records and account information as it shall deem reasonably necessary in order to determine in good faith whether a particular account should be designated as a "Bank Referral Account" and each of Moneta and Bank agree to provide such information upon request. Each member of the Committee, by serving thereon, agrees to maintain the confidentiality of information concerning the account of customers of the other party confidential except as may be required under this Agreement. In the event that the Joint Relationship Committee shall be divided and in dispute as to any matter and unable to resolve such dispute internally, such dispute shall be resolved by means of an "abbreviated arbitration" whereby Moneta and the Bank shall agree upon a single person to be designated as arbitrator and the decision of such arbitrator shall be final; provided, however, that in the event that Moneta and Bank are unable to agree on a single arbitrator to resolve such dispute, each of Moneta and Bank shall appoint one arbitrator and the arbitrators so selected shall appoint a third arbitrator who will serve as chairman of the panel. Any such arbitration shall be conducted in accordance with the rules of the American Arbitration Association unless otherwise then agreed by the parties. 24. FIDUCIARY OBLIGATION. This Agreement creates no fiduciary -------------------- obligation or responsibilities between the parties or between the Bank and any third parties purchasing products under the Moneta Bank Marketing Program. 25. SURVIVABILITY. The obligations of the parties under Sections ------------- 5.2, 10, 14 and 23 shall survive the termination of this Agreement. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed on its behalf as of the date first above written. MONETA GROUP INVESTMENT ADVISORS, INC. ATTEST: By: (SEAL) - ------------------------------------ ------------------------------- Secretary W.S. GRIFFITH & CO., INC. ATTEST: By: (SEAL) - ------------------------------------ ------------------------------- Secretary ENTERPRISE BANK ATTEST: By: (SEAL) - ------------------------------------ ------------------------------- Secretary 14 33 Schedule 1.2.1 -------------- 1. Neither the Bank nor any Bank Employee who will solicit Bank customers on behalf of Moneta pursuant to this Agreement is subject to an order of the Securities and Exchange Commission ("SEC") as a result of its determination that the Bank or the Bank Employee: A. Willfully made or caused to be made in any registration application or report required to be filed with the SEC pursuant to the Advisers Act, or in any proceeding before the SEC with respect to registration, a statement which was false or misleading to a material fact, or omitted to state in any such application or report any material fact required to be stated therein; or B. Willfully violated any provision of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Advisers, the Commodity Exchange Act, or the rules or regulations under any of the above, or any rule of the Municipal Securities Rulemaking Board, or are unable to comply with any such provision; or C. Willfully aided, abetted, counseled, commanded, induced or procured the violation of any of the provisions, rules and regulations set forth in (b) above, or has failed reasonably to supervise, with a view to preventing violations of the above provisions, rules and regulations, another person who commits such a violation and was subject to his supervision. 2. Neither the Bank nor any Bank Employee has within the previous ten (10) years been convicted of any felony or misdemeanor involving: A. (i) the purchase or sale of a security (ii) the taking of a false oath (iii) the making of a false report (iv) bribery (v) perjury (vi) burglary (vii) conspiracy to commit any of (i)-(vi) above B. The conduct of the business of a broker, dealer, municipal securities dealer, investment adviser, bank, insurance company, governmental securities broker, government securities dealer, fiduciary, transfer agent, or entity or person required to be registered under the Commodity Exchange Act. 15 34 C. Larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds or securities. D. The violation of: 18 U.S.C. Sec.152 (Concealment of assets; false oaths and claims; bribery) 18 U.S.C. Sec.1341 (Frauds and swindles) 18 U.S.C. Sec.1342 (Fictitious name or address) 18 U.S.C. Sec.1343 (Fraud by wire, radio, or television) 18 U.S.C. Sections 471-509 (Counterfeiting and Forgery) 18 U.S.C. Sections 1001-1027 (Fraud and False Statements) 3. Neither the Bank nor any Bank Employee has been found by the SEC to have engaged, or have been convicted of engaging in the conduct described in Question 1(A)-(C) above. 4. Neither the Bank nor any Bank Employee is subject to a permanent or temporary injunction prohibiting him from acting as an investment adviser, underwriter, broker, dealer, municipal securities dealer, government securities broker, government securities dealer, transfer agent, or entity or person required to be registered under the Commodity Exchange Act, or as an affiliated person or employee of any investment company, bank, insurance company, or entity or person required to be registered under the Commodity Exchange Act, or from engaging in or continuing any conduct or practice in connection with any such activity, or in connection with the purchase or sale of any security. 5. Neither the Bank nor any Bank Employee has been subject to an SEC order, judgment or decree barring or suspending their right to be associated with an investment adviser. 16 35 Schedule 1.2.3 -------------- SOLICITOR'S DISCLOSURE STATEMENT PURSUANT TO RULE 206(4)-3 OF THE INVESTMENT ADVISER'S ACT OF 1940 The undersigned hereby acknowledges disclosure of the following information in connection with the opening of an advisory account with Moneta Group Investment Advisors, Inc. ("Moneta"): 1. Name, address and phone number of investment advisor: Moneta Group Investment Advisors, Inc. 700 Corporate Park Drive, Suite 300 Clayton, Missouri 63105 (314) 726-2300 2. Name, address and contact person of solicitor: Enterprise Bank 150 N. Meramec Clayton, Missouri 63105 Attn: ------------------------------ 3. The above-named solicitor and its employees and agents refer advisory clients to Moneta for investment advisory services. Neither the solicitor nor its employees or agents will render any investment advisory services to the clients referred by it to Moneta nor will they receive any compensation from Moneta for such referrals other than that disclosed herein. All questions with respect to Moneta's services and the client's advisory account with Moneta should be directed to Moneta. 17 36 4. The solicitor, its employees and agents will receive 30% of the fees paid by the advisory client to Moneta. The advisory fees charged by Moneta are described more particularly in its brochure, provided herewith, and such fees do not differ between referred and unreferred accounts. 5. Moneta representatives may, from time to time, refer their advisory clients to Enterprise Bank for the purpose of establishing money market accounts, making deposits or requesting loans. In return, Moneta representatives will receive options to purchase stock in EnterBank Holdings, Inc., the parent company of the solicitor, as more fully described in Moneta's Brochure. Certain Moneta principals own approximately 4.5% of the outstanding shares of EnterBank Holdings, Inc. 6. The solicitor, its employees and agents hereby provide you with certain informative materials, including a current copy of Moneta's Brochure pursuant to Rule 206(4)-3 of the Investment Adviser's Act of 1940. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THIS DISCLOSURE STATEMENT AND A CURRENT COPY OF MONETA'S BROCHURE. Dated: ---------------------------------------- --------------------------- Signature ---------------------------------------- Print Name ---------------------------------------- Address 18 37 Schedule 11.1 ------------- With respect to fees for solicitation to persons to become advisory clients of Moneta, the Bank shall receive thirty percent (30%) of the fees received from the clients solicited by the Bank. The fees owed to the Bank will be paid by the 15th day of the month following the month the client's fee is received by Moneta. The obligation of Moneta to pay fees to the Bank hereunder shall terminate upon the termination of the client's investment advisory relationship with Moneta, and the Bank agrees to refund to Moneta any fees received that relate to a refund of investment advisory fees to the client. 19 38 Schedule 11.2 ------------- WS Griffith shall pay to the Bank thirty (30%) of: (i) Gross Dealer Commissions received or retained by WS Griffith with respect to trades of securities (excluding securities which are insurance and securities of the Bank or any affiliate of the Bank) initiated by Bank customers as a result of the Moneta Bank Marketing Program; and (ii) fees received or retained by WS Griffith with respect to referrals made by the Bank to WS Griffith, Moneta and their affiliates. "Commissions" means, with respect to shares of mutual funds, the amount reallowable to dealers as shown in the current prospectuses of such mutual funds pursuant to Item 7(b)(iv) of Form N-1A under the Investment Company Act of 1940 (the "1940 Act"), plus all amounts received by from the principal underwriter (as that term is defined under the 1940 Act) of such mutual funds pursuant to Rule 12b-1 under the 1940 Act, and, with respect to other securities, all commissions, discounts, and other sales compensation. Gross Dealer Commissions means "net" gross dealer commissions (Gross Dealer Commissions less clearing fees) for those securities traded through a clearing firm. WS Griffith shall have the right to cancel transactions when WS Griffith believes there is a valid business purpose for doing so. If transactions are canceled after WS Griffith has paid monthly Program Payments with respect to Commissions earned on the canceled transactions, WS Griffith either may deduct 100% of the canceled Gross Dealer Commission from the Program Payment owed to the Bank for the next Program Payment period, or may request, in writing, that the Bank pay 100% of the canceled Gross Dealer Commission within five (5) days of such written request. 20 39 FORM OF STOCK OPTION AGREEMENT pursuant to Customer Referral Agreement dated as of October 31, 1997 by and among Enterprise Bank, Enterbank Holdings, Inc. and Moneta Group Investment Advisers, Inc. Date of Grant:------------- Number of Shares:---------- Price per Share:------------ This Agreement is made and entered as of the -- day of ------, ----, (the "Date of Grant") by and between Enterbank Holdings, Inc. (the "Company"), a Delaware corporation, and ------------- ("Optionee") in accordance with the provisions of that certain Customer Referral Agreement dated as of October 31, 1997, by and among the Company, its subsidiary, Enterprise Bank, and Moneta Group Investment Advisers, Inc. 1. Grant of Option. Subject to the terms and conditions hereinafter set forth, the Company hereby grants to the Optionee as of the Date of Grant, the right and option to purchase up to ----- shares of the Common Stock, par value $.01 per share, of the Company, at a price of $ ---- per Share. Such option is hereinafter referred to as the "Option" and the shares of stock purchasable upon exercise of the Option are hereinafter sometimes referred to as the "Option Shares." 2. Installment Exercise. (a) Subject to such further limitations and conditions as are provided herein, the Option shall vest and become exercisable in five equal annual installments commencing on the first anniversary of the Date of Grant and the Optionee shall have the right hereunder to exercise each installment by purchasing, in whole or in part, the Option Shares to which such installment relates at any time on or after the date upon which it first becomes exercisable and prior to the time at which such Option expires. Option Shares which are not currently purchasable as a result of such installment vesting are sometimes hereinafter referred to as "Non-Vested Shares." (b) Notwithstanding the foregoing, the Option shall become immediately exercisable in full, to the extent to which not theretofore exercised, upon the occurrence of one or more of the following events: (i) the death of the Optionee; or (ii) the permanent physical disability of the Optionee; or 40 (iii) the occurrence of an Extraordinary Event, as hereinafter defined, with respect to the Company. 3. Termination and Expiration of Option. (a) The Option and all rights hereunder with respect thereto, to the extent that such rights shall not have theretofore been exercised, shall expire and become null and void as of the close of business on the business day immediately preceding the tenth anniversary of the Date of Grant (the "Expiration Date"). (b) In the event that the Optionee shall cease to be an employee of Moneta Group Investment Advisers, Inc. (or a subsidiary or affiliate of Moneta Group Investment Advisers, Inc., hereinafter collectively "Moneta Group"), other than as a result of death or permanent disability, then (i) vesting of the right to any Non-Vested Shares as of the date upon which such employment shall cease shall terminate and the Option shall immediately lapse and expire as to such Non-Vested Shares; and (ii) the Expiration Date with respect to Option Shares exercisable as of the date upon which such employment shall cease shall be the close of business on the last business day preceding the ninety-first (91st) calendar day following the date upon which such employment shall cease. (c) In the event of the death or permanent disability of the Optionee, the Expiration Date shall be the earlier of (i) the close of business on the last business day immediately preceding the tenth anniversary of the Date of Grant, or (ii) the close of business on the last business day immediately preceding the first anniversary of the date of death or, if sooner, the first anniversary of the date upon which employment of the Optionee by the Moneta Group was terminated due to permanent disability. (d) In the event that the Customer Referral Agreement is terminated (other than by reason of expiration at the end of its stated term), (i) any Non-Vested Shares as of the date of such termination shall not thereafter become vested or exercisable by the Optionee; and (ii) the Expiration Date with respect to Option Shares exercisable as of the date of 41 such termination shall be the close of business on the last business day preceding the ninety-first (91st) calendar day following the date of such termination. (e) Notwithstanding any other provisions set forth herein, if the Optionee shall (i) commit any act of malfeasance or wrongdoing affecting the Moneta Group or the Company or any subsidiary of the Company, (ii) breach any employment contract with, or covenant not to compete with, the Moneta Group, or (iii) engage in conduct that would warrant the Optionee's discharge for cause by the Moneta Group, any unexercised portion of the Option, whether or not then vested or exercisable, shall immediately terminate and be forfeited. 4. Exercise of the Option. (a) The Optionee may exercise the Option with respect to all or any part of the number of Option Shares then exercisable hereunder by giving the Secretary of the Company written notice of intent to exercise. The notice of exercise shall specify the number of Option Shares as to which the Option is to be exercised and the date of exercise thereof, which date shall be at least five business days after the giving of such notice unless an earlier time shall have been mutually agreed upon. (b) Full payment by the Optionee of the option price for the Option Shares purchased shall be made on or before the exercise date specified in the notice of exercise in cash or, in whole or in part, through the surrender of previously acquired shares of the common stock of the Company valued at their fair market value on the exercise date. On the exercise date specified in the Optionee's notice or as soon thereafter as practicable, the Company shall cause to be delivered to the Optionee a certificate or certificates for the Option Shares then being purchased (out of theretofore unissued stock or reacquired stock as the Company may elect) upon full payment for such Option Shares. The obligation of the Company to deliver Stock shall, however, be subject to the following conditions: (1) if the Company shall determine that the listing, registration or qualification of the Option or the Option Shares upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the Option or the issuance or purchase of Stock thereunder, the Option may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company; 42 (2) to the extent that the Company shall be willing to rely upon any exemption from registration, qualification, consent or approval in connection with the Option or the issuance or purchase of the stock thereunder, (A) Optionee shall provide to the Company such written representations or warranties as may be necessary to induce or otherwise permit the Company to so rely, and (B) the Company may impose, and Optionee shall consent to the imposition of, any stop transfer order and restrictive legends limiting the sale, transfer or assignment of the Stock being acquired by the Optionee; and (C) if the Company shall be required to collect and remit any federal or state income tax in connection with the exercise of the Option, the Option shall not be exercised unless Optionee tenders to the Company in cash the funds so required to be collected and remitted. (c) If the Optionee fails to pay for any of the Option Shares specified in a notice of exercise or fails to accept delivery thereof, the Optionee's right to purchase such Option Shares may be terminated by the Company in its sole discretion. 5. Adjustment of and Changes in Stock of the Company. In the event of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of capital stock of the Company, the Company shall make such equitable adjustment as it deems appropriate in the number and kind of shares of Stock subject to the Option or in the option price or both; provided, however, that no such adjustment shall give the Optionee any additional benefits under the Option. 6. Fair Market Value As used herein, the "fair market value" of a share of Stock shall be equal to the Market Value Per Share of the Company's common stock determined as follows: ((1) if the common stock of the Company is traded on a national securities exchange registered under the Securities Exchange Act of 1934 or if quotations for such stock are carried in the Nasdaq over-the-counter market maintained by the National Association of Securities Dealers, Inc., then the Market Value Per Share of the Company's common stock shall be equal to the reported closing price per share of such stock as of the date of grant to be reflected in the Option; 43 (2) if the common stock of the Company is not traded as provided in (1) above, the Market Value Per Share shall be based upon the weighted average of the prices paid per share for such common stock in arm's-length transactions not involving the Company or any director or executive officer of the Company reflected in respect of blocks of 500 shares or more occurring within the 90 days preceding the date of grant to be reflected in the Option; or (3) if the common stock of the Company is not traded as provided in (1) above and there are fewer than three transactions available to determine the price in (2) above, then the Market Value Per Share shall be determined in good faith by the Board of Directors of the Company in consultation with the firm of J. A. Glynn & Co. or another broker-dealer as may be agreed by the Company and the Moneta Group. 7. No Rights of Stockholders Neither the Optionee nor any personal representative shall be, or shall have any of the rights and privileges of, a stockholder of the Company with respect to any shares of Stock purchasable or issuable upon exercise of the Option, in whole or part, prior to the date of exercise of the Option. Notwithstanding the foregoing, the Company agrees that it will, upon the written request of the Optionee, provide to the Optionee (i) copies of any reports or proxy statements filed by the Company under the Securities Exchange Act of 1934, as amended, and (ii) copies of reports or communications distributed by the Company to its stockholders generally. 8. Non-Transferability of Option During the Optionee's lifetime, the Option hereunder shall be exercisable only by the Optionee or any guardian or legal representative of the Optionee and the Option shall not be transferable except, in the case of the death of Optionee, by will or the laws of descent and distribution, nor shall the Option be subject to attachment, execution or similar process. In the event of any attempt by Optionee to alienate, assign, pledge, hypothecate or otherwise dispose of the Option, except as provided for herein, or the levy of any attachment, execution or similar process upon the rights or interest hereby conferred, the Company may terminate the Option by notice to the Optionee and the Option shall thereupon become null and void. 9. Extraordinary Event As used in this agreement, an Extraordinary Event shall mean (i) any merger or consolidation involving the Company other than a merger or consolidation in which the outstanding capital stock of the Company immediately 44 prior to the effectiveness of such merger or consolidation is converted into (or remains outstanding and constitutes) a majority of the voting common stock of the surviving or resulting entity; or (ii) any transaction pursuant to which a majority of the outstanding capital stock of either the Company or of Enterprise Bank is acquired by a person or group pursuant to a tender offer or plan of acquisition or reorganization. Upon the occurrence of an Extraordinary Event pursuant to which the outstanding capital stock of the Company is converted into cash or in the case of an Extraordinary Event as defined in (ii) of the foregoing definition, the Company or its successor shall have the right to elect to terminate the Option by paying to the Optionee in full settlement of the Optionee's rights hereunder an amount per theretofore unexercised Option Share equal to the difference between the exercise price per share provided in this Option and the cash amount per share paid with respect to the outstanding shares of the Company's common stock. 10. Representations and Agreements of the Optionee (a) The Optionee acknowledges that he has been advised by the Company that neither this Option nor the offer and sale of the Option Shares as contemplated hereby have been registered under the Securities Act of 1933, as amended (the "Securities Act"), or comparable state securities laws in reliance by the Company upon one or more exemptions from the registration requirement. In connection therewith, the Optionee represents to the Company that Optionee (is)(is not) [select one at time of grant] an "accredited investor" as that term is defined in Regulation D under the Securities Act. The Optionee further acknowledges that he understands that the common stock of the Company is not currently registered as a class of securities under the Securities Exchange Act of 1934, as amended, and is not traded on a national securities exchange or pursuant to the Nasdaq over the counter market; and also that upon issuance of Option Shares pursuant to the exercise of this Option, such shares are unlikely to be freely tradable unless and except to the extent that the holding period and available public information and other requirements of Rule 144 under the Securities Act are met. Accordingly, the Optionee recognizes that upon any exercise of this Option the shares so acquired will constitute an "illiquid" investment. (b) This agreement and the Option shall be subject to and construed in accordance with the Customer Referral Agreement and any conflict between the two agreements shall be resolved in favor of the provisions of the Customer Referral Agreement. 45 11. Amendment of Option Except for adjustments in accordance with paragraph 5 which shall be made in the sole discretion of the Company, this Option may not be amended except by the mutual agreement of the Company and the Optionee. 12. Notice Any request or notice to the Company provided for in this agreement shall be addressed to it in care of its Secretary at its executive offices at 150 North Meramec, St. Louis, Missouri 63105. Any notice to the Optionee shall be addressed to Optionee in care of Moneta Group Investment Advisers, Inc., 700 Corporate Park Drive, Suite 300, St. Louis, Missouri 63105. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid. 13. Governing Law The validity, construction, interpretation and effect of this agreement shall exclusively be governed by and determined in accordance with the law of the state of Missouri except to the extent preempted by federal law, which shall to the extent govern. IN WITNESS WHEREOF, the Company and the Optionee have executed this Agreement as of the Date of Grant written above. ENTERBANK HOLDINGS, INC. By - ----------------------------- -------------------------------------- (Optionee) Duly Authorized EX-11 3 STATEMENT RE: COMPUTATION OF EARNINGS 1 ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES Exhibit 11 Three and nine months ended September 30, 1997 and 1996
======================================================================================================================= Fully diluted EPS number EPS number Fully diluted of shares of shares Net income EPS EPS - ----------------------------------------------------------------------------------------------------------------------- Three months ended September 30, 1997 2,254,021 2,254,021 604,991 0.27 0.27 Three months ended September 30, 1996 1,728,691 1,739,325 $ 429,334 0.25 0.25 Nine months ended September 30, 1997 2,176,712 2,176,712 1,608,439 0.74 0.74 Nine months ended September 30, 1996 1,702,870 1,716,018 1,266,340 0.74 0.74 =======================================================================================================================
2 ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES Exhibit 11, Continued Three and nine months ended September 30, 1997 and 1996
======================================================================================================================= Three months ended September 30, ------------------------------------------------------- 1997 1996 --------------------------- -------------------------- Fully Fully Average diluted Average diluted - ----------------------------------------------------------------------------------------------------------------------- Average shares outstanding 2,127,385 2,127,385 1,562,880 1,562,880 Warrants -- -- 99,500 99,500 Options - 1 vested 128,587 128,587 122,000 122,000 Options - 2 vested 71,200 71,200 53,400 53,400 Options - 2 vested 1,200 1,200 800 800 Gross shares 2,328,372 2,328,372 1,838,580 1,838,580 Shares purchased 74,351 74,351 109,889 99,255 Shares for EPS calculation 2,254,021 2,254,021 1,728,691 1,739,325 Warrants $ 5.50 5.50 5.50 5.50 Options - 1 vested 5.00 5.00 5.00 5.00 Options - 2 vested 7.00 7.00 7.00 7.00 Options - 2 vested 9.25 9.25 9.25 9.25 Warrants -- -- 547,250 547,250 Options - 1 vested 642,935 642,935 610,000 610,000 Options - 2 vested 498,400 498,400 373,800 373,800 Options - 2 vested 11,100 11,100 7,400 7,400 Dollars for repurchase 1,152,435 1,152,435 1,538,450 1,538,450 Price 15.50 15.50 14.00 15.50 ======================================================================================================================= ======================================================================================================================= Nine months ended September 30, ------------------------------------------------------- 1997 1996 --------------------------- -------------------------- Fully Fully Average diluted Average diluted - ----------------------------------------------------------------------------------------------------------------------- Average shares outstanding 2,044,051 2,044,051 1,496,933 1,496,933 Warrants -- -- 165,591 165,591 Options - 1 vested 137,480 137,480 122,000 122,000 Options - 2 vested 71,200 71,200 53,400 53,400 Options - 2 vested 1,200 1,200 800 800 Gross shares 2,253,931 2,253,931 1,838,724 1,838,724 Shares purchased 77,219 77,219 135,854 122,706 Shares for EPS calculation 2,176,712 2,176,712 1,702,870 1,716,018 Warrants 5.50 5.50 5.50 5.50 Options - 1 vested 5.00 5.00 5.00 5.00 Options - 2 vested 7.00 7.00 7.00 7.00 Options - 2 vested 9.25 9.25 9.25 9.25 Warrants -- -- 910,751 910,751 Options - 1 vested 687,400 687,400 610,000 610,000 Options - 2 vested 498,400 498,400 373,800 373,800 Options - 2 vested 11,100 11,100 7,400 7,400 Dollars for repurchase 1,196,900 1,196,900 1,901,951 1,901,951 Price 15.50 15.50 14.00 15.50 =======================================================================================================================
17 EX-27 4 ARTICLE 9 FINANCIAL DATA SCHEDULE
9 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 15,769,231 40,091 14,850,000 0 13,554,520 822,715 824,376 201,537,575 2,255,000 250,963,277 226,987,027 0 735,580 0 0 0 21,450 23,219,220 250,963,277 11,672,201 832,725 543,845 13,049,771 761 5,910,376 7,139,395 570,972 0 4,324,866 2,563,016 0 0 0 1,608,439 0.74 0.74 8.83 183,000 0 0 261,444 1,765,000 112,000 31,000 2,255,000 1,888,403 0 366,597
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